REG - Wentworth Resources - Operational and Corporate Update

Wentworth ResourcesAnnouncement

13/11/2023 07:00

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RNS Number : 1613T  Wentworth Resources PLC  13 November 2023

 

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) NO 596/2014 (AS IT FORMS PART OF UK DOMESTIC
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON PUBLICATION
OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION WILL BE CONSIDERED TO BE IN THE
PUBLIC DOMAIN.

 

13 November 2023

 

 

WENTWORTH RESOURCES PLC

("Wentworth" or the "Company")

 

Operational and Corporate Update

 

Wentworth Resources (ΑΙΜ: WEN), the independent, Tanzania-focused natural
gas production company, today provides an update on its operations, future
capital returns strategy and the offer from Etablissements Maurel & Prom
S.A.

Operational and Financial Update

The Company continues to deliver strong performance with record production
levels achieved in the first half of 2023 and continuing into the second half
of the year.

Average daily production year to date was 105 MMscf/d, a new record for Mnazi
Bay, and ahead of the annual average guidance of 90 - 100 MMscf/d. This strong
production, alongside an ongoing exemplary safety record which remains a key
priority for Wentworth, highlights the quality of the Mnazi Bay asset.

The Company's financial position underscores the robust nature of the business
with cash as at 31 October 2023 of $44.6 million and zero debt. However, given
that historic cost pools were fully depleted in Q2 this year, the Company is
currently deriving its entitlements from profit gas with only ongoing
operating costs currently replenishing the pool. As a result, revenues are
substantially lower relative to production levels than in previous years and
are expected to continue at a lower level throughout the remainder of 2023 and
into 2024 until such time as the planned re-investment programme in the Mnazi
Bay field commences.

The Government of Tanzania's re-examination of the historic cost pool audit
for the years 2013 - 2015 remains unresolved with the Operator. Wentworth's
maximum exposure is approximately $14 million.

Based on expected production, continued timely receipt of gas sales revenue
and no repayment of the disputed costs, cash is expected to remain broadly
flat in the near term.

2024 work programme

 

During Q4 2023, the Mnazi Bay partners agreed the annual Work Programme and
Budget for 2024. This includes a material capital expenditure programme with
the drilling of two wells and the addition of compression to the Gas
Production Facility at Mnazi Bay.

 

Further details will be announced upon formal budget approval, which is
expected to be in early 2024. This re-investment is critical for the future
optimization of the Mnazi Bay field and to support Tanzania in its goal for
universal access to energy for its people.

 

It is anticipated that Wentworth's share of this work programme will be funded
from existing cash resources and will form a key part of the capital
allocation policy for 2024. Capital costs incurred are expected to materially
replenish the cost pools allowing for rapid recovery via enhanced cost gas
revenues.

 

Offer by Etablissements Maurel & Prom S.A.  ("M&P")

 

Background

On 5 December 2022, the boards of Wentworth and M&P announced that they
had reached agreement on the terms of a recommended all cash offer by M&P
for the entire issued, and to be issued, share capital of Wentworth (the
"Acquisition"). The Acquisition is to be implemented by means of a scheme of
arrangement pursuant to Article 125 of the Jersey Companies Law. The circular
in relation to the Scheme was published and made available to Wentworth
Shareholders on 25 January 2023 (the "Scheme Document").

The Acquisition was approved by Wentworth Shareholders at the Court Meeting
and the General Meeting which were held on 23 February 2023, but remains
subject to the satisfaction or (where capable of being waived) waiver of the
other Conditions to the Acquisition as set out in Part III (Conditions to and
certain further terms of the Acquisition and the Scheme) of the Scheme
Document.

These Conditions include, inter alia, (i) consent from the Minister
responsible for petroleum affairs in Tanzania under the Petroleum Act 2015
(the "Act") and any other applicable laws; (ii) the waiver of any right of
first refusal or pre-emption right to which the Tanzania Petroleum
Development Corporation is entitled in respect of the Mnazi Bay asset; and
(iii) approval from the Tanzanian Fair Competition Commission ("FCC"), in
each case on terms satisfactory to M&P, acting reasonably.

