Member Info for mick2020

Great news, M&P has unanimously approved Pertamina's takeover bid, after receiving clearance from Tanzania Antitrust authority. Link below. When will WRL publicly announce that they intend to invoke their right of first refusal? Can't be long anymore. Once they do, this is immediately one of the most undervalued shares around! http://tinyurl.com/gnyapza

Eni has announced its investment decision for the first phase development of the Coral South project located in the deep waters of the Rovuma Basin, offshore Mozambique. The Coral South development project involves the construction of six subsea wells connected to a floating production facility Floating Liquefied Natural Gas (FLNG). The FLNG will have a liquefaction capacity of over 3.3 million tons annually, equivalent to approximately 5 billion cubic meters. See: http://explorationanddevelopment.energy-business-review.com/news/eni-approves-8bn-investment-plan-for-coral-south-project-offshore-mozambique-211116-5674022

A rather modest amount of shares though... Let's hope they buy a few more this week...

Vike, Without any drilling commitments (or need) to drill, connect or work-over any wells, operatorship won't be particularly complicated in 2016! (and I guess they won't sack M&P's operational staff in Tanzania...) Mozambique is a different story, and with any possible discoveries likely to be stranded for a few years, I think it is prudent that they are looking for a suitable partner.

Vike, Remember that in a previous life WRL (as Artumas) was the operator in Mnazi Bay. Just have a look at the reports prior 2009, when they farmed out to Maurel. They also have an office in Tanzania. Here's some background information (link below): - In 1981, AGIP drilled a shallow water, offshore well and discovered the Mnazi Bay Gas Field. Due to a lack of commercialisation options at the time, AGIP plugged the well and relinquished the PSC - Artumas acquired the rights to the development concession and, as operator (80% interest), in 2005 re‐entered, completed and tested the original AGIP Mnazi Bay well - Mnazi has achieved a 100% drilling success rate with 4 wells drilled (1 production, 2 appraisal and 1 exploration) drilled on 2 proven fields, yielding natural gas and small quantities of 24 to 27 degree API crude oil See: http://hugin.info/136496/R/1323178/310420.pdf (slide 21)

Mbolea, Maurel's stake creates an immediate and significant additional income stream (ca. $3.5 mln / quarter @ 34 MMscf/d), which will make borrowing much easier. You can't compare with this with borrowing money for new exploration/appraisal wells that may or may not generate income at an unknown point in future. Surely AEX would love to buy Maurel's stake, however, I don't see how they (or Orca) could get past WRL's right of first refusal. But I guess time will tell!

Apart from the disappointing production numbers (unfortunately not a surprise), there is one statement that I didn't like in the Q3 results, regarding the current liabilities (approximately $10.0 million): “This obligation is expected to be settled within the next 2-4 months” Looking at the financial statement, it seems that the exact number is $10.894 mln ($6.27 mln on 31 Dec. 2015). If this liability is settled in Q1 2017, WRL will be back to the same debt levels as in Q4 2015: Debt at the end of Q1 2017 is currently anticipated to be $17.3 mln, but including the $10.9 mln liability it will be back again at $28.2 mln. At 34 MMscf/d, the company is currently self-funding and able to pay off its debt. However, to pay for the Mozambique seismic acquisition in Q3 next year, WRL will need to borrow again, and altogether I think this makes it unlikely that the 50 million credit facility will also be used for a take-over/farm-in from M&P’s share…. if it happens of course. (unless they plan to spend less than $20 mln on it) Overall, the endless delays are getting rather annoying…. this really is a waiting game.. waiting until the infrastructure is in place, waiting until TANESCO is able to pay its bills and fund expansion project again and until actual/real gas demand in Tanzania finally picks-up. Worst case, we will need to wait another two years until things get a bit more exciting…

Unless demand picks up suddenly (and unexpectedly), I can't see them drilling any new wells in Mnazi bay in 2017. (why would they, with a well potential of 100 MMscf/d) The only planned capital expenses in 2017 are for already announced seismic survey in Mozambique, which should not cost much more than $5 mln. I can think of only one reason why they want to expand credit facilities... (And that is indeed an excellent reason!) Regarding the sp: the drop is indeed large, but the volumes are very small, so it can easily reverse on good news, hopefully in the next few weeks....

