The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Celebrated highlights of the week
" Complete nonsense Jollyboydrewky. " 1. RoJo
" an estimate of the gas in the ground is no basis for a valuation of AEX whatsoever " 1. Crusty Pete
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Working Capital:
Cash and cash equivalents stood at US$5.81 million," 1..AEX 2022
Current assets include the cash.
When the current liabilities exceed the current assets, you have what is known as a negative working capital. Aminex has a negative working capital. This means that the business does not have enough liquid assets to pay for its short-term obligations. They MUST generate cash flow and they MUST generate it soon. The situation should be cause for concern for lenders, creditors and shareholders alike.
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Re: Questions for AGM.
Last week's list has been narrowed down to 5. This is more manageable for Tanzania.
Questions to ask:
1) The dispute with the Tanzania Revenue Authority is ongoing. What's the plan to get free from this head lock?
Tanzania, you might also want to ask about the deposit required for an appeal.
2) The negative Working Capital requires attention. How big of a Capital raise are you working on?
Be prepared for them to pull the wool over your eyes Tanzania. Double down with insistence for a clear, concise answer. The Capital raise will entail dilution which subsequently entails further weakness in share price.
3) The Scirocco deal has yet to obtain a 'Clearance Certificate'. Also, there has been no closure for a GSA, 25-year license or FFD. ARA knows very well that the only leverage they have is to stall. How long of a stall can Aminex afford to sustain?
They will deflect this question. Just the mere act of deflection is very revealing.
4) Are you still on schedule for October gas production?
Best prepare yourself to have your eyes opened and your jaw to drop. The 'silly list' poster has been promoting this as a fundamental fact. You are about to learn what reality is all about Tanzania.
5) As a non-operator with no say, sway or control over anything, wouldn't the company be better off seeking a strategic alternative?
With nothing to do, management will continue milking this for as long as possible. They'll figure out some way to respond to this question.
" So incredibly frustrating this.... as management continues to fail in achieving anything at all, but reward itself as if they are doing a wonderful job..... Hopefully this is over soon, I just can't bear it any longer." 1. Mick2020 on WEN chat board as related to WEN. Ditto for AEX. Mick2020 warned you, over and over again, to get out of AEX whilst it was trading at > 4p.
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The company has no raison d'être. Before it is too late, what you want to hear from management on July 13th, is the following .....
" We have come to the realization how difficult things are at present and thus we have opted to se
Re: asking a question at the AGM
" ... could we not find and elect one spokesperson to represent our case?" 1. Tanzania
Yes, the most senior person deserves this ... namely, Tanzania.
It will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least. Select at least five questions from the list below. Make sure to ask question #10 Tanzania .... eyes wide open.
Questions to ask:
1)The dispute with the Tanzania Revenue Authority is outstanding. What's the plan to get free from this head lock?
2) The negative Working Capital requires attention. How big of a Capital raise are you working on?
3) Watching what's happening with Wentworth and Maurel & Prom, are you concerned that a takeover of Aminex may not be possible?
4) Did you have faith in the poorly defined 2D seismic cartoon? Of the 3D seismic you have seen, is it mostly small stratigraphic traps?
5) The Scirocco deal has yet to obtain a 'Clearance Certificate'. ARA knows very well that the only leverage they have is to stall. Are you expecting ARA to stall on Ruvuma because of this?
6) What is the cause of the hold up on the 3D seismic at Kiliwani North Development License?
7) Is there any institutional interest at all?
8) Could you provide an update on NT-1, NT-2 and CH-1, rig?
9) Are you any closer to a 25-year license, GSA or FFD? Do you expect ARA to stall until these three are approved?
10) Are you still on schedule for October gas production?
11) Are there any ongoing discussions with respect to the Nyuni farm out?
12) Will the completion of the Julius Nyerere Hydropower Project (JNHPP) have a significant negative impact on gas demand?
13) Other than sharpen pencils, what does management do all day long?
14) With no control over anything, why should the company even exist?
15) Do you foresee a day when this company will actually turn a profit?
16) With the persistent delays, what is the ultimate 'expiry date' or date of 'no return' for the company?
This is a classic case of where the emperor wears no clothes. The illiquidity could rapidly evolve into insolvency. It's time to look up and recognize that this emperor wears no clothes. A generation of investors have been left disillusioned and, with no control over anything, the company has no raison d'être. The company is a profoundly helpless and hopeless.
Encourage the takeover of Aminex. Apparently, even a takeover has regulatory risk as witnessed with Wentworth and Maurel & Prom. Be happy with a 30% premium to market and, hopefully, the takeover will get approval without attracting too many regulatory bodies each requesting a fee.
