< "> edit this post http://www.investegate.co.uk/afren-plc-%28afr%29/rns/trading-statement-and-operations-update/201301210700069619
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In an attempt to cut down the header page,i've transferred some of the older news to Page1 post No.3.

http://www.oil-price.net/index.php?lang=en
http://www.ft.com/home/uk

http://www.investegate.co.uk/Article.aspx?id=201111020700081674R
http://www.investegate.co.uk/Article.aspx?id=201111150700250723S
http://www.investegate.co.uk/Article.aspx?id=201112010705051251T
http://www.investegate.co.uk/Article.aspx?id=201201170700146472V
http://www.investegate.co.uk/Article.aspx?id=201201230701479690V
http://www.moneyam.com/action/news/showArticle?id=4323758
http://www.investegate.co.uk/Article.aspx?id=201204170700164488B
http://www.investegate.co.uk/Article.aspx?id=201205140700212304D
http://www.investegate.co.uk/Article.aspx?id=201205210700407032D
http://www.moneyam.com/action/news/showArticle?id=4430164
http://www.investegate.co.uk/afren-plc-%28afr%29/rns/significant-new-seychelles-3d-seismic-programme/201212120700052973T/
http://www.investegate.co.uk/afren-plc--afr-/rns/2013-half-yearly-results/201308230700063334M/
http://www.investegate.co.uk/afren-plc--afr-/rns/ogo-drilling-and-resources-update/201311190700083404T/
http://www.investegate.co.uk/afren-plc--afr-/rns/trading-statement-and-operations-update/201401280700096280Y/
http://www.investegate.co.uk/afren-plc--afr-/rns/interim-management-statement/201405200700135209H/
http://www.investegate.co.uk/afren-plc--afr-/rns/interim-management-statement/201410300700116483V/
http://www.moneyam.com/action/news/showArticle?id=4942625
http://www.moneyam.com/action/news/showArticle?id=4943375

RPT-Fitch Affirms Afren at 'B+'; Outlook Stable
May 29 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed Afren plc's Long-term Issuer Default Rating (IDR) at 'B+'. The Outlook is Stable. A full list of rating actions is at the end of this release.

Afren continues to generate solid operating cash flows, which are sufficient to finance its ambitious exploration and development programme. In the past the company has demonstrated its ability to meet ambitious production targets as it significantly boosted oil output in Nigeria in 2012 and 2013. Afren's profitability is supported by the tax holiday in place at Ebok, its largest producing field. However, Afren's production remains highly concentrated, which gives rise to elevated geological, country and tax risk, and its scale of operations is small. We view the possible oil industry reform in Nigeria as a risk, as its timing and key parameters, including tax implications, are unclear.

These factors constrain Afren to the 'B' rating category. This could be improved if Afren manages to substantially ramp-up production in the Kurdistan region of Iraq, where it has vast reserves.

Afren is a small-scale exploration and production (E&P) company with producing assets in Nigeria and Kurdistan. In 2013 its net production reached 47 thousand barrels of oil equivalent per day (mboe/d), predominantly liquids, which generated USD960m in EBITDA.

KEY RATING DRIVERS

Strong Operational Performance

In 2013, Afren's net production (working interest including cost recovery) averaged 47mboe/d, up 13% yoy and almost 2.5 times higher than in 2011, which was reflected in our June 2013 upgrade to 'B+' from 'B'. This growth was mainly attributable to Ebok, Afren's largest offshore field brought on stream in 2011.

In 2013, Afren also had a sound 2P reserve replacement rate (155%) and maintained low lifting costs (below USD5/bbl). However, it had a relatively small proved reserve life (nine years overall; six years in Nigeria), typical for E&P companies of this size.

In 1Q14, Afren's net production went down to 35.5mboe/d as it recovered the initial investments at Ebok and its working interest in the field decreased. We expect Afren's 2014 net production to be within 35-40mboe/d, rebounding to 40-50mboe/d in 2015, mainly thanks to moderate output growth at Ebok and ramping up of OML26 in Nigeria and Barda Rash in Kurdistan.

Concentrated Production

Afren's production remains highly concentrated. In 1Q14, Ebok accounted for 73% of Afren's total production, and only 1% of oil was produced outside of Nigeria. Afren has significant 2P reserves in Kurdistan (114 million barrels, 40% of its total) and is hoping to boost production at its Barda Rash field soon. However, any significant progress there will only be possible if Afren gets access to a secure export channel. We now assume that Nigeria is likely to dominate Afren's output in the medium term. This concentration exposes Afren to elevated emerging market country and tax risks.

