ADM Energy, an oil and gas investing company formerly known as MX Oil, is preparing to expand its portfolio of assets in Nigeria and West Africa.
ADM Energy, which holds a five percent equity investment in the Aje field, part of the OML 113 license offshore Nigeria, said on Thursday that it was embarking on a strategy to expand its portfolio of assets by investing in assets being made available across Nigeria and West Africa.
According to the company, this opportunity has necessitated an incremental increase in costs of the new management team and key personnel as ADM sets a platform to execute its growth strategy.
As a result, Osamede “Osa” Okhomina became its chief executive officer, while Peter Francis and Manuel Lamboley were named as a non-executive chairman and a non-executive director, respectively.
The company’s primary approach to investments will be to “option” appraisal assets where oil and gas have already been discovered, conduct a detailed evaluation, and then make a debt or equity contribution to access future upside. The benefit of this approach is that the company raises equity only after the asset has been secured.
ADM believes that the international oil companies have divestment programs planned and management estimates that up to 500,000 barrels per day could be sold to independent operators.
Consequently, the company no longer expects to be cash-flow positive and profitable in 2020 as previously anticipated on the current asset portfolio.
Okhomina said: “In recent months, we have been very busy behind the scenes laying the groundwork to expand our investment portfolio.
“The company’s existing stake in OML 113 provides a producing asset with a long-term license in place and potentially significant near-term upside, subject to further investment, from which to build this larger portfolio. PetroNor’s recent buy-in to OML 113 brings expertise that has only served to further de-risk operations and accelerate plans for production growth.
“We already have several investment opportunities in consideration and are now forming strategic alliances to best structure and conclude them. With these elements in place, we are well-positioned for a period of aggressive growth. I am looking forward to being able to announce these deals in the near future and delivering on the company’s vision.”
In its trading update, the company reminded that the Aje field continued to produce oil from both the Aje-4 and Aje-5 well in 2019, with annual net production of 890,203 barrels of oil. A reduction in production was caused by routine maintenance work on the FPSO and equipment upgrades on the gas lift modules in the second half of the year. Average barrels of oil per day was 2,967, of which 148 bopd was net to ADM.
ADM anticipated that the project debt would be repaid after the 12th lifting in January 2020. The lower than expected oil prices, combined with the slight delay meant that the project debt is now expected to be repaid on the 14th lifting scheduled in May 2020.
According to the company, the OML 113 partners continue to assess the viability of the next development stages, including funding to unlock the gas reserves at Aje, and technical work is currently been carried out.
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