The New Aminex

Friday, Jul 13 2012 by
20

I am starting a new discussion thread on Aminex because, in my opinion, the company has transformed significantly since the appointment of Stuard Detmer (SD) as CEO in September 2011.

In particular, whilst previously the company had a global spread of assets (and we had separate threads covering each). SD has now decided to focus exclusively on Africa, and other assets will be progressively divested. With the East African margin now having been proven as a major gas province, and plans for major LNG facilities under development, offering a route to market, that casts a new light on the value of Aminex's East African assets.

NB, as moderator, I do not intend to permit discussion of hour by hour price moves or long debates about T.A. here. If anyone wishes to discuss those, I suggest that you start your own thread.

 

Readers can download a detailed article on Aminex's strategy, that I wrote after the May 2012 AGM. You will note that several of the "next events" mentioned then have now occurred or are well underway. I won't repeat the ground covered in that article here.

Let's begin with some maps from Aminex's latest presentation, published today. The first shows Aminex's acreage (the Nyuni and Ruvuma PSAs) in the context of recent discoveries:

Next we have some detail on the Ruvuma PSA:

Route to Market

Besides the likely future LNG developments, Aminex's Ruvuma PSA benefits from a major pipeline development that has just begun. This will run some 25km from the Ntorya disovery, thus providing an export route for domestic consumption.

 

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Valuation

Aminex's prospects look exciting: there are a lot of interesting and potentially transformative leads in the Nyuni and Ruvuma acreage, as can be seen from the recent resource report and presentation. That prospectivity, however, is underpinned by significant tangible assets:

US Assets

These are currently being sold. It is hard to judge what they might fetch, but US producing assets are often sold on the basis of existing production. A typical/conservative figure is US$50,000 per boepd (allowing for a significant gas element).

Aminex's 2011 production was 130,250 boe, i.e. 357 boepd. That gives an estimated value of ~$18m (£11m).

Tanzanian Gas

The resource report shows discovered GIIP of 178*75% for Ntorya plus 45*70% for KN-1 = 165bcf net to Aminex.

We can value that gas by comparison to Cove Energy (LON:COV) 's offshore Mozambique discoveries. Cove's latest presentation (slide 8) shows that they have discovered ~70*8.5% = 6tcf of GIIP. Cove's market cap. is currently £1,358m. So that yields a value of £0.23m per bcf - i.e. £38m

 

So, that gives a reasonable value for known assets of £49m. This allows nothing for cash (level unknown at present), the Amossco service company or, of course, upside prospectivity.

Let the debate begin...

 


Disclaimer:  

The author may hold shares in this company, all opinions are his own and you should check any statements that appear factual and not rely on them before making an investment decision. The author is NOT a qualified analyst nor authorised to give investment advice. Whilst the author is a director of ShareSoc, all views expressed are entirely his own and not necessarily those of ShareSoc.


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Aminex PLC is engaged in the exploration for, and the development and production of oil and gas reserves. Its principal area of activities includes the United States, East Africa, North Africa and North Korea. Its segments include Producing Oil and Gas Properties, Exploration Activities and Oilfield Services and Supplies. The Company's licenses in Tanzania include Nyuni PSA, Kiliwani North and Ruvuma PSA. During the year ended December 31, 2010, it drilled three wells, one in Tanzania and two in the United States. As of December 31, 2010, the Company held leases at Shoats Creek covering approximately 2,100 acres. Aminex Oilfield Services & Supply Company (AMOSSCO), its wholly owned subsidiary, provides logistics services to oil industry and sources oilfield equipment and consumables to international oil companies. In October 2013, Aminex Plc announced the sale of its producing gas wells at the South Weslaco Field, Hidalgo County, Texas to Northcote Energy PLC. more »

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39 Posts on this Thread show/hide all

marben100 7th Dec '12 20 of 39
5

Polo Resources (LON:POL) final results, released just now, contain a snippet of interest to Aminex investors:

The investment in Signet Petroleum is a critical element in Polo's strategy to increase its exposure to the oil and gas sector. Signet is making significant progress across its oil and gas projects in Africa, with initial interpretation of the company's Mnazi Bay (Tanzania) 3D seismic data reinforcing estimates that the block contains a number of prospective targets.

