Hello, everyone. My name is Alan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Meren Energy Q1 2022 Results Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at that time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the number two. Please note that at any time, participants on the webcast can submit their questions using the Q&A option on the webcast interface. Please note that this event is being recorded. The recording will be available for playback on the company's website. I'd now like to pass the meeting over to Mr.
Shahin Amini, Africa Oil's Investor Relations and Commercial Manager. Please go ahead, Mr. Amini.
Thank you, Alan. On behalf of management, I thank you for joining us today for our first quarter 2022 results call. I am joined today with our President and Chief Executive Officer, Keith Hill, and our Chief Financial Officer, Pascal Nicodeme. Keith and Pascal will present the quarter's highlights and the business outlook before we go into the Q&A session. I would like to remind everyone that remarks made during this session are subject to forward-looking statements, which involve significant risk factors and assumptions and have been fully described in the company's continuous disclosure reports. The information discussed is made as of today's date and time, and Africa Oil assumes no obligation to update or revise this information to reflect new events or circumstances except as required by law. The company's complete financial statements and related MD&A are available on the company's website and on SEDAR.
Keith, we're ready for you. Please go ahead.
All right. Thanks, Shahin. I'd like to thank everybody for dialing in. Obviously, it's a Friday afternoon, and on the auspicious date of Friday the thirteenth. I'm coming here from Vancouver, and it's a rare sunny day out here in Vancouver. I understand it's a rare sunny day in London as well. Appreciate you joining in. You know, this is, I think, an incredibly exciting time to be in our industry and to be in Africa Oil in particular. I think obviously the world is going through a lot of turmoil and tragedy in the Russia-Ukraine situation.
I do think the world is starting to wake up and maybe helped fuel by that, energy transition is going to take some time, and oil and gas, and particularly gas, is going to be an important part of that mix until that transition occurs. I think we've put ourselves at Africa Oil; we're in a very good position to take advantage of this situation, which I think is going to be with us for the next 7-10 years while the transition tries to catch up with the world demand. Anyway, for those of you who've been here a long time, you've seen we've actually transformed our company pretty dramatically in the past few years. You know, we started as a pure little exploration company in East Africa.
We parlayed that into a big success with that we're developing now in Kenya. We also used the proceeds from our farm outs to Maersk Oil in particular to buy production in Nigeria. For the first time in our company's history, we now are starting our shareholder returns. I think the company's in very good shape. You know, we've got over 80 million barrels of reserves. We're producing about 27,000 barrels a day in entitlement production to us. We've cleaned up our balance sheet. You know, when we did that acquisition, we stressed our balance sheet quite a bit. Now we've paid off all of our debt at the corporate level.
We actually have $140 million cash in the bank, $100 million undrawn line of credit, and we've also paid down significant amount of debt at our Nigerian subsidiary. Probably the biggest thing we did this quarter is we brought exploration back into focus. You know, and I think, you know, you have to realize what you're good at, and I still think that is what we are best at, is exploration.
I think Venus, the Venus discovery, which we'll go through in a bit of detail, is really a reflection of us, our ability to get exposure to some of the best plays in the world, both in the Orange Basin, the South African basins, but also through Eco Atlantic, the Guyana Basin. These are, they're probably the hottest places in the world to explore for oil and gas, and we've got a very interesting footprint there. I will state, you know, we are part of that transition. We want to be part of the solution, not the problem. We have pledged to be carbon neutral by 2025, and we continue to believe that is quite achievable.
I think you know those companies that don't have a sterling reputation on the ESG front are not going to be investable in the future, and we wanna make sure we are investable. Next slide. I'll start with exploration, which is a good thing for me as an explorer. We have made a major discovery through our subsidiary Impact, well, not our subsidiary, our holdings in Impact. And it looks like it could be very large. I think that kind of gives us a bit of validation on our exploration portfolio approach. We'll talk a little bit about that. Obviously, Pascal will go through in detail the financial results and our balance sheet.
Another very good quarter, $45 million of net income. Again, all of our debt metrics looking better and better. I think, you know, this is not the easiest business to raise money in these days, to do new ventures. I think we are in a unique position with our strong balance sheet and unlevered unused credit facilities that we will be looking at acquisitions, and we continue to look at acquisitions. We have several that we're in the process of reviewing now, and one of my big goals is to close one of those this year. We don't really. We don't. We're hearing our shareholders loud and clear about shareholders' returns. We started a fairly modest dividend of $0.05 a share last quarter.
