PRESS RELEASE
28 February 2017
Wentworth Resources Limited
("Wentworth" or the "Company")
Update and Q4 2016 Financial Statements and MD&A
Wentworth Resources Limited, the Oslo Stock Exchange (OSE: WRL) and London Stock Exchange (AIM: WRL) listed independent, East Africa-focused oil & gas company, today announces an operational update along with its unaudited results for the fourth quarter and twelve months ended 31 December 2016.
The following should be read in conjunction with the Q4 2016 Management Discussion and Analysis ("MD&A") and Condensed Consolidated Interim Financial Statements which are available on the Company's updated website at http://www.wentworthresources.com.
Wentworth shall be issuing its audited 2016 Annual Consolidated Financial Statements and MD&A following publication of the results of an annual independent evaluation of the gas reserves at 31 December 2016 within the Mnazi Bay Concession in Tanzania, carried out by RPS Energy Canada Ltd. ("RPS"), Calgary, Canada which is expected during March 2017.
OPERATIONAL AND FINANCIAL UPDATE
- Mnazi Bay field production has averaged 44 MMscf/d year-to-date 2017, in line with guidance of 40 - 50 MMscf/d for 2017.
- In addition, increasing gas demand from industrial customers, including Goodwill Ceramics and Dangote Cement, is expected in 2017.
- Kinyerezi-I Expansion and Kinyerezi-II gas-fired power generation facilities are under construction and on schedule for completion and commission starting in 2018; anticipated additional demand from power sector of 70 - 80 MMscf/d once these new facilities are fully operational.
- All capital and operating expenditures incurred during 2016 expected to be fully settled during Q1 2017; minimal capital expenditure planned during 2017.
- Production facilities now fully invested with capacity of up to 130 MMscf/d and current well deliverability expected to support substantial increase in demand.
- Work underway to secure industry partners for the appraisal programme of the Tembo gas discovery in Mozambique; appraisal activities expected to commence once industry partners are secured.
- Amended the timing of principal payments on the existing $20.0 million credit facility to better align with the current production profile and without further leveraging the Company at this time.
- Secured access to a new $2.5 million overdraft facility for working capital purposes.
Q4 2016 HIGHLIGHTS
Financial
- Gas sales revenue of $2.73 million for the quarter, compared to $3.10 million in Q4 2015.
- Net loss of $0.42 million during Q4 2016 compared to a profit after tax of $32.81 million in Q4 2015,which includes a non-cash deferred tax recovery of $34.34 million.
- Capital expenditures of $0.67 million compared to $0.73 million during Q4 2015.
- Cash and cash equivalents on hand of $0.98 million compared with $2.75 million on hand at December 31, 2015.
- Working capital was $4.96 million compared to $11.98 million at December 31, 2015.
- Reduced outstanding debt to $20.67 million following a $1.0 million principal payment during Q4 2016 (2015 - $26.0 million).
Operational
Tanzania
- The Mnazi Bay field achieved average gross daily gas production during the fourth quarter of 39.4 MMscf/d compared to 34.3 MMscf/d during Q3 2016 as less downtime was experienced at the gas fired power generation facilities, Ubungo-II and Kinyerezi-I power stations.
- Expansion of the liquid separation units and gas processing facilities at Mnazi Bay was ongoing during Q4 2016 with commissioning and full operations expected in Q2 2017.
Mozambique
- Completed reprocessing of approximately 1,000 km of 1984/1985 vibroseis data which represents all of the existing regional seismic coverage over the Tembo appraisal area.
- Finalized the design details of a new 2D seismic survey of approximately 700 km of new data.
Geoff Bury, Managing Director, commented:
"Fourth quarter gas sales volumes were in line with our guidance of 40 and 50 MMscf/d and we remain confident this level is achievable for 2017, as we anticipate new demand from a local cement factory and a ceramics facility. We expect a material increase in gas demand beginning in 2018 when the new Kinyerezi-I expansion and Kinyerezi-II power plants are commissioned. The Company has taken prudent steps in order to reduce administrative and overhead costs coinciding with the reduction in capital activity expected in 2017. During the quarter we have also had productive discussions with our external lenders, amending the timing of principal payments on the existing $20.0 million facility, to better align repayments with the current production profile. We are confident in the Company's ability to generate positive cashflow at the existing production levels, allowing any upside in demand during 2017 to directly benefit the bottom line."
"The Company is focused on advancing a new 2D seismic acquisition program over the Tembo appraisal area in Mozambique and will be looking to secure an industry partner to share the costs and risk on the appraisal of the gas discovery."
"We enter 2017 with a positive outlook and with a business which is well positioned to take full advantage of the growing gas to power energy sector in Tanzania."
