Member Info for HighYield

From MP Q3 operational update

"M&P’s working interest gas production (60%) on the Mnazi Bay permit amounted to 62.5 mmcfd in the first

nine months of 2024, up 26% compared with the same period in 2023.

However, gas demand fell sharply in the third quarter (to 49.2 mmcfd on an M&P working interest basis) due

to the ramp-up of hydroelectric power generation in the country. Gas nominations are expected to increase

again. In any event, the take-or-pay clause in the gas sale contract protects sales from falling below a level

that is predefined annually"

October 2023 has also been guided before.

"Aminex is pleased to announce that plans to accelerate gas production, as outlined in our announcement of 1 November 2022, have been further developed with the Tanzanian authorities, now targeting October 2023 for production of first gas. This acceleration in the gas production schedule will result in earlier gas revenues to the Company (Q4 of 2023), decoupling the production of first gas from the spudding of the CH-1 well."

Orca released their Q2 report yesterday. As communicated before the report, there is a dispute regarding protected gas deliveries, that was supposed to end at 31 July 2024. Orca continues to deliver gas, and assumes to get paid for it some time in the future, but will not book revenue for it until an agreement has been made. Delivered gas volumes continues to decline. The company says it is because of lower demand due to higher electricity production. My guess it is mainly because of normal field decline. The market cap is about 48 MUSD, and net cash is 62MUSD, giving a negative EV of about 14 MUSD.

"On April 15, 2024, contrary to the terms of the Gas Agreement and PSA and in violation of Pan African Energy Corporation (Mauritius) (“PAEM”) and PAET’s expectations, the Permanent Secretary of MoE wrote to TPDC, copying PAET and Songas, directing TPDC to “ensure that Protected Gas continues to be produced to the end of the Development Licence on 10th October 2026”. Consistent with that instruction, TPDC has taken the position that Protected Gas should continue despite the parties’ contractual agreement that Protected Gas ceases on July 31, 2024. • It is our belief that PAET will be entitled to compensation at a commercial rate for all volumes of gas lifted by Songas and TPCPLC starting on August 1, 2024. Uncontracted gas has continued to flow post August 1, 2024, and there is a risk that PAET will not receive payment or payment may form part of a contract dispute. • PAET and TPCPLC have agreed (but not executed) the terms of a new gas sales contract (the “New GSA”) from August 1, 2024 to sell volumes as Additional Gas, which, prior to August 1, 2024, were supplied as Protected Gas. On July 23, 2024 TPDC rejected the entering into of the New GSA. The sole basis for TPDC’s rejections was its assertion that Protected Gas continued after July 31, 2024. On July 25, 2024, PAET escalated the matter to the MoE under article 4.3(b) of the PSA. On August 5, 2024, the MoE by a letter received by PAET the MoE rejected the terms of the New GSA, and the MoE demanded that PAET propose suitable wording for an “interim arrangement” to extend the provision of Protected Gas. The letter further states that if PAET fails to do so, the other parties will seek “alternative means” to operate the Songo Songo gas field. • On August 7, 2024 PAET and PAEM, issued a notice of dispute (“Notice of Dispute”) in respect of an investment treaty claim under the Agreement on Promotion and Reciprocal Protection of Investment between the Government of the Republic of Mauritius and the GoT (the “BIT”) against the GoT for breach of the BIT, alongside notifying a contractual dispute against the GoT and TPDC for breaches of: (i) the PSA, and (ii) the Gas Agreement, for damages in excess of $1.2 billion. Under the Notice of Dispute PAET and PAEM seek further negotiations with the GoT and TPDC, provided that if a resolution is not reached: (i) within s

Ufufuo thank you for your reply. To bad, that they did not reveal more information regarding the PSA, especially if they are more favorable than the previous terms.

I was referring to the PSA, where the fiscal terms are specified and the revenue split between TPDC and the license holders are set. The division of gas revenue between cost gas and profit gas and the split of profit gas between TPDC and the license holders. Is there any change to previous PSAs, where gas revenue was divided to up to 60% cost gas and 40% profit gas, and profit gas was up to 70% to TPDC and 30% to license holders depending on volume produced. I also assume a gas price of about 3.9 USD per MCF and adjusted upwards annually by US CPI.

