The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Missed the last couple questions at the end as my phone fell off, but they did cover cover flow rate estimate, which was helpful. With new mgmt coming in, I suppose all estimates will be off the table anyway. No other suprises.
...management has BECOME... aargh...
I think management has very conservative after several years of overpromising (und under delivering). However, with 80 MMscf/d production in February (yes, 100%...), and Kinyerezi II, Dangote and Kinyerezi I expansion at the end of the year increasing demand further, 100 MMscf/d in Nov/Dec sounds very achievable I would think. I wonder if Geoff will mention anything about the March payments during the conference call. It would not surprise me if he'll leave it to the new management to report out about this next week.
It's good cashflow, though mgmt stated: "The Company expects gross gas sales from the Mnazi Bay asset to average between 65 and 75 MMscf/d throughout 2018". Seems pretty conservative considering they had a tremendous Feb, with continued growth in demand over the year. Not sure why. I'll be dialing into the call at 3pm as Geoff and Lance do a good job of talking through the numbers, and answering questions. Perhaps they'll shed some light. Too bad they're leaving, and that they're dropping the Q1 and Q3 reports.
Correct Vike. Good for a total cash flow of more than 4 mln per month, WRL share, according to my estimates. And moving to 130 MMscf/d (100%) in 2019!
32% of a 100MMscf/d, no?
As long as the TPDC PAYMENTS keep coming in as scheduled, I am very happy!
Very few surprises. Makes sense to request an appraisal license extension in Mozambique at this stage, and given the civil unrest in the area last year ( reduced/resolved now I understand), I fully expect that this will be granted indeed. Average production is currently ca. 48% higher than in 2017 already (72.5 MMscf/d in Jan/Feb 2018 vs. 49.1 in 2017) so 2018 should be an excellent year. Pity perhaps that we won't get a Q1 and Q3 update any longer. By the end of this year, WRL will be a different company with a significant cash balance, low debt, production around 100 MMscf/d and a very healthy monthly income. As long as the TPDC keep coming in as scheduled, I am very happy!
anzania (Mnazi Bay) Increased average gross daily gas production of 49.1 MMscf/d (2016: 43.0 MMscf/d). Gross gas sales volumes increased by 14 percent in 2017. Exit daily gas production rate of 73.4 MMscf/d The Company received total cash payments of $18.57 million relating to gas sales and recovery of the long-term government receivable during 2017. During the course of 2017, gas sales receivables from the main purchaser of gas increased from two to four months in arrears. Regular payments have been received since Q2 2017. The Company continues to proactively manage working capital, by matching settlement obligations with gas sales payment timing.
Wentworth, the Oslo Stock Exchange (OSE: WRL) and AIM (AIM: WRL) listed independent, East Africa-focused oil & gas company, is pleased to announce the appointment of Katherine Roe as Chief Financial Officer ("CFO") of the Company, effective 1 April 2018. This announcement is further to the announcements made in November 2017 and January 2018 in relation to the Company's plans to relocate its head office to London from Calgary, Canada and establish an executive management team based in London.
Spot on Alph Annual Financial Statements and MD&A from Thursday, 29 March to Wednesday, 28 March 2018 to accommodate a national holiday in Norway.
Thank you Mick. Mutual milyonares to be......
Quite the opposite Tanzania, I think Eclipse Investments is a very smart company. Their parent company Zubair holds 29.9% of Aminex so I understand, so they all understand the situation in Tanzania very well. They also know the value of a high share price for a company that needs money... All I expect is that this �possible transaction� will not be completed anytime soon..... It�s time for fund raising first. The share price needs to be stable and Nyuni is a perfect card to play for that. If the transaction will actually ever be completed can be decided after that... Just don�t get depressed or take it personal, it�s only business! But good luck anyway, let�s hope that I�m just too cynical...
I could be quite depressed by your view of Aminex's prospects. Surely if it is true that demand for Gas in Tanzania is growing, all exploration companies could/should benefit ? As well, are you saying that the hugely funded investment company currently considering an Aminex farm-in has poor judgement ? Then of course there is Malcy's Bucket List which sees good reason to be optimistic about Aminex's future. I would rather hope both companies have high prospects, so bring it on !
Spot on mick2020. Truely remarkable that wentworth still has a marked cap Below AEX. For sure that would not last for long.
Tanzania, Unfortunatey, I fail to see why any near term gas consumption forecast is relevant for Aminex. Aminex produces barely enough to light a barbeque right nie, and it seems that it will take a long time before this will fundamentally change. OK, they might get Kiliwani back for a few months, but even that looks uncertain given the time it takes to install a compressor. Ntorya remains stranded as long as ther is no pipeline, which could easily take several years. Yes, you are right, a farm out of Nyuni COULD bring some money... but then, it could also lead to absolutely nothing (apart from a nice jump in share price in the short term.... besides, as LNG in Tanzania is at least a decade away, I wonder how much anybody would offer anyway for a stake) To me Aminex is a company that is very good at promising a wonderful future, without delivering on it. Their RNS�s are also amazing: the last write off of Kiliwani reserves and very modest NT-1, NT-2 and NT-3 resources was nicely masked by news of a huge increase in highly uncertain exploration resources in the wider Ntorya area... But indeed, if you like a roller coaster and don�t mind the risk of losing your money, then AEX is a great company. WRL is far more �boring�..... the only thing that matters is how quickly production is ramped-up to 130 MMscf/d, how large the invoices are that the company receives and what will happen with the Tembo farm out in Mozambique.... If you like more certainty and don�t like the risk of losing money, I think WRL is by far the more attractive company!
