Member Info for mick2020

:-) Indeed I needed several attempts... (some LSE IT issue I think!)

Mikkel,

You say that the Norwegian shareholders are “squeezed out” is that because Norwegians (and other Scandinavians) are legally not permitted to trade on AIM at all? I find that hard to believe to be honest. Have you tried www.degiro.co.no? I am with that broker (although not based in Norway), and I can trade on OSE, AIM and many exchanges around the world.

I agree with all your comments about the need to cut costs. They should have done way earlier, but better late than never.

Crudetrader,

The relocation to the U.K. and delisting in Olso is taking far too long in my view.
I also have little understanding for the concerns of the Norwegian shareholders, personally I couldn’t care less where exactly a share is traded, and if their broker doesn’t trade on LSE, then it’s perhaps a great moment to move to a better one. The whole job, incl. organising the moving of shares to the new broker may take only half an hour or so, so what are we talking about. Also, I don’t buy this argument that OSE “protects” the shareholders much better... Oh sure.... By the way: are we not in breach of the OSE rules already anyway? (I.e. no quarterly reports?) What did OSE say?

Unfortunately due to all these delays, my expectations for WRL are low for 2018. I think it will get interesting only at the end of Q1 2019, so perhaps Q4 is not a bad moment to get in.

Crudetrader, I fully agree, and you can even add point 5: monthly gas sales are increasing steadily due to higher demand. In fact, I expect that the sum of all payments will be around 24 million in the second half of this year. (Compare that to the 13 million in the first 6 months..) The trouble is, I just expected more in terms of reducing total liabilities.

No surprises here, no doubt that the results for the second half of the year will be the best ever. Cash build up and liabilities reduction will however continue to disappoint. Production needs to go grow further. Let’s hope Dangote will lift I it to 100 MMscf/d!

Alph, This announcement caught me by surprise yesterday, but I have to say, I like it! We need to create liquidity in London and I think Iain McLaren could be extremely helpful for that, with his many investment trusts. I also very much support the “Continuance” as well as “The delisting”. I think that the alternative investment casino”, ehh... market, is ultimately much more fun than OSE... Don’t get me wrong (I hold shares in Norway as well), but demand in Norway is very limited as well and AIM is simply much more suitable for creating a good hype.... eh... selling an exciting investment opportunity! ;-) WRL has a good stake in fantastic asset in Tanzania, which will allow them to run the company and further invest, while recovering all expenses for many years to come. While not a cash cow (yet) it is certainly a great basis for further growth! Just wish it would go a bit quicker!

HY,

Looking forward to read WRL’s explanation, although saying that, my expectations are rather low on this point....

But as a quick comment:

- isn’t it rather strange that the company keeps mentioning “net payment to Wenworth” in every monthly payment update, and this now turns out to be a gross figure? Also highly coincidental of course that the difference between gross and net is 3.1 mln, exactly the same as the last payment in June...
- the 4.344 mln due to M&P on 1 Jan must include something more than only the “cash call”, as the “cash call” balance itself was 3.55 mln, according to the 2017 annual report...

But I found a small new positive comment as well by the way:

“At June 30, 2018, the Mnazi Bay joint venture partners were owed six months of gas sales made to TANESCO, with $1.18 million owing to Wentworth of which $0.84 million representing five month of gas sales has been collected subsequently to June 30, 2018”

So total payments subsequent to 30 June were 10.1 mln. With 3.1 and 3.7 mln already announced, I now expect a very decent payment of 3.3 mln in the 1 Sept announcement.... The only trouble is: if it turn out to be correct, some comments in the H1 start to feel pretty dishonest...

WRL’s own P&O costs were 3.48 mln in 2017, so that could be the same number as in the CPR....Please keep me posted Mikkel, I’m very curious to hear how she explains this, and obviously, I hope that I am wrong....

If I’m not, and it is an additional cost currently only really visible in the liabilities, then the company should end all confusion and include “share of Mnazi Bay operator’s operating costs ” in the P&L statement...

