Independent oil and gas company Afentra has inked a Sale and Purchase Agreement (SPA) with Azule Energy – Angola’s largest equity producer of oil and gas – for Block 3/05 and Block 3/05A, offshore Angola. The deal will see Afentra acquire a 12% and 16% stake in Block 3/05 and Block 3/05A, respectively.
The transaction comprises a firm consideration of $48.5 million as well as deferred contingent payments of up to $36 million. The deferred payments are subject to various factors including oil price, production and development conditions.
“We are delighted to have agreed terms with Azule and signed the SPA increasing Afentra’s interests in the high-quality producing Block 3/05 and a material increase in our Block 3/05A interest offering access to existing discovered resources. This highly accretive transaction further demonstrates the company’s commercial discipline and focus on robust cash flow,” says Paul McDade, CEO of Afentra.
The acquisition will be funded through a combination of existing debt facilities arranged with the Mauritius Commercial Bank and Trafigura as well as existing cashflow on Afentra’s balance sheet, and follows a separate deal signed with Croatian multinational oil company INA-Industrija earlier this year for a 4% interest in Block 3/05 and Block 3/05A, respectively.
With the Azule Energy deal, Afentra and Angolan National Oil Company Sonangol have agreed to revise downwards Afentra’s interest in Block 3/05 in order to ensure support for the additional transaction and appropriate balance of interests in the offshore block.
As such, the parties have agreed to amend terms to a SPA signed in 2022, reducing Afentra’s interest from 20% to 14% in Block 3/05. The SPA terms will remain unchanged from the 2022 deal, with the exception that the acquisition consideration be reduced on a pro-rate basis. In this scenario, firm and contingent considerations will decrease from $80 million to $56 million and from $50 million to $35 million, respectively.
These agreements bring Afentra’s material equity to 30% of Block 3/05 and 21.33% of Block 3/05A, enhancing the firm’s exposure to the upside potential and near-term development of the blocks.
“We view the combined acquisitions as an attractive step forward for the business given the relative value at which we are acquiring the combined interests,” added McDade.