Results demonstrate once again the current a lack of demand for natural gas. (oh, and that a 'take or pay agreement' is pretty worthless in Tanzania). Apart from that, very few surprises: - Income from Gas sales: $2.38 million - Income from TPDC recoverables: $2.04 million - Income from Tanesco: 3 months of outstanding receivables: (ca. $0.55 million ) - Total debt was reduced by US$ 3.3 mln Absolutely no reason to panick at this stage, let's just hope gas demand will pick-up soon! By the way, Cantor Fitzgerald and finnCap reiterated their price targets today (57 and 59p), see: http://www.nandp.co.uk/sharedealing/company/?companyCode=WRL

"PT Pertamina Internasional Eksplorasi dan Produksi (« PIEP »), wholly-owned subsidiary of Pertamina Persero, confirms its intent to launch a voluntary tender offer under the terms and conditions already announced on August 25, 2016. The offeror PIEP and Etablissements Maurel et Prom ("Maurel & Prom"), a company listed on Euronext Paris (ISIN code FR0000051070) indicate that the offer calendar is being finalized pending the obtainment of an antitrust clearance required in Tanzania. Relevant filings have been made with the Tanzanian Competition Authorities on 2 September, 2016" http://tinyurl.com/grf3vo7

Some very large trades as well this morning: 1.65 million shares in in just two trades! Encouraging! :-)

As the end of the year approaches, I thought it could be useful to summarise the agenda for the coming period: 27-Oct: Q3 report from M&P, that will show the average production rate of the 3rd quarter. Expect a slightly disappointing rate (~45 MMscf/d average in Q3?), given that the maximum achievable rate with the Symbion plant offline is ca. 50 MMscf/d. 31 Oct - 4 Nov: 23rd Africa Oil Week. WRL will be present at the exhibition (booth 114), hence an updated corporate presentation is likely. 15-Nov: WRL Q3 financial statement. The release will show the net cash position after Q3. Debt will have been reduced by US$ 3.3 million. Mid November: starting to get more exciting as Ledouble should have finished their fairness report by then, related to the take-over of M&P by Pertamina. If the outcome is positive (likely) it will most likely mean that Pertamina will take-over M&P completely, which in turn will allow WRL to trigger their ROFR. Expect an RNS that WRL is in discussion with all relevant parties (Pertamina, M&P, Ledouble) to agree on a fair price for M&P’s Mnazi Bay share. As most will be aware, WRL’s share in Mnazi Bay could increase to 80%. Given that Pertamina's primary interest appears to be M&P's operations in Gabon, where there is a ROFR as well, I think it is quite likely that a deal will be reached, with potentially a very good price for WRL! 2nd half of December: Finalisation of the take-over of M&P by Pertamina, and an RNS that an agreement has been reached between WRL and Pertamina, about their future stakes in Mnazi Bay, including the take-over price. WRL will borrow the full amount (issuing shares clearly won’t cover it). Q1 2017: formal handover of Mnazi Bay operatorship to WRL. Altogether, I think there are very exciting times ahead! If WRL indeed takes over M&P’s Mnazi Bay share, then interest from institutional investors will surely grow.... With an 80% share in Mnazi Bay, and 85% in an very interesting exploration block in Mozambique (with a discovery well), WRL will basically look like a new company in 2017! A company with a fantastic (and unique) position in the Ruvuma basin, that is fundamentally healthy with serious cash generation and manageable debt, spare production potential readily available, and lots of opportunities in both the short and long term, in Tanzania and Mozambique! Let's see how the share price will respond to that! :-) 

Below some reports recently issued by the Tanzania ministry of Energy and Minerals: 1) Updated Energy Sector quarterly digest (28/9/16): http://tinyurl.com/znnkscf 2) Final draft of the natural gas utilisation plan (21/9/16): http://tinyurl.com/za8z4yg Some observations: Kinyerezi II: Expected to be completed by 2018. Interestingly, it is not mentioned any longer that it is a combined cycle turbine installation. Combined cycle turbines are apparently much more efficient, with an output of ca. 8 MW per MMscf/d (see the gas utilisation plan), meaning that gas consumption would be around 30 MMscf/d, when fully operational. Kilwa Energy Phase I: Supposed to be commissioned by end 2017. However, comparing this comment with the comment in the quarterly digest from Q4 2015, only the date has been changed (delayed with 1 year)

