Member Info for HighYield

More information regarding the progress of Kinyerezi. Thank you Leafless at the AEX board. "He said the extension work at Kinyerezi I would add up 185 MW in the national grid while the Kinyerezi II would raise the total in the state electric grid to 240 MW. "We have already released 111.88 MW in the national grid from Kinyerezi II, we hope to commission at least 30 MW every month until we reach the 240 MW mark," he said. According to the director, implementation of both projects were at 60 and 90 per cent. Kinyerezi II would be completed by September, three months earlier than the initial deadline of December this year. Tanzania, whose population is approximately 53 million, has 1,400 MW of installed grid capacity" http://allafrica.com/stories/201803060513.html

alph, you beat me by seconds.

Leaflessclover on the AEX board posted this article that says that Dangote will switch to gas now in march 2018. "Meanwhile Wentworth Resources, which holds the Mnazi Bay licence along with operator Maurel & Prom, has said its financial situation is continually improving as TPDC and Tanesco keep up with payments. In its most recent company update, Wentworth said it had received a net $2.5 million in February for gas sales from the Mnazi Bay concession, where production continues to rise. �Volumes have begun to ramp up significantly with the first two turbines at [the] Kinyerezi 2 [gas-fired power plant in Dar es Salaam] now operational and the remaining four turbines expected to be commissioned during this year,� the company said in January. Another new source of demand is the 3 mtpa Dangote cement factory in Mtwara, which is currently using diesel to generate power but intends to have fully switched to gas for both its electrical supply and to fire its kilns by March 2018. Wider gas growth plans Power sector demand growth is a key reason why the outlook for Tanzania�s gas suppliers is looking rosier. The fact Tanesco is being restructured to help alleviate losses also means Tanzania�s ambitious power plant plans now look more viable. Tanzania�s ministry of energy plans to bring around 5 GW of new generation capacity online by 2020. Beyond the startup of Kinyerezi 2, projects include the government�s 184 MW Kinyerezi 1 expansion, which should come online in 2019; China Power Investment�s 600 MW Kinyerezi 3 gas-fired plant, which should start up in 2020; and Poly Technology of China�s 330 MW Kinyerezi 4 plant, which should also be online in 2020. Further south, Tanesco expects to start up Kilwa Energy�s 320 MW Somanga Fungu gas-fired power plant, near Songo Songo, later this year. TPDC is also working to connect more industrial users, manufacturers and households to the gas grid through the expansion of its Regional Gas Distribution Project. The ongoing restructuring of Tanesco will be fundamental to ensuring these plans go ahead, particularly as the company has been denied a much-needed hike in power prices and has been forced to turn to the World Bank and African Development Bank (AfDB) for loans instead. �We are still working on [the loan],� Amadou Hott, vice president of power, energy, climate and green growth at the AfDB, told Interfax Natural Gas Daily at the end of February. The bank�s focus is on helping restructure the company to reduce financial and technical losses. �Some of the funding we want to give them will be linked to operational performance,� Hott said. But the company will ultimately need to raise power prices to ensure cash flows are stable. �Not suddenly, because of social reasons, but they need to have a plan to gradually increase tariffs because they cannot give what they donᦙ

According to the AEX recent CPR, the company holds 57.4% of the 1.94 BCF estimated reserves at Killiwani N. However, if we were to make the assumption that the contingent resources of 80.6BCF pending development can be turned into reserves following a successful NT3 drill, approval of 25 year development license, a gas sales agreement and TPDC building a gas pipe-line to the gas processing station at Madimba. Then these resources could be turned into reserves some time in a not too distant future. In such case AEX would have about 61.5 BCF in reserves (75%*80.6+57.4%*1.94). AEX current market cap is about 150 MUSD. Now compare this valuation with WRL's current market cap of about 73 MUSD and reserves of 176.4 BCF. Less then 50% of AEX market cap despite having reserves that are almost 3 times as large and that assumes that AEX contingent resources pendent development can be turned into reserves. My message is not that AEX is overvalued, but that WRL is grossly undervalued.

