Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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Strongly agree O&W, I balance my PF with solid growth stories such as Savp and Ptal where rewards are for the patient - then I have ones such as I3E where rewards short term can be high, of course with greater risk.
Off topic - it’s sad to see the demise of ECO which I know a few here did very well on, I certainly will look to be in next years drilling campaign there.
This isn't your usual "AIM oiler" share. We have witnessed for weeks, months on end, a light daily posting interest here, devoid of the usual ramping suspects (thankfully). I just think such PI types have looked at the offering here and decided to pass, at least until there is some greater price momentum developing. It is not an easily manipulated sub-£10mn MC share. It is heavily owned by a few IIs and insiders. It has been a long 27 month waiting game to get to this point. So why bother stirring things up, I hear them saying.
Savp will start to gain traction with every operational RNS that they put out, and that presumably can now start as early as next week, with a stream of announcements, video presentations, live meetings etc. But because IIs are heavily involved and sticky investors, it also means that greater emphasis will be placed on the delivery of solid EBITDA and revenue numbers, debt paydown through FCF generation, as well as spudding news, flow test results etc. You know, classical investment analysis stuff!
One broker says 90p NAV and the other says risked value at 41p with a potential 141p to add to that as the projects are de-risked, giving a potential 182p de-risked value. Further deals may also be done of course.
Is this share worth 26p/27p - well the market says so - the brokers are saying that the market has this one wrong at the moment - I agree but we have to wait and see if the market corrects itself which is why we are here - ahead of the 'crowd'?
I do wish they would mention the capex needed, these assets would have been underloved. Showing the need for investment is maturity, I’m sure AK will get around to it.
Trek
ThomasTT:
An excellent summary!! Many thanks for sharing the report with those of us who don't normally have access!! Very much appreciated!!
NK
Mirabaud Research - SAVANNAH PETROLEUM: SEVEN TRANSACTION COMPLETION
In arguably its biggest achievement to date, Savannah Petroleum (SAVP LN) has announced the completion of the Seven Energy transaction in Nigeria, transforming the company into a major full cycle E&P. The principal assets acquired from Seven comprise the Uquo gas field and Accugas processing facilities & pipeline infrastructure, which are owned 80% by SAVP and 20% by AIIM, the African infrastructure fund. This substantial, integrated gas project contains ~96 mmboe of gross 2P reserves and currently delivers ~150 mmscf/d (25 kboepd) of gross gas (take or pay volume) from the wellhead to end user. On top of the Uquo field, the company also has a 51% stake in the nearby Stubb Creek field, in partnership with Sinopec. This asset is currently producing small oil volumes but has a significant untapped gas resource which will be used to backfill the Uquo field. Broadly speaking, SAVP’s strategy in Nigeria is to ramp up gas volumes under its existing contracts and add new high value industrial users which are currently burning diesel at a gas equivalent of >US$10/mcf. As the only significant gas infrastructure owner in the Calabar region the company is ideally placed to deliver on this promise.
Looking Ahead, we estimate that SAVP will generate revenue & EBITDA of US$235m & US$174m in FY20 – the first full year of Seven ownership. Nigeria FCF will be funnelled into organic growth projects and debt repayment, allowing the business to rapidly de-lever (inherited Nigeria net debt ~US$480m). Further enhancing SAVP’s liquidity position, the company has sold 20% of Uquo and Accugas for US$54m in cash to AIIM, effective on closing. It has also received US$20m in cash via an equity injection by former Seven SSN holders. Whilst part of this cash inflow will be used to satisfy Seven related costs (Frontier swap, Government transaction tax, payables etc) the company will have sufficient liquidity to restart operations in Niger where first oil and further exploration drilling is on the cards for H2 2020. In summary, the stock remains cheap – trading at less than one-third of our Total NAV (94p) – and with the Seven deal closed, we believe the scene is set for a re-rating as the business plan unfolds.