Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Soon see won't we Mick, nothing happening till the CH-1 spud and drill results in terms of FFD, but then the next drill is a very interesting one @AEX it being a dual Geological appraisal with a deeper target of up to a TCF of gas or Oil, like 2 drills in one in fact.
Market likes a drill, never mind a double.
GL
The next 6-8 wells.... wow, as always you are very optimistic Perky. Personally I don't expect anything to happen in the next few months. I would be amazed if ARA drills even a single well before securing the licence extension again, and for investments beyond the minimum scope I'm sure there needs to be a clear route to market (i.e. FID taken of the export gasline). Like all O&G companies, ARA / Zubair will be scrutinizing projects far more carefully right now after this COVID crisis, and the financial tragidy that is has created.
Let's see how interested they really are, in investing in Tanzania, with monetisation uncertain and many years away. Perhaps relinquishing the licence is more attractive.... Have you seen a seen a recent announcement from ARA that they are celebrating their take over in Tanzania?? I haven't....
Oh, and the 1 BCF demand from Kenya.... sure, but several years AFTER the export pipeline has been constructed and Kenya's power stations have been upgraded. In 2030 perhaps?
Hi HY, I might still hold some free carry shares when AEX are producing but my main divi return investments are all main market in Europe and the US and not in Oil and Gas.
I think the next AEX 6 to 8 drills that are highlighted in the development plans will each provide significant short term upside, depending on how long any delays are between spud #1 and a 25 year development licence being issued. As you say, in Tanzania this can sometimes lead to years of inactivity.
The Uganda and Kenya gas export pipeline I think is the key to any meaningful future volumes in Tanzania before off shore LNG comes on line. If this is the case then there is also no reason why WEN would not also be included in providing export gas as well if the 1BCF demand per day that the TPDC forecast is to be believed.
GL
Thanks for your reply. Yes, market sentiment is a factor to take into account. Wen had its highest market value ahead of the Tembo drilling in Mosambique. However, not all drill results turn out to be positive. As I have been a long-term holder of WEN, I remember the long waiting period before agreements with the Tanzanian government gets finalized. Such waiting can be very tiresome for all shareholders, not just traders. I wish you good luck with the timing of market sentiment. From your reply, I read that you will not be a AEX shareholder when production is up and running, as the company then will be low risk and boring. Personally, I prefer low risk and dividinds insted of playing market sentiment.
Thanks HY, so the conclusion is that nothing is happening here then if the BOD do not look outside of their current 32% investment in Mbay.
Don't get me wrong and I have said many times before, WEN are in a good position in terms of cash flow, just there is nothing for the market to get excited about. I have seen endless calculations from people on what a small cap company is worth, but in the market place it all means very little at all, it's all about sentiment. So I stand by my point which is that AEX is likely to offer a much higher return in the short term than WEN due mainly to activity and the market interest and sentiment that it brings and no doubt people here will be shouting endlessly at how over valued the AEX SP will become.
The market is the market at the end of the day.
GL
C Perkin, sorry for a late reply to your question.
“What's happening next here HighYield? Maybe WEN want a slice of the pie, SCIR have 25% for sale.”
I would assume that Wen as well as other gas producers in Tanzania have been offered to farm in into the license, and it will be a question of price versus risk/reward. Wen has stated that they are in a so called “close period” for some time now, so it might relate to discussions regarding a possible farm-in.
However, from my point of view I hope that WEN instead allocate their funds to buy backs and dividends or investments into the Mnazi bay license instead of investing in new projects. The current valuation of the company is still very low with a market cap of about 32m £, and a net cash position of 14 MUSD (11m £) results in an EV of 21m £.
Let’s make some comparison with AEX and SCIR. First we have to make some very optimistic assumptions like license extensions, successful drilling s and GSA and PSA agreements in place without “usual delays”. Let’s also assume that the Ruvuma license reach a production capacity in line with target of 140 mmscf/d within budget and with similar terms for GSA and PSA as WEN.
In a number of years, AEX and SCIR share of production capacity (25% of 140mmscf/d) would be in line with WEN’s 32%of 100 mmscf/d. Actually we would also have to assume that TPDC will take a 20% stake in the field, reducing AEX and SCIR’s share to 20% of 140 mmscf/d.
If all goes well, AEX and SCIR will become gas producers. The bad news is that they might be valued like one, and that is not very encouraging. Applying WEN’s EV (21m£) on AEX implies a share price of 0,55p. For SCIR this comparison will be more difficult, as we do not know at what terms SCIR can raise funding for their 35 MUSD investment in the license.
I do realise that valuation should not be based on production capacity alone, especially if the demand is not there. A more appropriate comparison would be based on proven and probable reserves, but as we have no information about that we cannot do that right now.
I do hope, that AEX and SCIR will be successful and become gas producers in the future. It is fair that the companies and their shareholders get a reasonable return from their successful drillings in the Ruvuma license, but current valuation seems far too optimistic to me.