RE: Killiwani North2 Nov 2017 12:47
Hex,
Looking at the Aminex website ("Tanzania resouces", link below), you'll see that the gross contingent resources (= future reserves) associated with NT-2 are still 70 Bcf. There has not been an upgrade of this. It's only the "internal unrisked GIIP" that is now 466+823 = 1289 Bcf gross. It would be great to get an independent view on this, but unfortunately, AEX seems unable (unwilling?) to provide this.
I did read quite a bit about NT-2 and the Ntorya reservoir. To me it looks as if water is very close (the bottom of NT-2 seems to be standing in water), and I found the test rate disappointing. NT-1 was a poor well (20 MMscf/d, but fully open flow, so backpressure around zero, something you will not see during normal production), and NT-2 was not great either (17 MMscf/d, choked back so with a more normal back pressure). Remediating near wellbore damage is fairly straightforward (using acids, solvents, re-perforations etc) so I don't believe the story at all that this well will flow 50 MMscf/d when fully open, all hype. If the well was choked back because of sand production (common in an unconsolidated reservoir), the well will require an expensive workover/sidetrack first, before they can open-up the well further.
It remains to be proven that Ntorya is one large connected reservoir. NT-1 and NT-2 for sure, they are in a channel, but NT-3 could be completely different. If NT-3 is wet there will be a massive reduction in GIIP. Certainly an interesting well, but high risk at the same time.
The key problem for AEX is how to keep funding this exploration & appraisal campaign, as revenues from KN-1 are not sufficient to fund these wells. Compare that with WRL's situation: production from Mnazi Bay will increase first to 80 MMscf/d some time next year, then to 130 MMscf/d 1-2 years later, which will generate a lot of cash, more than enough to fund new wells, either in Mnazi Bay or in Mozambique.
Regarding Tembo: I think a comparison with Nyuni is not fair at all. Nyuni is offshore, and I don't believe that AEX will ever be able to fund drilling a well here. 3d seismic perhaps, just to be able to sell it to a bigger IOC that is prepared to wait 10 years.
Tembo itself is uncertain, I agree, but at the same time, well costs are low compared to offshore wells. With an LNG plant being planned in Mozambique, it would however be a very cheap �gamble� for any participating IOC's. If WRL gets a free well out of the farmout, plus 5 mln for a 2d seismic survey (in the success case) and a few million in cash, say 25-30 mln in total, I think it is already a good deal for WRL.. and peanuts for the majors.. especially if you spend more than a billion on an LNG plant.
I�m convinced that without hype AEX would be less than 2p. WRL is in a phase of �see first, then believe", and unfortunately it will take a bit more time before that changes. Unless a WRL finds a buyer for Tembo the next f
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