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Agreed Trustlie
I really hope we can push on with Niger opps and get to 5k production.
Huge incentive to do this with the pipeline operational.
As has been previously highlighted,
Stubb creek production with Niger could offer decent revenues.
With the possibility of a reimbursement for Chad next year, Savannah could be debt free, with increased production, without further acquisitions.
Mcn77 - I agree and hence afentra is just a reference point and not a perfect comparison although I would say if the market hence confidence that we have achieved first oil in Niger and converted our 2c to 2p than it might also attach a premium for future potential of the whole accreage and its exploration potential. So first oil in Niger is a big phycological step change in the market perception of the companies potential and hence a higher share price
Trust Lie,
I see where you are coming from with the AET theory, but you should take into account the debt position of the two companies, and the quality of management in charge of each business.
With acquired barrells, and a lifting due soon AET potentially should be debt free this year.
Their management is in a different class to Savannahs ( which isn't saying much ).
I may be wrong but I would think AET will pay a dividend before Savannah does also.
Would like to see a decent operational update here soon. Shareholders deserve some info after very limited comms for 18 months.
I am quite keen on getting the Stubb Creek acquisition over the line quickly so we can get to 5,000 bopd quickly. The great thing about this is once we complete the deal the timeframe shouldn't take long to increase production and de-bottleneck.
The wells are already drilled so it's just about de-bottlenecking the infrastructure and getting the wells to production. It say's 2025 but I reckon if they can achieve completion this year than they can quite easily increase production post completion in short order.
The CPR document say's "The upgrade, planned for 2025, will enable up to two more wells, SC-2 and SC-5, to be put on-stream. The wells are already drilled and completed in the Upper D3 reservoir.
Although I did not press them on it I think they were talking about the new drilling program. For FO we already have wells drilled and need to tie them into the new pipeline. I’m quietly optimistic on this work-stream personally.
'd add to that by saying that a similar level of potential annual dividend as paid out by SEPL would reward and keep on board many of the II and HNW investors while capital growth should really come through given the potential to really grow at least the Nigerian and Niger assets alone. Even AK said he would be a fan of dividends given his holdings. One of the KPIs was the delayed $20m dividend.
FWIW I believe we were on the cusp of this with the very sizeable 12,500 bopd Chad acquisition with also a significant income stream from the pipeline assets - hopefully this in time will reward us with some level of meaningful compensation.
In the meantime imo we are again on the cusp of a step up with the South Sudan deal which could mirror Seplats Div payments and cash flow even on a reduced temporary output even at 15k bopd.
Seplat have been able to invest into gas plants etc, controlling their debt levels all while paying that amount of dividend. Seplat have had numerous issues since ipo. Their production is only 10% higher than 8 years ago and fluctuates within the ranges in the previous posts. It too would also be on a major step change if the Exxon deal gets over the line.
Let's hope we will soon be rewarded for our patience (mostly enforced patience this past 18 months) and that new oil production is soon added from somewhere to give us that step up.
Personally I wouldn’t read too much into that article about first oil.
Rockyrides conversation with IR on 16 May confirmed “No new drilling taken place in Niger yet - progress proving to be quite slow”.
I think it’s just wishful thinking on the part of SPglobal and they are just quoting what SAVE has been saying about Niger first oil for several years.
Happy to be proved wrong though.
It's now back to 170p 10 years later. If you add in the $575m dividends allowing for the various ex rates over those years say using £1/$1.35 or £425m that's about an extra 72p so has been to date worth/made 242p in total if you were cashing in today.
It's been battered by Force Majeure, Mareva injunctions, internal spats, other court cases, trying to deport the CEO, Eland takeover not going so good at the time, fatalities, low oil prices, Covid, debt financing/repayment re low oil price/oil going below zero, worry over alternative export routes, low gas price, financing gas plant expansion and now the hold up on the Exxon deal which would be very material.
Really considering the above with our steady 20,000+ boepd net gas at an almost 50% premium relative to Seplat, + 1200 bpd Nigeria oil. Basically if we had circa 20,000 bopod additional oil (we have Niger up to 5k and a further 3.5k to come from Nigeria) we too should be in a position to rapidly reduce net debt or on a mixture of debt repayment/dividends as Seplat does - be in a position where we could be paying about $60m dividend (or about 3.4p/share ) though in SAVEs case they want to re-invest into renewables.
