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Savannah has signed a Memorandum of Agreement (MO) with the Government of the Republic of Niger for the development of two solar PV power plants (Maradi and Zinder) in southern Niger with a combined generation capacity of up to 200 MW.
- These projects are expected to increase overall grid connected power generation in the country by over 20% and avoid up to 260,000 tonnes of annual CO2 emissions. Feasibility studies will be conducted over the next 12 months, with project sanction expected in 2024 and first power targeted in 2025-26. Savannah expects to fund the projects from a combination of its own internally generated cashflows and project-specific debt.
- Savannah has built a material greenfield renewable power generation project portfolio from scratch over the past 18 months. This now includes four projects - three in Niger and one in Cameroon. On top of the two projects announced today, this also includes the up to 250 MW Parc Eolien de la Tarka wind farm in Niger signed last year, which is expected to start construction in 2024, and the 75 MW Bini a Warak hydroelectric project in Cameroon, where project sanction is expected in 2024, with first power in 2027-28. It brings the total renewable power generation capacity being developed by Savannah to over 500 MW as it pursues a target of having up to 1GW+ of renewable energy projects by the end of 2023.
- Savannah is delivering impressive progress with this division, quickly compiling a meaningful portfolio that offers diversification from oil and gas, provides the foundation for another long-term FCF-generating business from the second half of the decade, and showcases its full spectrum energy capabilities; an important calling card for accessing future growth opportunities
- Savannah's shares remain suspended and our forecasts under review until the publication of an Admission Document in respect of its acquisition of Petronas's South Sudan oil business, expected by mid year.
Zengas - Apologies I am still a little sketchy on the detail and will try to do some more research on the 2 assets mention below, i believe the below if we pursue will be post sudan so if we press ahead with Amni Energy that deal will likely conclude in H2 and not H1 which would make me believe that it would be in addition to south sudan completing in H1. In terms of structure of the deal I do believe an all share deal is likely almost akin to a merger creating an enlarged company Savannah Energy Group, believe a likely cash / shares deal being the likely scenario being accretive to Savannah shareholders. Although like i said it's not unheard of savannah widening the net as you have previously reported us being interested in Eni tunisia asset and petronas egypt. So I thought I would post the ones below to demonstrate the kind of assets that we are potentially after in nigeria as well. Also i was more intrigued that we were not after nigerian assets given our success with accugas. In terms of the Amni energy acquisition i was told it really difficult to complete if we did genuinely pursued it as its abit like the the seplat deal in nigeria with the new presidency and conflicted interest it's hard or almost impossible to jump through the regulatory hurdles.
whether the 2 i mentioned below ever see the light of day only time will tell but for now our priorities remain with south sudan completing in timely manner with government approval. Amni Energy would be a dream deal after south sudan as it could easily take us to 150,000 to 200,000 bopd production per day in the 2 or 3 yrs with reserves well in excess of 1 billion
Is Exxons share of production around 12k bopd on Oml 138.
They could offer a similar deal to what was done in Chad perhaps re financing.
Omni - don’t they have or have had significant oil production of around 20k bopd plus some other fields. Also 1.6 Tcf of undeveloped gas close to Port Harcourt area ? Maybe an all share deal ???
If true I think it would derisk repaying for South Sudan if production was interrupted for any length of time ? Same complex as Save on Victoria island and they did get involved with Lekoil so could be feasible. Couldn’t see them giving up on S.S after recent talk on closing it and being suddenly piling into these two possible deals as if on the rebound.
Save did say they would borrow up to $2.5b in their adm docs. Thanks for sharing Trustilie.
Sorry ignore the price quoted in point 1 of $1bn as he is unsure of the acquisition price but those are the 2 Nigerian assets we are interested in.
I don't have an official source so please don't slate me as I have heard it from someone in the african oil and gas space m&a that we are after additional oil and gas assets in Nigeria and potentially looking to acquire following assets:
1) An independent producing oil and gas company in Nigeria https://www.amni.com/ for circa acquisition price of $1bn
2) We are also looking to acquire OML 138 from Exxon not sure for how much - https://corporate.exxonmobil.com/what-we-do/energy-supply/crude-trading/usan
If this is true is this why the admission document is taking longer as we are looking at additional assets ? and they may form part of the admission document ? if this is true i can't see us acquiring 2 assets with $1bn + price tag simultaneously as it would sound highly unconceivable and even if possible who would give us $2bn of debt unless the Petronas south sudan acquisition is no longer feasible or the economic interest date of the south sudan acquisition means that the closing price is likely to be much lower so we can go for another 1 or 2 big one's ?
Again like i said i am not sure how trusted the source is so i am just putting it out there for discussion............
Todays ShoreCap note 11-5-23
Net Debt forecast
End 2022 = $441.3m.
In 7 months (End 2023) = $257.9m.