We see this as a base to build on. We do believe that returning money to shareholders, either through buybacks or through dividends, is a primary goal of the company. I think the good news for us is we'll be generating enough cash that we can still have a very aggressive shareholder return program, and still go out and look for, new opportunities and fund our own ongoing opportunities both in exploration and in Kenya development. Next slide. I'm gonna start with exploration. Usually in the past, few years, exploration has been the last slide in the chart, so I'm happy to see it advancing up to the front. We do have a very good exploration program up ahead.
We'll talk about a couple of the opportunities here, but we have some very significant wells that we'll be drilling not only this year, but next year. I think we still see this as a big value driver for the company. As the world searches for more and more non-Russian FSU oil supplies, I think Africa will become more and more in focus as a source of not only oil, but also of gas as well. Just to highlight, we have made two discoveries, one in South Africa through Africa Energy, which again looks very interesting from a short-term development, but also interesting from an upside exploration standpoint. You know, we have only explored about 2% of that basin that we hold, and I think there's a lot more to come there.
I think in the Orange Basin, maybe move to the next slide, Shahin. This is one I think is really going to become one of the hottest places in the world for exploration, and we are very well positioned there. Not only do we have the Venus discovery through our Impact investment. Again, I'm not going to go into reserves. I think you can read all the things in the press about how big it could be. I think you know not only in the trade journals, but WoodMac, and also Patrick Pouyanné, the CEO of TotalEnergies, have expressed their ideas that this could be a big multi-billion barrel field. I think you know caution is that it is early.
We've drilled one well here. I think the results of it were way above our expectations. I think given that the right next door Shell has found also what looks like a billion barrel oil field for the first two wells in this basin, really in the last 25 years, to both find billion barrel oil fields is pretty amazing. I think you know, Venus will be a focus for us going forward. The plans announced by Total at the recent conference in Namibia suggest that they're gonna drill 2 appraisal wells in the third quarter commencing in third quarter. You know, I think this is one we'd like to bring on stream as quickly as possible and delineate as quickly as possible.
You know, it has the chance to become certainly the largest field in Sub-Saharan Africa. Again, remember one well, we need to drill more wells, and we need to get some test data. The other thing we're interested in is 3B/4B. If you look, that's the block to the southeast of the Venus discovery. It actually looks quite a bit like the Shell block where the Graff discovery was made. It has 3D on it. It has a number of drillable prospects, and it's very large in size. I think to give you an appreciation of how big it is, we put the inset box on the left bottom corner there. That's the Guyana trend where there's 12 billion barrels of oil at the same scale.
You can fit that entire Guyana trend inside of our Block 3B/4B. I think that's pretty amazing that this giant unexplored delta, the Orange River Delta, which is really the last unexplored delta in Africa, has this kind of potential and has laid dormant for all of this time. The third block on there is Block 2B in South Africa. That's the one both Eco Atlantic and Africa Energy, two of our portfolio companies, have the dominant interest in. They have 85% of that block. We are planning to drill a well there later this year. It's a slightly different play. It's a rift basin.
It's not quite as related to either the Venus or Graff discoveries, but it's in very shallow water, and it's already got a well that's proven the hydrocarbon system. We'll see that well this year. We'll see probably two wells in Venus, appraisal wells, and we'll look to drill in 3B4B next year. Exciting times in the Orange Basin, and I think we're quite well located. Next slide. We certainly don't forget our core project, which is offshore Nigeria. This is kind of the gift that just keeps on giving. You know, it's these are the three largest fields in Nigeria, Agbami, Akpo, and Egina. We were fortunate to get into these at a reasonable cost, a reasonable price.
We've essentially paid back that entire investment that we made a little over two years ago. I think interestingly from a reserve standpoint we still have more reserves than we did when we bought these fields. It's been quite a good acquisition for us, and I think it's going to continue to be our main cash generator in the medium term. Next slide. I think that's you know highlighted by the amount of dividends we've received. Again we've basically received dividends equivalent to what we paid for the thing but we still have quite a bit of money in the bank there. There's $405 million in the bank. Sorry.
There's an increase of $195 million in the bank there, net to us. I think, you know, you'll see this as being really our primary funding engine. We've got the debt down from around $900 million net to us to about $400 million net to us. I think this is really a great accomplishment from this acquisition. Next slide. Again, this is about our positive reserve replacement. Since we bought it, both years that we've done reserve replacements, we've replaced more than we've produced. I think again, a very positive sign that these assets will continue to improve in the future.
