Aminex within touching distance of revenues from Tanzania| MENAFN.COM

Monday, 26 September 2022 07:22 GMT

Aminex within touching distance of revenues from Tanzania


(MENAFN- ProactiveInvestors - UK) Aminex(LON:AEX) has quietly come a long way in recent years and is now on the cusp of establishing its first revenues in Tanzania, which has been the core focus on the group.

The Kiliwani North gasoperations, came online in April and were a key milestone in the group's long awaited phase of development.

Funding for development arranged Recently, Aminex raised just over 18.2mln of which Eclipse Investments, part of the Zubair Corporation of Oman put up 12.8mln.

'Zubair is a long-established international group and one of Oman's most significant and reputable companies.

'It has existing interests throughout Middle East and Africa, including Tanzania, in a variety of industries,' said Jay Bhattacherjee, Aminex's chief executive.

Other institutional investors stumped up 4.1mln, while existingAminex shareholders added a further 1.3mln.

Kiliwani revenues imminent Aminex retains just over 50% of the Kiliwani North well, which is expected to initially produce between 20 and 30 mln cubic feet of gas per day.

The project was estimated, in a May 2015 evaluation, togenerate between $10mln and $15mlnof net cashflows.

It is currently estimated to host 28 billion cubic feet of contingent gas resources which could be converted to reserves once production is established.

Testing in July reached a flow rate of 30mln cubic feet per day, which equates to 5,000 oil barrels equivalent.

From Songo Songo, the Kiliwani North gas will be transported by pipeline to Tanzania's capital Dar es Salaam.

Kiliwani North's gas is, however, sold 'at the well head'.

The well head price was set out in the gassalesagreements signed in January 2016. The gas is to be sold at $3.07 per thousand cubic feet.

'The successful conclusion of the well integrity tests and installation of the wellhead control panel finalises the company's preparations prior to the commissioning of the new Songo Songo Island processing facilities,' Bhattacherjee said.

Ruvuma and Nyuni offer blue-sky potential Kiliwani North anchors Aminex's operations in Tanzania. The soon-to-be-cash-generativeassetwill pay for further expansion.

With the Ruvuma and Nyuniproductionsharing agreements Aminex has earlier stage but potentially much larger exploration assets.

These areas are mostly onshore and in coastal areas nearest to the very large gas discoveries made by Shell, Anadarko, Exxon and other majors in the east Africa region.

The Ntorya gas discovery is the mostadvancedof the assets here. And future work is likely to involve appraisal drilling to expand upon findings from a 2012 well.

Ntorya-1 flow tested at 20mln cubic feet per day, with 139 barrels of condensate.

And, subsequent seismic exploration work confirmed material upside.

A new well, Ntorya-2, could potentially target some 1.5 trillion cubic feet of possible in-place gas resources, in Cretaceous and Tertiary reservoirs.

Wells offshore - for example those drilled by Anadarko andOphir Energy- have made large discoveries.

In July, groundwork started at Ntorya-2, which is 1,500m south west of the first discovery.

The new well should satisfy its appraisal drilling obligation at the licence and if the second well is a success the company intends to apply for a 25-year development licence

Aminex commissioned a competent persons report, released in May 2015, which estimated the potential for nearly 10trn cubic feet of gas in place across the Ruvuma and Nyuni exploration areas.

More importantly, that study identifiedfour 'drill ready' prospectsin the Ruvuma PSA. These prospects - Ntorya Updip, Namisange, Likonde Updip, and Sudi - were together estimated to host 3 trillion cubic feet (3 TCF) of possible gas resources.

In Nyuni, meanwhile, a total of 5.7 trn cubic feet of in-place gas resources was estimated.

The study also highlighted a new focus area, in deep water where the Pande West and Balungi exploration leads were identified.

All this prospectivity has been an important strategic consideration, but, particularly in the current industryenvironment, it has been on the back-burner as a lower priority to establishing revenues.

Corporate deals an option, but so are 'alternative strategies' In early February, a proposedpartnership with Bowleven unravelled, Aminex told investors it would be assessingalternativeways to monetise gas resources in the Ruvuma PSA.

Top level terms were agreed for a tie-up with Bowleven back in November 2015, before the arrangement was cancelled in February.

Aminex, at that time, said a forward work programme could not be agreed that would be acceptable to Aminex and other stakeholders including the company's lenders and the Tanzanian authorities.

Whilst specific details were not disclosed, the November investor communications surrounding the Bowleven deal highlighted the possibility of a 'multi-well programme'.

The deal, had it gone through, would've seen Aminex give up a substantial portion of its percentage interests in the projects.

Bowleven would've taken 25% of Kiliwani North and 50% of Ruvuma, while Aminex would've got $8.5mln of upfront cash plus the benefit of 'carries' on futurework.

Further back in the history of these projects, before Bhattacherjee joined, Aminex was partnered withTullow Oil- though the FTSE 250 oiler dropped out part-way through the Ntorya well.

Aminex currently retains majority stakes in all its Tanzania assets, and its acreage position is both large and strategically positioned.

Naturally, the currentenvironmentis particularly conducive to optimal deal-making.

Weak international commodity prices very much make it a 'buyer's market'.

Currently, possible partners are more likely to see distressed companies and assets as lower hanging fruit.

For this very reason, Kiliwani North and revenue generation remains a very significant milestone for Aminex.

-- updates for funding and Ntorya- 2 drill plans--


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