" On 9 June 2023 the Company announced that representatives of the Company and M&P had attended a preliminary hearing before the FCC in Tanzania on 7 June, at which various Tanzanian governmental parties were present and that a number of concerns were raised which may impact the likelihood of the FCC to approve the Acquisition in its current form." Wentworth June 12th, 2023
Not exactly ' investment friendly' news. If this Wentworth / Maurel & Prom deal falls through, Wenworth shareholders will find themselves transforming back into the same helpless predicament that Aminex is currently in with no control over anything. Wentworth share price is not reacting well to this news,
Multiple levels of bureaucracy need to align. The Ministry, TPDC, TRA and the Fair Competition Commission all need to be satiated and that is a very tough task considering how voraciously hungry they are.
1) How is the Scirocco Energy deal moving along? Unless there is a resolution, ARA may elect to slow things down at Ruvuma.
2) How many brown envelopes do you need for the outstretched hands?
" .... this is Africa. The local lads will be queueing up, hands outstretched, to discuss "the fees" required to (i) satisfy the minister, plus (ii) to forego TPDC's rights of pre-emption to take over the Mnazi Bay asset and plus (iii) for final approval by the FCC.
Only after all those shovels have been inserted into the £61 million on offer from the purchasers, will WEN shareholders get their hands on whatever is left over. And as for a completion of a takeover by 31st December, it's most unlikely to be 2023. Pick a different year, the local lads are in no hurry to cut a deal. Just look at the troubles Tullow have had in monetizing their assets in both Uganda and Kenya, geographical next door neighbors to Tanzania. Not a single barrel sold since major oil discoveries some ten years ago." 1. gewillia on WEN chat board Jun 11th 2023
3) How long are you willing to suffer with these delays?
4) How far will the price drop with the next anticipated Capital raise?
We are still waiting on the Ruvuma 3D seismic interpretation. You really don't want to read about " small stratigraphic traps". Remember, this is still an exploration asset and not a development asset. Chikumbi needs to come in big as an outlier success.... no small feat. You can't rely on the poorly imaged 2D seismic but the 3D seismic will provide that binary decision point.
Aminex exhibits a life of desperation whilst the clock counts down and the ' lost opportunity ' costs continue to soar. Encourage the search for a strategic alternative such as a takeover of Aminex. Be happy with a 30% premium to market and hope to hell the takeover will secure regulatory approval.
At the AGM, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least.
This company's mandate should be to try to put together a decent return for shareholders. For a generation, it has failed miserably to do so and will most likely continue to fail. There has been nothing to show for it except years and years of lost opportunity. Referring to this company as a major disappointment is being generous.
The company is powerless because all of the events are outside of the company's control. It's a fact that they are in financial distress. This fact was published in their financial statements. Creating true shareholder value is an impossible task for the management team.
Even if minimal production does actually proceed, it won't have much impact ... ie .. compare Aminex with Orca Energy Group. This level is where Aminex would love to be at. Even at this level, it won't make a damn bit of difference because Orca Energy Group is still being ignored by the investment community.
Item ..............................Aminex ........Orca Energy Group
1. Gas Production .... 0 MMscf/d..... 95.5 MMscf/d (+ protected gas of up to 45 MMscf/d, sold at cost)
2. Cash Flow per share ... negative ... US $3.40 /sh
3. Working Capital ... negative .............. US $61.5 million
4. Cash / equivalent .. minimal ........ US $96.3 million (US $4.84/sh .. trading at US $3.90)
5. Net Income ...... negative ........... US $1.39 /sh (and the 'at cost' protected gas arrangement terminates July 31, 2024.)
6. Dividend Yield .... No dividend .........7.6%
Orca Energy Group desires to have a license extension past 2026. It is trading below the cash/sh level. Institutional investors simply aren't interested in either one. The luxury Orca Energy Group has is that, without a license extension, it can simply hand over the keys and distribute the ever-increasing bundle of cash which is kept offshore for a reason.
ARA will pull through eventually, but Aminex is no ARA ... far from it.
1. Production by October ... a pipedream .. more are starting to move towards this realization.
2. Capital raise .... there exists a high probability of an upcoming dilution. It doesn't qualify for a loan.
3. The Tanzania Revenue Authority is putting the squeeze on Aminex. They'll need one third of the disputed amount to be deposited just to hear the appeal. Either way, what do you suppose will happen to the deposit?
4. The negative working capital is a fact. This is serious because this WILL require remediation.
5. By hook or by crook, with a sequence of deliberately engineered delays, Aminex could end up being taken over for a song.
Wentworth / Maurel & Prom have yet to obtain their " Clearance Certificate'. Regulatory changes may cause the deal to go off track. Wentworth could find themselves back in the same predicament that Aminex currently finds itself in with no control over anything.
Encourage the takeover of Aminex.. Be happy with a 30% premium to market and hope to hell the takeover will secure regulatory approval.
1. Julius Nyerere Hydropower Project (JNHPP), otherwise known as the Stiegler’s Gorge project should be ready late 2024. At 2,115MW, its capacity is higher than national peak capacity today.
2. Tanzania’s power utility firm Tanesco entered into a joint venture with United Arab Emirates' Masdar to generate a further 2,000MW of electricity using renewable sources by late 2024.
