TIDMAEX
RNS Number : 2206G
Aminex PLC
19 November 2015
Aminex plc
("Aminex" or "the Company")
INTERIM MANAGEMENT STATEMENT - THIRD Quarter 2015
Aminex PLC ("Aminex" or "the Group" or the "Company"), an oil
and gas company listed on the London and Irish Stock Exchanges,
today releases its Interim Management Statement for the period 1
July 2015 to the date of this statement.
HIGHLIGHTS
-- Agreement signed with Bowleven plc for a total gross
consideration of $28 million in respect of:
o the sale of a 25% interest in Kiliwani North Development
Licence ("KNDL") and
o a multi-well farm-out for a 50% interest in the Ruvuma
Production Sharing Agreement
o inter-conditional agreement signed with Solo Oil plc to
participate pro rata in Ruvuma farm-out terms
-- Gas Sales Agreement terms agreed with Tanzanian Petroleum
Development Corporation pending final payment protection terms
which are largely agreed
-- Back-in rights for KNDL exercised by Tanzania Petroleum Development Corporation
-- Solo Oil retains option to acquire a further 6.5% in KNDL
following signing of Gas Sales Agreement
-- Tendering process for Ntorya-2 appraisal well underway with expected spud early 2016
-- Nyuni Area PSA work programme varied with deferral of
drilling obligations approved by Ministry of Energy and Mines
-- Sale of Egyptian interest into a royalty position
Chief Executive Jay Bhattacherjee said:
"It has been a transformational period for your Company; most
notably today's agreement with Bowleven for the sale of 25%
interest in KNDL and a potential multi-well farm-out of a 50%
interest in the Ruvuma Production Sharing Agreement which, after
Solo Oil's participation in the Ruvuma farm-out, provides a net
consideration of $24.375 million to Aminex. The Gas Sales Agreement
and subsequent first gas from Kiliwani North, news about which we
are aware is keenly awaited by shareholders, is expected by
end-2015. Our strategy of moving into a development and production
phase remains a key objective.
Following the completion of the combined transactions announced
today and with cash expected to be generated from KNDL soon, the
Board considers the Company to be well placed to identify other
production and development opportunities in line with the Company's
longer-term strategy."
Aminex is pleased to release its Interim Management Statement
for the period 1 July 2015 to the date of the statement.
PART DISPOSAL AND FARM-OUT
The Company today concurrently announces that it has reached an
agreement with Bowleven plc ("Bowleven"), the AIM listed oil and
gas company for part disposal and farm-out of its Tanzanian assets
(the "Bowleven Agreement"). Terms of the Bowleven Agreement include
the disposal by Aminex of 25% interest in the KNDL and farming into
the Ruvuma PSA, including the Ntorya appraisal programme, for a 50%
gross interest. Under an inter-conditional agreement with its
existing joint venture partner Solo Oil plc ("Solo"), the farm-out
terms for the Ruvuma PSA will be shared proportionately by Aminex
and Solo (the "Solo Agreement"):
-- Cash consideration of $8.5 million
-- Shares in Bowleven to the value of $5 million with a 9 month lock-up period
-- Net carry of $10 million on all Ruvuma PSA activity, enabling a multi well programme
-- A cash bonus of $0.5 million on the completion of drilling of the Ntorya-2 well
-- A bonus of $4 million, to be settled in cash or shares at
Bowleven's option, payable on achieving commercial production from
the Ruvuma PSA for a minimum of 30 days
The combined transaction is conditional upon, amongst other
things, the execution of formal agreements with Bowleven and Solo,
Aminex shareholder approval, and approval from the Tanzanian
authorities.
Under the Solo Agreement, Solo will receive a 25% share of the
net carry of $10 million and will be entitled to 25% of the
contingent bonuses. The net effective value to Aminex of the
transaction will be $24.375 million.
KILIWANI NORTH GAS FIELD (operator)
The Kiliwani North-1 gas well, which tested at 40 MMcfd, has
been completed and is ready to produce. An independent engineering
report ascribes the gas field with 28 BCF Contingent Resource and
it is anticipated that a sustained production rate of up to
approximately 30 MMcfd will optimise the economics and the life of
the reservoir. Initial gas production will enable the pipeline
operator to pressure-test the short spur line between the wellhead
and the new gas plant with revenue gas-flow expected in Q4 2015.
