The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Thankyou for posting the Gervais Williams IC podcast were he explains the pros and cons.
No idea what is going on with this one .
Might not be as bad news as first thought .
AIM not the place to be this last year.
6/6/22..5 year high *40.2p
Have on 3 accs.
12/1/22 ( D ) Sold a few @ 25 to 27.5p but just the ones bought in top ups under 15p .
Buys and Sells.
1st buy on ( D) 16/4/19 paid 22.5p
Have some ( Wi ) were I noticed suspension .
Have largest holding in ( T )
24/6/20 low 6.8p that did not look a good move.
12/7/19 Bought at 12.5p twice as many as ( D )
Don't think a brown field assets will be of interest to any oil major let alone a major like ENI, so they are clearly targeting the wrong companies.
Looks like Equatorial Guinea is still trying to find some buyers for Zafiro and another field.
https://www.africaintelligence.com/central-africa/2024/02/08/teodorin-obiang-offers-zafiro-and-fortuna-fields-to-eni,110157308-bre
Does this mean we will have another big dent in profit? Appreciate your comments.
You never know, Til :-)
https://www.sudanspost.com/world-bank-pledges-to-back-south-sudans-financial-reforms/
Interesting interview for IC, one thing I did pick up if the mention of credit guarantee of the accugas asset and if Savannah can get a similar credit guarantee on south sudan than it would be a great deal, could world bank provide a credit guarantee for this purchase as part of it's development goals for the country and seen as the country is heavily reliant on oil revenues to fund national budget ?
OB - thanks for the link. Just goes to show that PM (and I assume other II’s) are in this predominantly for the potential field more than for the potential capital growth. And specifically around the Nigerian asset. When speaking about the SS deal he says something like:-
“Frankly I don’t mind if it completes or not”
I find this comment a bit defensive to be honest but it does underpin the strong views on here of Z, PF, K and TIL (amongst others) that Accugas is very much the engine / jewel in the crown at the moment and even the Nigerian assets alone will be throwing of more cash that we could have ever hoped for only 2/3 years ago.
Scotpak - what are your latest views on the fx movements of the Naira and the possible effects on our debt refinance package? Could it be that if SAVE are so confident of SS closing that we do not conduct a long term debt refinance package for Accugas and simply aim to pay it off from the FCF thrown off by the Petronas RTO deal?
Oilbagger - the link is much appreciated, thank you. He sounded very optimistic about SS at the start of the section on SAVE, in a somewhat unguarded manner perhaps? Slightly ‘walked it back’ later in the interview, but great colour!
SAVE is mentioned by Gervais Williams of Premier Milton Group just before 7 minutes. Interesting to see II view on SAVE. Good risk/reward and expects to pay dividend longer term. Part of larger portfolio so obviously not material to them. Slight write down of SAVE in his fund due to fund processes/ (evaluates on news)/drop on oil price but as we all know all depends on any deals done. It didn't help that the interviewer got the name wrong and called it Savannah Resources. Anyway, worth a few minutes listening to it.
https://www.investorschronicle.co.uk/podcasts/2024/02/06/i-always-feel-it-is-a-bit-disappointing-to-buyback-shares-gervais-williams-of-premier-miton-group/
BTW although I don't post often I read the board frequently and thus appreciate the insights/analysis from the core contributors.
Gas shortage supply to Akwa Ibom Power plant, we supply 20 mmscfd which ended December 2023, Can we materially increase our supply with a new gas contract and significant volume or is there a constraint until CPF is completed. Definitely an opportunity here to increase volume significantly.
https://leadership.ng/power-grid-restored-as-tcn-blames-collapse-on-gas-shortage/
https://tdpelmedia.com/power-grid-restored-as-tcn-blames-collapse-on-gas-shortage/
GSA to supply 20 MMscfpd of gas to Ibom Power Company Limited, operator of the Ibom power station, for a ten-year period which ends in December 2023 with a take-or-pay commitment of 80% of the contracted volume. The GSA is expected to be renewed and discussions are ongoing. The Ibom power station has a current installed capacity of 191 MW and is owned by the Akwa Ibom State of Nigeria.
My timeline expectations and the patience timeframe I am willing to give for suspension to continue until maximum timeframe is 30th June 2024. My reasons are as follows:
1) Q1 2024 results released by than - usually comes 2nd week of April 24
2) Full year 2023 results released by than - usually comes 2nd week of June 24
3) Hopefully update on accugas debt re-structure by than
4) Hopefully update on ICC cases by than.
5) CPF completion + material increase in accugas contracts
6) Time to execute an additional deal or alternative deal whatever the SS outcome.
