Firering Strategic Minerals: From explorer to producer. Watch the video here.
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Savannah Energy+ (SAVE, Suspended, Under Review)
2023 results exceed guidance, multiple catalysts ahead
Savannah Energy has reported FY23 financial results this morning, which exceeded guidance. Total revenues of $261m (11% above guidance) reflected a 9% YoY improvement in average gas sales realisations in Nigeria to $4.5/Mscfe, while both operating expenses (inc. G&A) and capital expenditures were below guidance. 2023 Adj EBITDA was $184m, and Savannah ended 2023 with net debt of $474m. The report outlines the broad base of catalysts Savannah has in H2 2024 and beyond, all linked to its goal of further material growth within Africa. Completion of the proposed South Sudan oil asset acquisition from PETRONAS is targeted for Q3 2024, with the shares remaining suspended until the related AIM admission document is published.
2024 guidance: 2024 financial guidance is for Total Revenues of >$245m, with operating expenses and admin expenses totalling up to $75m, and capital expenditures of up to $50m. This excludes the impact of acquisition activity.
Nigerian operations: In Nigeria, the gas compression project at the Uquo CPF is on track to complete in H2 2024, enabling the future expansion of gas production for delivery to customers via its Accugas midstream subsidiary. The refinancing of Accugas’ $342m debt is underway with a new NGN340bn (c.$225m) transitional facility signed in January 2024. The recently announced purchase of its partner’s interest in the Stubb Creek oil field is due to complete in Q3 2024 and is to be followed by a de-bottlenecking programme to double production from the asset to around 4.7kboe/d.
Further catalysts across Africa: In Niger, flow testing of key fields within the planned R3 East Development project is scheduled for late 2024. The results can help optimise the development ahead of targeted first commercial oil production in 2025/26. The country achieved first oil exports via the new Niger-Benin export pipeline, with CNPC reportedly now transporting c.90kbbl/d. Meanwhile, Savannah remains ready to discuss its disputes with the Government of Chad on the March 2023 nationalisation, in pursuit of “an amicable solution” ahead of arbitration proceedings that are expected to conclude in H2 2025. Savannah’s Renewable Energy Division also remains very active with 696MW of projects in motion across Niger and Cameroon. Management expects this to increase to over 1GW by the end of 2024 and up to 2GW by end 2026.
Disappointed as i expected to be due to net debt increasing, FX Loss but pi--ed off that yet again Niger has been put back nearly another 2 years WTF.
On a plus side SS deal still alive expected to complete Q3 2024, acknowledgement by Chad Govt compensation is due (though not forthcoming) and finally drawing down the Niara denominated debt restructure (very positive. $98 comes into H1 2024 figures so i imagine no relist before H1 prelim results release as they could be positive .
"The net debt(g) at year end was US$473.7 million (2022: US$404.9 million), an increase of 17% year-on-year. During 2023, US$84.2 million of debt was repaid however the devaluation of Naira denominated cash balances led to an increase in net debt(g)."
Just had a VERY quick skim read as no time until later to fully digest. On quick skim read I did not see the net debt position. Could somebody kindly Copt and paste that sentence on here? TIA
You’ve written off the investment in a wholly solvent and growing business being impacted by FX moves?! Errrrr, ok mate.
Net debt seems to be going the wrong way. I’ve been ‘locked in’ here longer than I would have liked & have now just written off the investment in my SIPP. Thankfully a diverse portfolio has saved the day! Good luck fellow ‘lockees’ (if there is such a word) ;)
Accugas refinancing process underway with new Naira facility signed in early 2024, which is being progressively drawn down during the year and utilised towards repayment of the existing Accugas US$ facility;
Darien, the more detailed update came in the RNS on the 5th April. For some reason it's not showing on this site but you can find it here: https://ir.design-portfolio.co.uk/viewer/111/62140
17th May RNS: A further update on transaction progress, and associated matters, is expected to be made within the next four weeks. so its 3 weeks tomorrow. who is betting on next week getting more news..
RNS 28th march states: The Company will provide a more detailed update regarding the ongoing process to complete the transaction during the course of next week.
6 weeks later....RNS to tell us nothing
So probably Results 4.30 today or 7.00am tomorrow
Thank you 911. Surely we should still have an SS update as promised? Though likely to be non-newsworthy.
I have just spoken to SAVE they have confirmed that the notice of AGM will be issued today and the AGM will be held on Friday 28th June.
