Wentworth Resources : Operational and Reserves Update

RNS Number : 6565B

Wentworth Resources PLC

03 February 2020

PRESS RELEASE

3 February 2020

WENTWORTH RESOURCES PLC ("Wentworth" or the "Company")

Operational and Reserves Update

Wentworth (AIM: WEN), the AIM listed independent, East Africa-focused natural gas company announces the following operational and reserves update.

Highlights

• 2019 full year average daily production from Mnazi Bay of 70.29 MMscf/d (gross)
• Mnazi Bay production 2020 production guidance 65 - 75 MMscf/d (gross)
• MB-2flowline repaired and MB-4 Lower Mnazi Bay recompleted, increasing operational flexibility and enabling field to produce at sustained rates > 100 MMscf/d
• Final term loan debt repayment made 31 January 2020
• End 2019 net cash position of $13.5m
• Wentworth's share of Gross 2P Reserves as at 31 December 2019 estimated by RPS to be 95.1 Bcf (15.8 mmboe) with a post-tax NPV10 of $118.6 million

Mnazi Bay Operations

Full year average production from Mnazi Bay for 2019 was 70.29 MMscf/d (gross), at the mid-point of the revised guidance range of 68 - 72 MMscf/d issued on 19 November 2019. This was despite several challenges during the year, including abnormally high rainfall resulting in hydro-power displacing gas-generated power, increased competitive gas supply from the Songo Songo field into the National Natural Gas Infrastructure ("NNGI") pipeline, and the temporary shut-in of the MB-2 well.

Recent operational highlights include:

• The MB-2 flowline repairs were completed and the well was returned to production on 21 December 2019; and
• The MB-4 was recompleted to include access to the Lower Mnazi Bay sands, which has increased the production potential of the well by c. 15 MMscf/d.

Completion of the MB-2 flowline repairs and the recompletion of the MB-4 well is expected to allow the JV Partners to sustainably supply gas at rates in excess of 100 MMscf/d to meet the demand needs of Tanzania.

Mnazi Bay Operational Outlook

Modest growth in gas-fired power generation is likely to be offset by continued strong hydro-power, a product of unusually high rainfall outside the normal wet season and continued competitive gas from Songo Songo:

• In 2019, both the long (April-June) and short (December) rainy seasons had more than twice the total rainfall and had a longer duration than any corresponding period during the previous decade. In January 2020, rainfall totals have been above long-term averages and have resulted in subdued gas demand. If rainfall totals are more similar to those observed between 2008-2018, there will be potential for higher demand, and thus higher gas deliveries.

· As previously stated, Pan Africa Energy Tanzania ("PAET") began gas sales into the NNGI in December 2018 under a new Gas Sales Agreement ("GSA"), which provides for gas sales of 20 -30 MMscf/d. The allocation between Mnazi Bay and Songo Songo gas to date suggests that increased demand will be split proportionate to our GSA totals until the upper end of the PAET GSA is met, at which point management expects that additional demand will be supplied by Mnazi Bay.

• In September 2019, the JV Partners reached a full GSA with Tanzania Petroleum Development Company ("TPDC"), which includes a take-or-pay provision at 85 per cent. of the daily committed quotient ("DCQ"). The DCQ was mutually agreed at 80 MMsf/d for 2020, which means that if annual volumes fall below 68 MMscf/day the take-or-pay clause will take effect. This excludes 2 - 2.5 MMscf/d of gas sold to Mtwara.

Accordingly, guidance for 2020 has been set at 65 - 75 MMscf/d (gross) and will be reviewed at the half year point, after the end of the typical longer rainy season. The JV Partners have agreed a limited 2020 firm work programme totaling approximately $4.6 million net to Wentworth.

Financial Update

The Company continues to receive consistent monthly payments for gas sales with receivables from TPDC now standing at just one month. As anticipated, the Company has now fully repaid its term loan, having made its final repayment of $1.67 million plus interest on 31 January 2020. The Company's net cash balance at 31 December 2019 was $13.5 million. In accordance with the Company's dividend policy, established last year, Wentworth expects to declare its final dividend for 2019 with the Company's preliminary results in April.

