Africa Oil’s consolidation move brings new investor and opens doors to greater oil & gas growth opportunities

Canadian oil and gas company Africa Oil Corp. has struck a deal with BTG Oil & Gas and BTG Pactual Holding to consolidate their respective shareholdings in Prime Oil & Gas Coöperatief, an investee company with deepwater assets located offshore Nigeria.

While BTG Holding will be amalgamated under Canadian corporate law with a newly created subsidiary of Africa Oil, BTG Oil & Gas will receive newly issued common shares in the Canadian firm, as part of the proposed reorganization to create a differentiated upstream oil and gas company.

Aside from enabling Africa Oil to consolidate the remaining 50% interest in Prime, which the firm sees as its core cash-generating assets accounting for 100% of its reserves and production, the agreement adds a new strategically aligned cornerstone investor to the enlarged company and enables enhanced shareholder returns and a materially stronger growth proposition.

Furthermore, the proposed reorganization is anticipated to provide the enlarged Africa Oil with strategic and financial benefits, such as a 100% increase in working interest proved plus probable (2P) reserves and production on a pro-forma basis for BTG receiving about 35% of the shares. In addition, this will lead to accretion in free cash flow per share for Africa Oil shareholders in the 2025 – 2029 period, which is expected to be more than 100%.

This will significantly enhance the firm’s capacity to support sustainable through-cycle returns to shareholders, underpinning an annual base dividend of $100 million. The company is also set on an annual commitment to distribute at least 50% of excess free cash flow in the form of supplemental dividends or share repurchases; and an ongoing investment in its low-cost, high-margin core-producing assets in deepwater Nigeria to extend the production life of these assets, while exploiting in-field and near-field development opportunities.

While boards of directors of BTG Oil & Gas and Africa Oil have unanimously approved the proposed reorganization, the completion, which is targeted to occur during or before the third quarter of 2025, is subject to multiple conditions.

The list of these conditions includes Africa Oil shareholder approval, customary consents and approvals from the Nigerian authorities, the Toronto Stock Exchange (TSX), and Nasdaq Stockholm, completion of the previously announced farm-down of Africa Oil’s Namibian interests that are held via Impact Oil & Gas, and a reorganization of the holding structure of BTG Holding to implement the amalgamation agreement.

Following completion, BTG Oil & Gas is expected to hold approximately 35% of the outstanding share capital of the enlarged Africa Oil, which will undertake rebranding to reflect the broader geographic strategy of the business to pursue growth opportunities in Africa and other select regions.

“The enlarged Africa Oil, with its greater scale and financial resources, will be better positioned to deliver further growth beyond its existing portfolio, supported by a new cornerstone shareholder with a proven track record of creating value in the global oil and gas industry,” explained the Canadian player.