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Zengas - On the basis of what you are saying, I think if we if don't receive news by end of November than it is fair to say we are probably in the same place as end of September. My personal opinion is that the first 2 weeks of December probably aren't going to change the position we are in at the end of November. I tend to discount December as a slow month as it's pretty hard to get things moving quickly leading up to Christmas and new year break. So in reality wouldn't put it past if there was another extension till end of Feb / March 2024. Again Jan tends to be a slow month as well going into the new year.
So if December 15th is not achieved than with every chance we are looking at 31st March 2024.....................
'Took a further 12 months to complete Exxon on 9/12/23' - should read 9/12/22
Bear in mind
On 2/6/21 we were suspended on the basis of a proposed acquisition and RTO of Exxons interest - There was NO SPA signed.
On 13/6/21 just over 6 months later we signed the SPA with Exxon - but also signed the SPA with Petronas for their interest re Chad.
2 weeks later the adm doc was issued for both SPAs and suspension was lifted -overall in 7 months on 31/12/21.
Took a further 12 months to complete Exxon on 9/12/23 and we discontinued with Petronas in Dec '22.
This time around we've signed the SPA with Petronas for S.Sudan on 12th Dec 2022 along with immediate suspension.
We had a general statement for the adm doc to be issued in H1, then it was moved to be by 30/9/23. This time however it's a mid December month guideline - why not Dec 30th ? It's on or by 15th Dec - so is this seen as the overall final date, both for completion & approval.
Even though we signed the SPA with Petronas in Dec 2022 - i would think it was under discussion long before that - so why i think Jan 2022 might be the effective date.
That leads me to think that when AK said they hoped to have another significant acquisition before the end of 2023 - it could be well progressed.
If S.Sudan concludes - suspension is lifted and there'd be no need for a further suspension unless its a very large acquisition in its own right.
If S.Sudan doesn't go through then they should come back to trading immediately.
Perhaps this could throw a further acquisition into dissaray or they wait and leave a period of trading before an announcement which could be weeks, months away or not happen.
I think the date of 15th December is possibly significant regardless of Christmas - it's mid month and eaxctly 12 months since the SPA was signed.
I think the Government perhaps has been looking at an alternative deal in August on the basis of pre-emption which must be done in a defined period ie getting more money from somewhere else and run the asset themself.
Problem is they want a 5 year payment holiday and they are genuinely broke. From what i know all their oil is pre sold up to 2027 so have no flexibility imo and why i think the touted amount sought from Caltech has been so much to make an alternative deal worthwhile. On the basis of their pre sold oil, i'm not sure if that was based on much higher production figures say pre 2019 and which has fallen way down to todays numbers. Such a deal would leave them in an even more precarious state ie totally dependent on oil revenues something the world financial aid partners are totally against.
Https://cityreviewss.com/savannah-energy-to-delay-acquisition-of-petronas-assets/
Don’t think this says anything that we don’t already know; suspension extended because so far it didn’t get approval.
I wonder if we are exploring compressed natural gas (CNG) options in Nigeria. I assume the have one or two buses knocking around.
Nigeria's President Tinubu increases wages as national strike looms https://www.bbc.co.uk/news/world-africa-66976445
Https://twitter.com/PatrickHeinisc1/status/1708247943734587531?t=plrlA5vtk7KOS59363lL3g&s=19
Picked this up and thought it was interesting that it does seem to have been a very last minute surprise delay in admission doc
Thanks, useful.
I’d hope if SS fails shareholders would be given an opportunity to adjust their positions before another suspension, regardless of any potential new deal in the pipeline. The medium term Shante piece performance has been pedestrian, and that’s being polite.
It’s interesting that both of the main brokers to the company have no view on the valuation of the company as it currently stands.
Who knows how the relisting share price is determined behind the scenes in the absence of any normal supply/demand dynamics.
All a mystery.
Welcome Ian. RR beats me to it and explained beautifully.
