Member Info for CrustyPete

Actually the 15% of development costs includes a pro-rata contribution towards historic development costs. Though as I have mentioned before I believe we are still to see a historic contribution towards Kiliwani and it is not strictly enforceable..... Even if it was who on earth is going to threaten to take the TPDC to court? It would be commercial suicide....... :0)

Maybe Drewky but the important part of that statement is "if we do come up with oil"....... Moreover the big difference is that the Gas can be used domestically to "fuel" (excuse the pun) the growth of Tanzanian industry. Oil under any short term initiative would have to be exported and would not be used domestically; of course the petro-dollars that it earned would be useful but far greater value could be extracted once Tanzania has it's own refining capability. And all of the above assumes that there are both Commercial Quantites, flow rates and margin to justify extraction and infrastructure development; as we saw the TPDC have decided that is isn't worth building an 8" pipeline to Madimba without three wells churning out gas at quite a rate. It can be reasonably suggested that the Energy Minister may not approve the Development License without seeing post drill C1 flow rates (50:50); do you think they will have approved some speculative scheme for Oil production without the first drill being sunk? I think all entities concerned have more than enough on their plate without spending time, energy and money on hypothetical scenarios.

Strawman? I think it premature. There have been conversations with Middle Eastern States regarding the building of a Refinery in Tanzania. I think any Commercial imperative and strategy would be dependent on this. Why build a pipeline to export un-refined Oil when just for waiting a few years there may be a domestic refinery that enables you to add value to an otherwise low margin product? The Tanzanians would still be importing the high value refined products. Moreover they don't even know if they are going to find it at C1 in anything like Commercial quantities. So, yes maybe a high level discussion but nothing worth serious investigation until they know what they have under their feet. And as for the basin model CP, just bear in mind that it was only after NT2 that they decided they needed a new basin model and the ONLY drilling date they have relates to the higher level cretaceous levels. They know next to nothing about the Triassic and Jurassic levels so I cannot see them making definitive predictions or even estimates about what may be found at these lower levels. Even the TPDC have decided to rename NT3 as C1 to differentiate it from NT1 & 2 as an "Exploration Well". It would be foolhardy to initiate expensive studies and predictions until the new drill offers up some more hard and fast evidence.....

Treated differently? Yes I should say so. Let's assume that AEX actually find Oil anywhere within Ntorya; what do they do with it? There is no refining capacity, no suitable pipeline, no distribution infrastructure.... so yes they would have to treat it differently, it is a totally different "model". So how on earth does anyone come up with a Commercial Study for Oil? What are they going to do with it currently? There aren't too many options; get it to the coast and export it, raw, for external, third party refining....? Build a pipeline to alternative, external refining capacity. Where is the value in this for Tanzania? They would be extracting Oil that they could not themselves use. The greatest value would be "added" elsewhere.

CP, to pick up on your point, yes the License will cover all Hydrocarbons, however in the same way that the Development License required a revised and in depth Commercial Study and CPR for Ntorya Development I do not think it likely that AEX will get a GSA or it's Oil equivalent without something similar for any Oil finds: there was absolutely no indication that these had been submitted for anything other than Gas and the Ntorya EPS with the Development license application. So, in short whilst I suspect that there is the band width within the Development License to enable the Commercial Development of any Oil finds I would be very surprised nay, amazed, if the specifics of that have been explored in any detail whatsoever. It is virgin territory, there is no template for it within Tanzania, no infrastructure, no developed market, no nothing. They would be "inventing the wheel" and it would be a huge process. They would not have even begun that process until the situation demanded and justified it. Just my thoughts.

Maybe CP but think of it this way. The TPDC / Tanzanian Govt have asked us to change the name of the drill site to C1 from NT3 because, we are told, they view the new drill as an Exploration Well not an Appraisal Well and this because of the plan to drill into "uncharted waters". Moreover we have been told in the past that Oil is only the icing on the cake, fundamentally we are drilling for Gas. It is not inconsistent therefore to suggest that the EPS solution and 8 Well programme is based purely on the expectation of the CPR being proven whilst drilling C! and subsequent wells. This development programme could go ahead unaffected by an "Oil find". All the Development License needs to provide for is the flexibility to run an additional development programme alongside this for any unexpected progress. Moreover it would be senseless creating a Commercial Plan for something whose outcome is unknown and has only a limited chance of (commercial) success. The Development Plan is for 25 years and no-one can predict how that development will evolve over that period so flexibiity and adaptability needs to be built in.

Anyway BG, enough is enough; I will refrain from bringing this up again - if you do too. Everyone knows your position and don't need to be reminded of it yet again. And I won't need to be prompted into restating why I think you may have got it wrong.

