The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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I like N J Ajuk very articulate and appears to be singing of the same Hymn sheet as AK. i also take a positive in the mentioning of Save.
Thanks for sharing TL
Couple of interesting interviews posted on YouTube Energy Capital & Power channel a few days ago talking about South Sudan oil and gas opportunities from Nilepet MD Bernard and NJ Ajuk.
Nilepet MD - https://youtu.be/b-vedmLz7Qk
NJ Ajuk - https://youtu.be/nFAfNtiq4PE
Rockyride - Sentiment wise there would not be a better time to return to market with oil price strengthening this is an ideal time if we can cross the final hurdles.
Morning all
It’s always worth keeping an eye on oil price forecasts, especially with regards to the funding structure (when we know the precise detail) for the Petronas assets in South Sudan.
https://oilprice.com/Energy/Crude-Oil/Demand-Surge-Set-To-Push-Oil-Prices-Higher-This-Year.html
6 or 7
Tier - Wouldn't mind an extension albeit a preferred short one. If they are able to announce other operational updates like additional gas contracts, more definite work programme on Niger etc......... that would be great in the interim.
Can we or will we be allowed to announce other hydrocarbon acquisitions in the suspended period if the extension is longer or are we not allowed to from a legal standpoint, anyone in the group able to answer this question for definite or is able to find this information out ?
If they’re to ask for an extension, it’ll likely be until the end of September to safeguard themselves.
I hope it’s the case. Don’t feel like it’s been approved, and not over the next two or 3 days. We’ve been suspended for this long what’s the difference another two months longer.
Sorted, In the annual report they refer both to 'Projects that matter in Africa' and 'Projects that matter', but even when referring to simply 'Projects that matter' they state 'We are a pan-African energy and resources company..' and 'Our vision is to create a best-in-class African-focused energy company delivering Projects that Matter that we and our stakeholders are proud of.', so I think it's probably just semantics and I'd be surprised to hear us undertaking anything outside of Africa in the immediate future.
Yes, good point TiL. Hopefully that's the case.
5
Morning Komakino - I have always thought that Q£ always referenced closing, i.e the full timeline including our shareholder approval which would typically be 3 to 4 weeks after admission document and than financial close and transition from Petronas following shareholder approval. Andrew quote "(1) the closing of our proposed acquisition of PETRONAS' assets in South Sudan in Q3; " refers to closing when referring to q3 and not admission document.
My hope is when they mentioned 28th July 2023 they would have factored in an additional 2 weeks already as a buffer. So if Strand Hanson do grant an extension they would need visibility of a firm date where the south sudan government are meeting to approve the deal or not, otherwise as this deal requires explicit consent it timelines could easily continue to stretch without a fixed date in which case Strand Hanson and Savannah will have to come to market even without formal approval, which a lot on here have said they will not come to market without formal approval.
Might be semantics but was Save’s mission ‘delivering projects that matter in Africa’ latest RNS I believe it just said ‘delivering projects that matter’ could they be looking outside of Africa? Could have this wrong or reading too much into the detail.
Morning TiL. Pretty impossible to say I think. Most of us are hoping that we get the admission doc. this week as per the RNS, but the RNS did also say Q3, as well as a recent IR communication, so possibly leaving some wiggle room for another extension. There is also the unpalatable option of no deal, but given the length of time this has taken I think that's pretty remote. I've set my expectations on an extension but hope to be pleasantly surprised!
My semi educated guess:
7) Extension to mid - late September for relisting.
4)
Morning All
Now that we are 3 day's away from the said potential admission document date of 28th July 2023, I wonder what the groups thoughts and feelings are in terms of the likely scenario from the list below:
1) Admission Document by Friday 28th July & re-listing this week (Including ss government approval)
2) Admission Document by Friday 28th July & re-listing this week (without ss government approval)
3) Admission Document by Friday 28th July & re-listing early next week at the very latest (Including ss government approval)
4) Admission Document by Friday 28th July & re-listing early next week at the very latest (without ss government approval)
5) An update by Friday 28th July or early next week asking for a short extension for a couple of weeks max. i.e 2 weeks
6) An update by Friday 28th July or early next week asking for a whole month extension i.e 31st August 2023.
7)An update by Friday 28th July or early next week asking for 2 months extension i.e 30th September 2023.
