Wentworth Sees Surging Cash Flow After Tanzania Gas Deal

Oil explorer Wentworth Resources expects its cash flow to surge from the first quarter of next year as it earns revenues from a new gas sales deal at its Mnazi Bay and Msimbati Gas fields in Tanzania, it said on Monday.

Tanzania signed an agreement with French oil producer Maurel et Prom and Wentworth for the supply of gas aimed at doubling the country's power generation capacity to 3,000 megawatts by 2016.

"In the first year of production we are going to generate net cash-flow after all operating costs and development capex in excess of $20 million, net to Wentworth", Chief Executive Geoff Bury told Reuters.

"Over the first five years, our cash flow will exceed $140 million net of opex and net of development capex", Bury said.

The calculation is based on production of 80 million cubic feet of natural gas during the first eight months of production, followed by a ramp up with sales via the state-owned and operated Mtwara to Dar es Salaam pipeline and Madimba central processing facility.

"We have four wells in the field today. We believe they could deliver 80 million cubic feet per day," Bury said. "Additional three development wells will be drilled, which will give up to the 130 million cubic feet per day."

"We believe the field could sustain that level of production over its 17 years field life," Bury added.

Deliveries are expected to begin between January 22 April 22 and the price will be fixed at US$3.00 per mmbtu, or around $3.07 per mcf, rising thereafter with United States CPI Industrial index.

Wentworth owns 31.9 percent of Mnazi Bay production assets and 39.9 in future exploration operations while operator Maurel et Prom of France owns 48.1 percent in production and 60.1 percent in future exploration.

Tanzania Petroleum Development Corporation holds the remaining 20 percent in production operations.

"In Tanzania we believe we have significantly undiscovered gas resources in the Mnazi Bay concession", Bury said.

After the gas sale deal Bury said Wentworth was fully funded and did not need additional cash.

"We announced during our second quarter results that we have secured a debt finance facility, that facility is going to pay for field development costs before the cash flow begins next year", Bury said.

Apart from drilling in Tanzania, Wentworth has operations in Mozambique and expects to complete an exploration well some time in October.

(Reporting By Ole Petter Skonnord; Editing by Balazs Koranyi)