The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Thank you for posting Brendanor and paying so we can all see what is behind the paywall. The ninety days wait for the lease agreement has only a couple of weeks to run so interesting times next month. As Manayana has mentioned Providence may be in a position to take legal action if the lease agreement is not forthcoming. Either way time is up next month and some decision will need to be taken as the the future direction of the company. It is a black or red bet as to how things go.
Article in the Post today:
https://www.businesspost.ie/news/former-glen-dimplex-boss-ups-stake-in-providence-resources/
That is Sean O'Driscoll's company. I think people were wondering if he had taken a stake a while back. Well it is official now.
The fuel shortages at the pumps in a few months from now should focus the spot light on Barryroe
https://www.irishexaminer.com/news/arid-40900784.html
The Green Agenda is very aggressive TheShen. They are careful not to engage with the debate around the need for oil and gas instead choosing to demonize the industry. For example Caroline Lucas mentioned that it takes thirty years to drill a new well. Providence need to take a leaf out of her book - drilling a well taking six weeks, shipped ashore to Whitty, refined immediately and straight on to the forecourt, and due to extra supply, lowering the price to the customer. One of the problems for some countries is the lack of refining capacity, a problem that Ireland does not have,as oil from Barryroe would replace imports.
Europe using its own oil and gas fields will help in reducing inflation across the block as well as securing Europe's energy security as we transition to renewables in the medium term. Barryroe has an important role to play, not only in securing Ireland's energy security but also that of Europe's , especially when you consider that the proven reserves of 350 million barrels may well be just a section of what is available from the field. The PR department working for Providence have to date decided to keep a low profile due to the overarching shadow of the environmental movement, but things are changing fast on the ground. Two euros a litre for petrol is beginning to look like good value, so allowing people to know that there is 350 million barrels of crude oil waiting to come ashore and be refined into 350 billion litres of petrol, no longer seems like something that should be kept hidden under a stone. Public opinion will be on the side of Barryroe and that will apply political pressure.
Thank you JODO and Haggismchaggis1
You never know what will happen and as they say paper never refused ink. I am encouraged by the fact that the Sultanate of Oman through the Zubair Corporation is heavily involved. Local to the region so should have some influence.Getting a great deal but that is the way with big money. Also the change in the President of Tanzania was a big plus. The price of gas is also making it very attractive now. Hopefully the price will increase as we approach November and we can hedge our bets by selling some shares before the drill.
It is ten years since former Aminex boss Brian Hall originally hit part dirt in the Ruvuma licence in Tanzania, when he took on sole risk after Tullow Oil pulled out of a 50/50 deal on the licence, discovering a secondary target flowing gas at 20 million cubic feet a day. Hall followed this up five years later in 2017, when he drilled the second well, Ntorya- 2, that encountered a significant 51 metres of gas bearing sands, which in turn flowed at a rate of 17 million cubic feet a day, through a restrictive choke. Today, there has been little sign of real progress but a drill planned for November could change things very quickly.
Since then, there has been a lot of coming and going with JJ Bhaattacharjee, who came on board as CEO in 2014 to develop this gas field, jumping ship in May 2019. This was surprising, given that Hall had retired as chairman in August 2018
After the big discoveries, the plan was to drill a four-mile step-out well to prove up this estimated near two trillion cubic feet gas field. This crucial well is finally set for drilling in months.
- November 2022- and should prove up the full extent of this field. Significant reserves have already been identified on foot of this first two wells, but if the new source is a success, this could turn out to be a bigger field than anticipated.
It is difficult to know what has taken so long to move things along, with Hall having raised $25 million after the first successful well, and the sultanate of Oman put up $17 million through Zubair Corporation to land a 28% shareholding. This funding paid for the second well and was so successful that it should not have been difficult to raise funds to build the third well.
Just before Hall exited in August 2018, he secured the future of Aminex by farming out two-thirds of the company's 75% stake in the Ruvuma gas field, although this deal looked a bit too cosy, involving a farm-out with ARA Petroleum Tanzania (APT), a subsidiary of Zabair Corp which is, in turn, controlled by the Sultanate of Oman.
The deal, nevertheless, looks sound in that APT is committed to drill not only the third planned well, called Chakumbi -1, but to fully develop the field and commit to spending $140m and pay £5m to Aminex upfront.
