Africa Oil Completes Prime Deal, Declares USD 25M Dividend

Africa Oil Corp. has announced the completion of its transformational deal for full ownership of Prime Oil & Gas, marking a significant milestone in the company's growth strategy. The deal, which was finalized on March 20, 2025, is expected to double Africa Oil's Nigerian output and reserves, providing a substantial boost to its financial stability and growth prospects. In addition to this strategic acquisition, Africa Oil has declared a quarterly dividend of USD 25 million, underscoring its commitment to shareholder returns.

The completion of the Prime deal is a game-changer for Africa Oil. The company's Nigerian assets, which now include Prime Oil & Gas, are expected to generate significant free cash flows. This financial strength will enable Africa Oil to commit to an enhanced total shareholder returns model, including an annual base dividend of USD 100 million and an annual commitment to distribute at least 50% of excess free cash flow after the base dividend distribution in the form of supplemental dividends and/or share repurchases.



The strategic advantages of the Prime consolidation are manifold. Prime Oil & Gas accounts for 100% of Africa Oil's reserves and production, making it a core cash-generating asset. The enlarged Africa Oil will have a low leverage balance sheet, driven by large-scale and high netback assets in deepwater Nigeria. These assets are complemented by funded development and exploration projects in the prolific Orange Basin, providing a strong platform for organic growth.

The enlarged Africa Oil's objective is to deliver a superior investment case relative to its peer group through a combination of financial discipline, sustainable total shareholder returns, and funded growth. This is supported by the company's commitment to an annual base dividend of USD 100 million ("Base Dividend") that is deemed by the Board to be sustainable in a range of through-cycle oil price scenarios, as well as an annual commitment to distribute at least 50% of excess free cash flow after Base Dividend distribution in the form of supplemental dividends and/or share repurchases.

The declaration of a quarterly dividend of USD 25 million reflects Africa Oil's commitment to shareholder returns. The dividend payment of USD 0.025 per common share, payable on March 28, 2024, to shareholders of record at the close of business on March 8, 2024, demonstrates a tangible return on investment for shareholders. This dividend qualifies as an 'eligible dividend' for Canadian income tax purposes, which can be beneficial for shareholders in terms of tax advantages. The company's decision to pay dividends in Canadian dollars for shares traded on the Toronto Stock Exchange (TSX) and in Swedish kronor for shares traded on Nasdaq Stockholm, while all US and foreign shareholders receive USD funds, shows a commitment to accommodating different shareholder bases.



The potential implications for future dividend policies are significant. Africa Oil's commitment to a semi-annual dividend payment suggests a stable and predictable income stream for shareholders. The company's forward-looking statements indicate that it intends to continue with a Normal Course Issuer Bid share buyback program, which further supports the idea that Africa Oil is committed to returning value to shareholders through both dividends and share repurchases. This strategy is likely to continue, given the company's strong financial performance and its focus on growth and shareholder returns.

In summary, the completion of the Prime deal and the declaration of a quarterly dividend of USD 25 million position Africa Oil for significant growth and enhanced shareholder value. The company's strategic advantages, including increased reserves and production, enhanced free cash flow, and a stronger financial position, are expected to translate into sustainable dividends, share repurchases, and funded growth opportunities. Investors can look forward to a robust and clearly defined financial framework that supports Africa Oil's long-term growth prospects.