Transaction consolidates ownership in core cash generating assets and brings in a new strategically aligned cornerstone investor, enabling enhanced shareholder returns and a materially stronger growth proposition
The enlarged
Amalgamation Agreement
Under the Amalgamation Agreement,
______________________________________________________
1 Please refer to
Strategic Rationale for the Proposed Reorganization
In the view of the board of directors of
These pillars provide a strong platform for the enlarged
The Proposed Reorganization would provide the enlarged
- 100 per cent. increase in working interest Proved plus Probable ("2P") reserves and production2 on a pro-forma basis for BTG receiving approximately 35 per cent. of the shares in the enlarged
Africa Oil . -
Accretion in free cash flow per share for
Africa Oil shareholders in the 2025 - 2029 period is expected to be more than 100 per cent., significantly enhancingAfrica Oil's capacity to support:-
sustainable through-cycle returns to shareholders, underpinning an annual base dividend of
US$100 million ("Base Dividend")3 that is deemed by the Board to be sustainable in a range of through-cycle oil price scenarios; - an annual commitment to distribute at least 50 per cent. of excess free cash flow after Base Dividend distribution in the form of supplemental dividends and/or share repurchases; and
-
ongoing investment in
Africa Oil's low-cost, high-margin core producing assets in deepwaterNigeria to extend the production life of these assets, while exploiting in-field and near-field development opportunities.
-
sustainable through-cycle returns to shareholders, underpinning an annual base dividend of
- Increased scale and balance sheet strength, with combined net debt4 / EBITDA5 of 0.4x on a pro-forma basis at year end 2023, along with the potential to benefit from lower borrowing costs.
-
The introduction of a long-term cornerstone shareholder that is strategically aligned with
Africa Oil and committed to growing a sustainable upstream oil and gas business, would deliver superior value creation and shareholder capital returns.BTG Oil & Gas' support could increase the enlargedAfrica Oil's access to business opportunities and potentially unlock new sources of growth capital, while complementingAfrica Oil's disciplined capital allocation and financial decision making through BTG Oil & Gas' participation on the Board. -
Enabling direct control of Prime's cash flows and balance sheet through the consolidation of
Africa Oil and BTG Oil & Gas' respective interests in Prime versus the equity accounting method that is followed byAfrica Oil today for its investment in Prime. This in turn will facilitate greater transparency and visibility of Prime's financial performance forAfrica Oil's shareholders. - Significant scope to streamline the business processes and decision making to achieve cost savings.
Both the Board and the board of directors of
Completion of the Proposed Reorganization is targeted to occur during or before the third quarter of 2025 and is subject to, among other conditions,
______________________________________________________
2 Using
3 This indicated annual dividend amount is only to be distributed following the completion of the Proposed Consolidation and will be distributed over enlarged
4 Net Debt is a Non-IFRS metric. See Non-IFRS Measures below.
5 EBITDA is a Non-IFRS metric. See Non-IFRS Measures below.
Reorganization Structure and Exchange Ratio
The Proposed Reorganization envisages the consolidation of
In connection with the Proposed Reorganization,
The relative ownership of existing
The Proposed Reorganization requires the approval of at least 50 per cent. of the votes cast by the holders of
Each of the directors and officers of
Board Composition
On completion of the Proposed Reorganization, the Board will be comprised of nine directors, three of whom will be nominated by
- the Chief Executive Officer of
Africa Oil ; -
three independent non-executive directors nominated by
Africa Oil ; -
three non-executive directors nominated by
BTG Oil & Gas (includingHuw Jenkins as non-executive Chair); and -
two additional independent non-executive directors mutually agreed between
Africa Oil andBTG Oil & Gas .
Further details on the non-executive directors and executive management team will be provided in due course.
Listing and Headquarters
The existing
The Enlarged Africa Oil Capital Allocation Framework
The Proposed Reorganization will enable the enlarged
The Enhanced Capital Framework, to be implemented post completion, envisages the following capital priorities:
- Maintenance of a
US$150 million liquidity position. - Maintenance of a twelve-month trailing ratio of Net Debt6 / EBITDAX7 of no more than 1.0x.
- Base Dividend that is deemed sustainable by the Board in a range of conservative oil price scenarios.
- Distribution to shareholders of at least 50 per cent. of excess annual free cash flow after the Base Dividend has been paid in the form of supplemental dividends and/or share repurchases ("Supplemental Shareholder Returns") (with the Base Dividend and Supplemental Shareholder Returns collectively being the "Shareholder Distributions Policy").
