Wentworth Resources has reached agreement with Scirocco Energy to acquire its 25% non-operated working interest in the Ruvuma Production Sharing Agreement, in Tanzania.
The 1.9 Tscf (mean GIIP) Ntorya gas discovery located within Ruvuma, Tanzania is operated by ARA Petroleum Tanzania (50% working interest, Aminex plc 25%) and is adjacent to Wentworth’s Mnazi Bay gas producing asset.
The consideration is comprised of an initial cash payment of $3 million due upon Completion, with further deferred and contingent cash payments of up to $13 million dependent on certain development and production milestones.
The consideration will be funded through Wentworth’s cash resources whilst allowing the Company to maintain its commitment to a long-term, sustainable and progressive dividend for shareholders.
“This is a transformational transaction for Wentworth establishing us as a dual-asset, full-cycle E&P with a significantly enhanced resource base and production profile. The deal represents an attractively priced, low risk entry into a high growth opportunity which cements our position as a leading supplier of domestic gas to Tanzania.
“This compelling growth opportunity is fully aligned with our commitment to support the Government to reach its goal of providing universal energy access by 2030 in accordance with our purpose to empower people with energy and deliver value for Tanzania, Wentworth and all our stakeholders,” Katherine Roe, Chief Executive of Wentworth.
The Ruvuma Asset
The Ruvuma asset contains the Ntorya-1 discovery well, drilled in 2012, and the Ntorya-2 appraisal well, drilled in 2017, and is estimated by RPS (2018) to have a mean estimated GIIP of c.1.9 Tscf. The Ntorya-1 gas discovery well is located approximately 30 km from the Madimba gas plant which is within the Mnazi Bay concession.
Development activity is progressing with a 338 km2 3D seismic survey currently underway before the drilling of the Chikumbi-1 appraisal well in late 2022 or early 2023. The Chikumbi-1 well aims to confirm 2C resources of 763 Bscf. The cost of the seismic survey and appraisal well net to Wentworth is estimated at $6.25 million.
Final Investment Decision (“FID”) is targeted for 2023 with first gas expected in late 2024 and an ultimate target production rate of up to 140 MMscf/d. The project will require construction of a pipeline from the gas field to the government operated Madimba gas facility, located approximately 30 km eastward, which is capable of handling 210 MMscf/d and is currently receiving most of the production volumes from the Mnazi Bay gas field. Gas from the Madimba gas facility will then be distributed via existing gas infrastructure to end users.
A commercialisation study performed by io oil and gas consultancy (a Joint venture between Baker Hughes and McDermott) in 2017 showed that a 140 MMscf/d Full Field development project would require approximately $143 million (gross) of capital expenditures. Actual costs and project scope will be dependent on a development plan agreed to by the Ruvuma JV partners and the government.
The economic date of the Transaction is 1 January 2022.
The consideration structure ensures that the majority is only paid in a success case. The headline consideration of up to $16 million is payable in cash. Initial consideration of $3.0 million is payable in cash payable upon completion of the Proposed Transaction. Upon satisfaction of certain conditions Wentworth will make a loan of $0.5 million available to Scirocco (the “Initial Loan”). 50% of such Initial Loan is repayable in the event completion does not take place.
Deferred and contingent payments represent the remaining cash payment of $13 million which is due upon the following key milestones:
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