Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
WRL arranged a small "ask us what you want" meeting today. The meeting lasted about 2 hours and was very interesting. 1/2 the time was about payments, demand, risk, Aminex, Orca, etc. The rest was about Tembo. Exciting times ahead. :-)
Wentworth, the Oslo Stock Exchange (OSE: WRL) and AIM (AIM: WRL) listed independent, East Africa-focused oil & gas company, is pleased to announce that Managing Director, Geoff Bury, will be presenting a corporate overview at the Pareto Securities Oil & Offshore Conference on Thursday, 14 September 2017 at 09.30 CEST. The conference is being held at Scandic Holmenkollen Park Hotel, Kongeveien 26, Oslo. http://wentworthresources.com/pdf/170913%20Wentworth%20Corporate%20Presentation%20September%202017.pdf
My updated spreadsheet, a bit more detailed. https://www.dropbox.com/s/2i274ffnf6b5rnu/WRL-Cash_Flow_per_quarter_2016-2018-Estimates_per_Sept_2017.xlsx + M&P together with TPDC and Tanesco have had a meeting with the Deputy Secretary of the Ministry of Energy & Minerals about how to develop Mnazi Bay's gas. https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https://issamichuzi.blogspot.no/2017/08/dkt-pallangyo-akutana-na-kampuni-ya-m-p.html
"The additional demand is due to workover maintenance further up the pipeline at Songo Songo so it is replacing Kiliwani gas at the moment as that is the only producing field at Songo Songo tie into the new pipeline. All the best Katherine"
Alternative source: https://www.dropbox.com/s/xkhk5wy8g8sqrs3/Wentworth-resources-oil-gas-investor-forum-june-2017.pdf
"Efforts are being made to clear arrears in the energy sector and put the public electricity utility (TANESCO) on a sustainable footing. The stock of TANESCO’s arrears to gas suppliers stood at 0.8 percent of GDP as of February 2017. An agreement was signed between Tanzania Petroleum Development Corporation (TPDC) and TANESCO requiring the latter to pay weekly Tsh 4.5 billion on account of 70 percent of TPDC’s bill for gas delivery to TANESCO. Following a Presidential instruction to stop electricity provision to defaulting customers,TANESCO’s collection rate has started to improve. The ongoing shift in the power generation mix towards gas is also lowering TANESCO’s operating costs. Staff encouraged the authorities to swiftly operationalize the mechanism for centrally paying line ministries’ electricity bills to TANESCO through the MoFP. Ernst & Young and the Controller and Audit General have started a financial assessment of TANESCO. The assessment needs to be accelerated as it will constitute the basis for future financial support from donors to the energy sector." Page 17: https://www.imf.org/~/media/Files/Publications/CR/2017/cr17180.ashx
From Hardman & Co, 21st June 2017: "Cooking with gas. Wentworth Resources is developing a world class gas asset in Mnazi Bay in the Rovuma Basin in Tanzania and pursuing an exciting appraisal asset in Northern Mozambique. The Company is supplying gas in Tanzania at a low cost and providing government owned utilities an incentive to buy their gas and significantly lowering their respective costs of producing electricity. Since the Tembo-1 gas discovery in 2014, the Company has now completed the processing of all data and is advancing the farm-out process to secure an industry partner." "Investment summary. A recent CPR valued Wentworth’s Mnazi Bay assets at US$180.3m (NPV-10, 2P) which implies a value of 83p/share. We believe the market could be discounting for country risk here. Even if we utilise a higher discount rate of 20%, according to the latest CPR, this values 2P reserves at US$130.3m or 60p/share, which is three times the current share price." https://www.hardmanandco.com/docs/default-source/company-docs/wentworth-resources-ltd-documents/wentworth-resources-oil-gas-investor-forum-june-2017.pdf
It's not that difficult. Red = Cash out = New and old invoices to be paid. Green = Cash in = New and old receivables to be received. C13: C21: How the "Current Portion" of receivables and payables as of 31.12.2016 will affect cash flow over the next 12 months. Important, because short-term debt to M & P and late payments from TPDC caused some turmoil among investors. Delayed payments will move receivables to the next quarter and will affect short-term available cash but will not change the long-term cash flow. Working capital will of course never be zero. What's interesting is a possible CHANGE in working capital, not the actual figures when payables equals receivables. We do not know future growth in demand. That's why you can use your own numbers and observe the model change the cash flow accordingly. :-)
This is just a model and the only thing I've considered is WRL's own numbers. There will be variations in working capital, there will be delayed payments, but how do we build that into a model that is based on assumptions and qualified guessing in the first place? IMO production growth rate is more important than anything else, because it has the biggest impact on future cash flow. The model is easy to update, it gives some insight into which direction the company is heading, and it's useful if you want to simulate vulnerability against stagnant production volume and delayed payments.
Here's the new version of my model: https://www.dropbox.com/s/9f8dly1inhmyxjl/WRL-Cash_Flow_per_quarter_2017-2018_estimates.xlsx There should be more than enough cash for a well or two next year.
I agree. This one is more accurate, extrapolated from Q4. https://www.dropbox.com/s/3u1teakkbr1fb67/WRL-Cash_Flow_2017_estimates_45_mmscfd.xlsx
It's a simple model with a lot of uncertainty because we don't know exactly how future demand for gas will grow. About 2016: Finance income $4,693,000, Finance expense $5,115,000 Difference = $422,000, doesn't change the bigger picture.
