Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Absolutely Rellk! With news incoming, hopefully the share price will continue its slow and steady rise until next news drops.
✅ Scirocco deal done
✅ GSA signed
✅ Field Development Plan approved
✅ 25-Year Development License approved by all parties
Those were the things that shareholders said needed to be ticked off before ARA cracks on with drilling - that last one is just awaiting issue by TPDC to ARA.
Production expected within ~12 months. Got to create CH1 pad, transport that rig, drill CH1, then move it to NT1 to complete the workover on that well.
I’m excited to see what ARA can do now that the blockers are cleared. I’m also looking forward to the Knights MPR PR campaign.
Next month’s AGM should be a cracker!
You said you were a little out of touch, but you are starting to worry me (though that post of yours has gone missing - censorship of free speech makes me so angry). Are you struggling with your memory? Just getting out for a walk each day can do wonders for your mental wellbeing. Please do look after yourself.
Let me try to help with your questions:
You asked “What rig?”
So, ARA have long said that they would announce the contract for the rig once the development license was granted. The license is now fully approved and just needs to be issued. So news incoming! Woohoo!
You asked “Transport the rig?”
Yes, that’s right. If the rig isn’t transported, it will be in the wrong place and when they put the pointy bit in the ground, it won’t hit the trillions of cubic feet of lovely gas that are going to make shareholders very wealthy.
You asked “Where from?”
Easy tiger! You are clearly excited and hungry for answers - which is great! Like I said, rig contract is what they’ve promised to communicate following development licence approval. The final approval was The Cabinet. That’s sorted and it is now just a case of issuing that approved licence. Rig contract - and the information you crave - incoming! Yay!
That’s why it seems fortuitous that we are now entering a 10 month period in which the weather in Tanzania tends to be much more favourable for on the ground operations.
Hope that helps. We’ve got some very exciting weeks and months ahead! Right, off to bed. A minimum of 7hrs sleep is recommended for proper cognitive and behavioural function. You should try and get some rest too 👍
Sultan Al-Gaithi confirmed that drilling shouldn’t be affected by the wet season but may affect TPDC doing the trenching for the pipeline to Madimba. Better weather must make pad construction and transportation of the rig easier though.
The poor people of Tanzania have recently endured horrific weather, with floods that have caused a large number of fatalities.
By most accounts, May typically marks the end of the heaviest rainy season and the start of a long dry season through to the end of October. Then light rains for another 2 months before a further short dry season to end of Feb.
Let’s hope those next 10 months bring good weather and relief for the good people of Tanzania.
The timing also looks fortuitous for the pipeline to move from design to construction phase. Also, for ARA to prepare drill sites and transport the rig.
Ducks lining up!
Https://sg.finance.yahoo.com/news/1-tanzanian-lng-project-delayed-081055402.html
Agreement on financial terms for Shell and Equinor’s offshore LNG project is being delayed. It sounds like the negotiating parties are a long way apart at the moment.
This shows what an achievement it has been for ARA to get our GSA and Development Licence approved.
I wonder if having Ruvuma as a vast and much lower cost asset has changed Tanzania’s appetite and perceived negotiating leverage in relation to the offshore LNG.
Good news for Aminex as it will leave us as the undisputed, biggest game in town for even longer. Those pipelines to Uganda, Kenya and beyond are going to need to get their gas from somewhere!
I'm hoping that the schedule will not just be for CH1. In Nov 2022 Aminex said that, in addition to CH1, full field development "envisages the drilling of up to five additional wells in 2024" (at that point, CH1 was pencilled in for 2023). So, their intention was to do CH1 then a further 5 wells quickly after.
Obviously, that was before the 3D seismic results, so the number of planned wells might increase...though I'd be happy with another 5 wells through the course of 2025!
Previous RNSes have been clear that: "The proposal, following the successful drilling of CH-1, is to utilise the newly drilled well and the existing suspended gas producers, Ntorya-1 ("NT-1") and Ntorya-2 ("NT-2")."
and...
"The incorporation of three producing wells - CH-1, NT-2 and NT-1, the latter of which will be worked-over after the drilling of CH-1 to repair a minor leak in the casing string."
So, if they plan to drill CH1, then fix NT1 before production in the first half of next year, they are going to need to crack on with CH1. Surely, no later than Q4 this year or Jan of next?
I expect we'll find out soon (UK soon!). Issue of that already approved Development License first. Then schedule for drilling. I think they'll want to hold the AGM with a buzz in the air.
Couldn't agree more Wryape. Shall we round off the week with a reminder of possible valuations for Ruvuma, the World-Class Giant onshore asset for which we own 25%
"Why not" I hear you say 😁
Note all figures are unrisked. Note also that the two different Shard Capital scenarios I’ve extrapolated out from, consider a) just greater resources than base case and b) greater resources and production rates than base case:
“As the company’s stockbroker, it may be helpful to use the Shard Capital’s figures to derive valuations based on different scenarios. They published this research note on 29th Feb 2024: Is there a “big-picture” change in the cards? (research-tree.com)
In the report, they give an unrisked valuation of 2.8p for a scenario where Aminex has resources of 763bcf and produces at a rate of 140mmscfd. For a scenario where we have resources of 1.7tcf and produce at 250mmscfd they give an unrisked valuation of 4.6p.
Their earlier report from May 2023 (The time has come! (research-tree.com)) had practically the same figures (2.7p and 4.5p respectively). When considering potential outcomes of the – then yet to be confirmed – 3D seismic results, on p.6 of that report, they state:
“as a point of reference, we note two potential value points that we believe the market may consider when deciding how much value to recognise should the 2Tcf be confirmed”.
They then outline two scenarios based on different rates of production. Long story short, they say that 3D seismic results of 2TCF would justify valuations 4 to 6 times greater than the share price at the time of the report – which was 1.03p. So, somewhere between 4.12p and 6.18p.