I welcome everyone's thoughts as opinion as to where they think the current state of play is at ?
Longshorttrade - You would like to assume that how we concluded the Exxon deal will serve as a benchmark for all other deals similar and it gives the protection to the buyer and seller. The buyer get protection from unforeseen events the seller gets the benefit of full value of deal if everything is hunk dory............
Komakino - It's funny what you find when you actual read the full report carefully, we are all guilty of skim reading it when the answers are right in front of us at times. I will sure make it a habit of reading annual reports more thoroughly going forwards across all my other holdings.
Indeed good spot. i imagine AK would be after equal or better terms on SS due to added risk involved.
Good spot TiL!!
Hoping that the remaining debt structure for South Sudan is similar non-recourse or capped at a certain level to reduce exposure on the group.
On Exxon Debt Facility of $170m, it seems that the payment was tied to Doba crude oil liftings and distributions made from Cotco it say's the facility has since been amended to reflect Doba nationalisation so that is a huge positive
In December 2022, Savannah Energy Finance Limited entered into a term loan facility of $170.0 million to fund the acquisition of the Chad and Cameroon Assets. The loan carries an annual interest rate of 7% plus three months’ SOFR. Repayments are made from cash generated from future oil liftings within the upstream business in Chad, as well as distributions made from COTCo. The facility was guaranteed by the Company up to US$34 million; this guarantee has been treated as an insurance contract under IFRS 4. Following the Nationalisation, the terms of this facility were amended in 2023.
Zengas - Sure is a very tasty deal if they can cross the finish line...................................................................
AI on the 18/1/22
' Savannah is also looking with great interest at Petronas shares for sale in South Sudan. The British junior informed Petronas of this during the negotiations in Chad. The assets represent some 75,000 bpd for Petronas, with reserves of 300m barrels.'
The FinnCap note of 4th January 2022 page 9 at the time of the Petronas & Exxon assets assumed the acquisition price of $3.40 P2 barrel for the 103.8 mmbo 2P reserves with another 82 mmbo 2C.
With 22,500 bopd production = $15,700 flowing bl.
--------------------------------------
Afentra 19-7-23 on the Azule offshore Angola acquistion. "The attractive acquisition cost implies approx. $3.7/bbl based on 2P reserves". This is their 3rd acquisition on the same assets and gives them 6,000 bopd + 32 mmbo 2P oil + 20 mmbo 2C all done at $3.90b max which also includes some licence interests over and above production which has a discovery. If oil goes way above in 2 cases $65 and $75/b there are bonus payments to be made for 2 of the acquistions but these are spread out over 3 and 10 years respectively.
Flowing cost per bl approx $20,400.
For South Sudan - SAVE say "UP TO" $1,250m (so doesn't sound definitive to me) where as in the Petronas Chad acquisition it was for a definitive fixed sum when announced, while Exxon Chad was an up to price which included a contingency.
So does the "UP TO" $1250m price tag include possible contingencies for higher oil prices/production profile case ?
We kmnow little other than AI reported the reserves were some 300 mmbls - was this all 2P. There's also likely to be considerable 2C.
Based on what Save were paying for Chad ie an assumed $3.40 this would mean the 300 mmbls 2P in S.Sudan costing $1 billion pro rata. They are landlocked like Chad having to export a considerable distance through another country before reaching the loading terminal.
Based on $3.70 for Afentras offshore Azule acquistion and $3.82 for all - that would imply $1.1 - $1.15 billion for the S.Sudan 300 mmbls 2P - these are offshore and measurably less risk for export.
If you use the Chad price of $15,700 and Angola $20,400 flowing bl price - the 55,000 expected production in South Sudan could be in the $860m - $1.1b range. So on the flowing metric and 2P price examples it doesn't come to the UP TO $1250m and i can't see why SAVE would overpay given the risk never mind the Chad price example and the lower risk offshore Angola price example.
Unless there is signifcantly more reserves, greater production or some other infrastructure in S.Sudan that gives income - therefore on 300 mmbo P2 and 55k production i woukd hope for a $1b price tag with any contingencies taking it to that 'up to' $1250m initially quoted figure.
Apply a discount figure and if it's 1/1/22 then that could be a substantial deduction from $1 billion.