In light of this discussion, here’s a list of previous comments the annual/quarterly reports regarding the cash call. Based on a cash call of 4.1 mln for 9 months in 2017 and 3.5 mln for 6 month in 2018, the average cash call is 5.5-7 mln per year, or 450-580 k$ per month... Luckily the company can significantly reduce costs: (1.2 mln $ per year interest, > 1 mln annually for tie-in Capex, 1 mln G&A?), but this cash call remain a money drain unfortunately.... 2016 annual report: “Current liabilities include outstanding cash calls to the Operator of the Mnazi Bay Concession of $6.5 million. A total of $1.0 million has been paid in 2017 and the remaining $5.5 million is expected be settled through a combination of cash receipts from existing gas sales receivables and funds from a new working capital facility“ Q2 2017: “Current liabilities include outstanding cash calls issued by the Operator of the Mnazi Bay Concession for $3.49 million of which the Company settled $0.63 million subsequent to June 30, 2017. The remaining $2.86 million is expected be settled through a combination of cash receipts from existing gas sales receivables and funds available through a new overdraft facility which was concluded during the second quarter of 2017“ Q3 2017: “Current liabilities include outstanding cash calls issued by the Operator of the Mnazi Bay Concession for 2016 operating cost of $1.26 million of which the Company settled the full amount subsequent to September 30, 2017. The Company’s share of accrued Mnazi Bay activities for the nine months of 2017 was $4.10 million which is expected be settled through cash receipts from existing gas sales receivables“ 2017 Annual report: “Current liabilities include outstanding cash calls issued by the Operator of the Mnazi Bay Concession for 2017 operating costs of $3.55 million. Subsequent to year-end, the Company has settled $2.35 and expects to settle the remainder during Q1 2018.” 2018 H1: “Current liabilities include outstanding cash calls issued by the Operator of the Mnazi Bay Concession for H1 2018 operating costs of $3.49 million. Since June 30, 2018, the Company has settled $2.66 million”

Hi Mikkel,

Thanks for the compliments, and good to hear that somebody else has been pondering about this as well.

Hmm....

As a short answer: I am in the same position as you: I’m still confused about this issue and I can’t make my model match the reported numbers.

As this is a public board I need to be a bit careful about the rest...

Unfortunately I don’t find the answers that I get from Katherine about this issue “particularly satisfying”...

It seems that this “cash call from the operator” is clearly not taken up in the P&L statement. It is only carried forward in the statement of assets and liabilities, and if I’m not mistaken, it is simply added to the curren liabilities at the end of a reporting period (6 months now)

While I have always believed that 2018 would be a year of reducing liabilities (so reducing debt + other payables; note the 17.3 mln current liabilities on 31/12) and NOT about cash build-up, these newly added “cash calls” slow down the drop in liabilities.

The impact is significant: we will be reporting very healthy profits, but at the same time, liabilities will drop only very slowly, while cash build-up will keep disappointing. (You can forget about dividends until 2021 I suspect...). A strange consequence of this is also that at lower flow rates the company could be reporting profits while the financial position actually deteriorated....This risk becomes even greater when the TPDC long term receivables finish.

I think that the company could be a lot clearer about this.... it almost feels like a case of creative book keeping like this.

The only good news is that nobody will really care, as long as flowrates keep growing... Also, I think my earlier break even guestimate, in case you add costs of 3.5 mln every six months, was too pessimistic (I think it is around 75 mmscf/d)

Hope this helps a bit. Please also keep questioning Eskil & Katherine about this, I’m very interested to get a full explanation!

Good luck!

I did indeed receive an answer back from WRL (I remain very impressed by their openness to questions from PI’s!)

The key issue is regarding the payments, and also explains the cash call:

“$16.1m is the gross number, $12.9m is the net number actually received and transferred to our accounts. $3.5mm was retained by the Operator in settlement of cash-calls. The Operator , M&P, cash-calls the JV partners for any and all opex. The net amount is around $400-450k/month,

While the numbers don’t add up exactly, it shows the mechanism.

For estimates of future performance, I would deduct 20% from the gross payments.

The company should still do very well, starting at rates around 100 MMscf/d....

HY,

The cash call is certainly not for capex..... it is for the 2018 operating costs, so M&P’s Opex, and it is addition to WRL’s own operating costs. It shows by the way how incredibly important it is for WRL to reduce costs. Once the TPDC receivables stop, WRL could even struggle to pay these cash “calls”, if production is too low.....

The only thing that will solve all of this, is to ramp up production further... Luckily, I do expect that to happen in the next 12 months.

Highyield:

See page 15 of the MDA: “Current liabilities include outstanding cash calls issued by the Operator of the Mnazi Bay Concession for H1 2018 operating costs of $3.49 million. Since June 30, 2018, the Company has settled $2.66 million“

This “cash call” liability is added in every report I’ve seen so far (annual or 6 months), and I strongly suspect/ fear that this is simply 32% of Maurels operating costs in Tanzania. This is indeed my main concern, I used to think that this was only for past operating costs. We basically keep adding 550-600 k$ to the current liabilities, each month. If you add this amount to the balance, we may only break even at ~90 MMscf/d.....

