Shares in upstream exploration and production company Afren (LSE: AFR) plunged a further 8% in early trading as the company released a disappointing interim statement for the nine months ended 20 September 2014.
Following the conclusion of KPMG’s investigation into three unauthorised payments in 2012 and 2013, the company is evaluating whether there is a need to restate any historic financial information. Management believe any restatement is unlikely to result in a downwards revision to either profit after tax or net assets.
CEO Mr Shahenshah, COO Mr Ullah and Associate Directors Iaian Wright and Galib Virani were dismissed in relation to the payments following an independent review by Wilkie Farr and Gallagher earlier this month.
The market has not taken well to the gutting of such an experienced management team, and shares in the oil and gas producer have lost nearly 40% of their value since the CEO and COO were suspended on 31 July.
The performance of the underlying business was less distressing. Afren produced 31,147 barrels of oil per day (bopd) in the period, narrowly missing the full-year production guidance of between 32,000 and 36,000 bopd. Management attributed the miss to ongoing delays to the installation of the Ebok Central Fault Block extension due to adverse weather conditions. Nigerian development project OML also experienced unexpected downtime while necessary repairs were made to the Trans Forcados Pipeline.
Afren began an extensive 1,780km2 survey in Côte d’Ivoire in the period. Data from the seismic data acquired in May 2014 across OPL 310 and OML 113 in Nigeria is due to be processed by Q1 2015, while the first Afren exploratory well to be drilled in the region this year will be the Ebok deep exploration planned for Q4. The exploration targets resources of roughly 50 million barrels.
Partners sanctioned the Final Investment Decision for the Okoro Further Field Development. Development drilling is planned for Q2 2015.
The business also reported that operations had resumed in the Barda Rash field. The company suspended operations in August 2014 due to regional security issues.
The company has taken what it describes as a “precautionary step” to fully impair its $35m holding in the Ghanaian Keta block.
In spite of the ongoing disruption at the top of Afren, the company expects to achieve full year net production at the lower end of guidance of between 32,000 and 36,000 bopd.