You will notice that on the right side, we're talking about $40 million of CapEx. We haven't spent much CapEx over the last two years. You know, that was partially by design. I think in these difficult times, we were trying to increase our cash flow, pay back our debt, but we also need to take care of these fields. I think what you'll see is an increased expenditure going forward. If you go to the next slide. We do have some pretty aggressive investment strategies in OML 130 in particular. Egina is our newest field. This is a block we have 16% interest in as opposed to the 8% interest we have in OML 127.
We get about 75% of our revenues out of this block. It's very important to us. Again, we need to spend a little bit of time and money to keep these fields up and running. You know, we have a rate secured or very close to being secured, and we're looking to drill up to nine wells on Akpo and Egina to kind of stem that decline. You may notice we had a pretty significant decline in the last six months, and it's really because we haven't been drilling. I think once we drill these wells, you'll see that decline arrested, and you know, we'll be able to keep a much more stable production plateau.
Again, we also see great opportunities here to expand. Preowei is the obvious one. It's a field that we can tie into our existing FPSO. But there are a number of other fields that we're looking at drilling potentially in the short term and medium term. You know, the goal in these blocks is to keep these two FPSOs full as long as possible. The infrastructure costs of this are the primary operating costs, and the more barrels you can put through it, the lower your OpEx is. Again, Preowei, we hope to sanction that next year.
We are in license extension discussions now under the new PIA, and I think that's also going to give us a lot of opportunities if we're able to extend this license and give us confidence that we can keep moving forward with the expenditures of these licenses. I do wanna make. You know, I get a lot of questions about license extension. You know, I just wanna make the point. License extension in Nigeria is automatic. We get a 20-year automatic renewal. We don't have any concerns over extending the license. There's never been a license that has not been extended in Nigeria for companies that are complying with their work obligations and tax obligations, which of course, we are doing both of those.
What we're actually talking about is extending these licenses early. Under the new Petroleum Industry Act or the PIA, we have the chance for an early extension. That does a few things for us, but probably most importantly, it puts us under the new tax regime, which is more favorable to the oil companies. It also will allow us to push out our debt over a much longer period. We have been aggressively paying back debt for the last year and this year in particular. We'd like to spread that debt out a little so we can use some of the revenues being generated here for shareholder returns and possibly for acquisitions. Next slide. Don't forget about Kenya.
Kenya was the thing that started the company, and as you heard in the press, we are actively engaged in bringing in a strategic partner. I think we're coming to the end of that path. I think we are getting very close to signing a deal. You know, nothing is done till it's done. I think we've got some very interested parties, and I think there's a fairly good chance that we are able to get them over the finish line in the next couple of months. Again, this project is one that I think the market has given up on, but I can tell you I haven't. It is a good project.
Not only is the project good the way it stands, we make very good investments on the very good returns on the project as it stands, but I think we have a chance to double the reserves there. Once that pipeline is in and the infrastructure's in, I think you'll see us being a lot more aggressive in developing additional resources here. Kenya, we still think is a real cornerstone project for the company. With that, I'm gonna turn over to Pascal, and he can run you through some of the financial highlights.
Thank you, Keith. Yeah, so, I mean, this quarter again has been very strong and has been underpinned by Prime's very strong performance with stable production and contributing $51 million to our profit this quarter. We are posting a $45.6 million net income this quarter, which is stable compared to the last six quarters that we had since we've closed the Prime acquisition. It's also in this quarter that we have received the largest dividend ever from Prime, $100 million net to us, which has increased our cash balance up to $140 million, which is quite significant now.
I would just like to remind everyone that the red bar on this chart is the impairment we've posted in Kenya in Q1 2020. All this is behind us now, and what you can see here is a stable and strong production and cash flows and net income coming from Prime. Next slide, Shane, please. Thank you. Yeah, as I said, I mean, our strong results have been underpinned by Prime performance in these last quarters, these last two years. We are now posting a quarterly EBITDAX above $100 million on average in the last quarters.
Free cash flow has been also very consistent and in the $50 million-$150 million range on a quarterly basis. As mentioned by Keith, Prime still stand on this very significant cash balance, $265 million our share, which includes the Agbami security deposit. Prime has continued their efforts to de-leverage. The gross debt number at Prime level is $1.002 billion. That's $501 million our share.
The RBL has continued to amortize, and it is expected that the RBL will continue to amortize probably by another $300 million by the end of the year, and which has been compensated by the closing of the $300 million of PXF, which is now fully drawn. We have basically $700 million of RBL outstanding on a gross basis, plus $300 million of PXF. Next slide, please, Shane. This translates in a very strong position at Africa Oil's level in terms of liquidity. We now stand on $140 million of cash.
