Afentra : Annual Report 2023

Value driven growth

Annual Report and

Financial Statements 2023

www.afentraplc.com

Overview

Introduction and Highlights	2
2023 Summary	4
Purpose	8
Afentra's Approach	10
Chairman's Statement	12

Strategic Report

Market Review	18
Chief Executive Statement	22
Business Model	26
Asset Summary	28
Sustainability	42
Business Risk	54
Our Stakeholders	58
Financial Review	60
Corporate Governance
Board of Directors	66
Statement of
Corporate Governance	68
Audit Committee Report	71
Nominations Committee	73
Remuneration Committee Report	74
Extractive Industries
Transparency Initiative	84
Directors' Report	85
Statement of Directors'
Responsibilities	87

Group Accounts

Independent Auditors' Report	90
Consolidated Statement of
Comprehensive Income	100
Consolidated Statement of
Financial Position	101
Consolidated Statement of
Changes In Equity	102
Consolidated Statement of
Cash Flows	103
Company Statement of
Financial Position	104
Company Statement of
Changes In Equity	105
Notes to the Financial Statements	106
Appendices
Definitions and Glossary of Terms	134
Professional Advisors	137

1

Afentra plc ('Afentra' or the 'Company'), together with its subsidiary undertakings (the 'Group'), is an upstream oil and gas Company listed on the AIM market of the London Stock Exchange (AIM: AET).

Value driven growth

It has indeed been a transformational year for Afentra with the completion of its first two acquisitions from INA (May 2023) and Sonangol (December 2023) resulting in the Company, at year end, holding material non-operating interests in Block 3/05 (18%), in Block 3/05A (5.33%) and in Block 23 (40%) located offshore Angola. A key part of the Sonangol acquisition was the successful negotiation with the Angolan Government to approve the extension of the Block 3/05 licence to 2040 and improve fiscal terms to the production sharing agreement ('PSA'), encouraging future investment in the block.

Post period, the Company having received approval from the Angolan Government, has completed the acquisition of a further 12% non-operated interest in Block 3/05 and 16% non-operated interest in Block 3/05A from Azule Energy Angola Production B.V. ('Azule'). This results in Afentra's non-operated interests increasing to 30% in Block 3/05 and 21.33% in Block 3/05A. In addition, post period, the Angolan Government declared the Punja Development Area in Block 3/05A a marginal discovery with improved fiscal terms now applicable increasing the potential for future development.

The successful completion of these transactions provides the Company with material proven reserves, robust production and cash flow, and significant upside potential from a high-quality asset base. The Block 3/05 licence extension and the favourable improvement of the fiscal terms underpins our confidence in Angola as an attractive investment environment, where we can maximise the value of these high-quality assets over the long-term.

Following a year of material strategic and operational progress detailed in this report, Afentra is well

2 Afentra plc Annual Report and Financial Statements 2023

Overview

Strategic Report

Corporate Governance

Group Accounts

positioned to deliver its ambitious growth strategy while delivering the broad stakeholder benefits and value around which Afentra was formed.

The discourse on the Energy Transition, and how it can be achieved in an equitable and responsible way, continues to evolve. Geopolitical and economic headwinds in 2023 continued to focus policymakers' decision making towards energy security and affordability balanced with sustainability. There is

a growing recognition that African countries must be able to continue to benefit from the revenues generated from their hydrocarbon industries so that they can fund their socioeconomic development, and long-term Energy Transition, while also meeting strong domestic energy demand.

African governments, such as in Angola, are responding accordingly as they seek to encourage foreign investment and welcome ambitious

independents by improving fiscal terms and extending licences to create stable operating environments for investment. In addition to this positive investment climate, an industrial transition is anticipated to continue to gather pace as International Oil Companies ('IOCs'), that have been active in offshore and onshore Africa for decades, follow a trend established in other mature hydrocarbon basins, like the North Sea in the 1990s, by exiting non-core assets as they seek more significant reserves in new projects.

This presents an opportunity for independents like Afentra as a credible counterparty for IOCs to divest the assets and to deliver value creation for all stakeholders, supporting the responsible management of assets, optimising production while reducing environmental impacts and supporting a responsible Energy Transition.

