Member Info for Ufufuo

It is clear that Tanzania had switched attention from natural gas over the last couple of years. The focus and financial resources being directed to the Rufiji hydroelectric dam project.

The stuff in the news recently about gas export pipelines to Uganda and Kenya and then the signing of our farmout (at long last) suggests the tide is turning.

This recent article says that the Tanzanian government is still targeting 5000MW by 2025 and natural gas projects are going to make up the bulk of the projects to get there once the dam is built...

"President John Magufuli has vowed to continue with the implementation of major power projects that would stimulate economic growth and improve social welfare within the country targeting to reach 5000MW"

"Dr Magufuli said his government had in the past five years focused on strategies, which generate and supply power in the country, adding that if elected for the second term, his government will complete all pending projects and generate more power."

"Dr Magufuli mentioned other projects in pipeline, with their expected power production capacity in brackets"..."Kinyerezi II gas power plant (248MW) and Kinyerezi I (325MW)".

"He stated that his government will also use natural gas in Mtwara to produce 300MW in the region, Somanga Fungu gas plant in Lindi (330MW), Kinyerezi III (600MW) and Kinyerezi IV (300MW)".

""The completion of all major power generation projects in the list will enable the country to sell electricity to other countries, ensuring reliable operation in the country. Thus the idea of depending on power from a neighbour will be history," he said".

https://allafrica.com/stories/202009220518.html

Hi blackgold, you mention that Sakson is lined up to drill Chikumbi 1. I knew this but wasn't aware that they are also in the frame for the siesmic work:

"The Company has finalised the Chikumbi-1 executive drilling and completions programmes, has identified and selected the service companies required to operate all features of drilling and based on a competitive compassionate process, has selected Sakson Drilling and Oil Services DMCC to drill the Chikumbi-1 well. Sakson Drilling and Oil Services DMCC has also identified and designed an accurately 220 km2 3D seismic programme over the Ntorya development area".

http://abdas.org/2019/01/09/sakson-drilling-and-oil-services-dmcc-to-drill-the-chikumbi-1-well-in-tanzanias-ruvuma-psa/

Thanks Blackgold00 ;-)

An article from last month on Africa Intelligence (paid content):

“The state-owned Tanzania Electric Supply Co (Tanesco) is looking for a construction company to finish the extension of the Kinyerezi gas-fired power station, located on the outskirts of Dar es Salaam. In mid-September, Tanesco invited bids for the project, on which construction has been at a standstill for almost nine months with 85% of the work completed, according to Energy Minister Medard Kalemani”.

“The extension is set to add 185 MW to national electricity output. Worked stopped late last year after the Norwegian firm running the project, Jacobsen Elektro AS, went bankrupt under the weight of collossal debts owed to a General Electric subsidiary”.

My rough calve suggest that this would require an additional 18.5 MMscfd of gas.

How much is our Early Production System forecast to produce?

:-)

:-)

I’d realy recommend that people who’ve recently bought in read up to understand a) just how big the Chikumbi drill is and b) the scale of the full field development that Aminex is now fully carried for.

This share has a loooong way still to run ;-)

Expecting Monday myself.

Start organising the table plan Max. It’s coming ;-)

Not crazy at all in my view. Still just the beginning. Think forward 3 months. Chikumbi 1 has just hit first target and a shed load of gas. Now drilling to second target and potential for oil. How do today’s prices look in that context?

He actually said "current target price for Aminex of 3p WITH MORE TO COME once the project valuation can be more accurately be taken into account."

So, 3p MINIMUM as initial target.

It seems Malcy is expecting quite a bit more than 3p. He's just being cautious until he sees up to date plans, GSA terms, etc

"It has not been possible to speak to the company today, they are, probably sensibly, waiting for completion and my numbers are still based on very historic data from the company"... "ccordingly and having taken all other things into account can see a current target price for Aminex of 3p with more to come once the project valuation can be more accurately be taken into account. I’m very much looking forward to getting more numbers in the valuation as soon as Aminex start getting busy with the details."

So 3p MINIMUM is the message

They’re just flushing the tubes ready for Monday

As frustrating as the the delays are, I do think it is a case of when not if. Remember, the Tanzanian government has already taken about $2m in taxes in relation to the farmout transaction. So, that would strongly suggest they do intend to approve the farmout. Also, if they were anti Aminex, then why award the extension to the Mtwara license four and a half months ago?

It seems more likely to me that the delay is due to conflicting priorities as they focus on the pipeline agreement and the HGAs for the LNG project. That, and/or they don't want to agree the farmout until the commercials for the Rvuma PSA are agreed...the Tanzanians may feel it gives them more leverage in those negotiations.

It would be nice of they could get this sewn up this month and drill this side of Christmas.

BG they will probably disappoint me but perhaps, in addition to plans at Ruvuma, they could achieve a partnership in relation to Nyuni:
1. allowing us to progress that asset
2. giving us nearer term revenues in exchange for a share of Nyuni
3. Providing diversification through that deal if the exchange of share of Nyuni was for a share of a revenue producing asset outside of Tanzania

How would you feel about that?