 Tanzania

  • Interpretation of 3D seismic data suggests that the offshore Mnazi Bay North Block, Tanzania, contains a number of prospective targets up-dip from nearby discoveries. Interpretation and modelling is continuing

 

  • Well positioned as an early development opportunity into the domestic energy market (unsatisfied domestic demand for natural gas is estimated at over 500 mmscf/d)

 

  • New Mtwara to Dar es Salaam Gas Pipeline project inaugurated by the Government of the United Republic of Tanzania on 21 July 2012. The 532-km pipeline will link the Mnazi Bay gas field to Tanzania's largest city. Construction is underway and is expected to take 12-24 months to complete

 

  • Natural gas will be transported to large-scale electricity producers, other industrial users and major population centres in Tanzania

 

  • Plans for new Mnazi Bay 300MW gas fired power plant announced by Government of Tanzania on 13 October 2011

 

 

Signet's licences adjoin Aminex's Ruvuma offshore portion (IIRC - their website seems to have gone away). Their 3D data may be relevant to Aminex's interests.

 

Signet is currently a private company:

In line with Polo's strategic decision to target strong oil and gas investments, the Company made five investments between July 2011 and May 2012 into Signet Petroleum Limited totalling US$27 million. Polo acquired 7,809,522 Signet shares, representing 21.7 per cent of Signet's issued shares and 17.9 per cent. of Signet's issued shares on a fully diluted basis. This share acquisition opens up significant opportunities to add value in a highly sought after African oil and gas sector.

 

Mark

 

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marben100 10th Dec '12 21 of 39
3

Bit slow, but I've only just noticed another announcement from Polo this morning re Signet:

...In June 2012, Signet completed a 100 square kilometre 3D seismic survey over the Mnazi Bay North Block, offshore Tanzania. Initial interpretation of the 3D seismic is consistent with Signet's opinion that there is a substantial up dip extension of the BG/Ophir Chaza 1 gas discovery drilled near the boundary line between the BG/Ophir and Signet blocks.

Signet has commissioned an independent technical and commercial evaluation by UK engineering consultancy Challenge Energy, which will be followed by a formal sales process for the divestment of the block in Q1 2013...

 

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dbfromgb 13th Dec '12 22 of 39
3

Activa latest report out today has this snippet on the USA assets

The Loma Field water disposal well has
been drilled (depth: 3,500 feet) and we
are now working on finishing the surface
facilities. This more efficient method of
water disposal will allow us to increase
production rates on this well from late
December 2012. With natural gas prices
now at higher levels this makes good
sense and is expected to have a
positive impact on our revenues in 2013.

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blackgold00 22nd Dec '12 23 of 39
3

sonlite update, production increase

RPT DATE 10/01/2012, but is this the production figures for Sept or Oct? bearing in mind that the OM-10 well was worked over in Sept.

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_wellinfo2?p_wsn=241566

this from their Nov IMS

"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."

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kenobi 22nd Jan '13 25 of 39

yes, back to the old Aminex then !

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peterg 22nd Jan '13 26 of 39
2

In reply to kenobi, post #25

yes, back to the old Aminex then !

Well, is it?

It seems to me that SD had two main strands to his aims in Sept 2011. The fairly down to earth stuff about getting rid of peripheral assets and concentrating on Tanzania, while farming down to smaller levels on holdings there, and the more contentious stuff about growing by taking over other small African centered E&Ps, and "leveraging on the full listing", whatever that meant. I think a lot of people were pretty sceptical about the 2nd part, I certainly was.

But phase 1 looks well on the way, and may well be completed in the next couple of months, with farmouts in Tanzania and US sales. So perhaps he can see that he's done that part of the job and the more grandiose schemes were never going to happen, so time to move on? Or there have been tensions on the board about the more contentius part of the package? EIther way AEX is now in a more focussed and stronger position that in Sept 2011.

JT thinks it's "brilliant news". I'm not sure I go that far, sudden loss fo a CEO is never that, but I don't see AEX's prospects going forward as any less good than they were yesterday.

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bankerbasher 21st May '13 27 of 39

"JT thinks it's "brilliant news". I'm not sure I go that far, sudden loss fo a CEO is never that, but I don't see AEX's prospects going forward as any less good than they were yesterday."

Sooo now we have mioved along PG, what are your views now on the massive destruction of shareholder value going on at AEX?

