Afren PLC AFR Interim Management Statement

  Afren PLC (AFR) - Interim Management Statement

RNS Number : 9451Q
Afren PLC
13 November 2012




                              Afren plc (AFR LN)

                         Interim Management Statement

London, 13 November 2012 - Afren plc ("Afren" or the "Company"), announces its
Interim Management Statement and financial  results for the nine months  ended 
30 September  2012 and  an  update on  its  operations year-to-date  2012,  in 
accordance with the reporting requirements  of the EU Transparency  Directive. 
Information contained within  this release  is un-audited and  is subject  to 
further review.

2012 nine months ended 30 September 2012 results summary

Afren  continues  with  record  financial  results  in  2012  driven  by   the 
year-on-year increase  in  net production  from  the Ebok  and  Okoro  fields, 
offshore Nigeria.  Notably,  production  on the  Okoro  Field  Extension  has 
commenced,  following  the   discovery  announced   in  January.   Production 
operations continue at the Barda Rash field in the Kurdistan region of  Iraq. 
Following the exploration  success on  the Ebok  North Fault  Block and  Okoro 
Field Extension, adding significant reserves,  and a world class discovery  in 
the Kurdistan region  of Iraq,  exploration wells are  drilling ahead  onshore 
Kenya (Block 10A) and in the Kurdistan region of Iraq (Simrit-3).

                                      

Financial highlights

                                      Q3 2012 Q3 2011  Change
Revenue (US$mm)                       1,077.0   312.2 +245.0%
Operating cash flow (US$mm)*            787.7   226.3 +248.1%
Gross Profit (US$mm)                    543.8   153.2 +255.0%
Profit Before Tax (US$mm)               411.8   112.9 +264.7%
Normalised Profit After Tax (US$mm)**   145.5    66.5 +118.8%

* Before movements in working capital

** See note 4 of the condensed financial statements





Key Highlights

· Record sales revenue of  US$1,077.0 million and operating cashflow  before 
movements in working capital of US$787.7 million

· Year-to-date  net working  interest production  to 11  November of  42,033 
boepd in line with expectations; on track for 2012 production guidance

- Okoro-14 (Okoro  Field Extension)  early production well  onstream at  a 
stabilised rate of 5,000 bopd of 38° API oil;

- Plan to  replicate early  production on  Okoro Field  Extension with  an 
early production well at Ebok North Fault Block

· Independently certified 2P  reserves for Ogini and  Isoko upgraded to  129 
mmbbls and 2P+2C to 205 mmbbls on OML 26, onshore Nigeria

- New  gas lift  compressor  being installed;  drilling  of new  wells  to 
commence in 2013

· Exploration wells drilling ahead  onshore Kenya (Block 10A) and  Kurdistan 
region of Iraq (Simrit-3)

- DST programme ongoing at Simrit-2 well;

- Transocean  Monitor  drilling  Rig  secured ahead  of  E&A  drilling  on 
Okwok-10 and OML 115



Commenting on today's  IMS, Osman  Shahenshah, Chief Executive  of Afren  plc, 
said:

"Afren has delivered another period of record financial results following  the 
year-on-year increase in net production  offshore Nigeria. The Company is  on 
course to realise over a billion dollars  of net operating cash flow in  2012, 
all from Afren's greenfield developments.  I am also particularly pleased  to 
see our  ongoing  exploration  campaign delivering  commercial  success;  with 
multiple E&A wells planned over the coming months in Nigeria, East Africa  and 
the Kurdistan region of Iraq, Afren is  well placed to continue to add to  the 
growing reserves base."

Operations update

YTD production to 11 November 2012  Working interest Average gross Average net
(boepd)                                               production   production
Okoro                                     50%           16,158        8,284
Ebok                                   100%/50%*        29,359       29,359
CI-11 & LGP                          47.96% / 100%       5,730        3,168
Barda Rash                                60%              8            5
Total                                                  51,255       40,816
Associate company production             45%**           6,010        1,217
Total including associate company                       57,265       42,033
volumes

* Pre/post cost recovery

** Afren is a 45% shareholder in First Hydrocarbon Nigeria Limited (FHN) which
owns a 45% interest in OML 26

Note: All production data remains subject to reconciliation



Following the completion of planned facilities work at the Ebok field and  the 
commissioning of the  Okoro-14 (Okoro  Field Extension)  production well  post 
period end, average  net production  year-to-date as  at 11  November 2012  is 
42,033 boepd,  keeping  the  Company  on  track  to  achieve  full  year  2012 
production guidance.



Nigeria

Okoro and Okoro Field Extension

Production operations continue to run smoothly at the Okoro main field. In Q2
2012,  Afren  and  Amni  International  Petroleum  Development  Ltd.  ("Amni") 
successfully side-tracked the  existing Okoro-5 production  well. As part  of 
the partners' ongoing reservoir  management and production optimisation  work, 
the objective of the side-track well was to access additional oil volumes in a
previously un-swept area of the reservoir  within the Okoro main field  area. 
The Okoro-5 well was re-entered and side-tracked at a measured depth of  4,481 
ft, and the side-track subsequently drilled to a total measured depth of 9,800
ft. The side-track successfully encountered oil pay in the target  reservoir, 
in line with prognosis,  and a 2,500 ft  lateral drainage section within  this 
pay zone was bought onstream at a stabilised rate of 2,000 bopd.

In July  2012,  the Okoro-14  (Okoro  Field Extension)  development  well  was 
drilled by Afren and Amni from the existing Okoro main field wellhead platform
("WHP"), with the objective  of establishing early  production from the  Okoro 
Field Extension discovery.  The well targeted  Tertiary aged reservoir  sands 
within a  new play  comprising  a deeper  buried  horst block  structure,  and 
delivered rates in excess of 6,000 bopd on production test, making it the most
productive well drilled in the Okoro area to date. The well was  subsequently 
completed and  bought  onstream via  the  existing Okoro  Floating  Production 
Storage Offloading vessel ("FPSO") at a  stabilised rate of 5,000 bopd of  38° 
API oil. The partners are firstly utilising the available well head slots  on 
the existing Okoro  platform to  gain early production  information that  will 
allow optimal design of the full field development configuration, which  could 
potentially involve up to a further eight production wells under a full  field 
development scenario.  The  Company estimates  Pmean  STOIIP at  Okoro  Field 
Extension to be 157 mmbbls with upside to 329 mmbbls.

