Africa Energy Announces 2024 Year End Results

CNW Group

Thu, Mar 27, 2025, 3:30 PM 8 min read

The Company's financial results for the year ended December 31, 2024 have been negatively impacted by a US$97.4 million non-cash loss on revaluation of our investment in Block 11B/12B, offshore South Africa, which was due to changes in base assumptions for discount rates applied in the discounted cash flow model for valuing our interest in Block 11B/12B.

In July 2024, TotalEnergies EP South Africa B.V. ("TotalEnergies") provided a notification that it was resigning as operator of Block 11B/12B. In addition, TotalEnergies, QatarEnergy International E&P LLC and CNR International (South Africa) Limited provided notice to the joint venture partners that they were withdrawing from their 45%, 25% and 20% interest, respectively, in accordance with the joint operating agreement in respect of Block 11B/12B ("JOA"). Under the JOA, the withdrawing parties assign their interest free of charge to each of the non-withdrawing partners in proportion to the interest of non-withdrawing partners. Main Street 1549 Proprietary Limited ("Main Street"), of which the Company owns 49% of the common shares and 100% of the Class B shares, holds the remaining 10% interest in Block 11B/12B and does not intend to withdrawal from Block 11B/12B. The withdrawal of the joint venture partners from Block 11B/12B is subject to all relevant regulatory approvals by South African authorities.

On December 20, 2024, the Company entered into a non-binding agreement with Arostyle Investments (RF) (Proprietary) Limited ("Arostyle"), which holds the remaining 51% of the common shares of Main Street, to restructure their joint investment in Main Street. The Company and Arostyle plan to restructure Main Street resulting in the Company holding a direct 75% participating interest and Arostyle holding a direct 25% interest in Block 11B/12B. The restructuring of the investment will be subject to regulatory approvals.

HIGHLIGHTS

At December 31, 2024, the Company had US$2.3 million in cash.
On November 25, 2024, Main Street took over as operator of Block 11B/12B and is currently finalizing the handover of all important information from previous operator, TotalEnergies.
The joint venture partnership submitted an application for a Production Right on September 7, 2022. As part of the Production Right application process, the Block 11B/12B joint venture also prepared a draft Environmental and Social Impact Report ("ESIR"). On August 29, 2024, the joint ventures partners in respect of Block 11B/12B received an extension to submit the final ESIR until May 19, 2025. Main Street 1549, now as the appointed operator, submitted a new environmental application on February 28, 2025 and expects to submit the final ESIR in advance of the deadline. The approval of the Production Right application will not occur until after the Block 11B/12B joint venture receives environmental authorization in respect of the ESIR.
The Upstream Petroleum Resources Development Bill (now the Upstream Petroleum Resources Development Act, No. 23 of 2024) (the "Act") was signed by the President on October 25, 2024, and published in the Government Gazette October 29, 2024. The Act will, however, only come into effect on a date fixed by the President by further proclamation in the Government Gazette. We anticipate that the proclamation on the effective date of the Act will likely be made after the new regulations ("Petroleum Regulations") are published by the Minister of Mineral and Petroleum Resources. Once published, the Petroleum Regulations will be subject to a customary thirty-day public consultation period during which time the industry may make comments and propose amendments to the Petroleum Regulations. The Petroleum Regulations will aim to provide clarity and certainty as to the practical implementation of the Act by the Minister of Mineral and Petroleum Resources and the Petroleum Agency of South Africa.

OUTLOOK

Subject to all relevant regulatory approvals by South African authorities in respect to the withdrawal of the joint venture partners in Block 11B/12B and completion of the restructuring of Main Street 1549, the Company expects to hold 75% direct interest in Block 11B/12B. Despite the challenges and delays encountered so far, the Company remains confident that the Block 11B/12B resources can be commercially developed. The Brulpadda and Luiperd discoveries are the largest discoveries of natural gas resources in South Africa and if developed could supply a significant portion of the country's energy needs as it seeks to transition to lower carbon energy sources. The Company will be focused on obtaining the Block 11B/12B Production Right approval and securing offtake customers.

SUBSEQUENT EVENT

On January 30, 2025, the Company announced that it intends to enter into debt settlement agreements with Lorito Doraline S.à.r.l., Lorito Floreal S.à.r.l., Lorito Arole S.à.r.l. and Lorito Orizons S.à.r.l (together, the "Lorito Group") and Deepkloof Limited ("Deepkloof") in respect to existing indebtedness under the Company's promissory note, pursuant to which Deepkloof will receive 323,345,000 shares of the Company to settle approximately US$4.5 million of existing indebtedness of the Company and the Lorito Group will receive, in the aggregate, 66,502,000 shares of the Company to settle approximately US$0.9 million of existing indebtedness of the Company.

