Afren targets $105m in recapitalisation programme
Interim Chief Executive, Toby Hayward, who disclosed this in its financial statement, said: “Afren faced an unprecedented set of challenges in 2014, compounded by a decline in oil prices at the end of the year. Responding to these challenges has not been easy but as a Board we are determined to stabilise and strengthen the company.
He confirmed that lower oil prices significantly impacted the business at the start of 2015, which resulted in a review of the company’s capital structure, liquidity, funding requirements and business plan.
“Holders of existing notes have provided interim funding of $200 million by way of new private placement notes. Proceeds will be used for general corporate purposes and capital expenditure. Wider recapitalisation programme expected to be completed by the end of July 2015 providing a further $55 million to $105 million in net cash proceeds,” he stated.
The objective of this restructuring, according to him, wass to recapitalise the business, extend the maturity of our debt, lower our cost base and focus the company’s operational efforts towards achieving production and cash flow increases from our existing Nigerian production base, as outlined in our business plan.
“These measures should enable Afren to benefit favourably from any potential upward re-rating in the oil price dynamics but at the same time ensure the business can return to profitability from a lower oil price base.”
Afren had earlier offered a Nigerian indigenous firm Seplat a buy-out, which was latter scuttled due to inability of the parties to reach an agreement.
The Chief Executive however assured that Afren still has an attractive portfolio of assets, which it believed would provide a suitable platform for the company to move forward with in 2015 and beyond.
“We understand these have been difficult times for all but we wish to thank our shareholders, lenders, Partners and staff for their patience and reiterate our commitment to regaining the confidence of all our stakeholders,” he said.
He stressed that operational delays impacted the timing of the production ramp-up across our producing asset base which, when combined with the rapid deterioration in the oil price environment during the second half of the year, meant that our financial performance fell well below our expectations.
The company however announced its results for the year ended 31 December 2014 net production (excluding Barda Rash of 31,819 bopd), slightly below the full year guidance range of between 32,000 – 36,000 bopd.