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Sorry Tanzania, I do not quit understand your question. Could you explain what you mean again, or refrase it. English it not my native language, by the way.

Orca released the Q3 report yesterday. No major news, as the negative production outlook already was disclosed in the operational update. However, in the Q3 report the company reported a currency loss of about 3.2 MUSD . Both Wentworth and Orca have earlier said that it is becoming more difficult to convert local curreny to USD. This is negative for all companies in Tanzania, and a factor that AEX shareholders should be aware of.

"Net foreign exchange loss includes realized and unrealized revaluation gains and losses. Specifically, unrealized revaluation loss represents

changes in fair value of cash balances denominated in Tanzanian shillings."

For those of you that also follow other Tanzanian gas producers, Wentworth published an operational update today. https://www.lse.co.uk/rns/WEN/operational-and-corporate-update-mdnwtvllofg419j.html

Also worth noting, is that despite increased production in Q3, revenue fell from 18 MUSD in Q2 to 13 MUSD in Q3. The most likely reason for this fall is that cost recovery pool has been used up. WEN has informed about that in their 1H report.

The long stop date is 31st of December 2023, if I am not mistaken.

According to MP operational update, gas production at Mnazi Bay increased på 15,.5% in Q3 compared to the first half of the year. This implies an average production of 113.5 mmscf/d in Q3 at Mnazi Bay. I thought full production was around 100mmscf/d. MP bid for WEN was indeed a smart move. Not good for WEN though. I hope the bid will not be completed before the long stop date.

According to MP operational update, gas production at Mnazi Bay increased på 15,.5% in Q3 compared to the first half of the year. This implies an average production of 113.5 mmscf/d in Q3 at Mnazi Bay. I thought full production was around 100mmscf/d. MP bid for WEN was indeed a smart move. Not good for WEN though. I hope the bid will not be completed before the long stop date.

Thanks for your reply, however I am not that familiar with the outcome of the 2015 Tanzanian oil/gas review. Does it relate to the fact that Orca can sell gas also directly to industrial companies at market prices and not only to TPDC or Tanesco?

Please tell me what you don't like. When I am invested in a company, I like to see both sides of the coin. So any negative input, that I might not be aware of is appreciated information.

Bullfrog, you are correct that Orca's gas reserves are decreasing at a high rate and you also include the explanation for that, as reserves can only include gas that can be expected to be produced during the license period.

"The reduction in reserves was attributed to a 21% reduction in the time remaining until the expiry of the current Songo Songo Licence (3.8 year remaining at year end 2022 versus 4.8 years at year end 2021), which was partially offset by increased Company conventional natural gas sales and forecasts (which will be classified as Additional Gas (as defined in the Songo Songo PSA) (“gas sales“) until the expiry of the current Songo Songo Licence in October 2026)."

It will be more appropriate to compare reserves and company valuations when and if Orca gets a license extention. I think the odds are in favor of such a license extention, especially as Orca from 31st of July 2024 can stop deliver "protected gas" at cost.

I encourage all AEX holders to take a look at Orca as well. I think it offers good value at low risk.

Thank you very much, as an investor in share I always like to know more about potential risks that I am not aware of. Looking forward to your input.

Of course there is a risk that an extention is not approved, and these processes seems to take a very long time. I do not see any real problems with the relationship with the Tanzanian Government, instead it was Tanesco that could not pay for gas deliveries for an extended period in the past. As far as I can see, the relationship with TPDC has been working OK. In terms of risk assessment for a yes or no for a licence renewal, I would guess 80/20 in favor for a yes. But new terms also need to be negotiated. The agreement to supply gas at cost price to Songa Songa (protected gas) expires before the development licence, that expires in October 2026.

"During Q2, the Company formally requested to TPDC to initiate the process of licence extension, in accordance with the terms of the PSA. The Company awaits a formal response from TPDC on this and continues to actively engage with the GoT to progress this matter."

