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Also looking at the deal in tandem with strong brent price at present it seems like a steal for Oando
Looks like Eni has sold it's onshore assets to Oando. Looks like a solid and really cheap deal for Oando. Reported sell price over $500m and production circa 24,000 bopd net plus 400-500 million barrel of reserves.
https://www.energyvoice.com/oilandgas/africa/ep-africa/529408/eni-sells-down-nigerian-onshore-to-local-player/
https://www.reuters.com/markets/deals/eni-sell-nigerian-oil-gas-unit-naoc-oando-2023-09-04/
I reckon if we go for Nigeria assets they will be far cheaper comparatively than other countries.......................................................
Which end of September for closure are you thinking of?
I think end of September is aspirational. We've no sense of what the outstanding issues may be. The Chinese and the Indians have to sign off, as well as the South Sudanese and Malaysians (who I still assume are the financiers).
White smoke at the Vatican appears when we all stop looking, perhaps.
Good afternoon.
The timeline i still believe will be hard to pin down for closure. After the commentary about the state of play re achieving closure here, i've looked at Seplats own issues in getting it's acquisition over the line now 19 months later.
Looking at it in context of South Sudan and in trying to evaluate the 'UP TO' $1250m price tag -
Seplats ongoing acquisition of Exxons Nigerian assets = $1283m + up to $300m in contingency payments if oil above $70/b and paid over a 5 year term. This works out at paying $1.89 per bl produced no matter if oil is $72/b or $85/b+
The base price is $1283m for 446 mmboe 2P (411 oil + 35 Gas) and 95,000 boepd (8% gas) or 87,000 bpd oil.
Total overall cost $2.90/ 2P or $13,500 flowing bl.
If you were to completely remove the gas and apply $1250m against the oil - you get $3.04/2P and $14,370 flowing bl.
Applied to S.Sudan on 55k bopd/300mmbo P2 you get a $790m - $910m range.
--------------
I've now added this to my original 26/8/23 12:32 post with Seplat now making up the 4th EG to the 3 i covered then. There's no reason why i can logically see S.Sudan with all it's risk being more expensive than the most expensive eg in this list.
Afentra 2P = $3.50 + $19,750 Flowing bl.
Petronas/Exxon Chad 2P = $3.15 + $14,450 F/bl.
Assala 2P = $7.84 + $16,250-$17,900 F/b skewed up by inclusion of midstream.
Seplat 2P = $3.04 = $14,370 F/bl.
1. Approx $1050m - $1086m relative to Afentra using both P2 & flowing bl numbers.
2. Approx $795m - $945m relative to Chad using both P2 & flowing bl numbers
3. Approx $895m - $984m relative to Assala on the 2 flowing bl numbers (P2 not used) .
4. Approx $790m - $910m relative to Seplat.
In addition - With an effective transaction date of 1/1/22 i would think at least $600m could be shaved off 1,2,3, 4 above by 30/9/23 plus a further $100m off by end of 2023.
$257m - $275m estimated year end 2023 net debt on existing assets to be added.
At the most expensive option above, i get a max year end net debt of around $660m.
Applied on the basis of 300 mmbo 2P & 55k production acquired and if these are more/less then there would be an obvious variation but either being compensatory to that price.
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In theory and looking at the most expensive option above - to reach 100k of acquired production, a further 45k production at the most expensive option could see $1.3b overall net debt for a $3 billion revenue company on 100k production at $70/b oil, Accugas + small COTCo contribution. I think it's a massive transformational and understated prize to go for despite the pain to date. Imo would be fantastic when compared to TLW/KOS at circa $1.6b revenue each with $1.7- $2.3b year end net debt forecasts and valuations.
Morning All
Now that we are effectively in September 4 weeks away from the said potential admission document date of 30th September 2023, I wonder what the groups thoughts and feelings are in terms of the likely scenario from the list below:
1) An update on Admission Document prior to Friday 29th September
2) Admission Document by Friday 29th September & re-listing same day (Including ss government approval)
3) Admission Document by Friday 29th September & re-listing same day (without ss government approval)
4) Admission Document by Friday 29th September & re-listing following week i.e. 2nd October at the very latest (Including ss government approval)
5) Admission Document by Friday 29th September & re-listing following week i.e. 2nd October at the very latest (without ss government approval)
6) An update by Friday 29th September or 2nd October asking for a short extension for a couple of weeks max. i.e 2 weeks
7) An update by Friday 29th September or 2nd October asking for a whole month extension i.e 31st October 2023.
