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Wednesday, June 17, 2020
Wentworth Resources, the independent, East Africa-focused natural gas company, is announced an operational update ahead of its Annual General Meeting (AGM) to be held June 17. The company said production over the period from 1 January to 31 May 2020 averaged 58.2 MMscf/day (gross). This period covers the traditional rainy season when hydroelectric power displaces natural gas-powered electricity generation, as well as the decreased industrial and consumer demand as a result of the temporary Government restrictions put in place to reduce the spread of COVID-19.
Demand in H2 2018 and H2 2019 was c.12% higher than H1 2018 and H1 2019, respectively. Given this historical context, the expected rebound in industrial customer demand from the lifting of COVID-19 restrictions, as well as the pick-up in volumes in June 2020, management expects a significant increase in natural gas demand in H2 2020. With no operational disruptions due to COVID-19, the existing well stock at Mnazi Bay is strongly positioned to meet this expected surge in demand.
As previously announced, the Mnazi Bay JV Partners have agreed to a limited 2020 firm work program totaling approximately $4.6 million net to Wentworth. This program will ensure that Mnazi Bay maintains well integrity and is primed to support the growing in-country demand.
As previously announced and in light of the COVID-19 pandemic, shareholders (other than the minimum number required to form a quorum, as arranged by the Company) will not be able to attend the AGM in person and have been invited to submit questions by email in advance. Following the conclusion of the AGM, an Investor Presentation and Q&A answering the submitted questions will be made available on the Company’s website at www.wentplc.com.
HIGHLIGHTS
2020 Operations and Outlook
Financial
Sustainability
Financial
The Company continues to receive consistent monthly payments for gas sales with TPDC now fully current. The Mnazi Bay Partners are working with TANESCO to reach settlement of all outstanding arrears. As previously announced, the Company repaid its term loan in full on 31 January 2020 and is now debt-free. The Company’s net cash balance at 31 May 2020 was $15.7 million. In accordance with the Company’s sustainable dividend policy, established in 2019, Wentworth declared its second interim dividend for 2019 in April 2020, which will be paid this month.
Sustainability
The power access gap in Tanzania is growing despite energy supply increasing, with a reported access rate of only 32.7%, leaving 7.7 million households without power. Transformational growth is needed in domestic energy supply to deliver the Government’s target of universal access by 2030 through low-cost, low carbon solutions, aligned with the UN’s Sustainable Development Goals.
Natural gas will play a critical role in meeting this target to support cheaper and more reliable electricity as well as facilitating an enabling environment for carbon-free renewable energy systems, such as hydro and solar. Wentworth is committed to being a long-term partner for Tanzania to deliver low-carbon, domestic energy supply growth that will underpin the socio-economic development of the country in the near and longer-term. This commitment underscores our approach to responsible and sustainable growth in Tanzania that creates shared value for all stakeholders.
Understanding our business impact on employees, host communities as well as society at large in Tanzania is critical to ensuring that our business operates responsibly and aligns with societal needs. The Company is undergoing a review to increase our disclosure on our business impacts that aligns with global goals and internationally recognized reporting frameworks. A further update will be provided during H2 2020.
Katherine Roe, Chief Executive of Wentworth, said: “The health and safety of our workforce across our assets and offices is our priority and I’m grateful to the entire team for their dedication and hard-work to ensure that our business can continue to operate safely and seamlessly during this challenging time. As a result of their efforts, we have seen no impact on operational performance during the COVID-19 pandemic.
“Despite these challenges and Tanzania-specific reduced demand due to above average rainfall, Wentworth continues to demonstrate business resilience with a strong balance sheet, and operational readiness and flexibility.
“Emerging from this pandemic, it will be critical for businesses to be able to transparently demonstrate their impact on society as well as their resilience to these types of economic shocks in the future. We know that our business has a real opportunity to deliver significant, positive change for the people of Tanzania through gas to power and we are committed to increasing our disclosure on our business risks and impacts to align Wentworth with international best practice. The sustainability and ESG landscape is constantly evolving, meaning that this will be an ongoing journey for Wentworth and we look forward to updating you further on our progress later in the year.
“In the second half of 2020, we expect to supply increased gas volumes now that the rainy season has passed and COVID-19 restrictions in Tanzania have been lifted. We look forward to building on this foundation and remain committed to being a leading player in Tanzania’s energy growth and transition as it seeks to deliver universal access in the country by 2030.”
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