WTI $70.88 -3c, Brent $72.86 +17c, Diff -$1.98 +20c, NG $3.35 +6c, UKNG 69.3p -0.07p

Oil price

Little to add today I’m afraid save that most consensus news shows that global demand will increase in the second half and that the call on Opec will be substantial. It is Day 1 of the 2 day Fed meeting but apart from recognising some inflation there are no calls for any tapering or suchlike come decision day tomorrow.

It is retail gasoline day today, a gallon of Exxon’s finest will rush you $3.069 which is up 3.4c on the week, 4.1c m/m and 97.1c y/y.

Wentworth Resources

Wentworth has announced an operational and financial update ahead of its Annual General Meeting to be held today. The good news is that strong in-country natural gas demand in H1 2021 has enabled an increase in annual average production guidance for 2021 to 70-80 MMscf/day (gross) from 65-75 MMscf/day (gross).

Wentworth and Mnazi Bay JV Partners supply 50% of natural gas production in Tanzania and average daily production year to date of 80.3 MMscf/day (gross), compared with 58.1 MMscf/day (gross) during the same period in 2020, this is despite 2Q being a good quarter for Hydro power.

Demand is there and Wentworth are able to supply it when asked, a field production record for monthly average daily production of 101.85 MMscf/day (gross) in March 2021 and a field production record for daily production rate of 110.65 MMscf/day (gross).

The Mnazi Bay JV Partners have continued to deliver on the 2021 work programme, which is focused on ensuring reliability of supply. This work programme includes maintenance on MS-1X well including casing and flowline valve replacement, refurbishment of the MB-1 well site superstructure and calibration of flowmeters at Gas Processing Facility. In addition, they have an upgrade to the field’s Supervisory Control and Data Acquisition system (SCADA) and a pre-Front End Engineering and Design (FEED) Study on compression.

This has meant a strong financial situation, WRL has declared a final dividend in respect of FY 2020 of 1.0 pence per share ($2.6 million); a total dividend distribution in respect of 2020 of $3.8 million (1.5 pence per share) representing an increase of 27% from 2019 ($3.0 million) and a yield of approximately 6.7% (calculated on an annualised basis). Indeed, this might get better, the company record their ongoing commitment to a ‘progressive capital returns policy’ which should tempt investors in.

Wentworth is debt free with cash on hand of $21.5 million as of 31 May 2021 somewhat ahead of expectations due to the recent supply and continued cost control. The TPDC remains fully current with all invoices for gas sales
and with the TANESCO outstanding receivable of $1.7 million (net to WEN); revised GSA terms now agreed and awaiting TANESCO Board approval clearing the way for payments of arrears to commence.

Wentworth ticks a lot of boxes, firstly the power access gap in Tanzania is growing despite domestic energy supply increasing; transformational growth is needed in domestic energy supply to deliver the Government’s target of universal access by 2030 through low-cost, low carbon solutions that will secure a just transition for Tanzania in line with the UN Sustainable Development Goals.

Natural gas will play a critical role in meeting this target to support cheaper and more reliable electricity as well as facilitating an enabling environment to supplement carbon-free renewable energy systems, such as hydro and solar and replacing carbon-intensive off-grid fuel sources such as HFO and diesel.

As far as ESG is concerned it is surely one of Wentworth’s strengths, ongoing ESG strategy remains a priority following the publication of Wentworth’s inaugural Sustainability Report for 2020; it addresses how Wentworth proactively manages its impacts by upholding relevant international standards and adopting a responsible approach to doing business in Tanzania.

WRL is developing a robust climate strategy is a focus for 2021. With Scope 1 and 2 emissions at 0.22kg CO2e/Mcf (1.3kg CO2e/boe), Wentworth’s emissions profile is one of the lowest in the sector another key point for potential inbound investing.
Katherine Roe, CEO, commented:

“Building on from the successes of last year despite the challenging macroeconomic environment, the first half of 2021 has demonstrated the ongoing resilience and the strength of the fundamentals of our business.
We are delighted to be revising our 2021 production guidance upwards following higher than expected demand in H1 of this year alongside seeing a new record for monthly average daily production of 101.85 MMscf in March.

This increased demand is in part due to a recovery in industrial demand from the impacts of COVID-19 and in part due to lower rainfall in the catchment areas of the hydroelectric
dams. Our gas provides 50% of Tanzanian natural gas power generation demonstrating our critical role in facilitating sustainable energy growth in the country today and going forward.
The Board and I are delighted to be in the final stages of appointing a new independent non-executive director with regional expertise to demonstrate our ongoing commitment to and investment in Tanzania. It’s an exciting time for the country as it looks to accelerate its growth following the global pandemic. We are committed to being a valuable partner in the next phase of its growth story.”

Wentworth really does tick a number of crucial boxes with its business model in Tanzania and should be seeing  significant stock price appreciation. It inhabits a market with strong, increasing demand and a solid, index-linked price scenario in a country with determined Government support. It keeps an eye on potential acquisitions without losing the fact that its own business is hard to better and should an opportunity arise it is strongly financed.

Investors get state of the art ESG, few receivables and a progressive dividend that gives a yield of c. 6.7% and might well return more either by pay-out or capital growth, both are likely. What’s not to like about this company that the market has overlooked lately and should be a go-to investment?

Angus Energy

Angus has announced the acquisition of Alba Mineral Resources plc’s 5% interest in the Brockham Field.  The net consideration after settlement of outstanding amounts and a contribution toward eventual abandonment costs involves a payment by Alba to Angus of £38,400, settled as to £6,400 in cash and £32,000 by the issue of 12,407,910 shares in Alba at the 10 day VWAP of 0.2579p per share representing approximately 0.20% of the share capital of Alba.

 George Lucan, Managing Director, comments: 

“Seismic acquisition at Lidsey is complete and reprocessing of newly acquired and existing lines is underway.  In line with our husbandry of legacy oil assets, this transfer aligns our interest in Lidsey and Brockham fields at 80% with identical partners in each Licence.  It is the Company’s expectation that moderate oil production and the facility of water injection at Brockham, together with 9.7 million barrels of Oil In Place at Lidsey, will represent a good value proposition for shareholders, and for possible farminees, once seismic re-interpretation is complete and permissions are in place for a side-track at Lidsey. “

And finally…

Scotland started their Euro 2020 campaign with a 0-2 defeat to the Czech Republic and head to Wembley for Friday night. Spain could only draw with Sweden 0-0 whilst Poland lost 1-2 to Slovakia. Tonight it’s a real cracker with France v Germany and also Hungary v Portugal.

Royal Ascot starts today under a Government trial scheme and 12/- punters in the course. Expect to see Palace Pier, Battaash and Maven…