Obviously, the 3D seismic has confirmed a good likelihood of there being 3.45tcf associated with just the existing NT1 and NT2 wells – and 7.95tcf aggregated including CH1.
If 2TCF justifies between 4.12p and 6.18p…
3.45TCF would justify between ((4.12 / 2) x 3.45) 7.2p and ((6.18 / 2) x 3.45) 10.66p
If CH1 brings us to 7.95TCF that would justify ((4.12 / 2) x 7.95) 16.38 and ((6.18 / 2 x 7.95) 25.57p
So, in summary, the 3.45tcf for NT1 & NT2 may justify a valuation of between 7.2p and 10.66p per share. If CH1 brings us to 7.95tcf, that would increase that to between 16.38p and 25.57p per share.
There are lots of variables at play here – for one of those, you may be interested to know that the Shard figures are based on a presumed gas sales price of $3.9/mscf – probably conservative.
Just a yardstick. I hope this helps"
Coming back to the size of Ruvuma and value. The comparison to UK total reserves certainly puts things in perspective and gives credence to the World Class Giant classification and share price valuations many multiples of current levels.
It’s also interesting to compare with the much-vaunted offshore assets operated by Shell and Equinor. Shell has 16tcf, Equinor has an estimated 20tcf.
Would you rather be invested in Ruvuma, or one of Shell or Equinor’s enormous offshore blocks? The latter get all the hype but as I’ve posted before, costs of exploration and development of offshore gas fields are MANY times more expensive than onshore. Our onshore asset can be developed and brought into production much more quickly.
You want to invest in and sell thingamajigs. One company has an opportunity to invest in 8 thingamajigs, another an opportunity to invest in 16 pretty much identical thingamajigs but the latter will cost you several times more and take many years longer to be ready. Which would you see as more valuable? Which do you want to invest in? It has to be the one that is available sooner at a much lower cost!
Ruvuma is surely the place to be. Not so long ago, that might have been considered a very punchy statement. The market hasn’t fully caught up with this paradigm shift – but it will. Ruvuma is multi-tcf, a world-class giant, significantly less costly, faster to develop, all the required agreements and paperwork are sorted (bar a signing ceremony) and production expected within the next ~12 months. The offshore finds now hope for a financial decision next year, followed by another 5 or 6 years to bring to production.
Now that the huge scale of Ruvuma is beginning to be revealed, we can confidently say that Ruvuma is the premier and most valuable oil and gas asset in Tanzania. Now let that sink in 😉
Https://www.railway-technology.com/news/tanzania-first-test-daressalaam-dodoma-line/
I’m not sure if anyone posted about this already. This news about Tanzania’s $10bn Standard Gauge Railway (SGR) is more significant than it might seem on the face of it. Testing in progress and due to be in service in July.
The Tanzanian Power System Master Plan of Sept 2020 identified a large number of specific drivers of future power demand. Due to the SGR, Tanzania Railways is expected to need an extra 20MW of power.
To put that in context, there are 6 gas fired power plants in Tanzania. The Mtwara plant has a total generating capacity of 18MW. The Somanga plant generates 7.5MW. Admittedly, those are the smallest of the 6 and by some margin. The point is that 20MW is a significant amount of demand that’s about to come on stream - but just a small part of the wider story of growing domestic demand and plans to export gas and electricity!
Rojiutto is still trying to instil fear regarding availability of U.S. dollars. Today he/she said: "Claims have been made that the issue of the foreign exchange reserve deficiency in Tanzania doesn't apply to Aminex. Did Aminex receive Presidential immunity? If so, D.J. Trump would love to know how to acquire this Presidential immunity"
As a reminder, here's what you need to know for a more balanced view:
On 01st March 2024, Tanzania’s Minister for Finance, Mwigulu Nchemba was quoted as saying that he is confident that the supply of dollars in Tanzania will stabilise once mega projects are operational, easing the pressure of importing necessary equipment.
He said “Once these projects conclude, the scarcity of dollars will be history. We are also focused on enhancing crop production and expanding the value chain to facilitate the sale of more products abroad, thereby increasing the availability of dollars”
Then, on 15th April 2024, The Citizen news outlet reported that “The government is optimistic that the dollar crisis will start to ease from next month when the high tourism season begins. The situation will improve further, courtesy of a projected rise in exports of traditional crops and an increase in gold prices, according to the Bank of Tanzania (BoT)”
If you want a bit more detail, the article continued:
“Tanzania earned $1.3 billion from tourism in 2021, but receipts soared to $2.5 billion and $3.4 billion in 2022 and 2023, respectively. Gold brought in $2.7 billion, $2.8 billion and $3.06 billion in 2021, 2022 and 2023, respectively. With projections pointing to a further rise in tourist arrivals and gold prices, BoT is optimistic that foreign exchange challenges the country has faced in recent months will soon be history. "We anticipate a surge in revenue from tourism beginning this May, coupled with exports of traditional crops such as cotton, sesame and others"
and...
“The government has implemented multifaceted strategies to address the foreign exchange crisis, including reducing dependence on dollar imports for commodities that could be locally produced, such as palm oil and sunflower oil. This involved developing improved seed varieties to reduce cooking oil imports. Additionally, the government waived taxes on solar products to lower import costs, aiming to reduce dependence on the dollars and alleviate its shortage. Reports also listed proactive government measures taken in the previous year, including providing export credit guarantee schemes and supporting local businesses to boost exports”.
So, lots of action has been taken and the situation is fast improving – with data to back that up and assurances from the Bank of Tanzania themselves.
In summary then, the evidence suggests that this is an ever-diminishing risk, and soon to be a non-issue. Beware the scare-mongering troll(s) and, as ever, DYOR