As mentioned by Keith, the corporate facility has been refinanced and increased earlier in January, so it's now $100 million available until the end of the year, undrawn. We can basically draw on this facility for general corporate purposes, including acquisitions. We expect this facility to be increased and extended as soon as we get a formal license renewal on OML 130, which we are working on, of course. We expect also to receive further dividend from Prime by the end of the year, probably another $100 million net before the end of the year.
This does not include the Agbami security deposit, which we assume will stay for a couple of months at Prime, but we expect, and we are in discussion now with Prime to distribute that security deposit as an exceptional dividend. Next slide, please, Shane. Thank you. Yes. Keith, I think over to you on this slide on 2022 catalysts.
Yeah, I mean, obviously everybody loves catalysts, and we actually have quite a few in the second half of this year. I think, obviously the market is very focused on Venus, and I think, the results of those two appraisal wells and potentially some additional exploration wells of Venus, I think may be our biggest catalyst. According to the operator, TotalEnergies, they are well underway on putting that program together, and I think, we'll all be anxiously awaiting those results. To me, one of the biggest ones we've got is the license extension in Nigeria. You know, what that will do for us is really will free up a lot of cash to use both for shareholder returns, but also potentially for acquisitions.
I think getting that Equinor security deposit released is one of our big portions of that, but I think we're working towards that as well. Drilling at the Gazania well, you know, this is one that has been a little under the radar, but it's a big prospect. It's, you know, 200-300 million barrel prospect according to the operator, and it's in very shallow water. If you do find something there, it's one that you can. You know, it's what we call advantage barrels. You could bring that thing on very quickly. I think we're quite excited about that. Again, it's a proven petroleum system, so it's a fairly low risk exploration well. Then I think, you know, we've been talking about another strategic asset.
You know, we'd love to find another POGBV, another Nigeria type asset. There are ones that are on the market. Obviously in today's oil price, maybe a little harder to find the types of bargains that we had before. There are quite a few that you can still pick up at very reasonable prices. We're not buying things on $100 oil. We're buying them at $60 oil. If we're right about $100 oil being the norm for the next 3-5 years, we'll make a lot of money. I think the uncertainty in the market and the uncertainty in the world, I think we have to be a little prudent on what we pay for these assets, and we're not going to overpay for assets.
Anything that we buy has to be accretive to the company, and it has to basically be compared against taking that money and paying out those dividends to shareholders. Again, Kenya farm-out, I think by the end of June, we should probably know one way or the other whether we've closed that deal. If we do, I think it's value that's not in the market now, and if we're able to run outside, I think you will see value in the shares for that. Again, the 11B, 12B, we haven't really talked too much about that. That's that South African project that I mentioned early on that's primarily gas condensate. TotalEnergies are working strongly to put that into an early production phase, and they're in final negotiations with the government.
If we can agree on gas terms, we plan on submitting the petroleum right there by the end of mid-September. I think that also could be quite an attractive project for us. If you go to the next slide, which is the last slide, you know, I guess the question is always why should I buy Africa Oil? I know some of the questions I've already seen on the website is why is our share price so significantly below what the value of the company is? I think it's getting better. You know, we've had a pretty good increase in our share price, but I think we're still trading at a very significant discount to what we think the actual value of the company is.
If you just look at the blue bar, essentially that's what the value of Nigeria is, of a $60, $70, and $80 oil price. You can see we're trading at roughly half the value of what we think Nigeria alone is worth. If you take off the debt, the net debt that's in the company of $211 million, it's still probably a 40% or more discount to our NAV. I think the thing I like about the company and why I'm continuing to invest in the company is that you basically get everything else for free. Not priced in here is Venus. Not priced in here is Kenya Farm Out. Not priced in here is our 11B, 12B discoveries.
All the exploration wells that we're planning to drill, not only in West Africa, in the Orange Basin, but also other wells, through Eco Atlantic that we have planned going forward in the Guyana Basin. I think you basically get all that for free. I think there's a huge amount of upside in the stock. There's very little downside because I think we're really underpinned by that strong cash flow out of Nigeria. I think, you know, we've got some pretty exciting times ahead. I think, you know, we've had a couple of transformations in the past, but I think this year is probably going to be one of our biggest transformational years. If we come out of this year with even a few of these catalysts coming out of in our favor, I think we're gonna be in a very strong position going forward. As I said in my opening speech, I think it's a very strong market right now. I think you're seeing people retreating from some of the tech stocks, retreating from some of the companies that don't actually make money. I think you're seeing now that even the BlackRock and some of the bigger investment funds are realizing that we need oil and gas as a transition fuel, and they're starting to reinvest in us. Again, I think summary is, you know, the company's in a good position, and has a lot of catalysts.