On 9 June 2023, Wentworth received a letter from TPDC notifying Wentworth Gas
Limited, the Company's main operating subsidiary, of its decision purportedly
to exercise its right of first refusal in respect of Wentworth's interest in
the Mnazi Bay asset pursuant to section 86(7) of the Tanzanian Petroleum
Act, Cap 392 (the "ROFR"), which TPDC continues to assert.

Consequently, on 11 July 2023, Wentworth was notified that the FCC had issued
a decision notice that the application for FCC approval shall not be
determined at this time and that this application will be marked closed by the
FCC. Further, the decision included confirmation from the FCC that TPDC has
the right to pre-emption of the M&P proposed transaction to acquire
Wentworth.

Current Status

Following TPDC's notification of its decision purportedly to exercise its
ROFR, discussions have been ongoing between M&P and relevant Tanzanian
stakeholders regarding the satisfaction of the above-mentioned Conditions.
Wentworth understands that the Minister of Petroleum and the FCC are waiting
to understand any agreement reached with TPDC prior to making any
determination.

Wentworth also understands that these discussions have covered, inter alia,
the resultant equity interest in the Mnazi Bay licence to be held by M&P
and TPDC should M&P's Acquisition complete, related matters of taxation in
Tanzania, resolution of the 2013 - 2015 disputed cost pool, future capital
investment in the Mnazi Bay asset and the apportionment of M&P's
transaction costs in connection with the Acquisition.

During this period of discussions between M&P and relevant Tanzanian
stakeholders, Wentworth has maintained its strong and empathetic stakeholder
relationships in-country with regular visits and meetings by Katherine Roe,
the Company's CEO. Wentworth has remained supportive of both assisting in the
completion of the Acquisition, consistent with the Board's recommendation to
shareholders, and listening to the related concerns of Tanzanian stakeholders.

To date, these discussions have not resulted in any clear indication or
certainty that the above-mentioned Conditions will be satisfied or (if capable
of waiver) waived by M&P by the agreed Long Stop Date of 31 December 2023,
which the Board notes is rapidly approaching. If (i) these Conditions are not
satisfied or (where capable of waiver) waived by M&P prior to the Long
Stop Date and (ii) the Panel agrees that they are Conditions relating to
material official authorisations or regulatory clearances and the action that
needs to be taken to obtain the authorisation or clearance to satisfy these
Conditions is not sufficiently clear or is sufficiently clear but would give
rise to circumstances which are of material significance to M&P in the
context of the Acquisition, the Acquisition will lapse and will become
incapable of completing.

 

There can be no certainty that, if the Conditions are not satisfied or (if
capable of waiver) waived before the Long Stop Date, the Board will be
prepared to agree to any extension of the Long Stop Date, if requested by
M&P.

 

Dividend and Future Capital Returns

 

If any dividend, distribution or other return of value in respect of the
Wentworth Shares is declared, paid, made or becomes payable prior to the
completion of the Acquisition, M&P has the right pursuant to the agreed
terms of the Acquisition to reduce the consideration payable for each
Wentworth Share under the terms of the Acquisition by the amount per Wentworth
Share of such dividend, distribution or other return of value.

 

Further, as a result of the "no increase" statement made by M&P in its
announcement on 20 February 2023, which prevents M&P from improving the
financial terms of the Acquisition (other than in the specific circumstances
set out in that announcement), this is a right which M&P must exercise
under the Takeover Code.

 

As a result of this, the Board is not proposing to declare, pay or make any
dividend, distribution or other return of capital in respect of Wentworth
Shares unless and until the Acquisition lapses.

