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First of all, I will congratulate all longterm shareholders in AEX with the recent share price performance. It has been a while, since I commented here, and I expect there will be an AGM comming up soon. I think it would be very interesting to get some additional information regarding the PSA (production sharing agreement). From my understanding of the PSA, revenue from gas sales are divided into cost gas and profit gas in a 60%/40% split. Cost gas consist of opex, development expenses and tax payments. AEX will recover their carry of 35 MUSD (or 32 MUSD following the loan from Eclipse) through the cost pool mechanism. Profit gas is split between the license holders and TPDC on a 30/70% basis, meaning that when all costs have been recovered, the licenseholders will only get 30% of total gas revenue. Of course there will always be some level of opex that will be recovered through cost gas. When Wentwoth's cost pool had been recovered in the second half of 2023, gas revenue just matched their high admin expenses. It would also be interesting to hear if any of historical exploration expenses for drilling NT1 and 2 could be included in the cost pool and be recovered. I have also noticed from discussions here on the board, that TPDC may take a part of the license. In such a case, how large and what will they pay for it. Just their part of future development expenses, or maybee some part of old explorationexpenses as well.
TPDC has a 15% back-in rights, high
"Profit gas is split between the license holders and TPDC on a 30/70% basis, meaning that when all costs have been recovered, the licenseholders will only get 30% of total gas revenue. "
Highyield, I don't know where you get this info from, but I'm 100% sure ARA would not agree to a Development Licence if it was beneficial and profitable to both ARA and indeed AEX as having a 30% interest. Yes all looking extremely positive
So Highyield, why don't you attend the AGM yourself and ask those questions? Or maybe you don't actually hold any shares and so cannot attend the AGM? So, if that is the case, why are you even interested in the answer?
Are you just thinking about our best interests?
I wish we could edit a post if/when we make a mistake, also, is there anyway I can stop all the effing adverts that hinder and stop me using the site easily. It drives me round the bend lol 😀🤣
You're sounding more and more like haggis crusty!
So Highyield and as you well know - the terms of the Wentworth and the Kiliwani and Ntorya PSA's are totally different due to the arrangements around the "infrastructure" , offtake and the payments for the gas. The two are not comparable.
Moreover all PSA's have since been reviewed and many amended - 15% that is referenced in the Ntorya PSA may have been superseded by the now maximum of 20%. We have never been told that ours has changed through RNS or anything else but the BoD have referenced 20% being the TPDC entitlement at the last AGM. It is one of the things on my list of questions for the forthcoming AGM.
However until and unless you become an AEX shareholder I suggest the answer is hardly likely t be of any interest or relevance to you.
HighYield - nobody here has a clue what you're on about!
Oh yes they do Rojo..... they are more than aware of what he is "on about" ;0)
Are you sure you're not haggis?
Don't be a twat.
RoJo, alias mr " Gordon is a moron " la la la la la la. Sorry its my warped sense of humour. lol
Oh, I think we'll be just fine! From Shard Capital report of 25 May 2023:
"Therefore, as a point of reference, we note two potential value points that we believe the market may consider when deciding how much value to recognise should the 2Tcf be confirmed:
1) Extending the plateau of 140mmscf/s for 20 years, would result in an increased average annual FCF of c$25mm/year, and an approximated asset value of £175mm (~4x the current market cap), using a simplified 12% discount on FCF in perpetuity model. We note that in this case only 1Tcf of resources will be utilised in the 20-year period.
2) Theoretically, increasing the plateau to 250mmscf/s for 20 years would effectively exploit almost all of the 2Tcf of gas in this 20-year period. This hypothetical case, in our estimate, would generate an average annual FCF of about $40mm, representing an approximated asset value of ~£275mm net to AEX (~6x the current market cap)"
So, Free Cash Flow for Aminex of somewhere between $25m and $40m if the 3D seismic results were 2tcf. Obviously, they were very much higher than that.