I think our industry is finally coming out of the shadows, and I think it's gonna be very investable in the future. With that, I'll close, and I'll turn over for questions.
Thank you, sir. If you'd like to ask a question over the phone, you can do so at this time, once again, by pressing star one on your telephone keypad. Please make sure that your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. If you'd like to, do state your name before posing your question. Once again, over the phones, that is star one if you'd like to ask a question. We'll pause for a few moments to allow everybody the opportunity to signal. Once again, that is star one if you'd like to ask a question over the phones. All right, we'll take our first question over the phones. Caller, please go ahead. Your line is open.
Yeah, I hear you, James.
Oh, great. Yeah, just the first question I had was just when you outlined the investment outlook for OML 130. I was wondering how much of that activity you've listed has been approved by the partners and is definitely going ahead, and how much of it is subject to, say, final sign-off and securing rigs, et cetera?
Yeah. The three firm wells have been approved by the partnership this year. The budget, you know, there's a budget that straddles this year and next year. The fourth well, we're in the process of figuring out whether it should be an appraisal well on Egina or possibly an exploration well. I think the concept of drilling up to nine wells on both Akpo and Egina is fully supported by the partnership. The ones that are firm approved right now are three. Those will be the first three.
I think the important thing is that all of the partners are aligned that we need to, you know, start putting some investment into these fields to keep them producing at high levels. Egina, of course, just went on stream two years ago, and I think it's performing at or above expectations. You know, all of these fields need infill drilling to keep arresting the decline rate. I think we're all on board for that.
Then just a second question from me on the exploration inventory. I'm just wondering, are you anticipating, let's say, cash calls from some of your equity investment companies ahead of further drilling, and I think in particular Impact Oil & Gas? In fact, should we be anticipating you participating in a fairly sizable sort of equity raise from them, or indeed some of your Africa Energy as well in the near term?
I guess the positive thing in the near term, almost all of these companies are pretty cashed up. If you look, you know, Eco just did a fundraise and they had some money in the bank, and they've got more money in the bank now. I think they're fully cashed up. We won't have to put any money into Eco in the near term. Africa Energy as well, you know, until they get going in earnest on development, there's not much cash required on that. Once we have the petroleum right approved, and we move into development, then there will be, you know, a need for Africa Energy to raise money.
You know, we have no requirement to put that money in, but I think, you know, we like the project, and we certainly wanna stand in our corner on that. In this, there will be a short-term need for cash, and we have approval from our board to sort of follow our money on that. I think we will be making some investments in Impact to support them moving forward as well as the other key shareholders. Just 88% of the company is held by three shareholders, and I think all three shareholders have basically warranted that they will continue to support the financing going forward.
Okay. Thanks. Very good.
All right. Once again, star one if you'd like to ask a question over the phone. We'll pause for just another moment.
The moderator, I think there were also some questions that were submitted by mail. Should we tackle some of those if we're waiting?
Certainly. If you'd like to go to some more questions, go ahead.
Shane?
Sorry, I was on mute. Yes, I'm just gonna go to the number of questions that are submitted online. First one is, why is the realized average oil price for Q1? What is the reason for the delta between the realized price and the market price for Q1? Clearly, that was due to Prime's hedging policy. Now, there are a number of other questions, Keith, about hedging. I don't know whether you can provide your views on what is the outlook for that going forward.
Yeah. Obviously, there's been a painful quarter. The only pain I think I had in the whole quarter was watching my oil being sold significantly above market value. You know, those of you who know me, I've been an oil bull for a long time. I think, when the company was in pretty significant debt, I think it made a lot of sense to hedge. We had, particularly in 2020, we had a very strong year of hedging. We made $430 million of hedging gains at the POGBV level in 2020. We've continued to be a little bit, I would say, overaggressive on hedging since then. We have changed our hedging policy now in POGBV, and we will continue to look at that.
I think we're at the point now with the debt paid down to reasonable levels. I would say that I even question the need for any hedging at all, particularly on kind of giving away the upside going forward. Right now, all of our hedges roll off, roughly in September of this year. Everything we've got going forward is unhedged at this point. If we do any hedging going forward, it would be our recommendation that we only protect the downside, that we give ourselves the exposure to the upside. Obviously that's something the shareholders of POGBV need to opine on.
