TIDMWEN
RNS Number : 6565B
Wentworth Resources PLC
03 February 2020
PRESS RELEASE 3 February 2020
WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")
Operational and Reserves Update
Wentworth (AIM: WEN), the AIM listed independent, East
Africa-focused natural gas company announces the following
operational and reserves update.
Highlights
-- 2019 full year average daily production from Mnazi Bay of 70.29 MMscf/d (gross)
-- Mnazi Bay production 2020 production guidance 65 - 75 MMscf/d (gross)
-- MB-2 flowline repaired and MB-4 Lower Mnazi Bay recompleted,
increasing operational flexibility and enabling field to produce at
sustained rates > 100 MMscf/d
-- Final term loan debt repayment made 31 January 2020
-- End 2019 net cash position of $13.5m
-- Wentworth's share of Gross 2P Reserves as at 31 December 2019
estimated by RPS to be 95.1 Bcf (15.8 mmboe) with a post-tax NPV10
of $118.6 million
Mnazi Bay Operations
Full year average production from Mnazi Bay for 2019 was 70.29
MMscf/d (gross), at the mid-point of the revised guidance range of
68 - 72 MMscf/d issued on 19 November 2019. This was despite
several challenges during the year, including abnormally high
rainfall resulting in hydro-power displacing gas-generated power,
increased competitive gas supply from the Songo Songo field into
the National Natural Gas Infrastructure ("NNGI") pipeline, and the
temporary shut-in of the MB-2 well.
Recent operational highlights include:
-- The MB-2 flowline repairs were completed and the well was
returned to production on 21 December 2019; and
-- The MB-4 was recompleted to include access to the Lower Mnazi
Bay sands, which has increased the production potential of the well
by c. 15 MMscf/d.
Completion of the MB-2 flowline repairs and the recompletion of
the MB-4 well is expected to allow the JV Partners to sustainably
supply gas at rates in excess of 100 MMscf/d to meet the demand
needs of Tanzania.
Mnazi Bay Operational Outlook
Modest growth in gas-fired power generation is likely to be
offset by continued strong hydro-power, a product of unusually high
rainfall outside the normal wet season and continued competitive
gas from Songo Songo:
-- In 2019, both the long (April-June) and short (December)
rainy seasons had more than twice the total rainfall and had a
longer duration than any corresponding period during the previous
decade. In January 2020, rainfall totals have been above long-term
averages and have resulted in subdued gas demand. If rainfall
totals are more similar to those observed between 2008-2018, there
will be potential for higher demand, and thus higher gas
deliveries.
-- As previously stated, Pan Africa Energy Tanzania ("PAET")
began gas sales into the NNGI in December 2018 under a new Gas
Sales Agreement ("GSA"), which provides for gas sales of 20 -30
MMscf/d. The allocation between Mnazi Bay and Songo Songo gas to
date suggests that increased demand will be split proportionate to
our GSA totals until the upper end of the PAET GSA is met, at which
point management expects that additional demand will be supplied by
Mnazi Bay.
-- In September 2019, the JV Partners reached a full GSA with
Tanzania Petroleum Development Company ("TPDC"), which includes a
take-or-pay provision at 85 per cent. of the daily committed
quotient ("DCQ"). The DCQ was mutually agreed at 80 MMsf/d for
2020, which means that if annual volumes fall below 68 MMscf/day
the take-or-pay clause will take effect. This excludes 2 - 2.5
MMscf/d of gas sold to Mtwara.
Accordingly, guidance for 2020 has been set at 65 - 75 MMscf/d
(gross) and will be reviewed at the half year point, after the end
of the typical longer rainy season. The JV Partners have agreed a
limited 2020 firm work programme totaling approximately $4.6
million net to Wentworth.
Financial Update
The Company continues to receive consistent monthly payments for
gas sales with receivables from TPDC now standing at just one
month. As anticipated, the Company has now fully repaid its term
loan, having made its final repayment of $1.67 million plus
interest on 31 January 2020. The Company's net cash balance at 31
December 2019 was $13.5 million. In accordance with the Company's
dividend policy, established last year, Wentworth expects to
declare its final dividend for 2019 with the Company's preliminary
results in April.