That is a massive amount of Power. The above will have an impact on local gas demand. An export pipeline to Mombasa and Nairobi would help but that has been under discussion for over a decade.
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re: Kiliwani North Development License (KNDL)
" The [3D] incursion into the KNDL should provide valuable data to improve structural mapping and refine the prospectivity of the Kiliwani North and South structures " 1. Charles Santos
There has been a delay with the 3D seismic over the Kiliwani North Development License. The timing of the interpretation has extended to Q4 now. Will the cash flow from KNDL arrive in time to save Aminex?
Let's not discuss Aminex fundamentals because that would be a total waste of time other than to say they are absolutely atrocious. Looking at the balance sheet elicits a visceral sensation of repulsion. Without continued external financial support, they are in trouble. They certainly cannot afford the luxury of maintaining the operator status. Without a Gas Sales Agreement and without even one cubic foot of 1P reserves, the company doesn't qualify for a loan. The expected 30% drop due to the anticipated capital raise could be surpassed.
Orca Energy Group has US $93.6 million in cash. They are skilled as an operator and intimately acquainted with the World Class 'SongoSongo' reservoir. Assuming the 3D seismic interpretation proves to be awe-inspiring, Aminex should be more than happy to farm out most of their 63.8% position in KNDL. The bigger concern is, would Orca Energy Group want to farm in? Orca Energy Group's decision isn't a known.
Without any control and without any say or sway over anything, its usefulness is limited. This company's management team has about as much influence over events as does a bump on a log. This company has gone well past its 'best before' expiry date. The only useful function left is its ability to extract more capital from the easily deceived Old Age Pensioner. Management needs to seek out a strategic alternative in order to enhance shareholder value. A Wentworth-styled takeout, with a 30% premium to market, would be a godsend gift.
At the Annual Meeting, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least.
The following are two questions for serious deliberation.
1) Production by Oct 2023 or not?
2) Will they require a Capital raise or not?
No Gas Sales Agreement, no NT2 flow test results, no 'Clearance Certificate' from the Tanzania Revenue Authority ( TRA) for the Scirocco deal, no Ruvuma 3D results, no FFD sign off, no 25-year development license, no Ch1 pad construction, no Rig contracted, no Spud date, no drilling of 3rd appraisal well, no NT1 well workover, no Pipeline completion, no contractors hired for the pipeline, no First Gas Production from NT2., no KNDL 3D seismic. no KNDL farm-in partner signed up, no Nyuni farm-in partner signed up, no resolution with the TRA.
The TRA is determined to extract a pound of flesh from Aminex.
" In Feb 2020 and June 2022, The TRA issued the Group with several tax assessments " 1. AEX 2022 Annual Report ..Note 1.
It is nearly impossible to win an appeal for a case with the TRA.
And you say production by October????? Wouldn't most of the above have to be resolved first?
If you believe that this will happen, then you are an eligible candidate for " The home for incurable straw-clutchers and hopeless optimists".
The company is running out of money. You can't live off of hot air or nonsense 3'rd party broker reports. They are going to have to find some more funding. What price will the Capital raise be set at? Hopefully, the dilution creates no more than a 30% drop from here. This anticipated Capital raise isn't the first one and won't be the last one.
Just a reminder .. earnings per share is negative, cash flow per share is negative, working capital is negative, yield is zero per cent. This company has some of the weakest fundamentals ever which leads one to wonder where on earth are all of the gullible investors coming from?
The 'going concern' clock continues to run down. Is this because of bad timing or by a 2'nd party design?
At the Annual Meeting, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least.
The " Reality List" ...... not the silly list.
1. " Production by October is nothing more than a pipedream." 1. Prosciutto
" if the pipeline IS complete and operational by November 1st, I will sell up and never post here again, BUT you must agree that if it is NOT complete by then you will do the same." 1. RoJo
" Do you honestly believe those timelines will be hit?" 1. Crusty Pete
" I expect a delay of at least 6 months as I do not think the pipeline will be ready as soon as predicted. This will put additional pressure on liquidity that will require some sort of funding, equity or loan." 1. High Yield
2. Aminex requires some sort of funding, equity or loan. Contingent reserves don't qualify as appropriate loan collateral, so it will have to be equity. This massively obese structure is about to become grotesquely obese. Dilution tends to cause weakness in share price. The big unknown is, how far will the share price have to drop in order to entice the gullible to partake in the new dilution?
3. The KNDL seismic project timeline is delayed by at least a year. Orca Energy Group has US $93.1 million in cash / cash equivalent. It is a reasonable assumption that Orca Energy Group could be the KNDL farm-in partner. The delay of production from KNDL would be an annoyance for Orca Energy Group but, without that same cash cushion, any delay would be serious for Aminex.
4. ' going concern ' ...yes, but how much longer? The brick wall is getting closer.