Yeah, we still, you know, long story short, I think when we were in significant debt, we had to be a little more conservative. Now that we've basically gotten ourselves out of debt, I think we can afford to be more aggressive on oil price, and I still am very aggressive on what I think the medium-term oil price is. I think the supply-demand function in the world is there's zero chance that the existing supply. We're seeing OPEC, you know, not being able to meet its quotas. I think we're in for 2-5, maybe as much as seven years of basically supply shortages, which will drive oil prices.
Moving on, there is a couple of questions on the company's stated objectives of acquiring producing assets. Some people are comparing that opportunity with buying back shares, and some comments on the inflationary environment. Are there really good opportunities out there? Perhaps, Keith, you could provide some color on your views of opportunities that you are looking at and how they compare to, say, allocating capital to dividends or share buybacks.
Yeah, I think that's. That question is spot on, and that's what we will do with every acquisition. We will see, is this an accretive acquisition, and is it going to be more impactful for our shareholders than just returning cash to the shareholders, including buybacks? I think that's a question we'll have to ask ourselves. I can tell you know, we've been looking since POGBV acquisition, you know, two and a half years ago. We've been looking at a lot of stuff. There's still, even in today's price environment, I think there still are acquisitions that make a lot of sense and are very accretive to the shareholders. The dividend and/or buybacks for us, though, is sacrosanct. I mean, we're not going to eliminate that.
Anything we do is going to have at least the minimum dividend that we're paying today. Hopefully, especially if as we start freeing up some of the cash in Nigeria, we'll see a growing share buyback or dividend program moving forward. Yeah. Our goal is not to sit on cash. We either spend it on a good acquisition that's accretive to the shareholders or return it to the shareholders. That's our program going forward.
Okay.
Yeah.
Well, Keith, your commentary on exploration has received a good reception. The number of questions on exploration matters. One is, what are the plans for the Orange Basin Deep and AGC Profond? Are they drill ready?
Yeah. The AGC Profond is a prospect we really like. It's, you know, one of the Impact prospects, and it's one that we've been wanting to drill for some time. I think, you know, the issue there is it was renewal of the treaty. The AGC is a cooperation between two countries, Guinea-Bissau and Senegal, and I think, you know, that treaty is still undergoing revision. So I think we'd like to drill that well as soon as possible. CNOOC has farmed into that block, and will be carrying us for one well. So I think we'd like to keep pushing that. Realistically, will we do it this year? Probably not. Probably spilling into next year, but we like that block. The Orange Basin deep block is another one that we quite like.
It's a bit more frontier. It needs more seismic. I don't think it has a drillable prospect on it as of yet, but it's in the same system, and I think, you know, that's one we think is quite interesting.
Moving on from that, what are the main exploration and appraisal targets that could be targeted on OML 130 offshore Nigeria?
Egina West is one that we quite like. It's a nice easy tieback. Akpo Deep is one that again we would be able to tie right back into the Akpo field. All of the ones you see on this map that's up now, the orange and the yellow, those are all ones that we can do immediately. The other thing that's quite interesting and it doesn't really show that well on this map is there's a number of discoveries just outside of our blocks. Both this block, OML 130, but also OML 127. You know, we are looking at, you know, possibly talking with those operators. They're stranded assets because they don't really have a way to produce them. We've got these nice FPSOs sitting there with capacity.
I think another interesting way to grow the business here is to make deals with them to basically farm into those interests by using our unused capacity in our FPSOs. We see organic growth in Nigeria, you know, both the prospects you see here, but also potentially some stuff right in and around the block is a good way to leverage our ownership. All three of those FPSOs we own outright, right? I think that's something that has maybe been underexamined in the future.
The team at POGBV and our CEO, Ron Cochrane, who was, you know, five years in Nigeria with Shell, knows this area very well, and I think there would be an opportunity to grow the production in and around these blocks in the future. I think, excuse me, with the PIA now in place and with new field discoveries getting a five-year royalty holiday, I think that also gives more incentive to start bringing new fields onto production. I do think it's a good question, and I think that's something you'll see us focus on in the next few years. You know, Akpo and Agbami are on decline. There's just no way around that.
I think we need to fill those in and add more resources into those. Egina is a new field. It started on decline already. Most of that decline will be arrested by the Preowei field being put in. I think there's opportunities everywhere around here to keep those three FPSOs full.
