Member Info for mick2020

Start-up seems to be on track: "transportation of gas from Madimba Processing Plant in Mtwara has clocked 3 bars. For power generation to commence, we require between 50 and 55 bars of natural gas, which will be realised in the next one week since we are still pumping gas in the pipeline” http://www.dailynews.co.tz/index.php/local-news/49196-power-blackout-as-gas-pipeline-is-connected

Decent cash flow, plenty of reserves, good growth opportunities.... I think WRL will become very attractive to many.... including big oil!

You mean like has everybody has been hoping for many months now.... My take: it won't come. TPDC benefits more from a deal with the Mnazi Bay partners...

Really.... So what is exected cash from from Aminex in Q4.... It's a real shame, as Aminex really put boots on the ground, but they have been outsmarted by WRL/Maurel. I hope they can produce, otherwise they risk defaulting early next year.

As mentioned in a earlier post, the capacity of the gas processing plant at Madimba is 210 mmscf/d, of which 130 mmscf/d is already "reserved" for WRL /Maurel production from Mnazi Bay. WRL doesn’t have the capacity yet to produce more (not enough wells), but the competition cannot fill this up either with production from Ruvuma (also lack of wells, no pipeline connection). Conclusion: this spare capacity of 80 MMscf/d is up for graps in 2016. WRL has the best chances to also get this part, since their wells are already connected and flowing, a GSA is in place, but they need to drill more wells, fast, to build and sustain capacity at 210 MMscf/d. Without any income AEX can't drill many wells. Ruvuma may be a great asset to buy, for WRL/Maurel in future...

Pipeline capacity is 750 MMscf/d (see slide 3), so pipeline capacity will not be a bottleneck for many years to come. Current limitations are the new gas processing plant capacity at Madimba in the south (up to 210 mmscf/d) and Songo Songo towards the borth. Note that fromt the 210 mmscf/d capacity, 130 mmscf/d is already reserved for WRL (and partners).... Hence, spare capacity, potentially also for other companies is currently limited to ~80 MMscf/d in the south.

Wow... see the latest corporate presentation (Sept 2015) Slide 6: "Estimated cash flow $3.5 million per month in Q4 2015" Slide 18: Market Capitalisation: $88 million Apart from many other highlights (production has commenced, company is pursuing additional growth opportunities, payment guarantee is in place) See:http://www.wentworthresources.com/pdf/Wentworth-Corporate-Presentation-September-2015.pdf How undervalued can a company get? Why is the share price not shooting up?

Wentworth to Present at the Pareto Conference in Oslo, on Thursday this week http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12481858.html

Thanks Josik, that's more good news... If the share price doesn't go up soon, this will be a great take-over candidate!

Josik, I wonder if TPDC can pay off WRL and Maurel in such a short period. Do they now have to pay ca. 63 million in total to both WRL and Maurel? If so, their income from Mnazi bay is not sufficient to cover this in two years.

No matter how you look at this company, if there are no unexpected disasters (like plant start-up failure, corrupt authorities, civil unrest... all unlikely or manageable by the way), this company is highly undervalued. WRL can issue a steady stream of positive news releases in the next few months (gas volumes produced, wells hooked-up, well performance, received payments, new wells, etc), so it's only a matter of time before this is picked up by the press. I hate rampers on these boards, but it’s hard to not become one with this company, I just can't see any serious risks. But if anybody disagrees, I'd really like to hear your views.

You forgot WRL's 31.94% share in the project

Correct, and with a rate of 130 MMscf/d (as projected for 2016) this will return about £29 Million per year to WRL. Not bad for a company with a market cap of 58.3 Million....