This valued its carry for Aminexat £35m. Without having to pay a cent more, Aminex will benefit for a cost-free 25% interest in the development of this field
It was only in October 2020 that the farm-out deal with ARA was finally completed. It was not helpful that the president of Tanzania, John Magufuli, ran what was a semi-dictatorship. The Covid-denier eventually contracted the virus and died in March last year, resulting in his deputy, Samia Suluhashassain, taking over the hot seat.
She has claimed she will not as autocratic as her predecessor, and plans to open up Tanzania to foreign investment and develop international relationships. On the surface at least, this should only be good for Aminex
Recent financing activity has been hard to understand however. In his review in the 2020 annual report last year, executive chairman, Charles Santos, describing the APT deal, said: " This transaction should see the company entirely carried to material levels of production and revenue and without the need to return to shareholders for any additional funding for the development of the Ntoya location."
That deal left Aminex without any borrowings and net cast of $0,4m at year end, while the company had also committed to reducing overheads because it was no longer activity engaged in the big Ruvuma gas field project
Moreover, a long running dispute with that state's Tanzania Petroleum Development Corp over gas sold from the Songo Island offshore field ended with a 1.85m pay-out to Aminex (albeit well short of the $8m originally claimed)
Nevertheless, in January this year the company raised $4.4m in new equity by way of a placing. This is despite the fact that Santos, has been successful in reducing the less active Aminex's ongoing costs, slashing them from $6m to $1.5 pa - a 75% reduction.
Elsewhere, Aminex believes that there are further mineral reserves yet untapped in the Kiliwani gas field offshore. Tanzania and the area is now the beneficiary of a significant 13sq km new 3D seismic survey over this field, and an adjoining one, carried out by Pan African Energy Tanzania (PAET)
Aminex has no plans to go back in and redrill its prospects here, but, if this seismic survey shows up anything exciting, the company will negotiate a further farm-out deal with PAET to develop the Kiliwani gas field
Separately, onshore in the big Ruvuma gas field, Aminex's farmout partner, APT is now completing its own 3D seismic survey over the whole field and is committed to drilling and testing the four-mile step-out well. On foot of this survey, APT, will then format a field development programme for the Ntoya gas field
If Chikumbi -1 shows up anything like the 20 million cubic feet a day demonstrated on Hall's first well, then rather than the estimated 1.87 trillion cubic feet of gas that RPS Energy previously estimated to be in the field, on foot of the first two wells, the total could be closer to six trillion cubic feet.
Significantly, oil prices are back up at more than $100 a barrel and gas prices have been pulled up as a direct result and are likely to stay high, given the increasing commitment of the US and EU to gradually reduce and eventually ban all use of Russian gas and oil, no matter what happens with the war in Ukraine.
Previously, the estabished gas in Tanzania was $3 per 1,000 cubic feet but the going rate today is more like $10. If the step-out well drill is successful and APT proves up anything like a six trillion cubic feet gas field, with a 50% recovery rate, this would make this field worth a gross of £30bn and Aminex's 50% $7.5bn
This gas field is right at the end of a 300-mile 36-inch gas pipeline that goes all the way up to the capital city of Darsses Salam and connects up to a big power plant there, passing through a big ceramics factory and a cement plant adjacent to the field. Therefore, development of the field will not have to wait for any new pipeline infrastructure, and gas will be able to flow immediatly.
Aminex shareholders have had a awful time. Hall did an impressive job developing gas field in Russia in the 1990's before eventually selling out under duress for $20m. More recently, the company discovered the small Kiliwani gas field, before the two big onshore gas wells were drilled
The share price hit 17p in the late 1990s and fell back to 10p in the early noughties, before briefly hitting another peak of 41p in 2006 on expectation of the drill offshore Tanzania.
After Hall's first success onshore Tanzanai in 2012, the shares recovered again, this time to 7p but have never regained this level and now trade at a little less than 1p, at which the company is capitalised at £32m
Assuming the onshore drill in November shows recoverable reserve of up to three trillion cubic feet of gas as forecast, then, Aminex's net share of revenue, before the government takes its taxes, of course, would be a gross £7.5b
Even if half of this is accounted for by production costs and royalties, this would make Aminex shares worth about £1 each, 100 time the price they are trading at currently. This looks like a very wide gap and could close very rapidly if the step-out well drill delivers on expectations.