BG, just to make the point about "in parentheses", see below: http://www.grammar-monster.com/lessons/commas_for_parenthesis.htm Examples of Commas Used as Parenthetical Punctuation The second boat in the race, the 6-berth Kontarka, was crewed by school children from Pembrokeshire. Mr Tommy Millar, 36, was jailed for robbing his father's grocery store. James, a 23-year-old beggar from Hale, left his 4-million-pound mansion to live on the streets. Each of which is equal in all respects to the quote that you keep repeating. "The Company expects to receive an extension to the Mtwara Licence, possibly until January 2020, during which time the development licence for Ntorya is expected to be finalized". So BG I beg to suggest that it certainly can be interpreted as I suggest...... Your alternative position does not hold water. You are suggesting that the BoD is awarded a Liscnese extension until 2020 but that supposedly it could also be 2020 before they get a Development License? Just think about the logic of that suggestion. What on earth would be the point of having the Mtwara License without the Development License approval in parallel or immediately there after? What on earth would they be drilling for or doing in the meantime? Running seismics for a development that they cannot guarantee approval of? They haven't even identified any alternative prospective targets within the Mtwara License area. So what you are suggesting is that AEX get a License Extension that runs until 2020 but don't get the Development License until potentially a month or two before the license expires?!? So what on earth would be the point of that? Come up with some new drill targets and new development scheme? What would be the route to market? Sorry BG but it makes no sense. Of course if the Mtwara License is extended until 2020 the Development License will have to be awarded within that period otherwise they will have a license and nothing to do! What they are saying in my view is that before the Mtwara License is awarded the 25 Development license will be finalized.... Though I would question what thy mean by "finalized"? That may NOT be the same thing as approved. That I grant you.

So explain why it "CAN NOT" be finalized until the results of C1...? I could understand "might not", I could even understand "probably not" but "can not"? That is just plainly wrong.

During the time that it takes to receive the Mtwara License extension for goodness sake....!! Even in the original quote "The Company expects to receive an extension to the Mtwara Licence, possibly until January 2020, during which time the development licence for Ntorya is expected to be finalised." The 2020 relates to the possible period of the extension and NOT the timing of receipt of that extension and nor, in my opinion, the finalization of the Development License. Anyway enough BG, all you have proven is that you are only looking to confirm your own preconceptions, Suit yourself, I know you will anyway. But in any event please cease from stating your own opinions as facts. They are NOT facts. To state that the Tanzanian Govt CAN NOT approve the Development License without AEX first drilling C1 is just nonsense. Of course they can. Whether they will remains to be seen. That said you cannot find one piece of factual evidence to support your statement. I am not saying that you are wrong; I am simply suggesting that you might not be right. Moreover that you seem to think that by stating it often enough it will be come an established fact, or at least the received wisdom. Well sorry but that isn't going to happen.

Sorry that should have been "inclusion" not "conclusion"....

As I said BG the "possibly until 2020" is said, "in parenthesis"; the sentence would have made total sense without it's conclusion..... the "possibly until 2020" relates purely to the Mtwara License and not the Development license The sentence could have read "The Company expects to receive an extension to the Mtwara Licence during which time the development licence for Ntorya is expected to be finalised."

I am not arguing matherdj, I would agree with you but that depends on where you stand in the equation. To the Zubairs any new shareholder money is "cheap" and compared to lending very cheap if, as was the case with ARGO they ended up with millions of warrants on top of the 15% annual interest! Yes, of course to us shareholders being diluted out of future gains is very expensive but that is not how the BoD would see it - they don't care who or how many their shareholders are.... Loans have fees and obligations and interest comes out of cash flow and that is one thing we don't have any right now whereas shareholders charge no interest and you can largely ignore any obligations to them outside of having to hold an AGM every year.

I couldn't agree more matherdj, but I am pretty sure that as a "Debt free Gas Producer" the BoD will not want their headline mission statement "tarnished" (and with KN1 currently on it's knees we are at risk then of being neither "debt free" nor a "gas producer"!!) and the Zubairs will want the shareholders to stump up 70% of the development costs as it is the cheapest source of funding - particularly if, like them, you don't give two hoots about the sp! I personally would like to see a new Majedie but, like you, I do not think it will get past our "cornerstone investor"....

Drewky I cannot claim to know for sure but my expectation is that the Development license will be for a fixed time period during which certain obligations need to be fulfilled. These obligations will be set at the outset (albeit with contingencies) but could be modified over time as various influences/ assumptions change; the price of gas may change the commercial model over time, subsequent drills may change the geological interpretation, the finding of Oil may change priorities, agreements with neighbouring states for the supply of gas / oil, political changes may alter Govt priorities etc, etc. We have seen the strategy for Ntorya (8 drills and two pipelines with existing locations); this plan must be based on predictions and assumptions regarding GIIP and flow rates and whilst all of these assumptions remain unchanged so too ought the strategy BUT these things are fluid. Flow rates might be exceeded, there may be an aborted drill and even the seismics may show that the original locations need changing and as are result we now need not 8 drills but 7 or 9...... Moreover I fully expect them to go on and drill more than 8 over time and who is to say that there wont be a third pipeline or that AEX will look at CNG and Genset infrastructure for any excess capacity? There will be "wiggle room" in the Development license for all of these eventualities and more.

