Showing posts with label Financial. Show all posts
Showing posts with label Financial. Show all posts

Tuesday, 26 August 2025

Aminex Ara Breaking Ground: Ntorya Moves Closer to First Gas

Visible steps are aligning as infrastructure, wells, and regulatory milestones converge toward production.


A Project Now in Motion

The Ntorya development in southern Tanzania is advancing step by step toward its goal of delivering gas into the national grid via the Madimba pipeline. With approvals secured, funding confirmed, and procurement of facilities under way, the project is steadily progressing along its critical path.

Investors are understandably keen to see “hard evidence” — rigs mobilising, welders on the pipeline, or CPF construction above ground. Those milestones are coming, but there is already much happening that gives confidence in the journey ahead.


Upcoming Milestones: The Roadmap Ahead

1. EPC Contract Awarded

The Engineering, Procurement, and Construction (EPC) contract for the 35 km pipeline has been officially awarded to China Petroleum Pipeline and China Petroleum Technology & Development Corporation. This ensures the pipeline’s delivery is now in the hands of experienced international contractors.

2. Pipeline Fully Funded

The pipeline construction is being fully financed by TPDC, the national petroleum corporation. This reduces financial risk for the operators and demonstrates the Tanzanian government’s strong commitment to bringing Ntorya gas to market.

3. NT-2 Extended Well Test & CPF Integration

NT-2 has been identified as the first producing well. An extended well test will confirm reservoir behaviour and fine-tune the CPF’s design specifications. Importantly, this does not delay CPF construction — procurement and enabling works can proceed in parallel, with the test results helping optimise the final equipment setup.

4. PURA Approval for Rig Tender

The regulator, PURA, is reviewing rig tender plans. Approval of this plan is a milestone in itself, as it enables the operator to issue the formal rig tender.

5. Rig Award and Mobilisation

Once the tender is awarded, a drilling rig will be mobilised. Its first task: drill CH-1 (Chikumbi-1). The same rig will then conduct a workover of NT-1. This is a crucial step in adding redundancy and ensuring multiple wells can feed into the CPF and pipeline.

6. CPF Civil Works and Site Preparation

The approved US$41 million budget includes the CPF, flowlines, manifolds, and fiscal meters. While there has been no formal announcement of CPF mobilisation, satellite imagery in the wider Ntorya area shows ground activity that could indicate early site preparation. This should be regarded as an educated observation, not official confirmation.

Such early groundwork is entirely consistent with the development sequence — clearing land, preparing foundations, and creating storage areas typically begin before heavy equipment arrives, ensuring a smooth transition into construction.

7. First Pipeline Welds

The first welds on the pipeline right-of-way will provide unmistakable, visible proof of progress. This is one of the clearest signals investors can look for as the project enters the physical build stage.

8. First Gas Flow

All of these steps lead to the same target: the delivery of 40 MMscf per day under the Gas Sales Agreement in the first contract year, with capacity to grow further.


Investor Takeaway

MilestoneWhat It Demonstrates
EPC awardedContractors in place, work authorised
Pipeline funding by TPDCFull state backing, no financial burden on operator
NT-2 extended testOptimises CPF design, not a blocker
PURA approval for rig tenderRegulatory progress, green light to issue tender
Rig award & mobilisationVisible drilling and well activity
CPF enabling worksSite preparation under way, consistent with plan
First pipeline weldsPhysical build begins in earnest
First gasContracted supply of 40 MMscf/d delivered

Conclusion

Ntorya is progressing through a clear sequence of milestones. Some are less visible than others, but each is a step toward first gas. With the pipeline EPC awarded, funding secured, and wells prepared for development, the project is firmly moving forward.

The next stages — rig mobilisation, CPF civil works, and the first pipeline weld — will provide the visual proof that investors are waiting for. From there, Ntorya transitions rapidly from preparation to production, with 40 MMscf/d contracted under the GSA and a scalable pathway for growth.

Monday, 11 August 2025

From 80p to £1.35: Rising Gas Prices Supercharge Ntorya’s Valuation Potential

 

Orca’s 2024 realised prices reveal a higher-value demand mix, doubling Aminex’s projected upside in the 14-well scenario.

When we modelled Ntorya’s long-term value earlier this year, our 14-well, 420 MMscfd case used conservative gas prices of $3.50–$5.50/MMBtu. That produced impressive numbers — with some scenarios approaching 80p per share.

But the latest Orca Energy 2024 annual report changes the game. It shows:

  • Gas-to-power: $3.88/MMBtu

  • Gas-to-industry: $8.45/MMBtu

  • Weighted average realised: $4.95/MMBtu

Many of Ntorya’s likely buyers — CNG stations, GTL, fertilizer, LNG trucking hubs — fall into the higher-priced industrial category. Using blended scenarios based on Orca’s real-world data lifts our projections dramatically:

  • 50/50 industrial/power blend = $6.17/MMBtu

  • 70% industrial blend = $7.08/MMBtu

  • 80% industrial blend = $7.54/MMBtu

Applying these to our 14-well, 420 MMscfd case with a 40% effective cash entitlement to Aminex, the implied share price potential jumps from ~80p to as high as £1.35 at standard market earnings multiples.

This isn’t pie-in-the-sky speculation — it’s grounded in realised Tanzanian gas prices from a peer producer and in Ntorya’s planned production profile. With the Mtwara LNG project naming Ntorya as its primary supply source and multiple high-value industrial markets lining up, the revenue mix could lean heavily toward premium-priced sales.

For investors, the takeaway is simple: as the demand mix shifts towards industry and transport, Ntorya’s economics strengthen — and the gap between current market price and intrinsic value widens.

Updated Orca-Based Valuation:

Our original 14-well, 420 MMscfd projections used conservative gas price assumptions of $3.50–$5.50/MMBtu. However, Orca Energy’s 2024 report confirms a weighted average realised price of $4.95, with a $3.88/Mcf gas-to-power rate and an $8.45/Mcf gas-to-industry rate. Applying blended scenarios of $6.17 (50/50), $7.08 (70% industrial), and $7.54 (80% industrial) lifts projected share price outcomes significantly across all market multiples. At the upper end, the industrial-heavy blends more than double the implied valuation compared to our earlier chart, reinforcing the bullish case for Ntorya’s earnings potential as higher-value industrial demand ramps up.

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.