Savannah Energy Share Chat (SAVE)

I know the oil price is yoyoing about but SAVE seems to be on a rollercoaster more than other energy stocks, and we don't yet really count as an oil business. What is it with us and the bots who control and use the down days in oil to smash us hard?

I don't think the text suggests that we were one of the 20 bills, Zengas, but it's nice to see the employee's dispute with Esso and the Sav/Exxon deal being explicitly mentioned. With the displacement of Idriss Youssouf Boy as Private Secretary, who was allegedly pushing for sweeteners in the SAVE/Exxon deal, the reference to the deal can be read that it is being pushed through the appropriate legislative procedures. Hopefully this means we'll get something sooner rather than September.

I’m slightly concerned by the Chadian acronyms. They all seem expletive.

Certainly something got the SP perking up?!

I wonder if we were one of the 20 bills adopted ?

Chad: the CNT closes its first ordinary session
Alwihda Info | By Anass Ali Moussa - June 30, 2022

In his closing speech for the first ordinary session of 2022, today June 30 at the Palace of Democracy, the President of the National Transitional Council (PCNT), Dr. Haroun Kabadi believes that despite the diversity of the corporations that make up the CNT, the advisers nationals have been able to transcend their political, associative and corporate affiliation to devote themselves solely to their mission in the service of the Nation.

During this first ordinary session 2022, the CNT examined and adopted 20 bills in the field mainly of administration, especially justice, military justice, the national police, the orientation of the system of intelligence and the protection of defense secrets, the administrative organization of the territory of the Republic of Chad, the protection of vulnerable children, the environment and the retirement of soldiers and civilians.

As part of the monitoring of government action, two arrests relating to issues related to the dilapidated state of the road network, as well as the situation of Chadian employees in Chinese companies and Esso, the spillage of oil in nature, the sale of shares of Exxon Mobil to Savannanh Energy and other oil projects in progress, have been addressed to the government, specifies the PCNT.

In the security field, the CNT is pleased to note that security has been strengthened and controlled within our national borders (...), noted the PCNT, Dr. Haroun Kabadi.

https://www.alwihdainfo.com/Tchad-le-CNT-cloture-sa-premiere-session-ordinaire_a114809.html

I just checked and you're right, it's the same as the June AGM.

Zengas, page 8 of the Finncap note was a straight lift from the FY2021 annual report presentation (page 16) published on 7th June so don't think they've had anything new from Savannah on Niger. If the finance for Niger was dependent on the CC closure then that could possibly explain it being published in September with half-year results (if that, indeed, what IR meant), but then why would AK have said 3-4 weeks on 7th June. All a bit of a mystery. I'm going with end of September now in my own mind, and anything sooner is a bonus.

Given the Finncap coverage released just 4 days ago on 15th July is quite detailed on the individual costings of the Niger and Chad renewables projects, they must have had significant guidance from Save as well as the expected timetable for the acquisition completion.

Page 8 of the 18 page document doc -

Chad-Cameroon acquisition Q3.
Doba drilling looks to be early-mid Q1.

Niger R3 well test beginning Q1.
Niger R3 exploration mid Q1.
Niger EPF & pipeline construction looks like late Q1.
Niger First oil Q4.

AK said a month ago they would update on Niger plans. Given the FinnCap guidance - is that what he meant of news (back then) in 3-4 weeks ? So will it be confirmed come September.

If i remember correctly the well test oil could be trucked/sold.

Poster on ADVFN (otemple3) spoke to Investor Relations today. He posted the following

'Niger drilling plan is being released with H1 results apparently, which based on last few years is end of Sept.
Seems odd to say imminent if that is the case and will be a shame to tie in with 1st half results'

followed by

'Looking at the price action I wonder if an RNS is imminent as quick tick up. Looking at 2020 they released an H1 update late July so maybe that is what they meant (but wasn't what AR said), in which case could be any day......'

https://www.reuters.com/business/energy/oil-market-sees-support-physical-tightness-2022-07-18/

What I'd like to know is, who is running the CC show whilst this Exxon/employees spat and embezzlement issue are ongoing?

TiL, there appears to be a few things still to to be resolved so personally I'm taking AK's comments about things being resolved in Q3 as being towards the latter part of that period.

As well as the embezzlement issue 16/07/2022 https://lejournaldelafrique.com/en/will-chad-deby-succeed-in-getting-rid-of-his-government-and-his-opponents/

the issues between Exxon and it's employees still seem to be unresolved. There are a few articles in this link tracking the progress of the court case between the 2 parties http://www.lepaystchad.com/?s=esso

Zengas - any idea on timescales on cc closure to be fair I was expecting it by now. I always look forward to you Africa intelligence articles in hope that a confirmation confirms through :)

Agadem - Any word on the street from IR I was at least expecting a lot of other operational news whilst we wait for cc closure ?