5. A co-venturer could run down the clock a little longer to end up with the remaining 25% of Ruvuma for a song.
6. Earnings per share is negative
7. Cash flow per share is negative.
8. Working capital is negative.
9. Yield is zero per cent.
10. No 'sane' qualified investment advisor would dare give this a "BUY" rating.
ad infinitum
At the Annual Meeting, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least.
A strange phenomenon happens weekly. A long silly list appears shortly after this post appears. There is no utility in exposing this silly list to the world like a Moroccan fair menu. The conquistador is working hard on the obfuscation efforts.
Continue to work on developing your very own ember of independence. Think things through on your own. Wolf cubs are born both blind and deaf and wouldn't be able to hear or see what's coming down the track, but you do have that capability to look for yourself. Work on developing that ember of independence. There is a limit to how much you should tolerate from this capricious, melodramatic drama queen.
" friend RoJo. ..... And don't you dare say it isn't mostly down to you ." 1. Tanzania
RoJo has no influence on the share price .. none whatsoever .... it is all about fundamentals. Fill in the blanks.
Earnings per share _____Cash Flow per share ____
Working Capital ____ Yield ____
ie.... look at the balance sheet and you'll quickly notice something is seriously wrong.
The following is supplied from the official source.
1. " Reducing our operating expenses and overhead significantly to protect the Company while the project is still not generating cash." 1. Aminex
2. USD (000) " Total Current Assets 7 127 ........ Total Current Liabilities 9 917 " 2. Aminex.
The Company will need to raise money because the Tax Authorities must be paid. There is no choice here. There is dilution up ahead. This already massively obese structure is about to become even more grotesquely obese. Year after year after year, how much further dilution are you prepared to accept? You have to put a stop to the self-flagellation and convince the company to take the Wentworth 'exit' route if it is available.
The vociferous spewing of fake hope for over a decade now tends to generate a neurosis from which you need to protect yourself. That's not a scintilla of lavender you are smelling.
Orca Energy Group's Q1 report has been released. The Songo Songo / KNDL seismic project timeline continues to extend. Orca Energy Group with an 8% yield, is trading at well below their cash level. If events are deemed dire for Orca Energy Group, then they would be deadly for Aminex.
Production by October is nothing more than a pipedream. The subterfuge here never ends.
At the Annual Meeting, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable to say the least.
Accounting 101
USD ( 000 )
Total Current Assets 7 127
Total Current Liabilities 9 917
Uh oh
This requires money just to remain a 'going concern'.
Are you prepared to throw good money after bad?
Keep a close eye on the Tanzanian Tax Assessments. These folks will want their money and Aminex simply can't pay the amount they owe. What you have to be concerned about is what the Tax Department is prepared to do to ensure payment. The Tax folks tend play hard ball. You had best hope they don't seize the company for non-payment.
Wentworth received a 30% premium to market when they elected to be bought out. Wentworth had significant production, significant cash flow and significant exploration acreage ... much better shape than Aminex. With no GSA, this 30% premium for Aminex would be a godsend gift and a very lucrative option if they can get it. Any further delays and that 30% premium could quickly become a 30% or more discount.
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" Loss for the year of US$4.06 million" 1. AEX
The company's financial position is one of benign neglect year after year after year. A never-ending stream of losses. At last, there is something positive to say about Aminex .. it is consistent.
" Reducing our operating expenses and overhead significantly to protect the Company while the project is still not generating cash." 1. AEX
This represents the exact summary of their financial predicament .... written in plain black and white for all to read .... .. Danger! Danger! What more do you need? The company itself is saying the exact same thing you are being warned about. Remember, there is no money coming in. Those running costs do not stop. One more major delay and this entire house of cards comes crashing down.
" there is a big risk, that the company will need additional funding during the year, as working capital is negative." 1. High Yield
Orca Energy
Earnings Per Share .. . . .USD $1.39
Cash Flow /sh . . USD $ 3.40
Working Cap.... USD $61.5 million
Tanzania ... some answers needed from you. We trust you to fill in the correct answers.
Aminex ..... fill in the blanks. ... if you need help, ask Professor RoJo to help you. Hint ... all negative #s.
EPS . . . . . . .. . . _______
Cash Flow /sh . . _______
Working Cap.... _______
Tanzania, don't get taken in with all of the positive blather you are being exposed to. Try to comprehend how serious it is when you have a company with a negative Working Capital.... you are in 'deep' for needing more money.
The targets are still there. The schedules are still there. The expectations are still there. The Tax Department is still there. All of the risks are still there firmly placed on the shoulders of Aminex shareholders. Be especially wary of the Tanzanian Tax Assessments. With no payment forthcoming, they can get VERY nasty, VERY quickly.. see Note 25 of the Annual Report.
" Like I've said Jolly, that's a very long list !
The chances of undertaking and completing all items this year is, IMHO, ZERO. " 1. RoJo
Supposedly, Ruvuma production by October is in the cards. That's nothing more than a pipedream.
