Wentworth Resources Limited : Corporate, Operational and Resource Update
PRESS RELEASE
3 October 2018
WENTWORTH RESOURCES LIMITED
("Wentworth" or the "Company")
Corporate, Operational and Resource Update
Transition and Redomicile of the Company
As announced on 2 October 2018, following the Company's Special Meeting, and in
line with the head office relocation of the Company from Calgary to London
previously announced, the re-domicile of the Company to Jersey is progressing on
schedule. Following the Special Meeting and the passed resolution related to the
Continuance, the Company will now apply to:
* The Registrar of Corporations in Alberta to grant a certificate of
discontinuance; and
* The Jersey Financial Services Commission for their approval of the
Continuance.
The Company will also submit a Schedule 1 Pre-Admission Announcement, in order
for the Company's shares to be re-admitted to AIM in late October 2018, under
the name Wentworth Resources plc and the new TIDM of WEN. On completion of the
Continuance, the Proposed Directors, as previously announced, will be appointed
to the Board of Wentworth Resources plc.
Delisting from Oslo Børs
Further to the Special Meeting and the resolution passed related to the
application to de-list from Oslo Børs, the Company will shortly submit the
delisting application to the Oslo Børs. The Company will make a further
announcement, including expected timetable, in respect of this process in due
course.
Payment and Production update
The Company is pleased to inform shareholders that payments received for
September 2018 gas sales generated from the Mnazi Bay Concession in Tanzania
totaled $3.24 million net to Wentworth. Payments were received from both
Tanzania Petroleum Development Corporation ("TPDC") and Tanzania Electric Supply
Company Limited ("TANESCO") for one month's gas sales to TPDC and one month's
gas sales to TANESCO.
The Company also reports that gross production volumes during September 2018
from the Mnazi Bay concession averaged 83.2 MMscfd. The September reduction in
production volumes (August average of 87.9 MMscfd) was due to previously planned
slick-line activities on the wells and TPDC hot-tapping operations for the
Lodhia Steel works offtake.
Given the consistency of payments received to date in 2018, the Company no
longer intends to release monthly updates to the market. Such information will
be included in regular Corporate and Operational activity RNS updates.
Tanzania: Mnazi Bay PSA
The Mnazi Bay Production Sharing Agreement ("Mnazi Bay"), is located onshore
southern Tanzania (Mtwara region), approximately 410 km south of Dar es Salaam,
covering an area of 756 km(2). The Mnazi Bay asset is operated by Maurel et
Prom (48.06%) with the Tanzania Petroleum Development Corporation "TPDC" (20%)
and Wentworth Resources (31.94%) as joint venture partners.
The Mnazi Bay & Msimbati gas fields have been onstream and continuously
producing since January 2007, initially through a testing and commissioning
phase at c.2.5MMscfd to Mtwara. In October 2015, the Madimba gas processing
plant was completed and commissioned, allowing production to be ramped up to 44
MMscfd in 2016. Production continued to grow to c.50 MMscfd in 2017. In 2018
production has averaged 82 MMscfd year to date and 86 MMscfd in Q3, from five
producing wells. The Joint Venture is contracted ("DCQ") to supply 82.5 MMscfd,
with a Gas Sales Agreement ("GSA") option to increase to 130 MMscfd.
The increase in production to the current plateau levels, has resulted in
operating expenses being reduced from $1.16/Mscf in H1 2017 to $0.43/Mscf in H1
2018, as the mainly fixed costs are distributed over a larger production base.
Within Tanzania, Mnazi Bay is currently the pre-eminent domestic gas to power
("GTP") supplier, with a c.53% market share. Tanzanian power generation capacity
is currently c.1,500 MW, with some 780 MW derived from Natural gas.
Demand for Mnazi Bay gas is currently in excess of 95 MMscfd. Future demand is
ramping up significantly, with Mtwara, Sumanga-Fungo, Kinyerezi III and
Kinyerezi IV power plants all planned, with a projected combined additional
demand of 180 MMscfd. To the Company's knowledge, there are currently no
uncommitted onshore 2P gas reserves to supply the near to mid-term demand
requirements.
As part of the redomicile and AIM re-admission process, the Company commissioned
an RPS Canada Competent Persons Report ("CPR") evaluation of the Mnazi Bay
field's reserves which has resulted in gross 2P reserves of 541 Bscf of gas,
with 111 Bscf of net attributable 2P reserves to Wentworth Resources (with an
effective date 31 May 2018). The NPV(15) of the 2P reserves (net to Wentworth)
was estimated at $121 million USD after tax (on a life-of-field basis). RPS
Canada estimated the upside reserves potential (3P) for the Mnazi Bay field at
817/152 Bscf (gross/net). This CPR is available on the Company's website as of
today and a reserves summary table follows below.
