Tanzania

Ntorya-1 Test Results

http://www.investegate.co.uk/Article.aspx?id=201206280700043003G

The well flowed gas at a maximum rate of 20.1 million standard cubic feet per day (the equivalent of 3,350 barrels of oil per day) and an estimated 139 barrels per day of 48 degrees API condensate through a 1" choke. Small volumes of formation water were also produced. The data gathered during testing indicates an initial reservoir pressure of 5,424psi. Detailed analysis of the pressure data and samples gathered during the testing operation will be carried out in the coming weeks.

In reply to mangotree, post #589

The silence speaks volumes.

In reply to blackgold00, post #590

Not to me it dosen't!

Unfortunately, from the POV of Stockopedia, most of the discussion (and an awful lot of "noise") is going on elsewhere. I guess we need to get some more meaningful posting going on over here.

marben,

please give me a clue so I can go and read some of the discussion ! is it the fool ? please not advfn ?

thanks K

I have great respect for many here at stockopedia, especially knowing of their long relation and knowledge of Aminex and knowing that one at least is very much tide by what he can express. I take the silence as expressing a quite confidence that all will be revealed in time, and Aminex's true potential and value will out. As you say Marben, there is one hell of a lot of noise elsewhere.

In reply to kenobi, post #593

please give me a clue so I can go and read some of the discussion ! is it the fool ? please not advfn ?

'fraid so! There are some useful contributions from Mark, JT, and a few others, and a load of the usual space wasters and brain rotters you have to plough through - at least the signal to noise ratio on the AEX board is a few orders of magnitude better than the GKP boards! If you ignore a stupid number of contributors it makes it all a lot more manageable, and you are unlikely to miss anything worth reading.

Were I not heavily loaded up with AEX already, sadly at an average somewhere above the current price, I would be buying now - and may still top up. The news is clearly excellent, it's certainly at the top end of any sensible expectation, and I'm amazed the share price has done so little. 

Of course there is a long way to go, and a great deal of uncertainty. Hopefully we'll get a better view once the reserves report is out, but either way there is clearly going to have to be further seismic and drilling before anything can be booked, or even defined with any great clarity. That I suspect is one of the reasons why there is so little interest at present, along with market conditions (strongly risk off) and a history of disappointments. However, I think it's pretty clear now that there is a strong likelihood of something commericial, possible significant, and the some significant derisking of the rest of the Ruvuma blocks/prospects, so I think we are well on the way towards a farm out on reasonable/good terms which to me is the critical step in moving this all forward.

It's a shame we will have to wait for the transition zone seismic on Nyuni, but a good reserves report, and a shift in market mood could see the start of a sensible revaluation here. Though I think patience is certainly going to be called for - don't listen to those on ADVFN who are suggesting up to 20p next week! 

In reply to kenobi, post #593

Yeah, 'fraid so, sorry K. Unfortunately, that's where most of the discussion is at present. I'm mainly replying to posts that I feel are either missing key info, or that I think are wrong. Whilst there's a fair slice of nonsense and minute-by-minute share price commentary, the quality of discussion is not as bad as it has been, at times.

If I have something new and substantive to post, I will do so here. ;0) 

The main thing is that we should have the ISIS report shortly, which will shed more light on what it looks like we have at Ntorya, as well as updating on Nyuni after the recent well and re-entry of Nyuni-1A.

Cheers,

Mark

PS I don't rule 20p next week out, though obv. I'm not suggesting it's likely to happen either! Is a market cap of £150m unreasonable, if ISIS were to indicate a GIIP resource of 2tcf?

OK, guess I ought to post the source of the excitement on ADVFN here (besides the Ntorya result). It's slide 12 from this presentation by neighbour Wentworth Resources:

The slide was published before the Ntorya result. Thanks to ADVFN poster Talkman, who I met at the AGM and who drew the slide to my attention. It suggests that the structure Ntorya-1 has tagged is much larger than anything in Mnazi Bay. Putting a scale on the slide, it suggests that the structure stretches for more than 20km, all the way from Ntorya, into Wentworth's neighbouring licence. That would most likely be a multi-tcf structure - a massive stratigraphic trap. The flow and pressure results of Ntorya-2 seem consistent (to my inexpert knowledge) with that interpretation.