Back in the roasting UK around noon and now log on with all the Zengas posts await me. Thanks Zeng as ever.
Bad price week but makes no difference if not selling. Next week should be better with all the good press.

My correction to previous post (amended figures which ommitted the net debt reduction impact) and perhaps this might give an idea of the timescale required for 200p basis.

First time we get a detailed look at the renewables this morning -

On the 240 MW Niger wind farm they give $0.7m/MW development cost with EBITDA of $30m/yr and and an IRR of 15%. The others have a different pricing but on average 20% IRR.

From that, if the average EBITDA is $125k per MW, a 3GW target should be possible for $375m/yr EBITDA from the renewables side.

The risked price is now up to 109p while unrisked is 148p. In todays Niger exploration coverage it assumes 76 mmbls (ie 19p) of new 2P reserves from Niger exploration to get to 148p.

On average the 740 MW of mixed renewables have a risked 7.9p and when sanctioned/operational should rise to 12.7p. (sanctionable next year and first power 2.5 yrs from now approx).

30p net debt attached to the current assets is estimated to be eliminated in about 2.5 years (at least 10p/yr next).

That would increase the risked price to 139p and unrisked to 178p
For another 22p of unrisked to come through would require rougly another 88 mmbls of 2P oil.

Overall on the basis of 200p being met, it needs about 164 mmbls of new 2P to be found using FinnCaps $4.40/b over the next 12-24 months etc from either Niger or Chad or combined, along with the currently announced renewables starting up. (which account for 12.7p in Finncaps coverage).

So on a timescale consider in post 6971 re CPR as to where we are/time wise in needing what i see as about 164 additional bls).

" 1) Instead of 33 mmbo 2C so far, it could be as high as up to 109 mmbo from 4 of the existing 5 discoveries (P394).

2) Phase 2 gives 11 wells but 3 of these are on existing wells into deeper targets (Bushiya, Amdigh and Eridal P395).

3) The 'existing' wells with the deeper targets could offer up to 180 mmbo recoverable in total which could be a big step up from 33 mmbo.

In total, Phase 2 drilling is for a net mid case recoverable UNRISKED of 342 mmbls to 1.04 billion high case recoverable (P395) on top of the figures of 109 mmbo in '1' above. "

Going beyond that
A) On average every 100 MW of mixed renewables announced is averaging out about 1.06p risked to 1.7p unrisked.
B) Given that they have already announced 740 MW and they plan to announce more material deals - remember what AK said about wanting a slice of that massive once in a generational opportunity sized market - getting to 3GW should add another 24p risked or 38p unrisked.
(I already set out in adv fn 7033 how 350p could realistically be achieved for Niger alone. 200p is my personal target, but all things considered the potential clearly exists beyond that but perhaps on a longer time scale, though more acquisitions are in the pipeline, substantial gas sales spare capacity and if the OPL310 stakes come in to our possession it will imo continue to be revaluated upwards by

Using a l/term oil price of $60/b from 1/1/24

R3 sufficient cash to self fund development. No plans for either partnering or equity funding.

Accugas at advanced stage of refinancing. Bond issue well advanced. $100m in principle committment from one Nigerian fund.

First time we get a detailed look at the renewables this morning -
On the 240 MW Niger wind farm they give $0.7m/MW development cost with EBITDA of $30m/yr and and an IRR of 15%. The others have a different pricing but on average 20% IRR.

From that, if the average EBITDA is $125k per MW, a 3GW target should be possible for $375m/yr EBITDA from the renewables side.

The risked price is now up to 109p while unrisked is 148p.

On average the 740 MW of mixed renewables have a risked 7.9p and when sanctioned/operational should rise to 12.7p.

On average every 100 MW of mixed renewables announced is averaging out about 1.06p risked to 1.7p unrisked.

Given that they have already announced 740 MW and they plan to announce more material deals - remember what AK said about wanting a slice of that massive once in a generational opportunity sized market - getting to 3GW should add another 24p risked or 38p unrisked.

In todays Niger exploration coverage it assumes 76 mmbls (ie 19p) of new 2P reserves from Niger exploration to get to 148p.

If you add that to the pipeline of renewables it would take the unrisked target up to 186p based on approx 3GW and an addition of a new 76 mmbls from Niger (or basically Chad).

Different combinations for growth potential but to close my 200p target would for me now assume approx 3GW and 130 mmbls of new Niger (or new Chad/successful Lekoil deal) reserves in total.

