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Wentworth Resources (WEN:AIM) is a leading domestic natural gas producer in Tanzania with a core producing asset at Mnazi Bay in the onshore Rovuma Basin in Southern Tanzania. The asset has been materially producing for six years into the National Natural Gas Infrastructure (NNGI) pipeline, which runs from the Mnazi Bay field to Dar Es Salaam, Tanzania’s commercial capital and largest city.

RECORD FINANCIAL AND OPERATIONAL PERFORMANCE

In September 2021, Wentworth announced its strongest interim results to date, with record financial and operational performance driven by unprecedented gas demand in Tanzania. Wentworth’s resilient business model and strong fundamentals have placed the Company in the most financially and operationally robust position in its corporate history, as revenue growth, ongoing cash generation, lower operating costs and a focus on profitability drive continued strength.

As a financially disciplined Company, Wentworth has focused on paying down debt since starting material production into the NNGI pipeline in 2015. The Company is now debt-free with $21m cash in hand and minimal capital expenditure required. Wentworth’s investment case is further safeguarded by its long-term fixed gas price contract with the Government of Tanzania, limiting the Company’s exposure to commodity price volatility.

DIVIDEND DIFFERENTIATOR

Wentworth’s strategy is to maximise shareholder value through asset optimisation and fiscal responsibility. Commitment to this strategy has enabled the company to increase its interim dividend to $1.32 million, an increase of 10% from H1 2020 and in line with the Company’s stated progressive capital return policy.

Wentworth has returned $5.12 million to shareholders in the last 12 months and is one of only seven London-listed (main market & AIM) E&P companies committed to maintaining a dividend in 2021.

STABLE AND GROWING PRODUCTION

With increasing gas demand in Tanzania due to ongoing industrialisation and post-Covid economic recovery, Wentworth delivered record production at Mnazi Bay in H1 2021, averaging 80 MMscf/day – at the top-end of 2021 production guidance of 70-80 mmscf/day (million standard cubic feet per day) (gross).

The company also achieved an all-time production high of 110.65 mmscf/day in the first half, highlighting its ability to respond quickly to growing demand and comfortably scale up volumes without any additional investment.

Wentworth seeks to further optimise its production output through innovative work programmes and a focus on cost efficiencies, as demonstrated by its 72% reduction in operating costs in H1 2021.

TRANSITIONING TANZANIA TO A SUSTAINABLE FUTURE

With a fast-growing population and an economy poised for rapid growth, Tanzania is shifting away from its traditional agricultural economy to focus on large-scale industrialisation, adding considerable pressure to energy demand.

With a current energy access rate of only 33% and 7.7 million households without access to power, there is a significant need to increase energy generation – particularly using natural gas, Tanzania’s main source of power.

The government of Tanzania has set an ambitious target of universal energy access by 2030. This target, coupled with the Government’s robust industrialisation strategy, provides a real opportunity for Wentworth. Wentworth’s natural gas production has increased energy access across Tanzania, bringing affordable and continuous power to people’s homes, schools, towns, and villages – often for the very first time. With nearly 30% of Tanzanian electricity customers currently served by Mnazi Bay natural gas, Wentworth is playing a crucial role in connecting local communities to the grid and accelerating industrialisation. Wentworth’s gas-to-power platform is enabling 24/7 electrification for Tanzania, alleviating energy poverty for millions of people and transforming lives in local communities.

The introduction of gas-fired power plants in Tanzania has also significantly reduced the cost of electricity by replacing expensive, heavy polluting diesel-based generation. While this has several environmental benefits, it also provides a more cost-effective solution for businesses and industries – vital for Tanzania’s industrialisation ambitions.

NATURAL GAS AS A LOW-CARBON SOLUTION

Natural gas from Mnazi Bay is also accelerating Tanzania’s energy transition by displacing heavy polluting fuels and securing a low-carbon future for the country and its people. With natural gas providing a reliable and affordable baseload power supply, more renewable technologies – such as hydroelectric power – can be gradually added to Tanzania’s energy mix, without compromising energy access or security.

Natural gas – which accounts for more than half of Tanzania’s current power generation – is the right transition fuel to facilitate large-scale decarbonisation across the country.

Wentworth remains committed to not only reducing the carbon intensity of Tanzania’s energy mix, but also reducing its own environmental footprint in its field operations and regional offices. As a single-asset non-operator with a lean corporate structure, Wentworth maintains a low emissions profile, with one of the lowest CO2 intensities in the E&P sector in London at 1.3 kilogrammes CO2e per barrel of oil equivalent based on FY 2020 numbers.

As a part of its ongoing sustainability journey, Wentworth is in the process of developing a climate strategy and identifying ways to further reduce and mitigate its carbon footprint.

EMPOWERING PEOPLE WITH ENERGY

As a Tanzanian business, Wentworth invests in the local community by creating employment and supply chain opportunities for local people and building long-term partnerships that create real value.

To expand on its commitment to deliver positive social impact in Tanzania and drive long-term sustainable development, Wentworth operates the Wentworth Africa Foundation (WAF). Established in 2007, WAF is a charitable organisation focused on improving the health, education, and socio-economic outcomes of those living in the rural regions of Lindi and Mtwara in Southern Tanzania. Wentworth has contributed over $1 million to WAF’s programmes since its inception, creating lasting value for the communities in which it operates.

Wentworth is committed to being a leading player in Tanzania’s energy growth and transition, delivering responsible, sustainable growth to for shareholders, Tanzania and wider stakeholders.

DISCLAIMER: This article was written by Wentworth Resources and published by Shares under a commercial agreement. It is not a recommendation to buy or sell the shares. The article originally appeared in Shares’ Spotlight report on 30 September 2021.

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Issue Date: 06 Oct 2021