I’d say AK will only announce if the new deal is all done and dusted. I doubt he would want another prolonged suspension. I’m hoping two done deals announced at the same time, or ver close to each other in a matter of days.
Ian - I’ll have a go in my layman’s terms as I am no expert in this area but my understanding is as follows:-
In simple terms, if a company tries to acquire another company larger that it’s own it is deemed to be a Reverse Take Over (RTO). The rules that determine a RTO seem to be very complicated and there are quite a few of them. However, as a rule of thumb I tend to think of it as being if the market cap of the assets being purchased are larger that the company buying - then this is a RTO.
If a RTO is triggered it comes with a mandatory suspension until a new admission document is issued or the deal fails. Upon either of those two scenarios occurring then trading can resume.
My concern here is that if SS should fail and we immediately sign another SPA with another company larger than ours, we could possible go directly in another back to back RTO and subsequent suspension for another 6 to 12 months.
I’ve got a lot of capital ties up in this company and have been frustrated by not being able to adjust my position (in either direction). One thing I fail to understand is why the shares were actually suspended in the first instance. In other bid situations on the main market, shares almost always remain traded, allowing holders to take a view either way on the likelihood of a corporate action succeeding (and the likely impact on the share price).
Can someone explain why this situation is different?
FinnCap gave some costings on the renewables last year. (Page 4-5 July 22)
For the mix of solar & wind and 750 MW they had a 13p valuation which was unrisked until in development and up and running.
They estimated 75% would come from debt financing such as specialist infrastructure funds suggested by AK - the remaining 25% provided by SAVE.
For wind the cost was estimated at $0.7m MW. For solar $0.5m MW - an average of $600m GW on a 50-50 wind/solar basis ?.
SAVE were aiming for 1 GW in motion by this year end and 2 GW end of next.
It was to be mid -late next year before the up to 250 MW Niger will be sanctioned with 1st revenues in 2026. On the basis of the F/Cap estimates - that would mean a cost of around $175m of which SAVE would need to find around $44m of their own money but likely spread over 2 years.
Overall on the F/Cap estimate for the 2 GW to be in motion by the end of next year - the cost could be around $1.2 billion with $300m needed from Save although the first 1 GW up and running is likely to self finance a proportion of that with maybe $200-$250m needed to reach 2 GW ?.
Save is aiming for 2 GW by end of next year so it wouldn't surprise me to see projects for 4-5 GW by the end of the decade given the massive target market of an estimated 240 GW across Africa by 2030 from memory.
FinnCap are using about 13p for 750 MW for the mix of wind and solar last year net to SAVE.
That would suggest that a 50/50 mix of wind/solar could be about 17.3p per GW - so if they build out to 2 GW maybe over 34p and if long term there's something like 5 GW about 86p - if reasonably close this would indicate why AK sees it as once in a lifetime opportunity on top of the value from Accugas and the separate hydrocarbon acquisitions and Niger.
On project financing and an average cost of $600m per GW (50/50 Wind/Solar) - we'd need about $150m of our cash per GW.
Obviously a proportion of that becomes self financing when the earlier projects are up and running to help fund later projects.
The net debt profile on Nigeria should still be on track to be cleared in around 2 years (taking into account the added ownership of COTCo interest) - so you'd think should provide a significant level of freed up cash. Over the next 2 years id be disappointed if they haven't increased gas sales by another 25-50% or another $50-$100m sales.
If they can land that crucial and sizeable oil acquisition that can throw off $2-$300m FCF such as Petronas S.S which must be already significantly discounted since the effective deal date - this i would think will be able to build future cash reserves and cover our contribution to grow the renewables. Most of these divestments have a pay back time of 3-4 years from effective date and earlier at much higher oil prices and why i think they're crucial to the entire game plan.
Interested to see the response you get from your strong email rocky that you sent on Friday
TiL - I hope so too but having said that PI’s are always hungry for newsflow and never think they get enough. Although I think AK will only release a bare minimum and what he has too. And while he seems to have “an excellent relationship with Nomad” , i think it will be in the main his decisions what news is released.
