Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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More twists and turns:
Cameroon freezes purchase agreement between national oil company and Savannah Energy PLC - government statement
Tue, 13th Jun 2023 21:26
Thomson Reuters
DAKAR, June 13 (Reuters) - Cameroon's government has frozen a purchase agreement between its national oil company and Savannah Energy PLC, it said in a statement on Tuesday.
Savannah signed a shared purchase agreement with Cameroon's national oil company, SNH, on April 19.
The statement did not provide a reason for the government's decision to freeze the sale.
https://www.lse.co.uk/news/cameroon-freezes-purchase-agreement-between-national-oil-company-and-savannah-energy-plc-government-statement-zewcvjiwx5i8c84.html
Chad recalled its ambassador to neighbouring Cameroon days after the agreement, the latest escalation of a dispute over the sale by Exxon Mobil of its oil assets in both countries to Savannah Energy. (Reporting by Joel Honore Kouame; Writing by Sofia Christensen; Editing by Jonathan Oatis)
Excellent points, Streets. Thank you.
I'm really hoping SS is a Petronas PXF too.
Totally agree re AGM questions; there's so much to cover, we all need to focus on key issues. I think we particularly need more detail on the liability side of the balance sheet.
CYB - all good points, thank you.
Totally agree - underlying Nigerian business financials look solid. So an underlying business that is materially improving, with increased diversity of end buyers, and looks highly bankable for this key strategic segment within Nigeria.
To your main concern you surfaced: I think (hope) local banks eg Nigerian FIs will take a view of ring-fenced domestic assets in their lending and would hope they look through the lack of a clean auditors opinion and ‘get’ the broader context of the breach / misappropriation in other countries.
Confirmation of this pretty key question that emerged from the qualified auditors numbers and impact on the Nigerian refi is a question that remains unanswered in the FY22 glossy - for understandable reasons given events were in FY23 - however, I would hope this is addressed at the AGM if not before.
I’m personally keen to understand the numbers around the Exxon PXF - not just because of the obvious reasons shareholders would have for having transparency on this (vis a vis debt position (local and group) as well as whether partially or fully unencumbered now so shareholders can understand bottom line impact to the company of a positive / expected ICC Award in save’s favour (should settlement occur); but also as it’s presumably the template for SS.
I am trusting this will be made clear at AGM - if not it will be asked.
BTW I really hope people focus on key questions like this in the AGM rather than less key / material questions, as time Will be short.
Personally, questions around relatively small dividends for a growth company such as this are simply not interesting, & repeated questions on this topic at the AGM could waste precious time.
I’m keen to understand lessons learned from CC / applied to SS and the key high level principles to apply for what we are all guessing is a large Petronas PXF - key to know what SAVE SS is on hook for, what the proforma repayment schedule looks like, particularly should there be any disruption of the exports or in case of misappropriation.
Both questions on the Nigerian refi and the 2 PXFs are key as the company’s debt load and increasing costs with current interest rates having materially increased.
Would be good to understand how much cash is surplus to the debt servicing and free to invest now in preparing to ‘release’ & monetize Niger barrels in 2024, which will take investment in capex NOW - eg 30km of pipes, etc etc.
Don’t wish to sound repetitive but the warring factions keep trying. They certainly are trying but hopefully one day they can agree to disagree first and foremost for the people of Sudan and secondly for us long suffering shareholders 👍
Meant to say that existing debt may also be impacted if MAC provisions include this.
The disclaimer of opinion, albeit inevitable and outside the control of the BoD, is a concern.
New debt and debt restructuring will certainly be impacted: financial institutions will struggle to greenlight these without a clean audit opinion. Not sure where this leaves us on new debt (SS, for instance). Of course the debt on Chad will be non-recourse to the group but still, it's an issue.
I'm not clear from the financials how much we remain on the hook for with the Exxon PXF at the date the assets were seized. Its a pity this couldn't have been made clear.
There're loads of positives in the financials, but we should not overlook this important issue.
The board will be keen for a settlement ASAP and an interim audit (of some description), I suspect.
Sorry for the negative post, but I think this is important. Interested to know what others think.
Good to hear. Just very stupid policy.
Thanks Mr. B.
Come on SS announcement! Next RNS very soon hopefully.
