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Popular rag that on the bb's
7 trillion cubic feet of gas.
Repeated disappointments can disillusion weary investors. After all, the third development well on the gas discovery was meant to be drilled last September, but Bhattacharjee decided to avoid any risk and wait until a fully funded development partner arrived on the scene. Aminex got its free carry with the Zubair Corp deal, which includes an upfront $5m payment that will help Aminex fund its other gas prospects in Tanazania.
Zubair (through its Eclipse Investment subsidiary) already owns almost 29% of Aminex and, as a result of the farm-out deal, has 50% of the Ruvuma field. ( Solo Oil holds a 25% in that licence).
It would take a lot to go wrong for these shares not to be worth significantly north of their current paltry one times p/e multiple rating. The 105m development programme is scheduled to get under way in the next few months (allowing for any hiccups caused by Bhattacherjee's sudden exit), including the third development well, the so-called Chikumbi -1 development well that is planned to be drilled in the next two months. It could not only prove up the existing Cretacreous gas field, but possibly also discover an additional potential 1 trillion cubic feet of gas in the lower Jurassic sandstone zone.
In these circumstances, Aminex's shares could only be described as grossly undervalued.
Continued: He is taking charge of a particularly interesting gas discovery at Aminex. Prior to 2015, it would have had little or no value and has being regarded as stranded gas as it is not big enough to warrant the building of a very expensive LNG plant to export the gas from Tanazania as the country had no internal gas pipeline network to distribute the gas.
The Chinese, however, funded a big 400- mile. 36 inch gas pipeline all the way up the east coast of Tanazania to the capital Dar Es Salalm, where there is a huge energy shortage.
In addition, there is an adjoining existing gas processing plant, the Madimba facility. It has a processing capacity of 210 million cubic feet of gas a day, but is only processing 70 million cubic feet of gas a day, leaving the facility with spare capacity of 140 million cubic feet of gas a day. This gives Aminex the opportunity to develop its adjoining gas field to avail of this capacity without any additional capital expenditure and it can also link into the gas pipeline. This latter has the capacity to carry 800 million cubic feet of gas a day but currently only carries 100 million cubic feet of gas a day, so Aminex's planned 140 million cubic feet of gas a day could be easily facilitated.And it might not just be for distribution to the capital city as there is also , 20 miles away, a Dangote cement plant that could covert to gas power if it had sufficient supplies.
The provides a most favourable background for Aminex
On top of this, the state agency- Tanazania Petroleum Development Corp (TPDC) - prefers to control and distribute all gas inside the country and, accordingly, pays gas producers $3 per thousand cubic feet at well head. This is not a bad price and removes a significant element of risk associated with coasts on gas processing and pipeline distribution.
In the recent agreed $105m farm-out deal with Oman's Sheikh Mohammand Al Zubair, the Zubair Corporation has committed to fully fund the drilling of a third discovery well that should not only prove up the already discovered Gretaceous age reservoir with an estimated 753 billion cubic feet of gas, but will also penetrate the considerably lower Jurassic reservoir, which could contain 1 trillion cubic feet of gas.
There are also five other producing wells and the overall plan is to produce 140 million cubic feet of gas a day in two years.
This Jurassic prospect is in addition to the gas already discovered and leaves Aminex with a fully carried 25% stake, resulting in a potential $40m a year cast flow from its onshore Ntorya licence.
With the shares trading in Dublin at 1 point 2 cent, the whole of Aminex's equity is currently capitalised at only 40m , which is bewildering given that the company could deliver a potential $40m annual cash low in just two years.This puts the shares at just over one times price-earnings multiple, although Aminex has also identified other significant prospects that could potentially yield up to 7 trillion cubic feet of
Since things are going well I thought I would re-post an article from The Phoenix Magazine that was first printed in May of this year:
Aminex has farmed out the development of its gas discovery in Tanzania with a $105m development deal. wherein it is fully carried through to full production and looking at a potential distributable annual $40m net cast flow in two years. The stock market has, however, responded in a contradictory manner, with the share price falling steeply from the 7p it hit two years ago in March 2017, just after it succeeded with its second successful gas discovery well in its onshore Ruvuma gas field.The shares are at just 1p. This is hard to explain given the two successful discovery gas wells, with a third appraisal well about to be drilled onshore, followed by a fully funded six-well development and a pipeline development programme. Indeed, Aminex shares appear to be incredibly low risk.
The shares have been overstimulated at times and in 2007 hit a whopping 45p on foot of a discovery in shallow water offshore Tanzania, adjoining Songo-Songo Island, where the so-called Kilwani North gas field was ultimately developed. This never achieved what had been projected and h as since been closed down, although the immediate area is being appraised with a view to bringing it back into production. This could be done at low cost given the existing gas processing plant on the island and the already fully-connected pipeline all the way up Tanazania's east coast.
This latter has, however, not been on the agenda for Aminex or its CEO (until last week at least), 41-year-old Canadian , Jay Bhattacharjee, who focused on Aminex's big onshore gas discovery on its Ruvuma licence block in the south of Tanzania, just north of the Mozambique border. Not only has the group drilled two successful gas discovery wells on the block, with the first in 2014 flowing sustained gas of 20 million cubic feet a day combined with 139 barrels of oil a day and a second successful discovery well with 17 million cubic feet a day.
Last week, Aminex announced that Bhattacharjee was steeping down as CEO and a director of the company with immediate effect "due to health reasons" and board member Tom Mackay was installed as interim CEO
However, given the extent of the farm-out deal and the update available on the company's finances in the annual report, it is clear that Aminex is now in a safe position. All the work and all of the cost of upgrading and developing the discovered gas field in Tanazania have been outsourced.
Macaky had been appointed as a non-executive director in 2014 and was the senior non-exec on the Aminex board. A geologist and petroleum engineer, for the last 20 years he has been working as a petroleum consultant and is currently a partner in Gemini Oil and Gas Advisors LLP.
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