INTERVIEW: Afren may exit Iraqi Kurdistan, to focus on Nigerian oilfields – CEO

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Alan-Linn-CEO-Afren
Alan Linn

Afren Plc will consider exiting the Kurdistan region in Iraq and focus on oilfields in Nigeria as it embarks on a restructuring programme, Chief Executive Alan Linn said.

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The company has floundered under a series of problems over the past year, including the dismissal of founder and then CEO Osman Shahenshah, a dry oilfield in Iraqi Kurdistan and a failed takeover approach by Nigeria’s Seplat Petroleum.

Linn, who formally took over on Thursday, is tasked with turning around the fortunes of the company, which has lost almost all its market value in less than a year and is saddled with about $1.30 billion in debt.

“Where we are at the moment is we’ve put together a plan, which is effectively a survival plan, and it allows the company to honour its existing commitments,” Linn said.

Afren could sell some onshore and offshore assets and enter farm-out agreements – pacts with other companies for exploration and development activities – for some other assets in Africa.

Stifel analyst Dragan Trajkov said excluding debt, and at an assumed crude price of $80 per barrel, Afren’s assets could be worth about $1.40 billion.

Brent crude is hovering at around $65 a barrel after touching its lowest in nearly five years in January.

Afren said on Thursday it had secured about $255 million in interim funding from bondholders and was in talks for a wider recapitalisation.

Linn said Afren’s foray into Iraqi Kurdistan, which was an attempt to diversify beyond its seven assets in Nigeria, failed largely because of the challenging security issues and hard geology in the area.

“When you look at it, that is probably not a region where a company with Afren’s resources should be deploying capital.”

Linn said the company would now focus on its Nigerian business. “It’s got everything that you need to create a valuable enterprise.”

But Trajkov was sceptical about Afren’s ability to generate sufficient capital with existing assets.

“At this stage we wonder if the ‘haircut’ of the existing bondholders is short enough to give the ‘new Afren’ a fair chance.”

Linn said a rebranding of Afren was tempting, but he would rather focus on making the company leaner and more efficient.

“I think we’ll keep it as simple as ‘New Afren’ and actually demonstrate that we are that company.” (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty)

 

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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