Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Production: Demand Breakdown With the existing Mnazi Bay gas wells performing in line with expectations, the primary limiting factor on production is demand rather than any reservoir issues and the Company has good reason to believe these factors will be removed within the next month or so. The current production of c. 56 mmcf/d comes from three power plants, Kinyerezi-I, Symbion and Ubongo II, connected to the main pipeline and the smaller Mtwara power plant which consumes c.2 mmcf/d from the MB-1 well. The Symbion plant in the Ubongo region has one 35 MW, c.7.5 mmcf/d, and three 20 MW, c.5 mmcf/d, gen sets which are all currently operational. Together these require c.22.5 mmcf/d of gas. The Ubongo-II power plant, which is being changed from using a diesel feedstock to gas, has three 35 MW gen sets, two of which are currently operational. The third gen set is undergoing a workover, which the Company expects to be completed in February. This means that c.15 mmcf/d is being used currently, with a further 7.5 mmcf/d to be added imminently. The Kinyerezi-1 power plant currently operates two 35 MW gen sets, consuming c.15 mmcf/d, with an additional two 40 MW plants expected to be operational around the end of Feb. These are expected to need around 7.5 mmcf/d each of gas feedstock, with the precise figure unknown until they are onstream and demonstrating their levels of efficiency. We believe the clear demand catalysts coming from more power gen sets coming onstream give the Company good grounds to believe they can reach 70-80 mmcf/d in 1Q16. The two from Kinyerezi-I and one from Ubongo-II should add c.22.5 mmcf/d of demand to the current 56 mmcf/d. Downtime is only expected to be around 1-2 % annually, with no planned maintenance shut down time. In mid-2017, the Kinyerezi-I expansion of 185 MW is expected to bring c.30-40 mmcf/d in extra demand and in late 2017 the Kinyerezi-II power plant is expected to add c.45 mmcf/d, positioning the Company well to comfortably ramp up its production to 130 mmcf/d that year.
Production: Actuals Overall, Q4 2015 gross gas production averaged 46 mmcf/d (FCCe 50 mmcf/d), with production averaging 55 mmcf/d during the month of December 2015. Growing gas demand from the power sector has been impacted by delays in commissioning the new Kinyerezi power plant and the conversion of the Ubungo power plant from diesel to gas. The Company believes that these delays are short-term and that all power generation facilities which will utilize Mnazi Bay gas in electricity generation, will become fully operational during 1Q16. This would result in production of 70-80 mmcf/d being reached during 1Q16, which would remain consistent throughout 2016 and could potentially increase with demand.
finnCap’s research head on top picks for 2016: https://www.youtube.com/watch?v=GlMHu1y9Bag Doing all the right things. "Our investment case for Wentworth stems from its rapidly growing production and cash flow profiles. Mnazi Bay is essentially completely derisked on a commersial basis. It gets paid on a monthly basis for its production, has no downstream risk (as this has been taken by the government) and has also no currency risk as it conducts its business only in UD dollars." Core value 63p RENAV 94p https://www.xtrainvestor.com/sites/default/files/FinnCap%20-%2004.01.16.pdf
About the coming Kinyerezi II. It's expected to consume about 48 mmscf/d and generate about $17 mill. pa. (gross) to WRL. https://www.youtube.com/watch?v=CDw3z8qSFsI
The Mtwara gas plant once built, owned and ran by WRL will be expanded. "The demand for power in the region has now reached 16 megawatts being fueled by recent offshore discovery of natural gas now standing at 47.08tcf,” said Tanesco Director General Felchesmi Mramba in an exclusive interview with Afrika Reporter. Mramba said Tanesco will commission an additional 20 megawatts at the power-sub- station to meet the increasing demand for reliable energy. “We’re contracting Mantrac Tanzania co. to help stabilize and improve power reliability … we will have sufficient power for Mtwara,” he added" http://www.afrikareporter.com/tanzanians-fret-over-untapped-gas-potential/ Not much, but at least at a higher price than the gas sold to the pipeline. 18+20=38 = 7,6 mmscf/d * $5.72/mcf = about $5 mill. pa. gross income for WRL.
