Tag Archives: Ethiopia

Loss Making Atlas Development focuses more on Ethiopia and Tanzania as activity in Kenya reduces

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Nairobi securities exchange listed company Atlas Development has said it is now eyeing the Ethiopian and Tanzanian markets as oil exploration in Kenya and the Turkana region witnesses a significant reduction.

According to the company business in Ethiopia has been improving with contracts in the potash project where developers have been negotiating and have renewed as they look to advance their exploration and mining operations.

“The Ethiopian business pipeline is also improving in the natural resource and infrastructure spaces.  With a positive market dynamic and a growth in requirements for international standard support services the Board is hopeful that the Ethiopian operations will generate positive returns,” the company says in a statement.

The company adds that despite agreements in place to provide support services across the delivery spectrum in Kenya revenue visibility is not easy to predict at this time.

Atlas development adds that although tenders are being offered by a number of parties throughout the East African region the Board believes that the terms being demanded from service providers are not sustainable.

“Indeed in a number of recent cases contracts were agreed but terms then adjusted by the clients, causing the work to be unprofitable and therefore unattractive to the Company,” the statement continues.

Atlas also says it has conducted a full review of operations in Kenya and dramatically reduced costs and overheads to preserve the balance sheet whilst maintaining a presence to ensure the capabilities are in place to deliver these potentially transformational projects when the time arises or market sentiment changes.

In Tanzania, although the Company has a number of small contracts, the operations are heavily centred on the oil and gas sector where, as in Kenya, the general environment remains challenging.

The company continues operations continue in Western Sahara.

Meanwhile the Company reported comprehensive losses during H1 2015 of US$2.6 million, which included exchange rate losses of US$0.7 million (resulting from the 9% fall in the USD:KES exchange rate which heavily impacted the USD equivalent cash balances which were held in KES) and non-recurring restructuring costs of US$1.1 million.

Looking forward Atlas Development adds the Board has focused on the preservation of capital through prudent cost cutting and streamlining initiatives. The board adds that it is in discussion with a number of asset financing banks with regards to potential acquisitions and expansion opportunities.

“The conclusion of any transaction due to market dynamics and the current valuations is more challenging but the Board, as I said, believes there remains opportunity.”

 

Afren receives $300 million debt facility

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Afren plc has provided an update regarding the review of its capital structure, liquidity and funding requirements as announced on 27th January as the business seeks to address how it manages the overall leverage position of the Company.

Further to its previous announcements, Afren has obtained from the lenders of the US$300m Ebok debt facility a deferral of the US$50m amortisation payment due on 31 January 2015 until 27 February 2015.

In addition, the Board has decided to utilize a 30 day grace period under its 2016 bonds with respect to US$15m of interest due on 1 February 2015 while the review of the capital structure and funding alternatives is completed.

Afren adds that it is continuing discussions with the advisers to the ad hoc committee of its largest bond holders regarding the immediate liquidity and funding needs of the business.

Further the Company is also having discussions with its existing stakeholders and new third party investors regarding recapitalizing the Company.

The Company had a cash balance of approximately US$235 million at 31 December 2014 with the liquidity available to the Company being significantly lower as a result of restricted and segregated cash balances in place to address operational requirements.

Afren has operations in 11 countries across Africa and the Middle East including Kenya, Tanzania, Seychelles, Ethiopia and Madagascar in East Africa.

Afren reviews its capital structure to solve liquidity and funding requirements

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In light of the significant dislocation in the industry and related financing markets resulting from the rapid decline in oil prices Afren says its board has been reviewing the funding and liquidity requirements of the business and seeking to address how it manages the overall leverage position of the Company.

The Company had a cash balance of approximately US$235 million at 31 December 2014. Liquidity available to the Company is significantly lower as a result of restricted and segregated cash balances in place to address operational requirements.

The Company’s near term cash flow is also impacted by capital expenditure incurred in late 2014 before operational changes had been implemented to adapt to the current lower oil price environment.

Already Afren has initiated negotiations with the lenders of the US$300m Ebok debt facility with a view to obtaining a deferral of the US$50m amortisation payment due on 31 January 2015. In addition, the Board is considering whether to utilise a 30 day grace period under its 2016 bonds with respect to US$15m of interest due on 1 February 2015 while the review of the capital structure and funding alternatives is completed.

These actions are being taken to protect the immediate liquidity position of the Company while it seeks funding to address its additional requirements.

Afren adds it has been advised that an ad hoc committee of its largest bond holders has been formed.

The Board has reviewed its business plan with the aim of minimising its funding requirements in the current oil price environment to focus on the development of the Company’s core assets in Nigeria.

Assuming the Company’s current debt structure remains unchanged, there is an equity funding requirement which is likely to be significant and in excess of the Company’s current market capitalisation. New funds will be required to meet interest and principal repayments, working capital and a reduced capital expenditure programme.