As a result  of the Okoro-5  side-track and Okoro-14  (Okoro Field  Extension) 
development  well,  total   current  production   from  the   Okoro  area   is 
approximately 21,500 bopd.

Ebok and Ebok North Fault Block

As expected, planned shutdowns and ongoing facilities work influenced  average 
daily production during the period. Following completion of this work, current
production for November month to date  is averaging 34,948 bopd, with year  to 
date production averaging 29,359 bopd.

The Adriatic IX drilling rig has now been relocated to the Ebok field in order
to undertake  planned  rig-based  work,  which  includes  the  drilling  of  a 
development well  to establish  early production  from the  recent Ebok  North 
Fault Block ("Ebok NFB") discovery via existing facilities. This will provide
Afren and  partner  Oriental  Energy  Resources  ("Oriental")  with  important 
production and  reservoir  information  ahead of  implementing  a  full  field 
development solution that is expected to incorporate the installation of a new
12-slot wellhead support  structure and dedicated  Mobile Offshore  Production 
Unit ("MOPU") that will  be tied back directly  to the existing Ebok  Floating 
Storage Offloading Vessel ("FSO"). The Company estimates Pmean STOIIP at Ebok
NFB to be in excess of 100 mmbbls.

Okwok

Processing of  the 348  km^2 Ocean  Bottom Cable  3D seismic  survey that  was 
acquired over  the  whole  Ebok/Okwok/OML  115 area  in  late  2011  has  been 
completed, and results have  been integrated into the  existing data set.  The 
new data is  assisting with  an E&A programme  to test  upside potential,  and 
assist  in  development  planning  prior  to  formal  submission  of  a  Field 
Development Plan  to the  Nigerian authorities.  The most  likely  development 
scenario  for  Okwok  comprises  the  installation  of  a  separate  dedicated 
production processing platform tied  back to, and  sharing, the Ebok  Floating 
Storage Offloading vessel ("FSO") located approximately 13 km tothe west.

OML 115

The partners plan to spud  the first exploration well  on the block using  the 
recently contracted Transocean  Monitor Rig.  The Ufon  structure remains  the 
most likely target.

OML 26

Following  completion  of  an  independent  assessment  of  the  reserve   and 
contingent resource  potential  of  the  Ogini  and  Isoko  fields  for  First 
Hydrocarbon Nigeria  ("FHN"),  an  Afren Associate,  gross  remaining  2P  oil 
reserves at the fields have been estimated at 129.3 million barrels and  gross 
contingent resources have been estimated at 75.7 million barrels (gross  2P+2C 
reserves and  resources 205.0  million barrels;  92.3 million  barrels net  to 
FHN). This represents  a 218  per cent.  increase on  2P reserves  previously 
carried by  FHN  and a  12  per cent.  increase  on previously  carried  2P+2C 
volumes.

Gross production at the Ogini and Isoko fields averaged 9,980 bopd during  the 
third quarter  with  compressor  uptime  of 80  per  cent.,  boosting  average 
year-to-date production at 11  November to 6,010 bopd.  In order to  optimise 
compressor uptime, a  new 5.2 mmcfd  gaslift compressor unit  was procured  in 
October 2012 and is being installed, with plans also in progress to install  a 
Lease Automatic Custody Transfer  (LACT) unit at the  Eriemu manifold by  year 
end. Furthermore, sub-surface and facilities  studies are in progress and  it 
is the partners' intention to finalise the full Ogini FDP by year end and  the 
full Isoko FDP in 2013. The drilling of new horizontal wells will commence in
2013 with the objective  of ultimately increasing  gross production to  50,000 
bopd.



Kurdistan region of Iraq

Barda Rash

Having commenced an extensive testing programme at the BR-1 well in July  2012 
and establishing oil rates in excess of 6,000  bopd of 28° to 32° API oil,  as 
well as obtaining  valuable information on  the production characteristics  of 
the Mus/Adiayah  reservoir, the  Company  commenced production  operations  in 
August 2012 and  has produced its  first cargo of  sales specification oil  to 
tank. Initial storage capacity limits during the early phases of start-up  at 
the field led  the Company  to restrict flow-to-tank  from the  well to  2,472 
barrels as at 11 November. Workover operations continue on the BR-3 well  and 
a second rig is  being contracted in  order to commence  the Phase 2  drilling 
campaign. Drilling pads  for the  first 2  wells are  nearing completion  and 
locations are being finalised for the remaining Phase 2 wells.

Ain Sifni

On 12 September 2012, Afren announced that exploration drilling had  commenced 
at the East  Simrit prospect (Simrit-3  well). The Simrit-3  well is  located 
approximately 10 km  east of the  successful Simrit-2 discovery  well, and  is 
exploring the eastern extent of the large scale Simrit anticline.

The Simrit anticline is a large scale east to west trending structure  located 
on the northern part of the Ain Sifni PSC. The partners completed drilling of
the Simrit-2 exploration well in July 2012,  the purpose of which was to  test 
the western extent  of the structure.  The well was  ultimately drilled to  a 
total measure depth  of 12,467  ft and  encountered 1,509  ft of  net oil  pay 
throughout Cretaceous, Jurassic  and Triassic  age reservoirs.  No oil  water 
contact  has  been  established  in  the  target  reservoirs.  Following  the 
conclusion  of  drilling  operations,  a  comprehensive  well  test  programme 
commenced and is scheduled to recommence with a workover rig that is currently
undergoing acceptance tests. The partners intend to undertake up to a further
nine separate drill  stem tests ("DSTs")  in total, and  announced on 26  July 
2012 that  the first  batch of  three DSTs  in the  Triassic age  Kurra  Chine 
formation had yielded an aggregate flow rate  of 13,584 bopd of 39° API  oil. 
The Simrit-3 exploration well  is seeking to demonstrate  the presence of  oil 
within the same Cretaceous, Jurassic  and Triassic reservoir intervals at  the 
eastern extent of the Simrit anticline.