More divestment opportunities to come through.

You can see how the target value is consistently growing and should significantly continue to do so based on their planned renewables assets along with the sheer size of the 2.6 billion bls risked Niger exploration upside headroom, to achieve what i am personally looking for.

Imo/Dyor as always.

Savannah is delivering impressive progress with this division, quickly compiling a meaningful portfolio that underpins another long-term FCF-generating business from the middle of the decade and showcases its full spectrum energy capabilities, an important calling card for accessing future growth opportunities.

Billion-dollar baby
We have updated our corporate model for the string of announcements relating to additional gas sales agreements in Nigeria and renewable power projects over the past few months. We have also raised near-term oil price forecasts and now include the expected R3 East development in Niger within our numbers. These drive material upgrades to 2023 earnings and cash flow forecasts and boost our risked NAV and price target by 26% to 109p/sh. The expected close of Savannah’s Chad/Cameroon acquisitions is fast approaching, after which the company’s EV will be ~US$1bn. This transaction more than doubles FCF and provides the flexibility to rapidly deleverage while investing for growth and delivering shareholder distributions. In 2023, with a full year’s benefit of the acquired assets, we expect Savannah to generate US$1bn of revenue and, over the next five years, deliver over US$1bn of FCF after interest payments. Completion of the acquisitions in Q3 should prove a strong catalyst for the shares, which will be further fuelled by the expected refinancing of Accugas debt before year end and the sanction of its Niger R3 East development. Savannah’s expanding, highly cash-generative portfolio provides a solid platform for the continued pursuit of additional ‘Projects that Matter’ across Africa in its quest to become a significant regional energy player. - Material estimates and price target upgrades. We have updated our forecasts for the new Accugas gas sales agreements and renewable power projects announced recently, the Niger R3 East development and higher oil prices. We have also pushed back the expected close of the Chad/Cameroon acquisitions from July to September. Our 2023 forecasts increase materially – Total revenue rises 19% to US$1bn. EBITDA jumps 31% to US$620m, leaving Savannah trading at 1.7x 2023 EV/EBITDA. PAT increases 66% to US$187m, a P/E of just 2.6x at US$80/bbl Brent. CFFO expands 20% to US$387m, contributing to net debt falling to ~US$360m by end-2023, a ND/Adjusted EBITDA ratio of 0.6x. Our risked NAV and price target increase 26% to 109p/sh. - Strong FCF potential. We expect Savannah to deliver total FCF after interest payments of US$1.1bn over the next five years, or US$220m p.a. on average, a 40% FCF yield. Even after debt repayments – which will reduce post refinancing – we still expect an average FCF yield of 14% assuming just US$60/bbl Brent beyond 2023. This provides Savannah with the flexibility to rapidly deleverage while also investing for growth and delivering shareholder distributions. - Impressive renewables momentum. Savannah has rapidly secured three major renewable power projects with up to 750 MW of capacity since launching this division at the end of last year. Our 13p/sh unrisked valuation of these projects understates their strategic importance and the beneficial diversification they bring to the portfolio.

Announcement this am of Transglobe and Vaalco merger
Both companies about 20-25% off their recent highs.

Transglobe m/cap £235m. Vaalco m/cap £296m
The combination of VAALCO and TransGlobe will create a world-class African-focused E&P Company supporting sustainable growth and stockholder returns

Combined 2022 mid-point production guidance of 19,100 barrels of oil equivalent per day (" boepd ") on a net revenue interest ("NRI") (96 per cent oil & liquids) and 24,400 boepd on a working interest ("WI") basis(2) ;
Combined proved plus probable (2P) reserves on an NRI basis of 51 MMboe (90 per cent oil) and 66 MMboe (91 per cent oil) on a WI basis (as at January 1, 2022 in the case of VAALCO and as at December 31, 2021 in the case of TransGlobe)(2) ; Combined = 117 mmboe P2.

Committment to pay $28m annual dividend.
Net cash positive $53m
New entity = £530m m/cap.
117 mmboe 2P + 24,200 boepd production.
========================

Save estimated 40,000 boepd 183 mmboe P2 (should be 210+ mmboe P2 once R3 sanctioned). Seperate pipeline income and gas processing/transport business
M/cap £400m + $570m net debt (falling to zero in circa 2-2.5 yrs).

Strip out the debt and on the basis of only the Chad Cameroon oil production (no C-C pipeline tarrif inclusion or Accugas) surely worth a similar £530m or 40p/share alone with the rest driving towards the ball park 80-86p value given by Shore Capital and Finncap ??