The Company will be having discussions with its existing stakeholders and new third party investors regarding recapitalizing the Company.

The Board is implementing efficiency and cost optimization measures to improve its liquidity position. Alvarez & Marsal has been engaged to provide services as Chief Restructuring Officer.

Afren also  says  it continues to be in discussions with SEPLAT Petroleum Development Company plc regarding a possible combination with Afren although no certainty that an offer will be made or as to the terms of any offer.

Seplat has no later than 5.00 p.m. on 30 January 2015until must either announce a firm intention to make an offer for Afren under Rule 2.7 of the Code or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement.

Afren has operations in 11 countries across Africa and the Middle East including Kenya, Tanzania, Seychelles, Ethiopia and Madagascar in East Africa.

2D seismic acquisition to commence in Ethiopia’s Rift Basin Area Block

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Africa Oil and its partners have announced that 2D seismic acquisition of a 400 to 800 kilometer land and lake survey earlier planned for Q4 2014 will begin at the end of January at the Rift Basin Area Block in Ethiopia.

The frontier area that has no previous seismic data or wells saw the completion of a 36,500 Full Tensor Gradiometry FTG survey in 2013 that identified source rock outcrops. Oil slicks on the lakes have been identified in the block.

Rift Basin Block FTG Ethiopia Rift Basin Block

This is part of the planned work program by the block operator Africa Oil which is expected to range between 400 and 1200 kilometer for the initial exploration period which expires in February 2016.

The Rift Basin Area covers 42,519 square kilometers and is on trend and extending to the northeast of the highly prospective blocks in the Tertiary rift valley including the South Omo Block, and Kenyan Blocks 10BA, 10BB, 13T, and 12A.

Africa Oil is Operator and owns 50% in the Ethiopia Rift Basin Area Block with Marathon Oil Ethiopia Limited B.V., holding the remaining 50%.

Atlas Development & Support Services lists on the Nairobi Securities Exchange

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Nairobi-headquartered support services and logistics company Atlas Development & Support Services (ADSS or Atlas cross listed on the Growth Enterprise Market Segment (‘GEMS’) of the Nairobi Securities Exchange, having successfully raised KES 450 million (US$5 million) through a private placement to Kenyan investors.

According to Atlas CEO Carl Esprey the listing hopes to tap from the growing opportunity in the region as well as leverage on local content.

“The strong interest from Kenyan investors is recognition of the opportunity to create a world class development and support services provider in Eastern Africa. We have demonstrated robust financial performance, world class service delivery and regional scale to position Atlas as the best way to gain exposure to this opportunity,” says Esprey.

The funds raised in the placing will be used to provide additional capital for organic growth and acquisitions around Atlas’s support services offering in Kenya and the region.

The placing, which was offered solely in Kenya, was completed through the issue of 39,139,827 new ordinary shares at a price of KES 11.50 per share (being 8.13p, in line with the closing price of the Company’s shares on AIM on 20 November).

Andrew Wachira, Acting CEO, NSE says, “The cross listing of Atlas is another major step towards our goal of ensuring that companies that have substantial operations in Africa are accessible to both Kenyan and international investors. This cross listing is historic for our exchange and it is directly in line with Vision 2030, which envisions that the growth in Kenya’s natural resources industries will also help grow our financial institutions.”

“The cross listing further justifies Kenya’s stance that its financial market remains very attractive to both local and international investors. ” adds Mr Wachira.

Atlas recently commenced construction on a KES 180 million (US$2 million) planned investment to build a logistics hub in Lokichar, Turkana County. This will help companies and government operate more effectively across the Turkana basin.

Atlas has invested KES 1.4 billion (US$ 15 million) in Kenya over the last 12 months and plans to invest over KES 4.5 billion (US$ 50 million) in Kenya over the next five years.

Carl Esprey says, “We’re Kenyan-headquartered and our core operation was founded here in Nairobi. Today we’re proud to also call ourselves a Kenyan-listed company. The cross listing will provide further local support for Atlas and represents a natural alignment with our Kenyan stakeholders and customers.”

The shares have been offered today on the GEMS market – at a price of KES 11.50 (8.13p) per share – a slight discount on London.

Edward Burbidge, CEO says, “This cross listing is a very exciting transaction for both the Nairobi and London financial markets. Here in Kenya it will provide investors with a unique opportunity to gain exposure to this sector in Eastern Africa, through a company that has 100 per cent of its shareholder register tradable in both Nairobi and London.”

Burbidge Capital acted as placing agent and Nominated Advisor to the placing and cross listing.

Atlas provides international standard turn-key development and support service solutions to multiple sectors, including oil & gas, mining, geothermal, construction and infrastructure. It employs over 700 Kenyans in delivering engineering, infrastructural development projects and workforce accommodation solutions in Kenya, Tanzania, Djibouti, Mozambique and Ethiopia.