Côte d'Ivoire

CI-11 and Lion gas Plant

Average gross production to 11 November 2012 at CI-11 was 4,923 boepd, with807
boepd of  Natural  Gas Liquids  ("NGL")  production  at the  Lion  Gas  Plant. 
Production operations continue uninterrupted at  the Company's assets in  Côte 
d'Ivoire and remain in line with expectations.

CI-01

Progress is being made  to advance the field  development plan and  associated 
work programme with Petroci and the  Government on this block. 3D seismic  to 
augment the existing well and seismic dataset  is expected to be part of  this 
programme. It is believed that the acquisition of new data will significantly
enhance the prospectivity of this block.











West Africa exploration

Nigeria São Tomé & Príncipe JDZ

Block 1

The Obo-2 and Enitimi-1 wells were drilled during the first half of the year.
Both wells encountered oil  and gas pay, and  the operator Total continues  to 
evaluate the results and commercial viability.

Congo Brazzaville

La Noumbi

Following interpretation  of  depth  processed  2D  data  on  the  block,  two 
prospects have been  identified and  the operator plans  to commence  drilling 
these in the fourth quarter of 2012

Nigeria

OPL 310

Afren has identified several prospects that lie in the same Senonian, Turonian
and Albian sandstone intervals that have yielded significant discoveries along
the West  African  Transform  Margin  in  Ghana  and  Côted'Ivoire.  Detailed 
technical work and well planning  continues in preparation for an  exploration 
well in early 2013.

OPL 907, 917

The Company is continuing to evaluate the potential of the blocks in order  to 
identify areas for future  seismic acquisition that  could ultimately lead  to 
future exploration drilling.

Ghana

Keta Block

The partners have progressed  into the next two  year exploration phase.  The 
work programme associated with the  current phase requires the acquisition  of 
new 3D  seismic  data, which  recently  commenced,  and the  drilling  of  one 
exploration well  by May  2014. The  Nunya-1x exploration  well has  provided 
important  information  with  which  to  calibrate  and  further  enhance  the 
Company's understanding of this under-explored  block in what still remains  a 
high potential basin.

South Africa

Block 2B

The partners' near-term work programme involves the acquisition of 686 km^2 of
3D seismic  data  in the  first  quarter  of 2013.  Exploration  drilling  is 
expected in 2014.

East Africa exploration

Kenya

Block 10A

Having satisfied all seismic work commitments  with the acquisition of 750  km 
of 2D seismic  over the  block in 2011,  the operator  (Tullow Oil)  commenced 
exploration drilling at the Paipai prospect in September 2012 and continues to
drill ahead.

Block 1

Acquisition of the planned 1,900 km  of 2D seismic data is nearing  completion 
duringthe fourth quarter of 2012.

Blocks L17/L18

Interpretation of the new 1,207 km of 2D seismic data acquired in January 2012
has identified  four new  highly  encouraging prospects,  in addition  to  the 
previously mapped prospects in the shallow water. These prospects represent a
major new play with lower risk and greater materiality than the shallow  water 
play, and together have increased the mean prospective resources on the  block 
from 94  mmboe to  1,088 mmboe,  since  the Black  Marlin acquisition.  As  a 
result, Afren,  in  close  consultation  with  the  Ministry  of  Energy,  has 
commenced the  acquisition  of 1,000  km^2  3D seismic  in  lieu of  the  well 
commitment, in order to better understand the deep water prospectivity,  prior 
to exploration drilling. In addition, an onshore 2D seismic survey of 120  km 
has been contracted and commenced in September 2012 to simultaneously continue
maturation of the shallow water/onshore play.

Tanzania

Tanga Block

During  Q4 2011,  the partners acquired over  900 km of 2D  seismic 
data in  deeper water  areas  of the  licence.  Interpretation of  these  data 
reinforces previous views  of the prospectivity  of these areas,  in the  same 
play that has also been identified  in neighbouring Kenya blocks L17/18.  The 
result is an increase  in mean prospective resources  on the block from  1,026 
mmboe to 1,244  mmboe. A  3D seismic survey  of approximately  500 km^2  will 
commence immediately  after completion  of the  Kenya blocks  L17/L18  survey, 
prior to exploration drilling.

Seychelles

Areas A, B

Seismic data  previously acquired  by the  partners revealed  the presence  of 
several large scale structures in the  two licence areas. A major new  survey 
in  Q4  2011  (3,733  km)  focussed  on  these  areas  to  better  define  the 
prospectivity. The data is currently  being processed. An extensive  prospect 
building 3D seismic programme is being planned for the fourth quarter of 2012.

Madagascar

Block 1101

An airborne  gravity  and magnetic  survey  was completed  in  January  2012. 
Geological  fieldwork  was  conducted  in  June,  and  a  250  km  2D  seismic 
acquisition is underway. An exploration well is expected in 2013.

Ethiopia

Blocks 7, 8

Work is ongoing to further interpret the prospectivity of Blocks 7 and 8 ahead
of expected drilling by the new operator New Age in the first half of 2013.



Forward exploration and appraisal drilling schedule



                            Effective  Gross Mean
Country           Asset      Working  prospect size    E&A wells / Seismic
                            Interest     mmbbls
Nigeria         Ebok North  100%/50%*  Discovery**              -
               Fault Block
Nigeria         Okoro East     50%     Discovery**              -
Kurdistan       Ain Sifni      20%     Discovery**           3 wells
region of Iraq
Kenya           Block 10A      20%         100                1 well
Tanzania       Tanga Block     74%         200       550 km^2 3D seismic & 1
                                                               well
Nigeria          OPL 310       70%         250                1 well
Nigeria          OML 115    100%/50%*      60                 1 well
Nigeria           Okwok     70%/56%*       70                 1 well
Ethiopia       Blocks 7 & 8    30%         TBC                1 well
Congo           La Noumbi      14%         TBC               2 wells
Kenya             Blocks      100%         TBC        1,000 km^2 3D seismic
                 L17/L18
Madagascar      Block 1101     90%         TBC      250 km 2D seismic & 1 well
Seychelles      Areas A,B      75%          -               3D seismic
South Africa     Block 2B      25%          -          600 km^2 3D seismic

                                                    Ongoing technical studies
Côte d'Ivoire  Block CI-01     65%          -             and evaluation



* Working interest pre/post cost recovery;

** Ebok North discovery  announced 14 May  2012, successfully encountered  net 
oil  pay  of  370  ft.  Okoro  East  discovery  announced  17  January  2012; 
successfully encountered  net  oil  pay  of  549  ft.  Simrit-2  (Ain  Sifni, 
Kurdistan region  of Iraq)  discovery announced  17 April  2012;  successfully 
encountered net oil pay of 1,342 ft.







