Aminex PLC (LON:AEX) has produced first gas from its Kiliwani North gas field in Tanzania.
Jay Bhattacherjee, chief executive, said it was a significant moment for the company and marked its transition from a developer to producer in Africa.
Aminex has a 55.75% working interest in the field in Tanzania though this will reduce to 51.75% following a recent stake sale to partner Solo Oil (LON:SOLO).
Shares in both companies jumped on the hope it will be the start of major expansion of their operations in Tanzania.
As well as Kiliwani, Aminex (75%) is also partnering with Solo (25%) on the Ruvuma PSC and as Kilwani beds down this will also be a focus Battacherjee told Proactive Investors.
“Kiliwani is a first step in our continuous growth and we will keep expanding from here.”
Tanzania has huge energy needs over the next 24-36 months and onshore field such as Kilwani and Ruvuma will help meet this he added.
The first well, Kiliwani North-1 (KN-1), will deliver gas to the new adjacent Songo Songo processing plant.
A gas sales agreement with the Tanzania Petroleum Development Corporation (TPDC) will see Aminex receive US$3.00 per mmbtu (approximately US$3.07 per mcf) with expected net cash revenues of US$10-15 mln annually.
The gas price is not linked to any commodity price so importantly is unaffected by current commodity market conditions, said Bhattacherjee, adding that because the price is set at the well head there are no additional transport or future royalty costs.
“That makes it a really attractive deal,” he said.
Production is expected to build up to an anticipated production rate of 25-30 million cubic feet per day (mmcfd) or approximately 4-5,000 of oil equivalent over the next 90-100 days.
A well test during the production build up will determine the optimal flow rate and once settled gas will flow at this rate for as long as possible prior to a natural decline.
Neil Ritson, Solo’s chairman, added that he too was delighted with the first sales.
It recently signed a sale and purchase agreement with Aminex to take its stake in Kiliwani to 10%.
“Resulting revenues will initially be reinvested in growing our reserves base in Tanzania, “ he said.
Shares in Aminex jumped 16% to 1.43p and Solo by 23% to 0.36p.
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