Tanzania 'Profitable on Operating Basis': Wentworth
The managing director of Oslo and AIM-listed east Africa gas producer Wentworth Resources, Geoff Bury, said May 12 says its Tanzanian operations are "profitable on an operating basis".
It reported net losses pared back to $910,000 in 1Q 2016 from $2.72mn in 1Q 2015, as gas sales revenues increased to $3.21mn from $270,000.
The Mnazi Bay gasfield in southern Tanzania – operated by France’s Maurel & Prom (48.06%) partnered by Wentworth (31.94%) and Tanzanian state TPDC (20%) – began producing in August 2015.
Average gross (100%) Mnazi Bay production in 1Q 2016 was 48mn ft3/d, and reached 65mn ft3/d on March 31 and its wells are “performing exceptionally well,” said Wentworth.
“It was producing at 65mn ft3/d,” its finance chief Lance Mierendorf told analysts on a May 12 call. He added that the field is expected to produce 70mn ft3/d this month, and to maintain production at 70-80mn ft3/d for the remainder of 2016 and into 1H 2017.
“The five Mnazi Bay wells are performing well, so no more wells are planned in 2016,” he added.
Start-up and commissioning of power generation units at the new Kinyerezi-1 power plant (150 MW) and refurbishment of the Ubungo-2 and Symbian plants were essentially completed by end-March 2016, these being the primary users of Mnazi Bay gas sold to TPDC, said Wentworth’s statement.
The government has plans to add an extra 1,155 MW of power generation to the grid over the next three years by building three new power stations (at Kinyerezi, Kilwa and Mtwara) and expanding the recently completed 150 MW Kinyerezi-1 power plant.
Bury said that final investment decisions had been achieved on expansions of Kinyerezi-1 (a further 185 MW) and the new Kinyerezi-2 plant (240 MW), which are expected to be commissioned by mid-2017 and in Q1 2018 respectively.
Mnazi Bay production and sales will increase by 30mn ft3/d to 120 mn ft3/d for the mid-2017 Kinyerezi start-up, said Bury, and by a further 30-40mn ft3/d when Kinyerezi-2 fires up.
Asked how he could be sure of supplying most of that incremental demand, given the April 2016 start-up of competing supply from Kiliwani North and expansion of the Songo Songo field, Bury said: “We expect the first 130mn ft3/d will be our [Mnazi Bay] supply.” The gas is priced at $3/mn Btu.
Wentworth says the supply contract is for remainder of the Mnazi Bay concession extending to October 2031. Payments for gas delivered in Q4 2015 and Q1 2016 “were received in full within the agreed timeframes.”
Wentworth had working capital of $9mn, including cash in the bank of $4mn. It is gradually paying off interest on $26mn of loans; this included the $560,000 due in 1Q 2016.
In neighbouring Mozambique to the south, Wentworth said ministerial approval is pending for its proposed appraisal programme for the Tembo-1 gas discovery (onshore Rovuma) in the north of the country under which Wentworth’s operating stake would increase from 11.59% to 85%.