Financial position

Revenue in the period increased more than threefold to US$1,077.0 million  (Q3 
2011: US$312.2 million), following a full  period of production from the  Ebok 
field. The company realised  an average oil price  of US$107.7/bbl (Q3  2011: 
US$110.8/bbl) and an average gas price of US$5.95/mcf (Q3 2011: US$8.53/mcf).

Oil and  gas  inventory at  Q3  2012 was  US$37.9  million (Q3  2011:  US$49.2 
million), representing  approximately  228,000  barrels at  Ebok  and  415,000 
barrels at Okoro net to Afren.

Hedges covering approximately 6.2 million barrels are in place for the  period 
1 October  2012 to  30 June  2014,  providing minimum  floor prices  on  these 
volumes of between approximately US$80-US$90/bbl.

Profit from continuing activities  before tax was  US$411.8 million (Q3  2011: 
US$112.9 million).  This reflects  an increase  in gross  profit of  US$390.6 
million compared with the comparative period, but also includes the effect  of 
losses on derivative financial instruments of US$23.7 million on the valuation
of mark to  market oil price  hedges (Q3 2011:  US$5.2 million gain),  finance 
costs of  US$71.4 million  (Q3  2011: US$36.8  million) largely  arising  from 
interest charges on the  Company's banking facilities  and secured loan  notes 
and Afren's share of loss of associate FHN of US$5.0 million (Q3 2011: US$12.5
million gain). FHN  reported a loss  during the period  mainly due to  losses 
arising  from  crude  oil  hedging  contracts  in  respect  of  the  company's 
production from the OML26 field in Nigeria.

Normalised profit  in  the  period  was US$145.5  million  (Q3  2011:  US$66.5 
million). See note 4 to the financial statements for a full reconciliation of
this number.

The income tax charge for the  period was US$289.0 million, of which  US$209.7 
million related  to  deferred  tax  (Q3 2011:  US$47.5  million,  including  a 
deferred tax charge of US$6.3 million).  With a period of full production  at 
the Ebok field and having largely  utilised available tax losses in 2011,  the 
effective tax rate has increased during the period.

Operating cash flow before movements  in working capital was US$787.7  million 
(Q3 2011:  US$226.3  million).  After movements  in  working  capital,  which 
included advances and payments to partners of US$100 million relating to field
development, and tax payments of US$9 million, net cash generated by operating
activities totalled US$657.0 million (Q3 2011: US$152.0 million).

The Company's investment in appraisal and exploration activities has continued
during 2012, with  expenditure of  US$142.4 million  in the  period (Q3  2011: 
US$286.0 million). The main areas of expenditure were further exploration  at 
the Okoro Field Extension (US$20.5 million), Keta (US$18.6 million), Ain Sifni
(US$14.9 million)  and Kenya  Blocks  1, 10A  and L17/L18  (US$23.8  million). 
Expenditure on oil  and gas assets  was US$204.3 million  (Q3 2011:  US$318.2 
million), comprising continuing development of  the Ebok and Okoro fields  and 
US$69.2 million on Barda Rash.

Net debt, excluding  finance leases, as  at Q3 2012  was US$595.4 million  (Q3 
2011: US$518.8 million; 31 December 2011: US$548.3 million) with cash at  bank 
of US$448.0 million  (Q3 2011:  US$222.6 million; 31  December 2011:  US$291.7 
million).



                       Q3 2012
Afren net debt                     Coupon              Repayment due
                        US$mm
2016 senior secured      500       11.5%                    2016
notes
2019 senior secured      300       10.25%                   2019
notes
                               LIBOR +4.0% to Up to US$450 million facility.
Ebok RBL                 218       5.25%      Repayments commence 2012 through
                                                            2015
Unsecured corporate      50     LIBOR +4.5%          23 month facility.
facility                                          Repayment in July 2013
Capitalised borrowing   (25)
costs
Total debt at end       1,043
period
Cash at bank             448
Net debt at end period   595



Ends.



For further information contact:                            
 Afren plc (+44 20 7451 9700)  Pelham Bell Pottinger (+44 20 7861 3232)
  Andrew Dymond                 James Henderson

  Investor Relations             Mark Antelme



Notes to Editors

Afren Plc

Afren is  an  independent upstream  oil  and gas  exploration  and  production 
company listed on the main market of the London Stock Exchange and constituent
of the  Financial Times  Stock Exchange  Index of  the leading  250 UK  listed 
companies. Afren has a portfolio of 28 assets across 12 countries spanning the
full cycle E&P value  chain. Afren is currently  producing from its assets  in 
Nigeria, Côte d'Ivoire  and the  Kurdistan region  of Iraq  and holds  further 
interests in  Nigeria, the  Kurdistan region  of Iraq,  Ghana, Côte  d'Ivoire, 
Congo Brazzaville,  the  Joint  Development  Zone of  Nigeria  -  São  Tomé  & 
Príncipe, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South  Africa. 
For more information please refer to www.afren.com.













