Africa Oil flows after Prime acquisition

Canada’s Africa Oil Corporation has said it hopes to double output and reserves from Nigeria after it takes on full ownership of the privately-owned Netherlands-based company, Prime Oil & Gas, in the coming week

“On closing of that deal we will significantly change the scale of our business, we will double production, we double reserves and significantly boost our liquidity position,” Oliver Quinn, chief commercial officer at Africa Oil told Reuters news agency in an interview.

Assets held by Prime Oil & Gas Coöperatief U.A. — formerly known as Petrobras Oil & Gas — include indirect stakes in deepwater producing Nigerian fields operated by heavyweights Chevron and TotalEnergies.

The non-operating player has a stake in key oil blocks such as PML 2, 3, 4, and PML 52, in the Niger Delta region.

Following the acquisition, Africa Oil expects to produce around 35,000 barrels per day (bpd), Quinn told Reuters.

“They are very significant value barrels because they have very low lifting cost of under US$10, so the margin on the barrels is high and typically sell at premium to Brent.”

As well as boosting its presence in Nigeria, the company has a foothold in Namibia’s dynamic Orange Basin, arguably the hottest exploration property in Africa right now, with a stake in Impact Oil and Gas and exposure to the Venus discovery.

Africa Oil also has exposure to Equatorial Guinea, another major West African oil and gas producer.

On 27 February, Africa Oil’s president and CEO, Roger Tucker, presenting the company’s full-year results for 2024, said it had been a “transformative year” already, and one that will be enhanced again with the acquisition of Prime Oil & Gas.

“This transformational milestone will significantly enhance our scale, financial strength, and ability to deliver meaningful shareholder value,” he said, referring to the acquisition.

"The enlarged Africa Oil will benefit from robust long-term free cash flows and a strong balance sheet with low leverage. We will have direct interests in producing assets in Nigeria, complemented by funded development and exploration projects in the prolific Orange Basin.”

In Namibia, a final investment decision on the Venus discovery by operator TotalEnergies is expected to be taken in 2026, which could further swell Africa Oil’s production numbers.

“Our focus is to add to the cash generation machine, which runs through the decade while on the backend Namibia Venus comes onstream and then we have significant growth in that asset,” Quinn told Reuters.

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