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Oil and gas explorer and producer Aminex plc (LSE:AEX) is to sell a portion of its stake in the newly discovered hydrocarbon basin in East Africa as the company seeks funding to continue its resource exploration in its asset in Tanzania.
In a statement today, Aminex Chief Executive, Stuart Detmer said a formal farm out process for its 75%-controlled Rovuma Production Sharing Agreement has been initiated “to manage its future capital expenditure exposure on this highly prospective block.”
Aminex had expanded its interest in the Rovuma PSA when Tullow Oil (LSE:TLW) withdrew from supporting the continued drilling of the Ntorya well back in February after the original target did not encounter the expected oil and gas accumulation.
Gas was eventually discovered deep within the acreage with estimates set at about 1.2 trillion cubic feet (tcf) of gas or about 195 million barrels of oil equivalent (boe), duplicating the recent discoveries in nearby acreages within the Rovuma Basin, now holding over 100 tcf and soon to be a major liquefied natural gas (LNG) hub.
Funding Needed
A 900-kilometre onshore seismic programme is planned within the 6,000-square kilometre licence within the second half of the 2012 fiscal year following the latest independent estimates that the licence contains about 5.75 tcf of undiscovered gas trapped within.
However, the company has suffered a poor financial performance for the first six months of the year following the decline in gas prices and the subsequent disposal of its producing assets in the United States, losing US$3.2 million, compared to just US$0.9 million net loss for the whole of 2011.
A US$15 million loan was also announced to be under negotiations to augment the company’s net cash flow of US$5.17 million as at 30th June 2012, after spending nearly US$10 million in exploration activities, including the drilling of the Ntorya well – where the seismic programme’s focus will be.
Re-writing the JV
Aminex plans to divest as much as 50% of the total stake in the Rovuma PSA through a joint farm-out agreement with its partner, Solo Oil (LSE:SOLO), which holds the other 25% interest.
In a separate statement also issued today, Solo Oil announced it signed a Vendor Collaboration Agreement with Aminex in relation to the said farm-out process.
Market Reaction
Both listed on the London Stock Exchange, Aminex and Solo Oil received different reactions from the market following the announcement.
Shares of the main market player Aminex traded lightly with only over 1.7 million shares to lift the share price up by 5% to 4.2 pence by 11:00 AM GMT, whilst over 35 million shares of Solo Oil were traded by investors at around the same time.
Gaining 11% earlier today minutes after the market opened in London, Solo Oil shares were down -1.5% to 0.33 pence by 11:30 AM GMT.
