Wentworth Resources are something of an E&P anomaly. Covid 19 and the oil price crash have inflicted damage on many AIM-listed companies, but by contrast, Wentworth have continued their work programme and were financially confident enough to pay the second dividend of the financial year, amounting to a 7.6% yeild. #WEN are debt free and have $15.7M in cash as of May 2020.
In an exclusive interview with London South East, Katherine Roe CEO talked us through her growth strategy for the Tanzania-based gas business, and gave us an in-depth operational update. #WEN’s primary asset is a 32% non-operated holding in the Mnazi Bay gas field in the south of Tanzania, close to the border with Mozambique. It has a fixed price gas offtake contract until the end of the licence in 2031 and firmly a sustainable partnership approach with the Tanzanian Government is the way to do business in the country.
The field operator is Maurel & Prom, and the Government hold the remaining 20% through TPDC. Mnazi Bay is one of the largest natural gas fields in Tanzania and supplies gas to power electricity stations in the main industrial city of Dar es Salaam in the north. The electricity made is used primarily for domestic power generation. #WEN hope to close the ‘access to power gap’ in the country, where 8 million households are without electricity.
Tanzania has Hydro electricity, more prevalent in the rainy season, Gas and Renewable energy. Wentworth have given production guidance of 65 to 75 MMscf/day (gross) for the year, and when in-country demand has increased can supply to over 100 MMscf/day. Demand for gas will grow as new power stations are built and existing capacity expanded. Electricity distribution infrastructure is to be extended throughout Tanzania.
When challenged about a change of political leadership in-country Katherine said: “Access to low-cost, affordable power is a political imperative, regardless of who is President, who is in power, it’s at the heart of any country’s development”. And why hold Wentworth stock? I have paraphrased Katherine below.
1. Tanzania has a growing population and its energy needs will grow exponentially. Wentworth gives you exposure to the Tanzania opportunity via a well run high quality business.
2. We are an ESG-friendly business in a very difficult space which is moving towards a lower carbon carbon energy solution. Natural gas works well as a transition fuel. 3. We have a unique opportunity to deliver the possibility of both capital and income growth.