How Africa Oil Corp. made half a billion dollars from Nigeria in less than two years


Investing in Nigeria may not be for the faint-hearted, but the country continues to prove times and again that it can be a highly rewarding market. By securing an indirect interest in some of the country’s largest producing deep-water blocks in 2020, Africa Oil Corp. has shown the benefits that come with betting on Nigeria’s brownfield opportunities.

In early 2020, the Canadian junior secured a 50% equity interest in Prime Oil & Gas B.V. (POGBV) for $519.5m. POGBV has an indirect 8% interest in the Chevron-operated OML 127 that contains the producing Agbami field and a 16% indirect interest in the Total-operated OML 130 that contains the producing Akpo and Egina fields.

Because these represent some of Nigeria’s biggest producing assets, Africa Oil Corp.’s has relied on an average daily working interest production of 25,000 to 28,000 barrels of oil equivalent per day since 2020. Despite hedging constraining POGBV’s realized oil price to less than $60 in 2021, the company’s dividends to Africa Oil Corp. have been generous.

Since January 2020, Prime has distributed eleven dividend payments totaling $500m to AOC, representing over 95% of its original equity investment.  

"Performance of the Company’s investment in Prime has continued to exceed expectations with strong cash flows, dividend distributions and very modest investments on the upstream assets, offshore Nigeria."

Africa Oil Corp, 13 May 2022

A Brownfield Investment Destination

Nigeria offers some of the best proven reserves of oil & gas in the world, existing infrastructure and a large, established energy industry. But because of its above-ground risks, the country has repeatedly deterred foreign investors.

However, deals like the one made by AOC in 2020 are proof that opportunities in the market are real.

“Above-ground risks are constantly used as a pretext by foreign investors not to put their money in Nigeria. Those perceptions are often short-sighted and reveal a misunderstanding of the country’s environment. Because Nigeria is a brownfield investment destination, a successful investment strategy is one that relies on partnering with local actors who will be taking on the above-ground risks for you,” said Mickael Vogel, Hawilti’s Director & Head of Research.

Last year, the country adopted the Petroleum Industry Act in a bid to bring much-needed regulatory certainty to investors. But the transition to the new regime has come with its challenges and is yet to translate into a significant increase in investments.

“Recent and successful deals in Nigeria have been made by foreign companies that focus on injecting capital and bringing in technical expertise instead of seeking straightforward operatorship of the assets. In doing so, they let their Nigerian counterpart and operator navigate the country’s business environment while they focus on developing the reserves and cashing in on their investment,” added Vogel.

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