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We are not in some US unconventional play. Producing 100 Bscf out of a single well in a conventional gas field with high permeabilities is not unusual at all. I see no reason to doubt the production forecast in the CPR. The forecast is based on a normal p/z DCA (decline curve analysis) combined with an Mbal / Prosper model. The difference between the 1P and 2P forecast is that the production forecasts are constrained by the gas sales outlook: the 1P forecast is capped at 82.5 MMscf/d and the 2P case at 92.5 MMscf/d. Again, read the CPR. Also the ending dates differ. We don’t need more wells in the 1P and 2P case, and we won’t need any new seismic surveys before we start exploring again.
But good luck to you. I don’t think that WEN is a company you want to invest in.
There’s is no way they can drain the whole 2P from the existing wells. The field needs a 3D before wells can be optimised. What would Exxon do? Drain the structure with old 2D of course not..They will likely know the next phase will involve seismic expenditure.
It’s not the end of the world it just needs factoring in.
Geowiz,
This is getting a bit silly. Again, we don't need to drill more wells for either the 1P or the 2P case, and we also don't need new seismic. Have a look (again) at page 81 and 82. The remaining CAPEX is for a facilities upgrade (compression), a workover and some minor well interventions (re-perforations). The next development well (MB-5) is offshore and will unlock the 3P volumes.
On another topic: good volumes today, and a very nice price increase as well, encouraging! :-)
Geowiz,
This is getting a bit silly. Again, we don't need to drill more wells for either the 1P or the 2P case, and we also don't need new seismic. Have a look (again) at page 81 and 82. The remaining CAPEX is for a facilities upgrade (compression), a workover and some minor well interventions (re-perforations). The next development well (MB-5) is offshore and will unlock the 3P volumes.
On another topic: good volumes today, and a very nice price increase as well, encouraging! :-)
Hi Mick
Yes I’ve done so. The existing 3D is deep offshore. The field is mainly onshore so in order to develop it with more producers they are going to need a land or land to shallow water 3D. Same problem a lot of these AIM oilers have these 3Ds are eye wateringly expensive so.. $10 -20 million plus so it’s the catch here for sure. They can’t drill next phase without one.
Geowiz,
Before you post comments like this: read the CPR. You clearly haven't done so.
First of all: The field is mainly offshore and we are fortunate to have good quality 3D seismic data.
Secondly, development costs for the 1P reserves is practically the same as for the 2P reserves: 50.28 mln vs. 50.50 mln (100%), see page 81 and 82 in 2020 CPR (link below). So WEN will need to invest approx. 16 mln (32%) in the next few years. Note that our cash balance exceeds this sum already today, so we could pay for it right now if it was necessary. For the 3P reserves, the total sum increases by the way to 28.3 mln (32% WEN share), see page 83.
Finally, the CPR is reviewed annually, since 2014, by an independent party. Have a look at their website.
https://www.wentplc.com/investors/shareholder-centre/
The 2P resource numbers are not particularly relevant it’s the 1P that you should focus on. The 2P target usually needs multiple phases of development hence much more drilling. To do this they will need to invest in a modern 3D which means a CPR upgrade. Always very expensive onshore, that’s the catch here.
Geowiz,
"One trick pony".... "coming off plateau"... you sound like a reincarnation of somebody from the former Aminex lunatics brigade.
You can criticize WEN about many things, but not reserves. We are not even close to plateau. The Mnazi Bay 2P reserves (445 Bscf on 31 Dec 20, 100%) are enough to flow at 122 MMscf/d for the next ten years. The next development well is expected to add another 190 Bscf or so and exploration will add even more. The facilities are currently designed for 130 MMscf/d. Have a look at the latest CPR on their website.
Results not too bad for an AIM Oiler
Given it’s a one trick pony do we know when gas production is coming off plateau? When gas fields decline they do it quickly so I suspect it’s the key uncertainty here.
Production was bad in 2019, so I am happy that revenues increased. Agree on G&A, but hopefully McBean and Bentley stepping down will be positive for future G&A
Ozsurfer, net profit after tax is only 3,428 mln. G&A remains as high as it has always been, at 5.4 mln, which is outrageous for a non-operating company. You surely can't be happy about that I would think. Personally I think the 2019 results are, again, poor, but I agree that the outlook is very good.
What's not to like? Both financial results and the outlook are much better than I was hoping for.
Financial
•????Declaring a final dividend in respect of FY 2020 of 1.0 pence per share ($2.6 million); a total dividend distribution in respect of 2020 of $3.8 million (1.5 pence per share) representing an increase of 27% from 2019 ($3.0 million) and a yield of approximately 6.7% (calculated on an annualised basis)
•????Strong and resilient financial performance against a challenging macro-economic backdrop
•????Revenues of $18.9 million (2019: $18.6 million), underpinned by long-term fixed gas price contracts
•????Adjusted earnings before interest, taxes, depreciation, amortization and exploration (EBITDAX) of $9.7 million (2018: $8.8 million)
•????Debt free with cash on hand of $17.8 million at 31 December 2020
•????TPDC continues to remain fully current with all invoices for gas sales
Operational
•????Production averaged 65.5 MMscf/day (2019: 70.3 MMscf/day), lower due to fluctuating demand but in line with guidance of 60-70 MMscf/day
•????Capacity from existing wells and production facilities increased to in excess of 100 MMscf/day
•????Low operational cost of production of $0.69 / Mscf
•????Wentworth's share of Gross 2P Reserves as at 31 December 2020 estimated by RPS to be 90.8 Bcf with a post-tax NPV10 of $116.6 million
Corporate
•????Ongoing commitment to a progressive capital returns policy
•????Tanzania focused growth continues to be a key focus to capitalise on existing operational track record
•????Continued process of Board refreshment, with Bob McBean retiring as Chairman at the AGM and John Bentley stepping down during the year
•????At least one new Non-Executive Director to be appointed during 2021 with the aim of bringing further diversity to the Board
2021 Outlook
•????Record quarter performance to date with average production volumes for Q1 2021 of 84.74 MMscf/day (gross) compared with Q1 2020 average of 63.60 MMscf/day (gross)
•????All-time production volume highs at Mnazi Bay of 110.65 MMscf/day including monthly average production of 101.85 MMscf/day (gross) during March 2021, demonstrating the ability to supply greater than 100 MMscf/day (gross) consistently during periods of high demand
•????2021 Mnazi Bay production guidance remains unchanged at 65-75 MMscf/day (gross), considering the seasonal rainy season typically impacts demand for natural gas during Q2