On average over the last 10 years $575m paid out in divs = $63.8m year and still having as much net debt as Save ($385m March 31 2024)
Production over the last 10 years was a low of 25,877 boepd to a high of 51,183 boepd with Q1 2024 being 49,258 boepd which is an average of 42,300 boepd/yr.
Even servicing the debt, we should with an additional 20,000 bopd be able to support a similar average dividend of $60m/yr. Certainly imo with re-investment into renewables we should come out with the fabled and pencilled in $20m div.
Let's face it, they are not paying off the $380m Accugas but refinancing it over 10-15 years which would lighten the costs even more/free up cash for re-investment..
We have about 20,000 boepd net gas minimum. 1200 bopd from S Creek.
To approximately model our income to Seplat we need about 20,000 bpd of of additional oil
5k bopd to come through from Niger and a further 3700 bopd from S.Creek. Therefore an acquisition in the region 11-12k bopd could do it to mirror the past performance/dividend output from Seplat which could be worth $60m/yr of dividends or $20m min + funds sent to renewables? .
Unlucky with the hassle over Chad where we would now be there as above imo.
South Sudan still ongoing. It was a circa 50-55,000 bopd net production and with production even reduced by the rumoured 70% could still see 15k bopd still producing before pipeline repairs completed (if the deal goes through).
Gone through the SEPLAT annual report RNSs etc since IPO
For the sake of comparisson Seplat listed in April 2014 at 210p share with a m/cap of £1.14 billion. (542m shares) 4 months before SAVE.
It raised £300.9m.
'The net proceeds of the Global Offer will primarily be used to acquire and develop new acquisitions, and/or pay down any additional debt raised in connection therewith, of both onshore and shallow offshore acreages, assets and joint venture farm-ins. Approximately US$48 million shall be used to pay down in full a shareholder loan from MPI S.A.'
https://www.lse.co.uk/rns/SEPL/pricing-announcement-9y6vyme91v7rurl.html
It had 24,248 bopd + 39.4 mmcf/d for 2014 ie 30,819 boepd and 281 mmboe 2P. (139mm oil/condensate + 142 mm gas)
15/1/15 it secured $1b debt refinancing and pay down the existing $552m debt.
https://www.lse.co.uk/rns/SEPL/debt-refinancing-operations-update-o0vhffue61yd8fn.html
2014 Production 30,819 boepd (24,248 oil/rest gas) = 15c/$81.3m,
2015 Production 43,372 boepd. Net Debt $550m . Div 8c/$$43m
2016 Force Majuere issues, Production down to 25,877 boepd ( 52,000 boepd expected) 2P now 462 mmboe (195 oil & condensate + 267 gas).
Div zero due.
2017 Production 36,923 boepd. $141m net debt. Div Zero.(Preserving cash/debt reduction)
2018 Production 48,867 boepd (25,669 oil/rest gas). Net cash positive $135m (still looking for another oil pipeline route re Force Majuere issues re-occurring).
Div 10c/ $54m
2019 Production 46,498 boepd (23,935 oil/rest gas). Looking at a new pipeline potential to export. Net debt back up to $456m. Gas plant investment & Bought UK listed Eland Resources. Div 10c/$54m.
2020 Production 51,183 boepd (33,714 oil/rest gas). Net debt $440m. Div 10c/$54m. 2P Reserves now 499.4 mmboe ( 240.5 oil/condensate/258.9 gas).
2021 Production down to 47,693 re FOT shut-ins. (29,091 oil/rest gas) Net debt $426m Div 10c/$58.9m. (589m shares now in issue). New energy business announced Solar etc.
2022 Production down to 44,104 boepd (24,730 oil/rest gas). Net debt $365.9m. Div 15c/ $88m
" We continue to pursue alternative crude oil evacuation options for production at all assets, to increase our export flexibility reduce over-reliance on any one third-party operated export system." Announced also the Exxon acquisition in Nigeria on 25/2/22 just over 2 years ago and still awaited as per todays RNS update.
2023 Production 47,758 boepd (28,087 oil/rest gas ) Net debt $306m. Div 15c/$88m. Year end 2P = 478 mmboe.
I make that $521m of dividends paid but in the annual report for 2023 released on 22/4/24 they say they have paid out $575m since listing though i think this is me down to not having the exact date the shares jumped from 542m to the current 589m in issue.
