TIDMWEN
RNS Number : 5639O
Wentworth Resources PLC
13 June 2022
13 June 2022
WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")
Proposed Acquisition of 25% Working Interest in Tanzanian Gas
Development Project
Creating Tanzania's Multi-Asset Gas Production Leader
Wentworth Resources (AIM: WEN ), the independent,
Tanzania-focused natural gas production company, announces that it
has reached agreement with Scirocco Energy plc ("Scirocco") to
acquire its 25% non-operated working interest in the Ruvuma
Production Sharing Agreement ("Ruvuma Asset"), in Tanzania (the
"Transaction").
The 1.9 Tscf (mean GIIP) Ntorya gas discovery located within
Ruvuma, Tanzania is operated by ARA Petroleum Tanzania (50% working
interest, Aminex plc 25%) and is adjacent to Wentworth's Mnazi Bay
gas producing asset.
The consideration is comprised of an initial cash payment of $3
million due upon Completion, with further deferred and contingent
cash payments of up to $13 million dependent on certain development
and production milestones.
The consideration will be funded through Wentworth's cash
resources whilst allowing the Company to maintain its commitment to
a long-term, sustainable and progressive dividend for
shareholders.
Katherine Roe, Chief Executive of Wentworth:
"This is a transformational transaction for Wentworth
establishing us as a dual-asset, full-cycle E&P with a
significantly enhanced resource base and production profile. The
deal represents an attractively priced, low risk entry into a high
growth opportunity which cements our position as a leading supplier
of domestic gas to Tanzania.
"This compelling growth opportunity is fully aligned with our
commitment to support the Government to reach its goal of providing
universal energy access by 2030 in accordance with our purpose to
empower people with energy and deliver value for Tanzania,
Wentworth and all our stakeholders."
Strategic Rationale
-- Value accretive transaction represents an attractively
priced, low risk entry into a high growth opportunity with the
majority of the consideration only payable upon meeting development
and production milestones
-- The Ruvuma development is expected to deliver a
transformational increase in Wentworth's production and resources
alongside Mnazi Bay enabling Wentworth to support both the growing
energy needs and industrialisation of Tanzania
-- Progresses Wentworth's stated strategy of increasing scale
and driving growth through a focus on natural gas projects in
Tanzania
o Positions Wentworth as the leading domestic gas player in
Tanzania with a diversified production, appraisal and development
portfolio
o Ruvuma will become the third producer of domestic gas in
Tanzania alongside Mnazi Bay (Wentworth 32% working interest) and
Songo Songo
o Enables Wentworth to continue to support the Government of
Tanzania's ambition to increase energy access through lower-carbon
solutions and reach universal energy access by 2030
-- Underscores Wentworth's position as a key partner for the Government of Tanzania
-- Transforms Wentworth into a multi-asset domestic gas producer
in Tanzania and represents a first step into asset diversification
and towards a full-cycle portfolio
-- Wentworth's in-country expertise and track record of delivery
will support the Ruvuma JV to maximise the potential of a world
class asset
-- Wentworth remains committed to offset all existing Scope 1
and 2 emissions and partially offset Scope 3 emissions in 2022 and
will work with the Ruvuma JV partners to ensure the development of
the project is aligned with these aspirations to enable the Company
to continue to have one of the lowest carbon intensities per boe in
the UK plc market
The Ruvuma Asset
The Ruvuma asset contains the Ntorya-1 discovery well, drilled
in 2012, and the Ntorya-2 appraisal well, drilled in 2017, and is
estimated by RPS (2018) to have a mean estimated GIIP of c.1.9
Tscf. The Ntorya-1 gas discovery well is located approximately 30
km from the Madimba gas plant which is within the Mnazi Bay
concession.
Development activity is progressing with a 338 km(2) 3D seismic
survey currently underway before the drilling of the Chikumbi-1
appraisal well in late 2022 or early 2023. The Chikumbi-1 well aims
to confirm 2C resources of 763 Bscf. The cost of the seismic survey
and appraisal well net to Wentworth is estimated at $6.25
million.