+------------------------------------------------------------------------------+
| Oil and Gas - Reserves at 31 May 2018 |
| Mnazi Bay Licence, Tanzania |
+----------+----------------------------+----------------------------+---------+
| | Gross(1) | Net Attributable(2) | |
| +------+----------+----------+------+----------+----------+ |
| | | Proved + | Proved + | | Proved + | Proved + |Operator |
| |Proved| Probable |Probable +|Proved| Probable |Probable +| |
| | | | Possible | | | Possible | |
+----------+------+----------+----------+------+----------+----------+---------+
|Oil &| | | | | | | |
|Liquids |MMstb | MMstb | MMstb |MMstb | MMstb | MMstb | |
|Reserves | | | | | | | |
+----------+------+----------+----------+------+----------+----------+---------+
|Mnazi Bay| - | - | - | - | - | - |Maurel et|
|Gas Field | | | | | | | Prom |
+----------+------+----------+----------+------+----------+----------+---------+
|Total for| | | | | | | |
|Oil and| - | - | - | - | - | - | |
|Liquids | | | | | | | |
+----------+------+----------+----------+------+----------+----------+---------+
| | | | | | | | |
+----------+------+----------+----------+------+----------+----------+---------+
|Gas | Bscf | Bscf | Bscf | Bscf | Bscf | Bscf | |
|Reserves | | | | | | | |
+----------+------+----------+----------+------+----------+----------+---------+
|Mnazi Bay| 295 | 541 | 817 | 69 | 111 | 152 |Maurel et|
|Gas Field | | | | | | | Prom |
+----------+------+----------+----------+------+----------+----------+---------+
|Total for| 295 | 541 | 817 | 69 | 111 | 152 | |
|Gas | | | | | | | |
+----------+------+----------+----------+------+----------+----------+---------+
1. "Gross" are 100% of reserves attributable to the asset
2. "Net Attributable" are the net reserves volumes attributable to Wentworth
Activity & Production Outlook
Given the field is producing on plateau from the current well stock, Joint
Venture technical and operational activity has focused on better understanding
in-place volumes, reservoir connectivity, future production profiles, outlining
infill well locations and defining additional exploration potential on the
block. These initiatives combine to ensure an integrated and pro-active field
management strategy moving forwards.
From late August to early September 2018, slickline operations were performed in
the MB-2, MB-3, MB-4, and MS-1X wells to remove downhole memory gauges, perform
static pressure gradient surveys, and re-install downhole memory gauges. This
pressure monitoring campaign is ongoing and will help to address the remaining
uncertainty with regards to the in-place (and recoverable) volumes in the Mnazi
Bay field and the connectivity between the wells in the different reservoir
intervals, with particular near-term focus on the lower MB interval, currently
producing from the MB-1 well only.
Critically, the Mnazi Bay partners are working closely together to ascertain
production profiles and plateau periods that can be achieved for different
recoverable volumes, flow rates, pipeline inlet pressures and compression
scenarios. The results from this work suggest that at current stabilized
production of 82.5-90 MMscfd, the plateau can be maintained until sometime
between mid-2024 and late-2026, with limited capital expenditures ("CAPEX").
Although the GSA provides the option for volumes of up to 130 MMscfd to be
delivered, the Company does not believe this will be achieved until certain
commercial conditions have been satisfied.
In order to increase field production rates closer to a 130 MMscfd plateau,
while still maintaining the capability to provide minimum contractual volumes of
80 MMscfd to Madimba (TPDC) and 2.5 MMscfd to Mtwara (TANESCO), Wentworth
believes that additional well recompletions and/or drilling and compression
facilities will be required in due course.
In order to sustain and/or increase the Mnazi Bay production plateau Wentworth
(along with the Operator) is focused on four key value catalysts:
1. Securing a full GSA to move to Commercial Operations Date "COD" declaration.
As a result of the COD, the testing and commissioning period will end and
all terms of the GSA will become effective.
2. Maintaining the production plateau to comply with the GSA, by focusing on
network modifications including upgrading well flowline chokes, together
with slickline jobs to open existing perforated intervals and conducting new
perforations in unperforated horizons. This is made operationally simpler by
the MB-2, MB-3, MB-4 and MS-1X wells having smart well completions, with
sliding sleeves.
3. A reduction in the contractual optimum pipeline delivery point pressure from
95 bar(g) to 60 bar(g), which would allow for increased volumes per well,
and sustained overall production rates and/or plateau periods from the
current well stock, prior to installation of compression facilities. This is
technically and operationally realizable, has the potential to extend the
production plateau by c. 18 months on a standalone basis and c.42 months
including slickline and chokes upgrade work; and is immediately accretive to
asset value.
4. Renewal of the PSA, which will push expiration out a further 10 years, until
2041, thereby facilitating the commercial rationale for additional CAPEX to
unlock the 2C and the 3P resource base.