The pending S.Sudan acquisition has to be added. Could it be as low as $600m by then allowing for what was previously said re effective start date and possible contingencies if any included in the headline "up to" $1.25b figure. Perhaps overall net debt as low as $850m in 6 months and not the approx $1.2b i was running with.
Regardless of the S.Sudan deal and using the existing forecast $257.9m - if the remaining 30% of the COTCo pipeline was sold as what was achieved for the other 10% - pro-rata would give $135m so the Accugas net debt would in real terms be down to just $123m this year end.
Zengas - I recall your analysis in comparing us to the likes of kosmos which I found very useful, i guess the major difference in success case between us and kosmos if the deal were to complete would be that Kosmos has a premium on it's valuation purely on the basis that it has a much broader geographical spread i.e west africa, north sea, eastern Mediterranean whereas Savannah is heavily focused on africa, I would love Andrew to do an oil and gas acquisition outside of africa just to bolster overall market perception of Savannah but I know he won't as we are purely an african oil and gas play for better or worse.
Zengas - Taking the aggressive nature in which we are pursuing renewable projects you would think that there is some degree of confidence that the south sudan deal should progress as a contrarian view would suggest that cashflow from accugas and cotco would make it quite difficult to sustain and fund 1GW+ of renewable projects even if the majority is debt finance, so they definitely need another big hydrocarbon acquisition to put us in strong footing to unlock our potential renewable portfolio, I know we have niger but to get niger producing 20,000 bopd + is still probably 2 - 3 years away
People wondering where all the cash will come from for the renewables. No wonder that some significant oil/gas acquisitions are required because the renewables should be a very major business in its own right.
At $70/b oil there should be $400-450m FCF/yr imo from S.Sudan, Cameroon & Accugas.
Accugas was to be in a net cash position in around 2 years so looking at the timeline for bringing these renewable projects on stream gives an idea of the cash needed and also at what point the renewables become self financing.
Niger 250 MW wind farm. Project sanction this year. First power 2025.
Back in July last year F/Cap gave $0.7m MW development cost so overall $175m cost expected. 25% own cash needed would be about $44m. Expected to give EBITDA of $30m/Yr.
Niger 2 Solar projects combining to offer up to 200 MW. Project sanction next year 2024. First power 2025-26. F/Cap had $0.5m dev costs for the solar in Chad so i would assume the same here for Niger. (Chad had battery storage that would cost an extra $1.5m MW but none stated here for Niger this am). 200 MW costing $100m would require $25m of our own cash.
No concrete EBITDA figures for Niger Solar but perhaps yields $20m/yr.
That could mean the 3 Niger projects of 450 MW giving about $50m/yr EBITDA in 3 years with our internal cash of around $70m needed.
Pro-rata you could see potentially that if they had 2.5 GW Solar/Wind up and running and in development it would require about $390m of our own cash with possible EBITDA of around $280m/yr. Likely 25-40 year PPAs. They intend to have around a total of 1 GW+ of renewables in motion in the next 6 months alone.
The African Renewables market was stated by AK as around 310 GW by the end of the decade and a once in a generational opportunity.
Rather than give excess dividends to shareholders i can see the value in building out a renewables business given the market opportunity which would be worth multiples to an actual major dividend.
Cameroon 75 MW Hydro. Project sanction next year 2024 . First power 2027-28. No info yet what the cost/returns might be.
Article yesterday on bank lending for oil/gas assets in Africa and one prominent bank still lending regardless but in tandem expects to lend over $14b in the next 2-3 years alone for African Renewables projects so imo i don't see a problem on FinnCaps expectation of 75% financing.
Seperately FT article today on $5.2b of outstanding debt as of 2022 to China from Sudan but that doesn't include $billions in prepayments to Sudan for oil to be shipped.
Sudans state oil Co SudaPet) owes about $2.5b to CNPC. Chinese state backed entities loaned Sudan $15.5b to 2020 alone with $5.5b new loans pending.
"Deborah Brautigam, director of the China Africa Research Initiative at John Hopkins University, pointed to Chinas hectic 'shuttle diplomacy' that helped keep the oil flowing following the split between South Sudan and Sudan in 2011. Sudan is where Chinese diplomats first got involved in shuttle diplomacy, and at the time got grudging praise from their American counterparts" she said and "wouldn't be surprised if they returned to help sort out these problems".
Saves 3 acquisitions
Exxon Chad for the sum of US$360 million (with a further oil-price contingent payment of up to US$50 million), subject to other adjustments ie $410m.
Petronas Chad for the sum of US$266 million, subject to working capital and customary adjustments
Petronas South Sudan for a *total* cash consideration of *up to* US$1.25 billion, subject to certain completion adjustments.
As for South Sudan - information has been light. The price is stated as 'up to' and 'total consideration.
'
There remains a possibility that perhaps as much as 20% of that headline price could be inclusive of contingencies - ie for certain production levels being met as well as the oil price for x years.