If however they are talking about diluting our share of Ruvuma further then, on the face of it, I would not be happy

Personally, I’ll be delighted if the ‘marriage’ he refers to is focused on a new JV or farmout in relation to Nyuni.

As a reminder, the full year report issued a couple of weeks ago stated:

“The Group has applied for a Second Extension Period for the Nyuni Area PSA with reduced work commitments, which has been supported by both the TPDC and PURA and is awaiting Ministerial approval”.

“Aminex was advised to, and has submitted, a 2020 work programme and budget for the Nyuni Area PSA, assuming that the extension and amended work programme have been accepted. Aminex remains optimistic that the proposed extension and work programme will be accepted and approved in the near future”.
“...In addition, development of the Group’s other assets in Tanzania will require the sourcing of additional funding. This includes the Nyuni Area PSA where the Group has applied for the licence to be extended on a revised work programme.”

So, perhaps the ‘marriage’ that he refers to has been well sign posted in the annual report? If this is the plan, I’ll be very happy as it would mean two significant assets being progressed in parallel.

Any views on whether this is what he means or not?

In reality the drill was never going to be this moth or next. We could have dreamt it would be July Aug but most would not have been too displeased if it had been Sept. So in reality, it’s a delay of perhaps 3 or 4 months on top.

If other things start moving in the meantime, then this could actually give time for a continued and gradual improvement in the share price driven by longer term investors.

Some encouraging messages in an article posted earlier today.
1. It confirms that Tanzania is still “working on plans to export gas to Uganda via a pipeline.” I posted another article recently that specifically linked Ruvuma with these export plans.
2. It re-confirms that Tanzania “is working on distribution plans – through a mix of CNG, mini LNG and pipelines – to Morogoro, Dodoma, Tanga, Arusha, Mwanza, Shinyanga, Kagera, Manyara, Geita and Kilimanjaro.”
3. Interestingly it also seems to suggest that the LNG project (potential competition to us) is likely to be delayed by some years.

All very positive.

I think we may see an RNS next week confirming completion of the farmout. It’s then game on!

https://www.energyvoice.com/oilandgas/africa/240503/uganda-tanzania-pipeline-construction-planned-for-2021/

“Strategically and economically important” - excellent to hear influential Tanzanians talking in such terms.

Mention of regional demand is also encouraging. This is potentially a much bigger picture than just Tanzanian domestic demand.

Thanks for sharing CP

Article posted by another LSE BB member earlier in the year. Apologies, can't remember who...

A reader has requested that I take a look at Aminex (AEX), which is a bit of a blast from the past, as I can remember a time, quite a few years back, when this Tanzanian focussed company was popular with private investors and was going to be the next big thing in oil and gas.

As is so often the case, that success failed to materialise, and since the share price spiked to over 7p off of the back of a successful drill at Ntorya in February 2017, it has steadily declined since then and now trades at around just 1p.

Part of the share price decline has been as a result of things not going well operationally, to the extent that gas production from its Kiliwani North asset has now ceased due to reservoir pressure issues, and the lack of revenue coming in has meant that it is burning through cash at quite a rate – it made a loss of $2.2 million for the six months up to the end of June, although we may see that reduce for the half year period that has just ended, as per the commitment made by the company for a 34% reduction in G&A costs, as compared to 2018.

The offshore Kiliwani field is potentially a useful source of income – having produced 6.5bcf of gas so far – and remedial work is planned to try and get the well flowing again, as well as shooting 3D seismic to identify new drill locations in both the North and South parts of the field.

But in reality Kiliwani is just a potentially useful revenue-producing side show here, especially when considering that in spite of the share price decline, the market cap of Aminex is still around £36 million.

The main reason for considering an investment here would be the onshore Ruvuma production sharing agreement area, incorporating the Mtwara, Ntorya and Lindi licence areas, where Aminex has already successfully drilled three wells – the most recent being Ntorya-2 in 2017 which produced a stabilised gas test rate of 17MMcfd, as well as significantly increasing resource estimates for the area.

The last CPR for the area, carried out in early 2018 by RPS Energy, attributed GIIP of 1.87TCF to the Ntorya cretaceous zone, with 763bcf of 2C contingent resources. On top of that, at the end of 2018 a further 936bcf of prospective gas resources were assigned to Ntorya at the end of 2018, with these being potentially contained within the as yet undrilled Jurassic zone – plans are in place to explore these via the Chikumbi-1 well, which will be drilled as soon as possible.

AIM is of course full of oil and gas companies which talk a lot about having potentially huge assets in the ground – the whole of the Ruvuma area, on a gross GIIP P50 basis, is estimated to have circa 5.5tcf of gas – and you have to wonder why nothing has happened to fast track the development of those held by Aminex if they are so good.