WTI $93.10 +$3.22, Brent $94.44 +$3.03, Diff -$1.34 -19c, NG $3.94 -2c, UKNG 200.0p +25p

Oil price

When I was writing Friday’s blog it looked like the oil price would at last have a down week, although I am still bullish on fundamentals a breather seemed on the cards. And then around 8pm I started to see massive activity in the oil price which I traced back to the US comments about The Ukraine and its potential imminence.

Cue a rise of over three dollars as above and both WTI (79c) and Brent ($1.17) were up on the week. So this week becomes very crucial with regard to Russia of course and how we get out of it. Interestingly the big question is actually right now what does the oil price do under both scenarios? It is tempting to say down under a settlement and up on a war but as usual it may not be that easy.

There is a war premium in the price right now, maybe around $3 but markets are still underlying very tight and I don’t expect a huge fall in the event of a stand-off. I continue to recommend that Opec+ will decide the oil price in coming months, despite stories of oversupply I consider that we have low inventories and little spare capacity elsewhere.

It’s a bit late now but for those of us who have repeatedly tried to influence policy might just get a hearing. Use less imported hydrocarbons from suspect sources, realise that home produced oil and gas is more valuable than from elsewhere and also use our storage facilities in the summer. No, that’s way too sensible to put into practise…

Wentworth Resources

Wentworth has announced the results of the year-end Competent Persons Report for 2021.

Highlights

·    Wentworth’s share of gross 2P Reserves as at 31 December 2021 estimated to be 135.2 Bcf (22.5 MMboe) with an after-tax NPV10 of US$108.1 million

·    Gross full-year 2021 production was 29.8 Bcf representing an approximate 24% increase over 2020 gross production volumes

·    Remaining economically recoverable gross 2P sales gas for the Mnazi Bay Gas field estimated at 423.3 Bcf

·    Cumulative Mnazi Bay Field production to the end of 2021 is 154.4 Bcf 

·    Mnazi Bay Facility safely operated for over 2,000 days (or 5.5 years) without a lost time incident

·    Employee safety remains a top priority and robust precautionary measures remain in place relating to COVID-19

Reserves Update

RPS Energy Canada Ltd, an independent third-party reserves evaluator, completed a Competent Persons Report  for the Company’s interest in the Mnazi Bay licence with an effective date of 31 December 2021.  The updated full field 2P gross reserves for the Mnazi Bay gas field are 423.3 Bcf (83.6 Bcf being Wentworth’s share of net reserves).  This compares to 445.3 Bcf as at 31 December 2020 reflecting a year of strong production. Full-year 2021 gross production increased 24% to 29.8 Bcf (FY 2020: 23.9 Bcf).

The after-tax NPV10 for the 2P reserves as at 31 December 2021 is US$108.1 million net to Wentworth.

During 2021, Wentworth returned US$3.9 million to shareholders, made further capital returns via share buy-backs of US$2.0 million and increased its cash position (unaudited) to US$22.8 million as at 31 December 2021 (2020: US$17.8 million).

 

Reserves Summary

as at December 31, 2021

Reserves Category

Mnazi Bay Field

Wentworth 31.94% WI

Gross(1) Reserves

Gross(1) Reserves

Net(2) Reserves

Sales Gas

BOE

Sales Gas

BOE

Sales Gas

BOE

(Bscf)

(MMbbl)

(Bscf)

(MMbbl)

(Bscf)

(MMbbl)

PDP

  81.9

  13.6

  26.1

  4.4

  23.0

  3.8

PD

  81.9

  13.6

  26.1

  4.4

  23.0

  3.8

1P

  221.7

  37.0

  70.8

  11.8

  46.9

  7.8

2P

  423.3

  70.5

  135.2

  22.5

  83.6

  13.9

3P

  671.9

  112.0

  214.6

  35.8

  126.7

  21.1

(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 for Mnazi Bay

as at December 31, 2021

Contracted Price Forecast 2022-01-01

NPV After Tax

Reserve Category

Million US$

0%

5%

10%

15%

20%

PROVED

Producing

  45.0

  41.2

  37.9

  35.0

  32.5

Non Producing

  –

  –

  –

  –

  –

Undeveloped

  60.2

  47.7

  38.8

  32.2

  27.2

TOTAL PROVED

  105.2

  88.9

  76.6

  67.2

  59.7

Probable

  74.5

  46.9

  31.4

  22.3

  16.7

PROVED + PROBABLE

  197.7

  135.8

  108.1

  89.5

  76.4

Possible

  100.4

  61.7

  42.6

  32.1

  25.8

PROVED + PROBABLE + POSSIBLE

  280.2

  197.5

  150.6

  121.6

  102.2

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

Katherine Roe, CEO, commented:

“Our 2021 CPR reconfirms the long-term potential at Mnazi Bay, which continues to go from strength-to-strength having produced impressive volumes last year. The upwards revision in PDP reserves, after accounting for production, reflects our strong technical fundamentals as well as the hard work and ongoing investment of the Mnazi Bay JV partners.

“Our robust operations and reserves potential will enable us to continue supplying the people of Tanzania with a low-carbon, sustainable energy supply while returning capital to shareholders through our progressive dividend policy for the long-term.”