"Youngson also likes East African-based up and midstream company Wentworth Resources (WRL) (target price 63p) - the gas developer has production assets in Tanzania as well as exploration upside in Mozambique." http://www.iii.co.uk/articles/270547/3-strong-value-oil-tips
"Mtwara gas helps to avert power crisis." "Although the gas flowing through the new pipeline from Mtwara is yet to flow at full capacity, the little coming in at the moment has helped to avert a blackout that would have been more severe than the prevailing one. Recently released Tanesco data showed that the new gas was now helping to generate 145MW without which the country would have suffered more from the on-going power interruptions." http://en.africatime.com/articles/mtwara-gas-helps-avert-power-crisis As the only AIM-listed supplier to the new pipeline, WRL are now steadily increasing gas production as the generators are turned on one by one. By the way; From Katherine Roe (IR) in a recent e-mail: "Given the robust nature of our payment security arrangements, we feel confident payment risk will not affect Wentworth but as we continue to supply gas and start receiving cashflow from this month, we are sure this will be reflected in the confidence of the market."
Mick; The planned power plant in Mtwara will deliver 600 MW according to Symbion. "We are developing a large gas to power project in Tanzania . Tanzania has found huge amounts of gas off the coast of Mtwara in the south of the country, just North of the Mozambique border. There is an existing gas field there called Mnazi Bay, and there is already gas infrastructure and a small 18MW power plant on the mainland. In a public, private partnership with the utility TANESCO we are going to build a 600 megawatt power plant at Mtwara." http://www.symbion-power.com/about/events/article/all-africa-power-projects
Spoke with McBean about that. Of course he didn't answer directly, but smiled and replied as follows: "The peak value of the company in the short term will be after about three months with significant cashflow."
mick, WRL have priority over M&P whom will get their receivables AFTER WRL have got theirs. Page 65: http://www.wentworthresources.com/pdf/RPS-March-2-2014-Reserves-FINAL.pdf
- WRL only holds 31.94% of the license. (The rest is held by M&P and TPDC) - You can add about USD 37 mill. in additional income for the first 2 years. (TPDC receivables) - Price next year is expected to increase to about USD 3.13/mcf. (Follows US CPI)
WRL has a "take or pay" agreement in their GSA which will put them in favour of other potential suppliers.
More detailed: TPDC Carry: Wentworth holds an outstanding balance receivable from TPDC in relation to the costs of carrying TPDC’s interests in the exploration and development phases of the project. The carry balance is repayable by assignment of TPDC share of net cash flow, and it is expected that the carry balance will be paid within approximately two years after the start-up of the expansion development project. The TPDC carry balance owing as at December 31, 2014 is US$34.277 million to Wentworth, of which US$24.931 million is a preferential repayment balance to be repaid on a priority basis over balances owing to Maurel et Prom. The repayment amounts include interest payments at LIBOR plus 2% as set out in the JOA between TPDC and the Companies. For future interest payments, RPS has assumed a constant interest rate of 2.092% based on the average 2014 LIBOR rate. In addition: Tax: Each Company reports a different GOT income tax position dependent on the history of their involvement in the Concession. Tax loss carry forward balances included in this evaluation are US$176.5 million for Wentworth Gas Limited (Wentworth’s legal entity in Tanzania) and US$3.517 million for CMBL, in which Wentworth holds a 39.925% interests. It is unlikely under the currently envisioned development, that these tax loss carry forward amounts will be retired before the end of the project. Source: http://wentworthresources.com/pdf/RPS-March-2-2014-Reserves-FINAL.pdf
Hi guys! In addition WRL have this man: Salvator Ntomola, Mr. Ntomola is former Director of Exploration and Production and Deputy Managing Director for TPDC. http://wentworthresources.com/senior.php