8) An update by Friday 29th September or 2nd October asking for 2 months extension i.e 30th November 2023.
9) An update by Friday 29th September or 2nd October asking for 3 months extension i.e 31st December 2023.
10) An update by Friday 29th September or 2nd October asking for 6 months extension i.e 31st March 2024.
I welcome everyone's thoughts as opinion as to where they think the current state of play is at ?
My personal preference is if we haven’t received government approval for the deal than to perhaps extend a couple of months to obtain it and come back with market but also come back with another significant deal wrapped up simultaneously……………. As AK did say another significant deal this year so perhaps they could defer the admission document a little bit more and deliver 2 deals at once plus hopefully the additional extension will allow it to get the SS approval over the line as well.
Also if we don’t get SS government approval by 30th November 2023 than I believe realistically we will have to wait till 31st March 2024. I always tend to discount December and January as slow months to get any government to action approvals as holiday period tends to lead to inaction.
In 2022 there was 22 opportunities reviewed in 9 countries.
Who knows where those 9 countries were - Are they all Africa ? We simply dont know. They could well be looking outside the region or a different continent - we don't know until they tell us. And they'll hardly say until something compelling emerges.
For what's left of this year the strategy is to
1. Complete the South Sudan assets acquisition. 2. One significant M&A opportunity.
To say we are a one trick pony - we were on Niger (and then into Nigeria).
I'd be concerned if we weren't looking at further opportunities and AK allowed us to stay in that position and NOT going after opportunities. If we want to grow you can't give up after a few hiccups and unfortunately as a listed company thats the price you pay re potential suspensions.
As for Chad - you can't allow for any dirty tricks as was widely mentioned in AI by a certain other oil Co. They also reported that the oil minister had supported the deal and the president keen to wrap it up. Will every country act the same ? You also can't let that experience ruin your plans for growth so fair play for going to the ICC and addressing it rather than give up on it.
All these asset sales were flagged up from majors leaving/selling so not a surprise to governments and i've no doubt we've sounded out the S.Sudan SPA before it being RNSd so as for the Spray and Pray analogy i don't buy it as that would smack of totally unprofessional dd.
It was reported we looked at Seme in Benin and walked away.
Also reported 29/11/22 that Eni had agreed to sell its Tunisian assets to us - but it stalled due to government inaction and put on hold. So imo that's evidence that governments are already sounded out before an SPA is signed - otherwise we'd have an RNS saying we signed one and then go through the motions.
Afentras main SPA with Sonagol has gone on since 28/4/22 and aim to complete after some changes in Q4 this year (18 - 20 months). One condition was improved fiscal terms and licence extension (now recieved) and needs overall final consent
Seplats SPA of Exxons Nigerian assets is still rumbling on since 25/2/22 (19 months).
We don't know what all the workstreams are - Block 5A licence i beleive was due to expire in a few years so i'm sure that's one thing that needs fixed (if it is agreed).
I get the impression some people think that we are the only company doing this or all alone out there - We're not. The only difference is we're building a renewables business (which is expected to be built from the high cash throw off & re-invested along with private equity). All have high 'E' 'S' & 'G' credentials. There's standalone renewables business's operating in Niger, Mali and Cameroon already, the opportunity is huge so why not go after it given our outlay v risk/pvt equity in the years ahead.
Rockyride - that would be much appreciated I do try myself but i never seem to get a response seems like they are probably use to a few handful of individuals and happy to answer to them.................
Thanks Rockyride, I am hoping for a detailed, informative and tasty update from you. I must say I am a tad surprised that considering the size of our business they have not updated on other fronts like accugas gas contracts, debt financing, gas compression project, renewables etc etc............................ I believe Sayj mentioned in his update from IR the next update is likely to be news in relation to admission document, but considering the admission document date is end of September, probably safe to assume that we are likely to see the half year report before the admission document.
TiL - I am away on holiday for most of September but have a call booked for 8th Sept before I go. If I learn anything of note, I will of course put a bit on here.
