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Afren gains as output hits record-high in 2012 - UPDATE

Afren impressed the market with record results on Monday as the Africa-focused oil and gas group labelled its exploration and appraisal campaign a 'significant success'.

Afren impressed the market with record results on Monday as the Africa-focused oil and gas group labelled its exploration and appraisal campaign a 'significant success'.

"2012 saw record production and financial performance combined with significant exploration success in Nigeria and the Kurdistan region of Iraq," said Chief Executive Osman Shahenshah.

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Net production in 2012 averaged 42,830 barrels of oil equivalents per day (boepd), in line with the guidance range of 42,000-46,000 boepd given at the half-year results statement in August.

As well as output hitting record levels, the firm's pre-close trading update also anticipated record financial results for last year: 2012 sales revenue is expected to rise 151% year-on-year to $1.5bn, despite the realised average oil price slipping slightly to $107 per barrel, down from $109 per barrel in 2011.

"Very bright future"Head of Dealing Richard Curr from Prime Markets said in an e-mail that Afren has a "very bright future if today's trading statement is anything to go by".

"A 151% increase in sales revenue is a jaw dropping number by any standards, and as this comes from a company that is well run and well regarded in the City, one can almost hear the analysts sharpening pencils for the almost inevitable raft of upgrades," he said.

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From a technical point of view, Curr said that charts paint an "incredibly bullish technical picture with triple support lines all within a few pence of each other".

He said that this suggests a "very firm floor" in the stock at current levels, enough to launch a re-test of 150p year-highs and beyond.

Shares were up 2.69% at 138.63p before the close of trade on Monday.

Much to look forward toAfren hailed three "significant exploration discoveries" last year: the Okoro Field Extension, the Ebok North Fault Block and the Simrit-2. Meanwhile, seismic data and prospect maturation upgraded Afren East Africa Exploration prospectivity.

The firm spent $520m on capital expenditure in 2012 and expects to spend a further $620m this year. Net debt by December 31st 2012 fell to $488m, from $548m the year before.

The company said it expects to produce 40,000-47,000 boepd in 2013, excluding output from the Barda Rash project which was initiated in the third quarter of 2012.

Shahenshah added: "In 2013 we expect to further grow our reserves base through a multi-well exploration and appraisal drilling campaign in both established and new basins, while continuing to grow our production base.

"We are financially well positioned with robust cash flows, a strong balance sheet and the necessary financial capacity and flexibility to optimally explore and develop our high quality portfolio of growth opportunities well into the future. There is much to look forward to in 2013 and beyond."

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