Ufufuo, you are absolutely correct that more Capex is needed to support the current productionlevel at Mnazi bay. Furthermore if no capex is spent, then revenue will fall already in the second half of 2023, as the the cost recovery pool has been used up by then. However, that is already reflected in the current valuation, with an EV of about 15 MUSD compared to AEX of about 60 MUSD. My point is not to trying to convince AEX holders to invest in WEN instead, mainly as the upside may be limited due to the bid from MP, although I will admit that I have done so before some years back. Instead I try to show that current expectations from many commentators here are too optimistic in regards for future valuation of AEX. The many triggers that we all expect to happen (including me) should already be reflected in todays valuation. Imagine what would happen if these triggers were not materialise for some weird reason. The only real trigger, as I see it is the potential outcome of an updated CPR report that shows higher 2P resources than 763 BCF. The main risks are an additional capital raise due to delayed start of production. Latest estimate for that is still before year-end, but I see that as very unlikely. My guess is Q2 or Q3 2024, as construction of the pipeline has not started yet, at least I am not aware of it.

Just to be clear, I am whishing all of you long-term holders of AEX both operational and financial success. You have waited for it for a very long time for it.However, I see better alternatives in terms of risk and reward, mainly in the form of Orca.

Thanks for replying to my question regarding peer valuation. I though you were comparing with the two other listed gas producers in Tanzania, WEN and Orca. As I see it, it is not very relevant to compare valuation to other non producing companies nor comparing reserves to resources estimated by management.

A comparison with WEN and Orca is not just that straight forward either, as WEN is a about to be aquired by MP, so the upside could be limited to 32.5P per share. Orca's license is about to expire in a couple of years, and a renewal cannot be guaranteed as of now. However, I will give it a try. Current market cap for WEN is about the same as for AEX, about 50 MGBP, or 61 MUSD. Wen has got 46 MUSD in net working capital, of which 41 MUSD is cash. So the EV ( using net working capital plus LT debt, instead of net debt) is about 15 MUSD, compared to AEX current EV (using the same method) of about 62 MUSD. When AEX is in full production it could produce 35 mmscf/d (25% of 140 mmscf/d). You menthion recent data say 160 mmscf/d, but I have not seen that information elsewhere (please provide a link). WEN currently produce 31,4 mmscf/d (32% of 98.2 mmscf/d), so AEX revenue should be fairly in line with what WEN is currently reporting. We should assume similar terms for the GSA as both companies will deliver to the same gas processing plant. WEN reported revenue of 20 MUSD for 1H 2023, so revenue for AEX could be estimated at about 45 MUSD assuming full production. Revenue should not be seen as net profit, there will be Opex, depreciation admin cost and taxes also for AEX. So net profit will be substantially lower than revenue.

Orca the other peer comparison looks even cheaper. A market cap of about 69 MUSD and net woring capital of 71.3 MUSD plus a long term loan of 35 MUSD gives an EV of about 33 MUSD. The company is an operator and produced about 120 mmscf/d in Q2, of which 84 mmscf/d is so called "additional" gas which is yielding revenue. The protected gas of about 36 mmscf/d is just covering production costs. Orca reported revenue of about 58 MUSD for 1H2023. Both companies trade at a PE ratio of about 5X.

When comparing AEX to these companies, I see limited upside for the AEX share given the uncertainty of a capital raise and the start of production. A new CPR estimating higher resources and hopefully reserves could be trigger. The other triggers that has been often menthioned like, GSA, drill start for CH1 and formal development license should are already included in today's valuation, as I see it. What would the share price be, if some of these triggers are not obtained. My view is also that gas production will start first in late Q2 or in Q3 2024.

" It should be trading at not less than £200m-£300m right now based on peer valuations."

Could you please show some calculations for this statement. Listed gas producers in Tanzania are Wentworth and Orca.

My statement is that AEX is already priced as if it were in production, when comparing to Wen and Orca.

