Wentworth Resources Ltd Wentworth Resources Limited : Q3 2017 Financial Statements And Md&A

 
TIDMWRL 
 
 
 
 
 
 
   PRESS RELEASE 
 
   14 November 2017 
 
   Wentworth Resources Limited 
 
   ("Wentworth" or the "Company") 
 
   Q3 2017 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 its results for the quarter and nine 
months ended 30 September 2017. 
 
   Financial 
 
   Gas sales revenue of $4.1 million for the quarter, compared to $2.15 
million in Q2 2017 and $2.38 million in Q3 2016.  For the first nine 
months of 2017 revenue was $9.20 million compared to $9.02 million in 
2016. 
 
 
   -- Net profit of $0.7 million and net loss of ($0.95) million for the three 
      and nine month periods of 2017 respectively compared to losses of ($3.59) 
      million and ($4.67) million in 2016 respectively. 
 
   -- Capital expenditures of $0.84 million and $2.14 million for the three and 
      nine month periods respectively compared to $0.97 million and $3.79 
      million in 2016 respectively. 
 
   -- Cash and cash equivalents on hand of $3.36 million at 30 September 2017 
      compared with $0.98 million on hand at 31 December 2016. 
 
   -- Working capital of $13.48 million at 30 September 2017 compared to $9.08 
      million at 30 June 2017 and $4.96 million at 31 December 2016. 
 
   -- At the date of the press release TPDC has initiated payment for the 
      October 2017 gas sales invoice totalling $2.6 million cash net to 
      Wentworth. 
 
 
   Operational 
 
   Tanzania 
 
 
   -- The level of gas demand has stabilized during 2017 compared to 2016. 
 
   -- The Mnazi Bay field achieved average gross daily gas production of 60 
      MMscf/d during Q3 2017 and 45 MMscf/d year to date 2017. Full year 2017 
      production forecast remains within Management's previously guided range 
      of between 40 and 50 MMscf/d. 
 
   -- During the course of 2017 receivables increased but have stabilized at 
      between four and five months outstanding from the main purchaser of Mnazi 
      Bay gas.  The Company continues to manage working capital with creditors 
      to match the settlement of obligations with the timing of payments for 
      gas sales. 
 
   -- Cash payments of $5.18 million were received relating to gas sales 
      invoices, net to Wentworth, during Q3. 
 
 
   Mozambique 
 
 
   -- Completed the analysis of the Tembo-1 well drilled in 2014 and the 
      reprocessing of existing 2-D vibroseis seismic data from the Rovuma 
      Onshore Block while continued mapping and interpretation of all existing 
      data. 
 
   -- Continued planning of the drilling activities for an appraisal of the 
      Tembo-1 gas discovery, including designing the appraisal well, selecting 
      a well location, obtaining necessary environmental permits and initiating 
      preliminary procurement activities. 
 
   -- Continued the farm-out process to secure an industry partner to 
      participate in the appraisal programme in advance of drilling the 
      appraisal well in 2018. 
 
 
   Geoff Bury, Managing Director, commented: 
 
   "Q3 2017 was the strongest production performance in the Company's 
history with gross gas sales averaging 60 MMscf/d, a level anticipated 
to be achieved for the remainder of 2017.  In the near term, the Company 
is in a dominant position to take full advantage of increasing gas 
demand in Tanzania from the electrical power generation and industrial 
demand and reduced gas volumes supplied into the transnational pipeline 
by peers.  There is near-term incremental gas demand expected from the 
start of the commissioning of the newly constructed, government owned, 
Kinyerezi-2 power station and commencement of gas fired power generation 
at the Dangote Cement plant.  The combined gas demand is expected to 
initially require 10-12 MMscf/d of gas, at the time of start-up in the 
next two to four months, increasing to approximately 60 MMscf/d when 
these facilities become fully operational, which is expected during the 
second half of 2018. 
 
   We have substantially advanced pre-drilling activities for the Tembo 
appraisal well in our oil and gas concession in Mozambique with a plan 
to commence drilling operations late in Q2 2018.  The Company has 
completed the Tembo-2 well design and has commenced the procurement 
process for long lead items.  Furthermore, we have identified drilling 
rigs in the region capable of drilling to the planned depth and are in 
the process of determining the civil works necessary to prepare the well 
site location.  In parallel, we are actively seeking one or more 
industry partners to participate in the drilling of this prospect and 
to-date have received positive interest.  If successful, it will provide 
significant running room within the block and should add substantial 
value to the investment in Mozambique." 
 
   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). 
 
   Dial in numbers: 
 
   Please dial in 5-10 minutes prior to the start time and join the call by 
referencing "Wentworth Resources Q3 Results". 
 