Taking that into consideration along with whatever effective start date is used, there could be a very substantial discount to apply when you look at the make up of other deals and SAVEs use of the term 'up to'.
Panoro Feb 2021
Equatorial Guinea and Gabon oil producing assets (up to $180m)
for an initial aggregate cash consideration of up to US$ 140 million and aggregate contingent consideration of up to US$ 40 million, based on an effective date of 1 July 2020.
The EG Contingent Consideration is up to US$ 16 million in aggregate payable only in years where the average annual net production of the acquired interests is in excess of 5,500 bopd. Once this initial net production threshold has been reached, in that year, and for the four consecutive subsequent annual periods, annual contingent consideration of US$ 5.5 million will be payable to Tullow provided that the production threshold is met in such annual period and the average daily Dated Brent oil prices in respect of the annual period is in excess of US$ 60/bbl, subject to the aforementioned cap of US$ 16 million.
The consideration for the Dussafu Acquisition consists of an initial cash consideration of US$ 46 million (to be adjusted at completion for working capital and other customary adjustments) and a contingent consideration of up to US$ 24 million (the “Dussafu Contingent Consideration”).
----------------------------------------------------------
Afentra April 2022
Sonagol transaction $80.5m upfront with a $50m contingency (Contingency is $5m annually for 10 years subject to above $65/b oil price and being over 15k bopd gross production).
INA transaction $12m cash upfront plus $21m contingency (Contingency is $10m licence extension, plus $2m/yr x 3 yrs on 30% of the revenue upside if oil price above $65/b. Further $5m if any new discovery subject to it being developed.
Porsche - I believe that entity may relate to renewable projects in morocco. I.e renewable morocco
https://oilprice.com/Energy/Energy-General/As-Europe-Turns-To-Morocco-For-Clean-Energy-North-Africa-May-Lose-Out.html
I'm probably reading far too much in to this, but the reference to the hook up to a World Bank-funded project may be an oblique indicator of Savannah's relationships there. Take note, Chadians...
More projects to follow :)
We will continue to work towards achieving our target of having up to 1GW+ of renewable energy projects in motion by end 2023 and expect to update on further progress towards achieving this goal over the course of the coming months."
Savannah Energy RN2 Ltd changed its name to Savannah Energy RM Ltd yesterday.
M?
https://find-and-update.company-information.service.gov.uk/company/14856863/filing-history
Don’t think we will know what SESS POWER LIMITED (14588464) and SEGSS LIMITED (14859526) relate to and probably relate to renewable projects in South Sudan that probably can only be announced in conjunction with the hydrocarbon acquisition. I don’t think they want to do the same mistake as they did in chad previously where they created a false sense of security announcing the chad renewable deals giving a false sense of hope that it meant the chad oil deal was a formality
Looks like an rns tomorrow morning announcing solar projects in Niger as per below tweet
https://twitter.com/nigermeer/status/1656345403854315520?s=46&t=bdVeLrGB139mDog1SFRNlw
I for one am hoping that this is the start of a strong comms window within the next few weeks with hopefully additional renewable projects and re-listing, let’s hope we see some more on the hydrocarbon front………..
Looks like 3 new company formed 1 yesterday and 2 today:
- SAVANNAH ENERGY RN2 LIMITED (14856863) incorporated 9th May 2023 as reported by Zengas yesterday
- SEGSS LIMITED (14859526) incorporated 10th May 2023
- SAVANNAH ENERGY NIGER SOLAR LIMITED (14859356) incorporated 10th May 2023
The 3rd company is pretty obvious that we have a solar project lined up in Niger as the name gives it away. Not sure about 1, also not sure about 2 SEGSS LIMITED (14859526) which could be a renewable project in South Sudan to tie up with our hydrocarbon acquisition as another company which was set up in Jan SESS POWER LIMITED (14588464) as well so I believe SESS POWER LIMITED (14588464) and SEGSS LIMITED (14859526) relate to a same country
Https://leadership.ng/buhari-inaugurates-afam-power-plant-decries-gas-supply-gaps/
Plenty going on in the Nigeria gas power space so I am sure we will have plenty of additional opportunities to increase accugas revenues.......
Zengas - Looks like another renewable project in Niger by the looks of the name of the company ?
A Chinese contracting firm wins contract to build a pipeline in South Sudan, still plenty of confidence in the oil and gas sector in South Sudan, you would hope that there is plenty of reason to still progress with our deal as the outlook is long term and there is plenty of confidence in the sector and stability in South Sudan. Even though the pipeline built is a interconnecting pipeline every pipeline connecting fields within South Sudan will make alternative export routes easier
https://www.yicaiglobal.com/news/20230510--8-chinas-norinco-soars-on-scoring-usd12-billion-deal-to-build-oil-pipeline-in-south-sudan
Https://www.thecable.ng/osinbajo-inaugurates-240mw-afam-power-plant-in-rivers/amp
Savannah Energy RN2 registered today at Companies House.