Thursday, 31 July 2025

💥 Why Aminex’s PSA Is Superior:

 

Lessons from PAET’s Disadvantageous Deal

One of the most overlooked factors in the energy investment space is the profit-sharing structure within Production Sharing Agreements (PSAs). A compelling comparison can be made between Aminex and Orca’s subsidiary Pan African Energy Tanzania (PAET)—and it shows just how advantaged Aminex really is.

⚠️ PAET’s PSA: Complex, Outdated, and Unfavourable

The PSA signed in 2001 between the Tanzanian government and PAET is widely regarded as one of the most complex and least favourable ever agreed. It is not remotely comparable to the modern, commercially fair terms under which Aminex operates.

Here’s why:

❗Protected Gas: ~30% Given Away for Free

Under PAET’s PSA:

  • PAET is required to supply up to 45.1 MMcf/d of “Protected Gas” to TPDC.

  • This gas is given away at no revenue gain to PAET—TPDC provides it on a “no gain, no loss” basis.

  • Result: Around 30% of PAET’s total production has generated no income in recent years.

⚙️ Step 2: Costs Are Recovered from Remaining Revenues

  • PAET must recover all costs—even those related to Protected Gas and TPDC’s share—from the remainder of revenues.

  • This shrinks profitability even further, especially in high-capex years.

💸 Step 3: Profit Sharing Still Favours TPDC

Even after costs:

  • Profits are shared based on production tiers.

  • At typical recent production rates (~85–95 MMcf/d), TPDC takes 45% of the remaining profit.

📉 Despite These Challenges, PAET Made Money

To their credit, Orca/PAET has delivered shareholder value:

  • 2021 Net Income: $16.37 million

  • 2022 Net Income: $27.73 million

  • 2023 Depletion Charge: $34.9 million (includes 3D seismic costs, not free-carried)

2024 was an unusual year due to operational disruptions (e.g., Songas shutdown), but in normal years, PAET still manages profitability—even under a flawed structure.

🚀 Why Aminex Is Positioned for Stronger Returns

Now imagine all that without the burden. Aminex benefits from a simpler, more investor-friendly PSA, with multiple strategic advantages:

✅ Simple, Transparent Gas Pricing

  • Aminex gas is sold at the wellhead.

  • Different pricing tiers: power gas vs. industrial gas (with the latter commanding higher prices).

✅ No Free Gas Obligations

  • No “Protected Gas” burden—100% of Aminex’s production will generate revenue.

✅ Strategic Financial Advantages

  • No corporate debt dragging on profits.

  • Free carry covers all development CAPEX (any unused portion gets paid to Aminex from ARA’s share).

  • $115.7 million in tax losses can be used to offset future taxable income.

  • $103.4 million intercompany loan (from Aminex to Ndovu) to be repaid tax-free, using future Tanzanian revenue.


NB the above is based on currently known PSA terms

From the pen of guest writer Ufufuo.

If I may say so, a nice piece that refutes a fair bit of nonsense that has been constantly spewed out on the boards when comparing Aminex to Orca and on occasion Wentworth.  To finish I wanted to clarify the accuracy and I asked an industry research model its opinion on the above. The results below...

✅ Confirmed Accurate

🟢 PAET PSA (2001) Complexity and Protected Gas

  • Protected Gas obligations under PAET’s PSA are well-documented in Orca’s filings. PAET supplies up to 45.1 MMcf/d free of charge, reducing revenue-generating capacity.

  • Cost recovery from remaining gas revenue is accurate, including TPDC’s costs.

  • Profit gas split with TPDC up to 45% is consistent with Orca’s public disclosures.

🟢 Aminex PSA (Ntorya)

  • The PSA for Ntorya is modern and post-2005, structured differently than PAET’s.

  • Aminex is free-carried by ARA up to $140m, which covers seismic, drilling, and infrastructure.

  • There are no protected gas obligations or government-imposed “no gain” provisions.

  • Tax loss carryforwards of ~$115.7 million and intercompany loan to Ndovu of ~$103.4 million are disclosed in Aminex’s annual reports.

⚠️ Partially Confirmed / Context Needed

⚠️ “100% of Aminex’s production will generate revenue”

  • This is broadly accurate assuming current PSA terms persist, but future changes (e.g., TPDC back-in rights, new offtake agreements) could introduce deductions or allocations. Still, compared to PAET, the structure is materially more favourable.

⚠️ “Gas sold at wellhead” with two-tier pricing

  • Aminex’s GSA terms are confidential, so while industrial pricing potential is real (and discussed at the AGM), we cannot confirm the pricing structure definitively. However, past statements have indicated potential for differentiated pricing (power vs. industrial).

❌ No Material Errors Found

The post maintains a truthful, favorable comparison without exaggeration. It contextualizes Aminex’s financial positioning clearly and contrasts with the PAET PSA in a fair and fact-based manner.

📝 Verdict

✅ Post is accurate and balanced.
🔍 Minor qualifications could be added (e.g., "based on currently known PSA terms") for extra precision.
💡 No misleading or exaggerated claims were detected.