I keep an eye open on both WRL and AEX being a very, very LTH of the latter. The past week has been a good one for both companies has it not ? I say this because It appears to me there is a significant tick up on forward gas consumption estimates. I originally bought into Aminex at the time of the 20plus sp because of the acreage we had, but when the downturn came, kept faith averaging down in the 1p era. If you want the excitement of a roller coaster ride, you can't beat Aminex. Right now, things are afoot which could bring some real value our way, but then again, how many times have I told myself that ! We will see and my best of good luck to you all.
Have to wait and see how many $ Millions roll in from the Zubairs or ANO this time around and for what % then you can determine the time frame for the development plan. Still debt free that way. Everything costs!
Also fully agree HY, I have been expecting a capital raising for a while now. The tweets earlier this year also pointed to that. To me it looks as if the company is desperate to keep the shareprice stable right now (around 3p) in the absense of any real progress. But amazing to see the euphoria on the AEX forum. I have to say AEX truly excels is selling future promises.... if they materialise or not is a whole different matter!
Thanks HY, agree with your comments. My only issue is that the enterprise multiple (EV/EBITDA) is probably more interesting for potential buyers of the company, while the P/E ratio is more visible for private investors, and gets quoted almost everywhere (incl. this website). As both indicators look very good at flowrates > 80 MMscf/d, it doesn�t really matter which one you use...
I read the news from AEX yesterday, but see it quite different from most posters on the AEX board. The general view on the AEX board, seems to be that the potential transaction is a way for the majority owner, Zubair Corp to increase its exposure towards the Ntoyra Appraisal area without increasing its equity holdings in AEX above 30%. Alternatively to refute possible interest in the area by others. My reading of the situation is quite the opposite, I think AEX has tried to raise capital in the market after the CPR, but has failed to attract interest. In order to be able to fund NT3, a farm-out to the majority owner becomes an alternative. It will be very interesting to see at what price such a possible transaction will take place. If we assume that the entire value of AEX and Solo relates to the Ntoyra Appraisal area. This is of course not entirely correct as there are other assets and liabilities in both companies as well. However, by making this assumption each percentage of ownership of the appraisal area is valued very differently in these companies. In AEX each percentage of Ntorya is valued1.42 M pound (107/75), while in Solo the value is 0.52M pound (13/25). It will be most interesting to see, at what price a potential transaction will take place. I will not be able to respond to any comments, as I will be travelling today.
Mick, when trying to find a fair value of WRL, I would prefer a EV/EBITDA multiple instead of PE. Price earnings multiples are normally after tax, and WRL do book a tax charge, however they do not pay any taxes due to tax losses carried forward. I would be looking at annual EBITDA of about 20 MUSD when production reaches 100mmscf/d. Current EV (Mcap+net debt) is about 90 MUSD (76+14). However, I would treat the 20 MUSD TPDC receivable as cash, and then the EV would be 70 MUSD instead. What EV/EBITDA multiple should WRL traded at? I would say a normal multiple would be between 6-8X. Let's assume 7, is a fair number, then a fair EV would be 140 MUSD (7*20). With my assumptions the EV would consist of 145 MUSD in Mcap and a negative net debt (net cash of about 6 MUSD (20-14). A fair market cap of 145 MUSD, implies about a doubbling of today's share price. The it could be discussed what a fair EV/EBITDA multiple should be taking into account the size of reserves, exploration potential, need for Capex and value of tax losses carried forward etc.
Thanks for your comments. Highyield, the problem I have with including the TPDC receivable is that these payments will come to an end at sone point (early 2019?), and more importantly, that most of it will be used to pay off debt. But saying that, my P/E numbers still look very good. Assuming indeed that all other costs are fixed, I calculated a P/E of 8.5 at 80 MMscf/d, with a further improvement to 7.3 with all debt has been paid off (so without the 350k interest charges as in Q3). As it seems more and more likely that we will produce at 100 MMscf/d in the second half of this year, I think the P/E ratio at that rate is actually more important: my numbers: 5.0 with current interest payments, improving to 4.6 with zero debt. At 130 MMscf/d (2nd half 2019?) it starts to become pretty crazy: between 3.2 and 3.0... All in all, based on these numbers I think a doubling of the share price this year is more than justified. Once we achieve 100 MMscf/d, and with a clear sight on producing 130 MMscf/d another 50% increase is even realistic.... And if a P/E of 12-15 is suitable (I agree), then the price should increase even further! Good times ahead! (Just wish it would go a bit quicker...)
It seems more suitable to use an P/EBITDA - Capex, as most of the capex is already invested in the field. As I remember WRL share of investment in Mnazi is well above 100 mUSD, and according to the most recent CPR 2p reserves need only capital of 18 mUSD. I did a brief calculation, dividing the Capex of 18 mUSD over the next 10 years, at a production level of a 100 mmscf/d brings a free cash flow ex. TPDC receivable of 17,6 mUSD/year. And as so a P/"E" of 4, I've reckon a P/E 12-15 would be suitable given the low interest rate environment we live in.