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Ufufuo, that was a very well written comment about Orca. Orca is a very complicated investment case as the license expires in October 2026. The upside in the case, is if Orca gets a license extention. Reported reserves are only based on estimated production during the license period. Most likely there are more gas to produced if the license is extended. Regarding the profit split between Orca and TPDC, Orca recovers TPDC's share of Capex spending making the share of additional gas (profit gas) larger when Capex has been spent. From the Q3 report
" The Company was allocated a total of 65% of the Additional Gas net field revenue for Q3 2022 (Q3 2021: 72%) and a total of 72% of the Additional Gas net field revenue for the nine months ended September 30, 2022 (nine months ended September 30, 2021: 75%)."
Furthermore, the capex for 3D seismic is not included in short-term liabilities, however that item includes 10 MUSD of the 50 MUSD longterm loan, as 10 MUSD will be paid within 12 months. You also compare with AEX, with gross production numbers for the entire field. AEX holds 25% . A percentage that probably will be lower if TPDC wants a part of the field.

Mick 2020, I noticed from the filings that the Newlands had reduced their holding by 1 000 000 shares. Have you any idea, how they are going to vote?

Mick 2020,
I am not an expert when it comes to voting on this matter, but I would assume that in order for the offer to be accepted 75% of the votes need to be in favor of the bid. That means that it will not be neccessary to have 25% of the total number of votes, as many WEN holders will not vote at all.

I have sold some, but is prepaired to vote No, with my remaining holdings 750 000 shares.

I have sent this mail to Katherine. Hope to get a reply.
Dear Katherine,

Following the cash bid from Maurel et Prom, I believe it is vital that the company updates the market with the latest production numbers from Mnazi Bay. Maurel et Prom is the operator and has more information about field performance compared to the ordinary shareholder in Wentworth. In order to be able to evaluate if to accept the bid or not, it is vital that we have the same information. The production guidance from the company for 2022 is still 75-85 mmscf/d, although production for the first nine months of the year was 90.2 mmscf/d, according to Maurel et Prom’s nine month report. Has production so far in Q4 been so low that the upper range of the has not been surpassed?

I will also expect to see update from the company regarding production guidance and the new price for gas sales to TPDC in the beginning of the year.

For me as a shareholder, it is hard to understand that the BOD could recommend a bid price of 32.5pence per share, when net cash is about 12.9 pence per share and the bid excluding net cash represents a deep discount both towards reported book value and second party reserve reports. Does not the BOD believe in the numbers they have reported to the market?

Prosciutto

I do agree with you, the bid on WEN does not reflect the underlying value. MP is paying 45 MUSD for reserves valued at 140 MUSD, when you exclude net cash. I am dissapointed that the Board recommended this offer, but pleased with the 30% premium to where the company was traded before. I will probably reinvest in Orca, but hope for an improved bid in the mean time.

Re prosciutto

My interest in WEN is based on the low valuation and an attractive dividend yield. Based on 1H numbers, the stock is trading at a PE about 4.5X and an EV/EBITDA of 1.5X. 2H results are likelely to be somewhat lower as production in Q3 were lower due to well maintenance. As WEN is not the operator of the field it is up to MP to deceide if there will be drilling for new wells. WEN has stated earlier, that they would like a license extention before drilling new wells. But I would not be surprised if that would change as the pay back time for a new well is short given a drilling success.

I do not see WEN buying MP stake in the field due to the low valuation of the stock, as you say it would be very dilutive.

I agree with you, that if Orca finds something of interest in the seismic studies, they would be the most likely farm-in partner, or bidder for AEX stake in that field. No idea on what terms, as it would depend on what they find.

I find both Orca and WEN very attractive on valuation and hold both of them.

https://ewn.co.za/2022/11/23/tanzania-starts-rationing-power-because-of-drought

prosciotto

Yes, you are correct about the revenue split between TPDC and Orca and that Capex is recoverable in this calculation. The revenue split was even in Orca's favor in the previous quarters as Capex was higher then. As you are very much up to date with Orca, are you a shareholder as well?

"The average Additional Gas sales volumes for the quarters ended September 30, 2022 and September 30, 2021 as well as for the quarters ended June 30, 2022, March 31, 2022, June 30, 2021 and March 31, 2021 were above 50 MMcfd which entitled the Company to a 55% share of Profit Gas revenue. The Company was allocated a total of 65% of the Additional Gas net field revenue for Q3 2022 (Q3 2021: 72%) and a total of 72% of the Additional Gas net field revenue for the nine months ended September 30, 2022 (nine months ended September 30, 2021: 75%)."