In the last 5 years or more Seplats share price has been down a considerable time around 50p so lost 75% of its IPO value of 210p listing price. It's now back to 170p 10 years later.
Rocky ride it's probably not a comparison but the azule deal completion and the presentation this morning has put afentra at 6,800 bopd net with 32 million 2P and 20 million 2C and Afentra market cap at the moment is £130m.
So if we get Niger to 5,000 bopd and convert the 33 million 2c to 2p than we should add Afentra current market cap to our current market cap or thereabouts. Taking us to £500m market cap, plus if we can materially increase gas contracts post CPF completion than hopefully another 100 million in market cap as a result of that. Plus if we factor in Stubb creek production increase and deal completion with additional reserves, another £50m.
I think without acquisitions we have a credible path towards £600 - £700m market cap company without acquisition based on purely maximising our current assets without further dilution £600 - £700m market cap will put us in the range of 45 -50p share price. I believe any value beyond 50p will need to be boosted by another acquisition.
TiL - great stuff and 33mboe being reclassified from 2C to 2P should be SP enhancing too. Not sure how to calculate, in theory how much it should add to SP though. Maybe Z could refresh us on his views as I know he’s posted on this subject before.
The below article seems to imply that we should hopefully get first oil from Niger this year.
Meanwhile, London-listed Savannah Energy, the only Western oil company operating in Niger, plans to bring a new 1,500 b/d oil project online in the coming months before ramping up to 5,000 b/d.
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/052024-inaugural-cargo-of-nigers-heavy-sweet-crude-en-route-to-mediterranean
Seplat is a great story to remind people Seplat share price approx 85p (£500m market cap) when we were suspended for the south sudan deal and today its 170p (£1bn market cap). Our shareprice on suspension is 26.25p (£343m market cap).
The gap in valuation prior to suspension was circa £150m and in the suspension period seplat has added another £500m, so all in all if we are to come back to the market at the same SP the value difference will be £650m. £1bn (seplat market cap) vs £350m (Savannah market cap).
let's not forget Seplat are likely to close there exxon acquisition within the next few months that could easily add another 1 billion to their market cap. So we could see Seplat at £2bn market cap on completion of their deal that equates to an SP of 340p.
That could mean the market cap gap could be £2bn (Seplat) vs £350m (Savannah) = £1.65 bn. In this scenario seplat would have been a 4 bagger from 85p to 340p (pending exxon completion obviously)
Would be nice if savannah can close this gap in some shape or form either through strong Nigeria Accugas performance, Niger or new acquisitions or a combination of a bit of everything.
Savannah has all to play for in my assessment and even without another deal, a strong and growing accugas business with Niger first oil can easily claw some of that gap in valuation easily.
I dont hold (but I wish I did) so it’s not a pitch at all. I held quite some time ago but sold but have retained it on my watch list and it’s doing very well . The 52 week low (and it was lower before 12 months ago) was 99p and today it’s £1.72. It’s doing so well and also pays a decent dividend. I’m not buying but it just makes me even more keen (if that is at all possible) to see SAVE trading again.
Similar to many on here, I guess, my hopes of a successful SS deal ebb and flow between being a bull and a bear. ATM I’m quite positive of successful deal closure but let’s not kid ourselves - when / if it should close there are many calls and puts to the deal. Having said that, I do have a lot of confidence in AK in making the tough deals work (even if he can’t nip over a fix a pipeline!!!).
We of course know nothing of what’s required in detail fro the deal to close but it does seem more and more (to me anyway) that the PNCL accounts and all potential final settle payments are critical to Government sign off. I can’t see Petronas wanting to remain in the Countery one jot, so they have as much skin in the game as us to get this deal over the line.
I also can’t see much chance at all of the SS Government wanting to nationalise the oil fields in SS and I don’t see any other company have the appetite for the risk of this magnitude to try and pinch it from us.
AIM / NOMAD (although I think NOMAD’s in general just earn decent fees by talking a good game) must think that there is more than 50/50 chance of it getting over the line.
The saving grace for me is that the underlying existing business should be growing significantly month by month and should SS fail, the longer we are suspended, the higher chance of a stronger SP on return becomes.
