By Martin Clark
Lots of things are going on at Canadian-listed Africa Energy Corporation, which holds an equity interest in two frontier exploration blocks in Puntland, Somalia. The company – which has just changed its name from Horn Petroleum, but still remains a part of the Lundin family of companies – announced this week that it is raising US$4 million via a private placement.
But a much broader corporate shift is taking place. On March 11, the TSX-listed group unveiled a new strategy to “aggressively pursue onshore and shallow water upstream oil opportunities in Africa”, moving away purely from the Horn of Africa, where it currently operates.
The company owns the Dharoor and Nugaal blocks in Puntland with a majority 60 per cent stake. It will now be managed from a new office in Cape Town, although it will retain its Canadian listing, with an emphasis on seeking new deals in sub-Saharan Africa (hence the name change).
With the private placement, it will raise some additional funding as the group transitions.It plans to sell up to an aggregate of 38,462,000 million common shares at a price of $0.13 per share.
But it’s already a change from that announced just a couple of weeks ago, when the plan was to raise $15 million in new equity through a non-brokered private placement of new shares to finance these new initiatives.
In a statement this week, the company said: “In view of the current market conditions and low oil price environment, the additional funding contemplated in the previous announcement will be considered at a later date.”
There are other notable developments too, notably on the personnel side.
Former Energy Africa and Tullow Oil man, Jan Maier, with experience in Equatorial Guinea, Ghana, Uganda, Mauritania, Gabon and Kenya, joins as vice president for exploration.
Some other well-known new faces also join the new-look board, including former Energy Africa executives, John Bentley and Adrian Nel. Africa Energy’s president and chief executive James Phillips plans to relocate to South Africa next month to oversee the new strategy.
Earlier this month, when announcing the shift in direction, he said the changes “rebranded and refocused” the company ready for an exciting time ahead. “This is an opportunity-rich period in the industry for acquisitions, mergers, farm-ins and directly negotiated deals with various African governments with limited competition.”
In fact, similar to the conditions of late 2008 and 2009, when his previous team built an extensive East African acreage position at another aspiring junior, Africa Oil. While the focus will be on building value through the drill bit, he said, “we will also consider acquiring producing properties at distressed prices to help fund future exploration.”
Low oil prices are not always a bad thing for those able to take advantage.