   Participant Dial in Numbers: 
 
 
 
 
 
   All locations: + 44 20 3059 8125 
 
   United Kingdom (Local): 020 3059 8125 
 
   United States (Local): [phone] 
 
   Canada (Toll Free): [phone] 
 
   Norway (Toll Free): 800 69 940 
 
   -Ends- 
 
 
 
 
Enquiries:      Lance Mierendorf                                             [e-mail] 
 Wentworth       Chief Financial Officer                                                 [phone] 
                Katherine Roe                                                 [e-mail] 
                 Vice President Corporate Development & Investor Relations               [phone] 
Stifel 
 Nicolaus       AIM Nominated Adviser and Broker (UK) 
 Europe          Callum Stewart 
 Limited         Ashton Clanfield                                                               [phone] 
                Broker (UK) 
GMP              Hugh Sanderson 
 FirstEnergy     Jonathan Wright                                                                [phone] 
                Broker (UK) 
                 Richard Crichton 
                 Ross Allister 
Peel Hunt LLP    Chris Burrows                                                                  [phone] 
                Investor Relations Adviser (UK) 
                 Edward Westropp                                                         [e-mail] 
FTI Consulting   Kim Camilleri                                                                  [phone] 
                Investor Relations Adviser 
                 (Norway) 
Crux Advisers    Carl Bachke                                                                          [phone] 
 
 
   Key extracts of the Q3 2017 Management Discussion and Analysis are set 
out below and should be read in conjunction with the complete Q3 2017 
Management Discussion and Analysis which is available on the Company's 
updated website at http://www.wentworthresources.com. 
 
   Operations Overview 
 
   Mnazi Bay Concession, Tanzania 
 
   Mnazi Bay gas sold to Tanzania Petroleum Development Corporation 
("TPDC") is primarily utilized by Tanzania Electricity Supply Company 
Limited ("TANESCO") as a fuel source to power its electrical generation 
plants serving the National Electricity Grid in Tanzania.  During Q3 
2017, Mnazi Bay gas was used to fuel two TANESCO-owned power stations 
located within the city of Dar es Salaam: Kinyerezi-1 and Ubungo-II. 
Additional gas-fired power generation is expected to materialize within 
the next three to eighteen months with the completion and commissioning 
of the Kinyerezi-2 power station and the Kinyerezi-1 Extension.  The 240 
MW Kinyerezi-2 power station is expected to commence the commissioning 
process in December 2017 with the first of six gas power turbines being 
tested and becoming operational.  Completion of the commissioning 
process for the entire Kinyerezi-2 power station is expected by Q3 2018. 
Demand for Mnazi Bay gas to power this facility is expected to be 5 
MMscf/d at start up and reach 36 MMscf/d by the end of Q3 2018. 
Commissioning of the 185 MW Kinyerezi-1 Extension is expected to 
commence during Q4 of 2018 and, once fully operational in 2019, is 
expected to require an additional 35 MMscf/d to generate electrical 
power. 
 
   For the three and nine months of 2017, the Mnazi Bay gas field delivered 
59.9 MMscf/d and 44.7 MMscf/d respectively compared to 34.3 MMscf/d and 
44.2 MMscf/d respectively during 2016.  Both the Kinyerezi-1 and 
Ubungo-II power stations operated at near full capacity during the 
entire third quarter of 2017 resulting in a 75 percent increase compared 
to the same quarter during 2016.   In addition, higher quantities of 
Mnazi Bay gas were used for electrical power generation during Q3 2017 
compared to Q2 2017 as hydro power generation as a substitute for 
natural gas was significantly reduced following the end of the rainy 
season and lower quantities of gas were supplied by industry 
competitors. 
 
   Production from Mnazi Bay gas has recently peaked at over 70 MMscf/d in 
October 2017 while full year 2017 production is anticipated to be in the 
high end of Management's guidance of between 40 - 50 MMscf/d. 
 
   During Q2 2017, TPDC commenced delivery of Mnazi Bay gas to its first 
industrial customer, a newly constructed ceramic tile factory, Goodwill 
Ceramics.  Gas demand to power the factory is expected to reach 7 
MMscf/d by the end of 2017 and be sustained at that level thereafter. 
At the end of Q3 2017, gas deliveries to the ceramic tile company were 
approximately 5.5 MMscf/d. 
 
   Additional gas demand from growth in the industrial sector in Tanzania 
is expected to be realized in the near future.  During 2017, TPDC 

concluded a commercial arrangement to supply gas to a Dangote cement 
plant for power generation and for firing its klinker kilns used in the 
production of cement.  A new gas pipeline connecting the temporary power 
generation unit to the TPDC owned 36-inch transnational pipeline is 
currently in the process of being installed. The installation of a 35MW 
power generation unit and associated power supply to the Dangote cement 
plant is expected to be commissioned during Q1 2018.  Dangote also 
announced a plan to eliminate coal and convert the entire plant to gas, 
including the kiln furnaces for roasting the klinker, envisaging a 
permanent combined cycle power plant being built on the premises of the 
Dangote Cement factory. 
 