Standard Life Aberdeen plc +9,009,645
TT International -1,065,224
Ingalls & Snyder +2,400,000
Miton Asset Management Limited -1,600,590
Cavendish Fiduciary Jersey Limited -175,000
Capital Group Companies, Inc. 0
JO Hambro Capital Management -193,845
RWC Asset Advisors 0

Total +8,374,986

Latest share holdings updated yesterday of 3% or more - does anyone have the previous holdings list to see if any major changes ?

The following 8 (including the *EBT shares) represent 61% plus another 4.4% for the directors.

AK recently re-iterated that the institutions/top 20 hold 80% overall which is a high figure.

Abrdn Plc 151,996,033 = 11.64%
Ingalls & Snyder LLC 128,307,500 = 9.82%
TT International Investment Management 116,566,261 = 8.92%
*Cavendish Fiduciary Limited 99,858,893 = 7.65%
Premier Miton Investors 96,128,672 = 7.36%
Capital Research & Management 96,128,672 = 7.36%
JO Hambro Capital Management 62,711,271 = 4.80%
RWC Asset Advisors 44,821,106 = 3.43%

Since the former President Debys' death over a year ago and under the transitional government of his son, the peace talks have been underway in Doha for many weeks with the various rebel groups in the north and the main groups committed to a a way forward.

The 18 month transitional military government period ends in October and from what i beleive, Debys son and the current government members will be eligilbe to stand for a new government.

As for SHT, Debys son, transitional president, will be seen to have tackled corruption despite close friendships and can say under his present government he has signed a significant investment deal in bringing up to 500 MW of power which they say will be transformational for the country. I would think that the oil acquisitions are tied to this in making the power deals happen and represent significant investment potential in the years ahead that even the British government via their ambassador has commented on.

Worth remembering that a higher proportion of SHTs income comes from other oil fields and stakes with CNPC, Glencore etc, rather than just the Exxon/Petronas acquisitions.

The Energy & Petroleum minister- "We are already engaged to provide all the support needed for implementing these projects and having the first power delivered to our population and our industries in line with the State plan for enhancing the power offering in our country."

The UK amabassador to Chad" "I am delighted that a British company, Savannah Energy, is making such a substantial investment in renewable energy in Chad. Chad has plentiful resources of renewable energy which, through investments like this, can be harnessed to develop the economy and improve the lives of Chadians. This is a further example of UK commitment to Chad."

AK "I would like to thank General Mahamat Idriss Deby Itno, President of the Transitional Military Council, President of the Republic of Chad and Head of State; His Excellency Djerassem Le Bemadjiel, Minister of Petroleum and Energy of the Republic of Chad, and the wider Chadian government for the enthusiastic support we have received in relation to making these projects happen".

From Hinda Déby and the “Acyl network” to Albert Pahimi Padacké, there is only one step
As a reminder, Mahamat Déby was forced to appoint a civilian government after his coup in April 2021. As soon as his father Idriss Déby died, First Lady Hinda Déby Itno fled the country to Cameroon. It was in Douala that Hinda Déby then met Joseph Beti Assomo, Paul Biya's Minister of Defense, and Albert Pahimi Padacké, before they went together to N'Djamena for the funeral of Idriss Déby.

Four days later, Padacké was reappointed as Prime Minister in Chad. However, it is common knowledge that the head of government was not one of the favorites for the post. Eternal opponent, and one of the rare politicians of Chad to never have called upon the militias or committed violence, his nomination was very unexpected.

Read: The Chadian crisis, between opposition, ethnicity and French interference
On May 3, 2021, Hinda Déby Itno returned to Chad, where she remained until December, when the junta arrested two of the former First Lady's brothers, including Mahamat Déby's former aide-de-camp. Khoudar Mahamat Acyl. The arrest of the latter sowed the seeds of discord between Mahamat Déby and Albert Pahimi Padacké. A dispute that got worse after the dismissal of former President Goukouni Weddeye from the national dialogue from Qatar.

This Sunday, Mahamat Déby had two members of the Padacké government unilaterally replaced. The latter's chief of staff Abdelkérim Déby, whom he had replaced by the Minister of the Economy Mahamat Hamid Koua. And in Koua's place, Mahamat Déby appointed his former adviser Moussa Saleh Batraki.