The rampers at the AEX forum didn't like this simple comparison between Ntorya/AEX and Mnazi Bay/WRL. :-) https://www.dropbox.com/s/btrtdqkbku906z8/AEX_WRL.xlsx My slightly updated model for possible cash flow. https://www.dropbox.com/s/9f8dly1inhmyxjl/WRL-Cash_Flow_per_quarter_2017-2018_estimates.xlsx
I expect my latest post at the AEX-forum to be deleted, so here it is: TIPTOP: Just wanted to quickly note the reserves for the other Tanzanian producers, these are net reserves to that company. WRL ......1P - 79.8bcf...........2P - 115.9bcf..........3P - 156.5 Orca.......1P - 212bcf............2P - 260bcf Not exactly going to set the world on fire. All Orca's acreage is offshore and circa 50% of WRL is also offshore/nearshore mainshare: So...just take a look at WRL SP...and that's without any income!! Josik: What about some facts? - 100% of WRL's 2P-3P resources are onshore with 5 producing wells. http://wentworthresources.com/pdf/Mnazi_Bay_Resource_Evaluation_v1605_20170308_03-2017.pdf - WRL collected about $22m in 2016. https://www.dropbox.com/s/9f8dly1inhmyxjl/WRL-Cash_Flow_per_quarter_2017-2018_estimates.xlsx - WRL's onshore/near onshore acreage: http://wentworthresources.com/tanzania.php - Mnazi Bay's potential is at about 5 TCF. Page 7: https://unohrlls.org/custom-content/uploads/2016/12/2.TANESCO-SE4All-PRESENTATION-2-12-2016.pdf :-)
TPDC will take the first 130 mmscf/d from M&P/WRL. This means that WRL over time will supply Symbion, Ubungo II, Kinyerezi I, Kinyerezi I expansion, and about half of the gas used by Kinyerezi II. Commissioning of Kinyerezi II is expected in 2018.
A bit outdated, but still a lot of useful information : https://www.dropbox.com/sh/t84xrix5zhgygqi/AADCQbxHf3HxXX9dVQg9-BDea?dl=0
...Regarding our analysts, they are independent by nature so again we have no direct control on their views and opinions. We strive to keep them as informed as possible and ensure they have correct, up to date information but they can interpret this information in their own way. Specifically in relation to Colin Smith’s comment regarding the ToP, we have stated previously that we have clear line of sight on where our initial 80mmscf/d of gas is going and that have no reason to believe this demand will be displaced by new gas coming on stream from Aminex. This will become evident as we continue to increase volumes and report revenue and cash accordingly. All the best Katherine
The correct statements are as follows: Colin Smith (Panmure Gordon): "As I understand the ToP terms don't apply until eight months after the COD has been announced and that hasn't happened yet. So there is still quite a bit of exposure where I guess the government can choose how much to take from Kliwani North and how much from Mnazi Bay." Geoff Bury: "You don't have the facts quite correct. The ToP provisions becomes fully in place once the COD has occured, which we expect will happen in the coming months, so its immediatl at that point in time. That is the legal condition. The practical consideration is that we are the only one supplying gas at the present and we have indications from the government that they will be taking all of our gas up to 130 scuff (mmscf/d). We are not concerned about this."
vike1; You wrote: “I don't think you can fully trust any of these guys.” Based on what? It’s nothing but empty words from your side. M&P/WRL claim to have a valid GSA where TPDC will take all the gas they can produce up to 130 mmscf/d, 8 months after COD. The COD is expected within a few months. One may trust M&P/WRL/TPDC/the GSA for Mnazi Bay, or not. From other sources we can read: "According its plant manager John Mageni, Tanesco plans to expand Kinyerezi I capacity from 150 MW to 335 MW with the support of the natural gas coming from Mnazi Bay." http://www.ippmedia.com/business/japanese-connection-kinyerezi-ii-power-project "The Tanzanian government has recently launched construction works of the Kinyerezi II power plant project in Ilala district in Dar es Salaam, which will be supplied with natural gas from the Mnazi Bay and will add 240 MW to the national grid when completed in 2018 ." http://www.tanzaniainvest.com/energy/tanzania-starts-construction-works-on-240-mw-kinyerezi-2-gas-fired-power-plant Those of us who meet the management and communicate with them regularly, place them in the upper league far above most of their peers.
Bad news for AEX. Bury said that final investment decisions had been achieved on expansions of Kinyerezi-1 (a further 185 MW) and the new Kinyerezi-2 plant (240 MW), which are expected to be commissioned by mid-2017 and in Q1 2018 respectively. Mnazi Bay production and sales will increase by 30mn ft3/d to 120 mn ft3/d for the mid-2017 Kinyerezi start-up, said Bury, and by a further 30-40mn ft3/d when Kinyerezi-2 fires up. Asked how he could be sure of supplying most of that incremental demand, given the April 2016 start-up of competing supply from Kiliwani North and expansion of the Songo Songo field, Bury said: “We expect the first 130mn ft3/d will be our [Mnazi Bay] supply.” http://www.naturalgasafrica.com/tanzania-profitable-on-operating-basis-wentworth-1993