A conference call for investors, analysts and other interested parties will be held this morning at 01:30 MST (Calgary) / 08:30 GMT (London) / 09:30 CET (Oslo). Call in numbers:
Call in numbers:
Canada: +1 647 484 0480
Norway: +47 2350 0296
United States: +1 719 457 2086
International/ United Kingdom Dial In: +44 (0)330 336 9411
The participants will be asked for their name, company and confirmation code. The Wentworth Resources confirmation code is: 3878585.
| Enquiries: | ||
| Wentworth | Lance Mierendorf, Chief Financial Officer | lance.mierendorf@wentworthresources.com +1 403 680 8773 |
| Katherine Roe Vice President Corporate Development & Investor Relations | katherine.roe@wentworthresources.com +44 7841 087 230 | |
| Crux Advisers | Investor Relations Adviser (Norway) | +47 909 808 48 |
| Carl Bachke | ||
| Stifel Nicolaus Europe Limited | AIM Nominated Adviser and Broker (UK) | +44 (0) 20 7710 7600 |
| Callum Stewart Nicholas Rhodes | ||
| Ashton Clanfield | ||
| FirstEnergy Capital | Broker (UK) | +44 (0) 20 7448 0200 |
| Hugh Sanderson | ||
| FTI Consulting | Investor Relations Adviser (UK) | wentworth@fticonsulting.com +44 (0) 20 3727 1000 |
| Edward Westropp | ||
Financial Statements
The following primary statements have been extracted from the Q4 2016 unaudited condensed consolidated financial statements which are located on the Company's website at www.wentworthresources.com.
WENTWORTH RESOURCES LIMITED
Unaudited Condensed Consolidated Interim Statement of Financial Position
United States $000s, unless otherwise stated
| December 31, 2016 | December 31, 2015 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 979 | 2,746 |
| Trade and other receivables | 6,699 | 3,253 |
| Prepayments, deposits and advances to partners | 187 | 841 |
| Current portion of long-term receivables | 12,283 | 18,190 |
| 20,148 | 25,030 | |
| Non-current assets | ||
| Long-term receivables | 18,034 | 18,897 |
| Exploration and evaluation assets | 45,538 | 43,141 |
| Property, plant and equipment | 93,366 | 95,168 |
| Deferred tax asset | 31,145 | 34,341 |
| 188,083 | 191,547 | |
| Total assets | 208,231 | 216,577 |
| LIABILITIES | ||
| Current liabilities | ||
| Trade and other payables | 8,675 | 6,269 |
| Current portion of long-term loans | 5,258 | 5,270 |
| Current portion of other liability | 1,260 | 1,508 |
| 15,193 | 13,047 | |
| Non-current liabilities | ||
| Long-term loans | 15,254 | 20,512 |
| Other liability | 1,100 | 1,634 |
| Decommissioning provision | 773 | 973 |
| 17,127 | 23,119 | |
| Equity | ||
| Share capital | 411,493 | 411,493 |
| Equity reserve | 26,275 | 25,683 |
| Accumulated deficit | (261,857) | (256,765) |
| 175,911 | 180,411 | |
| Total liabilities and equity | 208,231 | 216,577 |
WENTWORTH RESOURCES LIMITED
Unaudited Condensed Consolidated Interim Statement of Comprehensive Loss
United States $000s, unless otherwise stated
| Three months ended December 31, | Twelve months ended December 31, | |||
| 2016 | 2015 | 2016 | 2015 | |
| Total revenue | 2,730 | 3,101 | 11,750 | 4,637 |
| Operating expenses | ||||
| Production and operating | (923) | (569) | (3,371) | (3,214) |
| General and administrative | (1,264) | (2,035) | (5,397) | (6,367) |
| Depreciation and depletion | (729) | (1,045) | (3,864) | (1,707) |
| Share based compensation | (121) | (173) | (592) | (767) |
| Loss from operating | (307) | (721) | (1,474) | (7,418) |
| Finance income | 1,051 | 1,020 | 4,693 | 4,818 |
| Finance costs | (1,045) | (1,829) | (5,115) | (4,707) |
| Loss before tax | (301) | (1,530) | (1,896) | (7,307) |
| Deferred tax (expense)/recovery | (121) | 34,341 | (3,196) | 34,341 |
| Net (loss)/profit and comprehensive (loss)/profit | (422) | 32,811 | (5,092) | 27,034 |
| Net (loss)/profit per ordinary share | ||||
| Basic and diluted (US$/share) | - | 0.19 | (0.03) | 0.17 |
WENTWORTH RESOURCES LIMITED
Unaudited Condensed Consolidated Interim Statement of Changes in Equity
United States $000s, unless otherwise stated
| Number of shares | Share capital | Equity reserve | Accumulated deficit | Total equity | |
| $ | $ | $ | $ | ||
| Balance at December 31, 2014 | 154,122,700 | 404,225 | 24,916 | (283,799) | 145,342 |
| Net loss and comprehensive loss | - | - | - | 27,034 | 27,034 |
| Share based compensation | - | - | 767 | - | 767 |
| Issue of share capital | 15,412,269 | 7,639 | - | - | 7,639 |
| Share issue costs | - | (371) | - | - | (371) |
| Balance at December 31, 2015 | 169,534,969 | 411,493 | 25,683 | (256,765) | 180,411 |
| Balance at December 31, 2015 | 169,534,969 | 411,493 | 25,683 | (256,765) | 180,411 |
| Net loss and comprehensive loss | - | - | - | (5,092) | (5,092) |
| Share based compensation | - | - | 592 | - | 592 |