BG I totally disagree. You state "it would seem then, that the F/O must be being negotiated with that view in mind, that is with no finalized development licence for sometime to come." It may seem like that to you but there is absolutely nothing in that statement that suggests that. "expects to receive an extension to the Mtwara Licence, possibly until January 2020, during which time the development licence for Ntorya is expected to be finalized". You selectively interpret that as, the Development License is expected to be finalised by 2020 (hence some considerable delay). However the "possibly until January 2020" is between commas - hence I suggest you read it thus. ""expects to receive an extension to the Mtwara Licence, .................., during which time the development license for Ntorya is expected to be finalized". If you read it that way it "seems" to me that the Development license is expected between now and when they receive the extension to the Mtwara license NOT sometime before 2020. As regards C1; you state "so it also seems to me that the development licence can not be finalized until results of the Chikumbi-1 are known". I will agree, and have said myself, that there is good reason to think this but it is totally misleading to say "development licence CAN NOT be finalized until results of the Chikumbi-1 are known....". Can not be finalised? Of course it can. You might not believe it but that does not make it an impossibility. The Tanzanian Govt could very well approve the License before C1 and you know they could, even if you do not believe it... All it requires is sufficient pressure being brought to bear on Tanzanian Govt and Energy Minister by AEX, Zubairs and others and he could choose to approve anything he likes! He might decide that the certainty of having Zubairs money behind the project is more important than the certainty of having drilled C1. It is as simple as that. It is a 50:50 call and to suggest otherwise is totally disingenuous. I could state that the Zubairs "can not finalize a farm-in before the Development License is in place...." - whilst I might believe it, it doesn't make it an impossibility. You appear to be looking at anything and everything to find evidence to support your own opinion. I am simply illustrating that there is more than one way to interpret the same statement that gives it a total different meaning. But IF as you suggest the Minister of Energy insists on C1 before the Development license is approved then I will bet that AEX BoD will be funding that with a dilution - because I cannot see the Zubairs farming in without it. Moreover no Development License until 2019 and no EPS until Q3/4 2019... Can the Energy Minister afford to be seen to be responsible for that delay?

Yes Drewky that would technically be the but do consider that the IO commercial study and resultant EPS strategy is an intrinsic part of the 25 Development License; that study must have used an assumed (or a given) price for that gas and any relevant obligations / commitments (infrastructure costs and provider) in the commercial study. So whilst I agree that it is highly likely that there will be one or more GSA agreements written in parallel with the Development License I suggest that the terms of, at least the NT1,2 & 3 GSA are already known and will be issued in tandem with the Development license. There is little point putting in a pipeline if there is no agreement in place to pump gas through it.... This would also allow AEX BoD to determine a for more accurate assessment of the value of any subsequent sale and /farm-out.

Me too Drewky, though now that we know that the TPDC now get involved with their own tweeting and PR I suspect that such a publication would come from them rather than AEX - or maybe both. Remember that as far as the TPDC and Tanzanian Govt are concerned these Gas Assets do not belong to AEX or AEX shareholders, AEX are just the Operator, the Gas belongs to the people of Tanzania; and hence the sensitivity around publication of any news to do with those assets...... For AEX to publish news such as this before the TPDC would be a breach of protocol methinks. The Tanzanian people, the owners of the gas, should get to see it before the shareholders of the Operator. Not quite how we Shareholders might see it but pretty much the way it is.

That would all be very do-able unless, as I do, you believe that the Farm-Out may well be contingent on the Development license approval. It would not surprise me if the Zubairs and the BoD have agreed terms in "principle" but are awaiting the Development License approval before being able to release them. If I am right you would need to work in the Dev license approval into that forecast; otherwise I fear that we may well see the BoD issue a new resolution for the AGM to raise up to 20% of new authorised capital as part of the published agenda.....

An extension Drewky would apply from the date that the last one "expired" and so be half way through already as it is already over 18 months "out of date". More importantly the License concerned was an Exploration License whereas the more recent Ntorya License was an Appraisal License; the BoD have already stated that as the two areas are geologically joined and thereby, to all intents and purposes, inseparable they were looking to bring the two licenses into line. When new licenses are created the operator usually has to pay for the concession, so this "new" license might just be an excuse for the TPDC to get more money out of AEX; I am sure that AEX would like to flower it up as an extension and thereby avoid additional costs. Maybe they will get away with this one. Time will tell I guess. I personally would expect the Ntorya Development area to be separate from the other areas, whether that be one or two - so it will be interesting to see what it is that the Zubairs are looking to farm in to. One, two or all three licenses.