Despite my usual tendency to look at stocks more critically than positively (I admit...), I thought I'll write down how a positive outcome could look like for WRL, over the next two years. No ramping intended; I tried to keep it as realistic as possible (based on available news/ past announcements). And obviously, the share price prediction is pure speculation from my side! Here it goes: Mid Dec 2016: WRL announces that it has reached agreement with Pertamina, to take over M&P’s share in Mnazy Bay for US$ 70 mln in cash. TPDC announces that it will increase its share by 5% as well, creating a 75% WRL, 25% TPDC venture. Funding will be done though a loan (8%), without issuing new shares. Interest in WRL from institutional investors re-awakes, and despite the size of the loan, the share price increases to more normal levels (40p) in a matter of days. February 2017: An agreement has been reached between TANESCO and Symbion about unpaid bills. The Symbion plant resumes operations and Mnazi Bay production increases to 70 MMscf/d. Share price increases to 55p Q3 2017: a busy quarter, with a seismic survey in Mozambique and preparations for the drilling of MB-5 in Mnazi Bay in Q4. Q4 2017: a very successful MB-5 increases well potential to 140-150 MMscf/d, ahead of the commissioning of Kinyerezi 1 expansion and Kinyerezi 2. Initial Mozambique seismic results are encouraging enough to formally start discussions about a farm out with several partners. Share price increases to 70p. Q1 2018: Agreement has been reached to farm-out of the Mozambique Rovuma concession. After the deal, WRL holds a share of 55%, with 30% to the new (financially strong) partner and 15% with ENH. Share price increases to 75p Q2 2018: Following the drilling and testing of MB-5, a new reserves report is issued. Mnazi Bay 2P reserves increase with 15%. Share price increases to 85p Q3 2018, after a very long delay, Kinyerezi 1 expansion and Kinyerezi 2 finally come online. Mnazi Bay production increases to 120 MMscf/d. Share price increases to 110p Q4 2018, a new exploration well is drilled in Mozambique, and test results not only prove economic quantities of gas, but also a large volume of oil, of yet unknown dimensions. Wild speculations in various media talk about a huge volume, potentially even a billion barrels of oil. The share price explodes and reaches 10 pounds… Even Tiptop (from the AEX forum) can’t resist and swaps his AEX shares for WRL….. ;-) Again, no ramping intended, just a summary of the potential!! :-)

Jergen, To be honest, I don’t think that a price target of 60p creates a lot of excitement amongst investors, especially it depends on specific future developments in a country, where long delays are commonplace. I suspect that an institutional investor wants to see evidence before investing in companies operating in a country like Tanzania. I.e. WRL first has to demonstrate a production rate of 80 MMscf/d, WRL needs to keep showing that TPDC do indeed pay their bills (and honour their GSA), also long term, and that TANESCO is serious with their plans to pay their bills as well one day. Promises are not worth a lot of money in Tanzania! On the other hand, this buy-out of M&P’s Mnazi Bay share is a different issue, and I suspect that it was/is not on the radar screen of many analysts. If WRL really takes over M&P’s Mnazi Bay share (for a good price) then this could seriously increase interest from institutional investors, simply because WRL’s net gas sales and cash flow increase instantaneously. Also, the target price would be significantly higher than 60p, after the buy-out, at least according to my NPV model! If WRL however fails to take-over M&P’s share, then this will just be another item on the growing list of disappointments… And personally, I think that the share price could fall further if that happens, mainly because shareholders are already very impatient. WRL may argue that it is not their fault that everything gets delayed in Tanzania, but that is more an academic debate. Fact is, WRL targets keep moving to the right (i.e. the expectation to produce 80 MMscf/d by end 2015 is now 70 MMscf/d by the time the Symbion plant is back online; Kinyerezi 2 has moved from 2017 to 2018 etc, ), and the company can’t do anything about it. Once it is confirmed that WRL will increase its share in Mnazi Bay, and take over operatorship, I expect WRL to be back on the radarscreen with larger investors. If you invest now in WRL, you basically gamble on a successful buy-out of M&P in the short-term. Everything else, although promising, is unfortunately years away. Let’s hope they will indeed do it! :-)