As I’ve said before at the very TOP of my list is true refinance of debt so that we eliminate the material risk of remaining a going concern.
Amazing really (but I clearly understand the fx issues - well at least I partly understand the complexity of it all) that it’s not more straightforward to restructure $443m of debt when we have $3.7bn of World Bank guaranteed gas contract in place over the next 14/15 years.
Some excellent photos of the vast Accugas infrastructure too:-
“We consider Savannah’s operational performance in the first half to be strong with the company also confirming continued successful expansion of its renewables division,” comments @ShoreCapital in their research note this morning following #SAVE’s half-year 2023 results.
Read more here: bit.ly/3rvJqyW
Strong momentum continued post-period end with #SAVE signing contract extensions with Central Horizon Gas Company Limited, First Independent Power Limited and Notore Chemical Industries PLC in Nigeria for a total of up to 85 MMscfpd.
#SAVE delivered gas to eight customers in H1 2023 and signed a number of new and extended contracts, including an agreement with Amalgamated Oil Company Nigeria Limited to purchase up to 20 MMscfpd of gas for onward sale to our customers, a new agreement with Shell Nigeria Gas Limited for gas supplies, which commenced in August 2023, and a contract extension with Shell Petroleum Development Company of Nigeria Limited for an additional 12-month period.
We are proud to announce the continuation of our strong safety record, with our Nigerian operations recording one million hours without a Lost Time Injury, in line with Pillar 2 of our sustainability strategy “Ensuring safe and secure operations” and UN Sustainable Development Goals 3 (Good health and well-being) and 8 (Decent work and economic growth).
Rocky - let’s hope there is sustained newsflow in the lead up to December 15th………….. surely not another 2.5 months of silence……. From the company………………
Positive mental thinking!
I know it’s a while from having a decision made but…
Should we win the ICC cases (good initial judgement indicators but a long way to go with a few swings from various court decisions up to decision date) that would be our current net debt of $443m wiped out, so long as we had a credible, reliable way of obtaining the award amounts.
Rocky - If the benin starts the pipeline that means ecowas restrictions will be lifted so continue to look out for what happens there..................................................
1) restructure accugas debt
2) If benin start the pipeline than I hope savnnah aggressively move to drill and flow testing well in short order and work up plans to connect 5,000 bopd to pipeline.
3) I believe they will be working on other deals in the background we know they are looking at Nigeria and Congo both being offshore assets, and i am sure there is plenty of other opportunities they have already worked the technicals on.............
Brilliant insight Scotpak thanks let hope we get some news on accugas debt restructure in October...............
Sp - TY and let’s hope it completes sooner rather than later. The next big thing for me is adding the successful compression project in Nigeria in order that we can continue to to expand our existing customers and add new ones too. I just saw this bit in yesterdays report which is very promising although i do not know when the expected completion date is for the compression project:-
“ Savannah continues to progress its US$45 million compression project at the Uquo Central Processing Facility. Following the front-end engineering and the associated order of long lead items, detailed design work has commenced and is on track to be completed in Q4 2023. The compression project remains within budget and startup is planned for mid-2024.”
Once debt refinance is secured and now I know compression is still on track, I will restart thinking a bit more about M&A. However, I must admit I’d love to see one or two new SPA’s land soon so that we could be working on 2 / 3 M&A targets inc SS simultaneously. This would cushion the blow if a couple of others landed should SS fail.