Mtwara gas pipeline is expected to be inaugurated later this month.... see: http://www.dailynews.co.tz/index.php/local-news/47913-australian-firms-eye-tanzania-s-gas-industry

Interesting.... Looks like a buy to me, given the price of the buys immediately before and after! Wasn't me though.... :-)

Corresponds perfectly with WRL's GSA / latest presentation! Operations to start on 29 July! DAR ES SALAAM, July 6 (Reuters) - Tanzania will this month put into trial operation a natural gas pipeline connecting offshore reserves south of the country to its commercial capital Dar es Salaam. The government said the commissioning of the pipeline would boost power generation and supply gas to factories and homes. The 532 km (330 mile) pipeline and gas processing plants, financed by a $1.23 billion Chinese loan, were initially expected to be completed last year but faced technical glitches. State-run Tanzania Petroleum Development Corp (TPDC) said in a statement that "gas processing plants and the natural gas pipeline will be ready for trial operation on July 29." It said the trial would last between 40 and 60 days. Once operational, initial production would start at 80 million standard cubic feet per day (mmscfd) in September, later rising to 130 million mmscfd. Tanzania estimates it has more than 55 trillion cubic feet (tcf) of recoverable natural gas reserves off its south coast. Discoveries offshore Tanzania and Mozambique have led to predictions the region could become the world's third-largest exporter of natural gas. (Reporting by Fumbuka Ng'wanakilala; Writing by Edmund Blair; Editing by David Holmes)

Inspired by an earlier post from Phoebus, I decided to do some NPV calculations myself to get a feel for what a realistic share price could/should be, based on future income from the Mnazi Bay GSA. The difference this time is that I added future capex investments (7 million annual, until 2020), used a more typical production forecast based on a gradual ramp up starting in Sept’15, short plateau level in 2017 and a gradually increasing decline rate after that. I also added a 30% corporation tax. Assuming a 7% discount rate, 1.5% annual gas price increase, and a peak average production rate of 130 MMscf/d in 2017, the NPV would be around 177 million US$ for WRL. This corresponds with a share price of 66 pence, based on the current number of shares (169.53 million). Apart from the uncertainty around tax and royalties, I feel that the estimate above is actually fairly conservative. Volumes produced in the estimate above are for example well below the 2P reserves. Does anybody know what the Tanzania tax rate is likely going to be? (the greatest uncertainty in this estimate). Altogether, I feel that WRL is undervalued. If gas production starts in September this year (and the "take or pay" agreement in their GSA is honoured starting in August), this share has fantastic potential. A doubling of the share price in the next 12 months, based on fundamentals, is definitely possible. Any views?

Looking at the pitfalls wrt investing in WRL, I have to say that the Rovuma exploration results on the Mozambique side were not exactly impressive: Mecupa-1 & Mocimboa-1 were non-commercial; Tembo-1 and Kifaru-1 were plugged and abandoned. The only good news here is that the last well officially fulfilled the third phase exploration drilling obligations, so hopefully that will be the end of this exploration campaign, apart from some study work perhaps.To me it sounds as if further Ruvuma development is unlikely, or at least many years away… Or did I miss something? Has Anadarko already announced further wells to be drilled in this area? Geological chance of success is only 14%-22% with only 504 Bscf recoverables (P50, WRL share). Hardly worth the money to invest in, at this this stage. Not that it doens't matter too much of course at this stage, with 5 good wells in Mnazi Bay, ready to be put on-stream later this year… (just trying to understand the whole picture) Pity that WRL spent so much money on this the last few years.....

Interesting comment, in the 2014 annual results: "The Company has a receivable from TPDC, a 20% participating interest partner in the Mnazi Bay Concession, for TPDC’s share of past development and operating costs paid by the Company prior to June 30, 2009 with respect to expenditures incurred on the Mnazi Bay Concession. In addition, the Company has been paying for a proportionate share of TPDC’s share of development and operating costs incurred subsequent to June 30, 2009, the value of which has been added to the TPDC receivable balance. The Company will recover this receivable from an agreed percentage of TPDC’s share of current and future production revenue from the Mnazi Bay Concession. The undiscounted face value of the TPDC receivable at December 31, 2014 is $33.52 million (2013 - $35.02 million). Due to its long-term nature, the TPDC receivable has been discounted to $28.91 million (December 31, 2013 - $24.13 million). Nice little income stream for years to come! (adding up to 11p per share)

Small correction: management subscribed to ~3.3% of newly issed shares (515,206 out of 15,412,269 shares). Hopefully they actually had to pay for them, instead of it being part of some reward package...