 

As soon as practicable after the Long Stop Date or should the Acquisition
lapse prior, it is the Board's intention to consider as an immediate priority
the declaration of a dividend (payable as an interim dividend so as to not
require shareholder approval) representing the FY 2022 final dividend, the
interim H1 2023 dividend plus an additional "special" dividend in recognition
of both the strong performance of the Company and the patience and forbearance
of all shareholders during the period since the announcement of the
Acquisition, noting in particular, the time that has been taken up by
discussions between M&P and Tanzanian stakeholders in relation to the
above-mentioned Conditions.  The Board is currently undertaking a full
capital allocation analysis to determine the appropriate level of any return
whilst ensuring sufficient liquidity and financial flexibility to meet its
future commitments.

 

 

AGM

 

The Company had previously postponed its 2023 Annual General Meeting,
typically held in June each year, due to the ongoing implementation of the
Acquisition. The AGM will now be held in December and the Notice of AGM,
containing all details of Resolutions and how to vote, is expected to be
published in the coming week.

 

Katherine Roe, Chief Executive of Wentworth, commented:

"We thank shareholders for their patience and support during the extended
period of implementation of the proposed M&P Acquisition. The Board
continues to work for a positive resolution of the  Acquisition before the
Long Stop Date of 31 December 2023.  In the event that the Acquisition
lapses, we will consider as an immediate priority the making of significant
dividend distributions with respect to FY 2022 and 2023.

"We will continue to update shareholders regularly between now, the upcoming
AGM and the Long Stop Date."

 

Terms used but not defined in this announcement shall have the meaning given
to them in the Scheme Document.

 

In accordance with Rule 26 of the Code, a copy of this announcement will be
available on the Company's website at
www.wentplc.com/investors/offer-for-wentworth/, where a copy of the Scheme
Document can also be found. The content of the website referred to in this
announcement is not incorporated into and does not form part of this
announcement.

 

Ends

 Enquiries:

 Wentworth Resources             Chief Executive Officer                                                     katherine.roe@wentplc.com (mailto:katherine.roe@wentplc.com)

+44 (0) 7841 087 230
                                 Katherine Roe

 Stifel Nicolaus Europe Limited  AIM Nominated Adviser and Joint Broker                                       +44 (0) 20 7710 7600

Callum Stewart

Simon Mensley

  Peel Hunt LLP                  Joint Broker                                                                 +44 (0) 20 7418 8900

Richard Crichton

Georgia Langoulant

  FTI Consulting                 Communications Advisor                                                       +44 (0) 20 3727 1000

Sara Powell

                                                                           wentworth@fticonsulting.com
                                 Ben Brewerton

                                 Ollie Mills

 

About Wentworth Resources

Wentworth Resources plc (AIM: WEN) is a leading, domestic natural gas producer
in Tanzania with a core producing asset at Mnazi Bay in the onshore Rovuma
Basin in Southern Tanzania.

 

Further information

Important Notices relating to the Financial Advisers

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
by the FCA in the UK, is acting as financial adviser, nominated adviser and
corporate broker exclusively for Wentworth and no one else in connection with
the matters referred to in this announcement and will not be responsible to
anyone other than Wentworth for providing the protections afforded to its
clients or for providing advice in relation to matters referred to in this
announcement. Neither Stifel, nor any of its affiliates, owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Stifel in connection with this announcement, any statement
contained herein or otherwise.

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated by the FCA in
the UK, is acting as corporate broker exclusively for Wentworth and no one
else in connection with the matters referred to in this announcement and will
not be responsible to anyone other than Wentworth for providing the
protections afforded to its clients or for providing advice in relation to
matters referred to in this announcement. Neither Peel Hunt, nor any of its
affiliates, owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Peel Hunt in connection with
this announcement, any statement contained herein or otherwise.

Overseas jurisdictions

The release, publication or distribution of this Announcement in or into, and
the availability of the Acquisition to persons who are residents, citizens of
nationals of, jurisdictions other than the United Kingdom or Jersey may be
restricted by law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom or Jersey should inform themselves
about, and observe any applicable legal or regulatory requirements. In
particular, the ability of persons who are not resident in the United Kingdom
or Jersey to accept or procure the acceptance of the Acquisition (when made)
may be affected by the laws of the relevant jurisdictions in which they are
located. Any failure to comply with the applicable restrictions may constitute
a violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. This Announcement has been prepared for the
purpose of complying with English and Jersey law, the Code, the Market Abuse
Regulation and the Disclosure Guidance and Transparency Rules and the
information disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with the laws
of jurisdictions outside the United Kingdom or Jersey.