From the Norwegian press (translated using google, with some edits): "Wentworth Resources confirms that they will have a preferential right to purchase Maurel a Proms' (M & P) share of the gas producing license Mnazi Bay in Tanzania if M & P should be taken over by Pertamina. Pertamina has already bought 25% of M & P and has announced its intention bid for the remaining shares. Should Wentworth exploit this, they will take over operatorship and own over 60% of the field. The company does not rule out that in such case raising equity as well as debt financing is required, depending on the price attributable to Mnazi Bay in Pertamina-M & P transaction. See: http://tinyurl.com/hs466kq (3rd paragraph) Note that this ROFR (right of first refusal) can only be triggered if Pertamina buys out M&P completely (as currently proposed). This really could be a golden opportunity for WRL! On a separate note: are there actually any private WRL shareholders left, who actually read these posts here? This forum really looks practically dead unfortunately.... A big contrast with the Norwegian WRL investment forums!

Unless there is an interested institutional investor, it will be impossible to raise such an amount. The share is totally illiquid anyway. Also, I doubt that Mcbean will accept a dilution, having such a large share in the company. But a loan (RBL) should be easy, especially since the immediate additional revenues will be ca. 3x higher than interest payments (in the above model), even at the current low production rate. Such an investment would therefore significantly increase WRL's cash generation! When production increases (either with the re-start of the Symbion plant, or in 2018, with Kinyerezi 1 expansion and Kinyerezi 2 coming online), final debt pay-off will be swift.

Cperkin, Read further, and take note of the "voluntary tender offer on all Maurel & Prom shares". See quote below. Yes, they are planning to take over M&P completely, and the M&P board supports the offer. Regarding the debt: it will be a lot, but with a guaranteed income (way above the interest payment), they can definitely manage! Quote: "Should Maurel & Prom's Board of Directors deliver a favourable reasoned advice on the offer following the conclusions of the report from the independent expert, PIEP undertook to file, to the French market authority, a voluntary tender offer on (i) all Maurel & Prom shares under the same conditions as those offered to Pacifico and on (ii) 2019 and 2021 convertible bonds at their par value plus accrued interests. The schedule of the operation is expected to be completed by the end of 2016. Maurel & Prom's Board of Directors has unanimously indicated that it supports the offer and has the intention to recommend the shareholders to tender their shares.

correction: if WRL "borrowed" that full amount...

On various other WRL investment boards rumours are going round that WRL is planning to buy the complete M&P share in Mnazi Bay, increasing its share from 32% to 80%, following Pertamina's take-over of M&P (having the first right to buy). The take-over will be completed by the end of the year. Now this is a very intriguing view. With an 80% share in Mnazi Bay, WRL’s gas sales would increase by ca. 250%, while net P2 reserves would reach 286 BPF (1.2 TCF net recoverable prospective reserves) Obviously this would increase WRL’s NPV dramatically if they can get the asset cheaply. The key question is, how much would WRL have to pay? Here's a guess: Pertamina’s take over of M&P values the company at $996 mln. M&P borrowings are $733mln and cash reserves $230 mln (see their half year results), so net of that, Pertamina values M&P at ca. $1.5 bln (not sure if this is really correct..). Mnazy bay is however a very small part of the M&P portfolio, with assets in Nigeria, Gabon, Tanzania, Namibia, Myanmar, Colombia, Canada, France and Italy. Most of those are exploration licences. Looking at hydrobarbon sales (Nigeria, Gabon and Tanzania), Mnazi Bay generates about 7% of M&P’s income. Looking at 2P reserves, Mnazi bay has a 14% share. However, estimating a value based on these numbers ignores the value of the assets in the other countries (Mnazi Bay is probably less than 1% of total acreage). If one assumes that half the value of M&P is in the exploration territory (Pertamina may be particularly interested in for example the Myanmar acreage), and Mnazi Bay is about 10% of the rest of the value, than WRL would have to pay about $75 mln for M&P’s share of Mnazi Bay. Sounds like a lot of money, however, if WRL bought that full amount, monthly interest payments (at 9%) would be ca. $540k, while sales would increase with ca. 1.7 mln per month (at the current rate of 50 MMscf/d). My personal calculations show that the additional debt will have been paid off by 2021, and NPV would increase to 2 pounds per share… So in conclusion: this is an absolute no-brainer and would be a golden opportunity for WRL! The only downside I see is the total dependence on TPDC, but so far they have proved to be a reliable partner. So perhaps 2016 will become exciting for WRL after all! :-) Any comments? DYOR, the above is just my view!