Condensed Group Income Statement

For the nine months ended 30 September 2012

                                                                   9 months to
                                                      9 months to
                                                                  30 September
                                                30 September 2012         2011

                                                        Unaudited    Unaudited

                                      Notes                US$ mm       US$ mm
Revenue                                                   1,077.0        312.2
Cost of sales                                             (533.2)      (159.0)
Gross profit                                                543.8        153.2
Administrative expenses                                    (17.3)       (25.8)
Other operating income/(expenses)
- impairment charge on exploration and    8                (14.4)        (0.9)
evaluation assets
- service fees receivable from associate                      3.2          5.0
company
- derivative financial                                     (23.7)          5.2
instruments
Operating profit                                            491.6        136.7
Investment revenue                                      0.1                0.3
Finance costs                             2          (71.4)             (36.8)
Other gains and (losses)
- foreign currency (losses)/gains                    (0.1)                0.3
- fair value of financial liabilities and             (3.0)              (0.1)
financial assets
- loss on derivative financial instruments            (0.4)                  -
on shares of associate company
Share of (loss)/profit of associate                   (5.0)               12.5
company
Profit from continuing operations before              411.8              112.9
tax
Income tax expense                        5         (289.0)             (47.5)
Profit from continuing operations after tax           122.8               65.4
Discontinued operations
Loss for the period from discontinued                     -              (2.5)
operations
Profit for the period                                 122.8               62.9
Earnings per share from continuing
operations
Basic                                     3           11.4c               6.6c
Diluted                                   3           10.9c               6.2c
Earnings per share from all operations
Basic                                     3           11.4c               6.3c
Diluted                                   3           10.9c               6.0c



Condensed Statement of Comprehensive Income

For the nine months ended 30 September 2012



                                                 9 months to       9 months to

                                           30 September 2012 30 September 2011

                                                   Unaudited         Unaudited

                                    Notes             US$ mm            US$ mm
Profit for the period                                  122.8              62.9
Loss on revaluation of investment                      (0.6)                 -
in associate
Total comprehensive income for the                     122.2              62.9
period





Condensed Group Balance Sheet

As at 30 September 2012                  
                                                                             
                                                 30 September     31 December
                                                         2012             2011

                                                    Unaudited          Audited

                                       Notes           US$ mm           US$ mm
Assets
Non-current assets
Intangible oil and gas assets                           802.8            713.7
Property, plant and equipment
- Oil and gas assets                                  1,646.2          1,668.6
- Other                                                   7.5              7.4
Prepayments and advances to partners                     95.3              0.6
Derivative financial instruments                         10.4             13.4
Investments                                              18.2             21.8
                                                      2,580.4          2,425.5
Current assets
Inventories                                              80.2             67.1
Trade and other receivables                             137.8            145.6
Derivative financial instruments                            -              0.7
Cash and cash equivalents                               448.0            291.7
                                                        666.0            505.1
Total assets                                          3,246.4          2,930.6
Liabilities
Current liabilities
Trade and other payables                              (244.6)          (317.4)
Borrowings                                            (217.8)          (157.8)
Current tax liabilities                               (107.9)           (39.6)
Deferred consideration and payables on                      -          (216.7)
acquisitions
Obligations under finance lease                        (19.0)           (18.1)
Derivative financial instruments                       (11.9)           (10.3)
                                                      (601.2)          (759.9)
Net current assets/(liabilities)                         64.8          (254.8)
Non-current liabilities
Deferred tax liabilities                              (334.1)          (124.5)
Provision for decommissioning                          (32.9)           (31.6)
Borrowings                                 7          (825.6)          (682.2)
Obligations under finance leases                      (103.0)          (117.4)
Derivative financial instruments                        (6.7)            (7.6)
                                                    (1,302.3)          (963.3)
Total liabilities                                   (1,903.5)        (1,723.2)
Net assets                                            1,342.9          1,207.4
Equity
Share capital                                            18.9             18.7
Share premium                                           920.1            918.1
Other reserves                                           32.3             26.4
Merger reserve                                          179.4            179.4
Retained earnings                                       192.2             64.8
Total equity                                          1,342.9          1,207.4





Condensed Group Cash Flow Statement
                                              
For the nine months ended 30 September 2012
                                              
                                                            

                                                            

                                               9 months to 30
                                               September 2012
                                                    Unaudited   9 months to 30
                                                                September 2011
                                                       US$ mm Unaudited US$ mm
Operating profit for the period                         491.6       136.7 
Depreciation, depletion and amortization                267.5        95.1 
Unrealised losses/(gains) on derivative                   4.0      (11.7) 
financial instruments
Impairment charge on exploration and                     14.4         0.9 
evaluation assets
Share based payments charge                              10.2         5.3 
Operating cash-flows before movements in                787.7       226.3 
working capital
Cash provided by operating activities of                    -       (2.5) 
discontinued operations
(Increase) in trade and other operating                (94.0)      (78.2) 
receivables
(Decrease)/Increase in trade and other                 (30.5)        41.1 
operating payables
Decrease/(increase) in inventory (crude oil)              2.8      (35.0) 
Current tax paid                                        (9.0)           - 
Foreign exchange adjustments                                -         0.3 
Net cash generated by operating activities              657.0       152.0 
                                                                          
Purchases of property, plant and equipment                                
- Oil and gas assets                                  (274.6)     (318.2) 
- Other                                                 (3.3)       (4.2) 
Acquisition of participating interest on              (190.2)     (220.3) 
licences in Kurdistan region of Iraq
Exploration and evaluation expenditure                (108.3)      (65.7) 
Purchase of investments                                     -       (0.7) 
Cash received on disposal of equipment of                 1.2           - 
discontinued operations
(Increase) in inventories - spare parts and            (15.9)      (10.5) 
materials
Expenditure on acquisitions pending                         -      (57.9) 
completion
Investment revenue                                        0.1         0.2 
Net cash used in investing activities                 (591.0)     (677.3) 
                                                                          
Issue of ordinary share capital - equity                    -       180.7 
raising
Issue of ordinary share capital - share based             1.9        17.5 
plans exercises
Net proceeds from senior secured loan notes             291.8       479.6 
Net proceeds from bank borrowings                      111.9       159.4 
Repayment of borrowings and finance leases            (227.5)     (189.4) 
Deferred consideration - finance cost paid              (9.7)           - 
Interest and financing fees paid                       (78.0)      (40.4) 
Net cash provided by financing activities                90.4       607.4 
                                                                          
Net increase in cash and cash equivalents               156.4        82.1 
Cash and cash equivalents at beginning of the           291.7       140.2 
period
Effect of foreign exchange rate changes                 (0.1)         0.3 
Cash and cash equivalents at end of period              448.0       222.6 





