Afren lowers FY output forecast by 20 percent

Oil explorer Afren Plc lowered its full-year production forecast by 20 percent after suspending activities in wartorn Iraqi Kurdistan, adding to woes related to unauthorised payments involving top executives.

Shares of the company fell as much as 8.6 percent in early trading, with more than 1.3 million shares changing hands in the first five minutes, on the London Stock Exchange.

Afren said it identified three unauthorised payments totalling $135.1 million on its balance sheet, including $93.3 million paid for an agreement for field extensions related to the Okoro field in Nigeria.

Afren has suspended CEO Osman Shahenshah, COO Shahid Ullah and two associate directors pending results from an investigation, expected to conclude in Septemeber.

Afren identified $135.1 million unauthorised payments on its balance sheet. It includes $93.3 million paid for an agreement for field extensions related to the Okoro field in Nigeria

Afren, which owns 60 percent of the Barda Rash oilfield, its only producing asset in Iraqi Kurdistan, said the suspension in production is not expected to significantly hurt cash flow.

The company, which has interests in oil producing assets across Nigeria and Iraqi Kurdistan, lowered its full-year production forecast to 32,000-36,000 barrels of oil per day.

Profit before tax for the six months ended June 30 halved to $133 million, and revenue fell 29 percent to $565 million.

Net production fell 25 percent to 33,488 bopd, most of which came from its Ebok oilfield in Nigeria.

Afren’s shares were down 8 percent to 91 pence at 0745 GMT.