TPDC has advised that the processing plant is close to completion
and a Gas Sales Agreement ("GSA") with appropriate payment
protection mechanisms will be concluded in order to begin
commissioning and testing. Gas from Kiliwani North will represent
Aminex's first commercial production in Africa. The pipeline
operator has constructed a sales pipeline from Kiliwani North to
the nearby processing plant at its own cost, with the Company
responsible for supplying and installing a gas metering unit. The
Company will therefore sell its production at the wellhead, greatly
simplifying commercial and management issues and allowing for low
operating and production costs.
In October 2015, the TPDC notified the Company of its intention
to exercise its right to acquire a 5% working interest in the KNDL
and will become a full working interest partner. The assignment of
this working interest will be subject to TPDC reimbursing the Joint
Venture Partners for TPDC's proportionate share of development
capital expenditure on the licence to date and becoming a party to
the KNDL Joint Operating Agreement.
Under the agreement with Bowleven, Aminex's interest will, on
completion, become 30.575% and Aminex will continue to act as
operator through its wholly-owned subsidiary, Ndovu Resources
Limited.
Under the terms of an Asset Sale Agreement signed in February
2015, Solo acquired 6.5% (before TPDC back-in) of KNDL for a
consideration of $3.5 million and was granted an option to acquire
a further 6.5% (before TPDC back-in) interest in the field for $3.5
million within 30 days of a GSA being signed. Approval from the
Tanzanian authorities for this second sale was obtained in
conjunction with the first sale. If Solo takes up its option,
Aminex's interest will become 24.4% after the TPDC back-in.
RUVUMA PSA (operator)
On completion of the proposed transactions with Bowleven and
Solo, Aminex will benefit from the $10 million net carry on all
production sharing agreement related costs. The net carry should
enable Aminex to participate in a multi-well drilling programme
which includes the recompletion of Ntorya 1. The contingent
consideration of $0.5 million on completion of drilling the
Ntorya-2 well and $4 million after 30 days production has been
achieved from the field would further support the Company's short
and medium-term cash requirements. As a result of the farm-out
agreement reached concurrently with Solo, Solo will receive 25% of
the above considerations directly from Aminex.
Aminex has contracted North Sea Well Engineering Ltd.
("Norwell") to manage the Ntorya-2 and Ntorya-3 well planning,
which is currently ongoing as well as the planning for a workover
of the Ntorya-1 well. In 2012 the Ntorya-1 discovery well in the
Ruvuma PSA tested 20 MMcfd together with 139 barrels of associated
condensate. Ntorya-1 is currently suspended awaiting workover to
recomplete the well. Early summer the management of Aminex took the
decision to allow for pressure build up to occur within the well to
see if it would be suitable candidate for re-entry and eventual
production. The results of the analysis indicate that the desired
results were achieved and the well is indeed a viable re-entry
candidate. Ntorya-2, located just west and up-dip of Ntorya-1, will
target tertiary reservoirs and the same Cretaceous sandstones as
found in the Ntorya-1 well. Ntorya-1 encountered 25-metres of gross
pay of which 3.5 metres was tested while a further 16.5-metres was
considered to be below the gas down to water contact. The primary
objective for Ntorya-2 will be to test the same net 20-metre sand
interval which is believed to be above the gas down to water
contact at the proposed location. The estimated prospective
resource for the appraisal well is 118 BCF Pmean gas in-place
(management estimate) with a 60% chance of success. Following the
Ntorya 1 recompletion and the Ntorya 2 well, the Ntorya-3 will be
drilled in the main Cretaceous channel fairway. The Company is
currently in the final phases of a tendering process to choose a
drilling contractor and will update shareholders once that has been
announced.
An updated resource report by LR Senergy, completed in May 2015,
has assigned 70 BCF best estimate contingent resources or 153 BCF
Pmean resources to the Ntorya-1 gas discovery. The up-dip part of
Ntorya, in addition to the gas discovery, has been ascribed a
further 945 Pmean BCF gas in-place for a total of 1.1 TCF Pmean gas
in-place for the greater Ntorya gas field.
While there are further exploration drilling commitments
required by December 2016 in addition to the current drilling
plans, Aminex is currently in discussions with the TPDC to
facilitate and accelerate the development of Ntorya and meet the
remaining obligations.
NYUNI AREA PSA (operator)
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