                    Condensed consolidated statement of changes in equity

                    

                    As at 30 September 2012
                                      Share
                              Share premium    Other   Merger Retained   Total
                            capital account reserves  reserve earnings  equity

                             US$ mm  US$ mm   US$ mm   US$ mm   US$ mm  US$ mm
Group
At 1 January 2011              17.0   896.8     22.8        -   (77.9)   858.7
Issue of share capital          1.6    17.3        -    179.4        -   198.3
Share based payments for          -       -      9.7        -        -     9.7
services
Other share based payments        -       -      0.1        -        -     0.1
Reserves transfer relating        -       -    (2.2)        -      2.2       -
to loan notes
Reserves transfer on
exercise of options, awards       -       -    (6.5)        -      6.5       -
and LTIP
Exercise of warrants              -       -        -        -     11.6    11.6
Other movements                   -       -    (0.5)        -        -   (0.5)
Net profit for the period         -       -        -        -     62.9    62.9
Balance at 30 September        18.6   914.1     23.4    179.4      5.3 1,140.8
2011



At 1 January 2012                        18.7 918.1  26.4  179.4  64.8 1,207.4
Issue of share capital                    0.2   2.0     -      -     -     2.2
Share based payments for services           -     -  10.9      -     -    10.9
Other share based payments                  -     -   0.1      -     -     0.1
Reserves transfer on exercise of            -     - (4.4)      -   4.4       -
options, awards and LTIP
Exercise of warrants                        -     - (0.1)      -   0.2     0.1
Net profit for the period                   -     -     -      - 122.8   122.8
Other comprehensive expense for the         -     - (0.6)      -     -   (0.6)
period
Balance at 30 September 2012             18.9 920.1  32.3  179.4 192.2 1,342.9







1. Basis of accounting and presentation of financial information

The  condensed  Group  interim  financial  statements,  comprising  Afren  plc 
(''Afren'') and its subsidiaries (together, ''the Group''), have been prepared
in accordance with International  Accounting Standard (''IAS'') 34,  ''Interim 
Financial Reporting'', as  adopted by the  International Accounting  Standards 
Board ("IASB").  Accordingly,  certain  information  and  footnote  disclosure 
normally included in annual financial  statements prepared in accordance  with 
International Financial Reporting Standards ("IFRS"),  as issued by the  IASB, 
have been omitted  or condensed  as is  normal practice.  The condensed  Group 
interim financial statements for the nine months ended 30 September 2012  have 
been prepared solely for the purposes of compliance with the terms of issue of
the  senior  secured  loan  notes.  The  condensed  Group  interim   financial 
statements are unaudited, and do not constitute statutory accounts as  defined 
in sections 435(1) and (2) of  the Companies Act 2006. Statutory accounts  for 
the year ended 31 December 2011 were  published and copies of which have  been 
delivered to the Companies House. The report of the auditors on those accounts
was unqualified,  did not  include a  reference to  any matters  to which  the 
auditors drew attention by way of emphasis without qualifying the report,  and 
did not contain any  statement under sections 498(2)  or (3) of the  Companies 
Act 2006.

Changes in accounting policy

The same accounting  policies, presentation  and methods  of computation  have 
been followed in these  condensed Group interim  financial statements as  were 
applied in the preparation  of the Group's financial  statements for the  year 
ended 31 December 2011. These interim  financial statements should be read  in 
conjunction with the  Group's consolidated financial  statements for the  year 
ended 31 December 2011.

Going concern

The directors  are  satisfied  that  the Group  has  sufficient  resources  to 
continue in operation for the foreseeable future, a period of not less than 12
months from the date of this  report. Accordingly, they continue to adopt  the 
going concern  basis  in  preparing  the  condensed  Group  interim  financial 
statements.

Principal risks and uncertainties

Full details of the principal risks and uncertainties affecting the Group  and 
its operations  can be  found on  the  appropriate pages  of the  2011  Annual 
Report, which is available on the Company's website www.afren.com.  Management 
consider these items to remain reflective of  the risks faced by the Group  as 
at 30 September 2012.



2. Finance costs

                                                                            

                                                                   2012   2011

                                                                 US$ mm US$ mm
Bank interest payable                                              12.1    8.2
Borrowing costs amortisation and facility fees                     11.4   13.7
Interest on finance lease                                           6.5    4.0
Interest on loan notes                                             61.4   40.5
Corporate facility interest payable                                 1.9    0.4
Unwinding of discount on loan notes                                   -    2.5
Unwinding of discount on decommissioning and deferred               4.5    1.5
consideration
                                                                   97.8   70.8
Less: capitalised interest                                       (26.4) (34.0)
                                                                   71.4   36.8







3. Earnings per share



                            Period ended 30 September 
                                   2012          2011 
From continuing and
discontinued                                          
operations
Basic                             11.4c          6.3c 
Diluted                           10.9c          6.0c 
From continuing                                       
operations
Basic                             11.4c          6.6c 
Diluted                           10.9c          6.2c 
The profit and weighted average number of ordinary
shares used in the calculation of the earnings per    
share are as follows:
Profit for the period used in     122.8          62.9
the calculation of the basic
earnings per share from                               
continuing and discontinued
operations (US$ mm)
Effect of dilutive                    -             -
potential ordinary                                    
shares
Profit for the period used in     122.8          62.9
the calculation of the
diluted earnings per share                            
from continuing and
discontinued operations (US$
mm)
Profit for the                        -           2.5
period from                                           
discontinued
operations
Profit used in the                122.8          65.4
calculation of the basic and
diluted earnings per share                            
from continuing
activities (US$ mm)
The weighted average number of ordinary shares for
the purposes of diluted earnings per share reconciles
to the weighted average number of ordinary shares     
used in the calculation of basic earnings per share
as follows:
Weighted average number                            
of ordinary shares used
in the calculation of     1,078,770,015   998,367,237 
basic earnings per
share
Effect of dilutive
potential ordinary                                    
shares:
Share based                 49,728,395 
payments schemes           49,453,920
Warrants                        165,340     
                                          1,424,149
Weighted average number                                 
of ordinary shares used                                   -
in the calculation of     1,128,389,275 1,049,519,781
diluted earnings per
share
                                                      









4. Reconciliation of profit after tax to normalised profit after tax

                                                                            

                                                                   2012   2011

                                                                 US$ mm US$ mm
Profit after tax                                                  122.8   65.6
Unrealised losses/(gains) on derivative financial instruments*      4.0 (11.6)
Share based payment charge                                         10.2    5.3
Foreign exchange gains/(losses)                                     0.1  (0.3)
Fair value of financial assets and liabilities                      3.0    0.1
Finance costs on settlement of borrowings                           1.8    7.4
Share of after tax loss of associate's derivative financial         3.6      -
instruments losses
Normalised profit after tax                                       145.5   66.5

* Excludes  realised losses  on derivative  financial instruments  of  US$19.7 
million (30 September 2011: US$6.4m).



