Afentra is up 112% – can buyers nonetheless revenue? MIDAS SHARE TIPS

Afentra shares have more than doubled from 25p to 53p since we recommended the stock a year ago.

Midas share tips looks at what investors should do now – and whether there is still an opportunity to buy in and profit.

All’s well: Afentra has a 30 per cent stake in Angolan oilfield

The Angolan war was long and bloody and, even though peace was declared in 2002, many still associate the country with hardship and corruption. 

Not Paul McDade. Formerly chief executive of FTSE 250 group Tullow Oil, McDade now runs Africa energy business Afentra – and he has focused to date on Angola.

Oil accounts for some 40 per cent of the nation’s economy and, until recently, state-owned firms monopolised the industry. But under president Joao Lourenco, a privatisation programme has been initiated, and Afentra has been a key beneficiary.

Founded in 2021, the group has spent the past three years working closely with local and international operators, acquiring assets that they no longer want or need.

Today, Afentra has a 30 per cent stake in a huge offshore oilfield in Angola and has taken steps to increase production and improve working practices.

Daily barrels of oil have risen from 17,000 to 23,000. And there are high hopes of reaching 30,000 by 2027 and more than 40,000 over the next six years, by raising production from existing wells and adding new ones across the site, known as Block 3/05. 

McDade and his team have an environmental agenda too, with plans to divert the gas that comes off the oil wells to a nearby gas pipe, so it can be used productively rather than polluting the atmosphere.

Afentra has also been selected as a preferred bidder for onshore assets which once produced thousands of barrels of oil a day but have been dormant for years.

Operating in Africa is not for beginners. But McDade is seasoned and he has shown officials, energy groups and investors that he is a man of his word and knows what he is doing. 

Block 3/05 is a case in point. The deal involved acquiring stakes from a Croatian oil company, a joint venture between BP and Italian energy giant ENI, and Angola’s national oil group. 

Securing agreements from all sides took time, but canny deal-making has reduced the ultimate cost from $117million (£93million) to little more than $10million (£7.9million).

More transactions are likely, as McDade scours the west coast of Africa for prospective sites.

Afentra is committed to improving efficiency too – not just financially but environmentally – by introducing up to date extraction methods and cutting back on polluting practices, such as gas flaring.

Midas verdict: Afentra shares have more than doubled from 25p to 53p since Midas recommended the stock in May 2023. Hungry investors may choose to sell half their stock now and bank profits. Longer-term, however, there should be plenty of firepower left in this business.

Traded on: Aim Ticker: AET Contact: afentraplc.com