A small reshuffle which suggests others at the head of the government. The “SHT gate” scandal was clearly an opportunity for Mahamat Déby to place his allies in government and to deprive Albert Pahimi Padacké of his own. But also to bring down the last allies of Hinda Déby. But while the investigation into "SHT gate" is not yet closed, will Mahamat Déby also bring down Albert Padacké? In any case, the Prime Minister has long since passed into the background in the governance of Chad. And while the political transition is slipping, Mahamat Déby is on the way to securing total control over the state apparatus.

https://lejournaldelafrique.com/en/will-chad-deby-succeed-in-getting-rid-of-his-government-and-his-opponents/

In Chad, the "SHT gate", a scandal of embezzlement of oil revenues, now threatens not only its authors, but also the government. Will junta leader Mahamat Déby demand the resignation of Prime Minister Albert Pahimi Padacké?

Will the head of the Chadian government Albert Pahimi Padacké be affected by the “SHT gate” scandal? For more than a month, this case of embezzlement of the income of the Chadian Hydrocarbons Company (SHT) has monopolized the headlines of the Chadian media. According to Confidential Afrique, which first revealed the disappearance of more than 180 million dollars from the coffers of the State of Chad, Padacké was not overly concerned by the accusations of corruption.

So why is the Union of Trade Unions of Chad (UST) asking for the head of the Prime Minister? And why has Mahamat Déby already started a purge in the government?

Last Saturday, the president of the Transitional Military Council (CMT) - the Chadian junta - Mahamat Déby assured that he would be "intractable in the face of proven embezzlement". He assures that "more than 80% of the income stolen from the SHT has been recovered". Mahamat Déby, however, threatens "those who have confused the state coffers with their dairy cows".

The "SHT gate", a scandal exploited by Déby?
The embezzlement in this case was reportedly discovered by the Chadian presidency last June. Investigators brought to light an offshore account where the money was transferred. On June 23, Mahamat Déby dismissed by decree his private secretary Idriss Youssouf Boy, the boss of the SHT Boayom Michel and his deputy Tahir Souleymane. Mahamat Déby then had the CEO of Orabank Chad, Mamadou Bass, arrested by the intelligence services (ANR).

As a reminder, Orabank, formerly Financial Bank, belongs to the Oragroup holding company and is present in 12 countries in Central and West Africa. COBAC — the Financial Commission of the Economic and Monetary Community of Central Africa (CEMAC) — as well as Oragroup sent two delegations to N'Djamena.

Prime Minister Albert Pahimi Padacké did not comment on the scandal. His Finance Minister Tahir Nguilin, for his part, declared that he had no connection with the "SHT gate", "neither near nor far", hammered the minister.

Chadian civil society, in this case the Center for Studies and Research on Governance (Cergied), has called for an exceptional independent audit of the case. Indeed, as the opponent Succès Masra explains, “embezzlement has been commonplace in Chad for decades”.

In place of Youssouf Boy, Mahamat Déby has appointed Ismael Souleyman Lony as the new private secretary (SP). A position that replaces the Secretary General of the Presidency. Lony is known as the sworn enemy of the former First Lady Hinda Déby Itno, who constitutes an opposing wing to Mahamat Déby in the seraglio of the Pink Palace.

Thanks so much for posting this, ZENGAS. We’d be in the dark on much of this without you.

I agree with Mount Teide and others; this action by the Chadian government should put us nearer the conclusion (completion?) of this deal. I actually think it is good news having read it a couple of times. If we’re to believe it, the key blockers have been removed. The fate of the finance minister still seems unclear and, of course, we don’t know what Mr Deby thinks (except, one assumes, he’d quite like some cash and apparently he’s just had his childhood pal arrested). But the oil minister, who is onside for the deal, appears to have won the day, if not the war. There’s clearly a political battle going on to decide who runs the country.

I do wonder what the situation is at the fields. Exxon people are all back in the lone star state. Are the nodding donkeys lying idle? Who is protecting the site and performing maintenance? Savannah? I’ve no idea. May be one of you does.

I’m still trying to envisage a scenario in which the deal doesn’t happen, but having difficulty with that. If Savannah isn’t going to operate it, who is? Certainly not Exxon. The Chad government, one imagines have neither the resources nor the skills, nor the funds to pay out Exxon and Petronas (who wouldn’t accept such a move anyway, unless they had absolutely no choice (assets sequestered)).

Anyway: this deal has taken at least 18 elapsed months of precious management time. Perhaps it’s wishful thinking, but I think this is going to be concluded in the next few weeks. Of course, if it were to fail, then the Chad renewables deals fall away too. And we could focus so much more on Niger, etc.

An update on the Niger plan of action was mooted by AK about a month ago and I also wonder if this has been delayed by a regulatory blackout. I think SAVE are very wise to stay silent on all fronts until the CC path ahead is clear, although it’s frustrating as a shareholder.

I still think the deal gets done and Agadem can come out of his 47 pence purdah (come on, Aggers!)

Best wishes, everyone, and thanks for your top-notch posts.