What Afren's worth now

There really is no argument that Afren's recapitalisation is complex and that ownership of the business now sits with bondholders, not shareholders. And, despite heavy dilution for equity investors, the Africa-focused oil company needs money fast, so it will likely receive the 75% of votes needed at an EGM in May to get the proposals through. But even then, Afren is not out of the woods.

"If approved, we believe the plan should see Afren survive, but the immediate impact on the current equity valuation is negative," says Barclays.

The heavily-indebted oil company could receive an extra $300 million of net total funding by the end of June, which will cover the immediate capital needs of the business. Other than equity dilution, the main features of the deal are extending maturities across the loans and notes to 2019/2020 and a shift to payment in kind for interest payments.

Management will get much-needed breathing space, but they'll need a bit of luck, too.

"Given the weighting to 2019, this capital structure appears heavily reliant on an improving oil price, with ~$900 million of principal and interest charges due in 2019," writes JP Morgan.

After reworking the numbers, the broker's estimate of core net asset value (NAV) falls 93% to 3.61p, which is where it sets its December 2015 target price.

JPM is also surprised, given Soco's big write-down last week, that Afren has not revised lower its 2P reserves estimates, seeing as the forecast capital investment plans are materially reduced - year-end 2014 2P reserves are 162 million barrels of oil equivalent (mmboe), which excludes January's revision on Barda Rash which essentially wiped out all gross 2P reserves of 190 million barrels.

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