   Initial gas demand of between 5 and 7 MMscf/d for temporary power 
generation is expected to commence towards the end of Q1 2018.   The 
kilns are expected to be fired by natural gas commencing Q2 2018, and 
will require an additional 8 and 10 MMscf/d of natural gas, increasing 
to between 20 and 25 MMscf/d in 2019. The temporary 35MW gas fired plant 
is planned to be replaced by the combined cycle plant using steam 
turbines in Q1 2019. 
 
   On a much smaller scale, Mnazi Bay gas is sold directly to TANESCO for 
electrical power generation at a 18MW power plant at Mtwara. The power 
station provides electricity to the isolated grid serving the region and 
includes the towns of Mtwara, Madimba, Lindi, Msassi and Newala.  Gas 
quantities of between 2 and 2.5 MMscf/d are being supplied to the power 
plant through an 8-inch pipeline which is owned by the Mnazi Bay joint 
venture. 
 
   During the third quarter of 2017, minor works continued the expansion of 
the Mnazi Bay joint venture owned processing facilities at Msimbati. 
Primary processing of the Mnazi Bay gas is required at Msimbati to 
remove free liquids before the gas enters the sub-marine pipeline that 
connects into the Madimba Gas Processing Facility.  The expansion of the 
processing facilities, together with tying-in all 5 wells completes all 
the necessary field infrastructure work to enable delivery of gas 
volumes expected to be in excess of 100 MMscf/d to the TPDC owned 
pipeline to Dar es Salaam. Commissioning of these new facilities is 
expected in December 2017.  With the completion of these capital 
investments it is anticipated that there will not be a need for 
significant additional capital expenditure until the average daily 
demand exceeds 100 MMscf/d for an extended period of time. 
 
   During July 2017, the Government of Tanzania enacted the following laws: 
the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017, the 
Written Laws (Miscellaneous Amendments) Act, 2017, and the Natural 
Wealth and Resources Contracts (Review and Re-Negotiation of 
Unconscionable Terms) Act, 2017 which cover activities within the energy 
and mining sectors. The first and second of these acts are forward 
looking and only apply to agreements entered into on or after the date 
of the legislative changes. These acts contain new regulations including 
but not limited to regulations that all arbitration processes must be 
heard within Tanzania and place restriction on the ability to move funds 
out of Tanzania. The third act covers existing agreements and provides, 
among other things, the right to the Government of Tanzania to 
renegotiate clauses within existing agreements that are deemed to have 
unconscionable terms.  The Company has undertaken a review of these new 
laws to determine their implications on the Company's Tanzania 
operations. Based on our current understanding of this new legislation 
and given the existing terms and conditions of our relevant agreements, 
we do not anticipate any material impact on our existing operations in 
the short to medium term.  It is unclear whether there will be any 
material impact in the long-term. 
 
   Appraisal of the Rovuma Onshore Block, Mozambique 
 
   Extension of the Rovuma Onshore Exploration Concession to conduct an 
appraisal of the Tembo-1 gas discovery was granted to Wentworth by the 
Government on June 15, 2016. On that same date, Wentworth was approved 
as the operator of the concession and now holds an 85 percent 
participation interest, with the Government holding the remaining 15 
percent.  The anticipated work program includes drilling of an appraisal 
well, which is scheduled to commence operations by June 2018. 
 
   During Q3 2017, activities mainly involved reprocessing and analysis of 
existing seismic data with a view to identifying a well site location, 
obtaining environmental licenses, planning for the drilling of an 
appraisal well and compilation of tenders for the procurement of a 
drilling rig and long lead items such as casing and tubing for the well. 
 
 
   The Tembo-2 well will appraise the discovery made at Tembo-1 Well in 
December 2014. Tembo-1 was drilled to 4,553m measured depth.  All data 
available from the Tembo 1 well has been thoroughly examined by the 
Company. The Tembo 2 appraisal well is designed to reach a total depth 
of 3,200m and is planned as a vertical appraisal well to the Lower 
Cretaceous.  Wentworth has started a process to procure the drilling rig 
and long lead items for the appraisal well. Expressions of interest 
(EOI) have been prepared for supply of the drilling rig and casing and 
tubing. The Company has identified several drilling rigs currently 
located within the region which are capable of drilling the planned 
appraisal well. The two EOIs are expected to be published in a 
Mozambican newspaper by the end of 2017 with an invitation to tender 
being sent to prospective bidders prior to year end. 
 
   Finalization of the well location and subsequent site visits to further 
inspect the site for the design of the well pad and site preparation, 
have been delayed due to the deteriorating security situation in and 
around the Macimboa da Praia region which is adjacent to the Company's 
concession area.  Clashes between police and extremists have increased 
during October resulting in a heightened risk profile.  Wentworth is 
monitoring the security situation closely and has sought advice from the 
Mozambican Authorities, the Canadian High Commission, other companies 
operating in the region and local security and risk management 
companies. 
 
