Member Info for mick2020

Very few surprises here. The good news is that TPDC pay their bills (both for gas sales and past capital expenses) and that debt is falling. Income is ca. 1 million per month for gas sales plus 1 million per month for capex recoverables. Also total well potential is about 100 MMscf/d. The bad news is that Tanesco isn't paying any bills (1.8 million outstanding to WRL) and neither is the Tanzania government (6.51 million outstanding). Also, Q3 production will be lower than expected, mainly because the Symbion power plant which is currently idle. Altogether I think he results are just good enough. WRL’s has is slowly improving its financial position, and can open the tap as soon as there is demand. But even if production growth is minimal in the short term, by mid 2018, production will be much higher than today (with Kinyerezi-1 expansion and Kinyerezi-2 coming online), while debt will be close to zero. Also, Mozambique could be a nice upside. If the Tanzania government suddenly solves their debt problem with Symbion, then WRL production should increase rapidly. Just wish they had shared more about actual production in July and August!

Jergen, I have seen the M&P plot, and I am also aware of the shutdown of Symbion's Ubungo 2 plant and that it directly impacts WRL. However, even with the Ubungo 2 plant fully running (only 105 mW, so ca. 21 MMscf/d), total production from Mnazi bay will still not reach 80 MMscf/d, and given that daily/seasonal gas demand fluctuations will happen in future as well, I think it is even unlikely that a MONTHLY AVERAGE rate of 70 MMscf/d can be achieved in the coming months. The Kinyerezi 1 expansion will add perhaps another 7 MMcf/d (when will that be implemented?) so even when you combine current production (52 MMscf/d) + Ubungo 2 (21 MMscf/d) + Kinyerezi 1 expansion (7 MMscf/d), you will still not produce 80 MMscf/d on a monthly average basis. I do find WRL's presentations a bit misleading in this aspect, especially the one from Q3-Q4 last year, predicting a rate of 80 MMscf/d by the end of the year. Also note the uncertainty in AEX' production from Kiliwani. So in your view, how will WRL reach 80 MMscf/d? Dangote power is years away (?), and thanks to TANESCO's poor payment record, expansion or conversion of any older power generators looks unlikely in the near term as well. Good news for Maurel et Prom's shareholders. Of course it will affect the Mnazi bay partnership.... but unfortunately not WRL's share price, it seems! As stated before, I do think this is an interesting share, but only in the long term. Buy now, come back at the end of 2017 to look at WRL's updated growth plan, and sell in 2020 or so.... Not bad, but not super exciting either...

Current net revenue should be around US$ 1.1 million per month, for WRL from gas sales. Disappointing to see that production growth so far is basically insignificant. One starts to wonder when they will actually achieve the 80 MMscf/d monthly average production rate (original "promise" from WRL: at the end of Q4 2015!). Personally, I actually start to doubt that we will reach that level before mid 2018, when Kinyerezi 2 comes onstream. However, at this stage it is even more important that TPDC pays back their outstanding debt of ca. US$ 35 million to WRL (for initial CAPEX expenses), as planned over the next ~18 months or so. Luckily, the Q1 showed that TPDC seems to be on track with settling this, and the Q2 results will hopefully confirm this. Debt repayments + net gas sales should result in a income of almost US$ 2.5 million per month right now. Not bad for a company with a market cap of only US$ 58 million, and no significant CAPEX expenses planned for the next 12 months or so! Long term buy IMHO

Great find! So current production seems to be about 66 MMscf/d (slide 18)... Pretty good (and improving)!

"Internal cash flow forecasts demonstrate that the Company expects to generate sufficient funds from gas sales activities to meet its anticipated capital, operating, administrative and debt repayment obligations beyond twelve months from the date of this report".... See the "Financial Condition and Liquidity" paragraph. As long as TPDC pay their bills, WRL can easily meet all debt obligations and still generate a lot of income. A production increase to an average of 70-80 Mmscf/d in Q2 will increase revenues even further.

Somewhat disappointing production numbers perhaps (ramp up is slower than expected), but far more important: WRL is recovering the US$ 35 million TPDC receivables, as contractually agreed. Great news, great long term investment. Bring on the Q2 results!

Excelent, very encouraging news!

The main reason behind all the delays in the energy/power sector in Tanzania ..... https://www.ippmedia.com/?l=90379

From Josik's link in the previous post, it also appears that Kinyerezi 1 has already increased power output from 75 to 105 MW : "This project is preceded by Kinyerezi number one project that is capable of producing 150 megawatts of electricity, and its equipment has already begun production of 105 megawatts incorporated into the National Grid" This would mean that WRL is producing >60 MMscf/d right now, which is definitely encouraging news! https://translate.google.no/translate?hl=en&sl=sw&u=http://www.matukiotz.co.tz/2016/03/rais-magufuli-aweka-jiwe-la-msingi.html

Bad news again.... shows that delayed payments a key risk for any company in Tanzania. Let's also hope that "holding off the production increase" refers to the increase from 80 to 130 MMscf/d.... --------- "There is growing concern among gas supplying companies that the tariff reduction move will cripple the already cash strapped state utility which collects barely enough to service debts month Officials at Songas Ltd and Wentwoth Resources Limited said they are watching closely Tanesco’s developments. “We may put our gas increase production on temporary hold because of the risk of delayed payments,” an official at Wentworth in Dar es Salaam, said." http://www.ippmedia.com/ippmedia/business/former-energy-ps-warns-against-tanesco-tariff-reduction