My understanding is that companies are only subject to UK tax on their profits arising in the UK.
Does the windfall tax apply to us being a uk company?
If anyone was wondering about Auctus Advisors (9 pages) as stated on SAVE’s Website - it’s merely their daily bulletin for lots of different companies and only 2 lines refer to SAVE which just states the obvious.
Zengas - If I get time I will try to post potential other assets screened although as you say the list is exhaustive all the public ones that you have listed already plus others which aren't so public not sure the status's on the ones i posted on 11th May (i.e. Amni Energy, and the Exxon Asset), the total list is probably greater than the 20 or so acquisitions screened mentioned previously. I believe that we are not just screening assets from just majors, we are looking at independent players as well as assets that the local countries government may want to sale a part stake in. For example there are plenty of independent oil companies in nigeria and broadly across africa that may be of our interest for example amni energy and also i have heard that we are screening producing assets which NNPC hold in Nigeria and they are looking to sale parts of it to reduce their debt levels.............
When I get sometime I will try to post other assets which we are potentially interested in
R3 should provide around 5,000 barrels per day of production for Savannah, with plateau running for eight years.
China National Petroleum Corp. (CNPC) is on track to complete the Niger-Benin export pipeline later this year, Savannah Energy has said.
UK-listed Savannah aims to begin flow testing its Nigerien fields in the fourth quarter of 2023, it said.
The Niger-Benin pipeline is more than 75% complete. It should begin transporting oil commercially in the fourth quarter of 2023, Savannah said. The move will be “transformational” for Niger, the company said, with oil sales likely to increase GDP by 24% and exports by 68% in 2025.
Savannah will play a part in this export growth through its work on the R3 contract. It aims to begin testing production this year under its 35 million barrel field development plan. Results from this test phase should allow Savannah to reach first commercial oil production in the last quarter of 2024.
The company had previously been planning to sell crude domestically to the Zinder refinery. It changed its plan to focus on exports in 2022. Under its domestic use plan, it would have reached first oil in 2023.
Savannah ordered long lead items – bottom-hole pumps and completion equipment – for its R3 East development in the first half of this year. The project covers the Amdigh, Eridal, Bushiya and Kunama finds. It also identified a workover rig for the test programme.
R3 should provide around 5,000 barrels per day of production for Savannah, with plateau running for eight years.
Success at exporting Nigerien oil would open the door for additional developments. It has 90mn barrels of gross unrisked prospective resources at five prospects and leads within tie-in distance to the R3 facilities.
The company claims to have a bank of 146 exploration targets in its areas. It has made five discoveries from five wells in the Agadem Rift Basin.
In addition to its oil plans at R3, Savannah is also working on solar photovoltaic (PV) plans in Niger. In May, it signed a deal with the government to develop two plants, with capacity of up to 200 MW.
The company aims to reach project sanction in 2024 and then begin producing power in 2025-26.
It has also signed on to a 250 MW wind farm in southern Niger’s Tahoua region. Savannah also plans to sanction this project in 2024, starting generation in 2026. The company’s plans would see it generating up to 450 MW of clean power in Niger, equal to a 60% increase in available grid electricity.
https://www.energyvoice.com/oilandgas/africa/pipelines-africa/507631/niger-benin-pipeline-track-2023/
Savannah reported average FY22 gross production up 20% y/y to 26.8kboe/d (90% gas) from its Nigerian operations generating $290m revenues and $222m adjusted EBITDA to end YE22 with $405m net debt
The Company is currently focussed on closing the proposed $1.25b acquisition of PETRONAS' assets in South Sudan in 3Q23 and at least one further hydrocarbon asset deal.
Savannah plans to conduct a flow testing programme in 4Q23 on the 35mb R3 East field to provide data to optimise the FDP development plan in Niger, ahead of expected first commercial oil production in 2024.
The Company is targeting project sanction in 2024 on 525MW of hydroelectric, solar photovoltaic and wind projects in Cameroon and Niger, and aims to grow the pipeline to 1GW+ of renewable energy projects by YE23.
Savannah's key asset remains a significant controlling interest in a large-scale integrated gas production and distribution business that is currently supplying gas to facilitate almost a quarter of Nigeria's thermal power generation.
