The two oil blocks are located offshore Angola. Credit: C Morrison from Pixabay.

Afentra (Angola) has signed a sale and purchase agreement (SPA) with Azule Energy Angola Production (Azule) to buy additional stake in two oil blocks offshore Angola.

Under the SPA, the wholly owned subsidiary of UK-based Afentra will buy a 12% stake in Block 3/05 and a 16% interest in Block 3/05A.

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The deal includes a $48.5m (Kz40.32bn) fixed payment as well as deferred contingent payments totalling up to $36m, subject to changes in oil prices, production levels and development requirements.

Afentra forayed into the Angolan oil and gas space in May this year by acquiring a 4% stake in Block 3/05 and Block 3/05A from INA-Industrija Nafte, a Croatian company.

Concurrent to the SPA with Azule, Afentra has reached an agreement with Sonangol Pesquisa e Produção (Sonangol) to amend the deal they signed in April 2022.

Under the new agreement with Sonangol, Afentra will buy a 14% stake in Block 3/05 instead of 20%.

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Afentra said the amended agreement with Sonangol is aimed at supporting the SPA with Azule and ensuring that an “appropriate balance of equity interests in Block 3/05” is maintained.

Following these deals, Afentra’s equity stake in both Block 3/05 (30%) and Block 3/05A (21.33%) will be material.

Due to the recent extension of the licence period and better fiscal terms for Block 3/05, Afentra hopes to expand its exposure to the upside potential of these production and near-term development assets.

Afentra CEO Paul McDade said: “We are delighted to have agreed terms with Azule and signed the SPA increasing Afentra’s interest in the high-quality producing Block 3/05 and a material increase in our Block 3/05A interest offering access to existing discovered resources.

“As we continually seek to work closely and ensure support from Sonangol, we have sought to amend the Sonangol Acquisition SPA to reduce the acquired equity from 20% to 14%, reducing the upfront and contingent consideration on a pro-rata basis.”

Both transactions are expected to close in the fourth quarter of 2023.