U.K. independent Aminex has transformed itself from a stagnating company in dire need of refinancing into a frontier pioneer that has exited the U.S. and is now closing in on first gas from one of its core assets in Tanzania. CEO Jay Bhattacherjee, a co-founder and CEO at Canyon Oil & Gas (now part of Aminex), shared with E&P the company’s rejuvenation and a “regionally agnostic” strategy.

Tell us about where Aminex came from as a company, how it is being rejuvenated and what its main focus is for 2015.

Aminex is transitioning to be a production, development and exploration-led oil and gas company focused in Africa.

As a junior company, like most others it has had a turbulent time with highs and lows. However, I am pleased to say we made positive progress last year. 2014 was a transitional year for Aminex, starting with the directorship/management changes that occurred in March 2014 when myself, Philip Thompson and Max Williams were appointed to the board. Since our appointment, we have worked rapidly to progress the company, with the sale of its U.S. assets [mainly two fields in Texas and Louisiana for a consideration of $5 million to Northcote Energy Ltd. and Springer Oil and Gas] and an agreement to sell up to 13% of the Kiliwani North development license [KNDL] to Solo Oil. We recently announced that the Tanzanian authorities have now given approval to the KNDL sale, and so all that is left is the signing of the deed of assignment.

We made these decisions to strengthen the balance sheet, which we hope will allow us to look for new opportunities in the future, and we are pleased to say that we are fully funded to execute our current work program and to get to production in early 2015.

Our corporate strategy is to expand the company’s technical capacity with a focus on Africa and our main core asset base in Tanzania. This year has seen us refocus our strategy and become regionally agnostic to take advantage of the best opportunities out there while maintaining the theme of production and development with exploration.

Our main focus is the Kiliwani North development, which is on track for first gas early in 2015.

Why Tanzania? What are the opportunities and the challenges of exploring and developing assets in this frontier area?

In the past Aminex has had licenses in a variety of locations. However, as part of our rejuvenation of the business, we decided to focus on near-term opportunities and, for that reason, sold the American assets, leaving our core African assets.

We are the operator of three licenses here; Kiliwani North development license, Ruvuma production-sharing agreement [PSA] and the Nyuni exploration license. Tanzania offers a company of our size access to a world-class petroleum province and, with Kiliwani coming onstream shortly, an opportunity to access production.

In other regions of Africa that can be viewed as frontier, there is great opportunity to explore, but access to infrastructure is limited. The large regional pipeline currently being constructed running from Dar es Salaam to Mnazi Bay would allow for all future developments to be brought onstream in a relatively quick manner.

Explain how the company worked to set up and establish its good working relationship with the Tanzanian authorities and the Tanzania Petroleum Development Corp. (TPDC). Was it all smooth sailing?

It is always important to establish good relationships with the local authorities, and Tanzania is no different. As a business the company has and continues to have good relations, mainly owing to longevity and doing what we have said we would do. The business has spent in excess of $100 million drilling and developing its assets since 2002.

What are the plans for Kiliwani North? What’s the schedule, and what’s the longer term view?

The Kiliwani North license is expected to be in production in early 2015. This has an expected IP rate of 20 MMcf/d [566 Mcm/d], with a P-mean resource estimate of 45 Bcf [1.3 Bcm] (gross). This is projected to create net cashflow of $10 to $15 million.

As I previously mentioned, we have agreed to sell up to 13% of the license to Solo Oil for a total consideration of $7 million, which has been approved by the Tanzanian authorities and just leaves the formal deed of assignment to be signed for the completion of the sale. Following this, the KNDL joint venture partners will be Ndovu Resources Ltd. (a wholly owned subsidiary of Aminex) with 52%, RAK Gas (25%), Bounty Oil (10%) and Solo (13%).

Once producing, this will represent a major milestone for Aminex by providing first revenues to the company. Construction of a 2-km [1-mile], 36-in. pipeline from the KN1 wellhead to the new Songo Songo processing plant has now commenced and is expected to be completed shortly.

A gas sales agreement for KNDL is expected to be completed prior to the commissioning of the pipeline and the processing plant in early 2015.

It will be a major milestone and represents first production and revenue for the company from East Africa.

Aminex has arranged to sell its gas from Kiliwani North at the wellhead. What is the advantage of doing this?

The company will have no exposure to midstream or downstream capex and opex, which greatly simplifies the operations and keeps costs to a minimum.

What’s the plan for the Ruvuma PSA and its Ntorya-1 discovery?

We have completed an infill seismic acquisition program over the Ntorya appraisal area connecting Ntorya and Likonde. We estimate the channel fairway alone has increased from 1.2 Tcf to 2.3 Tcf [34 Bcm to 65 Bcm]. We continue to reinterpret data over its Namisange prospect and its Sudi lead while priority is being given to the Ntorya and Likonde areas, which will be the catalyst for the drilling campaign.

Please give details of your outlook for Aminex’s Egyptian assets.

We have a 10% carried interest in West Esh el Mallaha. We were advised in September 2014 by the operator of the contract onshore Gulf of Suez that the South Malak-2 exploration well was spudded. This was targeting the prolific Nubia and Matulla sandstones. We were also informed that a second location was chosen, designated Wadi Kofra-1, with drilling expected shortly. Aminex has a 10% effective interest in this PSC [production-sharing contract], free-carried through to commercial production. It has no operational control over the license and receives information only when the operator provides it.

Please outline the company’s strategy going forward and why it chose to exit areas such as the U.S. Could it come back in the future?

Our focus is now on Africa and the large potential resource opportunities that it offers. As mentioned, the Kiliwani North Field is our major focus as it will be a milestone in the company’s development.

Our second priority is the Ntorya-1 discovery within the Ntorya appraisal license and its neighboring leads and prospects in the two exploration licenses, which the company holds under the Ruvuma PSA. A developed gas field in the Ruvuma PSA would find a ready market in Dar es Salaam via TPDC’s new regional pipeline, and the fast-tracking of such a development would certainly be encouraged and assisted by the Tanzanian authorities.

The third priority is to appraise with seismic the prospect identified in the deepwater portion of the Nyuni Area PSA, which we believe to have potential for a high-impact discovery.

We chose to exit the U.S. to pay down part of our loan facility and enable us to focus on our core business. I doubt that we will reenter into this area as we want to establish Aminex as a production and development business in Africa.

Where else is Aminex looking in Africa, or is it looking further afield at this time?

We are always on the lookout for new opportunities, and our strategy is now regionally agnostic, with a focus on proven basis with development potential.

What are the biggest challenges facing independents like Aminex at this time?

Funding is always an issue for independents like us. However, we are pleased to say that we are fully funded for our work program. Other than that, there are always challenges for exploration companies, especially for smaller companies with a smaller portfolio, which heightens risk. Nevertheless, this can bring with it advantages such as higher returns.

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