New corporate presentation out today. WRL expect to produce 70-80 MMscf/d at the end of this quarter! Given that there are only two more weeks to go, they must to be pretty certain...Great news! http://www.lse.co.uk/share-regulatory-news.asp?shareprice=WRL&ArticleCode=e16f33gi&ArticleHeadline=Wentworth_Resources_Limited__Corporate_Presentation_March_2016

Jergen, Can only agree with you, the main reason why all power projects in Tanzania get delayed is because of the terrible financial situation of Tanesco. It is crazy that a country with a such a GDP growth rate cannot sort out such basic things. Not even the government pays its bills. Reducing the electricity tariff at this stage already is another bad decision, in my view. Here's an interesting article about that: http://www.ippmedia.com/?l=89433

Interesting article below Kinyerezi 1 is set to commence operations on 30 March (generating 150 MW) Tanesco failed to meet an earlier deadline owing to financial constraints The Kinyerezi 2 project is expected to be ready in 2018 ------------------------------------ http://www.thecitizen.co.tz/News/Tariffs-nosedive-as-TZ-plans-to-export-power/-/1840340/3114070/-/trsye3/-/index.html

Josik, Thanks, I listened to the conference call. Not much news i thought, and except for the last question about "commercial operations date" rather boring questions and answers in my view.....I didn't like the reply to the questions about the TDPC recoverables (is the rather irrelevant discounting story some smokescreen?) The real questions should have been: why has TPDC not yet "paid" back any of the capex recoverables in q4 2015 and when exactly does WRL expect this time happen? Is it related to achieving a certain minimum flow rate first (i.e. 70-80 MMscf/d? (Part of the "commercial operations date?). If the GSA links the capex recovery to fist achieving a minimum rate, then TPDC has quite an incentive to make sure that achieving "commercial operations" gets delayed.... The financial story is completely based on the same assumptions that you made: 70-80 MMscf/d will be achieved soon, and 18 million capex investment will get recovered this year.... Show me some evidence. After that, I'll buy more shares again....

Sorry for nitpicking, but it appears to me that the payment in January was ONLY related to the line fill and line pack volumes. See the statement below (admittedly it is not clear which outstanding amount was exactly meant, given that payments were supposed to start in January). The line fill volumes add up to about 1.4 million in total (960 MMscf), and paying this back over an 18 months’ period will result in a payment of about US$ 78k per month. Not quite in the same category as the 18.2 million that WRL expects to recover this year alone, for previous capital expenses. Without a production increase to 75-80 MMscf/d, or more importantly, without clear evidence of receiving the TPDC capex share, this share will go nowhere.... Sorry Josik, but I think you are ignoring the risks a little bit, risks that are inevitably linked to investing in a country like Tanzania, where not even the government pays its bills normally.... ----------------- “The GSA signed during Q3 2014 specified separate payment terms for gas deliveries to the new pipeline for line fill and line pack. A significant majority of the gas purchased by TPDC and delivered to the new pipeline during Q3 was for the purposes of line fill and line pack with payment for the invoiced amount having been agreed over a period of 18 months commencing in Q1 2016. The amounts owed by TPDC to the Mnazi Bay joint venture that were outstanding at December 31, 2015 were settled in January 2016”

Josik, Your model hinges on two key assumptions: an “imminent” flow increase to ~75 MMscf/d and cost recovery from TPDC without further delays (18.2 mln in 2016). As the flow increase has been delayed already and capex recovery was supposed to start earlier to my knowledge (i.e. recover everything within 24 months of start-up; expected 3.5 mln cashflow at the end of 2015), these assumptions remain uncertain. If you calculate the cash flow for a worst case scenario, assuming a flowrate increase to 75 MMscf/d in Q4 this year, and recovery of initial capex delayed by two years, you’ll find that WRL will hardly have any money at the end of this year… So in summary, if you expect a quick production ramp-up and capex recovery as planned, this is a great share to buy now. If you fear that this could get delayed, then I don’t see a reason to buy this share, at this stage. A useful alternative strategy is to wait until there is evidence that the rate has been increased, and that costs will indeed be recovered….. By the way: in Q4 2015 WRL did not recover 1.2 million, as your spreadsheet indicates.

Correction, in september WRL expected 3.5 Million/month cashflow by the end of the year..... Forget the Q4 2015 results, is now all about the Q1 2016 results.... Let's see if any of these expectations will materialise... Wish we could fast forward by 6 months or so... Again...

Correction, in september WRL expected 3.5 Million/month cashflow by the end of the year..... Forget the Q4 2015 results, is now all about the Q1 2016 results.... Let's see if any of these expectations will materialise... Wish we could fast forward by 6 months or so... Again...

I won't be able to call in unfortunately. Looking forward to a clarification. Gas sales totalling only 3.1 million in Q4, no recovery of any TPDC capex, a pre-tax loss of 7.4 million for the year. I guess the "promised" revenues of ca. 3 million/month are just as far away as when they were announced, 4 months ago....

Cannot say anything else, despite the 20% reserves increase. No payment yet of the TPDC receivables, looks like a new Orca in the making.... Josik?