It seems that the electricity outage was short-lived.
https://guardian.ng/news/nigeria/national/strike-senate-condemns-labours-excesses-vows-to-prevent-repeat/
No idea if it stopped us pumping gas. I had considered whether the stoppage would allow our customers to claim force majeure. Decided it was unlikely unless the power cut physically stopped them being able to take the gas (though that may have been the case of course. Also, we may not have been able pump it, so FM may have been superfluous anyway. And it's all over...for now, apparently.
I get it, they operate in difficult jurisdictions so things can get delayed. However, looking at how other companies operating in similar jurisdictions update the market / investors it makes me wonder if SAVE is taking the Mikey. The announcements from SAVE on ESG related topics are nice to have, but I wonder if SAVE understand their investors. Any ESG investor first and foremost looks at the fundamentals before even attempting any ESG assessment. So what is the value of those ESG related reports if there is ZERO comm on fundamentals. Very frustrated here. I can see people selling on relisting because of exactly that frustration.
Tier, well I'm pretty sure no one has sold up... :)
Joking aside, I'm just waiting for some company specific news, in fact any news will do, instead of this company silence for us shareholders that it would seem don't exist...
Realise and understand the silence with SS/Chad, but they are not exactly selling themselves with the other important elements of the business in Nigeria/Niger etc
Rant over and as an aside,
I must Thank the many posters on here for the very informative updates, very appreciated 👍
Honestly where’s everyone? When you thought there will be posts there aren’t and vice versa.
Thanks for sharing this, Rocky.
It's beginning to remind me of Stewie asking Brian about his novel in Family Guy...
If all is fine then why nine months on still nothing?
16/2/24
This was the last email I received from Sally. I chased up a couple of times but she want 100% AWOL on me.
My apologies for the delayed response as I have been unwell. I will come back to you shortly on your questions.
27/11/23
As we issued a term-sheet to a consortium of lenders quite some time ago, I'd have expected this to have completed by now. Where are we with the Accugas debt re-finance and is it still expected to close in Q4/23?
The documentation is being finalised and we continue to anticipate this will be completed in Q4 2023.
16/10/23
We have known about this issue since the completion of the 7E RTO. We have also been working on it for in excess of two years with several 'expected dates' for closure missed. How on earth have we ended up in this situation whereby failure to renegotiate or refinance our current debt will seriously jeopardise the going concern of the whole company?
Why was this not completed to stabilise, underpin and safeguard the company before we embarked on our very risky M&A activities?
As you say this issue is not new, having been disclosed in our accounts since 2021. The refinancing of the debt acquired upon the Nigeria acquisition has taken longer than originally anticipated. However, as noted in our recent Half Year 2023 results announcement, we anticipate putting in place the Naira-denominated transitional facility during Q4 2023, with a term sheet already agreed with the lenders for this facility. We also do not consider that the current financing in any way jeopardises the financial stability of the company – we continue to adopt the going concern method of accounting and the audit opinion from BDO is not modified in this respect.
I’m still in touch and have a monthly call. In addition to my calls Sally used to reply to emails but she no longer does. I’m told she still works for Savannah but have not seen anything from her for quite some time.
Rocky are you still in touch with IR or they just ignore you? I’m worried though this going concern topic was intensively discussed on the rns dated 29 Sep 2023. The statement was in previous year’s report but I don’t think it was as strongly worded.
The going concern statement is, from memory, similar to previous years. Difference this time is the floating Naira & associated volatility. We need $$$ but can't see banks playing hardball with the court case / compensation outstanding and S S still in the mix
Cyb - from memory did it say something like:-
Failure to restructure the Accugas debt could result in a material risk to the company and the BOD could not guarantee Savannah would be able to continue as a going concern. - Like you say very sobering…
How on earth have we ended up in this situation? AK was taking about getting the debt restructured and aligning it in 3 phases to map on to out 15 years of long-term gas contacts way before the 2 significant devaluations to the Naira. We should have got our own house in order before spending circa $40m on very risky M&A deals in Chad and SS.
The only thing that gives me a bit of reassurance is that we have a debt provider willing to fund the remaining share of Stubb Creek along with some cash from ourselves - or at least so we are told. To be honest, I don’t believe anything at the moment and will only take the Stubb Creek transaction as a given when and if it is announced as completed.
Let’s hope we see some reading pleasing to the eye when we get the 2023 finals and hopefully some post period updates.
Hoping to see the 2023 finals sometime this month. My understanding is that the finals have to be reported by the end of June and that the AGM could follow 2 to 3 weeks afterwards.
KTF
Power cut across Nigeria as workers go on strike https://www.bbc.com/news/articles/c6ppwz87vgqo