7) South Sudan oil and power 2024 oil conference last week of June so it will either support or expose SS government to drive investment. Our deal decision eill sway investor interest and confidence on event and investment environment in SS
8) Progress and update on Niger work programme and Niger export pipeline.
I believe in my mind 30th June 2024 is the upmost period I am willing to accept in my mind, which allows enough time for the company to progress all of the above but also underpin the company and protect and enhance shareholder value beyond our suspended price.
After 30th June 2024, I don’t believe there is any sensible justification for the company to remain suspended beyond this date if they aren’t able to progress a few of the above items and would happily accept coming to market whatever the status of progress on above.
Some may disagree but I believe that timeframe allowed is the ideal timeframe in my mind
Thanks Rockyride - I am still of the opinion that with accugas with CPF completion will transform the company into another level in a few months time. One thing I will say is that all deals in Africa are difficult even Nigeria as we witnessed first hand how long it took for the accugas deal to reach conclusion that being said we have 3 offices in Nigeria and big Nigeria staff base we should still pursue another asset base in Nigeria to fully utilize our Nigerian staff and maximise efficiency
(Great to see the effective date of 1/1/22 mentioned as we have not seen that in print before. This date was mentioned to me by David Clarkson at the AGM but he did say he was not certain of it which I found very strange for a director to say - although he is definitely only a back seat passenger nowadays.)
01/02/2024, 11:59 am
Photo of Ed Reed
© Supplied by Savannah EnergySavannah Energy team in red overalls stand in the desert, in front of drilling rig
Picture shows; Savannah's drilling team. Niger. Supplied by Savannah Energy Date; Unknown
Savannah Energy has pushed back closing on its South Sudan acquisition yet again, although Shore Capital has set out some grounds for positivity.
The operator said it remained suspended from trading on London’s AIM. It has pushed back the cancellation date to April 2 this year.
However, Savannah said it is still making progress on the various parts of the deal. These include “in-country approvalsâ€, which are required to complete the deal for Petronas’ assets.
Shore Capital analyst Craig Howie said it can be “realistically expected†that Savannah publish its AIM admission document within this time.
Savannah announced the deal in December 2022. It agreed to pay $1.25 billion to Petronas for the Malaysian company’s assets in South Sudan. At that point, it aimed to publish its admission document within the first half of 2023.
Shore’s Howie said “we continue to sense that Savannah is pressing on to ensure that this can occur as soon as possible – noting AIM’s granting of the further extension announced todayâ€.
Once the documents are published, he said, it will be easier to assess the South Sudan. In the meantime, Howie said, “we continue to forecast material organic revenues and cash flowâ€.
Petronas has a 40% stake in Block 3/7, 30% in Block 1/2/4 and 67.9% in Block 5A. In 2019-21, the Petronas unit reported an average post-tax profit of $130.6 million.
The deal has an effective date of January 1, 2022. Thus, while the delays are inconvenient, cash flow from the assets will go to paying down the final price paid by Savannah.
Interesting PF, thanks for researching. Given the keeness that AIM seem to have for SAVE to relist, then one would think they could show some flexibility. For instance, if we signed an SPA for a new acquisition which would ordinarily result in a RTO, once we came back after acquiring SS (fingers crossed) then the likelihood is that the new enlarged company would no longer require an RTO for the new acquisition, so we could be back trading straightaway.
All conjecture but we have another 2 months to while away now so there's not much else to do :-)
Thanks SOG and Porschefund - One of the the many reasons why AK has remained in the AIM market is so there is more flexibility on the rules
TIL
From the LSE rules for AIM companies link below:
"A reverse takeover is any acquisition or acquisitions in a twelve month period which for an AIM company would exceed 100% in any of the class tests.".
Whilst the Gross Assets test allows a pro-forma (enlarged group) Balance Sheet included in the Admission Document to be used as part of the 100% equation, the Profits and Turnover class tests do not, and the relevant figures in the last published accounts would be used.
It would therefore seem logical that if another acquisition completes ahead of the SS deal the enlarged group would still fail the class tests and suspension would continue.
https://docs.londonstockexchange.com/sites/default/files/documents/aim-rules-for-companies.pdf
The class tests definitions start on page 19.
The following paragraph does however suggest some flexibility:
"Substitute Tests
In circumstances where the above tests produce anomalous results or where the tests are inappropriate to the sphere of activity of the AIM company, the Exchange may (except in the case of a transaction with a related party), disregard the calculation and substitute other relevant indicators of size, including industry specific tests. Only the Exchange can decide to disregard one or more of the class tests, or substitute another test"
Share price is holding up nicely despite the delay.
Apologies SOG for ruining your observation that the BB continues to be high quality!
