Afren sees shares fall after disappointing results

Oil exploration company Afren saw its shares go down on Thursday after disappointing results during the first nine months of the year.

Revenues dropped to $798.5m in the nine months ended 30 September from $1.2bn same time last year.

Ongoing delays, due to bad weather conditions at the Ebok exploration, affected the company’s profits before tax, which decreased from $427m to $165.8m.

The company’s results were affected by news earlier this month that it has fired its chief executive Osman Shahenshah and chief operating officer Shahid Ullah for gross misconduct. An independent review found they had received unauthorised payments from the group.

The company said at the time it is planning to take legal action to recover the missing sums, although said they had not resulted in a material loss for the group.

Earnings per share decreased to 15.4c from 15.6c, while cash and equivalents dropped to $648.6m from $779.8m.

Afren said its operations at the Nigerian field Okoro continue to run “smoothly, while appraisal drilling in the field of Ogo (OPL 310) has been now delayed to 2015. The Ebok Central Fault block installation is expected to be completed by the end of the year.

Interim chief executive Toby Hayward said: “Management remains focused on operational performance, having made good progress on our core development projects in Nigeria, which are expected to drive significant growth in production and cash flow in the medium-term.

“We are moving forward with our play-opening discovery at Ogo, while we continue to de-risk an exciting set of exploration opportunities across our portfolio."

Deutsche Bank said the announcement raises “inevitably fresh questions on Afren’s vulnerability".

Barclays was more understanding, saying it believed the company had "sought to draw a line" under its recent corporate governance issues these results.

"However, this may not help the investment case in the near term as the trimmed production outlook and slight delays in development activity provide a reminder that the portfolio faces operational challenges.

"We continue to see the appointment of a new CEO and a conclusion to any further external investigations as the next step in Afren’s rehabilitation process."

Shares were down 8% to 845.8p at 12:24 on Thursday.