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I guess most of you AEX holders are impatiently waiting for license approvals and drilling to commence. But once that has been solved, it is likely that it will be another frustrating waiting period before cash flow actually starts to tick in. Based on the following experience from Mnazi bay partners and Orca, I would be surprised to see cash-flow from Ntoroya before end of 2020. Being a shareholder in WRL I have been through the same frustrating and waiting period. A gas sales agreement with TPDC was first discussed in the beginning of 2012. Details from these discussions like volume were disclosed in the beginng of 2013 and the GSA was assumed to be signed "soon". But the GSA was not signed before 15 sept 2014. Gas deliveries were to start in Q1 2015 and reach 80 mmscf/d during the same year. Gas deliveries started 20 august 2015, but did not reach 80 mmscf/d until now in Q1 2018. The Mnazi bay partners are not to blame for the delays, they based their guidance on forcasts from TPDC and also some onforseen events like the closing of the Symbion power plant. Also Orca is waiting for a GSA for starting to deliver to the new pipe-line. This is from their Q1 report. " The SS-12 well was successfully completed in the first quarter of 2016 but is currently suspended awaiting tie-in." As there seems to be some conflict between TPDC and Orca it is likely to take some additional time until deliveries from SS-12 will start.

Another article about gas demand and supply. I posted this earlier today at the WRL board. "I found this article on the Norwegian WRL forum, posted by the signature alph. As I think it was worth reading, I post it here as well. The production number for KN1 at 10 mmscf/d is not up to date. Current production is about 0.7 mmscf/d, I think. The full article, http://africaoilgasreport.com/tag/featured/ Electricity increase will creep, and the country will slowly expand the current 160MMscf/d domestic market�. There are three development licences on the Tanzanian hydrocarbon concession map. The Songo Songo, Kilwani North and Mnazi Bay licences, are all gas producers, collectively outputting around 160Million standard cubic feet of gas per day (160MMscf/d). The Orca Exploration operated shallow offshore Songo Songo gas field produces 70MMscf/d (comprising both the Protected Gas and the Additional Gas*). The Kilwani North project, operated by Aminex, averages 10MMscf/d. The Maurel et Prom led Mnazi Bay project delivers 80MMscf/d. These three projects, which are in onshore and shallow water terrains**, supply gas to seven power plants and several industrial customers. Given the government�s published plans for more gas fired electricity plants, it would be easy to assume that the natural gas demand will surge. That is what Orca, Aminex and Mauriel et Prom and its partners are hoping for. �The Government of Tanzania intends to increase the installed power generation capacity from 1,583MW to 10,000MW by 2025�, Orca wrote in a report released in 2017, citing the Tanzanian Power System Master Plan 2016 and the Electricity Supply Industry Reform Strategy 2014(updated in 2016). �4,000MW of the increased capacity will be attained through the installation of new gas powered plants�.

Leafless, I haven't seen any recent number. WRL has said before, if my memory doesn't fail me that the 5 wells could produce up to 130 MMscf/d, but recent comments have been that production could reach north of 100 MMscf/d without additional Capex, so I would go for 100 MMscf/d . This is from the full-year report. "During 2017, engineering works were undertaken on the expansion of the Mnazi Bay Joint Venture owned processing facilities at Msimbati. Primary processing of Mnazi Bay produced gas is required at Msimbati to remove free liquids before the gas enters a sub-marine pipeline that connects into the Madimba Gas Processing Facility. Expansion of the processing facilities, together with tying-in of all 5 producing wells completes the necessary field infrastructure work to enable delivery of gas volumes in excess of 100 MMscf/d to the TPDC owned pipeline to Dar es Salaam. Commissioning of these facilities is expected in Q1 2018. With the completion of these works it is anticipated that there will not be a need for significant additional capital expenditure until the average daily demand from the Msimbati facility exceeds 100 MMscf/d."

Leaflessclover, I think you are right in your estimate, that demand for gas will soon equal current supply capacity. The Mnazi bay partners can deliver somewhat more than 100 MMscf/d from theri 5 wells and processing facilities at Msimbati. Orca can deliver additional volumes, but there seems to be some sort of conflict between TPDC and Orca (PAET), as the the expected GSA has not yet been signed and Orca is holding back payments of about 30 MUSD owed to TPDC for their part of gas sales. TPDC has also tried to halt the sale of PAET to Swala.

