Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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Is there any workable timescale for shares to trade again. Thank you
Good to see the Stubb Creek deal completed with Sinopec though i wasn't expecting the oil element which is a bonus.
My thoughts this past few weeks were on Save possibly doing something in tandem in Niger with Sinopec given they were after 4 neighbouring blocks to us but which the Niger government is rumoured to now want to develop themselves.
That's a lot of gas and oil before any further acquisitions.
Also a welcome dollar income boost from new additional and expected to double oil production.
Sinopecs Sipec made $27.8m after tax profit in 2022 so should overall improve our dollar income/less reliability on the naira and with overall production expected to double should really improve things.
This perhaps looks like the 'at least one further acquisition' which was expected by the end of 2023.
This has moved our net 2P/2C up to over 180 mmboe with Agadem net (220+ mmboe gross).
It' shows how quickly things can take a step change.
If they can push on this year in Niger and if the segments in Amdigh are as hoped for in pressure communication (which were not included in the first time around in the cpr), it could add a sizeable uplift in 2C. Approx 100 mmbo additional to play for in 3 existing fields.
Of course if S.Sudan could only complete and with a rumoured 300 mmbls reserves (A.Intel) would put us in a different 2P/2C and production league.
Thanks for Sharing RR.
Still awaiting soooo much news (Accugas refi, SS aqn completion, Niger production start, Chad legal challenge), but good to hear company is still alive and doing value adding moves like this. As is always the case, the longer we have without any news, the more worried and suspicious we get. So good on the company to provide some marginal relief.
Good luck to all.
This SCAP note brings the RNS to life and makes me realise what a great little this deal is for us. PS thank you - you know who you are…
SAVE LN Equity } Savannah (SAVE) is buying out its partner (SIPC) from the Stubb Creek oil and gas field in Nigeria, raising its exposure to a strategically important asset for the company with strong oil production enhancement and gas development potential at an attractive price.
Savannah will pay US$61.5m in total for the 49% of Stubb Creek it does not already own. This equates to an acquisition price of just US$1.3/2P+2C boe and is well below our US$102m valuation for 49% of Stubb Creek at US$70/bbl Brent.
The acquisition is expected to be funded through a new debt facility and existing cash resources. The transaction has an effective date of 1 September 2023 and completion requires regulatory approvals, but this is expected to be relatively straight forward over the coming months.
Savannah is acquiring reserves and resources of 46 mmboe, boosting its resource base by almost 30%. Of this, the 227 bcf (38 mmboe) of gas resource is especially important with development anticipated in c2033 as the Uquo field gas production comes off plateau, helping to satisfy Savannah’s growing Nigerian mid-stream gas requirements.
SIPC 2024 oil production is estimated at 1,400 bopd. However, management plan to implement a low-cost debottlenecking programme within 12 months of the deal completion that is expected to more than double Stubb Creek gross production to 4,700 bopd.
The acquisition has strong strategic and commercial rationale. It looks attractively priced and gives Savannah total operational control over a producing asset it knows well where oil production can be rapidly increased at modest cost. It brings a complimentary gas development asset into the portfolio that can support Savannah’s long-term midstream gas distribution ambitions. For investors frustrated by the South Sudan RTO, this smaller ‘bolt-on’ transaction should be welcome, demonstrating that management has not neglected its core business in Nigeria.
Very brief coverage from Cavendish this morning, please see below:
"Stubb Creek acquisition Savannah is buying out its partners from the Stubb Creek oil and gas field in Nigeria, raising its exposure to a strategically important asset for the company with strong oil production enhancement and gas development potential at an attractive price."
Niger:
US out, Putin in.
Bodes less well, I fear.
https://www.nytimes.com/2024/03/17/world/africa/niger-orders-american-troops-out.html?te=1&nl=morning-briefing%3A-europe-edition&emc=edit_mbe_20240319
And clearly SAVE deem it more important to wish people happy Ramadan on X than to promote a nice piece of new M&A. Wonder if we will be wished a peaceful Easter next week and Happy Christmas and New Year later in 2024?
PS 48.1% of Africans are Christian!
CYB - indeed and re your point 4, I notice AK has written Projects That Matter in BOLD on the first line today. Maybe he thinks Kiir has impaired eyesight too - LOL
Re the Naira - I note it’s started to improve a tad and gone from an all time low of 1,624 to 1,560 - baby steps but a strong trajectory towards 700 - 900 would be hugely beneficial to us all IMHO.