| Balance at December 31, 2016 | 169,534,969 | 411,493 | 26,275 | (261,857) | 175,911 |
WENTWORTH RESOURCES LIMITED
Unaudited Condensed Consolidated Interim Statement of Cash Flows
United States $000s, unless otherwise stated
| Three months ended December 31, | Twelve months ended December 31, | ||||
| 2016 | 2015 | 2016 | 2015 | ||
| Operating activities | |||||
| Net (loss)/profit for the period | (422) | 32,811 | (5,092) | 27,034 | |
| Adjustments for: | |||||
| Depreciation and depletion | 729 | 1,045 | 3,864 | 1,707 | |
| Finance (income)/costs, net | (6) | 809 | 422 | (111) | |
| Deferred tax expense/(recovery) | 121 | (34,341) | 3,196 | (34,341) | |
| Share based compensation | 121 | 173 | 592 | 767 | |
| Change in non-cash working capital | (1,371) | (348) | (2,506) | 175 | |
| Net cash (utilized in)/generated from operating activities | (828) | 149 | 476 | (4,769) | |
| Investing activities | |||||
| Acquisitions of evaluation and exploration assets | (736) | 687 | (2,371) | (10,299) | |
| Acquisitions of property, plant and equipment | (2,338) | (692) | (2,347) | (12,926) | |
| Reductions of/(additions to) long-term receivable | 2,469 | 556 | 10,763 | (1,116) | |
| Interest income | - | 7 | - | 7 | |
| Net cash (used in)/from investing activities | (605) | 558 | 6,045 | (24,334) | |
| Financing activities | |||||
| Proceeds from long-term loan | - | - | - | 20,000 | |
| Repayment of long-term loan | (1,000) | - | (5,333) | - | |
| Interest paid | (214) | (243) | (2,073) | (906) | |
| Issue of share capital, net of issue costs | - | - | - | 7,268 | |
| Payment of other liability | (102) | - | (882) | - | |
| Net cash (used in)/from financing activities | (1,316) | (243) | (8,288) | 26,362 | |
| Net change in cash and cash equivalents | (2,749) | 464 | (1,767) | (2,741) | |
| Cash and cash equivalents, beginning of the period | 3,728 | 2,282 | 2,746 | 5,487 | |
| Cash and cash equivalents, end of the period | 979 | 2,746 | 979 | 2,746 | |
About Wentworth Resources
Wentworth Resources is a publicly traded (OSE:WRL, AIM:WRL), independent oil & gas company with: natural gas production; exploration and appraisal opportunities; and large-scale gas monetisation initiatives, all in the Rovuma Delta Basin of coastal southern Tanzania and northern Mozambique.
Cautionary note regarding forward-looking statements
This press release may contain certain forward-looking information. The words "expect", "anticipate", believe", "estimate", "may", "will", "should", "intend", "forecast", "plan", and similar expressions are used to identify forward looking information.
The forward-looking statements contained in this press release are based on management's beliefs, estimates and opinions on the date the statements are made in light of management's experience, current conditions and expected future development in the areas in which Wentworth is currently active and other factors management believes are appropriate in the circumstances. Wentworth undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable law.
Readers are cautioned not to place undue reliance on forward-looking information. By their nature, forward-looking statements are subject to numerous assumptions, risks and uncertainties that contribute to the possibility that the predicted outcome will not occur, including some of which are beyond Wentworth's control. These assumptions and risks include, but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in exploration, development and production, delays or changes in plans with respect to exploration or development projects or capital expenditures, the imprecision of resource and reserve estimates, assumptions regarding the timing and costs relating to production and development as well as the availability and price of labour and equipment, volatility of and assumptions regarding commodity prices and exchange rates, marketing and transportation risks, environmental risks, competition, the ability to access sufficient capital from internal and external sources and changes in applicable law. Additionally, there are economic, political, social and other risks inherent in carrying on business in Tanzania and Mozambique. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. See Wentworth's Management's Discussion and Analysis for the year ended December 31, 2015, available on Wentworth's website, for further description of the risks and uncertainties associated with Wentworth's business.
Notice
Neither the Oslo Stock Exchange nor the AIM Market of the London Stock Exchange has reviewed this press release and neither accepts responsibility for the adequacy or accuracy of this press release.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.