Reserves Update

RPS Group, an independent third party reserves evaluator, performed a Competent Persons Report ("CPR") for the Company with an effective date of 31 December 2019. The updated full field 2P gross reserves for Mnazi Bay are 468.9 Bcf (95.1 Bcf being Wentworth's share of net reserves). This compares to 481.9 Bcf at 31 December 2018, despite production throughout 2019 of

25.7 Bcf. The fact that reserves decreased by less than production is attributable to the stronger than anticipated pressures measured across the field, which indicates larger in-place and recoverable volumes.

The NPV10 after tax for the 2P reserves at 31 December 2019 is $118.6 million net to Wentworth. This compares to $128.7 million for 2018. It should be noted that during 2019, Wentworth increased its cash position by $4.0 million and made total debt repayments of $7.3 million (including interest), while returning $1.0 million to shareholders through its maiden interim dividend.

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Reserves Summary for Mnazi Bay

as at December 31, 2019

	Field		Wentworth 31.94% WI
	Gross (1) Reserves	Gross (1) Reserves	Net (2) Reserves
Reserves Category	Sales	BOE	Sales	BOE	Sales	BOE
	Gas	(MMbbl)	Gas	(MMbbl)	Gas	(MMbbl)
	(Bscf)		(Bscf)		(Bscf)
Proved Developed Producing	57.9	9.6	18.5	3.1	15.1	2.5
(PDP)
Proved Developed Non-	69.9	11.6	22.3	3.7	18.0	3.0
Producing (PDNP)
Total Proved Developed	127.7	21.3	40.8	6.8	33.2	5.5
(PD)
Proved Undeveloped	160.6	26.8	51.3	8.5	29.8	5.0
Total Proved (1P)	288.3	48.1	92.1	15.3	63.0	10.5
Proved + Probable (2P)	468.9	78.1	149.8	25.0	95.1	15.8
Proved + Probable +	725.7	120.9	231.8	38.6	138.7	23.1
Possible (3P)

⁽¹⁾ Gross Reserves are Company Working Interest Share of Total Field Reserves

⁽²⁾ Net Reserves are calculated as the product of Company Gross Reserves and the ratio of Company net revenue to Company WI share of field gross revenue

Wentworth Resources Working Interest Reserves forMnazi Bay

as at December 31, 2019

RPS Forecast 2020-01-01

Reserves		NPV Before Tax			NPV After Tax
	Million US$			Million US$
Category
0%	5%	10%	15%	20%	0%	5%	10%	15%	20%
PROVED	10.1	10.8	10.8	10.5	10.1	8.9	9.8	10.0	9.7	9.4
Producing
Non Producing	61.0	53.7	47.9	43.2	39.4	56.0	49.4	44.1	39.8	36.3
Undeveloped	71.7	51.4	37.8	28.4	21.8	66.5	47.5	34.8	26.1	19.9
Total Proved	142.8	115.9	96.5	82.2	71.2	131.4	106.7	88.9	75.7	65.6
Probable	71.4	46.2	32.3	24.4	19.8	64.9	42.3	29.7	22.5	18.3
PROVED +	214.2	162.2	128.9	106.6	91.0	196.3	149.0	118.6	98.2	83.9
PROBABLE	106.4	68.1	48.0	36.9	30.2	97.3	62.6	44.2	34.0	27.8
Possible
PROVED +	320.6	230.2	176.9	143.5	121.3	293.6	211.6	162.8	132.2	111.8
PROBABLE +
POSSIBLE

The full CPR is available on the Company's website: www.wentplc/investors/documents.

Katherine Roe, CEO, commented:

"We are pleased that the JV Partners have successfully repaired the MB-2 flowline and recompleted MB-4, which will allow Mnazi Bay to sustainably increase production to satisfy demand from the Tanzanian market. Despite a challenging 2019, we met our revised production guidance and have exited the year in a strong operational position and continue to fully align ourselves with the objectives of the Government and our JV partners. Our balance sheet has continued to strengthen as we have now fully repaid our long-term debt and continue to receive regular payments, enabling the Company to return cash to shareholders via our dividend policy. We look forward to building on this foundation, leveraging our strengthened position in Tanzania and East Africa".