- Capex to be prioritized in the following order: (i) first, to increase short-cycle production growth, (ii) second, for development of future production and (iii) third, for exploration, limited to a small percentage of total annual capex.
______________________________________________________
6 Net Debt is a Non-IFRS metric. See Non-IFRS Measures below.
7 EBITDA is a Non-IFRS metric. See Non-IFRS Measures below.
BTG Oil & Gas Governance Provisions under Investor Rights Agreement
As part of the Proposed Reorganization,
It is the Company's intention that the Board of
The Investor Rights Agreement (including the additional provisions below) will be automatically terminated if (i) the Amalgamation Agreement is terminated in accordance with its terms or (ii) following completion of the Proposed Reorganization,
Additional Provisions of the Investor Rights Agreement
BTG Oil & Gas Lockup and Standstill
- sell the
Africa Oil common shares received in connection with the Proposed Reorganization (and any additionalAfrica Oil common shares it may acquire as a result of certain participation rights provided toBTG Oil & Gas in the Investor Rights Agreement), subject to certain exceptions, or be entitled to increase its stake in the enlargedAfrica Oil to more than 50 per cent.; or -
enter into a voting arrangement or similar agreement with a third party regarding its
Africa Oil shares if, when any holdings by such third party and its joint actors are aggregated withBTG Oil & Gas' ownership would exceed a 50 per cent. shareholding in the enlargedAfrica Oil ; or -
make, assist, encourage or facilitate a tender offer that would result in the offeror owning 50 per cent. or more of the enlarged
Africa Oil ; or -
initiate any proxy contest, put forth any shareholder proposal, or vote against Africa Oil Board nominees for election as directors, save that
BTG Oil & Gas and its affiliates shall otherwise be free to exercise the votes attaching to their shares in the enlargedAfrica Oil at their discretion.
Provided that
BTG Oil & Gas Consents Relating to Shareholder Distributions, Share Issuances and Significant Merger and Acquisition Transactions
Provided that
- Changes to the Company's Shareholder Distributions Policy (as outlined above) or declaring or paying dividends or other distributions other than in accordance with the Shareholder Distributions Policy.
- Issuance of new shares at more than a 10 per cent. discount to the prevailing 30 day volume weighted average share price.
- Issuance of new shares representing 20 per cent. or more of the outstanding issued share capital.
-
A merger or an acquisition (or similar transaction) with transaction consideration (including any assumed debt) greater than 25 per cent. of the market capitalization of the enlarged
Africa Oil (to be calculated with reference to the prevailing 30 trading day volume weighted average share price). For the avoidance of doubt, this shall not apply to or restrict an acquisition of issued and outstanding securities of the enlargedAfrica Oil by a third party in exchange for consideration paid by such third party.
BTG Oil & Gas Information and Registration Rights
The Investor Rights Agreement contains customary information, inspection, participation and registration rights for
Further Information
Further information regarding the Proposed Reorganization, the Amalgamation Agreement and the shareholders' meeting, will be included in a management information circular that will be mailed to shareholders of record in advance of the shareholder meeting. Copies of the Amalgamation Agreement, the forms of voting support agreements, the Investor Rights Agreement and proxy materials in respect of the shareholders' meeting will be available on SEDAR+ at www.sedarplus.com.
Conditions to Completion
As noted above, the Proposed Reorganization is expected to close during or before the third quarter of 2025. Completion is subject to customary closing conditions, including:
- approval by the shareholders of
Africa Oil ; -
completion of the farm-out of
Africa Oil's Namibian interests (held via Impact) toTotalEnergies ; -
approval by the TSX, including approval for listing of the
Africa Oil shares to be issued in connection with the Proposed Reorganization and the appointment of theBTG Oil & Gas -nominated directors to the Board; -
receipt of certain regulatory consents and approvals in
Nigeria ; and -
completion of a pre-agreed pre-completion reorganization of the holding structure of
BTG Holding to implement the Amalgamation Agreement.
Advisors
Evercore is acting as exclusive financial advisor to
Management Presentation
Senior management of
Participants should use the following link to register for the live webcast:
https://edge.media-server.com/mmc/p/hm2yfdkr
Participants can join via telephone with the instructions available on the following link:
https://register.vevent.com/register/BI9576c9eaed244844982cb0dfb955e2e8
- Click on the call link and complete the online registration form.
