Meren Energy raised its full-year cash flow and EBITDAX guidance after reporting third-quarter production near the upper end of its revised outlook, as the company prepares for a multiyear drilling program in Nigeria.
President and CEO Oliver Quinn said the company ended the quarter with $185 million in net debt and approximately $328 million in liquidity. Meren also declared its fourth $25 million dividend of 2026, bringing declared distributions for the year to $100 million.
“The operationally quiet period is behind us, and we are now entering a sustained period of activity across the portfolio,” Quinn said.
Higher financial guidance, lower 2026 capital spending
Meren raised its 2026 EBITDAX guidance to $390 million-$440 million and its operating cash flow outlook to $250 million-$280 million. Quinn said higher realized oil prices contributed to the increase, alongside continued asset performance.
The company narrowed its working-interest production guidance to 25,000-27,000 barrels of oil equivalent per day and its entitlement production outlook to 29,000-31,000 barrels per day. Third-quarter production averaged 25,300 barrels of oil equivalent per day on a working-interest basis and 28,300 on an entitlement basis.
Quinn attributed the production trend during the year largely to natural decline and a planned pause in drilling. Meren used that pause to reinterpret seismic data and refine its upcoming well program, he said.
Capital investment is now expected to total $70 million-$90 million in 2026, with some spending moving into 2027 as a rig for the Agbami and Ikija program is expected to arrive in the first quarter rather than this year. Chief Financial Officer Aldo Perracini said it was too early to provide a 2027 capital spending range.
Quarterly cash flow and oil sales
Meren generated $113 million in third-quarter EBITDAX, $74 million in operating cash flow before working capital and $59 million in free cash flow, Perracini said. Capital investment was $14 million.
The company lifted two oil cargoes during the quarter at an average realized price of approximately $92 per barrel. Perracini said the price represented a premium to Dated Brent during July and August, when the cargoes were lifted, even though it was below the benchmark’s average for the full quarter. Gas revenue rose to $12 million from $4.5 million a year earlier.
Meren recorded a $35 million loss on commodity contracts, including $13 million in settlements and a noncash mark-to-market loss on open positions. For 2027, the company has collars on a portion of production with floors of around $70 per barrel and upside to approximately $93 per barrel, Perracini said.
Third-quarter unit operating costs rose to $18.50 per barrel of oil equivalent from $10.70 a year earlier. Perracini said the increase reflected the timing of routine maintenance, nonrecurring personnel costs and lower entitlement volumes, and that costs should normalize toward previous-quarter levels.
Meren expects to lift two cargoes in the fourth quarter, subject to changes in oil prices, costs and production. Perracini said the company ended September with an underlifted position of slightly more than 400,000 barrels and expects that position to fall by roughly half by year-end under current assumptions.
Nigerian drilling and development plans
A drilling campaign around Akpo and Egina is expected to begin with the Akpo Far East exploration well, approximately five kilometers from existing Akpo infrastructure. Quinn said the well carries geological risk, but if successful, Meren would aim to connect it for production during 2027.
Asked about potential output, Quinn said an initial producing well in a new reservoir could deliver around 10,000 barrels per day gross. He described that as an estimate dependent on the drilling result, not a forecast of Meren’s share.
The Agbami-area program is expected to include three firm infill wells and an appraisal well at the adjacent Ikija discovery. Quinn said the rig delay reflected an extended assignment elsewhere and that the joint venture remained aligned on the program.
Meren is also advancing the Preowei and Egina South discoveries as potential tiebacks to existing Egina infrastructure. Quinn said Preowei is expected to move through front-end engineering and design in 2027, with a stretch target for a final investment decision by the end of that year. An appraisal well on an adjacent license is expected to help assess Egina South without appraisal cost to Meren.
Quinn said Nigerian deepwater tax incentives could add value to both projects. He also said updated subsurface work was positive for Preowei’s proved and probable reserves, while drilling at Egina South and Ikija would help mature those resources without immediately moving them into that category. Meren expects to disclose its updated reserves report in the first quarter.
Longer-term opportunities
Outside Nigeria, Quinn said the Venus operator has indicated the project is ready for sanction and is working toward a near-term investment decision, with first oil targeted in 2030. Meren’s interest is fully carried through first production, he said.
In South Africa, Quinn said the dismissal of appeals against environmental authorization to drill up to five wells on Block 3B/4B was a positive development. The Nayla prospect is ready to drill, although timing remains subject to any further proceedings.
Meren remains open to acquisitions, particularly offshore Nigeria, but will apply its capital allocation discipline, Quinn said. The company is also continuing to assess options for its two Equatorial Guinea licenses.
About Africa Oil (TSE:AOI)
Africa Oil Corp is an international oil and gas exploration company. It is an exploration stage enterprise that participates in oil and gas projects located in emerging markets, in sub-Saharan Africa. The company operates in the business segment of international oil and gas exploration, and geographically, it operates in Kenya and Ethiopia.
