Tanzania Producers Make Money, Yet Paid Late
Canada’s Orca Exploration, operator of Tanzania’s longest producing gas field Songo Songo, returned to profit in the second quarter, after an extensive workover of the field in late 2015 and early 2016. But like other producers in Tanzania, it remains affected by delayed payments for its gas.
Net profit in 2Q 2016 was $1.45mn, down from $3.57mn in the year-ago quarter, said Orca in results late August 16. However, a first half 2016 net loss of nearly $4.2mn contrasts with a net 1H 2015 profit of almost $1.9mn.
Its offshore programme at Songo Songo included workovers on wells SS-5, SS-7 and SS-9 and the drilling of one new well, SS-12, begun in 3Q 2015 and completed at the end of 1Q 2016, with demobilisation of the rig and services occurring during 2Q 2016. Orca said its expenditures – $16.8mn in 1H2016, all but $2.8mn during January-March – substantially increased the cost pool, entitling it to 75% of net revenue both for the current quarter and the six months ending June 30 2016. It also received a World Bank loan to cover some of the capex.
Songo Songo island (Photo credit: Orca Exploration)
Average Songo Songo prices realised by Orca in 2Q 2016 were $3.55/'000 ft³ from the power sector, $7.64/'000 ft³ from industry, so a weighted average of $4.83/'000 ft³, all up on 2Q 2015.
Orca’s second quarter revenues were up 16% at $14.6mn and in 1H up 36% at $30.4mn. But Tanzanian state utility Tanesco still owed Orca $79.4mn at end-June 2016 for unpaid gas, up from $69.7mn six months earlier. Late payment in Tanzania is not an issue affecting just one producer.
UK-based Aminex said August 18 it has received first payment in relation to gas produced from the Kiliwani North-1 well and supplied to the Tanzania Petroleum Development Corporation (TPDC). It said scheduled future payments will be in accordance with the agreed Gas Sales Agreement.
Aminex said it continues to work with TPDC during the current commissioning period to achieve an optimal rate and during this phase is being paid for all gas produced. Its UK partner Solo said it was pleased that the first invoice for gas produced in April and May has now been paid by TPDC.
On August 16, Wentworth – partner of French operator Maurel & Prom at the Mnazi Bay field in Tanzania – admitted that a ramp-up in production there was slower than expected because of a dispute between local US power producer Symbion and the government. Wentworth reported a small 2Q loss.