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The cash collection (and in particular the legacy debt) reported will be pivotal to the markets reaction to the results, IMO the Boards confidence in future cash flow will in part also dictate what future plans are also announced.
At the AGM AK said “ at the time of results we will also produce a very very comprehensive update on the financial framework and communicate in a way that they have not been able to communicate for the majority of this year. In a couple of weeks time I expect to give a clear picture of where we are and why we are optimistic for the future ‘.
I will be very disappointed if he doesn’t deliver having guided us so clearly.
On the subject of new customers AK said there are industry focused opportunities, but that we have to wait for results to talk about that. I will therefore be disappointed if there is no meat on those bones.
From the Brent Oil Price Chart, Brent had fallen to $29/b in Jan 2016 and still under $47/b in June 2017 ( https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart )
In July 2016 they raised $40m at 38p/share. By Jan 2017 they had completed 800km2 of 3D seismic during that similar period of low oil prices and a tightening in credit and farm in deals. It was early March 2018 that they had the well pad complete and rig on site.
At the time of the operational update and Niger CPR etc on 1st May past - the price of Brent oil was under $19/b. With it now being $42/b it might like 2016-17 be soon more favorable to do something on development of the EPS. Estimated $6m sart-up + $8m for 2 years leasing costs for the 1,000 bopd to be trucked.
AK said at the AGM it would take about $35-$40m to get to 5,000 bopd (i think this was additional to the first 1k bopd).
Even though there's no farm-in, i think it's possible that SAVE can or could progress something in Niger on their own on the existing discoveriers and start eventual exploration again on R3 which is the much smaller licence. I might be wrong but i wouldn't write off nothing happning in Niger just because there is no farm-in partner. I think the farm in is more required for significant seismic acquisition on all the blocks as well as a larger exploration drilling campaign.
We should hear in due course on the Pre-Stack Depth Migration (PSDM) re volumetrics on the discoveries.
Stubb Creek Oil should be healthier with the price recovery in oil.
Registered for marginal fields which might if won, boost reserves and add to production.
He commented on Alaoji being owned by the same entity as Calabar and that contract re take or pay but that's where i joined and didn't understand it in its entirety.
On the new IFAM contract - moving ahead and delay was down to work on the older NGC pipeline held up by C-19 and should be done in the next month or so (now a week on).
Also other customer deals to come and again all against background of already increased production and reduced costs.
Mentioned that any further CPF could be sited anywhere near the pipeline infrastructure and doesn't have to be at Uquo.
Doesn't expect to get debt tenure deal done this year - but beleives it's achievable and looking to match debt to gas contract terms.
On the dividend - he mentioned that he will review this come the end of the year and fwiw i thought interesting that he said this was discussed very clearly with the institutional shareholders so looks to be keeping them well abreast of where he sees things.
So new customer potential = add revenue/pay down debt. Increase Stubb Creek Oil. Niger EPS first oil possible. Potential for reserves/production from any award from the marginal field round. All in all, i thought v positive especially at this valuation.
It's impossible to get a clear picture about payments of invoices, but some positive comments were made at the AGM.
Q: Can the company supply details of invoices, what is currently owed, and have many accounts been written off as bad debt?
AK couldn’t answer this question due to the restrictions of the current close period, but he said:
“In terms of the general policy, for the avoidance of doubt we have contracts that are legally binding, and we expect our clients to pay us so, no, we do not intend to be writing off contractual monies that are due to us.”
AK also signalled that payment of invoices since completion has been in-line. Since the invoices for 2019 totalled $190m according to the trading update last December, this year, after price escalation, roughly $200m of invoices will be issued:
“And as we’ve said, just to re-iterate, we’ve recently said we received $96m in the five and a half months period between transaction close and today our run-rate basis, if you look at about $200m of take-or-pay revenues that the business is due that would suggest that cash collection year to date has been in line with what you would expect. There is a historic balance that we are in the process of collecting on as well, but the cash collections it’s night and day versus prior to the acquisition post acquisition as is the production performance, operational performance, cost performance.”
He says that securing payment of all of the historical invoices issued prior to completion is proving harder than getting paid for the invoices from 2019, as evidenced by the payments received for 2019 being $168.8m compared to the target of $190m according to the trading update in May. But payments in 2020 have been in-line.
Financially it is significant that production and operations at Accugas have both improved, whilst the costs have gone down.