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re: Kiliwami North Development License KNDL
" We anticipate that the acquisition of data will be completed by Q3 2023 and fast track data processing will be completed by Q4 2023" 1. Orca Energy (USD 96.3 million in cash)
This KNDL does have some potential. The KNDL 3D seismic interpretation should be highly prospective and should light up the screen. The main problem is these offshore development wells are very expensive. Orca Energy would be more interested in the Southern portion of this adjacent to the Nyuni Area PSA.
Keep in mind that Aminex is essentially broke, and it will have to make a decision as to how to finance expensive KNDL offshore development drilling in 2024.
1) Do they do an equity raise? .... doubt it.... who is going to be foolish enough to partake? You can fool some of the people some of the time, but you can't fool all of the people all of the time. This is already grotesquely obese.
2) Farm out? ... most likely ...yes .. including 'control'.
Aminex, with little influence over anything, will eventually have to follow Wentworth's exit route. Their business model has become pointless. Hopefully, that same exit path that Wentworth took doesn't disappear for them. Aminex doesn't have a useful purpose anymore. It would be a simple task for APT to purchase the remaining 70% of Aminex that it does not already own. It is a silly idea to invest in a "Portfolio Investment Company" when APT themselves are an Investment Company! Any minimum low-ball offer should do it.
" Or maybe it would now make more sense for them to simply buy the other 70% and own the all AEX assets outright?" 1. CrustyPete
Exactly the point being made here for months now.... Crusty Pete is finally coming around. One major point is missing though ... the 70% can be had for dirt cheap if an orchestrated delay is deliberately thrown into the timeline. Aminex has no accommodation built in for any delay whatsoever.
The Aminex business plan is an anachronism that no longer serves any useful purpose. Once Aminex is moved out of the picture, APT and Orca Energy can work together whilst no longer being hindered by Aminex.
At the Annual Meeting, it will be interesting to hear how management plans to make a silk purse from a sow's ear. The challenges are formidable. This may actually be accomplished with assistance from the deepfake community.
The paragraph below is a repeat from last week because many fail to grasp the gravity of situation.
" The number of shares outstanding places this in the 'grotesquely obese' category. ~ 20 000% times as many shares outstanding as that of Orca Energy. Sir Isaac Newton's 2'nd Law of Motion will tell you exactly how difficult it is to initiate any major movement with such a massively large body of dead weight."
As a result, any positive developments won't have much of an impact on Aminex. The impact of the supposed production on the earnings will be negligible.... see previous weeks calculations.
Whatever happened to the March 3D seismic reveal? If this 3D seismic interpretation does not materialize a drill-worthy well option, they may as well pack up and leave. Production by October is a pipedream.
There are some that would have you believe that Aminex is the panacea to all of East Africa's ills. At best, the company is destined to live a life of quiet desperation.
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re: Kiliwani North Development License. KNDL
"The Company will pursue farm-in partners to fund and operate the asset once our assessment of the 3D survey is complete. Notwithstanding the delays caused by late payment for gas, the outstanding commercial terms to be agreed upon, and the move to a non-operator strategy, the Kiliwani North and Kiliwani South assets remain fully impaired." 1. AEX
The entire company could become fully impaired. Without the operator status, it essentially becomes a 'clone' of Wentworth except Wentworth had significant production, cash and cash flow.
"M&P’s working interest gas production (48.06%) on the Mnazi Bay permit in Tanzania was 46.7 mmcfd (gross production: 97.3 mmcfd) for Q1 2023, an increase of 9% compared to Q4 2022." 1. Wentworth
Wentworth knew their best avenue to take was to submit. Taking this exit strategy may also be the best option for Aminex. The problem is, there may not be an exit ramp available. The business model just doesn't work anymore. To continue struggling along for eons is pointless.
Zubair Corp's hand could be forced to play hard ball earlier than anticipated. With two parties interested in the two separate parts, this company could become a prime candidate to be partitioned up. Let's face reality here, things would work a lot smoother and a lot faster if Aminex was moved aside This redundant business model makes one wonder what their raison d'etre is.
Are you Okay?
Can you withstand any major financial setback?
Yes .. protect yourself.
Are you Okay?
Here we are waiting for the Ruvuma 3D seismic interpretation to uncover a massive 'World Class' reservoir. This area is most likely comprised of isolated small stratigraphic traps/pockets of gas. There are going to be a lot of disappointed shareholders. There may be an initial flush of excitement, but it likely won't be sustainable.
Corrections need to be made.
Fact
1. Over the past decade or more, this has been a terrible performing 'Oil & Gas' stocks. The market has spoken.
2. KNDL development presents a serious conundrum for the company. They cannot afford to develop it and by the same token, they cannot afford NOT to develop it. The question is, how much are they going to lose?
3. There is not ONE single cubic foot of 1P gas reserves. The Banker plus the institutional investor requires 1P reserves.