   In July 2017, a formal farm-out process was initiated to secure one or 
more industry partners to share in the risk of drilling of the Tembo-2 
appraisal well.  The exercise is ongoing, and Wentworth anticipates 
securing an industry partner prior to commencing drilling operations in 
2018.  Funding of the drilling of the Tembo-2 appraisal well will be 
through internally generated cash flows and sharing of the cost with one 
or more industry partners. 
 
   Financial Overview 
 
   Revenue 
 
   Gas sales to TPDC 
 
   The Company recorded net sales to TPDC of 1,256,662MMBtu during the 
three months ended September 30, 2017, an increase from 2016 of 78%.  On 
a year-to-date basis, 2017 sales volumes were consistent with 2016. A 
more constant level of gas demand from gas fired electrical power 
facilities was experienced during 2017 as many of the start-up, 
commissioning, repairs to power plants and problems with Government 
owned electrical power transmission and distribution infrastructure 
experienced during 2016 were less prevalent. 
 
   The gas sales price was $3.04/MMBtu (Q3 2016 - $3.01/MMBtu) for total 
revenue during Q3 2017 of $3.82 million (Q3 2016 - $2.12 million). 
 
   Gas sales to TANESCO 
 
   Gas sales to an 18 MW gas-fired power plant in Mtwara, Tanzania during 
the third quarter and nine months ended September 30, 2017 were 51,186 
MMBtu (Q3 2016 - 49,256 MMBtu) and 153,116 MMBtu (2016 - 144,473 MMBtu) 
respectively while the gas price remained fixed and unchanged at 
$5.36/MMBtu. The power plant generally operates at below capacity and 
consumes on average between 2.0 and 2.5 MMscf/d.  Total revenue earned 
during the quarter was $0.27 million compared to $0.26 million during 
the same quarter in 2016. 
 
   Production and operating expense 
 
   Production costs within the Mnazi Bay Concession comprise the Company's 
share of field operating costs, Operator's administration and Operator's 
overhead required to manage production operations.  Management expects 
that, on a per Mscf basis, production costs will generally reduce as gas 
volumes increase as most of the field operating costs are fixed in 
nature.  Gross third quarter production was 59.9 MMscf/d compared to 
34.3 MMscf/d during the third quarter of 2016. On a year-to-date basis, 
production averaged 44.7 MMscf/d in 2017 compared to 44.2 MMscf/d during 
2016. Production and operating expenses during the third quarter were 
$0.92 million (quarter ended September 30, 2016 - $0.78 million) and 
were higher in Q3 2017 as the operator billed higher overhead costs 
compared to the same quarter in 2016.  For the nine months of 2017, 
operating expenses were $0.96 per Mcf compared to $0.87 per Mcf for the 
same period in 2016.   Third quarter operating expenses were $0.72 per 
Mcf compared to $1.05 per Mcf for Q3 2016 as higher production volumes 
were experienced during 2017. 
 
   General and administrative ("G&A") expense 
 
   G&A expenses during the third quarter of 2017 were $1.10 million 
compared to $1.07 million for the same period in 2016. During the nine 
months of 2017, G&A expenses were $3.12 million compared to $4.13 
million, a reduction of 25%. Cost saving initiatives and capitalization 
of costs for Mozambique operation after the Company became the operator 
in Q3 2016 have contributed to a reduction in ongoing expenses.  The 
table below shows the breakdown of G&A expenses: 
 
   The table below shows the breakdown of G&A expenses: 
 
 
 
 
                                      Three months ended     Nine months ended 
                                         September 30,           September 30, 
(Figures in $000's)                    2017       2016       2017       2016 
Employee salaries and benefits             423        406      1,246     1,682 

Contractors and consultants                166        198        342       605 
Travel and accommodation                   114        130        267       407 
Professional, legal and advisory           143         94        508       471 
Office and administration                  122        131        398       536 
Corporate and public company costs         134        106        354       432 
                                         1,102      1,065      3,115     4,133 
 
 
   The Company maintains offices in Calgary, Canada, Dar es Salaam, 
Tanzania and Maputo, Mozambique and is listed on the public stock 
exchanges in both Oslo, Norway (Oslo Stock Exchange) and London, UK 
(AIM). Many G&A expenditures are fixed in nature and include such items 
as corporate and public company costs (exchange listing, transfer agent 
and directors' fees), legal fees supporting the compliance with 
corporate and public obligations (Canada, UK and Norway) and 
professional advisory (external audit, resources engineering and Nomad 
for our AIM listing). 
 
   Following the appointment as Operator of the Rovuma Onshore Block in 
Mozambique in June 2016, the Company established an operational presence 
in Mozambique; directly attributable costs relating to the appraisal 
activities within the Rovuma Onshore Block are being capitalized. 
Directly attributable costs during the third quarter and year to date 
totaling $0.20 million (Q3 2016 - $0.39 million) and $0.91 million (YTD 
2016 - $0.53 million) were capitalized. 
 
