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''In the absence of S.Sudan i get an overall value of 67p less 27.6p in debt = just under 40p/share compared to 26p now.''
My rule of thumb for a long time here now is to divide Zengas's - brilliantly worked , in fairness - valuation analysis by two and go with that as my s/p target view here.
And 20 p instead of that 40p figure he works below is not far off my view on this maybe - but hopefully not, obviously - going as low as 15p ish on coming back to trading here if South Sudan kinda dead in the water then, and no other major deal completed - or in an unequivocally advanced state - at that time either. (I'd add on top the recent RNS - Consolidation of Stubb Creek Field Interest - as a small medium positive to push my 'maybe going as low as 15p ish' view up a bit towards that 20p figure)
I note my previous share price predictions over the years here versus Zengas's versus the actual s/p chart as support of my rule of thumb... and believe that to be a reasonably compelling support
That's not to say that Zengas's analysis is anything but utterly brilliant here.... and much appreciated too.. but s/p's are influenced by myriad non 'fundamental' factors; very especially on AIM imho
PS; I too cannot wait for the Zengas £2 party... which is of course possible here in due course... as are a myriad of other share price outcomes..... and great if Tier is a young man today too.
Did anyone else see the two trades yesterday? Curious? No impact on the SP!
Down another 50 basis points from 1,420 earlier today to 1,370 and was 1,624 at the beginning of the week. Let’s hope this momentum continues and I wonder what number AK is looking for before he pushes the Accugas debt refinance button?
Even without SS but with this new deal let’s hope price will keep.
I cannot wait for the Zengas £2 party. Bring it on Zeng, start booking venue.
You all are amazing posters. Thank you so much!
Definately some nigerian deal making coming into play.
It would probably be a good move especially in gas.....some recent comments from NNPC's Group CEO below.......
“We understand the arguments towards attaining energy transition, but the cheapest way to achieve that is through gas. We see clear opportunities that gas creates. Today we are building a number of trunklines and other gas infrastructure that will supply gas to a number of gas networks,” Kyari noted.
The GCEO said there is an ongoing engagement on the Nigeria-Morocco Gas Pipeline Project (NMGP), which is at an advanced stage, to create a pipeline that will pass through thirteen African countries and all the way to Europe.
I have a sneaky feeling more Nigeria deals are on the cards or at the very least being worked on especially with the recent reforms encouraging oil and gas investment in country...................................
Zengas and others, thanks for all insightful posts. Far more technical than anything I ever post. I am however heavily invested in SAVE, and for about 6 years longer than I’d hoped for!
But with Chad and potentially S Sudan not going thru, if that news becomes official - without any technical reasoning - I can see this stock dropping quite heavily, even if the ‘workings’ suggest it shouldn’t.
Investors will get fed up, and lose patience in a stock that has been suspended more than it hasn’t. They will also lose faith in knotts ability (be it his own fault or the country he’s dealing in) to get these RTOs over the line.
I won’t sell. But I can see a big drop if no s Sudan success. It will lead to fear of another RTO attempt, with less faith, and further suspension
I know some posters were saying 15p on return if no S.Sudan, but i never seen any workings to say why it's worth that.
Therefore without sticking a finger in the air to get 15p (why not 18 - 13 - 21 compared to a nice round 15p) it's as much for my own benefit not to make a reactionary decision just because others might and try and understand the sum of the parts valuation.
Whatever happens and at some point we get back to being unsuspended, perhaps the directors might show some further support by buying and demondtrating confidence at whatever price.
Last buy was from the new Chairman with 6,095,726 shares at 26.25p for £1.6m.
Ha, yes, all good thanks RR. Busy decorating my son's new house (for free) so not got much idle time at the moment. Fingers crossed for something positive on SS in just over a week, but not got a clue how that one is going to turn out. Would be nice to get back trading again for sure.
K - that really did make me laugh. Hope you’re well mate and enjoying sharing all our frustrations when let we twiddle our worn out thumbs.
Thanks Zengas, appreciate your thoughts and taking the time to articulate them to us. RR will be chuffed that you've confirmed his thoughts on the sp, albeit with a tad more reasoning ;-)
On a net valuation basis post the latest Nigerian CPR
1413m shares and £1=$1.275
Base case valuation at just over $60/b oil price.
Uquo & Stubb Creek 2P & 2C = $439.4m. Accugas = $636.3m. Total = $1075.7m = 59.7p share.
At end of June 2023 net debt = $443.4m.
If the net debt hasn't reduced and is still the same as of mid year 2023 - then with roughly $59.5m Stubb Creek acquisition costs to add to that ( less almost 7 months reduction for the effective transaction date for 75% of the cost) = approx $55m in total.