4. Aminex is not in control of its own destiny. It depends entirely on the agenda of others. If the pace of the agenda slows down or stalls, Aminex will hit a brick wall.
" ...... a gas development project at Ntorya could be viable with three wells, two of which have already been drilled and a third (Ntorya-3) is scheduled for drilling this year," 1. Competent Person Report Feb 5th, 2018.
5. The number of shares outstanding places this in the 'grotesquely obese' category. ~ 20 000% times as many shares outstanding as that of Orca Energy. Sir Isaac Newton's 2'nd Law of Motion will tell you exactly how difficult it is to initiate any major movement with such a massively large body of dead weight.
6. Scirocco is still missing the 'Clearance Certificate' from the Tax Department. This must be cleared up.
7. Still no Gas Sales Agreement
8. Still no license extension
9. and on .. and on ... and on it goes ... where it stops, no one knows.
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[ assuming production volume 140 000 MMscf/d]
" ... . So, based on this comparative valuation (purely based on estimated production), AEX has a higher valuation already today " ......... " You will probably be able to buy AEX shares at today's prices also when production is up and running at full capacity" . ......" I think most AEX holders are far too optimistic of the future valuation of the company " 1. High Yield
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[ production volume 17 MMscf/d from NT-2 ] .. (See my post from last week)
The financial impact of NT-2 production will be minimal.
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There does exist a 'flicker' of hope though and that lies with the 3D seismic over KNDL. The current uptick in share price probably has more to do with KNDL than Ruvuma. The Annual Report for Orca Energy should be released sometime today or tomorrow. There should be some mention of the KNDL 3D seismic. Loaded with a large horde of cash, Orca Energy, has the option of throwing a lifeline towards Aminex. If the KNDL 3D seismic interpretation proves prospective, Orca Energy could become motivated to salvage KNDL.
There are many reasons why this company has been on a multiyear downtrend.
" This comprises 80.6 BCF of Contingent Resources “Development Pending” from a three well development .. " 1. Feb 2018 Competent Person Report. This can't possibly provide any level of comfort.
NT-3 was to be drilled in 2018. Would this qualify as a delay? These types of delays are typical, plentiful and repetitive. The moving forward and implementation of the supposed 'plan' has been fraught with persistent peril.
Hypothetically, NT-2 may supply some gas... someday, but who knows when .... no guarantees there will be anything supplied.
Let us assume that there is production from NT-2 in October 2023 as they so claim. What would be the financial impact of such an event?
Production at 17 MMscf/d renders ~ US $ 4.25 million /y in net revenue
Projected net EPS estimate ~ US $0.0005.
Earnings Per Share is an annual amount and does not reflect the cash distributions to shareholders.
Price:Earnings ratio 6:1
Price = US $0.003 /sh
Pound Sterling = 0.0024
It should be trading around 0.24 p. Apparently; the financial impact of NT-2 production will be minimal.
Trading at 1.15 p, indicates this stock is grossly overvalued even with NT-2 in full production. Of course, NT-2 isn't in full production.
The fundamentals of this microcap are very weak to say the least. With their hand-to-mouth existence, KNDL will most likely be a farm out arrangement. Aminex will never have enough cash to cover the US $60 - $70 million needed for two expensive offshore development wells and no banker would dare lend them monies. The stock price would fall off the cliff if an attempt was made to tap the equity markets. The investors wouldn't appreciate further dilution. They don't have much choice but to divest their KNDL 'operator status'. This will leave Aminex in the same hapless state Wentworth found itself in ... a lame duck.
If you are expecting the Ruvuma 3D seismic to uncover a massive 'World Class' reservoir similar to Mnazi Bay, then you had best prepare yourself to be disappointed. Beware the excessive promotional verbiage. Try to take a more cerebral approach.
" These violent delights have violent ends" 1. Shakespeare
At the Annual Meeting, with the cash level running ever so low, it will be interesting to hear of how management plans to answer all of the 'unknowns' with the main 'unknown' being how they plan to spin a silk purse from a sow's ear.
Shareholders need to cleanse themselves of any illusion that this company has control over its own destiny. Aminex should get down on bended knee and beg that some company will make an offer and put an end to this never- ending litany of failed aspirations.
" Assuming the same situation for AEX would mean an annual revenue of about 10 MUSD if the license produces 40 mmscf/d. " 1. High Yield
A lot of things would have to fall into place before this happens but ... OK ... let's hypothetically go with 40 MMscf/d. The estimated earnings per share in USD would be around $0.0012 /sh. Not impressive by any stretch of the imagination.
Also, the big pink elephant in the room that nobody wants to discuss is that there isn't enough capital for development drilling at KNDL in 2024. Are you prepared for further dilution... perhaps up to 10 billion shares? This company is so grossly obese in terms of shares outstanding, that any kind of sprint in stock price appreciation would be short lived. Converting this gargantuan blob of lard into a finely tuned athlete is an insurmountable challenge.