Tax Holiday Benefits Cash Flows

Oil companies are generally heavily taxed in Nigeria. They pay substantial royalties and are subject to the Petroleum Profit Tax (PPT), which normally varies from 50% to 85% of the bottom line. Afren's Ebok field is exempt from paying PPT until May 2016, which significantly benefits Afren's cash flows and should allow it to finance new projects, while keeping leverage relatively moderate for the 'B' rating category. The company believes that the Petroleum Industry Bill (PIB), if finally passed by the local parliament, should not affect the tax holiday. At the same time, we believe that the proposed oil industry reform creates some uncertainty over Afren's future tax payments and makes its cash flows less predictable, since the reform's key parameters have not been finalised. The PIB, which calls for an increase of the government's revenue from the sector and changes in taxes and royalty structures, has been debated since 2009 and re-drafted several times. We have no views regarding the timing of the bill's passage into law.

Country Risks Remain

Afren is exposed to high emerging market country risks as its operations are concentrated in Nigeria (BB-/Stable). Historically, development of the oil and natural gas sector has been constrained by instability in the Niger Delta, with local groups often attacking companies in the area leading to shut-in production, as well as by oil bunkering, or theft. Afren is less vulnerable to these risks as all of its largest assets in the country, excluding OML 26, are offshore. The company is also exposed to high regulatory and especially tax risks in Nigeria. Afren's entry to Kurdistan should partially mitigate these risks over time, but we will only be able to give the company credit for some geographical diversification when it manages to boost production outside Nigeria to more than 30%-40%.

Uncertainty Over Kurdistan

In order to monetise its massive oil reserves in Kurdistan Afren needs to get access to a secure export channel. In 1Q14 its Barda Rash field yielded around 500 barrels of oil per day, all sold domestically, and ramping-up production to above 5mboe/d may not be feasible without access to a pipeline. The central government of Iraq and Kurdistan Regional Government (KRG) have been in a dispute over the regulation and taxation of the oil industry in Kurdistan, prompting Kurdistan to build an alternative 300mbbl/d export pipeline to Turkey, which was commissioned in 2013 but has remained mostly idle due to political concerns. We believe that the company's growth strategy in Kurdistan may be affected by highly unpredictable political factors and assume in our modelling that progress there will be rather slow.

Substantive Exploration Portfolio

Afren has a wide exploration portfolio, including seven licence blocks in East Africa. Its exploration activity has borne some fruit, in 2013 the company announced it made a significant oil discovery at the Ogo prospect in Nigeria, which can potentially enhance its reserve base and production prospects. Afren's relatively low proved reserve life relative to peers means that the company needs to constantly replenish its reserves, and the vast exploration portfolio may be helpful in this respect.

Solid Financial Profile

Afren now has a relatively low debt burden for the 'B' rating category. Funds from operations (FFO) adjusted gross leverage stayed at 1.8x at end-2013, and although we believe it may moderately increase on the back of high capital intensity, it should stay below 2.5x on a sustained basis under our conservative assumptions, including declining price deck and no substantial production upside. Afren can also be free cash flow negative in some periods. We do not expect Afren to pay any dividends in the medium term, as per its dividend policy.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to positive rating action include:

- Net production exceeding 100mboe/d on a sustained basis.

- Production becoming less concentrated, with no single country accounting for more than 2/3 of the overall output on a sustained basis.

- FFO adjusted gross leverage below 2x on a sustained basis.

- Sustainably positive FCF.

- More clarity regarding the evolution of tax environment in Nigeria.

- Getting access to secure export channels in Kurdistan and ramping-up production at Barda Rash.

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- FFO adjusted gross leverage exceeding 2.5x on a sustained basis.

- Net production declining and settling below 35mboe/d.

- Unfavourable tax changes in Nigeria having a direct impact on Afren's cash generating ability.

- Significant project delays and cost overruns.

SOUND LIQUIDITY

At 31 March 2014 Afren had no short-term debt, and cash of USD361m. In 2013, the company improved its debt maturity profile by issuing a USD360m secured bond due 2020 and partially repaying its USD500m bond due 2016 (currently outstanding: USD253m) and USD300m bond due 2019 (currently outstanding: USD250m).

LIST OF RATING ACTIONS

Foreign-currency Long-term IDR: affirmed at 'B+', Outlook Stable

Senior secured rating: 'B+'/'RR4'

Senior unsecured rating: 'B+'
http://www.reuters.com/article/2014/05/29/fitch-affirms-afren-at-b-outlook-stable-idUSFit70229520140529?feedType=RSS&feedName=financialsSector

cynic

Do you still hold now ? short term its a sell, long term
Kurdistan my turn out to be the best place to be ,, the Kurds and Turkey will protect the area and keep the oil flowing.

Anybody on here sold Afren today .

i sold some yesterday, merely to reduce exposure generally

I put a order in last nite to sell some at 145 , if it was 144 it might have been filled.