Normalised profit after tax is a non-IFRS measure of financial performance  of 
the Group, which in  management's view provide a  better understanding of  the 
Group's underlying  financial  performance.  This may  not  be  comparable  to 
similarly titled measures reported by other companies.

5. Taxation

                                    

                           2012   2011

                         US$ mm US$ mm
UK corporation tax            -      -
Overseas corporation tax   79.3   41.2
Total current tax          79.3   41.2
Deferred tax charge       209.7    6.3
                          289.0   47.5



The rise  in the  effective  tax rate  reflects  having largely  utilised  the 
available tax losses and the commencing of production at the Ebok field during
2011 and throughout the 9 months ended 30 September 2012.



6. Operating segments

For management purposes,  the Group  currently operates  in five  geographical 
markets which form the basis of the information evaluated by the Group's chief
operating decision maker: Nigeria, Côte  d'Ivoire, Other West Africa,  Eastern 
Africa, and  Middle East  and North  Africa. Unallocated  operating  expenses, 
assets and  liabilities  relate  to  the  general  management,  financing  and 
administration of the Group.

                                               Middle
                                                 East
                                  Other           and
                            Côte   West         North
                Nigeria d'Ivoire Africa   East Africa Unallocated Consolidated
                                        Africa
                 US$ mm   US$ mm US$ mm US$ mm US$ mm      US$ mm      US$ mm
Nine months to
September 2012
Sales revenue   1,052.5     24.5      -      -      -           -      1,077.0
by origin
Operating
gain/(loss)
before            546.7      0.4 (14.4)  (0.5)  (0.2)      (16.7)        515.3
derivative
financial
instruments
Derivative
financial        (23.7)        -      -      -      -           -       (23.7)
instruments
losses
Segment result    523.0      0.4 (14.4)  (0.5)  (0.2)      (16.7)        491.6
Investment                                                                 0.1
revenue
Finance costs                                                           (71.4)
Other gains and
losses -                                                                 (0.1)
foreign
currency gains
Other gains and losses - fair value of financial
                                                                         (3.0)
assets and liabilities
Other gains and losses - gain on derivative financial
                                                                         (0.4)
instruments in associate
Share of loss                                                            (5.0)
of an associate
Profit from continuing operations before tax                             411.8
Income tax                                                             (289.0)
expense
Profit from continuing operations after tax                              122.8
Loss from
discontinued                                                                 -
operations
Profit for the                                                           122.8
period
Segment assets  1,439.6    122.3   82.0  245.6  673.6        17.3      2,580.4
- non-current
Segment assets    577.2    (5.4)    3.3    2.5   10.4        78.0        666.0
- current
Segment         (944.6)   (42.4)  (8.2) (42.7)  (6.9)     (858.7)    (1,903.5)
liabilities
Capital
additions - oil   135.2        -      -      -   69.1           -        204.3
and gas assets
Capital
additions -        73.2      0.4   27.1   26.2             0.6      142.4 
exploration and                                  14.9
evaluation
Capital
additions -         1.2        -      -      -    0.9         1.2          3.3
other
Depletion,
depreciation    (250.7)   (15.3)      -      -  (0.1)       (1.3)      (267.4)
and
amortisation
Exploration           -        -   14.4      -      -           -         14.4
costs write-off



* During  the  period ended  30  September 2012,  exploration  and  evaluation 
additions of US$39.4 million  in respect of  Okoro-14 (Okoro Field  Extension) 
were transferred to oil and gas assets in the Nigeria segment.





6. Operating segments continued







                                               Middle
                                                 East
                                 Other            and
                           Côte   West          North
               Nigeria d'Ivoire Africa   East  Africa Unallocated Consolidated
                                       Africa
                US$ mm   US$ mm US$ mm US$ mm  US$ mm      US$ mm      US$ mm
Year to
December 2011
Sales revenue    546.8     49.8      -      -       -           -        596.6
by origin
Operating
gain/(loss)
before           279.3     20.8  (0.3)  (1.1)   (0.1)      (18.0)        280.6
derivative
financial
instruments
Derivative
financial       (11.2)    (1.3)      -      -       -           -       (12.5)
instruments
losses
Segment result   268.1     19.5  (0.3)  (1.1)   (0.1)      (18.0)        268.1
Investment                                                                 0.6
revenue
Finance costs                                                           (57.1)
Other gains
and losses -                                                               1.2
foreign
currency gains
Other gains
and losses -
dilution gain                                                             14.7
on investment
in associate
company
Other gains
and losses -
gain on
derivative
financial                                                                  8.0
instruments on
shares of
associate
company
Other gains
and losses -
fair value of                                                            (0.1)
financial
assets and
liabilities
Share of loss
of an                                                                   (14.0)
associate
Profit from
continuing                                                               221.4
operations
before tax
Income tax                                                              (96.0)
expense
Profit from
continuing                                                               125.4
operations
after tax
Loss from
discontinued                                                             (3.7)
operations
Profit for the                                                           121.7
period
Segment assets 1,390.1    139.1   71.6  216.6   588.8        19.3      2,425.5
- non-current
Segment assets   364.9     60.4    4.4    1.7    20.1        53.6        505.1
- current
Segment        (726.4)   (49.7)  (6.9) (43.6) (312.8)     (583.8)    (1,723.2)
liabilities
Capital
additions -      660.6      0.2      -      -     5.0           -        665.8
oil and gas
assets
Capital
additions -                                       
exploration       72.7      1.0   10.0   18.1   583.9         0.7        686.4
and
evaluation*
Capital
additions -        1.6      0.3      -      -       -         2.6          4.5
other
Capital
disposal -           -        -      -  (2.1)       -           -        (2.1)
other
Depletion,
depreciation   (143.9)   (14.3)      -      -       -       (1.9)      (160.1)
and
amortisation
Exploration
costs                -        -  (0.3)  (0.8)       -           -        (1.1)
write-off



* During the year ended 31 December 2011, exploration and evaluation additions
of US$415.4 million in respect of  the Barda Rash licence were transferred  to 
oil and gas assets in the Middle East and North Africa segment.