The AEX management are certainly running a tight ship. The cash position just decreased by 0.8 MUSD from year end and negative working capital increased to -3.6 MUSD compared to -2.8 at year-end. However, what's seems to be worrying is that in terms of operations there is not much change from the operational update from July. Things are expected to happen in the comming months, very similar to the wording in the July update. In terms of funding, there is a new comment within brackets, that I have not noticed before. "Finally, we have acquired the necessary funds via our equity placing in April 2022 to ensure our running costs are covered (before one-offs and exceptional items) until the projected receipt of Ruvuma gas revenues."

Although, I whish operational success for long-term AEX holders, I think the current valuation of the company does not include the risk for an additional capital raise. Working capital is negative with 3.6 MUSD and liabilities does not include tax claims of about 7 MUSD ( without merit according to AEX management).

Mick, I do agree with you and I just sent an angry mail to Katherine. However, I think there was a small calculation error . Net cash per share at year end should be 22.7 pence, not 27.7 pence.

"Dear Katherine.

Under normal circumstances, I would have congratulated you and the BOD for a very strong gas production and revenue. However, I am very disappointed that the BOD have not proposed a significant dividend as a part payment of the outstanding bid from Maurel et Prom. The bid was announced last year on December the 5th, with settlement expected in Q2 23. Now, the transaction is estimated to be completed earliest in Q4 23. The long stop date is 31th of December 2023. I have a growing feeling that the BOD are not acting in the best interest for its shareholders, but instead are acting in the best interest of Maurel et Prom. I also fear that the BOD may extend the long stop date, without any additional compensation for its shareholders.

The financial position for Wentworth is very strong with working capital of 46.7 MUSD of which cash was 40.7 MUSD. The current bid of 32.5 pence values the company at about 71 MUSD, depending on the exchange rate of GBP/USD. The value of operations excluding net working capital is less than 25 MUSD and Wentworth’s share of2P reserves are estimated at 137 Bcf as of 31th of December 2022. A real bargain for Maurel et Prom , I would say.

I have been a strong critic of the excessive level of general and administrative expenses for a small non-operating company like Wentworth. Recurring administrative costs were 4.3 MUSD in the first half of 2023. As you may remember, a full-year level of 4 MUSD was promised when the Oslo delisting was proposed.

While shareholders are waiting for payment, you seem to be handsomely rewarded.

“On 31 July 2023, the performance period ended in respect of an award of conditional rights over 942,593 ordinary shares granted to Katherine Roe, CEO, pursuant to the terms of the LTIP Plan. The Remuneration Committee reviewed the extent to which the performance conditions applicable to the award over the performance period were satisfied, and confirmed that, 95.62% of the award, representing 901,364 ordinary shares, vested. In addition, in accordance with the rules of the LTIP ("LTIP Rules"), the Committee determined to pay dividend equivalents on part of the award. “

It is about time, that the BOD starts to focus on their shareholders, if not they may risk being replaced."

Roger Jolly, I would rather think that those who ticked on the recommend button, did it because it was new information that had not been discussed on this forum before, than it was because of negative news for AEX. The delay and possible cancellation of the 3D seismic program is negative news for Orca as well, and I am an Orca fan.

Delay of 3D seismic program and risk for cancellation

• The Songo Songo 3D seismic project moved towards completion of mobilization for acquisition at the end of Q2. The progress of the contractor has been slow with delays due to technical challenges associated with the remote location, exacerbated by challenging weather and supply issues. As a result, the company is evaluating the options for delivering this project.

Applying for a license extension

"As such, we formally requested TPDC initiate the process to work towards a license extension. As evidenced by the Group’s significant investment in Tanzania to date, we are a forward looking organization and want to keep supporting Tanzania’s economic and industrial growth by realizing further value from the Songo Songo Gas Field for the benefit of all stakeholders. We await a formal response from TPDC and look forward to actively engaging with the Government of Tanzania and TPDC to progress this matter."

You could add, a new CPR report based on new 3D seismic.

"· The full 3D seismic results will be available by mid-year and will permit a full revision of gas reserve and resource potential for the field."