There've been a couple of observations on why we haven't actually included a slide on Block 11B/12B. Perhaps you could just elaborate a bit further on how that opportunity compares with what you've already spoken about in terms of Venus, Nigeria, and Block 3B/4B, and Block 2B.
Yeah. I had a slide in there. I mean, it's not that we aren't excited about that block, 'cause we are. I mean, you know, we've made two massive discoveries there, and again, like I said in the intro, we've only scratched the surface on that block. We've got three more prospects that look identical to those two discoveries that essentially we consider almost discovered reservoir, discovered oil fields. You know, the chance of success is in the 90s on those because of the seismic signature that we can calibrate to do discoveries. I think what I'm a little bit more excited about is in the eastern part of the block where, in the Kloofpadda area, where we've got a bunch of very large prospects, significantly larger aerially than the ones that we've already discovered.
We also think that those are oil prone. If you look at the source kitchen, the burial's shallower as you move to the east, we think there's a chance that there's some oil-prone source rocks over there. I you know I really like that block. I think you know we've only scratched the surface. The two wells we've drilled have both been major discoveries. I think very well positioned in the market too, because South Africa is highly in need of energy and especially of clean energy.
You know, if we can develop this gas, which I think the world is now kind of seeing as a transition fuel and displace some of the, you know, coal burning coal-fired power plants, I think it has a great advantageous position due to its location.
There are a couple of good questions that I think kind of wraps the exploration theme quite well. One is, well, what is your strategy to monetize your exploration portfolio? The second, which is more specific, is regarding Venus. Well, if Impact sells Venus and returns the money to Africa Oil, would Africa Oil return all or some of that proceeds to Africa Oil shareholders?
Yeah, I mean, obviously, the approach we took to make these portfolio companies was a little unorthodox. I think we did it because it was an expedient way to get into what we thought were some of the best exploration plays in the world, which I think has proven correct. I think we're in some of the hottest basins in the world because we were able to come in and take this investment into these companies that needed to raise cash in a very difficult market. It's a question I get asked quite a bit, not only by shareholders but my board as well, is how do we monetize this?
I think the short answer is, you know, we would potentially look to exit these projects at the right time at the right price. You know, at some point, once we've delineated these, you know, for example, in 11B, 12B, once we have the petroleum right, once we've got the license issued, and once we have the thing going forward, it's possible that there'd be a lot of people who would be interested in this block. Same thing with Venus. You know, once we build the appraisal wells, once we have a development plan, once we've delineated, you know, we may think of selling the whole thing to somebody.
We may think about staying in, again, depending on what our corporate structure looks at, like at that point, you know, what the world energy markets are doing. We may decide to stay around. I think it's a valid question. At some point, we need to figure out how to monetize these and return money to the shareholders. The one thing I can say is if we do sell any of these for a big windfall profit, that money would be returned to the shareholders. Once again, we wouldn't be just sitting on that cash. We'd be, you know, as we have done in the past in the Lundin Group, we'd be returning that money to shareholders in the form of a special dividend.
Very good. Moving back to potential acquisition of producing assets, there is a question on whether Meren Energy would be willing and ready to raise equity at the current prices to fund a big M&A deal.
The short answer is we will do everything. It would have to be an exceptional thing for us to even consider equity. You know, we share our shareholders' belief that our shares are incredibly undervalued right now, and we really don't want to do anything that would make us raise equity. That's why we're keeping a bit of dry powder. You know, we've got this undrawn $100 million line of credit. We have some cash in the bank now. I think September is the next time we announce our dividend, you know, and I think that's where we make the decision whether.
If we don't have an acquisition that we can use that money to fund and hopefully with no equity raise, then I think we'd return that money to shareholders. Again, we should be getting more money out of Nigeria as the year goes on, especially if we get that license extension. You know, we'll continue to do that. Equity raise right now I think would be very difficult, just because we think our shares are so undervalued.
There is one comment that someone says that there's very strong echo on the call. I apologize for that, for that technical problem. It is Friday thirteenth, so again, the quality isn't as good as would have been expected. Let's go back to Alan, the operator, to see if there are any questions on the phone.
Once again, that is star one if you'd like to ask a question.
Shahin Amini, do you have any more or?
There is a couple more. Maybe we'll tackle two to three more as we have a few minutes left. Can you provide an update on the Equinor security deposit?
Yeah. There's an ongoing discussion regarding that. You know, it was put in as a security to settle the redetermination between Equinor blocks 127 and 128. It's the payment to finalize that dispute, and we no longer have that dispute. I think the long and short of it is we can take that money out, but there are some complications with Petrobras, particularly for some of our partners that they're trying to work through. We believe we'll have that money released by the third quarter of this year one way or the other. Our share of that, of course, is $152 and a half million.
