Wentworth Resources (AIM: WEN), the independent, Tanzania-focused natural gas production company, is pleased to announce its interim financial results for the six months ended 30 June 2020.
All dollar values are expressed in US dollars unless stated otherwise.
HIGHLIGHTS
2020 Outlook
The health and safety of our employees is our priority and robust precautionary measures remain in place to ensure the continued safety of our staff; there have been zero reported cases of COVID-19 at Mnazi Bay
Mnazi Bay remains fully operational, with no adverse impact on supply from the pandemic
Marginal decline in industrial demand due to weakened activity as a result of COVID-19 with 2020 production guidance slightly adjusted to 60-70 MMscf/day (gross)
Tanzania's economy has remained resilient with recent data from the African Development Bank suggesting Tanzania's projected GDP growth in 2020 is set to be the highest in the East Africa region at 5.2%
Production volumes are expected to be typically higher in H2 2020 than H1 2020 due to the end of the rainy season and the lifting of COVID-19 restrictions in Tanzania
Mnazi Bay is well-positioned to supply increased gas volumes and support demand growth in H2 2020 and into 2021 with the capacity to supply volumes of 100 MMscf/day (gross)
Financial
Interim dividend of $1.2 million declared, an increase of 20% from H1 2019 ($1.0 million), bringing the total dividend distribution declared in the last 12 months to $4.2 million
Revenues of $8.3 million, underpinned by long-term fixed price contracts with the Government of the United Republic of Tanzania
Adjusted EBITDAX of $4.1 million (H1 2019: $3.3 million)
Debt free with $16.7 million cash on hand at 2 September 2020
Tanzania Petroleum Development Corporation ('TPDC') now fully current with payments
Continued commitment from Tanzania Electric Supply Company ('TANESCO') to settle all remaining arrears with payments resuming in August
Katherine Roe, CEO, commented: 'Despite a challenging macroeconomic environment due to the ongoing impacts of the COVID-19 pandemic, Wentworth has continued to demonstrate business resilience, robust financial and operational performance which has underpinned our decision to increase our interim dividend.
Having only launched our sustainable dividend policy in Q3 2019, we're delighted to have now declared three dividend payments within the last twelve months returning $4.2m in total to shareholders. This latest interim dividend also represents a 20% increase year-on-year from our inaugural dividend in September last year and demonstrates how our sustainable business model can withstand these global economic shocks.
Looking ahead to the second half of 2020, with Tanzania now returning gradually to business-as-usual and following unprecedentedly high levels of rainfall in the H1 2020, we expect to see an increase in demand for natural gas during the remaining part of this year.
Responsible and sustainable growth that creates value for all our stakeholders remains our priority. We are proud to be a Tanzanian business that is committed to playing a leading role in closing the country's energy access gap through low-carbon solutions as it seeks to deliver universal access by 2030. Through the provision of reliable, affordable and low-carbon power we have a significant opportunity to deliver transformational change for the people of Tanzania and to support the ongoing socio-economic development of the country.'
Contact:
Katherine Roe
Tel: +44 (0) 7841 087 230
Email: katherine.roe@wentplc.com
About Wentworth Resources
Wentworth Resources plc (AIM-listed: 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.
The power demand base in-country is growing and with an ambitious universal energy access target set by the Government for 2030, Wentworth has a vital role to play in increasing access by ensuring a reliable, affordable and growing supply of natural gas into the local market.
In 2019, Wentworth launched its dividend policy and remains committed to responsible growth that maintains returns for shareholders.
Incorporation and basis of preparation
Wentworth Resources PLC ('Wentworth' or the 'Company') is an East Africa-focused upstream oil and natural gas company. These unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries (collectively referred to as 'Wentworth Group of Companies' or the 'Group'). The Company is actively involved in oil and gas exploration, development and production operations. Wentworth is incorporated in Jersey and shares of the Company as at 30 June 2020 were listed on the AIM Market of the London Stock Exchange (ticker: WEN).
The Company's principal place of business is located at 4th Floor, St Paul's Gate, 22-24 New Street, Jersey JE1 4TR.
The Company maintains offices in Dar es Salaam, United Republic of Tanzania and London, United Kingdom.
Summary of significant accounting policies
Use of judgements and estimates
In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the 2019 annual report and financial statements.
Going concern
With the world currently struggling to come to terms with the unprecedented events of the Covid-19 pandemic and the risk presented to the continued health and well-being of our workforce alongside the disruption that preventative measures have had on the global supply chain in placing restrictions on the transportation of goods, services and personnel set to continue for some time to come, considerable time and resource have been allocated by Directors and senior management in ensuring that Wentworth is best placed to be able to continue to safely produce gas from Mnazi Bay alongside the Operator, Maurel et Prom. Given the essential nature of services provided and the forecasted impact of the virus in the country, the Group notes that an interruption of production and unavailability of key workforce is remote. The Directors however are mindful of the speed with which circumstances may change, both for the better or for the worse, and all modelling is based on information that we currently have available to us.
The Group has a long established and collaborative relationship with the Government of the United Republic of Tanzania, having operated in-country for many years, however the Directors do recognise that the Group is dependent upon the continued collection of gas sales invoices and ongoing operational support of the Government as its sole gas sales customer through its operating agencies TPDC and TANESCO.
The Directors have, therefore, judged that on a risk-weighted basis which takes into consideration both the probability of occurrence and an estimate of the financial impact, the continued timely settlement of gas-sales invoices by the Government of the United Republic of Tanzania continues to be the most significant risk currently faced by the Group. To this end, should no settlement of future gas sales invoices be received from the date of approval of these financial statements, we have assessed that the Group would be able to continue to operate for a period of up to 12-months without the need for a further injection of working capital.
Further to this, based on the application of reasonable and foreseeable sensitivities, which include potential changes in demand, capital spend, operating costs, the Directors believe that the Group is well placed to manage its financial exposures. The Directors have judged that owing to a combination of the stability of this relationship which has seen payment terms continue to improve during H1 2020 and its much improved financial position having fully repaid all of its fixed-term debt in January 2020, the Group has sufficient cash resources for its working capital needs, committed capital and operational expenditure programmes for at least the next 12-months based on the Directors' worst case scenario of no settlement of future gas sales as noted above.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Basis of presentation and statement of compliance
These unaudited condensed consolidated interim financial statements have been prepared by management in accordance with International Accounting Standard 34, 'Interim Financial Reporting'. The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
These unaudited condensed consolidated interim financial statements have been prepared following the same accounting policies as the annual audited consolidated financial statements for the year ended 31 December 2019 and should be read in conjunction with the annual audited consolidated financial statements and the notes thereto. These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on 2 September 2020. The disclosures provided below are incremental to those included in the 2019 annual consolidated financial statements.
The information for the year ended 31 December 2019 included in the report was derived from the statutory accounts for that year which were prepared in accordance with International Financial Reporting Standards ('IFRSs') issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations committee ('IFRIC') of the IASB as adopted by the EU up to 31 December 2019, a copy of which has been delivered to the Registrar of Companies. The auditor's opinion in relation to those accounts was unqualified, did not draw attention to any matters by way of emphasis and also did not contain a statement under section 498 (2) or 498 (3) if the Companies Act 2006.
WENTWORTH RESOURCES 