Member Info for mick2020

After another disappointing year for WEN shareholders, I find it actually difficult to remain positive about the company, it is all going far, far too slow to my liking...

But you are right, let’s hope that Tanzania keeps developing their gas projects, and hopefully the signing of the Stiegler contract is actually the start of a new focus on gas development projects.

One thing that is basically guaranteed now with the signing of the Stiegler project, is that demand for cement in Tanzania will be huge... and nearby Dangote is ready to supply it ((coincidence?)... producing it with Mnazi Bay gas....

:-)

Interesting Jergen,

While I’m certainly not an expert in hydroelectric power, a 100% cost overrun and 10 years construction time sounds a little too negative I think, especially given the extensive feasibility work done by Odebrecht and Norconsult in the past. Personally, I think a total cost of 3.5 – 4.5 bln and 5 year construction period until start-up of the first 400 MW power generator seems quite realistic.

The point however is not how long it will take or how much it will cost, but the fact that the Tanzanian government is pressing ahead with this project, and is spending a lot of money on it already now. The 2018-2019 federal budget contains an allocation of US$307 million for this project, which is 40% of the total budget (see link below).

An huge amount of money spent on perhaps an absurd project, but unfortunately, I fear it will dramatically reduce available money for competing power projects. Have you heard any news about Kinyerezi III for example? It seems that appetite for investing in gas projects is very low in Tanzania. Why are we still waiting on COD? Why is the government so slow in renewing licenses? (see the Aminex saga, I start to doubt that the Tanz. government will ever build that pipeline).

I’m very glad that WEN is producing now, reasonably profitable even, but further growth and further development of Mnazi Bay may take a long time still…

https://www.hydroworld.com/articles/2018/05/40-of-tanzania-s-budget-proposal-allocated-for-stiegler-s-gorge-hydro-project.html

Positive news, this should reduce cost ( and increase profit) by about 2 mln next year. Just a shame they didn’t do this a year ago already, or even earlier. Did Katherine not write: “in the unlikely event that we don’t find a partner....”? What a nonsense that was. But looking forward this is certainly positive. The company is increasing profitability quickly now. I hope WEN will also reduce the Tanzania office to the absolute the minimum, and save more money.

Just dissapointing that we don’t get an update on production rates and November payments. Eskil doesn’t want the company to become too transparant I guess?

All this aside, I have to say that I don’t like the news from Tanzania that I’m reading. With the signing of the $3 bln Stiegler dam contract (2100 MW in 2022!) , I doubt that Magufuli will have much appetite for further investments in gas fired powerplants or new development licences that requires the country to invest some money.... such as building a new pipeline... Will the MDNGP project ever become profitable for Tanzania? I start to wonder.

Let’s hope that the Mnazi Bay partners will have to supply the gas for the kinyerezi I extension or that Eskil finds an exciting M&A opportunity, otherwise 2019 will not get much more exciting that 2018 I’m afraid...

Sabel,

Personally, I hope that the M&A opportunity is Mnazi Bay itself, and that WEN will increase its stake to beyond 40% (and becomes the operator). Immediately after that, I’d like an announcement that COD has been declared and that agreement has been reached about the Madimba compressor and License extension beyond 2031 (?), and that TPDC has requested to increase flow rates from Mnazi Bay at the earliest opportunity to 130 MMscf/d....

That would be a nice start of 2019! 😊

Sabel,

Quite agree, but in addition, don’t forget that liquidity is essentially zero unfortunately.

Not many people will place a bet on Eskil pulling a rabbit out of a hat in the next 2-3 months, if they can’t sell their shares in the situation that he doesn’t.

Would you really? Lock up your money now for a dividend of 5%, starting in 2020 or 2021?

Seeing is believing, especially in places like Tanzania. Show me some great financial numbers or this amazing new M&A opportunity, and I’ll buy more shares.

Good luck!

Oztrader,

So far, and let’s be honest here, WEN has failed to deliver on any of its promises:

- we have never seen any seriously good financial results so far
- the company promised a lot in Mozambique, but didn’t deliver anything
- we still don’t have a COD, and we’re not yet ramping up beyond 95 MMscf/d
- no material news on expansion plans.

The company has to show some truly good results first, or surprise the market with an exciting new opportunity before anything will happen I’m afraid.
The idea of the “chance of receiving a small dividend in 2020” is not particularly appealing to the UK PI’s. Remember that the UK is a nation that loves betting: double/triple or nothing.... exactly the same as many companies on AIM, and the focus on exploration companies. The higher the risk, the better almost.

WEN must show truly good results for the second half of 2018, otherwise we will be waiting until summer next year again. Luckily, I do expect very good numbers. Just a pity it will take until end March before we find out.

“He added that the Kinyerezi I project was in final touches and expected that in May next year it would also be completed, ready to add 185MW to the national grid“.

https://allafrica.com/stories/201811060548.html

185 MW corresponds with 35 MMscf/d. So who will supply this, Pan African (Orca) or Wentworth/M&P? Both can easily make the gas available, but both will need to negotiate....

If commissioning really is in May, we will find out very soon!

😊

New name: Wentworth Plc
New tradename: WEN
New LSE page: http://www.lse.co.uk/SharePrice.asp?SharePrice=Wen&goButton=Go
New company website: http://www.wentplc.com/
New presentation: https://wentplc.com/wp-content/uploads/2018/11/2018-10-02-WRL-IRpack-draft-EJ-4.0.pptx

Bye bye WRL!

“The aspiration is to be a midcap player in the next 5 years”....

https://www.investopedia.com/terms/m/midcapstock.asp: A mid-cap is a company with a market capitalization between $2 billion and $10 billion...