part two "Aminex will expand production of the Kilwani gas field, it says in its updates, and put the newly discovered Ntorya field into production. �Existing plant and gas sales agreements have sufficient capacity to permit rapid integration of any future Kiliwani discoveries�, the company reports. Orca is hoping to finalise Gas Sales agreement with TPDC and increase its production from Songo Songo. The Company has also identified and is developing additional markets among existing industrial customers, new industry and Government gas-fired power generation which, based on current forecasts, has the potential to contract for sale all of the existing and potential new productive capacity of the Songo Songo field to the end of the license. Orca�s subsidiary, Pan Africa Exploration, operates three wells, two of which are in production (SS-10 and SS-11) and one of which is not (SS-12 requires platform and flowlines). Including the Songas wells, current production capacity is 155 MMscf/d which can be increased to 180 MMscfd/ once SS-12 is tied into the country�s main gas infrastructure network. *The Production Sharing Agreement (PSA) between Orca Petroleum, the Tanzanian Petroleum Development Company (TPDC) and the Government of Tanzania defines the gas produced from the Songo Songo field as �Protected Gas� and �Additional Gas�. Under the terms of the Gas Agreement, TPDC has assigned its rights to sell or otherwise dispose of the Protected Gas to Songas Limited. Songas utilizes the Protected Gas as feedstock for projects it has designated to supply gas. **The projects discussed in this article are all entirely onshore and shallow water and outside the deep water licences, which reportedly hold over 45Tcf, and have been subject of so much debate about Tanzania�s export potential."

I found this article on the Norwegian WRL forum, posted by the signature alph. As I think it was worth reading, I post it here as well. The production number for KN1 at 10 mmscf/d is not up to date. Current production is about 0.7 mmscf/d, I think. http://africaoilgasreport.com/tag/featured/ Electricity increase will creep, and the country will slowly expand the current 160MMscf/d domestic market�. There are three development licences on the Tanzanian hydrocarbon concession map. The Songo Songo, Kilwani North and Mnazi Bay licences, are all gas producers, collectively outputting around 160Million standard cubic feet of gas per day (160MMscf/d). The Orca Exploration operated shallow offshore Songo Songo gas field produces 70MMscf/d (comprising both the Protected Gas and the Additional Gas*). The Kilwani North project, operated by Aminex, averages 10MMscf/d. The Maurel et Prom led Mnazi Bay project delivers 80MMscf/d. These three projects, which are in onshore and shallow water terrains**, supply gas to seven power plants and several industrial customers. Given the government�s published plans for more gas fired electricity plants, it would be easy to assume that the natural gas demand will surge. That is what Orca, Aminex and Mauriel et Prom and its partners are hoping for. �The Government of Tanzania intends to increase the installed power generation capacity from 1,583MW to 10,000MW by 2025�, Orca wrote in a report released in 2017, citing the Tanzanian Power System Master Plan 2016 and the Electricity Supply Industry Reform Strategy 2014(updated in 2016). �4,000MW of the increased capacity will be attained through the installation of new gas powered plants�. Last year, Maurel et Prom and Partners in the Mnazi Bay project published a list of pending power plants and industries whose �imminent gas demand� are expected to boost the project�s supply to 300MMscf/d by end of 2019. It is close to mid-2018. And 2025 is just seven years away. True, some of those plants are up and running, even at optimum. The Kinyerezi-1 power station operated at near full capacity during the second half of 2017 and the Kinyerezi-2 commenced commissioning during Q4 2017. But overall, the Government�s estimates that the total power demand will increase by 8% per annum is not being converted to actual market activity. By its own admission, the completion dates for five near term planned Gas Powered Plants, expected to consume 294MMscf/d to generate 1,376MW, �are likely to slip, given the size and financial commitments required to complete the projects,� Orca reports. What�s clear is that Tanzania, unlike South Africa, Egypt and, to a lesser extent, Nigeria, does not bear an acute hunger to be an industrial economy. And yet these companies �see� opportunities in the Tanzanian energy ecosystem.

Mick 2020, you are right on your assumptions. I found this reply frpm Katherine posted on the Norwegian WRL chatboard. "Dear XXXX Thank you for your email. We report monthly cash receipts which is not the same as revenue as this also included recovery of the long term receivable. Total payments year-to-date is $10.3m ($6m for March and April; $2.5m in February and $1.82m in January). Hope that helps. All the best Katherine "

As production from AEX only producing well KN1 dropped in the second half of 2017, a comparison between the second half of 2017 is more appropriate. USD m 2H 2017 2H 2018 WRL Aminex Revenue 8,34 2,04 EBITDA 4,07 0,70 Net result 0,95 -3,29 Cash flow from operations 8,85 0,71 Change in WC -3,51 2,30 Capex 1,86 -3,14 Financing -2,50 0,00 Total Cash flow 4,70 -0,13 Balance sheet Cash 3,75 6,23 Net debt 14,05 -6,23 Working capital 15,48 6,03 Valuation Market cap 69,70 148,0 Net debt 14,05 -6,2 Enterprise value 83,75 141,7