It wouldn't be surprising if continue to expand our gas production through another gas acquisition in Nigeria as supposed to oil or perhaps both.
Now that we approach September it would be great to see if any of the posters are reaching out to IR to see if we are on for the said September deadline...............
Zengas - as you know in my eyes you are the misted highly respected poster of all. But how would you feel about any possible deal completing in Gabon if we had signed an SPA a few days ago? With these very high value deals, and I call them ‘spray and prey deals’, surely we can only try so many times before we seriously need to review the strategy. What looks like a good deal today can turn in to a nightmare deal tomorrow in Africa.
Your posts are absolutely amazing but with your vast knowledge, I’d like to see a bit more on your views of risk in addition to the few caveats you always include. Absolutely, I will be ex tactic if SS concludes successfully but after Chad and now Niger, more and more pressure is building on closing this deal. Should it fail, what next? We could well find ourselves in another RTO situation and back to back suspension, leading to another 6 to 12 months on no dealing on the share. While there is so much unrest in the continent shareholders need to be able to buy or sell their shares for a decent window of time.
Agreed Accugas is the jewel in the crown but until we close something else, we are still really a 1 trick pony + a bit from Cotco. We can not keep spending $15-$20m on risky transactions if SS fails. AK is making a killing here with his huge salary, buying equity at 19.35p (when we were not allowed) and is it him who has the option of 100m shares at 23p.
As I’’ve said before and I know Rome was not built in a day, we floated 9 years ago at 56p and at the moment, we are sitting with a flaky suspended share price of 26p.
It’s great that AK wants to change the whole power model in Africa, improve GDP, increase life expectancy etc etc etc, but at some point he needs to realise that people and companies far far bigger than him have tried to do this for decades with minimal success.
Yes you and others can shoot me down but my spreadsheet shows me MASSIVE profits on some of the forecasted projections of SP but it also shows me a very bad number should tings not go in our favour.
Ready, steady go - take aim and fire at me guys, I have very broad shoulders!
Tinubu chooses multiple companies to end gas flaring
Often singled out for the amount of gas it flares, Nigeria is taking another big step forwards in the process it began eight years ago to put an end to this practice. In early August, President Bola Ahmed Tinubu approved a list of 44 firms under the Nigerian Gas Flare Commercialisation Programme (NGFCP) to carry this out.
Launched in 2016 and then repeatedly pushed back until 2022, mainly because of the Covid-19 pandemic, that programme involves selling the gas that was previously flared, to third-party private companies. During this first phase, the results of which were initially due to be published in December 2022, 49 licences were granted.
Those companies, most of them Nigerian, were selected from among 139 bidders by the Nigerian Upstream Petroleum Regulatory Commission, headed by Gbenga Komolafe. They will replace the private oil companies whose size does not allow them to use the gas released during extraction. Oil companies, both public and private, that are able to put an end to gas flaring on their own extraction sites have been exempted from submitting their batches, on condition that they undertake to stop this practice.
The NGFCP aims to meet Nigeria's target of eliminating gas flaring by 2035 and achieving carbon neutrality by 2060. In 2022, the country ranked ninth for the volume of gas flared, with 5,300m3, according to World Bank data.
https://www.africaintelligence.com/west-africa/2023/08/30/tinubu-chooses-multiple-companies-to-end-gas-flaring,110037315-bre
I strongly believe we will be one of the said companies and beneficiaries of this programme...............
Zengas - Agreed coups rarely affect operators who are already operating assets in said territories in the instances you mentioned below correct it does not affect production levels for those companies and they continue to operate as normal. I purely referenced assala energy as reference because if we were acquiring it than it can get stuck in government inertia, however if the asset was signed and approved by the country and operatorship was assumed than it makes no difference.................
Coups will only impact acquisitions if it falls within the acquisition window as it could delay things such as approvals and consents but have no bearing whatsoever once operatorship is assumed.
I don't get the catiness over it's a wonder AK wasn't doing a proposed deal in Gabon ? I'm sure it's a country of interest.
It's where Tullow gets a quarter of its production. Panoro a third, plus multiple other Oil Cos and its not the only industry with listed companies operating.
I haven't seen any of the listed companies having any problems (miners) operating in Mali or in Burkino Faso. Coups have been part and parcel of most of the continent.