Ufufuo, I have read your excellent summery of discussions at the AGM. The only thing I miss, is more information regarding the PSA. Should we assume the same production sharing terms as for Killiwani North, or does the Ruvuma PSA differ in any aspect.

"On 25 November 2022, at the Tanzania Petroleum Development Corporation ("TPDC") headquarters in Dar es Salaam, the parties to the Ruvuma PSA signed an addendum to the PSA ("PSA Addendum"). The Ruvuma PSA, as with all other PSAs in Tanzania, contained profit share, royalty, and taxation rates only for oil production. The PSA Addendum sets out the relevant terms for gas production. "

Regarding Orca's negative cash flow in Q1. You are correct that the cash position decreased from about 101MUSD to 94 MUSD in Q1. However, that mainly because of payment of taxes during Q1. When looking at working capital (short term assets minus short term liabilities), it actually increased by about 6 MUSD and includes the quarterlu payment of dividends.

Page 61-62

It took some time to find it again. Remeber, I had a look at it some years ago. You find it under Documents and circulars (2018) on AEX home page.. 181207_-EGM-Circular-web-version

Fiscal terms from the farm-out agreement.

"The Development Licence is at present under negotiation. Aminex suggested that there are many reasons to expect similar Fiscal Terms as the Kiliwani North development licence. Given the lack of approved fiscal terms and considering the status of Contingent Resources, it has been assumed fiscal and commercial terms similar as suggested: • Grant of a development licence for 25 years • Royaltyis payable at 12.5% by the Tanzania Petroleum Development Corporation (TPDC)

Cost Recovery:all costs considered as Recoverable Contract Expenses may be recovered from petroleum revenue limited to an amount not exceeding 40% to 60% for Oil and 60% for Gas. Any unrecovered cost is allowed to be carried forward into subsequent years without restriction. Recovered costs include Opex, Capex (depreciation) and Abandonment costs. Any excess of Cost petroleum after having recovered all costs is automatically considered as part of the profit petroleum and distributed according to the profit sharing terms.

Corporate Income Tax (CIT):The effective income tax rate applicable is 30.0%, calculated considering the following main deductions: o Operating Costs o Tangible Capital Costs: depreciation based on 20% straight line method o Intangible Capital Costs: 100% write-off in year spent."

Profit gas is split between TPDC and the contractors at a falling scale based on production volume. When production is low , the contractors get a larger share of profit gas (70%), and as production is increasing that share falls to 30%.

I guess discussions regarding fiscal terms, and back-in rights from TPDC could be the main reason for the delay of the development license.

Sorry for late reply, but I do not follow the discussions here on a regular basis. No, I am not a shareholder in AEX, and live in Norway, so I will not attend the AGM for any questions. My interest in AEX, is based on my previous holding in WEN and current holding of Orca, so my interest in AEX is more of a peer comparison. Based on the discussion following my post, the back-in right for TPDC seems to be around 15-20%. A clarification from the BOD at the AGM, could provide more certainty on that number. Regarding the PSA (profit shareing agreement), I base my numbers from the farm-out agreement in 2018 and that is based on the assumption that it will be similar to the fiscal terms as Killiwani North. Furtermore, WEN has fairly similar terms for the PSA at Mnazi bay. Orca has more favorable terms, but are unlikely to retain those terms in case of a license renewal. Any information on the fiscal terms from the BOD at the AGM would be valuable information for all, I think. I will post my findings on the fiscal terms, expressed in the farm-out agreement in a separate post.

