tanzania

From Aminex's capital raising prospectus released tonight, an interesting read on what we've just given away on the cheap:

TANZANIA
Background and History

In 2002 Aminex acquired Tanzoil NL of Australia with onshore and offshore exploration acreage in Tanzania including the Nyuni/East Songo-Songo Production Sharing Agreement (?Nyuni PSA?), adjacent to the producing Songo-Songo gas field and the Ruvuma onshore technical evaluation agreement (an agreement between a host country and an operator to allow the operator to evaluate geological, geophysical, engineering and transportation issues in a concession area, usually a precursor to a production sharing agreement), adjacent to the Mnazi Bay gas field. Aminex became the first company to drill an offshore well on the East African coastal margin for 12 years, with the Nyuni-1 well in 2003/2004.

Although different in detail, the geology of East Africa shares broadly the same evolutionary pattern as the hydrocarbons present in the productive West African Margin.

Tanzanian Concession Areas
Nyuni PSA
Reserves/Contingent resources

There are currently no hydrocarbons categorised as commercial reserves in this concession area. However, the Kiliwani North-1 well drilled in March 2008 encountered a sixty metre gross gas column and flowed gas under a full production test at approximately 40 million cubic feet per day with no measurable pressure decline. ISIS Petroleum Consultants Pty Ltd have attributed contingent resources of approximately 45 billion cubic feet gas initially in place (?GIIP?) at the P.mean level to the Kiliwani North discovery. In addition, contingent resources of approximately 233 billion cubic feet GIIP at the P.mean level have been attributed by the same independent petroleum consultants for Albian Aptian sands encountered during the drilling of the Nyuni-1 well in 2004, although this well was not tested.

Main Terms and Conditions (including farm-ins)

The Nyuni PSA was extended into a first extension period, an extension of four years, with effect from 19 November 2004, the first such extension ever granted in Tanzania. Under the terms of the Nyuni PSA, on moving into the first extension period, Aminex opted to retain 50 percent of the Nyuni Concession Area, relinquishing the 50 percent situated mainly in deep water which was not thought to be prospective for oil and gas. In addition to seismic data acquisition including 660 kilometres of 2D shallow marine seismic in 2005 and other geological work, the work commitment under the terms of the production sharing agreement during the first extension period was for two exploration wells, with a minimum expenditure for the period of US$6 million. The Nyuni PSA has been extended into a second and final extension period which will expire in May 2011. The current extension period has a work commitment for two further exploration wells and a minimum expenditure during the period of US$6 million. Nyuni-2 will be the first well to be drilled in the current extension period but following formal ongoing negotiations with the Tanzanian authorities, the Directors believe that the second well commitment will become part of a future work programme. The Nyuni Concession Area contains significant undrilled prospects. The Directors are in negotiations with the Tanzanian authorities with a view to entering into a new production sharing agreement to replace the current Nyuni PSA when it expires in May 2011.

The Nyuni PSA provides a right of access to an existing pipeline between the producing Songo-Songo gas field and Dar es Salaam in the event of a gas discovery.

In October 2010, in accordance with the terms of the Nyuni PSA, Aminex submitted a 25-year development licence application for Kiliwani North to the Tanzanian authorities and expects the development licence to be granted in the near future.

On 4 February 2011, Aminex announced that it had entered into a binding heads of terms to increase its interest in the Nyuni PSA from 50 percent to 65 percent through a farm-in arrangement. Under the terms of the proposed farm-in, Aminex would fund a 20 percent share in the dry hole cost of the forthcoming Nyuni-2 exploration well in Tanzania in return for assignment to the Company of a 15 percent interest in the Nyuni Concession Area. The proposed farm-out party is Key Petroleum. Under the terms of the proposed farm-out, Key Petroleum would become a 5 percent partner and responsible for 5 percent of ongoing costs. The agreement is subject to the formal consent of the Government of Tanzania.

The Nyuni joint venture partners are (as of the date of this Prospectus):

? Ndovu Resources Limited (a wholly-owned subsidiary of the Group): 50 percent.
? Bounty Oil & Gas NL: 5 percent.
? Key Petroleum: 20 percent.
? Ras Al Khaimah Gas Commission: 25 percent.

Progress of Oil and Gas Exploration Activities

An exploration well, Nyuni-1, was drilled on the Nyuni PSA in 2003/2004 to a depth of nearly 4,000 metres. This encountered oil and gas shows in a thick but complex reservoir sequence but did not flow hydrocarbons. Logs indicated the presence of gas in the Albian/Aptian section which have since been estimated by independent petroleum consultants to contain 233 BCF GIIP. However, due to operational constraints at the time, the well was not tested and remains suspended with a wellhead in place. The results of the well and Aminex?s subsequent geochemical matching of oil recovered from the well with naturally-occurring oil seeps on the Tanzanian mainland indicate the presence of a widespread oil-prone Jurassic source rock.

