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TiL - I’d like you to be correct on a friendly deal here and also your source of information being correct on quite a large acquisition in Nigeria too. There certainly seems a hell of a lot to shoot for in that Country. The new President is certainly making all the right noises so far and seems to be getting on with the job.
Re the deal you mention potentially being struck with Chad, if done this could bring a few more positive initiatives in the region and it’s USUALLY better sorting things out round the table than relying on a positive, long-winded and costly successful award from a judge.
Well we have to get an RNS by 2 weeks on Friday at the moment telling us something about the SS deal. Let’s hope we see something before then on that deal and maybe a few other updates on the inordinate amount of other things currently going on within Savannah.
They may be certain truth to this as the week before was the AGM on 30th June where they were hesitant on discussing anything to do with chad probably because this may have been in the works but as ever we will see..............
Rob - My guess is a good as yours and hence i did say treat it with caution apparently i. But a settlement of circa $100m is being talked about we may retain our 40% stake or reduce reduce down to 25%. although there could be slight variation on that but reckons that the settlement was agreed last week and it's just a matter of formal approval over the next few weeks, amongst all the news headlines that we were seeing the mediation process was continuing in the background through ICC.
As ever we will only know how reliable this source is if we receive formal confirmation through an RNS.....................
Hi TrustLie
Is your source reliable on that front? it would seem to suggest there is a dialogue between Savannah and Chad on this - i had assumed there was no dialogue and it was simply(!) in the process of the arbitration. Are you able to add anything further on that based on you information?
Thanks
Speaking to the new Chairman at the AGM, he was reassuring tthat the COTCO deal would complete as is being suggested with SAVE selling their 10% and keeping the rest. Fingers crossed as this gives us a nice cash boost and a healthy income stream.
What if we agree to pay $100 million over 5 years and keep our current 40% stake. I would be happy with that at least we can spread the payments over a number of years from positive cashflow whilst growing the field and investing in the asset a win for savannah energy and chad as well.
I was hearing that a settlement agreement has potentially been reached between the chad government and savannah energy last week on the DOBA field PSC not sure how true it is so take it with a pinch of salt or if true what the terms are but if it’s the case it is positive for everyone even if we have to pay up slightly more it would materially remove uncertainty. Not sure how that would affect Cotco side of the business but let’s see it is expected to be finalised within the next few weeks.
That would be one of the biggest pay-offs for blackmailers in corporate history.
Or perhaps we ending up paying chad and reducing our holding to 25%.
Savannah pay a total of $100 million to the Government of Chad and retain a 25% interest in the DOBA oil field, with approval and granting of a new long term production sharing agreement.
The only way we can have an out of court settlement is perhaps if we reduce our exposure of 40% in DOBA fields down to like 20% and giving chad or perenco 20% or perhaps selling our entire interest in the Doba oil field entirely but as a condition we retain our 30% interest in the pipeline network with approval and a couple of board seats on cotco think this is more of a likely outcome.
K - I hope so and I also hope our relationship with Cameroon has remained in good health post the to’ing and fro’ing between chad and Cameroon Governments over the last few weeks. The last thing we need is another sour relationship in a 2nd Country and possible withdrawing from the 75MW renewable project. If all is good I think a hydrocarbon deal in Cameroon could possibly come to fruition and there may have been 1 or 2 on AK’s list of 20 or so potential opportunities that he was running his rule over. I’m sure that AK is very keen to own %’s of infrastructure but also to pump some percentage of our oil through it. I’e not just own 31% of pipeline alone in a single country.
I did email IR mid last week re press speculation on the % ownerships of the pipeline but they have gone very quiet with myself along with others here. I’d hope to see, but also be surprised to see an RNS on it next week. I think it’s more likely that a 3-line whip has gone out from our legal team via AK to say ABSOLUTELY nothing at all to do with Chad and Cameroon until the court ruling is awarded. I know Cameroon is not part of the Chad case, but the last thing we would want to do is issue something regarding Cameroon and annoy the Chat extremist Government even more. So no news is good news for me and let’s hope we get the court decision in our favour within the next 12 months. From what we hear and read, i certainly can’t see an out of court settlement happening anytime soon. But if the Chad Government acted like adults, I’m sure that would be the best outcome for all concerned. I also think AK would be up for doing a deal to get paid an agreed figure but would never take anything on new again in that Country.
Possibly TiL, but unless they and Cameroon nationalise the pipeline too then there's no legal procedure I can think of for them to freeze SAVE out, which the article doesn't suggest with those %'s. As it stands Chad and Cameroon can both outvote SAVE when it comes to any decision making anyway. As always though, we'll just have to wait for the next RNS to clarify things.
I slightly disagree hear and don’t believe it’s as clear as that the whole intention is to freeze savannah out of the cotco holding entirely they wanted savannah to not have a board sit so they can than ask the banks to freeze their share of dividends from the asset. Until the company don’t confirm what the state of play is as it stands it’s safe to assume that there is more going on and they are probably awaiting legal advice on what it means for them in reality and probably exploring avenues for challenge.
