Africa Energy Corp.

Africa Oil ended Q2 with $185 million of cash, down from $232 million at the start of the year. In the first half, the main cash uses were about $51 million returned to shareholders, about $6 million of exploration spend, and about $11 million of operating/G&A outflows, including about $5 million of cost related to the BTG amalgamation agreement. Prime posted Q2 EBITDA of $92 million and free cash flow of $77 million. Q2 oil sold at an average of $89 per barrel versus Dated Brent at $85, and management said two cargoes are scheduled for September and October at an average price of $79 per barrel. Q2 working-interest production was 16,700 barrels per day and first-half entitlement production averaged 19,300 barrels per day, with the Q2 dip attributed to the planned Akpo shutdown. Management said full-year production guidance is maintained, and for capital allocation the company plans another $2.50 per share dividend at end-September. On the Prime deal, management kept guidance for completion in Q2/Q3 2025 and said the key gating item is Nigerian government approval.

Roger Tucker framed the quarter as evidence that the company has been executing a deliberate portfolio-consolidation strategy, saying recent transactions worth more than $1 billion were meant to simplify the business and position it for the Prime consolidation. He emphasized the company’s exposure to Tier 1 operators and world-class offshore assets in Nigeria, Namibia, South Africa and Equatorial Guinea, while stressing that the portfolio still retains carried exploration upside. His tone was confident and strategic, with repeated emphasis on focus, optionality and long-term value creation.

Pascal Nicodeme focused on cash discipline and balance-sheet strength, saying the company started the year with $232 million of cash and ended Q2 with $185 million after shareholder returns, exploration spend and G&A. He said the first-half shareholder return totalled $51 million, made up of $39 million of buybacks and $11 million of dividends, and noted total returns since the dividend program began in March 2022 now stand at $143 million. He also said a combined view of Africa Oil cash and Prime net debt gives about $36 million of combined net debt, and explained that the Africa-level corporate facility has been reduced to $65 million and extended for three years, while the consolidated capital structure will likely keep an RBL facility and target net debt/EBITDA of 1x. He added that there is room for another Prime dividend before year-end, but the size is still to be determined, and the BTG true-up should not require a cash payment between the parties.

Analysts pressed management on the split between dividends and buybacks, and Oliver Quinn said the post-Prime framework includes a $100 million annual base dividend plus distribution of 50% of excess free cash flow, with buybacks considered only later because the current structure makes them less attractive. Questions on the Prime deal timeline drew the response that Q2/Q3 2025 remains the target, with shareholder approval expected not to be the critical path and Nigerian government approval the main gating item. Management also said Prime’s overlift/underlift position should average toward zero over time but will fluctuate quarter to quarter, and explained that TotalEnergies’ exit from South Africa Block 11B/12B has no direct read-across to Africa Oil’s 3B/4B position. On Equatorial Guinea, Roger Tucker said the company sees an attractive infrastructure-led block in EG31 with prospects in excess of 1 TCF, but that the geology is complex and work is ongoing.