My understanding from the question raised at the Agm was 20% was muted but negotiated back down to 15%
As Highyeild. I remember in the past you coming up with stuff like that. Would you like to support with some facts and a link please as I recall nothing of the sort.
PS if you read the RNS you will know an AGM has been arranged. Look forward to seeing you
That’s correct RJ, The Board did indeed say they had negotiated it down to 15%
Maybe they did but years ago, not since the last AGM... I repeat - he BoD said at the AGM last year they were expecting a 20% back-in.
TBC on 27th of course but as I have said umpteen times, I am not making it up.
Not my understanding of their wirds Crusty but we will find out next month when we can clarify. I agree they mentioned 20% was asked for but I maintain the negotiation. I think it was you that asked the question. No sweat
15 % back-in rights, is originally as it was and is excellent new that 5he TPDC couldn't negotiate it higher.
BlackGold
Yes there is a way of seeing the page properly but sadly this would mean not seeing the adverts which help keep this site funded to all our benefit. It involves a download of a software solution block.
Sorry for late reply, but I do not follow the discussions here on a regular basis. No, I am not a shareholder in AEX, and live in Norway, so I will not attend the AGM for any questions. My interest in AEX, is based on my previous holding in WEN and current holding of Orca, so my interest in AEX is more of a peer comparison. Based on the discussion following my post, the back-in right for TPDC seems to be around 15-20%. A clarification from the BOD at the AGM, could provide more certainty on that number. Regarding the PSA (profit shareing agreement), I base my numbers from the farm-out agreement in 2018 and that is based on the assumption that it will be similar to the fiscal terms as Killiwani North. Furtermore, WEN has fairly similar terms for the PSA at Mnazi bay. Orca has more favorable terms, but are unlikely to retain those terms in case of a license renewal. Any information on the fiscal terms from the BOD at the AGM would be valuable information for all, I think. I will post my findings on the fiscal terms, expressed in the farm-out agreement in a separate post.
Fiscal terms from the farm-out agreement.
"The Development Licence is at present under negotiation. Aminex suggested that there are many reasons to expect similar Fiscal Terms as the Kiliwani North development licence. Given the lack of approved fiscal terms and considering the status of Contingent Resources, it has been assumed fiscal and commercial terms similar as suggested: • Grant of a development licence for 25 years • Royaltyis payable at 12.5% by the Tanzania Petroleum Development Corporation (TPDC)
Cost Recovery:all costs considered as Recoverable Contract Expenses may be recovered from petroleum revenue limited to an amount not exceeding 40% to 60% for Oil and 60% for Gas. Any unrecovered cost is allowed to be carried forward into subsequent years without restriction. Recovered costs include Opex, Capex (depreciation) and Abandonment costs. Any excess of Cost petroleum after having recovered all costs is automatically considered as part of the profit petroleum and distributed according to the profit sharing terms.
Corporate Income Tax (CIT):The effective income tax rate applicable is 30.0%, calculated considering the following main deductions: o Operating Costs o Tangible Capital Costs: depreciation based on 20% straight line method o Intangible Capital Costs: 100% write-off in year spent."
Profit gas is split between TPDC and the contractors at a falling scale based on production volume. When production is low , the contractors get a larger share of profit gas (70%), and as production is increasing that share falls to 30%.
I guess discussions regarding fiscal terms, and back-in rights from TPDC could be the main reason for the delay of the development license.
You are quoting these figures HY but where did you get them from? Please supply a link so we may read them for ourselves or provide a page number for the farm out prospectus that many of us still hold copies of. It was monstrous document so please at least back up what you are saying or point us to it.
I remember the document took hours to read so as you state you are none invested party I am surprised you took such interest and as far as I am aware that document only went out to shareholders.
Just looking for confirmation
It took some time to find it again. Remeber, I had a look at it some years ago. You find it under Documents and circulars (2018) on AEX home page.. 181207_-EGM-Circular-web-version
Page 61-62
Will dig it out and refresh. Thanks