This is a really impressive CPR especially given that production last year was so high and reflects on the high quality of the asset at Mnazi Bay. Any worries people may have had with respect to depletion and longevity of the reserves in Tanzania can now be parked for the very long term. 

As CEO Katherine Roe states the really exciting part of the document was the ‘bump’ in PDP which comes from opening up new zones and is proving that the reservoir is without any doubt performing better than expectations which is  exceptionally good news and proves that this is an asset that just keeps on giving. 

I remain very positive about Wentworth shares which are, apart from anything else, backed by a fantastic asset and working in a country that is determined to make full use of it to develop power supplies for Tanzanians. 

President Energy

President has announced unaudited 2021 trading highlights together with an updated Argentine reserves report as at 31 December 2021.

2021 Unaudited Trading Highlights

·      Turnover of approximately US$34.2 million, without any consistent contribution from the Louisiana assets

 ·      Average Group production of 2,473 boepd (2020: 2,714 boepd) with no material contribution from Louisiana

 ·      Estimated adjusted EBITDA in Argentina of US$9.5 million (calculated on the basis of Group financial reporting)

 ·      US$14.5 million of free cash generation from operations (after workovers) and treasury income

 ·      Group results are expected to include a benefit of US$13 million to the profit and loss account arising from the spin out of Atome Energy PLC and dividend distribution to shareholders of President which represented a yield of approximately 20 per cent

 ·      The Company retains a 27.9% holding in Atome Energy PLC which at 31 December had a market value of US$9.8 million

Argentine Reserves as at 31 December 2021

·      President’s 2P reserves in Argentina as at the year end have been assessed at a robust 24.4 MMboe

 ·      Argentina reserves and contingent resources have been independently certified according to Argentinian Law as at 31 December 2021, after taking into account production in the year

 ·      Group net 2P Reserves of over 24 MMboe limited to current life remaining of concessions taking no account of any future extension of such contracts

 ·      Significant contingent resources in producing areas awaiting conversion to reserves after contract terms are prolonged

 ·      The reserves reported exclude the internally estimated Paraguay exploration PMean of 536 MMbo unrisked oil-in-place that are in addition to the figures reported today; drilling of a complex estimated to contain 230 MMbo of that total will be undertaken in 2022 in a joint venture with CPC, the state energy company of Taiwan.

                  

YE2021 Reserves

(MMboe)

YE2020 Reserves

(MMboe)

1P

2P

3P

1P

2P

3P

Puesto Guardian, Salta

6.2

11.7

19.4

5.7

12.7

20.8

Rio Negro, Neuquen Basin

7.3

12.7

15.3

7.6

10.9

13.2

Total Argentina

13.5

24.4

34.7

13.3

23.6

34.0

Peter Levine, Chairman, commented

“Whilst trading in 2021 was solid, despite the static production taking into account the loss in all material respects of Louisiana’s contribution in the year, we still showed a healthy, operationally profitable business

“On a strategic level, we produced material returns for our shareholders through the spin out and IPO of Atome Energy and successfully, notwithstanding the pandemic, farmed out our Paraguay exploration prospect to the state energy company of Taiwan

“It is important to ensure that going forward we leave no stone unturned to achieve optimum performance and delivery for our capital expenditure

“With one new well in Salta on stream and still stabilising, the second to be online at the end of this week and the third to be drilled this month, Salta commercial oil production is already increasing and is expected to continue as the other new wells come on. The waterflood secondary recovery project in Rio Negro scheduled to start within 6 months is very promising for both stabilising natural decline and increasing the amount of recoverable oil. Work is progressing to prepare for the high impact exploration well in Paraguay to be drilled this year targeting, based on internal estimates, 230 million barrels of unrisked oil in place

“We therefore look forward to an improved performance this year with regular newsflow keeping the market updated”.

President has delivered in the last year and that is without firing on all barrels, the existing portfolio is doing well and of course should build through this year. Add to that the potential from Paraguay and others and President shares  should  be much higher. 

And finally…

That was a packed weekend of sport, the racing is still in the can.

The Six Nations sort of went as expected although to be fair Scotland should have won in Cardiff and interestingly it was a yellow card that hit them just as it had hit England at Murrayfield, result the same 20-17 to the home side. France beat Ireland and these two teams must have played the decider unless France go off the rails as sometimes they used to, not so likely now though. Finally England  beat Italy as they should have but to be honest another 30 points should have been scored. 7

Superbowl 56 was nicknamed Cryptobowl as many adverts were for M Mouse currencies etc and a few went down during the process which rather defeated the whole shebang. On the field the Rams beat the Bengals 23-20 in what seems like a  close finish.

In the Prem both the Noisy Neighbours and Liverpool won, Chelsea werent playing as they were in the desert winning the useless world team cup. The Red Devils and the Hammers both drew, the Gooners didnt play leaving the top as you were.

So, my suggestion that Adele might win more Brits than team GBR is still a live bet, 10 days in and the Brits havent yet troubled the scorers…Meanwhile the Court for Arbitration has let off the 15 year old drug cheat and allowed her to continue on the ice on the proviso that if she wins anything there will be no medal ceremony, pass the sick bag…