Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Hi Max - tbh I don’t think you’ll find a Chairman whose interests are more aligned with the shareholders than Keith Phair. He draws minimal income as a NED (granted we don’t know if that’s changed now he’s taken the role of Chairman) and is heavily invested in Aminex. He invested in Aminex long before he took the role of NED and was brought on board to look out for shareholder interests. As the SP sits in the doldrums I understand that may be hard to believe, but for me, I’d happily have him take the role on a permanent basis (and perhaps be compensated with shares as opposed to salary!)
I'm surprised at the consensus that this will still likely happen this year. The language used from the company started changing early this year, from looking at H2 2018 to something non-specified and far more open-ended. The last reference I could see to this year was in April (haven't trawled everything on line so if I've missed anything, do tell)
But I've personally written it off for this year.
Corproate Presentation
Mon, 5th Feb 2018
"Company committed to drill Ntorya-3 with forecasted spud 2H 2018"
Operations Update
Mon, 8th Jan 2018
"The Company is actively engaged with the Tanzanian authorities and with third-party engineering firms on advanced well planning and drilling management for the Ntorya-3 well which it is committed to drill as soon as operationally possible"
Ruvuma Operational Update
Mon, 9th April 2018
"The tendering process for a rig to drill Chikumbi-1 is due to close during the current quarter with an expected spud date later in the year"
Transformational Ruvuma Farm-Out
Wed, 11th July 2018
"Drill, complete, and test Chikumbi-1 (formally Ntorya-3) as soon as reasonably practicable"
Operational Update
Thu 23rd Aug 2018
"If successful, CH-1 is expected to be produced into the existing Madimba Gas Processing Plant and ultimately integrated into a full field development programme."
No mention of dates at all.
2018 Half-yearly Report
Fri, 28th Sep 2018
"During the first half of 2018, the Company continued to progress work on the Chikumbi-1 drilling prospect in preparation for the completion of the Farm-Out with an expectation to commence the Chikumbi-1 drilling programme as soon as reasonably practicable."
Hi Drewky - I didn't see the deets about the circular not arriving in September so I'm not ignoring it but basing my PoV on the information I've consumed. If that's inaccurate I'm happy to stand corrected - do you have a link handy?
Having initially purchased in 2006 I got tired of visiting presentations and meetings tbh as I concluded that much of the information around prospects and dates to be unreliable. My money remains in AEX to back Ruvuma and I still consider that as having decent (though diminishing) potential upside, despite the geopolitical risk and sadly, the poor communication and ability to keep to commitments from the AEX team. So it's a case of sit and wait and try not to get too fed up with the inconsistent and inaccurate drivel presented to the market (CH-1 is looking like it's going to be pushed back to next year which could well be nearly 2 years from the initial dates considered - I'd be interested to hear your (unemotional!) justification for this as I always like to have my PoV challenged). I'm not convinced the end of November will be committed to and neither it appears is the market.
And lastly, I think it's quite reasonable to assume that investors make decisions based on information from the CEO. And quite reasonable to become frustrated when that information shifts or proves itself to be unreliable.
So when a CEO clearly and publicly states that they will make material notification to the market within a given month and people invest their money based on that information, and the CEO then fails to deliver on that statement, causing the share price to drop very significantly, which in turn causes people to lose a significant proportion of the money they invested, does that make the CEO an incompetent communicator or are they actually lying to the market, in the hope that people will invest in his company in a flawed attempt to bolster the share price?
Hi Dunder & CP - what, we haven't found 155,155,272 barrels of oil???
@Drewky - I'm just trying to help so we can get a more realistic valuation and the way you've presented the figures figures doesn't do that.
"If that were the case I would not be wrong would I". No, you would not be wrong.
If I grew wings I could ease my commute to the office by flying there. I'm not wrong in making that statement either, but the fact is I'm not going to grow wings and neither are Aminex going to extract 155,155,272 barrels of oil at $80 per barrel. I would happily bet more than I have invested here on that.
