The Company’s strategy and outlook can be broken into three phases: near-term, medium- term and long-term. The near term strategy is to deliver on a number of key milestones during the remainder of this calendar year. These milestones primarily centre around securing partners to share both the risk and the rewards of exploration activity on our acreage. We are pleased to say that this process is at its most advanced stage yet at this moment in time and we remain confident that we will deliver additional transactions to the ones already announced in the coming months.
Our ability to have completed more transactions to date has been somewhat delayed by the global sector backdrop which has been challenging over the past six to nine months as a result of the rapid oil price decline at the back end of 2014. The surprising speed at which the oil price fell led the majority of independent E&Ps, IOCs and NOCs, many of whom we had been in discussion with at the time, to take a step back to assess the wider impact of oil price decline on their respective strategies and capex budgets. We believe that most of these companies have now recalibrated their strategies to adapt to a lower oil price environment and, based on the recent exploration successes in the region and the high level of interest we are seeing in our dataroom at present (including parallel datarooms), we are confident that exploration of the West Africa Transform Margin is very much on the industry agenda.
African Petroleum benefits from high equity positions across the portfolio ranging from 90- 100% and this gives us a lot of flexibility and optionality in our farmout discussions. We continue to be mindful of the sector backdrop and are pragmatic about the impact it has played and continues to play on our farmout discussions with regards to transaction structures. However, we are confident that our acreage, which has been de-risked by a number of world-class discoveries along the margin in the last year, will enable us to conclude farmout discussions with an outcome that crystallises value for shareholders and retains significant yet suitable exposure to the exciting upside potential to be explored in the coming years.
Once we have secured the appropriate partners we are seeking for our licences, we will be able to enter the second phase of our strategy which will focus on the operational activity across the portfolio. We have made significant strides towards progressing the portfolio through technical work, as highlighted by the significant volumes of prospective resources independently verified by leading petroleum consultant ERC Equipoise Ltd, and as a result many of the prospects on our blocks are drill ready. We have already ordered some of the long-lead items to enable the Company and its future partners to commence drilling operations in late 2015 and early 2016. The weaker oil price environment has had a significant impact on the rig contractors, both in terms of pricing and industry demand, and we will be well positioned to take advantage of these factors as we commence drilling activity.
The longer term strategy for the Company is simple and focuses on leveraging our world class exploration portfolio to grow into a significant independent exploration and production company. We believe that we have the right asset base and management team to be able to achieve this ambition.
AOQ Price at posting:
0.1¢ Sentiment: Buy Disclosure: Held