It's important for us to get that money out of the bank and into our pockets.
Okay. There are a number of questions on hedging. If it's okay, Keith, I'll tackle that. Basically, people want an update, and the short answer is there is no update. The hedging position for Prime hasn't changed since what we reported for Q4 2021 release. The next question for you, Keith, is Africa Oil or any of the other portfolio companies that Africa Oil has are considering other positions in the Orange Basin?
Yeah. We have several chats with people in the Orange Basin, but I think, you know, unfortunately, the price of poker has gone up since the Venus discovery and the Graff discovery. We continue to have discussions with other operators, you know, maybe throwing in their lot with us to make a bigger Orange Basin position. But I think it's going to be more difficult. All of the majors now are approaching all of the smaller guys trying to find position in there. You know, competing against the super majors to try to get acreage is probably not the thing we'd like to do.
Yeah. Another question, this one I can tackle quickly as well. Pascal mentioned $300 million of expected RBL amortization. The question is that gross to Prime or 50% share to Africa Oil? I can confirm that is the gross number to Prime. Net to Africa Oil, that would be $150 million. We have tackled a couple of things on the hedging and basically another question on Kenya is just you know if things go well looking further ahead what could be a possible timeline to final development plan FID final investment decision and oil? What are we talking about a number of years? How many years for instance? Again we've got to be mindful. We're very careful. We're not giving guidance.
Keith, if you were to provide some color on that, what would you say?
Yeah. I think, you know, obviously getting the strategic partner is step one, and then getting government approval for the strategic partner is probably step two. I think, you know, we have invested a lot of time and money. You know, we think we're probably no more than a year away from FID if all of the things fall into place. I think it's really getting those first two steps done and then, you know, FID will follow. You know, obviously in today's oil price environment, that project looks a lot better than it did at $50 oil. Given that we're not going to produce oil for probably three years after FID, we do wanna make sure it's robust at low oil prices as well.
While we continue to be optimistic about oil price, I think we have to protect the downside. I think we all have memory very clearly of, you know, fairly low oil prices in the recent past. You know, I think the project looks great today, but I think we have to make sure that it looks great at all oil prices. I think, you know, we've done a lot of work on this project, and we've made it very robust, even to low oil prices, which I think is why we're able to attract the partners that we're in discussions with now.
I think if we can get the farm-out deal over the line, I think you'll see us moving fairly rapidly and aggressively towards FID.
Very good. Sort of more of a question on sort of the strategic portfolio management side. Does it make sense to combine Africa Oil, Africa Energy, Impact Oil & Gas, and Eco Atlantic into one larger entity? Does that make sense from a cost perspective and an overall portfolio optimization point of view? What do you say, Keith? Keith, I can't hear you. I don't know.
Can you hear me?
I can hear you now.
Can you hear me?
Yes.
Yeah. I think in the longer term, I think that's something we certainly would consider. I think for the smaller companies like Africa Energy, they've got, you know, two big catalysts this year. They've got the drilling of the Gazania well, and they've got the submission of the petroleum right application. I think as a shareholder of Africa Energy, I think you'll wanna see those things completed. I think for Impact, you'll wanna see the results of those two appraisal wells and maybe even a little bit further. I think at any time, you know, we would consider trying to merge and fold those companies back into the mothership, especially if we start making the decision to move down the development path.
I think it makes more sense to have a bigger company with a stronger balance sheet standing behind there. I would say this year, I don't think that probably makes sense until the smaller companies have some of their catalysts come to fruition. You know, certainly if you look at the longer term vision of Africa Oil, I think having some really good world-class development projects in the hopper with still remaining upside exploration potential makes a lot of sense. You know, we certainly have had those discussions at our board level already. We'll continue to examine and have those discussions, but I don't think it's gonna happen this year.
Okay. A question on Prime. Is Prime now getting paid for its gas sales, OML 130 gas sales in Nigeria?
I think the answer is yes and no. I'd probably like to defer that. I'm not sure if
Yeah.
I'm really in a position to discuss that.
Yeah. Understood. Well, on that note, and I don't believe we have any more questions from the phone lines, and as we are running out of time, I'll bring this Q&A session to a close, and I will hand you over to the operator for the final goodbye.
Yes, sir. Thank you, sir. This concludes today's conference. Thank you for your participation. You may now disconnect.