Why was there a delay of spudding of CH-1? Was it something to do with the 3D seismic interpretation? If they relocate the drilling position of CH-1, might it have something to do with the seismic interpretation? Where is the mid-March 3D Seismic interpretation? If you are expecting a 'World Class' reservoir, prepare yourself to be disappointed.
Management has managed to keep you in the dark and probably for a good reason. There are a lot of unknowns. Perhaps management should hire Donald Rumsfeld as their spokesperson to clear things up.
" As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. " 1. Donald Rumsfeld
At the Annual Meeting, with the cash level running low, it will be interesting to hear of how management plans to answer all of these 'unknowns' with the main 'unknown' being how they plan to spin a silk purse from a sow's ear.
March 29th, 2023. 12:30 PM
True / False Quiz
Title: " Reality Check on Aminex"
1) Ruvuma 3D Seismic interpretation has been released
2) Ruvuma Gas Sales Agreement is in place
3) Pipeline construction has started
4) AEX has sufficient capital to invest in Kiliwani development
5) AEX has a 'proven' source of 'material' income
6) A firm drilling date has been set for CH-1a
7) Ruvuma 3D seismic interpretation expected to reveal an elephant-sized reservoir
8) They'll be able to maintain 'operator status' for KNDL
9) They have found a farm-in partner for KNDL
10) SCIR deal is all wrapped up
11) Delays are rare in Tanzania
12) Shareholders wouldn't mind further dilution
13) Tullow found vast quantities of oil at Likonde-1 well just North of NT-1
14) Institutional Investors are enthralled about investing in a microcap
15) Finances are so strong, there is no need to farm out KNDL
16) Delays are few and are of no concern
7) Things move at lightning speed in Tanzania
18) Because of possible gas cash-flow, expect stellar profits
19) Because of possible gas cash-flow, expect a dividend
20) Geologic features of Ruvuma are identical to Mnazi Bay
21) Any issues we have here can be blamed on Silicon Valley Bank
22) World gas prices have a strong bearing on local gas prices
23) There are minimal levels of Government bureaucracy to deal with
24) " It's all speculation " 1. RogerJolly
25) Getting down on bended knee for an offer, is one way to alleviate this mountain of misery.
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Mark your own Quiz
1) to 23) are all False and 24), 25) are both True
Tanzania.
Report you mark to Professor RoJo. He'll determine whether you graduate or not. Professor RoJo could help you with any residual questions you may have. Professor RoJo is admirably adapted to check your work. I've been told he solves half a dozen second order nonlinear differential equations before breakfast as a warm-up exercise.
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High Yield
" Assuming the same situation for AEX would mean an annual revenue of about 10 MUSD if the license produce 40 mmscf/d. " 1. High Yield
OK ... let's hypothetically go with 40 MMscf/d but what time frame?
1. Why not finish this ... your estimated earnings per share in USD?
2. The big elephant in the room ... Is there enough capital for development drilling at KNDL in 2024?
Re: Ruvuma
Tullow was disappointed with the oil-prospective Likonde-1 well which is just a few km North of NT-1.... they left ... no oil here.
The 3D seismic has yet to prove that there is more than just isolated small stratigraphic traps/pockets of gas. This isn't a 'Mnazi Bay' type of reservoir.... different facies, different trapping configuration, different petroleum system. What the 3D seismic needs to do is prove that this is commercial both in scale and sustained rates.
Multiple year delays are common here ...
" ... that a gas development project at Ntorya could be viable with three wells, two of which have already been drilled and a third (Ntorya-3) is scheduled for drilling this year .. " Feb 5, 2018 RPS CPR
NT-3 / CH-1 was supposed to be drilled in 2018.
What's holding up SCIR's Ruvuma closing? Where is the GSA?
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Re: KNDL and a lesson on 'Finance 101'.
The happy-pill pushers failed the introductory course on 'Finance 101' and failed badly.
The upcoming capex next year implies that some major decision making must take place.
The plan would likely call for two very expensive offshore development wells to be drilled at KNDL ~ US $60 - $70 million
Even with a hypothetical 25% of gas from NT-2, Aminex will still be massively short on funds.
((17 MMscf/d * $3.65/mcf * 365 d/yr * 0.25) - $4 million G&A )) / 4.123 Billion = US $0.000403 /sh
Aminex Earnings =~ US $0.000403 /sh .. enough to prevent insolvency but just barely.
How is Aminex going to pay for their % of the KNDL development drilling without becoming an eviscerated carcass?
Answer ... it can't. Correction .... it's impossible.
Their KNDL 'operator status' is in danger of being forfeited.
Perhaps, they could issue more shares? There are already so many shares outstanding that Aminex badly needs a weight loss goal: To be able to clip its toenails and breathe at the same time.
There won't be any dividend.... not a snowball's chance in hell. Just to be able to continue as a 'going concern' will be a major challenge. Let's face it ... this company isn't going anywhere fast.