Sorry forgot the link. https://www.dailynews.co.tz/index.php/business/55922-cashew-lift-lindi-mtwara-growth

Strong economic growth should lead to higher demand for electricity. The Mnazi bay partners supply gas to local power station at a high price 5.36 USD/mmbtu. "THE Gross Domestic Product (GDP) in the south eastern zone grew by 16.3 per cent thanks to good performance in agriculture and manufacturing sectors. The GDP for Ruvuma, Mtwara, Lindi and Coast regions measured at current price, climbed to 10.75tri/-in 2016 from 9.24tri/- in 2015, according to a Bank of Tanzania report" From WRL's Q3 report "On a much smaller scale, Mnazi Bay gas is sold directly to TANESCO for electrical power generation at a 18MW power plant at Mtwara. The power station provides electricity to the isolated grid serving the region and includes the towns of Mtwara, Madimba, Lindi, Msassi and Newala. Gas quantities of between 2 and 2.5 MMscf/d are being supplied to the power plant through an 8-inch pipeline which is owned by the Mnazi Bay joint venture. "

The plant is currently processing 80mmscf a day, which is almost one-third of installed capacity since gas demand is still low. The plant Head of Operations and Maintenance, Mr Lucas Nkilila, said the gas processed is transported to Dar for power generation at Kinyerezi where 400MW is produced from Madimba�s plant. �This plant is under Gasco, [a TPDC subsidiary], overseeing gas supply. The gas processed is drawn from four wells at Mnazi Bay,� Mr Nkilila said. https://www.dailynews.co.tz/index.php/business/55874-tpdc-gas-plant-keen-on-safety-measures

Yes I agree, news regarding the farmout process could be an important trigger for the valuation, but I would have hoped for news already by now. The longer it takes, the larger risk for a negative outcome, I fear. However, the shareprice does not reflect any expectations at least, so I would not expect any major negative reaction if the farmout process does not materialize.

I would say that depends on what parameters you are focusing on. If it is contingent resources/market cap, you are probably right. WRL's most valuable assets are the producing Mnazi Bay gas assets that are regarded as reserves. It could take some time and additional investment before the Ntory contingent resources become producing reserves. It also strikes me that what is classified as contingent resources varies a lot in quality and accuarcy. I would regard the 80 BCF based to the 3 NT wells (nr 3 to be drilled) as very much more valuable than other contingent resources mainly based on seismic. But when just comparing the total number of contingent resources this difference in verified resources from drilling is not taken into account. I would also put some prospective value into the Tembo license. Hopefully WRL will be carried for a drill in the start of 2H 2018. In a presentation from September 2017, It says "The prospective resource estimate for the Tembo Structure alone is 1.7 Tcf of gas or 219 million barrels of oil (unrisked P50)"

hex314 OK, thanks.

I thought the 28 BCF at KN was regarded as reserves, as AEX had a buyer for the gas and it was sold with a profit. Do you know why it was not regarded as reserves, or was it just because the CPR before was from 2015, and at that time production had not started at KN1?

hex314, I was only making a remark that you were comparing reserves with resources, and I you would compare reserves with reserves the comparison would be very much different. But you correctly stated that you were comparing reserves with resources. I have very limited knowledge when it comes to geology and what could be regarded as contingent resources. But what I find strange from Aminex CPR from today is that 80.6 BCF of contingent resources relates to three wells of which two only have been drilled so far and 682.2 BCF is only based on seismic, is that correct? I think the 80.6 BCF should be of " higher quality" as it is partly based on discoveries from two wells. Ntorya 2C gross Contingent Resources: increased to 762.8 BCF after the results of the Ntorya-2 well (approximately 11 times increase from 2015 CPR). This comprises 80.6 BCF of Contingent Resources �Development Pending� from a three well development and 682.2 BCF of Contingent Resources �Development Unclarified�

hex 314, I think you are comparing reserves with resources. Aminex CPR from today actually includes reserves, 1.94 BCF at Killiwani North. I think that is a reduction from 28BCF stated before. The decrease of these reserves are actually ggod news for the Mnazi bay partners, as they are providing the gas that KN1 is uanable to provide. This is from today's PR. "The Kiliwani North structure has Pmean GIIP of 30.8 BCF according to RPS. Approximately 6.4 BCF has been produced from the Kiliwani North-1 well. RPS estimates 2P Reserves ascribed to the well, after compression is installed, to be 1.94 BCF"

