Wentworth, the Oslo Stock Exchange (OSE: WRL) and AIM (AIM: WRL) listed independent, East Africa-focused oil & gas company, is pleased to provide an operational update on its producing gas assets in Mnazi Bay, Tanzania.
Further to the Company's announcement on 4 November 2015 that gas deliveries to the new transnational pipeline had commenced and production volumes were ramping up, Wentworth reports that Q4 2015 gross gas production into the pipeline and directly to a power plant in Mtwara averaged 46 MMscf/d, with production averaging 55 MMscf/d during the month of December 2015. To date, growing gas demand from the power sector has been impacted by delays experienced in commissioning the new Kinyerezi power plant and the conversion of the Ubungo power plant from diesel to gas. These delays are considered to be short term in nature and all of the power generation facilities that will utilize Mnazi Bay gas in the generation of electricity are expected to become fully operational during Q1 2016. As a result, production volumes into the pipeline are now expected to reach between 70 and 80 MMscf/day during Q1 2016 and thereafter remain consistent throughout 2016, with the potential for a further increase in volumes depending on demand. The existing Mnazi Bay gas wells continued to perform in line with expectations and are anticipated to be more than capable of meeting expected demand. As a result, no new development wells are currently planned for 2016.
Payments by the buyer, Tanzania Petroleum Development Corporation ("TPDC"), to the Joint Venture, for gas sales delivered to the new pipeline have been consistently paid in accordance with the agreed terms. Under the Gas Sales Agreement signed on 12 September 2014, the sale price has been set at US$3.00 per million BTU (approximately US$3.07 per thousand cubic feet, rising in line with the US CPI industrial index) commencing in 2016.
The Company ended 2015 with cash of approximately $2.7 million and debt of $26 million of which $7.4 million of principal and interest is due to be repaid from internally generated cash flow during H2 2016.
Although no firm exploration plans have been made in 2016, the Joint Venture plans to align exploration activities in the Mnazi Bay concession with gas demand growth within Tanzania. Management will look to provide an update to shareholders as these plans progress.
Geoff Bury, Managing Director, commented:
"I am pleased that the commissioning of the pipeline and the gas offtake facilities have all gone smoothly and that the Mnazi Bay wells have performed as expected; the Joint Venture's position as the main feedstock for the new gen-sets in Tanzania provides a unique position from which to benefit from the growing demand for power. Moreover, the expectation of increasing production without the need for additional capital expenditure will further enhance our rapidly strengthening financial position. Wentworth is in the unique position for a small E&P company to experience a growing cash balance on the back of increasing gas production with no commodity price risk."
"The newly elected Government has demonstrated its commitment to the future growth and development of Tanzania's power industry and continues to work diligently to enable new and existing power plants to become fully operational in the coming months."