Despite the proposed nationalisation of the Company's recently acquired Exxon assets by the Chadian government, there are several other potential catalysts that management are progressing towards completion over the next 12M.
We look forward to further updates from its busy management team.
Part 2
Operational highlights for the year were similarly in line with our existing understanding. FY22A average gross production from the Nigerian operations of c.27mboepd was in line with our forecast and represented a 20% increase on the prior year. Unsurprisingly, Nigerian production continues to be dominated by the Uquo gas field, which accounted for 90% of total gross volumes.
As previously announced, four new gas sales agreements were added in Nigeria last year, with a contract extension for the GSA with FIPL also confirmed.
2
Importantly, Savannah has now secured new renewable energy projects with expected generation capacity of up to 525MW, meaning that it is now more than halfway towards its goal to have up to 1GW+ of renewable energy projects in motion by the end of this year - with existing projects already encompassing wind and solar projects in Niger, along with a hydroelectric scheme in Cameroon.
Our recent note (Filling the hopper in renewable energy - 11 May 2023) discusses the renewable energy division's strong progress in more detail.
Other post-vear end highlights include the acquisition of a c.41% interest in Cameroon pipeline company COTCo and subsequent deal to dilute down to c.31% with an agreed disposal of 10% to state hydrocarbon company NH. Savannah reports today that (in the first five months of this year) COTCo transported an average c. 137mbopd of oil, with a total of 21 liftings undertaken. Our model currently assumes gross daily throughput for COTCo of c. 129mbopd in FY23F, so this aspect of the business appears to be outperforming our expectations in the year-to-date.
Savannah's full FY22A annual report is now available on its website, including a particularly interesting section, in our view, discussing "Why we do what we do"
Ahead of publication of the AIM Admission Document relating to South Sudan (which we now expect in the third quarter of this year), we continue to forecast material organic revenues, profits and cash flow in FY23F - along with very manageable gearing levels.
Our last-published Risked NAV estimate is maintained at 45p/ share.
Part 1
This morning's FY22A results from Savannah were much as we expected, even if cash generation was somewhat better than we forecast. Total revenues increased by a robust 26% year-on-vear to US$290m (Shore Capital: US$295m) and significantly exceeded guidance, while adjusted EBITDA of US$222m rose by 27% year-on-year and was pretty close to our US$227m estimate. The adjusted EBITDA margin in the year was 77% - broadly unchanged year-on-year and exactly as we expected.
As always, there are plenty of moving parts within today's results, including operating and administrative expenses which were modestly higher than we forecast, and DD&A which was somewhat lower.
A key takeaway for us, however, was Savannah's cash generation in the year. FY22A operating cash flow of US$76m comfortably exceeded our US$66m forecast, while capex for the year totalled just US$24m (Shore Capital: US$35m). Such measures combined to give closing net debt of US$405m, meaningfully lower than our US$441m forecast.
Ahead of forthcoming publication of the AIM Admission Document relating to the major South Sudanese reverse takeover transaction (now anticipated in Q3), we will leave our FY23F forecasts unchanged for now, but see these as being well underpinned given the recently-announced third party gas sales and purchase agreement with AMOCON in Nigeria, and results today which contained no real surprises.
Savannah takes the opportunity to reiterate the growth that it has been achieving from its Nigerian upstream and midstream businesses, which have delivered compound annual growth in total revenues of 21% (and doubled the number of customers supplied since their acquisition in FY17A.
CEO Andrew Knott lays out five key objectives for FY23F, including (1) completion of the company's proposed South Sudanese reverse takeover transaction in the third quarter of this year; (2) "at least one further hydrocarbon asset deal"; (3) reaching the targeted delivery of up to 1GW+ of new renewable energy projects by the end of this year; (4) flow testing at R3 East in Niger; and (5) refinancing of Savannah's Nigerian debt.
All of these objectives are consistent with our existing understanding and expectations, even if the narrative surrounding point number two does seem to imply, in our opinion, increasing visibility at the company on hydrocarbon acquisitions to potentially follow South Sudan. We will eagerly look forward to further updates relating to such potential follow-on deals in due course.
Trustilie, i was wondering what your thoughts are now re your post 11/5/23 17:41 re acquisitions you mentioned (due to size) particularly as in the A/report they mention outside of South Sudan delivering one SIGNIFICANT M&A opportunity.
