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Would it be possible to take a stake in these fields as part of a consortium by using our Niger asset as collateral or allow balance of consortium to have a slice then use a finance facility to develop the fields but spreading the risk amongst the consortium. Might be too complicated but just a thought ?
18/5/20 TOTAL RNS Total Discontinues the Acquisition of Occidental Petroleum’s Assets in Ghana. Paris – In August 2019, Total and Occidental Petroleum entered into a Purchase and Sale Agreement (PSA) in order for Total to acquire Anadarko’s assets in Africa. Under this agreement, Total and Occidental have since completed the sale and purchase of the Mozambique and South Africa assets. The PSA provided that the sale of the Ghana assets was **conditional upon the completion of the Algeria assets’ sale.** Occidental has informed Total that, as part of an understanding with the Algerian authorities on the transfer of Anadarko’s interests to Occidental, Occidental would not be in a position to sell its interests in Algeria. Given the extraordinary market environment and the lack of visibility that the Group faces, and in light of the non-operated nature of the interests of Anadarko in Ghana, Total has decided not to pursue the completion of the purchase of the Ghana assets and, as a consequence, to preserve the Group’s financial flexibility. “This decision not to pursue the completion of the purchase of the Ghana assets consolidates the Group’s efforts in the control of its net investments this year and provides financial flexibility to face the uncertainties and opportunities linked to the current environment,” said Patrick Pouyanné, Total Chairman and CEO. https://www.total.com/media/news/actualites/total-discontinues-acquisition-occidental-petroleums-assets-ghana
The Total acquisition of Oxys Ghana assets fell through becaue Oxy can't sell the Algerian assets that Total wanted so they pulled out on Ghana as it was conditional on Algeria. Ghana appears to be going to tax the sale of its interest in Jubilee and TEN which Oxy will have to pay - not the buyers problem i feel. Oxy wants to raise $15b to reduce debt. About $8.3b of that was meant to come from the South African, Mozambique, Algerian and Ghanaian assets that Total were to buy - the latter two that Total won't be buying because the Algerian deal was blocked. There's probably alot of merit to seek to buy distressed assets as they have a lot of further upside and provide instant cash flow from day one. In addition opex is low. Saves initial trucking target is for 1,000 bpd in phase 1 Niger at a cost of $6.3m + a further $8m in leasing costs over 2 years which should be doable regardless. 5,000 bopd in phase 2 at about a further $43m = total of $57m. Could Save have a decent return from Ghana by the time phase 2 in Nigeria would commence anyway ? Still up in the air and i'd say a steep one for SAVE with other competition for the assets.
I’d rather SAVE developed the assets they have, particularly Niger, before spending management time and money on acquiring some of the 24% of the Jubilee field that Oxy still have after Totals pullout (rumoured to be due to difficulties agreeing the tax liability on the purchase with the Ghanaian govt)
Previously AEI reported on Save in the running to secure R3/R4 in 2016. They also named Seven Energy as the target acquisition before it was later disclosed by Save in 2017. Late last year they said Dig Oil were after the 4 blocks which were to come available and earlier this year stated they were off the market which Save later confirmed as renegotiated into 10 year blocks. On past reports, i'd tend to see some truth in this and Saves own strategy (see below).
AEI report that OXY could expect $800m - $1b for it's interests for some 30,000 boepd and i beleive about 296 mmboe 2P/2C with further upside. These obviously have instant cash flow.
Save had a 2018 undrawn $50m facility from an oil trading group - are they able to call on something like this/increase it along with some other terms to match a 10-20% interest as part of a consortium ? They've also just got the resolutions passed at the agm. 3-6k bopd (for a 10-20% interest) would increase revenue by $50m-$100/yr at this current oil range.
From Saves recent adm doc - "Outside of “on asset” or “near asset” growth opportunities in Niger and Nigeria, the Company reviews potential acquisitions and strategic transactions on an ongoing basis. In order for the Company to progress with a growth opportunity, it assesses the potential opportunity to deliver material NAV accretion, asset diversification and medium-term cost of capital reduction.
Opportunities should also be cash flow generative, or close to delivering cash flow generation, represent controlling interests in assets (or have a competent, credible operator) and be located in an emerging market jurisdiction with high-quality subsurface characteristics.
The Company also keeps under review the best avenue for developing its Nigerien Assets and Nigerian Assets, which may, in due course, result in the Company seeking independent finance for each business. Savannah aims to move quickly to take advantage of opportunities that arise and to react promptly to changes in the business environment."
Zen- Thanks as ever for all the detail. You are right David Jamison was co-founder and first Managing Director of Vitol. Perhaps a coincidence but as a SAVE NED he is probably well connected to help SAVE position itself as part of a consortium. A placing at 7.5p would also be a nonsense, if SAVE pursue this deal with new debt/legacy cash receipts I hope it will not result in further Niger delays.
Total have pulled out because they can't buy, though it bought the Oxxy Mozambique and SA assets. Tullow as operator unlikely because they are busy selling other assets (Kenya recently) to pay down debt and already own 35% of Jubilee and 47% of TEN. Kosmos who have an interest have over $ 2.5b debt of their own. Oxxy that own them are in a bit of a fire sale mode after paying $38 billion to buy Annadarko (that owned the Ghana assets). They are trying to raise $15b through asset sales to pay down their debt. Oxxy - 27% of Jubilee is about 93 mmboe P2 and 87 mmboe 2C and about 21,600 boepd net. Oxxy - 19% of TEN is about 29 nmmboe 2P and 87 mboe 2C and about 9,500 boepd. Combined about 296 mmboe 2P/2C and about 31,000 bopd for sale ?. What price 10-20% as part of a consortium which is immediately cash generative ?
Porsche, that's an interesting report - Total had to pull out of buying Occidentals stake in the Jubilee and TEN fields in Ghana on 18th May 2020 which has come nearly 3 weeks after SAVEs supplemental addmission document and update so unlikely to have been on the agenda then.
The AEI report says OXXY has enticed several (Oil) traders to set up a consortium to buy the assets. Might be irrelevant but isn't one of our NEDs a founder of oil trading group Vitol ?
I think OXXYs share is 27% of 82,000 bopd Jubilee for 2020 and 9 or 19% of the 50,000 bopd TEN fields (Teneboa, Enyanra and Ntomme). If correct, ultimately it's hard to know what any participation or interest for us would be relative to other offers. If SAVE are in the running, then someone must be making capital available to us as part of some financing deal/secured on the assets ?
Ghana industry rumour plus SAVEs own addmission of entering the marginal field round in Nigeria. If anything it shows they are not planning to stand still solely on the assets we have.