But this might start some buying, its what i had been thinking when i heard the first news from Iraq.


NigelWestM
12 Jun'14 - 09:27 - 358904 of 358905 1 0


This just in from Westhouse:

Yesterday all three stocks with material exposure to Kurdistan were materially down – Gulf Keystone (GKP LN, almost 9%), Genel (GENL, almost 7%) and Afren (AFR LN, almost 4-5%).

The reason for that was the fact that Sunni militants from the Islamic State of Iraq and the Levant (Isis, an extremist al-Qaeda splinter group), seized control of the northern Iraqi city of Mosul, the capital of the province of Nineveh, situated in an area that includes the supergiant Kirkuk oilfield (Iraq) and the fields of Iraqi Kurdistan.

The attack is a blow to Iraqi PM Maliki, who has been trying to form a new government after his Shia bloc won parliamentary elections in April. Mosul is the second city lost to the extremist group (in January it was Fallujah, a city just near Baghdad) and the attack highlighted the fact that Iraqi security forces are being outgunned by the Islamist militants.

According to Erbil (KRG) governor, tens of thousands of residents fled to the relatively stable Kurdish region to the north. Atheel al-Nujaifi, governor of Nineveh province, was forced to flee Mosul as well and he accused Iraqi troops of abandoning their posts.

Our view

Kurdistan, as opposed to Iraqi army, has a well-trained and well-armed forces, called Peshmerga, and it has always been much more efficient when it came to fighting extremists. It is estimated that Peshmerga has 270,000 to 370,000 fighters while Isis has 3,000 to 5,000 fighters. In our view, Kurdistan has an advantage now. Iraq will cooperate with Kurdish forces to retake Mosul from Isis, Iraqi Foreign Minister Hoshyar Zebari said June 11, Reuters reported. Baghdad is facing the possibility of losing control of large swathes of western and northern Iraq and needs Peshmerga to avoid it. Isis may not be able to maintain its hold on Mosul in the end, but Kurdistan now has an advantage in negotiating on the legal dispute over the export of its crude. Kurdistan now has two tankers with oil, but no firm buyer yet. The reason there is no buyer is because oil traders were warned they may face potential legal action if they buy the Kurdish crude, after Iraq filed an arbitration case against Turkey with the International Chamber of Commerce. But the reality of things is that Iraq's Central government is weak internally and has too many security and social issues on its hands. With attacks from the extremists, it will need help from Peshmerga and this could be a bargaining chip for Kurds. KRG has been consistently moving towards independent export and in my view, will continue to do so. Hence, Buy all three stocks while the share prices are weak but keep in mind that we prefer AFR (Buy; 180p/share) for long-term holding and GKP (Neutral; 125p/share) for a short-term speculative trade as maintain my view that it faces operational challenges.

Iraqi Kurdish forces say they have taken full control of the northern oil city of Kirkuk as the army flees before an Islamist offensive nearby.

"The whole of Kirkuk has fallen into the hands of peshmerga," Kurdish spokesman Jabbar Yawar told Reuters. "No Iraq army remains in Kirkuk now."

With all this going on in Iraq , i would have thought with Afren having such a large investment in Kurdishstan there would be more comments on this thread

kurdistan is not AFR's main play

Didn't say it was , but it seems to be what is holding the price back and it is a large investment risk.

sp hasn't really moved very much in months, or at least it feels that way

http://uk.advfn.com/news/DJN/2014/article/62634349

CEO suspended etc etc

have cut my losses and fast
thank goodness I slashed my holding a few weeks ago otherise that would have been very nasty instead of just ouch

Interesting , i wonder what that is about .

That price drop was a shock , here was i looking foreward to 160 plus

"Is this the next Tullow" - the title of the header - ha ha ha

It seems to be as Tullow now at what seems to be almost a five year low.
I have just had a punt on Afren - bought 40,000 at 110p - I recon the Company is the same basis Company, only the CEO and COO are corrupt - Not so unusual for Nigeria.
It should all come right again after throwing them out ? What do you guess ?

nigeria = corruption = CEO!

sorry to see you have dumped a further 10% since you bought

How high the bounce back ?

or, "What other nastiness to crawl out of the woodwork?"

If my fore-sight was as good as my hind-sight,
I would be a dammed- sight better off."

I have not done myself in yet over the 10% drop.

I remain hopeful of a recovery very soon.
Those who are forced or panic into making a deal will be soon be removed
from the scene, and things will settle on the basis of what the Company
is perceived to be worth.

You should all hold on for now I think - I hope

Company valuation has dropped about £500 million or about 33%, since yesterday
can that be justified ?

We need to throw out a couple of directors, who I thought were too greedy anyway,
and they will be replaced by more trustworthy directors.

Their director share options must have been hammered also !!