6. Operating segments continued



                                                         Middle                           
                                      Other            East and
                              Côte     West     East      North                Consolidated 
                Nigeria   d'Ivoire   Africa   Africa     Africa
                                                                 Unallocated         US$ mm
                 US$ mm     US$ mm   US$ mm   US$ mm     US$ mm       US$ mm
         Nine months to September 2011                                                      
Sales revenue     279.5       32.7        -        -          -            -          312.2 
by origin
Operating
profit/(loss)                                                                             
before                                                                                      
derivative                                                                           131.7
financial
instruments       141.8       11.8        -    (1.3)          -       (20.6)
Derivative                                                                               
financial                                                                                   
instruments                                                   -                         5.2
gains/(losses)      6.4      (1.2)        -        -                       -
Segment result    148.2       10.6        -    (1.3)          -       (20.6)          136.9 
Investment                                                                              0.2 
revenue
Finance costs                                                                        (36.8) 
Other gains and
losses -                                                                                (0.1) 
foreign
currency gains
Other gains and losses - fair value of financial
                                                                                          0.2 
assets & liabilities
Share of result of associate                                                             12.5 
Profit from continuing operations before tax                                            112.9 
Income tax expense                                                                     (47.5) 
Profit from continuing operations after tax                                              65.4 
Loss from discontinued operations                                                       (2.5) 
Profit from continuing operations after tax                                              62.9 
Segment assets       1,327.8     144.1     76.4     205.7        410.6         19.0   2,183.7 
- non current
Segment assets         241.2      45.0      7.8       2.0            -        180.9     477.0 
- current
Segment              (667.4)    (45.5)    (5.0)    (41.7)      (192.1)      (568.1) (1,519.9) 
liabilities
Capital
additions - oil        538.6         -        -         -            -            -     538.6 
and gas assets
Capital                                                                                    
additions -                                                                                   
exploration and                                                  410.6                  471.9
evaluation              41.2       0.8      7.9      11.3                         -
Capital
additions -              1.4         -        -       2.7            -          2.8       6.9 
other
Capital
disposals -                -         -        -     (0.1)            -        (0.1)     (0.2) 
other
Depletion,
depreciation          (83.9)    (10.0)        -         -            -        (1.2)    (95.1) 
and
amortisation
Exploration                                                          -                  (0.1) 
costs write-off            -         -        -     (0.1)                         -





7. Senior secured loan notes

On 8 March 2012, Afren announced the closing of the offering of US$300 million
of its 10.25% senior secured notes due 2019 (the Notes).

The Notes are guaranteed  on a senior basis  by certain subsidiaries of  Afren 
plc and on a  subordinate basis by Afren  Resources Limited. Interest will  be 
paid semi-annually.  The interest  charged for  the period  is calculated  by 
applying the  10.25% coupon  rate to  the total  proceeds. Interest  amounting 
toUS$17.6 million has been charged to the income statement for the period  to 
30 September 2012. Total expenses of the offering incurred amounted to US$8.2
million which  are  being amortised  over  the life  the  Notes. Part  of  the 
proceeds of the offering were used to settle borrowings amounting to  US$200.0 
million and accrued interest of US$0.3 million.





8. Impairment charge on exploration and evaluation assets

The charge during  the period relates  to Nunya-1x well  costs, in Keta  block 
offshore Ghana, written  off during  the period as  the well  was plugged  and 
abandoned.



9. Contingent liabilities

There has been no material change to the contingencies reported in the  annual 
report for the year ended 31  December 2011. The Company continues to  review 
its strategic  options in  relation  to OPL  907/917  and discussions  are  in 
progress to  extend future  drilling  commitments and  associated  performance 
bonds which crystallise in 2013.



10. Related parties

The following table provides the total amount of transactions which have  been 
entered into with related  parties during the nine  months ended 30  September 
2012 and 2011:



Trading transactions

                   

                Sale of      Purchase of              Amounts owed
             goods/services goods/services       to/(by) related parties
                       Nine
                Nine months    Nine   Nine
              months         months months
                      ended          ended
               ended     30   ended     30                            As at 30
             30 Sept   Sept 30 Sept  Sept   As at 30 Sept
                2012   2011    2012   2011            2012           Sept 2011

              US$ mm US$ mm  US$ mm US$ mm          US$ mm              US$ mm
St John            -      -     0.2    0.1  
Advisors Ltd                                  -              -
STJ Advisors       -      -     0.4    1.2              -                   -
LLP
First
Hydrocarbon      3.2      -       -     -           (3.9)               (2.2)
Nigeria Ltd



St John Advisors Ltd and STJ Advisors LLP are the contractor companies for the
consulting services of John St. John,  a Non-Executive Director of Afren,  for 
which they receive  fees, including  contingent completion  and success  fees, 
from the Company.  Both St John  Advisors and STJ  Advisors LLP also  receive 
monthly retainers of £18,000 and £36,000 under contracts which started from 27
June 2008 and 15 December 2011 respectively. The contracts have a twelve month
period which automatically continues unless terminated by either party.

In addition, a  separate contract was  entered into with  STJ Advisors LLP  in 
2010 for consulting services provided in  relation to the issue of the  senior 
secured loan notes which completed on 27 January 2011.

First Hydrocarbon Nigeria Limited (FHN) is an associate of Afren plc.







                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSZMMMMGZRGZZZ -0- Nov/13/2012 07:00 GMT
 
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