Wentworth Resources, the independent, Tanzania-focused natural gas production company, has agreed to purchase Scirocco Energy’s 25 percent stake in the Ruvuma Production Sharing Agreement (PSA) in Tanzania.
The 1.9 Tscf (mean GIIP) Ntorya gas discovery located within Ruvuma, Tanzania is operated by ARA Petroleum Tanzania (50 percent working interest, Aminex plc 25 percent) and is adjacent to Wentworth’s Mnazi Bay gas producing asset.
The consideration is comprised of an initial cash payment of $3 million due upon completion, with further deferred and contingent cash payments of up to $13 million dependent on certain development and production milestones.
The consideration will be funded through Wentworth’s cash resources whilst allowing the company to maintain its commitment to a long-term, sustainable, and progressive dividend for shareholders.
“This is a transformational transaction for Wentworth establishing us as a dual-asset, full-cycle E&P with a significantly enhanced resource base and production profile. The deal represents an attractively priced, low-risk entry into a high-growth opportunity which cements our position as a leading supplier of domestic gas to Tanzania,” said Katherine Roe, Chief Executive of Wentworth.
The Ruvuma development is expected to deliver a transformational increase in Wentworth’s production and resources alongside Mnazi Bay enabling Wentworth to support both the growing energy needs and industrialization of Tanzania.
Wentworth remains committed to offsetting all existing Scope 1 and 2 emissions and partially offset Scope 3 emissions in 2022 and will work with the Ruvuma JV partners to ensure the development of the project is aligned with these aspirations to enable the company to continue to have one of the lowest carbon intensities per boe in the UK plc market
The Ruvuma asset contains the Ntorya-1 discovery well, drilled in 2012, and the Ntorya-2 appraisal well, drilled in 2017 and is estimated by RPS (2018) to have a mean estimated GIIP of c.1.9 Tscf. The Ntorya-1 gas discovery well is located approximately 30 km from the Madimba gas plant which is within the Mnazi Bay concession.
Development activity is progressing with a 130.5 square miles 3D seismic survey currently underway before the drilling of the Chikumbi-1 appraisal well in late 2022 or early 2023. The Chikumbi-1 well aims to confirm 2C resources of 763 Bscf. The cost of the seismic survey and appraisal well net to Wentworth is estimated at $6.25 million.
Final Investment Decision (FID) is targeted for 2023 with first gas expected in late 2024 and an ultimate target production rate of up to 140 MMscf/d. The project will require the construction of a pipeline from the gas field to the government-operated Madimba gas facility, located approximately 30 km eastward, which is capable of handling 210 MMscf/d and is currently receiving most of the production volumes from the Mnazi Bay gas field. Gas from the Madimba gas facility will then be distributed via existing gas infrastructure to end users.
A commercialization study performed by io oil and gas in 2017 showed that a 140 MMscf/d Full Field development project would require approximately $143 million (gross) of capital expenditures. Actual costs and project scope will be dependent on a development plan agreed to by the Ruvuma JV partners
The proposed acquisition is subject to formal shareholder approval from Scirocco’s shareholders at a General Meeting to be held in due course, as well as certain regulatory approvals plus the non-exercise or waiving of pre-emption rights by the other Ruvuma Asset JOA partners.
The company currently expects the transaction to be complete ahead of the Longstop Date of June 30, 2023.
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