As a minimum in addition to Accugas let’s hope we see:-
CPF completion
First oil in Niger
Stubb Creek completion
Accugas debt re-structure
If these 4 things should happen, even without a successful SS deal, I see a quite healthy SP by the end of 2024.
You've got to feel for them...
https://x.com/PatrickHeinisc1/status/1793255399497318577
Thank you TrustLie and Rocky for the additional information regarding the PCNL Accounts which certainly helps explain the delay - and assists my peace of mind and hopefullyt others too!
In the short term, yes, Naira appreciation would allow FX losses to be clawed back. However in the long term, ideally post the refi of the accugas facility to local currency, Naira depreciation wouldnt be a bad thing. As in you would be using USD revenue to pay down Naira debt which is depreciating (vs the USD) and thus getting smaller.
Im also hoping that with recent FX reforms and improved FX liquidity, SAVE wont be required to hold so much cash on hand in Naira.
So am I correct in saying that if we assume that the worst of the naira devaluation is out the way and let’s say 1500 usd to 1 US dollar is the low. So effectively if the company thinks that this is the low and continues to build cash receipts at current levels and than naira starts to appreciate than we could effectively net off some of the losses too.
I suppose it depends on the timing of the cash reciepts and at what rate vs whether the naira has appreciated or depreciated since that cash hits the bank accounts.
So depending on how the rate fluctuates some receipts could have gains and some could be on losses. But assuming naira is only likely to appreciate from here on in than any cash receipts are likely to see an fx gain in the future with appreciation of naira against the US dollar.
So perhaps the company might want to claw back some of the FX losses this way before converting the facility prior to the term expiry date that zengas alluded to
Hi Trustlie
Was going to type a lengthy email, but dont need to given Rumplestielzchen is spot on!
From memory, part of the issue is that Acugas contracts are priced in USD but paid in NGN (at least for the main contract). Contracts have a true up clause, so any negative FX moves between delivery and payment are protected. The challenge here is that you cannot easily convert those NGN into USD to service your debt.
So the NGN sit there as cash balance, compounding at 20-25%. However, your debt remains in USD. And when Central Bank devalues NGN you are not protected for the cash balances you have. This is the part where the FX losses come from. And this is where debt restructuring into NGN will help.
Well they will have to sort the Accugas term facility debt out as it matures end of next year.
They won't run it to the last minute/month.
Matures 31/12/2025
Obviously if we are significantly able to increase our USD denominated income than the problem would fall away easily as I would imagine the company would aggressively pay off the accugas debt and be done with it
Scotpak - I am no fx expert but I believe that the accugas debt restructuring to naira is not solely about the naira depreciation, I would imagine the company have taken a cautious view in re-financing as having a fully naira aligned debt amongst naira rate hikes could also increasing the cost of servicing naira debt.
Hence I think there would have to be a clever middle ground in restructuring all of accugas debt to naira that does the following:
1) protects against any further naira de-valuation but leaves room for positive fx appreciation in naira
2) protects against any future interest rate rises from Nigeria central bank as having a fully naira based loan could see our naira debt servicing increase with every rate hike
Perhaps this could be the reason that Savannah has held of on converting debt to naira entirely. One would imagine rate cuts in us rates will positively affect our US denominated debt so would it be better to hold USD debt for now as we are probably closer to US rate cuts than we are to naira rate cuts
Welcome your thoughts on this
NAIRA 3.6% stronger today (vs USD) after Nigerian central bank hiked rates to 26.25% (vs expectation of 25.75). Hopefully the start of an appreciating trend.
Demand for a our gas will continue to grow, as Afreximbank grants $3.5bn funding for Bakassi deep see port, with the only gas pipeline in close proximity to the planned project, it makes sense why Savannah were keen on consolidating the stubb creek gas reserves from sinopec as well, the demand for their gas and the utility of there pipeline network is going only one way and this is up.
https://www.vanguardngr.com/2024/05/criver-secures-3-5bn-for-bakassi-deep-seaport/
Location of port - https://google.com/maps/place/541115,+Cross+River,+Nigeria/@4.8861658,7.9560538,10z/data=!4m6!3m5!1s0x10679c3212428b3b:0x281026c7449a39d6!8m2!3d4.7691216!4d8.4293891!16s%2Fg%2F11nnm4mtbv?entry=ttu
Accugas pipleine network -
https://www.savannah-energy.com/operations/nigeria/