Final Investment Decision ("FID") is targeted for 2023 with
first gas expected in late 2024 and an ultimate target production
rate of up to 140 MMscf/d. The project will require construction of
a pipeline from the gas field to the government operated Madimba
gas facility, located approximately 30 km eastward, which is
capable of handling 210 MMscf/d and is currently receiving most of
the production volumes from the Mnazi Bay gas field. Gas from the
Madimba gas facility will then be distributed via existing gas
infrastructure to end users.
A commercialisation study performed by io oil and gas
consultancy (a Joint venture between Baker Hughes and McDermott) in
2017 showed that a 140 MMscf/d Full Field development project would
require approximately $143 million (gross) of capital expenditures.
Actual costs and project scope will be dependent on a development
plan agreed to by the Ruvuma JV partners and the government.
Details of the Transaction
The economic date of the Transaction is 1 January 2022.
The consideration structure ensures that the majority is only
paid in a success case. The headline consideration of up to $16
million is payable in cash. Initial consideration of $3.0 million
is payable in cash payable upon completion of the Proposed
Transaction. Upon satisfaction of certain conditions Wentworth will
make a loan of $0.5 million available to Scirocco (the "Initial
Loan"). 50% of such Initial Loan is repayable in the event
completion does not take place.
Deferred and contingent payments represent the remaining cash
payment of $13 million which is due upon the following key
milestones:
o $3.0 million on reaching FID;
o Up to $8 million through a minority share of net profit to
Wentworth; and
o $2.0 million on reaching gross cumulative production of 50
Bscf.
Wentworth has agreed to a loan arrangement of up to $6.25
million with Scirocco (the "Facility") to enable Scirocco to meet
its cash call obligations and provide continuity to the work
programme in the interim period to Completion. Any drawdowns under
the Facility are subject to Scirocco shareholders' approval and
partner non pre-emption and the full amount of drawdowns (less
$0.25 million of the Initial Loan) are repayable in the event of
non-completion. The Facility will be secured by assignments of
security by Scirocco in favour of Wentworth over the Licence
Documents for the Ruvuma Asset. The grant of such security will be
subject to the consent of the Minister for Energy in Tanzania and
both parties will look to obtain such consent as soon as possible.
The first $3.0 million to be drawn under the Facility is interest
free, however, any amounts drawn in excess of $3.0 million will
incur interest at a rate of 7% per annum until such time as the
grant of the security in respect of the Facility is approved by the
Minister for Energy in Tanzania.
In line with the requirements of Schedule Four of the AIM Rules,
Scirocco recorded its interest in the Ruvuma Asset at a gross asset
value of GBP14.63 million ($18.0 million) per its unaudited
accounts for the six month period ended 30 June 2021. For the
audited year ended 31 December 2020, Scirocco incurred losses
relating to the Ruvuma Asset of GBP0.81 million.
Timetable and Conditions
The proposed Acquisition is subject to formal shareholder
approval from Scirocco's shareholders at a General Meeting to be
held in due course, as well as certain regulatory approvals plus
the non-exercise or waiving of pre-emption rights by the other
Ruvuma Asset JOA partners.
The Transaction will not result in any changes to the Board of
Wentworth. The Company currently expects the Transaction to
complete ahead of the Longstop Date of 30 June 2023.
Conference Calls
Analyst call
The Company is holding a conference call for analysts at 9.30am
BST today, Monday 13 June 2022.
To register for the call, please click on the following
link:
https://secure.emincote.com/client/wentworth/wentworth009/vip_connect
You can view the presentation during the call via the following
link:
https://secure.emincote.com/client/wentworth/wentworth009
Investor call
The Company is holding a live presentation and Q&A webinar
for investors at 12.00pm BST today, Monday 13 June 2022, via
Investor Meet Company.
To register for the call, please click on the following
link:
https://www.investormeetcompany.com/wentworth-resources-plc/register-investor
Ends
Enquiries:
Wentworth Resources Katherine Roe, katherine.roe@wentplc.com
Chief Executive Officer +44 (0) 7841 087 230
AIM 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 Alexander Allen +44 (0) 20 7418 8900
Communications Advisor
Sara Powell
Ben Brewerton
FTI Consulting Ollie Mills +44 (0) 20 3727 1000
About Wentworth Resources
Wentworth Resources plc (AIM: WEN) is a leading, domestic
natural gas producer in Tanzania with a core producing asset at
Mnazi Bay in the onshore Rovuma Basin in Southern Tanzania.