If ISIS agree with Wentworth's interpretation, the market could but in for rather a nice surprise. ;0)

Cheers,

Mark

In reply to marben100, post #597

Hi Mark

OK, guess I ought to post the source of the excitement on ADVFN here

My probelm with getting too excited over that diagram (which could be very exciting, if it's at all accurate) is that Ntorya was a cretaceous discovery, whereas Wentworth's "blob" is in the Eocene! Make of it what you will, but it suggests that caution is required. I do wonder if it's possible that diagram is based on the predrill seismic which was looking for a higher target? If so I don't think we should be giving it too much credence, since there was such a large, apparent, mismatch between the seismic and the drilll result.

Hopefully ISIS will clarify things a bit shortly, though my suspicion would be that at this stage any conclusions are going to be pretty speculative and we are going to have to wait at least a few months for new seismic to get a clearer picture. 

Peter

Hi Peter,

Thanks for that, which I hadn't spotted!

However, it could just be that the depth from the seismic had been misinterpreted. The Cretaceous lies just below the Eocene shown in Wentworth's slide. As you say, until we have something definitive from ISIS - or it may need more seismic to be definitive - the interpretation is speculative. But both the actual flow test, and Stuard Detmar's words in an interview after the result was announced are encouraging:

"The fact that we're flowing these kinds of volumes from only three meters of net pay is very, very encouraging, and suggests that there's something a good deal larger. We must have just drilled into a narrow down-dip part of a larger structure," Mr. Detmer said. 

Hopefully, we'll have a clearer idea soon enough.

Cheers,

Mark

Based on this very recent article, I've done a "back of the fag packet" calculation which troubles me sightly.

According to the article, new pipeline infrastructure is to be built with a credit of US$1.2bn for gas export from Mtwara and from Songo Songo/Nyuni/Kiliwani. For that credit to be commercial, I guess the infrastructure would need to generate revenues ITRO $200m p.a. (depends on discount rate you use, obviously). The pipeline capacity will be 210mmscf/d, so that means a ballpark pipeline tariff of $1m p.a. per mmscf/d.

I work that out as ~$3/mscf (i.e. $3,000/d for 1mmscf/d). A pretty hefty chunk out of the sales price in Dar.

Do others agree with my sums?

Cheers,

Mark

In reply to marben100, post #600

Broadly, yes.

I won't get involved with the details of discount rates etc, but the general point that tariffs will take a significant chunk out of the sales price seems correct. It would be interesting to hear JPGH's comments, as he has some experience of these sorts of costings.

In reply to marben100, post #600

I work that out as ~$3/mscf (i.e. $3,000/d for 1mmscf/d). A pretty hefty chunk out of the sales price in Dar.

Do others agree with my sums?

Not really ;-)

On your numbers it works out at $2.60/mcf. However, I think you can take with some certainty that this Chinese funding is going to be on pretty favourable terms, as leverage leading to Chinese fingers in other Tanzanian pies. In any event, I'd have thought the pipeline economics would be based on at least 25 year term, so payback likely to be longer than you imply. Furthermore, gas from Kilwani/Nyuni will only utilise part of the new pipeline, hence lesser tariff than that gas from Manzai (and Ntorya) travelling the full length. I'd also note that Exim's funding appears to include gas processing facilities(according to AEX presentations). No idea whether that is purely pipeline related or something else.

Re Ntorya, it appears to be a stratigraphic trap so given the good test result from such a thin sand is encouraging. Let's hope the 'field' does extend 20km and gets thicker.

In the words of the old Amex ad... "that'll do nicely, sir": http://www.investegate.co.uk/Article.aspx?id=201207020700115849G

Headline results are as follows:

 

· 11.4 TCF total discovered and undiscovered mean Gas Initially-in-Place* for the Ruvuma and Nyuni Area PSAs combined 

 

RUVUMA PSA 

· Total 1.17 TCF mean unrisked Gas Initially-in-Place at Ntorya of which 178 billion cubic feet (BCF) is discovered 

· Total undiscovered mean Gas Initially-in-Place for all leads of 5.57 TCF 

· Total discovered and undiscovered mean Gas Initially-in-Place for the Ruvuma PSA area of 5.75 TCF

 

NYUNI PSA 

· Total undiscovered mean Gas Initially-in-Place for all structural leads of 2.44 TCF

 · Total undiscovered mean Gas Initially-in-Place for all stratigraphic leads of 3.23 TCF

 · Total undiscovered mean Gas Initially-in-Place for all leads of 5.67 TCF

 ...