If it doesn't, the existing discovery proven up by the two successful gas wells already drilled would equate to an equivalent gross value of the field of $2.5bn. Again, assuming 50% is spent on production costs and government levies, this would leave the shares worth 30p
The unfortunate Aminex shareholders will be keeping their figures crossed that they eventually get some real good news.
We are almost at the point in Ireland where opposition politicians and the media are going to be talking publicly about why Eamon Ryan is not signing the lease agreement for Barryroe. The UK has started drilling again in the North Sea and Germany and others are looking for new oil and gas fields around Europe. With energy prices increasing and the real risk now of supply restrictions the penny is beginning to drop to with the Irish public that we should be doing the same and they may very well discover that we are sitting on 86 million barrels of crude oil in one hundred meters of shallow water a couple of miles from an oil refinery in Whitty that will turn that 89 million barrels of crude oil into hundreds of billions of litres of petrol and diesel. We are close to everyone in Ireland knowing that there is a Irish oil and gas company called Providence Resources. Now that is providence.
Good to see a change of direction when it comes to public relations. The public will be glad to be made aware that Ireland has one of the biggest oil and gas fields in Europe off the coast of Cork and it is the perfect time to let people know that we can secure our fossil fuel needs for the next decade
I agree Swizz. I think the government can give Barryroe the green light as the war in Ukraine has made it necessary to find new sources of oil and gas. The European Union will also be in favor of exploration around the seas of Europe. It is almost impossible to argue against Barryroe in the current climate ( forgive the pun) and the green party should be able to go along with it.
No guarantees when drilling for oil, which works in Providences favor, as it gives cover to Eamon Ryan, as he can mention that oil has never been found before in Ireland and if they do find oil he can mention that due to the war we can use it for a couple of years.
Swizz draws attention to the realize of this document on the ADVFM board today. He mentions that these cohesive plans are required for alternative and secure supplies of gas.
Table of Contents: Section Seven
7: Theme 3: Reducing our Dependency on Imported Fossil Fuels.
This section sets out how Ireland is seeking to phase out our dependency on Russian gas,
oil and coal imports as soon as possible. It is focused on three areas of work:
• Reducing demand for fossil fuels, which would seek to reduce overall demand for
oil, natural gas and coal in Ireland. This can be done through demand reduction
measures (such as using public transport instead of driving), or energy efficiency
measures (such as retrofitting buildings). Reducing demand for fossil fuels is being
considered across the heat, transport and electricity sectors.
• Replacing fossil fuels with renewables, which would seek to reduce the use of
gas, oil and coal in Ireland by replacing it with renewable energy sources such as
wind energy, solar energy or bioenergy.
• Diversifying fossil fuel supplies, which would seek to replace any Russian
supplies of gas, oil and coal (direct or indirect) with supplies from other sources
Hopefully diversifying fossil fuel supplies means using existing exploration licences that are part of the agreed programme for government.
With Europe naming gas as a green energy and the need for more oil drilling off the coast of Europe due the upcoming ban on Russia oil in May. The Green Party can go along with these polices as long as oil and gas use does not increase and continues to decrease over time. For example reaching the target of one million electric cars by 2030 in Ireland, leaving one million cars on petrol and diesel as well as the heavy machinery fleet.
David McWilliams is on the Claire Byrne show on RTE radio one. He just said that Ireland gets it's deisel from three refineries in the UK. These refineries have no crude oil at the moment so we we will have no deisel in three or four weeks time. To quote Claire Byrne " Three or four weeks time!"
He says we have outsourced our energy supply to Russia.
The Department of the Environment has mooted the idea of a state owned non commercial LNG terminal as part of an energy security review. The departments review team should also ask Eamon Ryan to sign the lease agreement for Barryroe!
A state-owned, non-commercial LNG terminal is mooted as part of energy security review. The
Creation of gas storage capacity and conserving some Corrib gas for emergencies are also raised as possible strategies by the review team
Daniel Murray
Political Correspondent
@danieltmurray
20th March, 2022
A state-owned, non-commercial LNG terminal is mooted as part of a energy security review.
A state-owned non-commercial LNG terminal, the creation of significant gas storage capacity, and payments to the operators of the Corrib gas field to leave gas in the ground for any potential future emergencies are being considered as part of the state’s review of Ireland’s energy security.
The review, which is being carried out by the Department of Environment, Climate and Communications, was first commissioned in 2019 by then minister Richard Bruton...