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.
NOTES
Resources and Gas Initially in Place (GIIP) volumes quoted in
this release have been estimated by RPS Energy, an independent
third-party evaluator and were contained as part of an EGM circular
for Aminex plc in December 2018. The document is available on
Aminex plc's website.
RPS Energy is an independent energy advisory consultancy, part
of the London-listed RPS Group plc.
Volumes presented in the report were estimated using the 2018
Petroleum Resources Management System ('PRMS') sponsored by the
SPE/WPC/SEG/AAPG/EAGE/SPEE/SPWLA as the standard for classification
and reporting.
Information related to the referenced io oil & gas
consultancy commercialisation report can be found in a corporate
presentation dated 17 July 2018 on Aminex plc's website.
In accordance with the AIM Rules for Companies, the technical
information contained in this announcement has been reviewed and
approved by Mr. Aaron LeBlanc, Chief Operating Officer of Wentworth
Resources PLC. Mr. LeBlanc is a qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
Companies and has the necessary professional and technical
competencies to conduct and review petroleum operations. Mr.
LeBlanc has a Bachelor of Science Degree in Geology from the
University of Calgary and has been a professional member of APEGA
and a member of the AAPG and EAGE. Mr. LeBlanc has 20 years of oil
and gas industry technical, operational and leadership
experience.
RPS definitions :
Contingent Resources: are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, by the application of development project(s)
not currently considered to be commercial owing to one or more
contingencies. Contingent Resources have an associated chance of
development. Contingent Resources may include, for example,
projects for which there are currently no viable markets, or where
commercial recovery is dependent on technology under development,
or where evaluation of the accumulation is insufficient to clearly
assess commerciality. Contingent Resources are further categorized
in accordance with the range of uncertainty associated with the
estimates and should be subclassified based on project maturity
and/or economic status.
Prospective Resources: are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of
geologic discovery and a chance of development. Prospective
Resources are further categorised in accordance with the range of
uncertainty associated with recoverable estimates, assuming
discovery and development, and may be sub-classified based on
project maturity.
1C: Denotes low estimate of Contingent Resources
2C: Denotes best estimate of Contingent Resources
3C: Denotes high estimate of Contingent Resources
1U : Denotes the unrisked low estimate qualifying as Prospective
Resources
2U : Denotes the unrisked best estimate qualifying as
Prospective Resources
3U : Denotes the unrisked high estimate of qualifying
Prospective Resources
RPS Resource and gas in place in place table
RUVUMA: GAS IN PLACE AND RESOURCES 100% LICENCE
BASIS (Bcsf)
Category Ntorya discovery estimated Resources Prospective
GIIP Resources
-------------------------- ---------------------------------
P90 P50 P10 Mean 1C 2C 3C 1U 2U 3U
-------------------------- ----- -------- ------- ------- ---- ---- ------ ---- ---- ------
Gas Initially
in Place 669 1,642 3,363 1,870
----- -------- ------- ------- ---- ---- ------ ---- ---- ------
Prospective Resource 399 936 1,798
----- -------- ------- ------- ---- ---- ------ ---- ---- ------
Contingent Resources:
Development Pending 26 81 213
----- -------- ------- ------- ---- ---- ------ ---- ---- ------
Contingent Resources:
Development Unclarified 342 682 945
----- -------- ------- ------- ---- ---- ------ ---- ---- ------
TOTAL NET 669 1,642 3,363 1,870 368 763 1,158 399 936 1,798
----- -------- ------- ------- ---- ---- ------ ---- ---- ------
-- Estimations of resources assumes development licence is ratified
-- Prospective resources shown relate to the Jurassic Chikumbi
Prospect which lies below and separate from the Ntorya
development
Glossary of Terms and Abbreviations
Bscf: billions of standard cubic feet
Boe: Barrels of oil equivalent
GIIP : Gas Initially in Place
GSA : Gas Sales Agreement
MMscf/d : millions of standard cubic feet per day
Tscf: trillion standard cubic feet
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END
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