In addition, the Company announced that it intends to complete a non-brokered private placement issuing up to 598,153,000 common shares of the Company at an issue price of Canadian $0.02 for aggregate gross proceeds of approximately US$8.3 million. The proceeds from the non-brokered private placement will be used to repay approximately US$5.3 million of remaining debt under the promissory notes, for general working capital purposes and to advance the development of the Company's interest in Block 11B/12B offshore South Africa.

Completion of the debt settlement agreements and the non-brokered private placement, which is expected to occur on or before March 31, 2025, is subject to certain conditions including, but not limited to, the receipt of the shareholder approval and the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. Upon completion of the debt settlement agreements and the non-brokered private placement, Deepkloof is expected to directly own approximately 37% of the Company. In addition, Deepkloof owns approximately 51% of Impact Oil & Gas Limited, which owns approximately 36.2% of Africa Energy.

The Company has also committed to completing a consolidation of the Company's shares on a 5:1 basis within 90 days of closing the debt settlement agreements and the non-brokered private placement.

FINANCIAL INFORMATION
(Audited; thousands of US dollars, except per share amounts)

	Year Ended	Year Ended
	December 31,	December 31,
	2024	2023
Operating income/(expenses)	(99,455)	(119,048)
Net income/(loss)	(100,615)	(119,776)
Net income/(loss) per share (basic and diluted)	(0.07)	(0.09)
Weighted average number of shares outstanding (basic)	1,407,812	1,407,812
Weighted average number of shares outstanding (diluted)	1,407,812	1,407,812
Number of shares outstanding	1,407,812	1,407,812

Cash flows provided by (used in) operations	(1,113)	(2,133)
Cash flows provided by (used in) investing	(582)	(3,946)
Cash flows provided by (used in) financing	2,300	1,000
Total change in cash and cash equivalents	597	(5,086)

Change in share capital	-	-
Change in contributed surplus	691	2,588
Change in deficit	100,615	119,776
Total change in equity	(99,924)	(117,188)

	December 31,	December 31,
	2024	2023
Cash and cash equivalents	2,305	1,708
Total assets	42,577	138,833
Total liabilities	10,655	6,987
Total equity	31,922	131,846
Net working capital	(8,229)	1,671

The financial information in this table was selected from the Company's audited consolidated financial statements for the year ended December 31, 2024 (the "Financial Statements"), which are available on SEDAR at www.sedar.com and the Company's website at www.africaenergycorp.com.

EARNINGS TREND AND FINANCIAL POSITION
(Audited; US dollars)

Operating expenses decreased by $19.6 million for the year ended December 31, 2024, compared to the same period in 2023. The Company recorded a $97.4 million non-cash loss on revaluation of the financial asset during the fourth quarter of 2024 versus $114.2 million during the fourth quarter of 2023. The non-cash loss on revaluation of the financial asset relates to the Company's investment in Block 11B/12B and was due mainly to changes in base assumptions for discount rate.

At December 31, 2024, the Company had cash of $2.3 million and working capital deficiency of $8.2 million compared to cash and working capital of $1.7 million at December 31, 2023. The reduction in working capital since December 31, 2023, can be mainly attributed to the amount due on the promissory note becoming a current liability, as it is due March 31, 2025. On December 19, 2022, the Company entered into a promissory note for $5.0 million. On November 7, 2023, amendments were made to increase the total amount available under the promissory note to $8.3 million, with a maturity date of March 31, 2025. At December 31, 2024, the Company borrowed the total amount available under the promissory note.

NEXT EARNINGS REPORT RELEASE

The Company plans to report its results for the three months ended March 31, 2025 on May 15, 2025.

About Africa Energy Corp.

Africa Energy Corp. is a Canadian oil and gas exploration company focused on South Africa. The Company is listed in Toronto on TSX Venture Exchange (ticker "AFE") and in Stockholm on Nasdaq First North Growth Market (ticker "AEC").

Important information

This is information that Africa Energy is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact persons set out above on March 27, 2025, at 5:30 p.m. ET.

The Company's certified advisor on Nasdaq First North Growth Market is Bergs Securities AB, +46 739 49 62 50, rutger.ahlerup@bergssecurities.se.

Forward looking statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or the Company's future performance, business prospects and opportunities, which are based on assumptions of management.

The use of any of the words "will", "expected", "planned" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of certain future events. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, including results, timing and costs of seismic, drilling and development related activity in the Company's area of operations and, uninsured risks, regulatory changes, defects in title, availability of funds required to participate in the exploration activities, or of financing on reasonable terms, availability of materials and equipment on satisfactory terms, outcome of commercial negotiations with government and other regulatory authorities, timeliness of government or other regulatory approvals, actual performance of facilities, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual future results may differ materially. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Company. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.