During the first extension period of the Nyuni PSA, two wells were drilled. The first well, Kiliwani-1, was drilled from the small island of Kiliwani but did not encounter commercial hydrocarbons in the targeted Neocomian formation. This well was plugged and abandoned in February 2008 and the rig moved a short distance north to Songo-Songo Island. In 2008, the second well, Kiliwani North-1 (KN-1) was drilled from Songo-Songo Island and encountered a sixty metre gross gas column, 18 metres of which were perforated and flowed gas under full production test conditions, yielding a flow rate of approximately 40 million cubic feet per day (equivalent to 6,700 BOPD) with no measurable pressure decline. Follow up work on KN-1 indicates contingent resources of gas of approximately 45 billion cubic feet at the P.mean level. The Directors have been independently advised that a recovery rate of 73 to 83 percent of GIIP should be achievable.

The contingent and prospective resources at Nyuni have been mapped and independently calculated by ISIS Petroleum Consultants Pty Ltd, Ground Floor, 47 Colin Street, West Perth WA 6005, Australia, following (1) acquisition and processing of new seismic in 2009, (2) reprocessing of existing data and (3) integration of all seismic data sets and well data. Contingent resources (identified by drilling) and prospective resources (identified by mapping of seismic) together total over 2.8 TCF GIIP on a P.mean basis, equivalent to approximately 460 million bbl of oil.

The Kiliwani North discovery well is located 2.5 kilometres overland in a straight line from the gas treatment plant for the producing Songo-Songo gas field, which delivers gas to market in Dar es Salaam via a 200 km common-user pipeline. The Group intends to commercialise the KN-1 discovery on Songo-Songo Island, subject to regulatory approval and finalising negotiations with the pipeline operator, with the expectation of gas production commencing in 2012. Commercialisation of KN-1 has been delayed due to outstanding issues between the Tanzanian Government regulator and the regional pipeline operator, which have now been resolved. The pipeline operator has submitted a formal development plan to the Tanzanian authorities for an expansion of its gas treatment plant on Songo-Songo island, the purpose of which is to handle additional volumes of gas including production from KN-1. In October 2010, Aminex submitted an application to the Tanzanian authorities for a development licence which the Directors expect to be awarded in the near future.

Aminex and its joint venture partners plan to acquire additional 2D seismic in 2011 over the Fanjove North prospect in order to identify another well location within in the Nyuni Contract Area.

In 2011, Aminex intends to drill a second exploration well, Nyuni-2, from Nyuni Island, deviated at an angle of approximately 30 degrees from vertical and is expecting to spud the well inApril 2011. In the event that Nyuni-2 is a commercial gas discovery, it is expected that it will ultimately be tied into the gas pipeline terminal on Songo-Songo Island, which is approximately 20 km from Nyuni Island. The Company is in final negotiations to contract a drilling rig for the Nyuni-2 well and expects to sign an agreement in the near future. As operator, Aminex has started ordering long-lead items including well casing and this process will be continued.

West Songo-Songo PSA
Reserves

There are currently no hydrocarbons categorised as reserves in this concession area.

Main Terms and Conditions

The West Songo-Songo PSA was signed by Key Petroleum in May 2008, covering an area of 505 km2 offshore Tanzania, immediately adjoining both the Nyuni PSA and to the west of the producing Songo-Songo gas field.

The term of the West Songo-Songo PSA consists of an initial exploration period of four years from 29 May 2008 followed by a first extension period for a period of four years and a second extension period for a period of three years. The work programme commitment in the current initial exploration period, which expires in July 2012, includes reprocessing of existing seismic, geological and geophysical studies and the drilling of two wells. The first of these two wells is required to be drilled by July 2011. The operator, Key Petroleum, has advised that it is in discussions with Tanzanian authorities concerning an extension of this drilling commitment. As the Company is not involved in these discussions it cannot be certain that an extension will be granted. The minimum financial commitment for Aminex and Key Petroleum under the PSA for this initial period is US$14.25 million.

The West Songo-Songo PSA is operated by Key Petroleum. which holds a 50 percent interest and Aminex?s wholly-owned subsidiary Ndovu Resources Limited which holds the remaining 50 percent interest.

Progress of Oil and Gas Exploration Activities

To date, the operator Key Petroleum has completed an interpretation of all existing seismic on the block and an initial assessment of prospectivity. Several structural leads have been identified located immediately to the west of the Pan-African operated Songo-Songo gas field. In order to evaluate further the structural and stratigraphic definition of the existing prospects and leads, Key Petroleum plans to reprocess the existing seismic over these areas. West Songo-Songo lies within the Rufiji basin, a proven producing trend which includes the Songo-Songo gas field and Aminex?s Kiliwani North gas field. Based on proximity to the Songo-Songo gas field, the Directors believe the most likely hydrocarbon to be found in the West Songo-Songo Concession Area is gas. The Directors believe that there is further potential in Lower Cretaceous play fairway. Key Petroleum has reported that preliminary volumetrics show potential resource of 1 TCF GIIP.