Sounds great!

😊

Thanks Oz, Hopefully we have reached the bottom now with a price of around 2 NOK. At least it seems to have stabilised now. The worst should be over now, I suspect. I think we’ll start to see a recovery soon. Looking forward to when we have this delisting behind us!

Ozsurfer, My thinking so far has been that some institutional investors in Norway are forced to sell their shares as a result of the de-listing, not so much the PI’s. Do you know if that is correct? Frustrating times, I agree, but the outlook is better than ever, so I’m not too worried. The key question will soon be about who will supply the gas for the Kinyerezi I extention: Orca or Maurel/WRL. As Mnazi Bay is the cheapest supplier in Tanzania, ignoring even the 20% stake of TPDC, I think we are clearly the front runner!

Bought some shares this morning for 2.24 NOK, which corresponds with 21p..... An amazing price; I think this is a real opportunity at the moment, especially for people who can trade both in the UK and in Norway!

Crudetrader,

While I feel very sorry for the Norwegian investors who are currently forced to sell their shares, I think the news is overall actually very good. Cash flow is good, solid reserves (conservative estimates), a clear route to 130 MMscf/d, no well issues, plenty of promising exploration opportunities in Mnazi Bay and big cost saving opportunities. Giving up on Tembo alone will already save us about 2 mln per year....
With the very low share price at the moment (necessary to create a market?), I have to revise my opinion again to a strong buy. No doubt 2019 is going to be an excellent year for the company, and the current price is amazingly low. I will probably buy some more shares myself in the coming week!

Thanks Mikkel, I now remember indeed that I had read somewhere that the “additional ” TPDC payments will continue, as long as the trade receivables are still outstanding. However, has this been explicitly confirmed by WRL recently? It would of course imply that Maurel will need to wait on their outstanding TPDC receivables until all trade receivables for WRL have been cleared.... Hmmm... it would certainly be good news. Would like to see it. But given that TPDC is 4-5 months behind in payments, we won’t find out before May anyway I guess.

CT, I am worried about the trade payables (not falling quickly enough) and I’m also worried about the TPDC receivables (payments will drop with approx. 40% when they end) But to make it clearer why I’m so extremely disappointed with the H1 results: Despite total received payments of 13 million in H1, WRL only managed to increase cash with 0.29 mln and reduce liabilities with 2.25 mln. In other words, we spend 10.5 mln of the 13 mln on overheads and “investments”.... A truly awful performance!! Sorry to say, but I can’t make it any better.

CT,

On 30 June, we had 4 mln cash and 24.2 mln liabilities. (Ok, you can take of 900k for the decommissioning provision, but that still leaves 23.3 mln liabilities) Sure we have even greater receivables outstanding , but so far TPDC is not showing any inclination to catch-up on the monthly invoices unfortunately (Tanesco is, but that is small stuff).
Again, while I expect these numbers to improve quickly in the coming months, I really can’t see Eskil buying into any new ventures until we have at least say 20 mln in cash. Now I wish it was different but I can’t see that happening before end 2019.
I think for the foreseeable future the focus of WRL will be purely on reducing costs and increasing flow from Mnazi Bay (also beyond 100 MMscf/d once the Madimba inlet pressure has been reduced), unless they find a partner for Tembo.

Crudetrader,

When this delisting plan was announced, I contacted Eskil and asked him directly about any possible plans to take the company private. His answer was very clear: “we have no intention of taking the company private”. While this is obviously not a waterproof guarantee, I actually do not doubt this, especially after seeing the half year results. The key issue: this company is still very much cash constraint, and will remain so for a quite while still! It is in the interest of the company to keep a listing. Note that if WRL want to invest in either Mozambique or Tanzania, they can only do so by borrowing against a rate of around 9%. Very expensive therefore. While the cash situation is obviously improving, with total outstanding debt + other payables currently at 24.2 million, it will take a couple more years before they can truly rule out that they will ever want to place any shares again. Certainly not in the next two years at least I would say. But in addition to the cash issue: WRL will need the backing of many large shareholders before they can take the company private. As most of these will be sitting on (large) losses, why on earth would they support this, especially now the company starts to earn money? I truly don’t believe that. And finally, going private is usually good for its shareholders, in so far that they usually get a significant premium on the market price.

While I agree with you that WRL should reduce costs and consider closing its office in Tanzania (and maybe even Mozambique…. I am personally not at all convinced about Tembo), I think the company is actually gearing up for something different: more like a complete sell…. nicely concentrated in the UK, with in March amazing results for the half year, significant growth prospects at least in Tanzania…. I expect the company to reach a share price of 40-50p on its own sometime early next year, and then sell out at a 40% premium…. Bob wants to retire, and so does Mick2020 actually! 😊

Thanks Jergen,

Hmmm..... indeed, the $3.49m is on the (asset and liabilities) balance sheet, NOT in the P&L statement. So the same for Capex even. Unfortunately, this is exactly what I expected. The company will show great profit numbers (from the P&Lstatement) but 3-4 mln of that will be spent immediately, just to keep the liabilties at the same level.... every six months...

Can’t say I like it....

Oh, and no news of course about the cash call.

The answers from our CFO are “confusing”, to put it mildly....

If it was up to me, she would be an employee who I had to let go...

Mikkel,

Perhaps there are differences between countries, but as far as I know, is certainly not the case that degiro “grant themself the right to lend out shares on your behalf” This page probably explains:

https://www.degiro.co.no/om-de Giro/sikker-og-pålitelig.html

But I would think that other brokers must offer the same in Norway. I don’t know anything about that “aktiesparekonto”, so that is probably indeed an issue.