Unlocking these commercial triggers will allow the Joint Venture to extend and
increase the current production plateau of 82.5-90 MMscfd with confidence, as
well as access, unlock and convert the existing material prospective resource
base to 2P reserves. Discussions are ongoing between the Joint Venture and
various Tanzanian stakeholders to secure fair and equable agreement on these
issues.
Exploration Activity
Wentworth has undertaken a detailed review of the exploration potential of the
greater Mnazi Bay area and as such has identified a material prospect and lead
inventory. Seven of the highest potential leads were evaluated by RPS Canada as
part of the reserves and resources evaluation, which ascribed P(50) full block
gross prospective resources at greater than 1.5 Tcf. Wentworth is currently
working with the operator to determine how to best de-risk the running room
portfolio and developing a strategic plan towards converting these resources to
future 2C and 2P reserves.
Mozambique: Tembo Block Appraisal Licence
The Tembo Block Appraisal Licence ("Tembo"), which has an area of approximately
2,500 km(2) is located in north-eastern Mozambique, approximately 1,800 km north
of Maputo and 100 km southwest of the Mnazi Bay field in the onshore Rovuma
Basin. The block is operated by Wentworth Resources (85%) with Empresa Nacional
de Hidrocarbonetos ("ENH"; 15%) as a carried partner.
In 2014, the Tembo-1 exploration well was drilled to the Cretaceous where it
encountered strong gas shows, logged a hydrocarbon pay interval section, and was
declared a technical discovery. In June 2016, the Instituto Nacional de
Petroleo ("INP") granted approval for an appraisal plan for the Tembo-1 gas
discovery, with a two-year appraisal period. During the first two-year
appraisal period Wentworth reprocessed c. 1,000 km of 2D seismic data and
conducted pre-drill activities including well planning and design and scouting
of the proposed wellsite location. In addition, from late Q4 2017 the Company
reached out to the market to secure a partner to farm-in for the proposed Tembo-
2 appraisal well. In June 2018, partly due to above ground security issues and
an inability to secure a risk-sharing partner, a further one-year extension was
granted, extending the licence until 15 June 2019 with no additional work
commitments or exit penalties.
Activity & Outlook
In Q3 2018, Wentworth commenced a detailed re-evaluation of the Tembo discovery,
creating an updated basin model which integrated in-house analysis of the Tembo-
1 discovery, including re-interpretation of all the existing block and regional
2D seismic data, reservoir & rock properties, in-place and recoverable volumes,
reservoir flow rates, deliverability and well-based economics. This in-house
study, which was concluded after the RPS CPR evaluation was finalized, suggests
that the primary "Q sand" package as mapped on the reprocessed 2D seismic likely
has in-place Pmean gross volumes of c.87 Bscf with recoverable volumes of c.61
Bscf.
Set out below are management estimates of Prospective Resources Assessment for
the Tembo prospect.
+-------------------------------------------------------------------------------+
| Oil and Gas - Prospective Resources |
| Tembo Appraisal Area, Mozambique(1) |
+---------+------------------------+------------------------+---------+---------+
| | Gross(2) | Net Attributable(3) | | |
| +------+--------+--------+------+--------+--------+ | |
| | | |Proved +| | |Proved +| Risk |Operator |
| |Proved|Proved +|Probable|Proved|Proved +|Probable|Factor(4)| |
| | |Probable| + | |Probable| + | | |
| | | |Possible| | |Possible| | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
|Oil &| | | | | | | | |
|Liquids |MMstb | MMstb | MMstb |MMstb | MMstb | MMstb | | |
|Reserves | | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
| | - | - | - | - | - | - | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
|Total for| | | | | | | | |
|Oil and| - | - | - | - | - | - | | |
|Liquids | | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
| | | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
|Gas | Bscf | Bscf | Bscf | Bscf | Bscf | Bscf | | |
|Reserves | | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
|Tembo Q| | | | | | | | |
|Sand | | | | | | | | |
|Prospect,| 10 | 61 | 151 | 9 | 52 | 128 |42.1%(4) |Wentworth|
|Base of| | | | | | | | |
|Slope Fan| | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
|Total for| 10 | 61 | 151 | 9 | 52 | 128 | | |
|Gas | | | | | | | | |
+---------+------+--------+--------+------+--------+--------+---------+---------+
1. Management internal estimates
2. "Gross" are 100% of resources attributable to the asset
3. "Net Attributable" are the net resources volumes attributable to Wentworth
4. "Risk Factor" is the Geological Probability of Success and does not include
any evaluation of the commerciality of the resources.
The downward volumetric revisions have predominantly been driven by a decrease
in the interpreted reservoir storage properties and a more restricted sand
fairway system. The Company is of the view that a gas discovery of this size
with sub-commercial flow rates is highly likely to be stranded given the lack of
adjacent infrastructure.