Net debt perhaps $498m = minus 27.6p share.
Net value (after debt) for Nigeria around 32p.
In Niger, Reclassifying the 33 mmbo 2C to 2P at $4/b = $132m or 7.3p share.
In the absence of S.Sudan i get an overall value of 67p less 27.6p in debt = just under 40p/share compared to 26p now.
*** Above is my baseline for not making any reactionary decisions re price swings come what may re S.Sudan ***.
Obviously the faster the net debt reduces, this should translate to an increase the share price.
I would like to think that with the S/Creek oil acquisition, it will help to reduce net debt faster, dollar liquidity etc and also from some more gas sales after compression completion etc.
Given the resource upside in Uquo and S.Creek, i'd expect the next few years production to be more than replaced there.
Also the 2C Gas at Stubb Creek when reclassified to 2P should also help increase the valuation beyond the current core value.
With Chad playing out in the background, one other way of significantly or eliminating the net debt is the award (if any) of substantial damages for the loss of the Chad oil fields and pipeline and also the Cameroon pipeline interest in a seperate issue that is not included here - nor have i included the Cameroon valuation.
In the absence of any further acquisitions and as we stand we have the 2 billion bl + exploration potential in Niger - but getting more value there depends on how soon we start to return to proving up barrels and adding to the share price.
The unknown is S.Sudan. If it completes at a $1,250m cost and if this is reduced by now down to a net $400m debt at completion to pay - it might leave up to $850m core value or a net 47p/share provided no dilution etc and if the oil is not shut-in for any length of time.
Roughly equates to 87p net = around RockyRs revaluation estimate with 50p on top for $900m net debt = 137p when net debt eliminated/net cash positive + upside from getting a move on in Niger exploration ?
Improved another 60 base points today to 1,420 from 1,480 yesterday and down from 1,624 earlier this week. Do I hear the pitta patta of baby footsteps?
"What price for size, shag?" 🧐
TiL - morning Sir
I wonder if Exxon would give us a 10% discount if we take the lot?
Https://uk.movies.yahoo.com/movies/exclusive-exxon-steps-assets-sales-145150073.html
Yes, Afrenta building a nice position there.
Noix - Angola is one of the regions that the majors are still keen to retain and invest in as they have large reserves, but sure they may be looking to get rid of smaller fields a bit like afentra deals
I find it strange given the proximity to where we are already doing business and their apparent willingness to engage, that we are not talking to Angola (perhaps we are of course.) Reserves are very high and Exxon and Eni are in country, though I don't know if they are divesting assets.
One thing I find fascinating about Savannah compared to other small cap players is that AK has built a strong network in the industry and also some of the executive team are also ex investment bankers in there past life at major banks, in addition to this we have access to capital unlike other players.
This makes us a prime candidate for deals and we would definitely be on all majors list for divestment of assets, in some cases it wouldn't surprise me if majors came to us asking to buy there assets rather than us going to them such is our position of strength in negotiating deals. We have made inroads with 3 majors already since we have started to deal make Exxon, Petronas and Eni who we wanted to purchase tunisia assets on in the past, i am sure we there are many more which we would have consulted.
This gives me great confidence that we will always be offered deals, the question than becomes whether the deal is right for us from an asset performance and financial metric and how the host governments are receptive of us, both can be overcome with some hard work and going for the right countries.
My immediate thought before I have breakfast, is no best case production for South Sudan.
1.3bn shares
$440m net debt
30mboepd production in Nigeria
88mboe 2P Nigeria
1.5mboepd production in Niger
33m 2P Niger
$500m on the way from ICC awards (one off dividend or large buy-back)
0boepd production in South Sudan (worst case)
300m 2P South Sudan
Balance payment for SS deal from future production
Debt re-financed in Nigeria
No raise of equity
CPF completed
Renewables back in focus
1 or 2 more M&A for oil production + 2P
Lots of possibilities eh and good food for thought!
The Niger section is copied below and we were told we’d see a further update on Niger in Q4 2023. We did not see an update in Q4 and after the relaxing of boarders etc, we surely are due one soon. Also CAPEX was reduced by $30m, so let’s hope to see that CAPEX put back in. I think the majority of the $30m was for the tie-in pipeline to the newly commissioned export pipeline.
Niger Update
Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South East Niger. As previously announced, the intention was to carry out a well test programme on our principal discoveries in Q4 2023. However, following recent political events, this timeline will be subject to further revision due to restrictions imposed by the Economic Community of West African States on Niger, which has resulted in the closure of the border between Benin and Niger. This has created logistical challenges for companies operating in Niger and, specifically for Savannah, in relation to the importation of the necessary equipment to complete our planned well test programme. A further update in relation to timing will be provided in Q4 2023.