Interim Management Statement

RNS Number : 3888R

Aminex PLC

19 November 2012

 



INTERIM MANAGEMENT STATEMENT - Third QUARTER 2012 

Aminex PLC ("Aminex" or the 'Company"), an independent oil company listed on the main market of the London and Irish Stock Exchanges with exploration and development assets in the emerging hydrocarbon province of East Africa, today issues its Interim Management Statement ("IMS") for the period 1 July to the date of this statement.

Highlights

·     11.4 TCF (1.9 billion BOE) of discovered and undiscovered mean Gas Initially In Place (GIIP) attributed to Ruvuma and Nyuni Area PSAs by independent technical evaluation

·     Discussions held with Tanzanian state oil company regarding tie-in of Kiliwani North to new pipeline

·     Ruvuma PSA 890 km 2D seismic programme targets leads with 4.6 TCF potential for three well drilling programme

·     Launched process to farm out up to 37.5% working interest in Ruvuma PSA

·     Nyuni Area PSA deep water and transition zone seismic planned for early 2013

·     US asset enhancement projects nearing completion.  Divesture to proceed in early 2013

·     $15 million bridge financing facility negotiations ongoing

Tanzania

Early in the reporting period Aminex published the results of an independent technical evaluation of the Ruvuma and Nyuni Area PSAs.   The study attributed 11.4 TCF total discovered and undiscovered mean Gas Initially in Place (GIIP) for the two licences combined, with 5.75 TCF attributed to the Ruvuma PSA and 5.67 TCF to the Nyuni Area PSA.   The total 11.4 TCF estimate represents the equivalent of 1.9 billion barrels of oil (BOE).

Concurrently, the Tanzanian government announced the launch of construction of a 36" diameter pipeline which will pass through the Ruvuma PSA, the site of the Company's Ntorya-1 discovery, to Dar es Salaam with a 24" diameter spur line to Songo-Songo Island where Aminex and partners have a development licence for the 45 BCF Kiliwani North discovery.  The new pipeline and associated gas processing facilities are expected to be commissioned in the first half of 2014 and will provide a direct route to market for gas from Aminex's two discoveries.

Ruvuma PSA

Following the Ntorya-1 gas discovery at Ruvuma in the first half of the year, Aminex and its partner have applied for an appraisal licence over nine blocks and negotiations are being held with the Tanzanian authorities.   The Ntorya discovery is estimated to have 1.17 TCF (195 MMBOE) potential and in testing flowed 20 MMSCFD of natural gas (3,350 BOEPD) together with 139 BOPD of 53 degree API condensate.   An independent technical review of the Ruvuma PSA attributes over 5.75 TCF (970 MMBOE) of discovered and undiscovered GIIP across multiple prospects including the Ntorya discovery.   Over the course of the next two years, Aminex plans to drill three wells at Ruvuma: two exploration wells and an appraisal well at Ntorya.

In order to prioritise exploration and appraisal drilling locations and to optimise acreage relinquishment, an extensive seismic programme is being undertaken onshore.  A letter of intent has been signed with the seismic contractor to acquire 890 kilometres of 2D seismic across the four most important leads:  Ntorya-1 and Ntorya Updip (1.17 TCF mean discovered and undiscovered GIIP), Namesange (2.6 TCF mean undiscovered GIIP) and Sudi (426 BCF mean undiscovered GIIP).   The total cost of the seismic programme is estimated at $13 million.

Aminex currently has a 75% operating interest in the Ruvuma PSA and has announced a process to farm down its interest in the block to a targeted 37.5%. FirstEnergy has been engaged to manage this process.    Marketing materials have been sent to targeted companies and a data room is scheduled to open this week to interested parties.   There has been significant interest in the farm out expressed by a diverse array of international companies.  Aminex expects to complete the farm out in the first half of 2013. 

Nyuni Area PSA

The Nyuni Area PSA, signed in October 2011, comprises onshore, transition zone and deep water acreage.  The deep-water area in the eastern portion of the block accounts for approximately 30% of the PSA.   Over 5.6 TCF of undiscovered GIIP has been attributed to structural and stratigraphic leads in the Nyuni Area PSA.

Aminex is currently planning a 1,200 kilometre 2D seismic program in the deep water of the Nyuni block and is in discussions with seismic vessel providers to conduct the survey in the first quarter of 2013. 

Earlier this year Aminex completed 141 kilometres of seismic data as part of a transition zone seismic programme over the shallow waters, reefs and islands of the Nyuni Area PSA.  Transition zone seismic operations were suspended in late June due to rough seas.   Aminex is currently evaluating options to complete the transition zone seismic in conjunction with the deep-water programme, which should result in cost savings. 