First of all, I will congratulate all longterm shareholders in AEX with the recent share price performance. It has been a while, since I commented here, and I expect there will be an AGM comming up soon. I think it would be very interesting to get some additional information regarding the PSA (production sharing agreement). From my understanding of the PSA, revenue from gas sales are divided into cost gas and profit gas in a 60%/40% split. Cost gas consist of opex, development expenses and tax payments. AEX will recover their carry of 35 MUSD (or 32 MUSD following the loan from Eclipse) through the cost pool mechanism. Profit gas is split between the license holders and TPDC on a 30/70% basis, meaning that when all costs have been recovered, the licenseholders will only get 30% of total gas revenue. Of course there will always be some level of opex that will be recovered through cost gas. When Wentwoth's cost pool had been recovered in the second half of 2023, gas revenue just matched their high admin expenses. It would also be interesting to hear if any of historical exploration expenses for drilling NT1 and 2 could be included in the cost pool and be recovered. I have also noticed from discussions here on the board, that TPDC may take a part of the license. In such a case, how large and what will they pay for it. Just their part of future development expenses, or maybee some part of old explorationexpenses as well.

Reading today's news, I got the impression that the Ruvuma license hold huge quantaties of GIIP, far more than was expected before, and that exploration in other areas of the license could lead to significant new additions to the resource base. However, when looking into the report, my conclusion is that most of the potential GIIP relates to the area around the two wells that already have been drilled. 65% of the estimated P50 GIIP of 6.9TCF relates to the area around NT1 and NT 2. Please correct me if I am wrong, cause I am no expert in reading thse kind of seismic reports. It will be interesting to see if RPS increases their resource estimate following new 3D seismic data. I fear for an equity raise following today's news as estimated time for revenue has been put forward once again.

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I do agree, it will be very interesting to see what will happen regarding a license extention. Another aspect to follow, is what will happen with the so called "protected gas". That agreement expires on July 31 st this year, and Tanesco still have some outstanding bills that are not paid (about 20 MUSD, I think). My guess, is that there will be a license renewal, but with PSA terms that are in line with current PSAs.

Orca released its reserve report yesterday. As expected, reserves were lower as reserves can only be included for the remaing period of the license (expire oct 2026). They also wrote that TPDC had not apllied for an extention of the license. Orca's current PSA has better terms than other gas producers in Tanzania, giving them the right to sell gas to private market and a 55% share of profit gas.

"• In April 2023 PAET requested TPDC to apply for an extension to the Songo Songo Licence, as they are obliged to do under the terms of the Songo Songo PSA. Grant of an extension will enable ongoing investment to continue which will sustain production from existing compartments and bring additional pools in the field into production. Unfortunately, it appears as though TPDC has not made the application as at the date of the press release. Given the uncertainty associated with the extension of the Songo Songo Licence, it has been necessary to remove approximately US$55million of future development capital from the 2023 year end 1P reserve evaluation, as the associated projects are no longer economic in time remaining on the development licence (2.8 years from year end 2023). On this basis, the respective reserves associated with the removal of development capital have been reclassified as contingent resources pending receipt of a licence extension beyond October 2026 as provided for in The Petroleum Act, 2015 (the "Act").

Maurel et Prom solved the preemption problem with TPDC by giving them an option to increase their stake. Now it looks as though the bid will be approved by Tanzanian authorities.

The Agreement is structured as a 'call option' for TPDC, which provides a pathway for TPDC to increase its ownership by up to 20% in the production interest (the "Call Option"). As part of this Agreement, M&P has received the required pre-emption waiver from TPDC and Tanzanian government approval for the Acquisition, and only the final consent from Tanzania's Fair Competition Commission ("FCC") remains outstanding, which is expected to be granted before the Jersey Court sanction hearing.

Tanzania, I think you are mistaken. I believe that was my comment that he had copied into his contribution. Read it again and you can see that he referred to my signature.

As I have written before, I whish AEX shareholders success, but I think many of you are too optimistic regarding share price potential when AEX starts producing. Until then there is an increasing risk for another capital raise.

StockCheque,

I agree that the gas price is set in USD, however both Orca and Wentworth has stated that there is a lack of USD in the country , so they are getting pais in local currency instead. I guess the same problem will aplly for ARA as well.

StockCheque, thank you for interesting links. No problem at all for ARA to get USD into the country. As there is a shortage of foreign investments in Tanzania, an inflow of USD would be very welcome.

"Tanzania"wanted a positive point from my comment regarding problems to convert local curreny into USD. Sorry, I should have written, this problem does not affect AEX and its shareholders as AEX does not have any revenue to report.