Angola’s war was long and bloody, and although peace was declared in 2002, many still associate the country with hardship and corruption. Not Paul McDade. McDade, former chief executive of FTSE 250 group Tullow Oil, now heads energy business in Africa Afentra – and so far it has focused on Angola.
Oil accounts for about 40 percent of the country’s economy and until recently state-owned companies monopolized the industry. But under President João Lourenco a program of privatizations has been launched, and Afentra has been a key beneficiary.
Founded in 2021, the group has spent the last three years working closely with local and international operators, acquiring assets they no longer want or need. Today, Afentra has a 30 percent stake in a huge offshore oil field in Angola and has taken steps to increase production and improve labor practices.
Daily barrels of oil have risen from 17,000 to 23,000. And there are high hopes of reaching 30,000 by 2027 and more than 40,000 in the next six years, by increasing production from existing wells and adding new ones across the site, known as Block 3/05.
McDade and his team also have an environmental agenda, with plans to divert gas from oil wells into a nearby pipeline so it can be used productively instead of polluting the atmosphere.
Everything is going well: Afentra has a 30 percent stake in an Angolan oil field
Afentra has also been selected as a preferred bidder for onshore assets that once produced thousands of barrels of oil per day but have been idle for years.
Operating in Africa is not for beginners. But McDade is experienced and has shown officials, energy groups and investors that he is a man of his word and knows what he is doing. Block 3/05 is a case in point. The deal involved the acquisition of stakes from a Croatian oil company, a joint venture between BP and Italian energy giant ENI, and Angola’s national oil group. Getting agreements from all parties took time, but shrewd negotiation has reduced the final cost from $117m (£93m) to just over $10m (£7.9m).
More deals are likely to follow as McDade scours the west coast of Africa for potential sites.
Afentra is also committed to improving efficiency, not only financially but also environmentally, by introducing modern extraction methods and reducing polluting practices such as gas flaring.
Midas Verdict: Afentra shares have more than doubled from 25p to 53p since Midas recommended the stock in May 2023. Hungry investors may choose to sell half their shares now and bank profits. However, longer term, there should be plenty of firepower left in this business.
Traded in: Aim Heart: AET Contact: afentraplc.com