   Share based compensation 
 
   During the third quarter of 2017, the Company recognized $0.03 million 
(Q3 2016 - $0.11 million) as share based compensation expense.  For the 
nine months of 2017, $0.18 million was recognised compared to $0.47 
million during the same period in year 2016. 
 
   During the third quarter of 2017, no options were granted, exercised or 
forfeited (during Q3 2016 - 350,00 options were forfeited, and no 
options were granted or exercised). A total of 10,600,000 stock options 
were outstanding at September 30, 2017 with 9,266,671 vested and 
exercisable with an average exercise price per share of NOK 4.36 
($0.55). 
 
   Depreciation and depletion 
 
   Depreciation and depletion of gas producing assets of $1.24 million (Q3 
2016 - $0.83 million) or $0.97/Mscf (Q3 2016 - $1.07/Mscf) were recorded 
during third quarter of 2017. For the nine months of 2017, $2.79 million 
(Q3 2016 - $3.14 million) or $0.97/Mscf (Q3 2016 - $1.06/Mscf). At 
September 30, 2017, the net book value of natural gas property, plant 
and equipment was $91.25 million (September 30, 2016 - $94.16 million). 
 
   Finance income and costs 
 
   Finance income and costs that are settled in cash are interest income, 
interest expense and realized foreign exchange gain/(loss) on current 
transactions.  All other finance income and costs are non-cash in 
nature. 
 
   During the quarter ended September 30, 2017, interest expense on the 
long-term loans totalled $0.35 million (Q3 2016 - $0.52 million).  For 
the nine months of 2017, interest expense was $1.23 million compared to 
$1.73 million for the same period in 2016. During the quarter and nine 
months ended September 30, 2017, non-cash accretion of the TPDC 
receivable of $0.69 million (2016 - $1.27 million) and $1.46 million 
(2016 - $3.38 million) was recorded in finance income. During the first 
quarter, the Company revised the accounting estimates used to determine 
the expected amounts and timing of future revenue streams to determine 
collection of the TPDC receivable resulting from revised gas demand 
estimates for future periods obtained from industry sources.  This 
resulted in a $0.87 million being charged to finance costs (2016 - $2.13 
million).   The accounting estimates used to determine the balance of 
amortized cost of the TPDC receivable remain unchanged for the third 
quarter of 2017. 
 
   Non-cash accretion of the Tanzanian Government receivable (Umoja/power) 
of $0.16 million (2016 - $0.12 million) and $0.31 million (2016 - $0.35 
million) for the quarter and nine months ended September 30, 2016 was 
recorded in finance income during the quarter ended September 30, 2017. 
Similar to the determination of the TPDC receivable, during Q1 2017, the 
Company revised the accounting estimates resulting in an amount of $0.49 
million being charged to finance cost (2016 - $0.09 million).  The 
accounting estimates used to determine the balance of amortized cost of 
the Tanzanian Government receivable remain unchanged for the third 
quarter of 2017. 
 
   Deferred tax expense/recovery 
 
   At September 30, 2017, the deferred tax asset of $30.86 million reflects 
the estimated future tax benefit of accumulated tax losses within the 
Tanzanian operations. The commencement of commercial production and 
sales of gas under the long-term Gas Sales Agreement ("GSA") allowed for 
the recognition of deferred tax asset on the accumulated tax losses 
estimated to be utilized in the future.  A non-cash deferred tax expense 
of $0.52 million (2016 - expense of $2.70 million) and $0.29 million 
(2016 - expense of $3.08 million) has been recorded in the quarter and 
nine months ended September 30, 2017 respectively. 
 
   Receivables from gas delivered to TANESCO 
 
   The Company's ongoing exposure to receivables from TANESCO is associated 
with gas sales from the Mnazi Bay Concession to the 18 MW gas-fired 
power plant located in Mtwara, Tanzania.  At September 30, 2017, the 
Mnazi Bay joint venture partners were owed nine months of gas sales, 
with $1.54 million owed to Wentworth. Subsequent to quarter end, TANESCO 
has paid three months of invoices relating to the outstanding balance at 
September 30, 2017 totaling $0.54 million (inclusive of the Company's 
share of the TPDC receivable amount relating to this gas sale). 
 
   Receivables from gas delivered to TPDC 
 
   An amount of $10.43 million is owed to Wentworth at September 30, 2017, 
of which four months invoices are past due. Subsequent to quarter end, 
TPDC has paid $1.59 million for the February 2017 gas sales invoice and, 
as of the date of this MD&A, has initiated payment of $2.61 million for 
the October 2017 gas sales invoice.  The total amount of these two 
invoices is $4.20 million net to Wentworth (inclusive of the Company's 
share of the TPDC receivable amount relating to this gas sale). At 
December 31, 2016, two months worth of invoices were outstanding. TPDC's 
ability to settle gas sales invoices to the Mnazi Bay joint venture in a 
timely manner is directly impacted by the timeliness of TPDC receiving 
payment for gas it sells to TANESCO owned electrical power generation 
plants. Recently, TANESCO has been inconsistent with paying TPDC in a 
timely manner for the gas that TANESCO purchase.  This has a direct 
impact on the cash flows of the Mnazi Bay joint venture partners. 
Wentworth and the operator of the Mnazi Bay Concession continue to 
engage with both TPDC and TANESCO on finding ways to improve the 
timeliness of settling obligations. 
 