The receipt of cash pursuant to the Acquisition by Wentworth Shareholders may
be a taxable transaction under applicable national, state and local, as well
as foreign and other tax laws. Each Wentworth Shareholder is urged to consult
their independent professional adviser regarding the tax consequences of the
Acquisition applicable to them.

Further details in relation to Wentworth Shareholders in overseas
jurisdictions are contained in the Scheme Document.

The Acquisition will be subject to the applicable requirements of the Code,
the Panel, the Jersey Companies Law, the London Stock Exchange and the FCA.

Notes to US investors in Wentworth

Shareholders in the United States should note that the Acquisition relates to
the shares of a Jersey company and is proposed to be made by means of a scheme
of arrangement provided for under, and governed by, Jersey law.  Neither the
proxy solicitation nor the tender offer rules under the US Securities Exchange
Act of 1934, as amended, will apply to the Scheme.  Moreover the Scheme will
be subject to the disclosure requirements and practices applicable in the UK
and Jersey to schemes of arrangement, which differ from the disclosure
requirements of the US proxy solicitation rules and tender offer rules.
Financial information included in this Announcement and the Scheme Document
has been or will be prepared in accordance with accounting standards
applicable in the UK and Jersey and may not be comparable to financial
information of US companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States. If M&P exercises its right to implement the Acquisition by
way of a Takeover Offer and determines to extend the offer into the United
States, such offer will be made in compliance with applicable United States
securities laws and regulations.

Wentworth and M&P are organised under the laws of Jersey and France
respectively.  Some or all of the officers and directors of Wentworth and
M&P are residents of countries other than the United States.  It may not
be possible to sue Wentworth and M&P in a non-US court for violations of
US securities laws.  It may be difficult to compel Wentworth, M&P and
their respective affiliates to subject themselves to the jurisdiction and
judgment of a US court.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act, M&P or its nominees, or its brokers (acting as agents), may
from time to time make certain purchases of, or arrangements to purchase
Wentworth Shares outside of the United States, other than pursuant to the
Acquisition, until the date on which the Acquisition becomes Effective, lapses
or is otherwise withdrawn.  These purchases may occur either in the open
market at prevailing prices or in private transactions at negotiated prices.
Any information about such purchases will be disclosed as required in the UK,
will be reported to the Regulatory Information Service of the London Stock
Exchange and will be available on the London Stock Exchange website at
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.

This Announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.

Neither the US Securities and Exchange Commission nor any securities
commission of any state or other jurisdiction of the United States has
approved the Acquisition, passed upon the fairness of the Acquisition, or
passed upon the adequacy or accuracy of this Announcement. Any representation
to the contrary is a criminal offence in the United States.

Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the Announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the Announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website
at www.thetakeoverpanel.org.uk (http://www.thetakeoverpanel.org.uk/)  ,
including details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified. You should
contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are
in any doubt as to whether you are required to make an Opening Position
Disclosure or a Dealing Disclosure.

Forward - looking statements

This Announcement contains certain forward-looking statements, including
statements regarding M&P's and Wentworth's plans, objectives and expected
performance.  Such statements relate to events and depend on circumstances
that will occur in the future and are subject to risks, uncertainties and
assumptions.  There are a number of factors which could cause actual results
and developments to differ materially from those expressed or implied by such
forward looking statements, including, among others the enactment of
legislation or regulation that may impose costs or restrict activities; the
re-negotiation of contracts or licences; fluctuations in demand and pricing in
the oil and gas industry; fluctuations in exchange controls; changes in
government policy and taxations; industrial disputes; war and terrorism. These
forward-looking statements speak only as at the date of this Announcement.

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.

 

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