" Annual Income 20 pounds, annual expenditure 20 pounds ought and six, result misery" 1. Charles Dickens
Aminex should get down on bended knee and hope that some company will make an offer and put an end to this never- ending mountain of misery.
Mid March ... and no News Release
Even after adjusting for a hypothetical 25% of 17 MMscf/d, Aminex would still be seriously impoverished.
Options are very limited with respect to paying for the KNDL drilling costs.
Aminex has lost operator status for Ruvuma and will most likely lose operator status for KNDL. Your best scenario is that it could evolve into a " Wentworth" ... a lame duck.
In any takeover, if you can get a 30% premium above market as did Wentworth, you should quickly take it.
Page 1
" ... that a gas development project at Ntorya could be viable with three wells, two of which have already been drilled and a third (Ntorya-3) is scheduled for drilling this year .. " Feb 5, 2018 RPS CPR
NT-3 / CH-1 was to be drilled in 2018 and five years later ... " later this year ". Aminex has lived through a plague, and now fully understands why renaissance paintings are full of Rubenesque ladies lying on couches. With over 4.1 B shares, Aminex is the equivalent of a grossly overweight sumo wrestler. Aminex should set a weight loss goal: To be able to clip its toenails and breathe at the same time. Aminex is far from being a finely tuned athlete.
Mid-March is set for the interpretation of the 3D seismic. The interpretation of this 3D seismic will be a very important. You really don't want to hear phrases with ' isolated, small stratigraphic traps / pockets of gas.'
As mentioned before, NT-1, NT-2 were never an " extended well " test and now a two-week well-testing program is to take place. You should be worried about the one well. It is being re-worked but we'll see what happens here. You had best keep your fingers crossed.
The GSA for Ntorya Gas is to be finalized shortly but TPDC hasn't even hired a contractor yet for the pipeline. The picture of the pipe in the link posted by Smudger63 is the Mtwara - Dar es Salaam pipeline.
A further extension of the Ruvuma License shouldn't be a problem, but the exact drilling rig arrangements have yet to be announced.
The full 3D seismic results will be available by mid-year and will permit a full revision of gas reserve and resource potential for the field.
" It's all speculation " 1. RogerJolly, the happy-pill pusher. Truer words were never spoken.
Yes ... drill speculation and 3D seismic speculation. You're betting the farm on an inside straight. Victory is not within your grasp yet.
" Victory often changes her side " 1. Homer, Iliad, 8th cent. B.C.
The 3D seismic will ultimately be that binary decision point. Let's hope it's not Tembo2.
Page 2
Calculating the earnings
Assume Ntorya is targeted October 2023 for production of first gas. One well brought online.
17 MMscfd, 25% interest, US $3.65 / mcf, 365 days /yr, > $4 million (G&A + minutiae), 4.123 557 000 Billion shares
((17 MMscfd * $3.65/mcf * 365 * 0.25) - $4 million)) / 4.123 Billion = US $0.000403 /sh ( 0.000336 pounds/sh)
Aminex Earnings =~ US $0.000403 /sh .. enough to prevent insolvency but just barely.
Now subtract the 2024 KNDL development costs. How is Aminex supposed to cover the development costs of KNDL? They'll need to negotiate a superb financial arrangement with Orca Energy. Also, the Ruvuma breast-feeding with the free-carry will last only so long and then the real costs start to kick in.
My estimated 2022 Earnings for Orca Energy is US $1.86 / sh. Next year, the ' Protected Gas' clause expires. They will receive cash for an additional 45 MMscf/d with a netback of ~ US $2.80/ mcf. Revenue should spike by about 50%. Orca Energy supplies ~ 71% of the total gas production in Tanzania and supports ~ 50% total power generation in Tanzania.
Orca Energy [est] US $1.86 /sh earnings. Aminex [est] US $0.000403 / sh earnings
Will Orca Energy make an offer for the KNDL stake?
If you want to know what Aminex should be trading at, multiply the earnings by 6 (half-way point between P/E of WEN at 9.5:1 and P/E of Orca Energy at 2:1). It will be touch and go right down to the finish line. If it arrives, the accelerated gas production is a lifeline for Aminex.
Ufufuo will tell you 160 MMscf/d, $4.00 /mcf, 15 P/E ratio ..... wishful thinking.
It is rather clever the way they have de-risked the 'Project' from a dependence on the spudding and outcome of CH-1. You don't suppose there might be another delay with CH-1 do you?
" Delays have dangerous ends " 1. Shakespeare.
The good news is that someone wants to keep Aminex alive. Having said that, you should prepare yourself for further dilution. Even though the float is already gargantuan, they'll require more money to cover some of the KNDL development costs next year and/or because the breast-feeding program at Ruvuma has ended.
Aminex is treading water and its nose is just barely above water level. How long must it continue to tread water?
Any quick stock price movement is due to pure speculation and will likely be met with inevitable exhaustion. TPDC would be wise to wait for the full 3D seismic interpretation before beginning with the pipeline.