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peterg 21st May '13 28 of 39
5

In reply to bankerbasher, post #27

Not going as well as hoped, clearly, but the plan is still progressing. Prospects look reduced in that the terms of any sale or farmout are not going to be at the top end of expectations/hopes. But to me "massive destruction of shareholder value" implies something in the way of mismanagement. And I don't really see that, though that is clearly the view of the pack.

I think it would be possible to say the BoD were at fault for appointing SD, and for not getting rid of him quicker, but in reality he clearly would have seemed a plausible candidate, even if his plans looked rather over inflated, and getting rid of someone you've just appointed is never easy, so no great surprise it took a year to see what happened and act. Other than that, what have they done wrong in handling these deals over the past 6 months that you see as so massively destructive of shareholder value?

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bankerbasher 22nd May '13 29 of 39

In reply to peterg, post #28

Erh...look at the share price Enstein!

Shareholders invest in companies to make a return not loose 90%+ of their cash whilst directors and non execs fill their pockets. Company hasn't made a profit for decades!

Investors want results we can watch soap operas any day of the week.

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peterg 22nd May '13 30 of 39
1

In reply to bankerbasher, post #29

I'll take that as meaning you don't have an answer to my question then.

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deucetoace 23rd May '13 31 of 39

Interesting that there were non-trivial votes against both of the non-execs up for re-election this time. One of them has been on the board for 22 years!

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emptyend 23rd May '13 32 of 39
2

In reply to deucetoace, post #31

Interesting that there were non-trivial votes against both of the non-execs up for re-election this time.

FYI there were even bigger votes against another of them last year:

Corporate governance issues are only rarely as "black and white" as proxy advisory firms encourage their clients to think.

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deucetoace 23rd May '13 33 of 39

For a couple of reasons it seems inappropriate to comment further on these issues relating to this specific company. However I would say that in general

1) Institutions still rarely vote against the board. This is changing which is all to the good but at present a vote against the board is unusual enough to be of interest.
2) Non-execs who have been on a board for a long period are often likely to be less independent than those that haven't and almost always will be seen as less independent as those that haven't. A period of over 20 years for a non-executive director is unusual enough to be of interest.

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emptyend 23rd May '13 34 of 39
4

In reply to deucetoace, post #33

So...speaking generally then:

1) Institutions still rarely vote against the board. This is changing which is all to the good but at present a vote against the board is unusual enough to be of interest.
2) Non-execs who have been on a board for a long period are often likely to be less independent than those that haven't and almost always will be seen as less independent as those that haven't. A period of over 20 years for a non-executive director is unusual enough to be of interest.

I would say that institutions generally do what their retained proxy advisors suggest they do. The proxy advisors will make their recommendations based on a view of what the ideal board should look like, without paying much regard to the actual practicalities that a board may face from time to time. So, for example, they may recommend voting against on grounds of long service (though not, it would seem, in this case - given the 2012/13 comparison) - but they may also vote against non-execs who have share options....regardless of whether those are of material value and ignoring why they are occasionally awarded in the first place (eg reducing spending on cash compensation).

Regarding your point 2) this is always a valid area of concern -and, as you say, it is unusual. But, again, context is always relevant - and shareholders can always ask about it at or before an AGM. None did in this case, AFAIAA. In other examples, such as this one,  there is one non-exec who has been in post for 16 years and a further three for 14 years. The justification in that case is the project life-cycle and familiarity with the assets. It is always a matter of judgement between what is theoretically desirable and what is actually practical (and desirable, having regard to all the circumstances known to the company) - but such matters are always kept under review and can certainly be queried if a shareholder has particular concerns.

 

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bankerbasher 19th Nov '13 35 of 39

In view of the recent IMS from the company I would be interested on any view, especially for EE as to whether AEX is a viable company going forward. It now has imminent liabilities, lack of cash and has been unable to sell US assets or find a partner to farm into it's Tanz Op.

They are looking for a "strategic new investor" considering the current share price what are the implications for existing shareholders?

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jonnyt 20th Nov '13 36 of 39
2

You know as well as I do that EE's a salaried Non Executive Director of Aminex so will be unable to comment perhaps forever via an NDA.

We all know existing shareholders are going to get diluted to a not worthwhile state.

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dalemra 21st Nov '13 Moderated for Spamming
grisurdef 21st Nov '13 Moderated for Copyright Violation
1
Fangorn 21st Nov '13 39 of 39
1

Would someone please delete this imbecile.

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