Newcomer Afren Launches London Listing; Shares Soar on News of Sao Tome Deal

Newcomer Afren Launches London Listing; Shares Soar on News of Sao Tome Deal

Afren, the latest African explorer to list in London, got off to a roaring start on Monday, with its shares almost tripling in the first day of trade.

Afren, whose shareholders include Nigeria’s former presidential oil adviser Rilwanu Lukman, listed on London’s Alternative Investment Market (AIM). It placed 40 million shares at 20 pence each, raising around £8 million ($ 15 million) before expenses.

The shares were trading at around 55 pence later Monday, after the company revealed details of a likely deal with Nigerian-Norwegian venture Dangote-Energy Equity Resources (EER) that would give it a 4.41% stake in Block 1 in the Nigeria-Sao Tome Joint Development Zone.

“We believe we have brought together one of the most experienced oil and gas teams within Africa which, combined with an excellent first asset opportunity, positions Afren to become a leading pan-African oil and gas exploration and production company,” said executive director Ethelbert Cooper in a statement.

Formed in 2004, the company is headed by acting Chairman Guido Pas and executive director Egbert Imomoh, former deputy managing director of Royal Dutch/Shell in Nigeria.

Lukman, who is a non-executive director of Afren, resigned his post as adviser to Nigeria’s President Olusegun Obasanjo in October 2003 amid rumors of a fallout. He held ministerial portfolios in previous Nigerian governments, handling both foreign affairs and petroleum, and also served as Opec secretary general from 1995 until 2000. The company’s directors will hold a combined 12.81% of Afren.

The company is seeking to exploit upstream opportunities in the Gulf of Guinea region through the leveraging of strategic relationships and local expertise. “Afren’s strategic objectives will ensure that the company will offer shareholders a diversified and balanced portfolio of attractive exploration, development and production asset opportunities,” the company said. Afren is thought likely to target marginal fields in Nigeria and may also bid in the country’s upcoming oil licensing round.

Under the terms of the Block 1 deal, Afren said it would pay EER $ 6.5 million to help finance the field’s development. EER raised eyebrows last April when it was awarded a 9% stake in Block 1 after being set up specifically to bid for the block. The Block 1 consortium comprises operator ChevronTexaco with 51% and Exxon Mobil with 40%.

EER is owned by Aliko Dangote, who controls an industrial and trading conglomerate. Dangote is close to Obasanjo, who has reportedly urged him to stand as his successor in 2007.

Afren is also being supported by the World Bank’s International Finance Corp., to which it has applied for seed capital. The IFC is considering an equity investment in the form of ordinary shares of up to $ 1 million equivalent. Afren has budgeted $ 5.7 million for establishment and operational costs for its first year.

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