Reserves Update
RPS Group, an independent third party reserves evaluator,
performed a Competent Persons Report ("CPR") for the Company with
an effective date of 31 December 2019. The updated full field 2P
gross reserves for Mnazi Bay are 468.9 Bcf (95.1 Bcf being
Wentworth's share of net reserves). This compares to 481.9 Bcf at
31 December 2018, despite production throughout 2019 of 25.7 Bcf.
The fact that reserves decreased by less than production is
attributable to the stronger than anticipated pressures measured
across the field, which indicates larger in-place and recoverable
volumes.
The NPV10 after tax for the 2P reserves at 31 December 2019 is
$118.6 million net to Wentworth. This compares to $128.7 million
for 2018. It should be noted that during 2019, Wentworth increased
its cash position by $4.0 million and made total debt repayments of
$7.3 million (including interest), while returning $1.0 million to
shareholders through its maiden interim dividend.
Reserves Summary for Mnazi Bay
as at December 31, 2019
Field Wentworth 31.94% WI
-------------------------------- ---------------------- -----------------------------------------------
Gross (1) Reserves Gross (1) Reserves Net (2) Reserves
-------------------------------- ---------------------- -------------------------- -------------------
Reserves Category Sales BOE (MMbbl) Sales BOE (MMbbl) Sales BOE
Gas Gas (Bscf) Gas (MMbbl)
(Bscf) (Bscf)
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Proved Developed Producing
(PDP) 57.9 9.6 18.5 3.1 15.1 2.5
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Proved Developed Non-Producing
(PDNP) 69.9 11.6 22.3 3.7 18.0 3.0
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Total Proved Developed
(PD) 127.7 21.3 40.8 6.8 33.2 5.5
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Proved Undeveloped 160.6 26.8 51.3 8.5 29.8 5.0
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Total Proved (1P) 288.3 48.1 92.1 15.3 63.0 10.5
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Proved + Probable (2P) 468.9 78.1 149.8 25.0 95.1 15.8
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
Proved + Probable +
Possible (3P) 725.7 120.9 231.8 38.6 138.7 23.1
-------------------------------- -------- ------------ ------------ ------------ -------- ---------
(1) Gross Reserves are Company Working Interest Share of Total
Field Reserves
(2) Net Reserves are calculated as the product of Company Gross
Reserves and the ratio of Company net revenue to Company WI share
of field gross revenue
Wentworth Resources Working Interest Reserves for Mnazi Bay
as at December 31, 2019
RPS Forecast 2020-01-01
NPV Before Tax NPV After Tax
Million US$ Million US$
--------------------- ------------------------------------------------ ------------------------------------------------
Reserves Category 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
PROVED
Producing 10.1 10.8 10.8 10.5 10.1 8.9 9.8 10.0 9.7 9.4
Non Producing 61.0 53.7 47.9 43.2 39.4 56.0 49.4 44.1 39.8 36.3
Undeveloped 71.7 51.4 37.8 28.4 21.8 66.5 47.5 34.8 26.1 19.9
Total Proved 142.8 115.9 96.5 82.2 71.2 131.4 106.7 88.9 75.7 65.6
Probable 71.4 46.2 32.3 24.4 19.8 64.9 42.3 29.7 22.5 18.3
PROVED + PROBABLE 214.2 162.2 128.9 106.6 91.0 196.3 149.0 118.6 98.2 83.9
Possible 106.4 68.1 48.0 36.9 30.2 97.3 62.6 44.2 34.0 27.8
PROVED + PROBABLE
+ POSSIBLE
320.6 230.2 176.9 143.5 121.3 293.6 211.6 162.8 132.2 111.8
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
The full CPR is available on the Company's website:
www.wentplc/investors/documents.
Katherine Roe, CEO, commented:
"We are pleased that the JV Partners have successfully repaired
the MB-2 flowline and recompleted MB-4, which will allow Mnazi Bay
to sustainably increase production to satisfy demand from the
Tanzanian market. Despite a challenging 2019, we met our revised
production guidance and have exited the year in a strong
operational position and continue to fully align ourselves with the
objectives of the Government and our JV partners. Our balance sheet
has continued to strengthen as we have now fully repaid our
long-term debt and continue to receive regular payments, enabling
the Company to return cash to shareholders via our dividend policy.
We look forward to building on this foundation, leveraging our
strengthened position in Tanzania and East Africa".
