Afren, which has operations and investments in Nigeria, Ghana, Kenya, Madagascar, and the Kurdistan region of Iraq, said its normalised post-tax profits had surged from $125 million to $244 million.
The profit advance followed production improving from 19,284 barrels of oil a day to 43,059 barrels of oil a day, an increase of 123%. The greater production helped revenues climb 151% to $1,499 million.
Afren also revealed its net debt had decreased from $548 million to $488 million despite capital expenditure of $523 million during the year.
A dividend was not declared.
Osman Shahenshah, Afren’s chief executive, said: “In 2012 we achieved record financial results driven by strong production growth at our greenfield developments offshore Nigeria. We realized an E&A success ratio of 88% and a 2P reserves replacement ratio of 265%. We have started our 2013 multi-well E&A campaign with success at Okwok, offshore Nigeria, and Simrit-2 and Simrit-3, in the Kurdistan region of Iraq.
With a track record of project delivery, exploration success and strategic acquisitions, we are well placed to continue to create significant value for shareholders.
Looking to 2013, Mr Shahenshah reckoned production during could average between 40,000 and 47,000 barrels of oil a day, and predicted capital expenditure could rise to $620 million.
Based on today’s results, Afren’s £1.6 billion market cap is equivalent to about 10 times last year’s earnings. Of course, only you can decide whether that valuation and this morning’s figures both combine to make Afren’s shares a buy right now.
Whatever you decide, Afren’s shares have more than ten-bagged since their 2009 low and provide another example of how smart investors can make enormous sums from quality resources shares.