*Note: The terms 'Discovered and Undiscovered Gas Initially-in-Place are used in accordance with the SPE Petroleum Resources Management System classification of 2007. Previously reported Contingent and Prospective Gas Initially-in-Place numbers are equivalent to the Discovered and Undiscovered GIIP classification.

My thoughts FWTW... A very satisfactory 178bcf of contingent resource assigned to Ntorya, with around 1tcf of further potential from prospective Ntorya resources. A further 2.62tcf in a new prospect to the west, 'Namisange' - I presume that corresponds to the shallower red blob, shown to the west in Wentworth's diagram.

Slightly disappointing that Nyuni re-evaluation, in the light of Nyuni-2 and -1A re-evaluation has led to the removal of the previous 233bcf Aptian/Albian contingent resource - though Brian did say that he was surprised that ISIS had granted that originally. Never mind, I'll happily swap that for the clear-cut Ntorya discovery - plus the other new prospects identified in Nyuni.

Whoa...

With the latest reprocessed seismic and the benefit of courtesy seismic data in the deepwater portion of the Nyuni Area Licence, the stratigraphic potential of the block has been re-evaluated with very significant potential identified in the deepwater area on the east side of the Licence. In particular, a lead identified by the operator of the adjoining East Pande Licence, has been mapped extending into the Nyuni Licence. Lead 3 has an estimated 1.3 TCF undiscovered mean GIIP unrisked, within the Nyuni Licence. Other stratigraphic leads in the transition zone areas on the shelf identified from multiple seismic criteria including amplitude anomalies at various Tertiary and Upper Cretaceous levels, have a combined undiscovered mean GIIP of 1.9 TCF unrisked. The aggregate total of all stratigraphic leads mapped in the Nyuni Area amounts to 3.2 TCF.

Very nice. Presumably the "courtesy seismic" must be from Ophir. ;0) ...but:

With this updated evaluation of the Nyuni Area Licence, Aminex is well positioned to high-grade the structural and stratigraphic potential on the block with the transition zone seismic and planned deep water 2D seismic to be acquired in 2012, leading to a new drilling campaign in 2014. 

So, we'll have to wait for a couple of years before drilling.

I wonder whether this plethora of leads will lead to a change in Sturad's strategy? In particular, will he now be seeking other farm-in opportunities elsewhere in Africa? The focus is now very much on what farm-out terms can be negotiated. Over to Stuard.

Cheers,

Mark

In reply to marben100, post #603

That will indeed do nicely!

The market seems somewhat underwhelmed at present. That may be due to the downgrade at Nyuni, but as you say, I'd far rather have 178bcf contingent, which has flowed well than 233bcf they had never managed to get to flow (for a variety of reasons). It's certainly more than I'd expected to see as discovered/contingent at Ntorya at this stage.

Peter

I'd say the market is underwhelmed because nothing is going to be drilled until 2014. Given Aminex's history the prudent investor would push that back to 2015. We can divest US assets, improve the seismic (which was obviously pretty poor previously - why I didn't realise this earlier given we never seemed to discover anything in Tanzania where we actually looked for it) and bring in some partners. But nothing tells the story more clearly than a successful, well funded drilling campaign. That is up to 3 years away - fortunes are won and lost in such a period so it's back to the bottom draw for the most unsuccessful investment I've ever made. I still believe it could go big one day - though personally speaking it might be more appropriate in a SIPP than and ISA!)

Conversely, Neil Ritsom of Solo Oil states he hopes to drill again next year in this interview:

http://www.youtube.com/watch?v=oxGHu_82r_8

In reply to Jimla, post #605

Jimla, it's only NYUNI that won't be drilled again before 2014. Aminex have said nothing, so far, about drilling in Ruvuma. SD was certainly intending to drill that in 2013 (licence requirements are for two wells to be drilled in 2013). He also stated that he wants the company to be drilling 7-10 wells per year. Watch this space, I suggest. ;0)

I seem to remember lots of posts in Autumn 11 stating that the new Mtwara pipeline would be up and running in 2012. It now appears, from today's RNS that my suggested timetable - completion late 2014, is acknowledged as realistic.

FWIW, I've always thought that Brian Hall was a realistic, but unlucky CEO. Don't know what to think about the new man yet.
Regards.