3

2023 Summary

Strategic

• Afentra completed the acquisitions from INA (May 2023) and Sonangol (December 2023) of non-operated interests in Block 3/05 and Block 3/05A located offshore Angola in the Lower Congo Basin, resulting in the Company at year end holding 18% and 5.33% respectively in these two licences.
• Afentra announced on 19 July 2023 it had signed a Sale and Purchase Agreement ('SPA') with Azule to acquire a further 12% non-operated interest of Block 3/05 and 16% non- operated interest of Block 3/05A.
• An Executive Decree was published on 17 May 2023 formally approving the extension of the term of the Block 3/05 PSA to 31 December 2040.
• A subsequent Executive Decree was published on 4 October 2023 formally approving the revised fiscal terms, which have been independently assessed to enhance the economics on Block 3/05 and will apply to the Block 3/05 PSA for the remainder of its term.
• In accordance with Rule 14 of the AIM Rules, the Company's ordinary shares were suspended from trading on AIM from 19 July 2023 as the Azule acquisition and amended Sonangol acquisition constituted a reverse takeover ('RTO').

• Publication of the Admission Document on 18 September 2023 lifted the suspension of shares in Afentra only 9 weeks after the announcement of the transactions. Shareholder approval was received on 5 October 2023.
• Key stakeholder engagement across Governmental, Regulatory authorities and industry counterparties underscores Afentra's confidence in Angola as an attractive operating and investment jurisdiction.
• Efforts to efficiently screen and evaluate compelling M&A opportunities in line with the Company strategy continued.
• The Board was further strengthened through the appointment of Thierry Tanoh as an Independent Non- Executive Director and Chairman of the Audit Committee.

4 Afentra plc Annual Report and Financial Statements 2023

Overview

Strategic Report

Corporate Governance

Group Accounts

Financial

• Cash resources at year end 2023 of $19.6 million (2022: $30.6 million), which includes restricted funds of $4.9 million (2022: $10.2 million).
• Reserve Based Lending Facility at year end of $31.7 million resulting in year end net debt of $12.3 million.
• The Company sold its first cargo of 300,000 bbls of crude oil in August 2023, comprising crude oil stock and subsequent production from the INA Acquisition. The sales price inclusive of the Brent premium was $88/bbl, generating pre-tax sales of $26.4 million net to Afentra.
• Crude oil stock as at year end 2023 of approximately 300,000 bbls1.

• Asset level cashflow generation related to 30% equity in Block 3/05 in 2023 was $67.4 million at an average weighted sales price of $90/bbl.
• Mauritius Commercial Bank became a lender to the Company by entering both the reserve base lending ('RBL') and working capital facilities. Trafigura retains an interest in the RBL facility and will continue as an offtake provider.
• The Group remains fully carried for Odewayne operations in Somaliland (Third and the Fourth Periods of the PSA).

Cash resources at 31 December 2023

$19.6 million

(2022: $30.6 million)

Pre-tax sales at 31 December 2023

$26.4 million

(2022: Nil)

• Crude oil entitlement

5

2023 Summary

Operations

• Average 2023 gross production on Block 3/05 and Block 3/05A was 20,180 bopd representing an 8% increase from 2022 gross production rates of 18,700 bopd.

• On Block 3/05, two successful light well intervention ('LWI') campaigns were carried out in 2023, involving 30 wells. This involved successfully re-entering wells to carry out matrix and tubing washes, perform water shut offs and re-perforations. These well interventions resulted in incremental production increases, leading to an average monthly gross production exceeding 23,000 bopd in December (December 2023 net production exceeded 6,5001 bopd ) and have demonstrated the benefits of low-cost well interventions.

• Investment in upgrades to the water injection system have doubled injection rates since 2022 on Block 3/05, with December rates reaching ~42,000 barrels water injection per day ('bwipd') and further significant improvements are expected in 2024. The improved water injection is expected to positively impact oil production in the medium term as the reservoir pressure increases.

• Production was restored at the Gazela field on Block 3/05A

in March and averaged 1,300 bopd, gross, through 2023.

• Progressed future investment options to unlock the significant resource base which include the installation of electric submersible pumps ('ESPs'), heavy workovers, infill drilling and development of Block 3/05A discoveries.