Sorry to sound direct - you're doing some great work flying the flag but I think conceding on a few points would be helpful to readers of this board. There is a fantastic asset in play here and that's why we're invested - there is no need to over-state its value and doing so serves to make Aminex look like a fool's investment - a different conversation all together ;-)
Hi Drewky - I'm sure if you Google you'll find more stuff around valuation and I'll absolutely hold my hands up to say mine is a very crude (pun?!) approach and a discounted cash model is probably a better approach though I've never fully got my head around it. But this article does put some sense on it, though I think he's looking at a lower in the ground value than $10/bbl:
https://oilprice.com/Energy/Crude-Oil/Why-Value-Per-Barrel-Is-Such-A-Lousy-Metric.html
It is NOT just the market fluctuations of the oil price that keep the in the ground price lower than the spot price. It is intended to show what the field is valued as NOW (i.e. if a company was intending to buy Aminex), as opposed to what cashflow it will generate between date x and the field's end of life. For example KN-1 is presently producing nothing and requires spend to get it on side. What if the geology is more complex than first thought and the field is highly compartmentalised and therefore the oil cannot flow as expected meaning we cannot retrieve as much as intended. The point I'm trying to make is that just because something has been found in the ground, there are still myriad problems that can prevent full recovery (and yes, spot price is one of them - imagine a collapse in the oil price 6 months into producing from your new field) and that is why the Net Asset Value (what's your asset worth now) is significantly lower than the spot price.
You cannot assign $80/bbl - it is wholly inaccurate and nobody valuing a oil company professionally would do so.
Drewky - in the ground valuation is usually assigned $10 per barrel and gauged against P10, P50 and P90 chances of recovery:
P10 155,155,272 * 0.1 = 15,515,527 * $10 = $155,155,272 (£119,526,191)
P50 155,155,272 * 0.5 = 77,577,636 * $10 = $775,776,360 (£597,630,955)
P90 155,155,272 * 0.9 = 139,639,744 * $10 = $1,396,397,448 (£1,075,735,720)
Therefore, in the massively unlikely event (i.e. borderline nonsense) of the lower target containing only oil and that 90% (P90) of that oil can be recovered, it would have a Net Asset Value of around £1 billion or about 30p a share.
On a P10 basis that's £120 million or by my calculations about 3p a share.
So all worth finding but putting a valuation of $12 billion is inaccurate for valuation purposes.
Hi randomaxe - do we know what the salaries are currently?
The only thing I've seen are the figures published in the 2017 results where yep, there was a salary hike throughout 2017 for JB and MW (though overall salary payments were down due to WT leaving), and a bonus awarded based on "successful drilling of Ntorya-2 well, continuing production from Kiliwani North-1, repayment of all debt of the Company and submission of Development Licence application for Ntorya discovery".
So as far as I'm aware we don't know what their salaries are for 2018. The basis for last year's bonus is now clearly out of the window so I would expect that, unless the farm-out is signed off before year-end, little or no bonus would be awarded this year.
Like you, I'd like to see a salary reduction for 2018, though remain doubtful that it will have happened - but as far as I'm aware we presently do not know as the information is not in the public domain (happy to be proved wrong); there was nothing I could see in today's half year report.
Annual report here:
http://admin.aminex-plc.com/uploadfiles/Aminex%20PLC%20Annual%20Report%202017.pdf
"I agree expected does give them a get out, but we surely can't expect them to give specific dates when so much relies on a third party to come up with the goods". Absolutely agree - so why give a date at all, it's leaving them wide open to criticism when it fails materialise?
Why not more along the lines of :
"We are aiming to complete the farm-out before end of year. Risk that may affect that target date are x, y and z."
Aminex are in an industry and region that is high-risk and prone to delay. Continually putting up dates that cannot be kept ruins credibility for many who struggle to accept the and risk frustrations of the industry and for me, I'd rather see the messaging managed better. It could go a long way to regain some of that credibility lost through continually slipping on expected or promised dates.
Hey Drewky,
I value your input here so I'm not intending to slight that - but I don't think we can trust their published dates anymore. I appreciate the text "The Farm-Out is expected to be completed by 30 November 2018" but that word "expected" gives them a get-out - they have too much previous with slipped dates to form any bond of trust for me and the deal has now become more risky as I think is being reflected in the share price.
I think this is a material negative:
"drilling, completion and testing of the Chikumbi-1 well as soon as reasonably practicable, which is designed to test an exploration Jurassic target while delineating the Cretaceous Ntorya gas field and be left as a producer, as soon as reasonably practicable".
So the date has slipped again - we now have no estimate on dates and I assume this is down to the issue highlighted yesterday wrt the horrendously slow pace at which licences are being approved. This worries me - and presents risk to a deal being done by November, given that deal is "subject to the grant of an extension to the Mtwara Licence, currently awaiting approval".
