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In 2009, our producing assets in Nigeria (Okoro) and Côte d’Ivoire (CI-11 and the Lion Gas Plant) provided oil, natural gas and natural gas liquids from both upstream and midstream activities. In 2009 we achieved net working interest production including NGLs of 22,100 boepd, compared with an average rate of 3,900 boepd in 2008. Production is set to increase further with the start-up of Ebok scheduled for October 2010, and infill drilling at Okoro. 

Strategy In Action

Okoro Setu
By the end of 2009, the Okoro field had produced 8.1 mmbbls of oil. Better than forecast reservoir performance and good aquifer support have meant that the field is declining at a slower than forecast rate. These factors, combined with the impact of planned infill drilling have led to an increase of estimated recoverable reserves at the field, to 24.8 mmbbls.

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Today, only 19% of our reserves and contingent resources have been developed and are onstream. This means we are
in a position to deliver strong production growth over the near to medium term – from development and appraisal activities across our existing asset base alone. In 2009 we made significant reserve additions at the Ebok field having completed three appraisal wells in the period. Also, with net prospective resources estimated at over
1 billion barrels we have an exploration opportunity set that offers multiple drilling opportunities of transformational scale. 

• Continued appraisal and exploration drilling across the core Ebok/Okwok/OML 115 area 
• Prime acreage positions along the prolific West African Transform Margin and Upper Cretaceous fairway
• High impact wells planned at OPL 310 (Nigeria) and the Keta Block (Ghana).
• Selective addition of further high grade exploration opportunities

Strategy In Action

Ebok development
Phase 1 of the Ebok development, targeting the Central Fault Blocks, commenced in December 2009 following completion of a three-well appraisal campaign. First oil is expected in October 2010 with development Phase 2, targeting the West Fault Block, to follow soon after. 

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A key factor behind Afren’s growth has been our acquisition strategy, and in particular accessing and developing discovered but undeveloped assets in partnership with indigenous companies. In Nigeria alone we see in excess of 170 such opportunities, typically residing as ‘fallow’ fields in the shallow water and onshore areas of the Niger Delta. In 2009, we also jointly established First Hydrocarbon Nigeria Limited (FHN), an indigenous platform from which we will pursue larger-scale opportunities that may arise out of the Major IOC’s portfolios in particular. We have also made selective, opportunistic acquisitions where we have been strategically advantaged, such as our portfolio of assets in Côte d’Ivoire acquired from Devon Energy.

• Targeted acquisitions of discovered but undeveloped fields
• Capitalise on our indigenous platform in Nigeria (FHN) to pursue large-scale Nigerian acquisitions
• Pursue selective corporate situations

Strategy In Action

The Okwok field
In August 2009, we extended our partnership in Nigeria with Oriental Energy Resources Limited through the agreement to farm-in and jointly develop the Okwok field. The technical knowledge gained on the Ebok field provides significant subsurface and development synergies. 

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The uncertain economic climate in 2009 had a far-reaching impact across the entire oil and gas industry. High commodity price volatility alongside a difficult credit environment made it a challenging period. Afren responded by quickly taking steps to ensure stability and drive greater efficiency into every aspect of the business.

• Emphasis on operational efficiency and cost savings at all levels
• Continued debt repayment
• Field operating costs at Okoro reduced by 13% in 2009

Strategy In Action

Driving profitability
We significantly enhanced the normalised profitability of the business in 2009, driving down average field operating costs to US$11.6/boe (from US$29.7/boe in 2008) and administrative expenses to US$27.2 million (from US$32.5 million in 2008). We ended the period in a net cash position (with operating cash flow of US$278 million in 2009), and have secured an up to US$450 million RBL facility on Ebok reserves. We have the capital structure and flexibility to deliver our 2010 work programme. 

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