The exact date of the June payment is a non-issue of course, and can artificially improve the H2 results ( receiving 7 payments in 6 months), even though such atttempts to make the numbers look better annoy me very much.... (in the presentation, and again today, with the statement of three payments post H1)

Alph, 1) the corporate presentation from 16 July showed 6.3 mln cash on 30 June. Why has that number now been reduced to 4.04 mln? 2) adding up the monthly payment for the first 6 months of the year, we should have received 16.1 mln. That sum now turns out to be only 13 mln. Looks like we didn’t receive the June payment in June, but in in July. 3): 3 monthly payments since 30 June. Sure, that is for June, July and August. No news therefore 4) Why do we keep incurring cost for “cash calls by the operator for operator costs”? 3.5 min for the first 6 months in 2018, a hefty sum. If we have to keep paying 550-600 k$ per month to Maurel for this indefinitely, then WRL will struggle to ever make any serious money I suspect, or at least not below 100 MMscf/d. 5) Total liabilities have dropped by a meagre 1.33 mln even though we reduced debt by 2.7 mln. 5) We keep hearing that the Mnazi Bay tie-in has been completed, but yet again, we spent another 683 k$ capex on it, in the first 6 months. I asked Eskil directly for comments on this; very curious if he will respond..... So what did you think of the numbers? Only at 130 MMscf/d and beyond this becomes a cash cow, if we continue like this.

Dissapointing, even without the one-off costs.

2019 then?

http://www.lse.co.uk/share-regulatory-news.asp?shareprice=WRL&ArticleCode=9s7o52h9&ArticleHeadline=Wentworth_Resources_Limited__Half_Year_Financial_Statements_and_MDA

Great start of the second half of the year: Production increasing, payments increasing, what more do you want... well... OK, it should have happened in 2016 already... ;-) Anyway, all looking good right now Those outstanding liabilities will melt faster than snow in the sun this year: 17.3 min current liabilities (1 Jan) will be gone by the end of the year, and cash is already building up! ————- The Company is pleased to inform shareholders that payments received during July 2018 for gas sales generated from the Mnazi Bay Concession in Tanzania totalled $3.7 million net to Wentworth. Payments were received from both Tanzania Petroleum Development Corporation ("TPDC") and Tanzania Electric Supply Company Limited ("Tanesco") for one month's gas sales to TPDC and one month's gas sales to TANESCO. The Company is also pleased to report that gross production volumes during July 2018 from the Mnazi Bay gas field averaged 90 MMscf/d.

Not that anybody cares, but it all looks extremely encoraging! Can’t wait to see the H1 results. I expect a net profit of ca. 4.5 - 5 mln $ for the first 6 months; a very good “start” for such a small company (P/E ratio < 7!). However, it will get truly exciting once we hit 100 MMscf/d.... and conpletely unbelievable at 130 MMscf/d!! This time next year?

Another excellent RNS! And, again, zero response on AIM.... hmmm.....

Wentworth, the Oslo Stock Exchange (OSE: WRL) and AIM (AIM: WRL) listed independent, East Africa-focused oil & gas company, today provides an update to shareholders.

The Company is pleased to inform shareholders that payments received during June 2018 for gas sales generated from the Mnazi Bay Concession in Tanzania totalled $3.1 million net to Wentworth. Payments were received from both Tanzania Petroleum Development Corporation ("TPDC") and Tanzania Electric Supply Company Limited ("Tanesco") for one month's gas sales to TPDC and one month's gas sales to TANESCO.

The Company is also pleased to report that gross production volumes during June 2018 from the Mnazi Bay gas field averaged 87 MMscf/d.

HY,

I actually agree with all your points. While I do support cost cutting measures it seems premature to de-list from OSE at this stage. However, saying that, it will take months to complete the delisting, so there could be enough time to create a new market in the UK. Also, the company may decide to maintain its shareholder register in the VPS for Norwegian shareholders. What percentage of Norwegian shareholders will chose to transfer their shares out of the VPS into the UK CREST system do you think?

Did you, or anybody else from the Norwegian shareholders contact Katherine or Eskil about this? What was the response?

A net profit of 0.63 mln in 2017 with a market cap of 23.3 mln. Debt is £0.73m (end 2017).

I don't get it. Where is the appeal?

And again some decent buys this morning...