The %'s mentioned in the last energy voice article you posted were SHT 53.77%, Cameroon 15.17% which leaves exactly 31.06% which is the amount SAVE acquired under the Exxon agreement, less the 10% they were proposing to sell to Cameroon. If that article is correct it would mean the the sale will be approved and SAVE will then only need to RNS the completion of that 10% sale. As Chad can't nationalise that part of the Exxon deal I'd be very surprised if that's not how it plays out regarding COTCO.
Rocky ride - I wonder if the recent Costco situation could affect the the admission document. If we lost control or our shareholding and are not due to benefit from its revenues than they might need to leave it out from the admission document.
Great to have you back posting, so helpful and mostly reassuring. Less reassuring is this article I came across on Cameroon
hTtps://www.theguardian.com/global-development/2023/jul/07/death-of-a-radio-host-the-web-of-corruption-lies-and-revenge-behind-the-killing-of-martinez-zogo?
I'm not that surprised but concerned nonetheless, me thinking they couldn't be as bad as Chad.
PF - great post that and great research. God knows how you’ve discovered all that. I think plan A will be option 3 and I think we could also see a couple of options 2’s bolted on as well. Let’s all hope we see the SS deal AD issued by 28th July. Only 15 trades until then and in theory it could drop any day from Monday onwards. However, as we know from experience, 28/7 must be the odds on favourite for either an AD to be issued or aRNS kicking it down the road a bit more. Or even a worst case scenario of an RNS saying deal cancelled.
AK has referred to further hydrocarbon acquisitions in 2023 and 2024. My understanding is to avoid a further suspension the acquisition cannot exceed 100% of the five class tests based on the year ended 31st December 2022 figures and in the case of the Consideration Test and Gross Capital Test - market value at date of acquisition.
1 Gross Assets Test- $1.761bn
2 Profits test - loss before tax and extraordinary items $53m
3 Turnover test - $212.5m
4 Consideration and
5 Gross Capital Test - MV £344m
The Profits Test and Turnover test appear to be the problem tests i.e. the acquisitions making a loss in excess of $53m and have a turnover of less than £212.5m (circa 8000bopd).
To avoid a further suspension there appear to be three options:
1 The next acquisition is in 2024 and the class tests are based on the 2023 figures (hopefully including SS) and hopefully a higher MV.
2 The acquisition is small and loss making.
3 An unconditional contract is signed and all due diligence completed by the time the SS contract completes and the next acquisition details are included in the Admission Document.
It is also possible the next conditional acquisition is announced at the same time SS completes or is abandoned and we are bounced straight into another suspension.
Smeddyo, nothing IR give out is price sensitive so I'm not sure what advantage you think is being gained over other investors. It can be useful to have them clarify certain things in RNS's or from presentations, and sometimes to confirm published plans are on track etc, so nothing untoward with getting information from them.
So you find the ability of somebody to get an inside track with IR a good thing do you? I think it stinks, but is what many in business do all the time. Faux bon homie to gain an advantage. Hence why the guy freaked over "assumption" of ownership. He knew what it meant and that it wasn't The Plan. This is investing / trading. Not the Waltons.
Agadem / rocky ride - so good to have you back mate missed you. Just having your presence in the background sometimes serves as a calm soothing effect amongst all the noise / news that circulates and your relationship with the company and IR has been truly remarkable to say the least no one has built that relationship with the company and even I struggle to sometimes get response from them. I must say like me a lot of people appreciate your updates when we are in a period of no official news so I hope if and when possible you keep that up.
As for all things savannah at the moment i hope that South Sudan closes and we close another acquisition of similar or greater size to chad which should neutralise the effects of the chad dispute until it’s sorted at tribunal. Not to forget the growth to come from the an accurate assets and Niger. We are now 3 weeks basically away from the new deadline of 28th July remains to be seen if we successfully meet it with South Sudan deal closure or whether we get a further extension. But surely the can cannot be kicked down the road forever. I am hoping that there is dialogue to suggest that the approval will be forthcoming and it’s just a matter of all the work streams being concluded, otherwise it would seem pointless for the South Sudan government to not grant approval after 7 months when they could have just outright blocked the deal in a matter of weeks like how chad did in December.
But as always never say never in Africa and personally I hope we wrap up a hydrocarbon deal in Nigeria where we have better credibility as operators and regulators. Plenty of assets up for grabs in Nigeria for example TotalEnergies asset in Nigeria. We need strong producing assets with strong reserves and I believe that’s what we will be looking at assets which can give multiples and quick returns in short term but exploration potential for long term gains
Great to have you back and love the summary at the end.
Assuming all that happens I can confidently say we will be a very happy set of investors.
Surely north of 89p too ;-)
Great to see you back RR!