   Long-term receivable - TPDC 
 
   The Company has a receivable from TPDC, a 20 percent participating 
interest partner in the Mnazi Bay Concession, for TPDC's share of past 
development and operating costs that were paid by the Company prior to 
June 30, 2009. In addition, the Company has been paying its 
proportionate share of TPDC's share of development and operating costs 
incurred subsequent to June 30, 2009, the value of which has been added 
to the TPDC receivable balance. The Company will recover this receivable 
from an agreed percentage of TPDC's share of current and future revenue 
from the Mnazi Bay Concession.  The undiscounted face value of the TPDC 
receivable at September 30, 2017 is $20.59 million (December 31, 2016 - 
$27.15 million).  Due to its long-term nature, the TPDC receivable has 
been discounted to $18.34 million (December 31, 2016 - $24.84 million). 
With the passage of time and as gas sales are realized, the carrying 
amount of the TPDC receivable is accreted up to the face value with a 
corresponding credit to finance income. 
 
   Based on the Company's internal estimates of potential gas sales volumes, 
the $20.59 million receivable as at September 30, 2017 is expected to be 
fully recovered by Q4 2018.  The recovery of the TPDC receivable is 
expected to provide a significant source of cash flows to the Company 
during this period of recovery.  As gas sales are realized, the current 
portion of the long-term receivable is transferred to accounts 
receivable and settled at the time cash payments are received from 
purchasers of Manzi Bay gas. 
 
   At September 30, 2017, the current portion of the TPDC receivable is 
$13.20 million compared to $12.28 million at December 31, 2016.  During 
Q3 2017, $3.57 million was recovered from TPDC's share of gas sales. 
The current portion of the receivable is updated at each reporting 
period and is calculated taking into consideration the estimated timing 
and amounts of future gas sales. 
 
   Long-term receivable - Tanzanian Government (Umoja/power) 
 
   The Company has an agreement with the Government of Tanzania (TANESCO, 
TPDC and the Ministry of Energy and Mines ("MEM")) to be reimbursed, at 
cost, for past project development costs associated with transmission 
and distribution ("T&D") expenditures. An audit of the Mtwara Energy 
Project ("MEP") development expenditures was completed in November 2012 
and costs of approximately $8.12 million were verified to be 
reimbursable. After deducting costs associated with the Tariff 
Equalization Fund and VAT input credits associated with the MEP totaling 
$1.61 million, the amount agreed to be reimbursed was $6.51 million. 
The receivable is considered long-term in nature and has been discounted 
to reflect the anticipated timing of collection.  The undiscounted face 
value of the Tanzanian Government receivable (Umoja/power) at September 
30, 2017 is $6.51 million (December 31, 2016 - $6.51 million) while the 
discounted value, taking into consideration the anticipated time of 

collection, is $5.31 million (December 31, 2016 - $5.48 million). 
Management continues working with the Government of Tanzania on agreeing 
a mechanism to settle the outstanding balance and anticipates recovering 
the amounts from the Government's share of revenue generated from the 
Mnazi Bay Concession. Timing of reaching an agreement on the 
reimbursement procedure is indeterminable. The Government initiated a 
second audit of the costs to verify the balance owing, the results of 
which are expected to be received in the coming months. 
 
 
 
   Capital expenditures 
 
   During the third quarter of 2017, capital spending totaled $0.84 million 
which were primarily incurred on appraisal activities in Mozambique 
including technical evaluation of the Tembo-1 well, seismic reprocessing 
and interpretation, preliminary planning for drilling an appraisal well 
in 2018 and ongoing in-country operations. 
 
 
 
 
                                            Three months ended     Nine months ended 
(Figures in $000's)                              September                 September 
                                            2017       2016       2017       2016 
Exploration and evaluation assets 
Mozambique 
 Seismic reprocessing and interpretation 
  and analysis of Tembo-1 well results         160          153      414         153 
Drilling preparation and planning              180            -      180           - 
 Exploration drilling                            -            -        -         950 
 Operator and indirect overhead                201          388      864         533 
                                               541          541    1,458       1,636 
Tanzania 
 Seismic acquisition, processing 
  and interpretation                             -            9        -          26 
 
  Property, plant and equipment 
Tanzania 
 Field infrastructure                           99          317      402       1,724 
 Other field development capital               204           98      279         393 
                                               303          415      681       2,117 
Canada 
 IT and office assets                            -            -        -           9 
 
                                               844          965    2,139       3,788 
 
 
 
 
 
   External debt facilities 
 
   Medium term $20 million credit facility 
 
   The principal balance outstanding on the $20.0 million credit facility 
at September 30, 2017 was $13.32 million.  During the nine months of 
2017, principal payments of $3.35 million were made. 
 