Am not even thinking about niger or renewables at the moment but I am looking forward to the ICC decisions which I hope will land sometime next year. Not sure how true the rumour is of a June 2025 date being set for the judge led hearing.
they mentioned that we will get an update on niger plans in q4 and i believe it will be driven by this ecowas restricting. china will force benin hand................
talon seeks to reassure xi jinping over cnpc-agadem pipeline
the fate of the export pipeline for cnpc's crude, one of the most important potential sources of revenue for the new junta in niamey, now lies in the hands of patrice talon in neighbouring benin. he is under pressure from ecowas to delay its launch.
behind the scenes, the beninese president patrice talon is continuing to assuage chinese concerns over the export pipeline for agadem crude, whose launch may be delayed following the coup in neighbouring niger on 26 july.
though oil is a central pillar of chinese-beninese relations, the subject went unmentioned in both countries' official media coverage of talon's visit to beijing in september. but although the minutes of their talks were similarly silent on the matter, oil issues were indeed discussed by the beninese leader and his chinese counterpart xi jinping at their meeting on 1 september.
according to our sources, the latter expressed his concern at the potential repercussions of the coup in niger on the pipeline that exports the oil of the state-owned china national petroleum corp (cnpc) via benin.
his main worry is that the pipeline transporting crude from the agadem region to the beninese port of semè will not come on line in october as scheduled, economic community of west african states (ecowas) sanctions on niger having led to the closing of the border between the two countries. talon did his best to reassure his opposite number on this point.
ecowas pressures talon
meanwhile, the new nigerian president and current ecowas chair ahmed bola tinubu, who is hoping to orchestrate the return to power of the ousted nigerien leader mohamed bazoum, is pressuring talon to block the launch of the pipeline, which would throw a welcome financial lifeline to the junta if it comes on line rapidly.
had the situation not changed so suddenly in niamey, the pipeline was to have carried nearly 96,000 barrels a day. the putschists and their leader, general abdourahamane tchiani, are hoping to negotiate a compromise with ecowas so that the crude can flow to its destination.
on 8 september, tchiani, who appointed mahaman moustapha barké as minister for oil, mines and energy in the government of ali lamine zeine on 10 august, signed a decree featuring the name of his new adviser on oil, mahaman laouan ***a. having served as secretary-general at the oil ministry during the presidency of mahamadou issoufou, ***a held the same job title at the african petroleum producers' organization (appo) up until 2020.
A termsheet will usually specify the applicable interest rate, loan maturity, any amortisation payments, loan collateral and any associated loan covenants (rules the company must abide by to maintain availability of the loan). If they already have a termsheet complete with a consortium of lenders, then usually completion is only 5-10 days away max. But thats from my own experience. Dont want to give anyone false hope.
Scotpak - getting to a term sheet sounds good to me. From your experience how likely do you think the debt refinance will complete now that we have got this stage? Hopefully we will see some his resolved during the early part of Q4.
The FX losses themselves were not the "one-off". The one-off was the massive Naira devaluation enacted by the Nigerian central bank. Please see my previous post for more info one why this was done.
In terms of what the company are doing to reduce this risk. The main thing is completing the refinancing of the $300m+ Accugas bank facility (matures in Dec 2025) using a Naira denominated local bank facility. Once this is achieved, the companies largest debt liabilities will have a currency which will match the local currency gas invoices (main source of revenues).
Yes, until this done, FX risk will remain, but the recent huge FX loss is definitely a "one-off". Not in terms of frequency but in terms of size.
Rockyride - I am personally hoping for more newsflow in the period leading up the the December 15th date personally I think it's poor if they go silent for another 2.5 months like they did since 27th July update...................................
Whatever that news flow is we need some rns to keep the investor base appraised. it's a 2 way partnership between us shareholders and the company. Happy to not to be informed about south sudan if it jeopardises the deal until the company is comfortable to do so but at the same time we deserve sustained newsflow and comms as well, not constant new blackouts...............................
I hope AK and IR are cognisant of this matter of fact
PART 2
Finally let’s hope AK has decided to get all the bad stuff (a lot of bad luck), warts and all out in yesterdays update. If so we have a new baseline to work from as we move forward. Let’s secure debt refinance and then build on things from there. If we could complete the debt deal and bring in SS I would be a happy bunny again.
Sorry for the downbeat stuff yesterday but I did find the report very poor on my first assessments of it.
Onwards and upwards and here’s hoping for a strong Q4 and an even better 2024.