Bad for the balance sheet. Mate we'd have $30m in the bank, nothing better for the balance sheet than that. When I'm discussing figures for Kiliwani I'm talking our share of the profits. Our share of the well over its expected lifetime is $50m so I feel $30m upfront for our share is fair??
Point taken TT my comment was very tongue in cheek... Refinancing would be the best option then; pay off ARGO get three times as much for the same interest and plough a lone furrow. Subject to satisfactory conclusion of all outstanding Ruvuma issues..... including a route to market.
The key being Crusty......we've already hit a commercial well in Ruvuma at Ntorya-1. If we were wild cat drilling I would completely agree with you but we are only drilling a step out well 1500m away from our discovery. Our acreage is surrounded by fully charged gas reservoirs which produce for fun and our discovery is no different. Ntorya-1 was the largest light oil discovery in Tanzania and still produced 20mcf\d aswell. We have already bagged 70bcf for the Ntorya well which is nearly 2.5 times bigger than Kiliwani. Likonde well which we drilled nearby showed huge potential beyond belief and our Ntorya-1 discovery produced 20 mcf from 3m perf which is very, very impressive.
Ruvuma is going to be huge and I want to keep 75% of that asset because I'm greedy !!! I didn't come all this way to let it slip through our fingers at the last moment. Kiliwani is a baby........Ruvuma is the Daddy and I am talking potential Ndovu !!
And I would tend to agree with you TT on the KN1 production figure and hence I would be reluctant to sell up too early. It is a trade off; which is the most financially efficient way of funding Ruvuma? How much of a "discount" might we sell KN1 for, might it be more efficient to farm out a slice of Ruvuma or if we can borrow funds very cheaply might we be better off doing that.....? It's all about the "cost" of the money.... Interest vs Ruvuma dilution vs KN1 "discount". The only one of these that is fully quantifiable is the interest. However we could end up farming out Ruvuma and it costing next to nothing if NT2 & NT3 end up being "dusters"! I wouldn't mind giving away 50% of nothing!! ;-)
Great to see the charm offensive is still in top gear. A lot of issues can be caused if the Tanzanian people are not included in plans and profits. Im very happy that my investment is bringing such a change to millions of people's lives across Tanzania. Power is a basic commodity that should be available to everyone and Aminex is helping provide that and more !
I do agree with you Crusty but I would bet my last bottle of vino that Kiliwani will definitely produce more than 40bcf, however, it will take 7 years to find out and I'm not waiting around for that. We will definitely be selling it at less than its very true value but we have gained the largest profit increment by bringing it online and that's all we need. Gain the largest profit from an asset then monetize and move on imho
What you propose has considerable merit but we haven't optimised the value of KN1 until we have flow rates. What is more as you yourself pointed out the depletion rate of KN1 is not known (ten years plus being typical for Tanz as you yourself pointed out) ; it makes valuation very difficult - we could end up selling it for far less than it's optimal value....
That aside if we get top dollar for it having cash in the bank is never a bad thing. Furthermore JB alluded to "selling assets" and I would rather sell a fully developed asset than one with upside potential as long as provision has been made for the potential downside risks. He also raised the prospect of a strategic partnership which suggests to me that there will be a significant third party investment arriving at some point.
With a combination of these two things and the increasing facility for AEX to borrow cheaper money there are a multitude of possibilities; I just reiterate Webmoors earlier warning of the downside of overextending...
I don't mind what sort of Loans, farm downs and sales we undertake but we need to use what we have to progress and only Jay can make that decision with all the info at hand. He is talking my language with growth both organic and external. As I keep saying Jay is a cautious figures man that will not undertake anything that is not well within our capabilities. I'm very excited about the potential both at Ruvuma and regards introducing a new asset. Let's put Aminex on the map !!
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