AEX out with full-year numbers today. Here is a comparative valuation with WRL. USD m 2017 2017 WRL Aminex Revenue 13,44 6,63 EBITDA 5,34 3,45 Net result -0,71 -2,28 Cash flow from operations 5,34 3,21 Change in WC -5,36 -2,61 Capex 2,92 -10,63 Financing -0,13 -2,77 Total Cash flow 2,77 -12,79 Balance sheet Cash 3,75 6,23 Net debt 14,05 -6,23 Working capital15,48 6,03 Valuation Market cap 69,7 148,0 Net debt 14,1 -6,2 Enterprise value 83,8 141,7

Bounty made a write-down of KN1 assets in their full-year report, but not AEX. Here is why. "As a result of the review of technical data over the Kiliwani North Development Licence block, the Company has identified the Kiliwani South structure as a viable lead for further exploration with management estimating a Pmean gross GIIP of 57 BCF. The Directors have assessed the impact of the new technical interpretation and believe it is appropriate to reclassify costs of $4.54 million previously incurred in relation to this structure from property plant and equipment to exploration and evaluation assets"

Crusty, you were correct, AEX did not buy any expensive Christmas gifts to their shareholders after all. In my calculation, based on numbers from Bounty Oil and assuming similar payment patterns. I came to the conclusion that accounts receivables at year-end would be around 7 MUSD, and accordingly cash would be about 2 MUSD as AEX had stated previously that cash and cash receivables were about 9 MUSD at year-end. The mistake I made was that AEX had only included their net share of AR (2.7 MUSD) not the gross number of 6.94 MUSD in that statement, that cash and cash receivables were about 9 MUSD at year-end. As I am a WRL fan, you of course suspect me for spreading negative information about AEX whenever I can, but actually I have no regrets, as this was an honest mistake.

Crusty, I do not know about any expensive Christmas presents, as I am not an AEX shareholder. I just base my calculations on the assumption that accounts receivanbles have decreased at the same proportion as for Bount Oil ( a parter in the KN1 well). By making that assumption AR should have decreased to about 7 MUSD for the full-year, and if cash and cash receivables were 9 MUSD at year-end, then cash should be about 2 MUSD. However, as I am not a AEX shareholder, I am not as up to date as many of you.

I think that will translate to about 2-3 MUSD in cash and 6-7 MUSD in accounts receivables.

Found this on the Norwegian WRL board, worth sharing, I think. http://thenerveafrica.com/16908/siemens-plans-invest-tanzanias-energy-sector/ "The German conglomerate, in partnership with the Tanzanian government, estimates that the energy deal will see to the provision of about 1,000 megawatts energy for its over 55 million population. And eighty percent of that energy will be natural gas."

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.

Mick, assuming that all other costs besides depreciation are more or less fixed, I am looking at an annual profit of 10.5-11 MUSD at a production rate of 100mmscf/d. That would imply a P/E ratio of about 7X, which is a bit on the low side I think. I am more impressed by the cash flow as the TPDC receivable of about 20 MUSD is expected to be repaid during 2018. Assuming a production rate of 100 mmscf/d, cash-flow coud be as high as 40 MUSD, including payback of the TPDC receivable. Not bad for a company valued about 70 MUSD.

https://www.dailynews.co.tz/index.php/business/56652-dangote-cement-plant-closed-for-routine-maintenance-management �As to the energy costs, we have been using temporary diesel generators to power the plant and this has a high cost. We are replacing them with gas turbines this month and that will stem these losses."

http://allafrica.com/stories/201803190490.html "Dar es Salaam � The use of domestically produced natural gas in Tanzania has resulted in Sh8 trillion in savings to the economy over the last three years alone." "According to TPDC records, the demand for natural gas has doubled from a total of 145 million standard cubic feet (mcf) per day in 2016 to 300mcf last year." "The TPDC acting managing director, Mr Kapuulya Musomba, noted that, "at the moment, gas supply is ahead of demand. But, we are working to meet the needs as per the industrialisation plan." He also revealed that TPDC is currently carrying out a study to map out gas demands across the country. So far, at least 42 industries have been connected to the natural gas supply system - although only 37 are fully using this source of energy. Also, two non-industry institutions are using natural gas at the moment, while only 70 houses have already been connected to the natural gas pipeline, which runs from Ubungo to Mikocheni in Kinondoni District, Dar es Salaam."

cperkin, the outlook for gas demand certainly looks good. I hope we can get some news from WRL in their upcoming Q4 report, both about the commercial operating date (COD) that should result in a take-or pay clause and about plans for additional development wells at Mnazi Bay. Of course, such information needs to be coordinated with M&P, the operator.