Enquiries:	Katherine Roe,	[e-mail]
Wentworth
	Chief Executive Officer	[phone]
Stifel Nicolaus Europe	Nominated Adviser and Joint	[phone]
Limited	Broker
	Callum Stewart
	Ashton Clanfield
	Simon Mensley
Peel Hunt LLP	Joint Broker	[phone]
	Richard Crichton
	James Bavister
Vigo	Investor Relations Adviser	[phone]
	Patrick d'Ancona
	Chris McMahon

About Wentworth Resources

Wentworth Resources is a publicly traded (AIM: WEN), independent natural gas company with production, exploration and appraisal opportunities for domestic power generation and local industry in the Rovuma Delta Basin of coastal southern Tanzania.

Notes and Glossary

These assessments are made in accordance with the standards defined in the Petroleum Resources Management System (Revised 2018) sponsored by SPE, WPC, AAPG, SPEE, SEG, SPWLA, and EAGE.

Cameron Snow, Head of Subsurface and Business Development, is a geologist with 15 years' experience across North America, South America, Africa, and Europe. He holds a BS in Geology from North Carolina State University, an MS in Geology from Utah State University, a PhD in Geological and Environmental Science from Stanford University, and an MBA from Imperial College London. Mr. Snow has read and approved the technical disclosure in this regulatory announcement.

Bcf/Bscf	Billion standard cubic feet
BOE	Barrels of oil equivalent

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MMbbl	Million barrels
MMboe	Million barrels of oil equivalent
NPV	Net present value (at a specified discount rate and specified
	discount date)
Gross Reserves	Reserves volumes before deductions for royalty
Net Reserves	Reserves volumes after deduction of royalty
1P	Proved Reserves, those quantities of petroleum, which, by
	analysis of geoscience and engineering data, can be
	estimated with reasonable certainty to be commercially
	recoverable, from a given date forward, from known
	reservoirs and under defined economic conditions, operating
	methods, and government regulations.
2P	Proved + Probable Reserves, those additional Reserves
	which analysis of geoscience and engineering data indicate
	are less likely to be recovered than Proved Reserves but
	more certain to be recovered than Possible Reserves. It is
	equally likely that actual remaining quantities recovered will
	be greater than or less than the sum of the estimated Proved
	plus Probable Reserves
3P	Proved + Probable + Possible Reserves, those additional
	reserves which analysis of geoscience and engineering data
	suggest are less likely to be recoverable than Probable
	Reserves.
Reserves	Quantities of petroleum anticipated to be commercially
	recoverable by application of development projects to known
	accumulations from a given date forward under defined
	conditions.

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.

Cautionary note regarding forward-looking statements

This press release may contain certain forward-looking information. The words "expect", "anticipate", believe", "estimate", "may", "will", "should", "intend", "forecast", "plan", and similar expressions are used to identify forward looking information.

The forward-looking statements contained in this press release are based on management's beliefs, estimates and opinions on the date the statements are made in light of management's experience, current conditions and expected future development in the areas in which Wentworth is currently active and other factors management believes are appropriate in the circumstances. Wentworth undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable law.

Readers are cautioned not to place undue reliance on forward-looking information. By their nature, forward-looking statements are subject to numerous assumptions, risks and uncertainties that contribute to the possibility that the predicted outcome will not occur, including some of which are beyond Wentworth's control. These assumptions and risks include, but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in exploration, development and production, delays or changes in plans with respect to exploration or development projects or capital expenditures, the imprecision of resource and reserve estimates, assumptions regarding the timing and costs relating to production and development as well as the availability and price of labour and equipment, volatility of and assumptions regarding commodity prices and exchange rates, marketing and transportation risks, environmental risks, competition, the ability to access sufficient capital from internal and external sources and changes in applicable law. Additionally, there are economic, political, social and other risks inherent in carrying on business in Tanzania. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements.

-Ends-

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