Kiliwani North Development Licence

Aminex held talks with the Tanzanian state oil company in early November regarding the technical engineering design for tying in Aminex's Kiliwani North-1 (KN-1) gas well to the planned gas processing facility on Songo-Songo Island and pipeline to Dar es Salaam.   Aminex had previously completed the engineering design for the local 6" pipeline connecting KN-1 to the existing local gas processing facility and the 6" pipe has already been purchased and delivered to Tanzania.   Only minor adjustments to the design will be required to enable the tie in to the new gas processing facility. 

The new Songo-Songo gas processing facility and pipeline are now expected to be commissioned and put into operation in the first half of 2014, providing Aminex with a route to monetisation of KN-1 gas.    Kiliwani North holds discovered mean GIIP of 45 BCF and the tie-in is designed to handle an optimum production level of 20 MMCFD. 

USA

In the first half of 2012 Aminex announced that it had launched a marketing programme to sell its US assets so as to redirect capital to high impact exploration activities in Tanzania.   Subsequently Aminex received notification from the operator of the Alta Loma property in Texas that it planned to drill and complete a saltwater disposal well that will allow the property to produce at full potential whilst reducing per unit operating costs.  The operator of Shoats Creek also notified Aminex that it planned to recomplete the lower zones of the OM10-1 well in order to increase production.  Aminex advised both operators of its approval to proceed with these projects effective immediately.

Because these projects are expected to have a material positive effect on the value of the US assets, Aminex temporarily suspended the marketing of the US properties pending completion of the work.

The salt-water disposal well at Alta Loma has now been drilled to a TD of 3,500 feet (1,067 metres) and subsequently cased and perforated.  Installation of flow lines, electricity supply and supporting facilities are expected by the end of November with anticipated increased production stabilising by the end of December.

At Shoats Creek, the OM 10-1 was worked over in September and the two lowest zones, originally tested in 2010, were put on production.  Oil and gas production from the well has been increasing as the well continues to unload a combination of formation water, the heavy brine used to workover the well and residuary frac water from the lower zones. 

Resumption of the marketing programme for the US assets is now scheduled to resume in January 2013.

EGYPT

Aminex holds a 10% carried interest in the West Esh el Mellaha-2 PSC ("WEEM-2") in the Gulf of Suez, Egypt.  Control of the majority interest partner was recently bought by Triumph Energy Group ("Triumph") of Hong Kong.   Triumph has negotiated a six-month extension to the second period of the PSC so as to allow more time to acquire additional seismic and drill two wells.  Three wells have already been drilled over this PSC, the third of which encountered crude oil in non-commercial quantities.  Aminex has a 10% interest in the concession and its share of costs is free-carried through to commercial production.

FINANCING

In its 2012 half-yearly report the Company reported that it was in advance negotiations for a $15 million loan repayable from the proceeds of the planned sale of the US assets.   Negotiations for the loan are ongoing and are expected to be concluded in the near future.

Aminex CEO, Stuard Detmer, commented:

"With over 11.4 TCF of discovered and undiscovered potential in our Tanzanian properties, Aminex is implementing an aggressive seismic exploration programme to develop existing leads and target upcoming drilling both onshore and in the deep water.    The Tanzanian government's forward-looking pipeline project is progressing and will connect Aminex's two existing discoveries at Ruvuma and Kiliwani North to the key natural gas market in Dar es Salaam, providing a clear route to monetisation in 2014.   Our strategy of managing risk and focusing resources on Africa is progressing with the launch of the Ruvuma farm out process and the divestiture of our US assets, now scheduled for early 2013.  It is an ambitious programme that will move us towards our goal of becoming one of the leading companies in the East African region."

For further information please contact:

Aminex PLC                          [phone]

Stuard Detmer

Chief Executive Officer

M: Communications           

Patrick d'Ancona                 [phone] or  [phone]

Chris McMahon           [phone] or  [phone]

Glossary of terms used
PSA or PSC	Production Sharing Agreement or Contract
BCF	Billions of cubic feet of natural gas
TCF	Trillions of cubic feet of natural gas
MM(S)CFD	Millions of (standard) cubic feet per day of natural gas
BOE/BOEPD	Barrels of oil equivalent/per day
BOPD	Barrels of oil per day
MMBOE	Millions of barrels of oil equivalent
GIIP	Gas initially in place
km	Kilometres

 

END

 

 

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