Hi TIL
I’m not an expert in the matter but in the spirit of brainstorming on this bb ( ie not advice/dyor), on scanning the below FCA link
https://www.handbook.fca.org.uk/handbook/LR/5.pdf
And quickly scanning reading other googled articles, I couldn’t see such a restriction.
In openly signaling a possible second hydrocarbon transaction and pursuing other transactions for quite some time while suspended for SS the company (SAVE) seems to not be acting as if this were the case either. So anecdotally this doesn’t seem to be an actual issue; or perhaps another way to look at is it’s not an issue in practice? I don’t know if this helps.
Personal opinion: It would be difficult to imagine being able to credibly approach other sellers to enter into a transaction if this material restriction in completing a transaction were the case.
Again, I’m not an expert, just my 4 penn’orth!
It’s been an exciting week on this share / bb - really appreciated everyone’s posts. This bb continues to be high quality. I’m optimistic on SAVE, and wish the Management Team Godspeed in getting the deals across the line!
RockyRide - So you mean summary we cannot complete another deal like Assala Energy or another prior to SS is that correct ?
I have asked the NOMAD this before and he said (the normal standard party line) that any material information needs to be declared in the same way whether a share is suspended or not. I probed further and he said, the point any other deal would be deemed material would be at the point of SPA being signed. If my memory serves me correctly, Z has said he’s seen SPA’s being signed very late in the total cycle and completion happening in a matter of weeks. But in this scenario, while we are delisted with no company currently existing on the stock market, I wold think that this kind of think would be impossible and we have not seen a SPA being signed anyway. However, I would be hoping that we are ready to sign one very soon after re-list either with or without a SS deal. But if it is without, I think we will see a lot of PI’s bailing as they would be in fear of another RTO and subsequent lang suspension again.
I just had a thought this morning and wondered if anyone had a view on this and whether it's technically and legally possible. Could we complete another deal whilst we wait out decisions on SS government prior to the SS Deal. What I mean is return to market with another deal which enlarges the company so it doesn't need to stay suspended prior to the SS Deal, than the SS deal can play out in it's own time with the deal still intact in the background if it continues to take longer.....................
I wonder if that's actually possible in this same suspension window and whether legally and technically allowed given that we were suspended for the SS Deal in the first place so would be able to re-order the running order and execution of deals ?
Probably a legal or a Nomad question one would think ?
And I wouldn’t be surprised for some sort of deal being done with the Government to give them more skin in the game. Maybe they take a higher percentage of revenues from the extensions to the PSC’s. Could they benefit by taking a slightly larger share from ourselves, CNPC and the other partner (can’t remember who they are).
Or could we sell a bit of our share back to the Government, similar to us trying to sell 10% of COTCO back. I know the SS would not have the funds to pay but could it all be done from production revenues with an economic interest date of dd/mm/yyyy. The other 2 partners may do the same if it enhances the chance of the PSC extensions and would reduce any threats of Nationalising the oil fields as happened in Chad.
One way or another we need to take the Government with us and not by dropping suitcases out of planes.
As with all deal making there is an escrow process so folks can google it, so all parties to transaction feel comfortable to commit to each other using a third party a legal firm. So the South Sudan government can feel comfortable that Savannah can finance the acquisition and has backers and the debt providers can feel comfortable that they have assurance on government approvals, It's a matching process and it happens in tandem, you can have the approvals happen later but in this case I believe Savannah and Debt providers would want approvals and debt execution to happen concurrently to give assurance to both parties, so the escrow process allows for this and both parties can not say you are not providing debt or you are not providing approvals, they can both satisfy each other through escrow.
It really comes down to SS government will to complete this deal and let's be frank that's the only thing that matters with this acquisition and nothing else really
It's hard to say Ian.
Some of these institutions have major funds under management and while holdings in SAVE for the top 9 including the EBT are just shy of 60% it might not register that high at all on their overall FUM.
For a few weeks to a few months this either going to transform from $280m to nearly $1.8b yearly revenues with a significant debt reduction (we hope) on the transaction cost 2.25 years on ? and IIs seeing a more realistic valuation/re-rating with perhaps further deals in the pipeline in the short-medium term for continued growth ?.
If they were to pay a $50m div (from $1.8b revs) it's about 12% at the current valuation at 26p to 4% at 78p which imo would be affordable relative to low debt and a $70/b oil price.
Maybe a need to wait and see the expansion plans re reneweables - would IIs pull their money without seeing the details of that growth arm/performance next few years. On the above they'd have to now pull that money and look for opportunities anew and success while Save might be on the cusp of transformation. They may not react in the same way as PIs re access to capital. Just imo.