One should have in mind that payment of the receivable is not recognized as revenue in the PL statement, but included in the cash flow as the receivable is settled for cash. Beside the receivable on TPDC amounting 20.6 MUSD as of the end of Q3 17, WRL has another receivable of 6,5 MUSD on the Government. However, the settlement of this receiveble has not yet started and it is still unclear how and when it will be settled. Book value of these receivables are slightly lower as they have been discounted due to their long-term nature. WRL says in the Q3 report "Based on the Company�s internal estimates of potential gas sales volumes, the $20.59 million receivable as at September 30, 2017 is expected to be fully recovered by Q4 2018." This would amount to about 4.1 MUSD/quarter on average. However, gas sales are expected to grow in 2018, so payments would be higher in 2018, compared to Q4 17. So Mick 2020's estimate of 4.4 MUSD per quarter in 2018, sounds about right to me as well.

Maybee if Malcy were to include WRL in his bucket list, the stock might get some more attention. This is his comment on today's update. "I have been most impressed by WRL in the last few months, production is picking up nicely and guidance is being beaten on a regular basis. Mnazi Bay has seen an increase in demand as K-2 has the first two turbines up and running and increased demand from industrial customers has gone up as well. Accordingly the exit rate at the end of last year was 73.4 MMscf/d with a 4Q ave of 62.2 MMscf/d and over the year 49.1 MMscf/d which is most impressive growth. With 2018 providing another four turbines for K-2 and demand from Dangote Cement likely guidance for the year has risen to 65-75 MMscf/d which looks very achievable. Finally it looks like things are going to plan at the Tembo Appraisal in Mozambique with farm-out discussions under way and hopes of an appraisal well 3Q this year if those discussions are successful. No mention of filthy lucre in this report but recent announcements have been very positive on that front. I remain increasingly happy with Wentworth at the moment."

"He cited the projects as expansion of gas-fired Kinyerezi I and construction of Kinyerezi II which will generate 425MW. �Execution of Kinyerezi II has now reached 87 per cent and it has started to pump 55.94MW to the national grid as of December last year, with additional 27.94MW expected this month,� he stated." https://www.dailynews.co.tz/index.php/home-news/55289-3-300-projects-listed-as-industrial-agenda-ticks/

Wentworth has announced this morning that it has received payments from both the TPDC and Tanesco for $2.5m net worth of gas sales during the year. The company express confidence that they will receive paid invoices on a monthly basis evidence provided by today’s news. Probably more important is the news that gas delivery has started to Kinyerezi-2 for the commissioning of the first two (of 6) gas turbines which in due course will see demand of up to 36 MMscfd when it becomes fully operational. 2018 looks like being a most interesting year for WRL highlighted in my note from AOW in October and very much one for the watch list.

Thank you cperkin. Yes, 2018 is looking really good for WRL. Payments from TPDC and Tanseco were 7.24 MUSD so far in Q4 and should increase in 2018 as production is likely to increase. If payments continue to be regular, I expect that payments in 2018 (gas sales, down payments on receivables) will be about half the current market cap of WRL. Despite the strong near-term cash-flow, WRL's market cap is just half the one of AEX. I find that very remarkable considering the current problems with KN 1, and uncertainties regarding several lisences. I do hope some of you AEX fans would consider to diversify your exposure into WRL as well. Merry Christmas!

"While maintenance of Songas plant is expected to be accomplished soon, the Kidatu plant will follow, the minister said. He said the situation will improve by this week, with 30 Megawatts which are expected from Kinyerezi 1 power plant." https://www.dailynews.co.tz/index.php/home-news/54680-minister-there-is-no-power-rationing-it-s-power-outage

Mick, thanks for the warning, but I think I will stick around for some more years. I am a real long-timer, as I was holding Artumas as well. I do agree with you regarding straight answers from Katherine. Our friends at the AEX board are really struggeling with updated information. I must say, that if I had been an AEX share holder I would have been frustrated as well. It is clearly unsatisfactory needing to search for updates from other licenspartners rather than getting the information straight from the operator. One example is reduction in production from KN 1 from Bounty Oil and I think some informatio/clarification was given by Solo yesterday. AEX could easily give some sort of quarterly update on production, regularity in payments and current status on the development license etc.