PART 2
Chad
We what a bloody mess
Let’s just hope we win the court case currently underway. In April, i think I read somewhere that it was expected to take 12 to 18 months, so let’s hope for a positive decision in 2H next year at the latest. People at the company seem extremely confident but obviously can’t say anything. I was told that we’ve got the best lawyers on the case that you could possibly find.
But as ever, it’s OK winning a case but how do we get paid? As a very silly example, let’s say we win and get awarded $500m. Could we see the award stating that say 5k of boepd is awarded to us at the point of sale in Cameroon? I’m sure that the court in Paris would still allow Chad to claim some of their production, so let’s go 50/50 on 1ok gross. If the net back to us was $40 per barrel we would get $200k per day, $73m per annum for nearly 7 years. Guess I’m smoking something here but we must be able to get the cash somehow if we win.
Cameroon
No idea what’s going on here. Are the Govenment on side with us or stitching us up with the Chad regime? At best I’d like us to sell the 10% of Cotco as planned for $44.9k and retain 31% + dividend payments.
Re the 75MW renewable project, I guess it’s all down to the outcome of the above.
Before this Cotco issue raised its head with Chad trying to control >50% and all the crap that comes with it, I was convinced we would be acquiring hydrocarbons in Cameroon later this year. No I have no idea at all.
South Sudan
I’d love to see this in Q3, mentioned at the AGM a bit after the formalities. But I’d love it to close in July even more. I think it will all come down to if and when we get Government sign-off and like others I have no idea where we are at with that.
If closed I’d like to see a balance payment of no more than $600m which would give us total net debt of around $1bn. No Idea what the 2P would be but I’ve heard 50kboepd on day one a few times now.
Within 18 months, I’d hope to see this rise by at least 5k - 10k pd with some remedial work to some wells and the drilling of others. But at the end of the day we will be in the hands of the operator.
New Hydrocarbon deals
SAVE seem very confident of at least 1 and maybe more. I guess a lot depends on SS closing as we surely but surely don’t want to go immediately into another RTO should it fail.
In very brief summary I’d like to see us a very much larger company in 18 months with something like-
120-150kboepd production with over 500m 2P and next debt do less than $2bn
Minimum of 2GW of renewable projects well underway
Accugas deal done on very attractive terms
Retain 31% of Cotco + dividends all agreed on an amicable basis
ICC court case in Paris awarded to us WITH a mechanism to get all the award paid to us, starting immediately and full paid within 5 to 10 years.
Anyway I’m running out of my 2nd lot of 3,000 characters and I don’t want to post another one, so I’ll leave it a
Call it my wish list or my inspirations but this is a very brief summary of what I want and hope to see in the short-term. My short-term in O&G shares is 12 to 18 months, which by coincidence now matches my investment period that i set a long time ago of December 2024. I know and understand that other peoples idea of short-term is a lot shorter than mine but we have to accept that we are doing very difficult stuff in very complex continent which is renowned for going at a slower pace than other continents and definitely a lot slower than we would like to see. My bullet point list below, I admit is at the very high end of my hopes but as the old saying goes ‘Shoot for the moon and even if you miss, you’ll land among the stars’
Niger
Successful well test in Q4
30km tie-in pipeline completed quickly and cheaply
(David Clarkson told me that this is a non-conventional bit of pipeline, that is quite cheap and very easy to lay. This is our responsibility sand we pay. I’m not sure about cost but I’m sure I’ve come across a $8m figure from somewhere)
First oil (YIP BLOODDY EE) to follow soon after test and the long awaited event of booking 35mboepd 2P. Some people seem to have heard AK say first oil and the booking of 2P in Q4 this year but I did not hear that, but as I say I struggled with sound quality and accent again.
Looking for strong progress on the 200MW and 250MW renewable projects here as well.
Bit disappointed we seem quite a way off a new drilling program or maybe bringing in a partner but I’m sure the BOD know a lot better than I. I must admit though, I’ve heard AK talking about bringing in a partner for 8 years now.
Nigeria
Love how this is going and it looks like we will be taking on a lot of stranded 3rd party gas as oppose to more drilling at UQUO.
Need to see more and more customers and fill up more of the capacity on the Accugas network. I’m not sure but I think we may only be running at around 33% capacity. And with 75% to 80% gross margin, let’s go and pick a load of low hanging fruit and fast.
For Niger and Nigeria, I personally would be looking for more development and hydrocarbon acquisitions in these 2 countries. We are proven on what we can do and we must surely have better relationships that places like Chad.
I would not be surprised to see another renewable deal signed in Nigeria.
Obviously looking forward to the Accugas debt resign and term extension to match our long-term gas contracts. I think we have $4bn or so committed revenues on the 15 to 16 years left on the current contracts
Renewables
Great we are up to 525MW at the moment of WIP deals, 2 in Niger and 1 in Cameroon. Am looking forward to another 475MW minimum of deals being signed to get us to Andrews 1GW KPI number by the end of this year.
With over 240GW to play for, the figure I’ve read that will be up and running in Africa by 2030, I think we may see more than SAVE’s 2GW target by end of 2024.