WTI $65.69 +$1.20, Brent $68.88 +$1.32, Diff -$3.19 +12c, NG $2.97 n/c, UKNG 59.5p -1.76p

Oil price

Not much is changing to be honest, the US figures continue to impress and the virus problems in India are thought to be transient. Janet Yellen made a slip of the tongue yesterday, initially she seemed to sanction inflation and then very quickly rowed back by saying ‘ I am not predicting or recommending higher rates’.

The API stats were pretty good across the board, crude drew 7.7m barrels, gasoline fell 5.3m barrels and even distillates were off 3.5m b’s.

Afentra Plc

Afentra launches today and the long-awaited return of Paul McDade into the London market and with the renaming of the Sterling vehicle that he has used for the process. By its very nature the company is explaining today its plans and I have effectively copied them below, after the statement from Paul McDade I have added my own thoughts about how I feel it might pan out.

Afentra plc (AIM: AET), the upstream operator focused on opportunities in Africa, has been launched with a clear mandate to look at opportunities to invest in the energy transition in Africa. Spearheaded by CEO Paul McDade, the foundations have been laid with the development of a comprehensive corporate strategy and appointment of team members including a new CFO that can deliver against this new vision. 

The name Afentra, which stands for African Energy Transition, reflects the Company’s strategic imperative of capitalising on opportunities resulting from the accelerating energy transition on the African continent. Afentra has been established to support sustainable change in the African energy industry, in a sector that needs further responsible, well managed, independent operators.

The global energy transition is being driven by political, corporate and civil society in pursuit of the goals set by the international community to decarbonise. The energy industry is seeing Oil and Gas majors recalibrate their strategies and business models to a lower carbon energy portfolio. A significant divestment cycle of legacy assets is expected in Africa similar to the industry transition that occurred in both the Gulf of Mexico and the North Sea generating a compelling market dynamic for agile and innovative consolidators.

As the global energy transition progresses, hydrocarbons will continue to play a critical role in future energy and economic systems.  Responsible supplies of oil and gas will be a necessary part of a transition to a lower carbon world.  Natural resources are central to the economic and social development of the continent and will require continued access to capital. To access capital markets, Afentra will need to address stakeholders’ ESG focus as a central part of its business risk and opportunity management.  

Afentra has embedded ESG into its operating model with the imperative to reduce energy-related emissions, whilst also protecting the positive socio-economic impact of oil and gas revenues. 

Afentra’s growth strategy is to achieve scale through implementation of a buy and build model – positioning itself as a trusted partner of divesting IOCs and host governments to build a portfolio of assets that progress the growth strategy.  The Company is specifically targeting producing assets and discovered resources in Africa where the team has existing knowledge, experience and network.  The Company is focusing on operated positions but will also consider non-operated positions alongside credible operators with shared standards.  Target assets must be value accretive, adding potential for robust cash flow and proven reserves.  

 Once acquired, the Company intends to leverage its deep operating capabilities to increase efficiencies, enhance production, reduce operating costs and improve environmental performance. Afentra’s overall aim is to support the energy transition in Africa by responsibly realising the full potential of assets for the benefit of all stakeholders. 

Afentra has assembled a strong team with an established network with IOCs and Host Governments, a proven track record for business delivery and high operating standards.  The team is actively screening a pipeline of opportunities, consistent with the strategy and aims to announce a transaction within the next 12 months. 

The Company also announces the appointment of Anastasia Deulina as Chief Financial Officer and to the Board of Directors of the Company.  Anastasia joins from Tullow Oil where she was Group Head of Strategy, Planning and M&A.  She brings over 20 years’ experience working in the energy sector within global investment banks, private equity and corporates, and adds extensive expertise in strategy development, M&A, deal origination, structuring and execution, and business transformation and growth. Anastasia’s appointment completes the assembly of an experienced executive management team with diverse and complementary skillsets capable of delivering Afentra’s growth strategy. 

Commenting on the launch of Afentra, CEO Paul McDade said:
“We have formed Afentra to capitalise on a compelling market dynamic and see a clear role for our Company to support a responsible and sustainable energy transition in Africa that serves the purposes of all stakeholders.  We have embedded an ESG agenda into the core fabric of the business and see those objectives as absolutely central to our growth strategy.  The impact of a poorly managed energy transition on the socio-economic wellbeing of many countries on the continent is not currently part of the global climate change narrative. Through our approach and operating model, we hope to highlight the importance of credible operators like Afentra in ensuring a smooth transition that continues to support the socio-economic development of host countries.

We have ambitious growth plans and look forward to engaging with the various counterparties on the target opportunities.  Afentra has a strong balance sheet, supportive shareholder base, experienced and motivated leadership team, and a strategy that is tailored to the present and future outlook for this industry.  We believe that the value accretive buy and build model coupled with our unwavering commitment to ESG fits with the progressive agenda that investors increasingly expect in terms of ensuring solid shareholder returns alongside a positive broader stakeholder impact.  We look forward to updating the market on our progress.”

So, how do I see Afentra as it starts its journey with today’s launch? Firstly it could not have a much better launch pad in terms of financing, board and available market in which to look for acquisitions. With some $40m of cash on the balance sheet AET is well financed and has the backing of a serious list of industry players and institutions. Next is the board, which has McDade as CEO, Ian Cloke COO and Anastasia Deulina as CFO, admittedly ex-Tullow heavy but when that company was a market pin-up they found, developed and financed some of the best plays in Africa. The two non-execs are also as good as they could have got, I have a huge amount of time for Jeff MacDonald who is an industry legend as is Gavin Wilson who brings shareholder experience from his high class portfolio of worldwide assets.

The company is wise to have backed its raison d’etre with a positive and up front approach to ESG and especially with its focus on Africa where McDade says he sees as a ‘compelling market dynamic for agile and innovative consolidators’ and where he sees ‘ a host of assets of the right scale would become available now and over the next five to ten years’. To start with its approach will be for producing assets but with the chance to buy ‘discovered resources with a view to developing them in parallel’.

To sum up, I see this as an exciting chance to climb aboard a venture that is likely to be picking off stranded assets left by retreating oil majors and at the moment it ticks a lot of important boxes in my book.

Getech

Getech has announced a strategic agreement between H2 Green, Getech’s subsidiary in the green hydrogen production sector, and Element Two, a developer of hydrogen refuelling stations and a retailer of hydrogen fuel.

The parties plan to align production and distribution strategies, with an objective to accelerate the creation of the UK’s first hydrogen network. They will also combine H2Green’s position in hydrogen generation and storage and Getech’s state of the art location analytics, with significant data gathered by Element Two on fuel customer habits.

This data-led approach will hopefully enable both groups to high-grade and expand their land asset portfolios.

Jonathan Copus, CEO of Getech plc commented:
“Green hydrogen will play a key role in the decarbonisation of commercial transportation, and the development of green hydrogen hubs will be a crucial component of our cities’ plans to decarbonise and meet their net zero targets.

H2 Green and Element 2 are united by a common vision that places the customer at the heart of the hydrogen commercial transport market. To align our production and distribution strategies, the groups plan to combine H2Green’s position in hydrogen generation and storage and Getech’s state of the art location analytics, with significant data gathered by Element 2 on fuel customer habits.

This data-led approach will enable both groups to high-grade and expand their land asset portfolios and we are already discussing the location of a demonstration project that will be a testbed for a programme of national collaboration.

These steps are important as we believe they have the potential to accelerate the creation of the first UK-wide hydrogen network, which supports the UK government in the implementation of its energy transition objectives of decarbonisation and green job creation.”

KeyFacts Energy Industry Directory: Malcy's Blog