As part of the Company's Transition and Redomicile process, RPS Canada was
required to conduct a CPR of the Tembo discovery. This evaluation which
commenced in May 2018, was undertaken incorporating a legacy subsurface model,
prior the above in-house evaluation.
RPS Canada, has determined, based on the prior Wentworth work that the Tembo
prospect has Best estimate P(mean) gross risked prospective resources of 262
Bscf, with a 30% chance of expected Commercial success, further noting "there is
a wide range of uncertainty in the estimated volume". This CPR report is
available on the Company's website as of today.
The updated in-house assessment of Tembo, coupled with the lack of a risk-
sharing partner and above ground concerns, all point to further appraisal well
activities not being commercially supported by the Company.
Wentworth continues to evaluate remaining Cretaceous and Tertiary potential in
the greater onshore Rovuma Basin as part of its evaluation activities in
Mozambique, where it has a significant in-house data set, established regional
expertise, operational capabilities, and importantly substantive relationships
with ENH and INP, in what is a rapidly developing LNG (and domestic gas) region
of Mozambique.
Eskil Jersing, CEO, commented: "Since my arrival in late June, we have
undertaken a thorough technical review of the company's asset portfolio. I am
excited by the potential of Wentworth's principal Mnazi Bay asset in Tanzania,
and believe our focus is to work closely with the operator and key stakeholders
in country to progress a value-led technical and operational strategy that
extracts as much of the field's undoubted potential as possible in a
commercially attractive manner. Our work to better understand commercially
realizable opportunities available in Mozambique continues unabated.
As a result of our having the corporate team in London working very closely with
our Dar es Salaam team and asset partners, I believe we are now better placed to
both drive the business operationally and communicate with our market,
especially investors and analysts. In addition, our being in the UK will also
enable us to access and execute on M&A led opportunities in order to secure
accretionary value for the Company in this next phase of growth. I look forward
to updating investors in due course.'
-Ends-
Enquiries: Bob McBean, rpm@wentworthresources.com
Wentworth Executive Chairman
Eskil Jersing,
Chief Executive eskil.jersing@wentworthresources.com
Officer +44 7717 847623
Katherine Roe, katherine.roe@wentworthresources.com
Chief Financial +44 7841 087 230
Officer
Stifel Nicolaus AIM Nominated +44 (0) 20 7710 7600
Europe Limited Adviser and Broker
(UK)
Callum Stewart
Ashton Clanfield
Peel Hunt LLP Broker (UK) +44 (0) 20 7418 8900
Richard Crichton
Ross Allister
Vigo Investor Relations +44 (0) 20 7930 0230
Adviser (UK)
Patrick d'Ancona
Chris McMahon
Kate Rogucheva
About Wentworth Resources
Wentworth Resources is a publicly traded (OSE: WRL, AIM: WRL), independent oil &
gas company with natural gas production; exploration and appraisal
opportunities, all in the Rovuma Delta Basin of coastal southern Tanzania and
northern Mozambique.
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
and Mozambique. 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. See Wentworth's
Management's Discussion and Analysis for the year ended December 31, 2017,
available on Wentworth's website, for further description of the risks and
uncertainties associated with Wentworth's business.
These assessments are made in accordance with the standard defined in the
SPE/WPC Petroleum Resources Management System (2007) and the Canadian Oil and
Gas Evaluation Handbook ("COGEH").
Cameron Snow, Head of Subsurface and Business Development, and an Exploration
Geoscientist with over 12 years of experience across North America, South
America, Africa, and Australia, has read and approved the technical disclosure
in this regulatory announcement. Mr. Snow holds a BS in Geology from North
Carolina State University, a MS in Geology from Utah State University, a PhD in
Geological and Environmental Science from Stanford University, and an MBA from
Imperial College of London. Mr. Snow is a member of the Society of Petroleum
Engineers.
Glossary
Bscf Billion standard cubic feet
Contingent Resources Quantities of petroleum estimated, as at a given date,
to be potentially recoverable from known accumulations,
but the applied project(s) are not yet considered mature
enough for commercial development due to one or more
contingencies
MMscfd Milion standard cubic feet per day
MMstb Million stock tank barrels
MW Mega Watt
Gross Reserves Reserves volumes before deductions for royalty
Net Reserves Reserves volumes after deduction of royalty
NPV Net present value
2C Best estimate scenario of contingent resources
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.
Prospective Resources Petroleum deposits that are estimated, on a given date,
to be potentially recoverable from accumulations yet to
be discovered
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.
TCF Trillion cubic feet
WI Working interest attributable to Wentworth
Notice
Neither the Oslo Stock Exchange nor the AIM Market of the London Stock Exchange
has reviewed this press release and neither accepts responsibility for the
adequacy or accuracy of this press release.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.