I have not followed KEY for some time, having sold when Orca tied up most of the gas sales in Dar es Salaam a month or so after the July 2008 ann by Key that "Tanzania discovery declared commercially viable" thereby leaving only nonviable distant markets for sale of KEY gas. Smart move by Orca...
In September 2008, immediately after the KEY declaration, Orca was bragging about their cement kiln contract with Tanzania Portland Cement Company and Orca continues to sign up smaller industrial customers in Dar es Salaam from its 35 kilometers of low pressure pipeline and will commence the sale of compressed natural gas.
I note that the sp has tanked after the March Quarterly Report that highlighted the RAK sale negotiation failure:
"Tanzanian Planned Divestment During the previous quarter Key received an approach from the UAE based, Ras Al Khaimah Gas Commission (RAK Gas) a participant in the Nyuni block joint venture, to acquire Key‟s interests in both the Nyuni and West Songo Songo PSCs. Following much discussion between the parties, a sale price was agreed. RAK Gas however, has now disputed the basis of the agreement reached with Key and this has thwarted the exchange of formal sale contracts. In light of RAK Gas repudiating the proposed sale and purchase of the Interests, Key has decided to embark upon a programme to implement a sale of the Interests in the near future, conditional upon a reasonable price being attained."
RAK Gas is incorporated in Ras Al Khaimah, a member state of the United Arab Emirates, under the chairmanship of His Highness Shaikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah.
They probably have a spare Dirham or two stashed in their palaces and can wait for the Orca contracts to finish and manipulate a joint venture with Orca et al, having picked up KEY and other Nyuni block joint venture partners for a songo songo. There appears to be an agreement with the Govt in place where they have access to the pipeline due to World Bank finance.
The MC of KEY is only $7M and it looks like cash will currently be about $3m with the CR; this is all committed with $2,250,000 for the Perth Basin drilling and the quarterly expenses taking up the balance so there is a lot of pressure on the company to resolve a sale of TZ assets in the near future with limited buyers likely.
At the current sp, I reckon it's worth a punt; surely can't go much lower...
KEY Price at posting:
5.0¢ Sentiment: LT Buy Disclosure: Not Held
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