Let’s hope SAVE’s 5 x 2023 KPI’s are delivered in 2024 and I’d take that all day long.
Very interested to see Z’s views on the production increase, additional 2P and financial structure of this little deal.
Mwahahaaa! Thanks, kat!
Standard Chartered and Citi also join Goldman in predicating a naira recovery this year.
https://www.legit.ng/business-economy/money/1584147-two-top-firms-bold-pediction-naira-dollar-exchange-rate/
The jury is still out on whether this is a good deal, as the share price has hardly moved.
Agree TIL it would be nice to see a steady increase in positive news flow over the next week or so leading to Admission doc with completed SS Deal.
Initial thoughts on this:
1. Our operating (commercial) interest in SC after this goes through appears to be 100%, with the legal ownership at 62.5% (or just over). There seems to be an unusual arrangement with UER here: see the 2022 glossy. Please correct me if I've misunderstood.
2. This deal is to be funded by a Standard Bank facility and cash reserves of the company. Good. Suggests group liquidity remains healthy.
3. I've mentioned before that the existing Nigeria TOP contracts have thus far involved a lot more paying than taking. This acquisition suggests that either that situation may soon start to reverse or other credit-enhanced customers may soon be secured. Or both. Given the parlous state of the Nigerian economy, this is encouraging.
4. The Accugas post-2017 growth story reads like a valedictory aimed directly ay HE President Kiir and his team.
5. Were the parties awaiting some degree of NGN stability before announcing this, I wonder? Is the fabled Accugas debt restructuring soon to follow?
Anyway, I'm cautiously encouraged.
Best wishes, all.
Let's hope the news this morning is just the start of news flow from growth perspective, nice move to consolidate the Sinopec shareholding strengthens our accugas position giving us circa 5,000 bopd oil production but more importantly gives us material gas feedstock and with CPF facility hopefully completed soon it significantly enhances the accugas asset, allowing significant gas throughput.
I found this line interesting "Savannah remains committed to growing our core business in Nigeria through a combination of both value accretive acquisitions and organic projects."
I hope more Nigeria acquisitions are on the cards as I have always mentioned I prefer us to go for a material oil producing acquisition in Nigeria and let's hope that we do.
Here is to new beginnings and more wins for all Savannah shareholders.
Summary of Nigeria Gross Reserves and Contingent Resources as per the Updated Nigeria CPR
Gross 2P Reserves
Gross 2C Resources
Oil & Condensate (MMstb)
Stubb Creek
11.9
-
Uquo
0.6
-
Gas (Bscf)
Uquo
456.2
82.8
Stubb Creek
-
515.3
Total (MMboe)
88.6
99.7
All Reserves presented above are as at 1 January 2024.
Andrew Knott, CEO, Savannah Energy, said:
"Savannah remains committed to growing our core business in Nigeria through a combination of both value accretive acquisitions and organic projects. This is reflected in this morning's announcement of the SIPEC Acquisition. The base case acquisition has been priced in line with our expected returns criteria, with the identified upside cases (the oil de-bottlenecking and new gas sales to Accugas projects) hoped to add significant value to the Stubb Creek field over time.
I would like to take the opportunity to thank the members of our team who have worked diligently on this transaction to make it happen. Thank you all."
The following information in relation to the SIPEC Acquisition is included in accordance with the disclosure requirements of Schedule Four to the AIM Rules for Companies:
For the financial year ended 31 December 2022, SIPEC audited accounts show income after tax of US$27.8 million (excluding exceptional income of US$42.3 million) and total assets of US$136.5 million.
Nigeria CPR Summary
The Nigerian CPR has been published by CGG and is available to download on the Company's website (https://wp-savannah-2020.s3.eu-west-2.amazonaws.com/media/2024/03/Nigeria-Competent-Persons-Report-18-March-2024.pdf). A summary of the gross reserves and contingent resources associated with the Uquo and Stubb Creek fields, in accordance with the 2018 Petroleum Resource Management System, is set out in the table below. For an explanation of the defined and technical terms in this announcement, readers should refer to the updated Nigeria CPR.
Bscf of 2C Contingent gas resources. SIPEC oil production is estimated at an average for 2024 of 1.4 Kbopd. Savannah's Reserve and Resource base will increase by approximately 46 MMboe following completion of the SIPEC Acquisition.
It is anticipated that, within 12 months following completion of the SIPEC Acquisition, Stubb Creek gross production should increase by approximately 2.7 Kbopd to approximately 4.7 Kbopd through implementation of a de-bottlenecking programme.