Niger - may be different given the military bases for France/US and why i think more importance attached to it and thus sanctions. Other than delays, i don't see any change to SAVEs interest or Chinese.
There would have been a coup a month ago in Senegal imo (Kosmos) if Macky Sall hadn't stood down after attempting to run a third time which is now the case after really shoddy elections in Gabon. I don't think it was unexpected.
Sometimes i despair of peoples immediate reactions.
Either Nigeria or begin diversifying from Africa. Yes it would be a huge strategic decision but there is no way all this unrest in Africa is going away anytime soon and will probably get a lot worse before it gets better. As we are (or at least seem to be) struggling to get Government approval in stable jurisdictions, I seriously think it might be time to be looking at assets in other continents.
100% ✔️
Hence I have always preferred doing deals in Nigeria as seems to be the most stable african country and the chance of a coup in Nigeria is on the very low end of the spectrum.......................
I sincerely hope our next deal is in Nigeria........
Glad we didn't go for assala energy assets would have been a nightmare trying to get approvals..........
Surprised AK wasn't in there already with another proposed deal.
These are all around Cameroon, hope one does not happen there or more importantly in Nigeria or South Sudan.
Gabon: Army officers say they are taking power https://www.bbc.co.uk/news/world-africa-66654965
Potential trucking of oil and discussions on pipelines through other East African countries. Would be welcome news and ensure security of export and Great news for savannah if they can successfully close the transaction
https://sudantribune.com/article276606/
'Til' -The desire for an immediate dividend amongst investors would pale into insignificance if that scenario can be pulled off .
On net debt i was looking for $660m end of this year post S.Sudan. That is on the basis of up to $250m being in the form of bonus payments re production/oil price and not on the books as net debt (otherwise possibly $900m).
A further 50-70k bopd at up to $20k flowing bl is going to cost perhaps $1-$1.4b (see my recent post on 3 EGs of flowing bl/P2 cost) but hopefully taking into account the effective date - perhaps at least 1/3rd cheaper or $650m - $930m.
For 100k production across 2 acquisitions and 25k at Accugas the net debt level may be as low as $1.3b with about $3 billion total revenue (at $70/b oil, Accugas sales + small COTCo contribution) about twice that of TLW or KOS and over a third to 50% lower net debt.
In the above scenario it would be absolutely transformational - so here's hoping and some guidance in the half year report in 4 weeks.
If they can pull off S.Sudan at 50-55k bopd there's no doubt in my mind that they could certainly add another 45-50k in acheiving the above and have an absolute critical mass.
Additionally I wouldn't be surprised if Savannah announced another deal which is signed, sealed and delivered potentially in Nigeria with south sudan deal pending approval as that will enable them to come to the market whilst the ss deal works itself through and takes it's natural course..................
Zengas - I am all for dividend however, I believe we should pursue dividend only after we have added 100,000 bopd of production through acquisitions. Personally I would like to get to 150,000 bopd before dividend payout. We are currently at 30,000 bopd with accugas if we close ss successfully and if it is still producing circa 50,000 bopd that will take us to roughly 80,000 bopd. Then close another acquisition in the region of 50,000 - 70,000 bopd in Nigeria and we will be comfortably be in the region of 150,000 bopd with net debt range of $2bn - $2.5bn.
Understand the jitters as AK still needs to deliver a successful oil acquisition and we have been at it for nearly 3 years with Chad being caught up in issues. So really the closure of SS or another significant deal of similar size with government approvals will be the key.
It's funny if AK manages to land a significant deal with government approval than i fully believe shareholders will be happy to and almost begging him to go for another big one instead of dividends as they will buy into his acquisition strategy and they will start thinking he can actually deliver deals of size to full closure. The question around dividend at the moment purely stems from this at the moment.
Hence I have always said AK would be smart to ask for further extensions to complete a deal instead of coming back to the market without a deal whether that is the south sudan deal another deal of similar size or 2 deals at once. The key remains to come to the market with a deal................
Which is one of the many reason why i feel further extensions are being granted as I feel Savannah is probably already laid majority of the ground work on another deal incase SS fails to complete this is not to say they are not looking to complete SS as well which I fully believe they are but I reckon the intention is to close a significant deal this year fully and if they close more than one than that's a dreamy scenario.