Have I mis-read this?
A shame those Oil barrel Conference presentations aren't available as I'm sure I recall him talking about the unexpected size of the flare when he presented there, shortly after the Kiliwani N drill. Also saying how pleasantly surprised everyone was given how shoddy the seismic was.
I seriously think Aminex have lucked out (more with Ruvuma than Kiliwani) - buying some cheap and poor quality seismic that just so happened to have been taken over what is slowly revealing itself to be a world class asset. It's fundamentally why I've stuck around so long. I still think 25% of it will prove to be be incredibly impactful to the MCAP .
Thanks CP, that's helpful.
For the record, I'm not sure if the ramp comment was directed over her, but that's not my intention. I'm keen on getting an accurate valuation and if used well, these boards can help with that.
Hi Hex - I have no qualms about being naive with the numbers here, I've always struggled with valuations on gas plays.
But given the lack of posting around valuation, I've inferred I'm not alone in that and it's why I'm trying to stimulate conversation in that area.
You seem to have a better handle on this than me - do you fancy breaking out your valuation for Ruvuma?
Hi TB - I read through the last CPR and thought the breakdown came up roughly the same as Drewky's headline figure I used that (found the CPR hard to interpret):
"5 TCF GIIP - for Ruvuma - Ntorya 1.9TCF GIIP - 368 BCF 1C - 763 BCF 2C & 1162 BCF 3C"
I'd assumed the 1.9 was from the Ntorya drills.
Whaddya reckon - revise down to 1.9?
Not sure why I'm doing this but here goes...
Can we attempt to get a valuation of Ruvuma? I've read through the last CPR again and tbh it confused the hell out of me so I've made a simple attempt myself.
Happy to have it pulled apart as long as it's in the spirit of trying to get to a more accurate number, not bemoaning any inaccuracies.
GIIP=5TCF * 25% = 1.25 TCF (net to Aminex)
P10 of 1.25 TCF = 125,000,000,000 (20,833,333 boe)
P50 of 1.25 TCF = 625,000,000,000 (104,166,666 boe)
P90 of 1.25 TCF = 1,125,000,000,000 (187,500,000 boe)
I got the BOE figure by dividing by 6,000.
Last time I did this was with a true oil company and I'd assign an in the ground value of $10 per barrel but I'm unsure if that can be applied to BOE figures above - can anyone out there comment?
But I'll assign $5 per barrel for the purposes of this post which provides the following NAVs:
USD 104,166,665 (GBP 81,072,915 or around 2p a share)
USD 520,833,330 (GBP 405,364,580 or around 10p a share)
USD 937,500,000 (GBP 729,656,250 or around 18p a share)
For me that provides a positive bet that the 25% slice of Ruvuma is a large asset for a company with a current MCAP of GBP 70 million. And of course it ignores all other assets or resource upgrade to Ruvuma following further drilling.
I have been buying a bit at these levels as I have a stupid appetite for risk. I am buying with the hope that these items push the share price higher:
- Farm out is signed off
- Development license is signed off
- CH-1 spud date is announced
- CH-1 is spudded
- KN flows again
I find no surprise that the SP is being held back without items in place - too risky for the most I'd've thought.
I was trying to provide some context CP; it was less the money that I was drawing comparison to and more the fact that small companies have to give away large percentages of their assets to get anywhere. I fully understand that there is no comparison in the value of Ruvuma in 2006 to 2018.
Anyway, I'll revert to the lurk as the culture here, presently at least, seems to be one of high emotion and argument rather than trying to work together and form a consensus view.
This provides some interesting context given the current "good deal/bad deal" conversations.
It discusses when, in 2006 Aminex famred out "a 50% interest in the Ruvuma production sharing agreement in exchange for funding 100% of the costs of an onshore 2D seismic survey at an estimated cost of $3,000,000" to Hardman Resources (HNR).
https://www.offshore-mag.com/articles/2006/03/aminex-signs-farm-out-with-hardman.html
HNR were of course then taken out by Tullow, who drilled Linkonde-1 with Aminex but subsequently exited Tanzania and gave us (and Solo) back their share of Ruvuma, being more interested in the Ugandan assets acquired from HNR.
Obviously Ruvuma has been proved up more since those days (despite it now relating to a single block, right?), but USD 3million for some siesmic compared against the deal given today, and we still retain 25% of the asset kind of says to me that if Jay delivers on the deal promises, he's pulled a blinder.