The SIPEC Acquisition will secure significant additional feedstock gas available for sale to Savannah's 80% owned Nigerian gas processing and distribution subsidiary, Accugas Limited ("Accugas"). At present, Accugas has eight principal gas customers, including large thermal power stations, such as Calabar Generation Company Limited, as well as key industrial players, such as Lafarge Africa PLC and the Central Horizon Gas Company Limited. With a weighted average remaining contract life of 14 years, Savannah's natural gas supplies are a critical enabler of the Nigerian economy and currently support approximately 20% of Nigeria's thermal power generation.
Since Savannah announced its intention to acquire Accugas in late 2017: (i) volumes of gas transported; (ii) the number of significant customers served; and (iii) the Company's contribution to thermal power generation in Nigeria have each more than doubled.
SIPEC Acquisition
SIPEC's principal asset is a 49% non-operated interest in the Stubb Creek oil and gas field ("Stubb Creek"), located in Akwa Ibom State, Nigeria. An affiliate of Savannah, Universal Energy Resources Limited, is the 51% owner and operator.
The SIPC SPA will see Savannah Energy SC Limited (a wholly owned subsidiary of Savannah) acquire a 75% equity interest in SIPEC for cash consideration of US$52 million, payable on completion and subject to customary adjustments for a transaction of this nature from 1 September 2023. The Jagal SPA will see Savannah Energy SC Limited acquire a 25% equity interest in SIPEC for cash consideration of US$7.5 million (without adjustment), payable on completion, plus US$2 million in deferred cash consideration payable in eight equal quarterly instalments post-completion. The transaction consideration is expected to be funded through a new bank debt facility arranged by The Standard Bank of South Africa Limited and the existing cash resources of the Company. Completion under each of the SPAs is subject to the parties' satisfaction of customary conditions precedent, including certain regulatory approvals, as well as a mechanism ensuring that completion under both SPAs occurs simultaneously.
March 2024
Savannah Energy PLC
("Savannah" or "the Company")
Consolidation of Stubb Creek Field Interest
Share Purchase Agreements Signed to Acquire a 49% Participating Interest in
Stubb Creek Field, Nigeria and Updated Nigerian CPR Published
Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, announces that it has signed separate Share Purchase Agreements ("SPAs") with Sinopec International Petroleum Exploration and Production Corporation ("SIPC") and Jagal Ventures Limited ("Jagal") to acquire 100% of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited ("SIPEC") (the "SIPEC Acquisition").
Savannah also announces that it has today published an updated Competent Persons Report ("CPR"), compiled by CGG Services (UK) Ltd, covering its assets in Nigeria.
I thought some of you might like to revisit this presentation from the end of 2021. Posted without further comment.
https://wp-savannah-2020.s3.eu-west-2.amazonaws.com/media/2021/12/Restoration-to-AIM-and-major-acquisition-presentation-December-2021.pdf
Looks like operations at port sudan and transit has re-commenced from last Wednesday so previous oil liftings that were in waiting will be processed.
https://www.southsudanminingjournal.co/en/post/boost-for-oil-transit-as-maersk-cautiously-resume-operations-in-port-sudan/617
Https://www.offshore-energy.biz/perenco-boosts-its-portfolio-with-enis-oil-assets-in-congo/
https://www.eni.com/en-IT/media/press-release/2024/03/eni-sale-of-some-upstream-assets-in-congo-to-perenco-completed.html
I’d prefer the US to be there.
Niger's junta revokes military agreement with US https://www.bbc.co.uk/news/world-africa-68590531
My understanding is that Petronas is joint operator via the OCs so I'm assuming Savannah would be so too.
I'm speculating in imagining some sort of de minimis consideration in the event of excessive delay.
From discussion with an experienced arbitrator (top-notch guy and a close friend), we've reached a conclusion (punt) of mid-2025 for a Chadian outcome. Should it be in Savannah's favour, then we're into Mareva injunctions.
Still....Nigeria, Niger, Cameroon, Gabon, Tunisia, etc. My African geography has improved no end.
It’s definitely an interesting conundrum for savannah but having persisted with this deal for so long one would think that Petronas and Savannah would have worked up scenarios if deemed consent is not received.
Perhaps the exit tax or consent fee as the article alludes too needs be the biggest and the sweetest to convince the SS government after all they are in an economic peril so if Petronas are really keen on exiting by all means possible than they could test this avenue to see what is the level that the SS government bite at. Let’s be honest they don’t really want to be operators they all want a big up front lump sum check