Wentworth Resources Secures Approval for Mozambique Appraisal Plan

East Africa-focused oil and gas company Wentworth Resources Limited announced Wednesday that its operatorship and appraisal plan in Mozambique has been approved by the country’s minister of minerals and energy.

Under the two-year appraisal period, which relates to the gas discovery made at the Tembo-1 well location in December 2014, Wentworth will become the operator of the Rovuma Onshore Concession, increasing its participation interest in the asset from 11.59 percent to 85 percent. State owned Empresa Nacional de Hidrocarbonetos (ENH) will retain a 15 percent participation interest as a carried partner through to the commencement of commercial operations.

The Implementation of a work program will commence later this year with the reprocessing of approximately 620 miles of existing seismic data, the cost of which will be funded from internally generated cash flow. In the second half of 2017, the company plans to acquire a minimum of 300 miles of new onshore 2D seismic data and the drilling of an appraisal well is anticipated to occur in 2018, after the identification of a suitable drilling location based on the evaluation and integration of the new and existing data. 

The Tembo-1 well was drilled to a total depth of 14,937 feet into rocks of Upper Jurassic age. Natural gas and some condensate was recovered by modular formation dynamics testing, confirming the petro-physical analysis of 36 feet of pay in sands of Cretaceous age. 

In addition to news of the approval of appraisal plans in Mozambique, Wentworth revealed that production volumes have been ramping up in Tanzania but have plateaued following the impact of seasonal hydro-power generation and disputes between energy firms within the country.

In Mnazi Bay, gas deliveries continue to the new transnational pipeline and are ultimately used in power generation facilities near Tanzania's commercial capital, Dar es Salaam. Production volumes from the Mnazi Bay gas field peaked at 74 million cubic feet per day during the second quarter of this year, however, volumes were curtailed for a period of time during April due to heavy rains when some natural gas power generation was displaced by hydro generated power. Furthermore, sales volumes to the pipeline have been maintained at just 50 MMcfpd since June 2 due to a dispute between Symbion, one of the power plants which utilizes Mnazi Bay gas which has temporarily ceased operations, and TANESCO.

It is unclear how long it will be before the dispute is resolved and power generation at the Symbion power plant resumes, according to Wentworth, and, until such time, volumes are expected to remain at this level. Daily production volumes of between 70 and 80 MMcfpd are still expected to be achieved in 2016 once this dispute has been resolved and power demand stabilizes.

"I am very pleased to announce the receipt of Government approval for our operatorship and appraisal plan over the Tembo-1 gas discovery in Mozambique. With all the data gained to date through our exploration drilling and seismic interpretation, we believe this area of onshore Mozambique to be highly prospective and although we expect minimal capital spend this year, I am looking forward to working with ENH as we progress this acreage position toward appraisal drilling in the future,” said Bob McBean, Wentworth’s executive chairman, in a company statement.

"We continue to be extremely pleased with the performance of our wells in Mnazi Bay and how the new pipeline system is successfully delivering natural gas to Dar es Salaam. Whilst production volumes are lower than expected for the second quarter, this is considered short term in nature and the capacity to step up our production volumes remains in place. With further power generation capacity still being installed, we are confident of the long term growth prospects for Wentworth," he added.

Market reaction to Wentworth’s latest updates was “slightly negative”, according to FirstEnergy, due to reduced levels of production. The oil and gas advisory firm did say, however, that it expected a limited impact on its valuation of the company if the dispute is resolved as soon as Wentworth has suggested. FirstEnergy also stated that clarity on the program in Mozambique was “welcome news”, particularly as there are no work obligations in place.


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