- Upon registering you will receive the dial-in info and a unique PIN to join the call as well as an email confirmation with the details.
- Select a method for joining the call;
- Dial-In: A dial in number and unique PIN are displayed to connect directly from your phone.
- Call Me: Enter your phone number and click "Call Me" for an immediate callback from the system. The call will come from a US number.
Additional Information
This information is information that
Advisory Regarding Oil and Gas Information
The terms boepd (barrel of oil equivalent per day) and MMboe (millions of barrels of oil equivalent) are used throughout this press release. Such terms may be misleading, particularly if used in isolation. Production data are based on a conversion ratio of six thousand cubic feet per barrel (6Mcf: 1bbl). This conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Estimates of reserves in this press release were prepared using guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The reserves estimates disclosed in this press release are estimates only and there is no guarantee that the estimated reserves will be recovered.
Reserves
Reserves are estimated remaining quantities of commercially recoverable oil, natural gas, and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Reserves are further categorized according to the level of certainty associated with the estimates and may be sub-classified based on development and production status.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Oil and gas reserves and production referred to in this release are for conventional light and medium gravity oil and conventional natural gas.
Non-IFRS Measures
This press release contains measures that are not generally accepted accounting principles ("GAAP") measures under International Financial Reporting Standards ("IFRS") and non-IFRS ratios. EBITDAX, EBITDA and Net Debt are a non-IFRS measures. Net Debt/EBIDTAX and Net Debt/EBIDTA are non-IFRS ratios. These non-IFRS measures do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures by other companies. The Company believes that the presentation of these non-IFRS figures provide useful information to investors and shareholders as the measures provide increased transparency to better analyze performance against prior periods on a comparable basis.
EBITDAX (non-GAAP measure): earnings before interest, taxes, depreciation & impairment, amortization and exploration expenses is used by management as a performance measure to understand the financial performance from Prime business operations without including the effects of the capital structure, tax rates, depreciation, depletion and amortization, impairment and exploration expenses.
EBITDA (non-GAAP measure): earnings before interest, taxes, depreciation & impairment, and amortization.
Net Debt (non-GAAP measure): net debt is calculated as loans and borrowings less cash and cash equivalents.
Net Debt/EBIDAX (non-GAAP ratio): net debt divided by EBITDAX and is a measure of the leverage.
Net Debt/EBIDA (non-GAAP ratio): net debt divided by EBITDA and is a measure of the leverage.
Non-IFRS measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. A reconciliation from total profit (a GAAP measure) to EBITDAX can be found on page 16 of the annual management's discussion and analysis for the year ended
Forward-Looking Information
Certain statements and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward-looking statements") relate to future events or the Company's future performance, business prospects or opportunities.
All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "anticipate", "plan", "continue", "expect, "may", "will", "potential", "could", "believe", "envisages", and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, ongoing uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including statements pertaining to shareholder returns; the enlarged
No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in macro-economic conditions and their impact on operations; changes in oil prices; contractual performance; the need to obtain required approvals from regulatory authorities; timeliness of government or other regulatory approvals; stock market volatility; the availability of capital on acceptable terms; liabilities inherent in oil and gas operations; satisfaction of the conditions to consummate the Proposed Reorganization; failure to complete the Proposed Reorganization; the amount of costs, fees, expenses and charges related to the Proposed Reorganization; and the failure to realize the anticipated benefits of the Proposed Reorganization. Actual results may differ materially from those expressed or implied by such forward-looking statements.
View PDF
For further information, please contact:
Investor Relations -
Head of
info@africaoilcorp.com
T: +44 (0) 20 8017 1511
Media -
Brunswick
africaoilcorp@brunswickgroup.com
T : +44 (0) 20 7404 5959
About
About
About Prime
Prime is a joint venture company between
- 8 per cent. Participating Interest ("PI") in
Chevron operated petroleum mining lease ("PML") 52 (Agbami field), and petroleum prospecting license ("PPL") 2003; and -
16 per cent. PI in
TotalEnergies operated PML 2 (Akpo field), PML 3 (Egina field) and PML 4 (Preowei field), and PPL 261.
https://news.cision.com/africa-oil-corp/r/africa-oil-announces-agreement-to-consolidate-the-remaining-50--interest-in-prime,c4005165
https://mb.cision.com/Public/17207/4005165/86666ca05cf336f5.pdf
(c) 2024 Cision. All rights reserved., source