Enquiries:
Wentworth Katherine Roe, katherine.roe@wentplc.com
Chief Executive Officer +44 (0)118 2065428
Nominated Adviser and Joint Broker
Callum Stewart
Ashton Clanfield
Stifel Nicolaus Europe Limited Simon Mensley +44 (0) 20 7710 7600
Joint Broker
Richard Crichton
Peel Hunt LLP James Bavister +44 (0) 20 7418 8900
Investor Relations Adviser
Patrick d'Ancona
Vigo Chris McMahon +44 (0) 20 7390 0230
About Wentworth Resources
Wentworth Resources is a publicly traded (AIM: WEN), independent
natural gas company with production, exploration and appraisal
opportunities for domestic power generation and local industry in
the Rovuma Delta Basin of coastal southern Tanzania.
Notes and Glossary
These assessments are made in accordance with the standards
defined in the Petroleum Resources Management System (Revised 2018)
sponsored by SPE, WPC, AAPG, SPEE, SEG, SPWLA, and EAGE.
Cameron Snow, Head of Subsurface and Business Development, is a
geologist with 15 years' experience across North America, South
America, Africa, and Europe. He holds a BS in Geology from North
Carolina State University, an MS in Geology from Utah State
University, a PhD in Geological and Environmental Science from
Stanford University, and an MBA from Imperial College London. Mr.
Snow has read and approved the technical disclosure in this
regulatory announcement.
Bcf/Bscf Billion standard cubic feet
BOE Barrels of oil equivalent
-------------------------------------------------------
MMbbl Million barrels
-------------------------------------------------------
MMboe Million barrels of oil equivalent
-------------------------------------------------------
NPV Net present value (at a specified discount rate
and specified discount date)
-------------------------------------------------------
Gross Reserves Reserves volumes before deductions for royalty
-------------------------------------------------------
Net Reserves Reserves volumes after deduction of royalty
-------------------------------------------------------
1P Proved Reserves, those quantities of petroleum,
which, by analysis of geoscience and engineering
data, can be estimated with reasonable certainty
to be commercially recoverable, from a given date
forward, from known reservoirs and under defined
economic conditions, operating methods, and government
regulations.
-------------------------------------------------------
2P Proved + Probable Reserves, those additional Reserves
which analysis of geoscience and engineering data
indicate are less likely to be recovered than
Proved Reserves but more certain to be recovered
than Possible Reserves. It is equally likely that
actual remaining quantities recovered will be
greater than or less than the sum of the estimated
Proved plus Probable Reserves
-------------------------------------------------------
3P Proved + Probable + Possible Reserves, those additional
reserves which analysis of geoscience and engineering
data suggest are less likely to be recoverable
than Probable Reserves.
-------------------------------------------------------
Reserves Quantities of petroleum anticipated to be commercially
recoverable by application of development projects
to known accumulations from a given date forward
under defined conditions.
-------------------------------------------------------
Inside Information
The information contained within this announcement is deemed by
Wentworth to constitute inside information as stipulated under the
Market Abuse Regulation (EU) no. 596/2014 ("MAR"). On the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
Cautionary note regarding forward-looking statements
This press release may contain certain forward-looking
information. The words "expect", "anticipate", believe",
"estimate", "may", "will", "should", "intend", "forecast", "plan",
and similar expressions are used to identify forward looking
information.
The forward-looking statements contained in this press release
are based on management's beliefs, estimates and opinions on the
date the statements are made in light of management's experience,
current conditions and expected future development in the areas in
which Wentworth is currently active and other factors management
believes are appropriate in the circumstances. Wentworth undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless required by applicable law.
Readers are cautioned not to place undue reliance on
forward-looking information. By their nature, forward-looking
statements are subject to numerous assumptions, risks and
uncertainties that contribute to the possibility that the predicted
outcome will not occur, including some of which are beyond
Wentworth's control. These assumptions and risks include, but are
not limited to: the risks associated with the oil and gas industry
in general such as operational risks in exploration, development
and production, delays or changes in plans with respect to
exploration or development projects or capital expenditures, the
imprecision of resource and reserve estimates, assumptions
regarding the timing and costs relating to production and
development as well as the availability and price of labour and
equipment, volatility of and assumptions regarding commodity prices
and exchange rates, marketing and transportation risks,
environmental risks, competition, the ability to access sufficient
capital from internal and external sources and changes in
applicable law. Additionally, there are economic, political, social
and other risks inherent in carrying on business in Tanzania. There
can be no assurance that forward-looking statements will prove to
be accurate as actual results and future events could vary or
differ materially from those anticipated in such statements.
-Ends-
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END
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