They reviewed 22 new business opportunities in 9 different countries (so where else outside South Sudan, Chad, Cameroon, Nigeria and Niger have they contemplated?
We know they were mentioned in AI re Exxons Zafiro (Eq Guinea) as well as Chevron i think, Seme field (Benin), Eni Assets (Tunisia) and loosely on Petronas (Egypt) brings the total to 9 countries though Egypt may have crept into 2023. Worth remembering that Petronas had been keen to offload it's assets to the same buyer (until Chad issue arose) so could there be 20k bopd on the cards in Egypt ? That accounts for roughly the 9 countries but not all of the 22 opportunities.
2023 KPIs -
Completion of the acquisition of the South Sudan Assets.
Deliver at least one significant M&A opportunity.
Also a paragraph by the COO Antoine Richard on COTCo and Bini a Warak in Cameroon - where he mentions "We are actively working on further hydrocarbon AND renewable energy asset opportunities in country.
Niger elaborated on-
110k bopd pipeline taking into account CNPCs planned production expected to leave 30k bopd spare for other operators.
30km pipeline to be laid between SAVEs EPF and the export pipeline. Big change from laying a 90km one all the way back to the refinery. The exported oil means on time payment compared to selling it to the government refinery.
Main export pipeline to reach 300k bopd in 4 phases with 8 pumping stations added.
I know everyone is understandably focussed on deal timings and speculation around further acquisitions but worth also noting that this is another exceptional set of results from Nigeria in particular. Savannah are definitely developing a reputation for smashing their guidance, also much, much better to see under promising and over delivering than the other way around!!!
Zengas - Judging by the fact that we are expecting 1 or more sizeable deals post south sudan deal, makes me think that the economic effective price on closing must be really manageable or pretty decent to continue to pursue further deals. Even though we have got headroom up to circa $2.5bn of debt.......
" Looking forward to the rest of 2023 - Key projects we are focused on completing include:
(1) the closing of our proposed acquisition of PETRONAS' assets in South Sudan in Q3;
(2) at least one further hydrocarbon asset deal; "
From the above i believe there is at least 3 (including S.Sudan) to come. It's the level of reserves and production that we don'y know yet, but given peoples concerns over S.Sudan (Sudan issues at moment) the risk can be reduced in repaying the associated non recourse debt by 1-2 sizeable further deals.
If S.Sudan completes, i don't see any future suspension as the next acquired assets would have to be absolutely bigger than what we would have combined post S.Sudan.
Yes, if the addional deal he mentions becomes part of the July admission doc., then I think we would all take that. God knows how long that would take to read though!
Also AK has always said more deal but has never been more specific as to the number but he clearly says here that, 1 additional hydrocarbon deal could we be close to executing another SPA, if so we could see another SPA between now and 28th July and than further details on the admission document.
Will be interesting to see if they are part of the deal signing on Thursday, which we have hitherto presumed would be the case. Getting the ministerial consent on Thursday would be great. I thinkanother hydrocarbon deal is a possibility but would have thought they would have issued an SPA by now if that was the case. At least we have The Ashes to keep us (well, me at least) occupied over the summer whilst we wait!
My gut feeling say's that admission document has been pushed back because they are trying to incorporate another sizeable acquisition alongside the Petronas deal. AK also alludes to it - (1) the closing of our proposed acquisition of PETRONAS' assets in South Sudan in Q3; (2) at least one further hydrocarbon asset deal;
Makes me think they want to incorporate this as part of the admission document as it will avoid any future suspension which in the grand scheme of things wouldn't be so bad as I don't think another suspension after south sudan deal will be acceptable to institutions, and shareholders alike to might as well delay it to produce an all encompassing admission document.
I think this is a high probability now considering the delay in admission document, I always did feel that this was the case but now i am more certain with this mornings delay by a month and AK saying 1 additional hydrocarbon asset deal makes me more convinced now.
Sounds as if they haven't quite finished the paperwork in time for the conference.
"...intends to publish an AIM Admission Document by 28 July 2023, following which point the Company would seek restoration to trading on AIM of its ordinary shares. Further updates will be provided as and when appropriate"
Says that the South Sudan deal will close in Q3 so does that mean we are still due an admission document this month ?