   During the second quarter of 2017, the Company executed amendments to 
the credit facility agreement which include the restructuring of 
principal loan payments and the addition of the following new 
provisions: 
 
 
   -- the addition of a Debt Service Coverage Ratio and Loan Live Coverage 
      Ratio as financial covenants; 
 
   -- a requirement to maintain a minimum cash balance; 
 
   -- a cash flow waterfall procedure to ensure certain cash proceeds from gas 
      sales are used in settling obligations in priority; and 
 
   -- in the event the Company decides to accelerate principal payments using 
      funds not generated internally a prepayment fee of 25 percent of interest 
      forgone is required. 
 
 
 
   The Company and the lender are in ongoing discussions on agreeing the 
details and processes relating to implementing and monitoring the new 
provisions. 
 
   Principal repayments on the credit facility are set out in the following 
table. 
 
 
 
 
                             Repayment amount 
Principal repayment date    (Figures in $000's) 
April 30, 2018                            1,665 
July 30, 2018                             1,665 
October 30, 2018                          1,665 
January 30, 2019                          1,666 
April 30, 2019                            1,665 
July 30, 2019                             1,666 
October 30, 2019                          1,665 
January 30, 2020                          1,664 
                                         13,321 
 
 
 
 
   Medium term $6 million credit facility 
 
   At September 30, 2017, the principal amount outstanding on this facility 
was $3.0 million.  During the nine months of 2017, principal payments of 
$1.0 million were made. 
 
   All provisions of the $6.0 million credit facility remain unchanged from 
the original loan agreement executed in December 2014.   Interest is 
paid on a semi-annual basis, in arrears, on the principal repayment 
date.  The principal repayment dates are as follows: 
 
 
 
 
                             Repayment amount 
Principal repayment date    (Figures in $000's) 
December 8, 2017                          1,000 
June 8, 2018                              1,000 
December 8, 2018                          1,000 
                                          3,000 
 
 
   Overdraft $2.5 million credit facility 
 
   During 2017, the Company secured $2.5 million overdraft credit facility 
with a TIB Corporate Bank ("TIB Corp"). The overdraft facility has an 
interest rate of the lender's base lending rate minus 1% per annum to be 
paid monthly.  At September 30, 2017, the lender's base lending rate was 
9%. 
 
   A total of $1.09 million and $1.65 million was drawn from the overdraft 
credit facility during the three and nine months ended September 30, 
2017 respectively. Subsequent to quarter end, a further $0.85 million 
was drawn and the overdraft credit facility has been fully drawn. 
 
   Security provided to the lender includes a debenture over the fixed and 
floating assets of the Company's Tanzanian assets and a deed of 
assignment equivalent to approximately 20% of the revenue/cash flow from 
sales of natural gas from the Tanzanian assets. The Company expects to 
draw on the full amount of the facility during the second half of 2017 
and utilize funds for short-term working capital purposes. 
 
   Shares, share capital and dividends 
 
   On May 23, 2017, the Company completed a private placement and issued 
16,953,496 new common shares, for cash consideration of $0.32 (GBP0.25 
or NOK2.73) per share for total gross proceeds of $5.53 million (GBP4.2 
million or NOK46.3 million). 
 
   Following the private placement offering the Company had 186,488,465 
common shares issued and outstanding.  All outstanding shares at 
September 30, 2017 are of the same class and with equal voting and 
dividend rights. The Company's ordinary shares are listed on the Oslo 
Stock Exchange (ticker: WRL) and denominated in Norwegian Kroner. The 
Company's shares are also traded on the Alternative Investment Market of 
the London Stock Exchange (ticker: WRL) and denominated in British 
Pounds. 
 
   As the Company is in the early stage of its operations, it does not have 
a formal dividend policy. No dividends have ever been declared or paid 
by the Company. There are no restrictions on dividend distributions.  At 
the Annual General Meeting in 2017, the Board of Directors did not 
propose dividends to be paid for the year ended December 31, 2016. 
Proposals for dividend distribution in future years will be subject to 
assessment of business performance, operating environment, and growth 
opportunities in determining the appropriate level in any specific year. 
 
 
 
 
   Related party transactions 
 
   There were no related party transactions during the three and nine 
months of 2017. 
 
   Financial Condition and Liquidity 
 
   At September 30, 2017, Wentworth had cash and cash equivalents of $3.36 
million and trade and other receivables, prepaids and deposits, and 
current portion of the long-term receivable from TPDC of $25.51 million. 
The Company has started collecting substantial amounts of this long-term 
receivable from TPDC following the commencement of commercial quantities 
of gas sales to the transnational gas pipeline in 2015. Outstanding 
receivable for gas sales sold to TPDC and TANESCO total $11.97 million 
at September 30, 2017. A total of $2.13 million of the outstanding gas 
sales receivables has been settled subsequent to September 30, 2017 
while a payment of $2.61 million relating to the October 2017 invoice 
for October gas sales to TPDC has been initiated by TPDC. 
 