Yes, Orca Energy is a bit complicated equity story. Some of the gas that is produced is so called "protected gas" which is sold to Songa at production cost, so the numbers that Orca report is just for "additional gas". Also the fact, that the company has two classes of shares where the A shares with 20 times as many votes give the main shareholder full control makes a potential take.over more difficult. However, the main shareholder also controls 19% of the B shares, and the dividend is the same for both share classes. Regarding the preference shares that Swala issued to Orca to finance the acquisition of 8% of PAEM, the company that holds 100% of PAET (the company the produces the gas) could be a potential upside for Orca. As no dividend has been paid on these prefernce shares, Orca has demanded the return of the 8% holding of PAEM. If those shares were to be returned it could be a positive trigger for Orca. I think the company is to cheap to ignore, despite the somewhat complicated equity story.

pekingduck, yes as you noticed gas producers in Tanzania are really cheap. AEX prepare yourselves for a chock when AEX becomes a gas producing company. However, there are some reasons for the extreme low valuation of Orca. Their license expires in 2026, but I guess they have received some signals for an extention. Why else invest in new seismic and talk about drilling in 2024. Another explanation for the extremely low valuation is that the result is partly boosted by payment of old invoices by Tanesco. Invoices that have previously been written down as Tanesco has been a very unreliable customer. Besides the strong earnings, Orca is in a net cash position of 38 MUSD, resulting in an EV/EBITDA multiple below 1. I am a shareholder in Orca and WEN.

https://dailynews.co.tz/tz-must-sprint-to-reap-from-natural-gas-global-demand/?utm_source=rss&utm_medium=rss&utm_campaign=tz-must-sprint-to-reap-from-natural-gas-global-demand

hand-some, have you calculated at what price the shares were bought?

Yes, the terms are very different. The part that is defiened as "protected gas" is sold on a non profit basis. No revenue, just sharing of production costs. The other part "additional gas" is sold for power generation to TPDC and Tanesco. The revenue per mcf was 3.61 USD, about the same price as the gas from Mnazi Bay. Gas sold to the industrial sector is priced higher. In Q2 22 the price was 8.43 USD per mcf. In terms of volume, protected gas was 38.1 mscf/d, power generation 71.5 mscf/d and 14.1 mscf/d for the industrial sector.

Not quite my reading of the deal.
"the Facility is repayable by Scirocco upon Completion by way of a corresponding reduction to the consideration payable under the Asset Purchase"
So that would mean, that the loan does not get repaid by SCIR if the project gets scrapped after 3D seismic or drilling. The total cost for WEN would be 9.26 MUSD and SCIR would get 3 MUSD in such a scenario.
Next step (2) is FID SCIR would get additional 3 MUSD, in total 6 MUSD
Step 3, SCIR gets up to 8 MUSD (25% of WEN's share of gas revenue or profit). However, this payment will be reduced by paying back the loan of 6.25 MUSD. Net 7.75 MUSD (3+3+(8-6.25))
Step 4. Additional 2 MUSD if total productio reaches 50 Bscf. Total net for SCIR 9.25 MUSD.

This is just my understanding of the deal. No guarantee that I am correct in my assumptions. I am also a WEN holder and from previous discussions especially on the AEX board. WEN shareholders can't be trusted.

No 4 on the list, is new to mee. Is it so, or have i missed them before. A dutch value investor.
https://www.wentplc.com/investors/shareholder-centre/
Fidelity International 21,183,000 11.89
BNB Bank ASA 18,679,127 10.54
Vitol SA 16,813,535 9.49
OVMK Vermogensbeheer 13,183,322 7.44
Mr Robert McBean 9,605,385 5.42
Hargreaves Lansdown Stockbrokers 7,765,906 4.38
Julius Baer Private Banking 6,186,315 3.49

I just read an updated research report from Cenkos. I cant't share it, but it might be available through https://www.wentplc.com/investors/analyst-research/. WEN target price raised bu 2p to 48p, based on Ruvuma transaction assuming a 30% chance of operational success.

From ehat I can see, that LOI has not materialized in a loan yet. So far, all of the development work has been funded by equity

BD, I doubt very much that WEN would consider such an alternative. They believe that their share is undervalued and would not accept using it for payment for SCIR. My guess instead, is that WEN would loan SCIR 3 MUSD to fund the cash call for Ruvuma, and later convert that loan into shares at a substantial discount. All SCIR shareholder would be able to invest new money at the same price to cover the funding of the drilling. Going forward there would be additional equity raises to fund cost for the development and WEN would increase their stake in these equity raises. The other business in SCIR could be spun off into a new company and distributed to all shareholders. If it plays out this way, WEN would not have to pay up to 16 MUSD for Ruvuma. On the other hand they would not own the entire 25% stake in Ruvuma, but would be in control.

Ok, so what you are saying, is that you don have trust in the management and don't like their other business ventures. But, would that change if the price for Ruvuma had been higher?