Lundin stops funding Africa Oil

Africa Oil’s history dates back to 1983, when it was founded as Canmex Minerals with funding from the Lundin family. The company was officially renamed to Africa Oil in June 2009 to reflect its strategic and geographic focus. Since 2009, the company went through a series of acquisitions to consolidate its position in Kenya and Ethiopia.

• July 2009: Acquired Turkana Energy (100% in Block 10BB)
• February 2010: Acquired 100% in Blocks 12A and 13T from Platform Resources
• June 2010: Acquires 80% in South Omo from Agriterra
• November 2010: Acquired Centric Energy (50% in Block 10BA)
• June 2011: Acquired Lion Energy (15% in Nugaal and Dharoor PSAs, 33% interest in Block 9, 10% interest in Block 10BB)

 Africa Oil and its partner Tullow began an aggressive exploration and appraisal campaign in 2012 and the partners have since drilled over 30 wells in Kenya. For Africa Oil, previously a small explorer, this campaign has been funded through a series of fund raises. However, surprisingly and contrary to public opinion, the Lundin family have not supported the company through its fund raising efforts.

Africa Oil fundraising history
Source: Africa Oil

Historically, Lundin maintained above a 20% shareholding in Africa Oil and following dilution from the April 2009 fund raise, further stock was acquired on the market to boost its ownership up to 23.1%. Since 2010, Lundin has not participated in the company’s equity raises, which has seen its ownership fall to 5.2% following the most recent fund raise in May 2015. This is perhaps consistent with Africa Oil’s messaging of funding the Lokichar development through a farm-down or a corporate sale, rather than asking for more cash from Lundin. Unfortunately, the delay in advancing the Kenyan export pipeline by the government, introduction of capital gains tax and the fall in oil price has hampered efforts by the company to find a partner or acquirer.

Lundin family ownership in Africa Oil
Source: SEDI, OGInsights

Note that the Lundin family hold Africa Oil through the following entities and individuals:

Zebra Holdings and Investments SARL

Lorito Holdings SARL

Abalone Capital

Lukas Lundin

The shareholding information above is based on SEDI filings