Atlas Development secures first contract in Mozambique

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African focused support services and Logistics Company Atlas Development & Support Services Limited has announced that, in line with its expansion strategy for East Africa, it has been awarded its first support services contract in Mozambique.

The agreement, with an international oil company, underlines Atlas Development’s increasing penetration into the oil & gas support services market and its growing reputation with international blue-chip operators.

According to Atlas CEO Carl Esprey the multi-service agreement reflects the Company’s strategy of supporting early stage exploration activities with a view to securing and implementing long term development contracts.

“Atlas Development has its sights set on becoming the turnkey support services company of choice in East Africa, and today’s contract with another international oil company not only marks our transition in a new strategic jurisdiction, but also validates Atlas Development’s reputation as a quality and international standard operator,” says Esprey.

The contract also marks an entry point into a new country and complements the Company’s existing operational presence in Kenya, Ethiopia and Djibouti.  The Company is headquartered in Nairobi and has regional offices in the Turkana region of Kenya, Addis Ababa and Djibouti.

Esprey adds that this first contract in Mozambique could be the beacon for a new presence in the country.

“Mozambique, as with other countries in East Africa including Kenya, Ethiopia and Djibouti, holds a significant amount of potential for us.  We are therefore pleased to have secured this contract to support our client’s entry into Mozambique and believe that this initial agreement will pave the way for a long term strategic presence in the country.”

Mozambique is an important new territory for the Company as it is host to the development of multiple large scale oil & gas, mining and power projects, making it an ideal target for Atlas Development.

The company’s Board adds intends to further leverage its position as a market leader in the provision of turnkey support services and logistics solutions to additional operators within the burgeoning resource and power market in Mozambique.

This new contract comes even as the company prepares to dual list in the Nairobi Securities Exchange later in the month with Atlas saying discussions are in the final stages.

 

4th Oil & Gas Africa International Trade Exhibition set for Nairobi in April 2015

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The 4th Oil & Gas Africa International Trade Exhibition is set to happen in April 2015 in Nairobi bringing together key players in the oil and gas community from around the world.

The event will offer participants the opportunity to showcase the industry’s latest achievements and technologies while networking with key figures from the region’s oil and gas sector.

Organizers say they have invited visitors from all over East and Central African countries as major emphasis is being laid upon attracting traders and importers from neighboring countries.

To achieve this organizers say they are liaising with several regional trade bodies in Kenya, Tanzania, Ethiopia, Uganda, Somalia, Mozambique & Congo to ensure they attract as many players as possible.

This year Valser Oil & Gas a company supplying and offering valves, actuators & accessories and PPE in East Africa will be the gold sponsor.

Later in the year the expogroup who are the organizers will also put together first Oil & Gas Africa International Trade Exhibition in Dar es Salaam in the month of August.

Among major categories in the event include: Drilling & Well Completion Equipment, Lifting Equipment, Cranes and Winches, Offshore Platforms, Design, Piling, Floating Equipment, Instrumentation & Control Technology, Health, Safety & Environmental Products and Management as well as Refining & Petrochemical Equipment and Services.

Toyota Tshusho named oil pipeline lead consultant

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Toyota Tshusho Engineering Corporation will design and carry out a feasibility study for the construction of a crude pipeline between Hoima to the Kenyan coast after the company won the tender.

The company that signed the contract last week in Kampala submitted a design that would see the crude oil pipeline follow the Hoima-Lokichar-Lamu route in a project estimated to cost $4 billion.

Toyota Tshusho beat other companies including three designs that start from Hoima are by a consortium consisting of Tullow/Total/ CNOOC, while the rest are by Total (Hoima-Eldoret-Lamu/Mombasa) and another by  the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor which starts from Juba in Southern Sudan through Lokichar and Moyale to the Lamu port.

“The governments of Kenya, Uganda and Rwanda have signed a contract with Toyota Tsusho of Japan for the feasibility design and preliminary engineering design study for the Hoima-Lokichar up to the Kenyan coastline crude oil pipeline,” Kenya’s Energy and Petroleum Principal Secretary Joseph Njoroge is quoted by the Business Daily.

Following the awarding of the tender focus now shifts to financing with the cost initially estimated at $3 billion expected to shoot by 25 percent should the design incorporate a heated pipeline as well as further expenses expected from the terrain between Hoima and Lamu.

Toyota Tshusho is expected to complete the study in five months with the pipeline set to be completed between 2017 and 2018 in time for both Kenya and Uganda to start the exportation of crude oil.

According to a communiqué from a heads of state summit in Rwanda this June the five governments that include Kenya, Uganda, Rwanda, South Sudan and Ethiopia will decide on their financing arrangement model by February next year.