   During May of 2017, the Company raised gross proceeds of $5.53 million 
through the issuance of 10% of the Company's share capital.  These 
additional funds provide the Company with required funding for working 
capital and the ongoing Mozambique appraisal activities. 
 
   Current liabilities include outstanding cash calls issued by the 
Operator of the Mnazi Bay Concession for 2016 operating cost of $1.26 
million of which the Company settled the full amount subsequent to 
September 30, 2017. The Company's share of accrued Mnazi Bay activities 
for the nine months of 2017 was $4.10 million which is expected be 
settled through cash receipts from existing gas sales receivables. 
 
   Current liabilities also include the principal repayment obligations on 
external credit facilities and the anticipated settlement of other 
liabilities also due within the next 12 months.  During Q1 2017, the 
Company reached agreement with its main corporate lender to enhance 
short-term liquidity by deferring payment of the January 28, 2017 
principal payment of $3.33 million to Q2/Q3 2017, deferring the July 28, 
2017 and January 28, 2018 principal payments and extending the term of 
the credit facility by one year.  Principal payments totaling $5.33 
million are scheduled to be made within the next 12 months. 
 
   The Company is working closely with the Operator of the Mnazi Bay 
Concession and the external lenders to make settlement of obligations 
coinciding with the receipt of cash from gas purchasers for settlement 
of gas sales invoices.  To date, the cooperation amongst all parties has 
allowed the company to effectively manage working capital. Existing gas 
sales receivables at September 30, 2017 of $11.97 million exceed the 
immediate obligations to the Operator of the Mnazi Bay Concession and to 
the external lenders thus allowing for certain flexibility in the 

precise timing of settling obligations. 
 
   During the remainder of 2017 and 2018, the Company expects to have no 
significant capital commitments relating to exploration and development 
activities in Tanzania.  Anticipated development capital spending is 
limited to approximately $0.8 million for general field development 
maintenance capital. In Mozambique, spending on appraisal activities is 
expected to be limited to completing the necessary technical work to 
support drilling of an appraisal well in 2018, costs associated with 
securing an industry farm-in partner and administrative and support 
costs for managing the operation under the Rovuma Onshore Block in 
Mozambique. 
 
 
 
   Outlook 
 
   Realized gas sales during Q3 2017 were the highest quarterly sales 
volumes in the Company's history and the Company expects gas demand to 
grow in the coming months with the commissioning and start-up of the 
Kinyerezi-II power station and commencement of delivery of gas to the 
Dangote cement plant. Wentworth is well positioned to meet this growing 
demand as there is sufficient Mnazi Bay gas immediately available to 
produce thereby allowing for immediate delivery, along with a long-term 
gas sales agreement to deliver up to 130 MMscf/d which is well in excess 
of the current 60 MMscf/d production rate. The primary challenge 
continues to be the receipt of regular and timely cash receipts for gas 
sales made to TPDC and TANESCO.  While the timeliness of cash receipts 
from TANESCO has improved since the start of 2017, settlement of 
invoices for gas sales made to TPDC, remains at between four and five 
months. The Company continues to effectively manage working capital and 
is working with debtors and creditors to match cash receipts with the 
settlement of liabilities.  While the Company expects the situation to 
improve within the next 12 months, significant effort and patience will 
need to be exercised by all parties. 
 
   With the support of the Government of Mozambique, the Company plans to 
proceed with drilling an appraisal well and seeking an industry partner 
to participate in the Rovuma Onshore Block.  With information generated 
from analyzing the Tembo-1 well results, reprocessing existing seismic 
data and remapping the structure, there is sufficient information 
available to support drilling of an appraisal well, thereby deferring 
acquisition of new 2D seismic until after drilling.  The Company 
anticipates securing an industry partner prior to commencing drilling 
operations in 2018. 
 
 
 
   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. 
 
   Inside Information 
 
   The information contained within this announcement is deemed by 
Wentworth to constitute inside information as stipulated under the 
Market Abuse Regulation (EU) no. 596/2014 ("MAR"). On the publication of 
this announcement via a Regulatory Information Service ("RIS"), this 
inside information is now considered to be in the public domain. 
 
   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, 2016, 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. 
 
   Q3 2017 MDA: http://hugin.info/136496/R/2149522/824952.pdf 
   Q3 2017 Financial Statements: 
http://hugin.info/136496/R/2149522/824951.pdf 
   171114 Announcement: http://hugin.info/136496/R/2149522/824953.pdf 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Wentworth Resources Limited via Globenewswire 
 
 
  http://www.wentworthresources.com/ 
 

(END) Dow Jones Newswires

November 14, 2017 02:00 ET (07:00 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.