• Drone surveys to identify fugitive emissions and assist in quantifying flaring were carried out in November 2023 over the Block 3/05 infrastructure. This forms part of a holistic gas management program to identify, measure and reduce GHG emissions.

• A full competent persons report ('CPR') was completed as part of the re-admission of the enlarged group to trading on AIM with an effective date of 30 June 2023 and published in the Company's admission document. Based on this report, reserves replacement in the first half of 2023 has been in excess of 150%.

• Net average December combined production exit rate from Block 3/05 and 3/05A post completion of the Azule Acquisition.

6 Afentra plc Annual Report and Financial Statements 2023

Overview

Strategic Report

Corporate Governance

Group Accounts

Post year end

• Afentra submitted bids, as a non-operating partner, for Blocks KON15 (1,000 km2) and KON19 (900 km2) located in the Kwanza onshore Basin and has since been informed that it has been selected as the preferred bidder for 45% equity in both Blocks.
• In February 2024, the Company sold its first 2024 cargo of 450,000 bbls of crude oil. The sales price inclusive of the Brent premium was $85/bbl, generating pre-tax sales of $38.2 million to Afentra.
• In March 2024, Afentra with its partners agreed and initialed the PSA for the onshore Block KON19 with Agência Nacional de Petróleo, Gás e Biocombustíveis ('ANPG') and now await the formal Government approval.
• In March 2024, Afentra announced that it had received approval from the Angolan Competition Authority for the acquisition from Azule of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A, offshore Angola.
• In April 2024, Afentra announced that it had received approval from the Angolan Government for the Azule Acquisition.
• In April 2024, Afentra announced that the Government of Angola had declared the Punja Development Area in Block 3/05A a marginal discovery with improved fiscal terms now applicable for the remainder of its term.

• In May 2024, Afentra announced the completion of the Azule acquisition resulting in Afentra holding non-operated interests of 30% in Block 3/05 and 21.33% in Block 3/05A, including the following completion settlement figures:
• • Net completion payment of $28.4 million, with Afentra inheriting crude oil stock of c.480,000 bbls.
  • Net completion payment to be funded by $4.9 million held in escrow, $17.0 million from the agreed RBL and $6.5 million from cash resources.
  • Further contingent payments payable to Azule include up to $14.0 million over two years for Block 3/05 (subject to oil price thresholds) and up to $15.0 million (for future developments, subject to oil price thresholds and production hurdles in Block 3/05A).
  • Following the Azule acquisition, the total RBL drawn is $47.3 million, the total working capital facility drawn is $13.7 million, and the cash balance is $14.8 million, resulting in a net debt of approximately $46.2 million.
  • After completing the Azule acquisition, the company holds a stock of c. 840,000 bbls1, that can be valued at $63.0 million (based on $75 per barrel) on a pre-tax basis.
  • The company expects to sell its next cargo of crude oil (around 450,000 bbls) in June 2024.
  • Mauritius Commercial Bank continues as the lender to the company. Trafigura retains an interest in the RBL facility and will continue as offtake provider.

Stock held following completion of the Azule acquisition		Pre-tax sales year to date
c.840,000 bbls1		$38.2 million

• Crude oil stock entitlement

7

Purpose

Effecting sustainable change

Our purpose remains to support the African Energy Transition as a responsible, well managed independent, enabling the continued economic and social development of African economies and bridging the gap to other/ renewable forms of energy.

Our enabling role in this connected energy ecosystem is to access, redevelop and unleash the full potential of existing producing fields or undeveloped discoveries that no longer fit the portfolios of major companies. We will do this in a safe, responsible and sustainable manner. By investing in the region, empowering our people and working with our partners, we can positively impact local economies and deliver significant economic returns to all stakeholders.

Mission

Our mission is to be the trusted partner of both IOCs and host governments in the divestment of legacy assets. By managing these assets responsibly, we turn these fields or discoveries into profitable assets by applying focus, innovation, efficient operating practices and smart commercial arrangements. We use our approach to unleash the full asset potential whilst also reducing carbon emissions, promoting growth through employment and facilitating socio-economic development.

Defining legacy assets

Producing fields or undeveloped discoveries that:

• May no longer fit with a company's strategy in Africa
• May need investment, regeneration or upgrading
• May be sub-economic for larger companies

8 Afentra plc Annual Report and Financial Statements 2023