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Juba City team up with World Bank for city facelift -
Further from the interims re Niara impact
"The net debt at 30 June 2023 was US$443.4 million an increase of 9% from year-end position (31 December 2022: US$404.9 million). During the period US$74 million of debt was repaid however, there was an overall increase seen in net debt due to the revaluation of Naira cash balances (as discussed above). This has resulted in a marginal increase in leverage5 from 1.8x to 1.9x."
"The principal Naira denominated asset on the balance sheet was cash and this reduced in US$ terms by US$66.5 million when it was translated. This was partially offset by the reduction in Naira denominated liabilities which included borrowings and trade payables."
The interims noted an "unrealised foreign exchange loss following Naira exchange rate harmonisation of US$66.5 million" ?
They would hedge the exchange rate with a refinance.
Obviously a cost to do so but no-one would gamble on exchange rates in that manner
Exactly as I said in my short post. I read somewhere there’s rule rationing $ exchanges, or simply as a result of illiquidity. If that’s true, as caution said our big pile of naira is fast becoming Monopoly money.
For info, some observations from Thommie on ADVFN re Scotpak's post:
isnt another part of the problem that save isnt able to exchange the naira into dollars directly after getting paid due to an illiquid exchange market and thus is forced to hold big parts of the revenue in naira? So if thats still the case I expect another big fx loss in q1 as the received revenue in Naira will have lost most part of its value due to another big devaluation throughout this timeframe.
The reason they dont close the refinancing is the big devaluation of the Naira. Just imagine they close the refinancing in Naira now at an exchange rate of 1:1500. That would mean they roll over their current Dollar liability into a Naira liability on the terms of 1:1500. Their revenue is based on a fixed dollar gas price that is paid in the Naira exchange rate. So just imagine following scenario: save closes refinancing of the Dollar debt into a Naira debt now at an exchange rate of 1:1500. At 100$ debt as an example that would translate into a future debt of 150000 Naira. So we would need toll sell gas worth 100$ to pay the debt. If then in the following years the Naira gets much stronger and returns to sth like 1:750 we are getting paid only half of the Naira amount. So we would need to sell gas worth 200$ to pay down this naira debt. That means our real debt would double just on this. It would be very stupid to close such a deal now. On the other hand it would have been fantastic if save would have been able to do the refinancing a year ago when the Naira exchange rate was around 1:450? (I only guess). That would have meant, that they would only need 1/3 of time to pay it back as they are currently getting 3 times the amount of naira for their Dollar fixed contracts. Sadly that didnt happen. So in my opinion it would be the best not to do any refinancing now as long as we expect that the nigerian economy improves over the years to come and the exchange rate would then drop dramatically. Just let it be in dollars and pay it down, in the best case the earnings from a sucessful South Sudan deal will pay this dollar based debt down ... So to say a big failure of save mgmt not to refinance into a naira based debt before the big naira devaluation happened, as they planned to the do that since nearly 3 years? Refinancing now could just turn into an even bigger nightmare if there exchange rate drops inthe future and the naira getting strong er again...
I'm thrilled this company didn't come back to market anytime in 2023....and fine with it not coming back to market in early 24 either: Against the Chad debacle backdrop and the delays in SS government approval .... and a barbaric AIM bear market backdrop - as well as thru 22 - thru most of 23 .. I could have seen this going sub 15p as a low point whenever in that window, if it was live trading.
I have renewed hope here now.. and expect this to be readmitted sometime in the next 6 months, with a shareholder appealing deal or two fully signed off .. and a no longer barbaric AIM market backdrop to help too.
Thanks Scotpak, interesting and as always appreciated.
Some new research I came across on Naira (summarizing as not able to post exact text) :
> Reform momentum in Nigeria has been strong recently The USDNGN has depreciated by more than 30% over the last 2 weeks, significantly closing its gap with the parallel market rate.
> The Central bank of Nigeria (CBN) has also made important changes on the FX regulatory front, lifting exchange rate restrictions on international money transfer operations and interbank transactions.
> Important changes have also taken place with regards to transparency around oil revenues. Nigeria's state oil company has announced that it had moved a significant portion of its earnings to an account held at the CBN, which should improve transparency around oil-related inflows, and ease pressures on the naira.
> This should allow new sources of FX to the official market, and help unlock a budget support loan from the World Bank
> Given the speed of reform momentum we forecast that the Naira will stabilize by the end of the year, and our new year-end forecast is N1450 (current level is 1514)
With regard to SAVE, I wonder if said poster is still feeling the same way when he came back on here a while back to tell us 'So glad I disposed of 90% of my holding before suspension', before putting the money into I3E and PRD.
No one can foresee how things will always turn out but coming back to gloat is never a good move.
Niger - is clearly diversifying it's export markets beyond just the pipeline great to see once production starts to ramp up. There will be a strong case to build a bigger refinery which can supply countries around it's borders whilst the pipeline will take product to international markets. Makes aggressive work programme for operators even tastier if they can start drilling.
Performance has been slow to say the least but let's hope we are on the cusp of a transformational deal and potentially $1.8b combined annual revenues if all goes through as hoped for.
It's why i haven't been tempted at all to switch or sell my stock paticularly while there could be significant news still to come re Chad decision and other deals.
I don't disagree with the frustration and i know a few went to pastures new over a year ago but i've kept an eye on 2 stocks that an other poster selected while i decided to stay firmly put no matter how supposedly attractive they looked at the time compared to here.
PRD down near 40% this morning to around 8p while I3E has also slumped from 21.15 to 8.6p and a substantial reduction in dividend as well, so at least at 26.25p my money (for now) hasn't performed any worse in that period. I'd like to think a deal here will materially re-rate the company whereas the other two stocks now need time and work to improve their share prices over the next number of months or even much longer ? and where perhaps SAVE is tantalisingly close to completion ?
I've used 'nameless' as the poster because its not intended to be personal in any way - merely pointing out my rationale for not budging/company belief and reflecting on the performance on those 2 stocks if i had followed suit.
'Nameless' - I3E Price: 21.15 - 22 Dec 2022 07:26
' Phew. Finally the RNS We've all been waiting for. Excellent news. Just done and re-checked my numbers. I'll be getting over £1000 or month gross and net income next year. That will do very nicely towards my pension income. Thank you Majid.'
Nameless : PRD Price: 8.25 - 16 Dec 2022 10:12
'Happy to participate in these at just over 8p. (and) Two of those blocks were mine. 8.11p and 8.14p.'
Nameless : PRD Price: 6.00 - 17 Mar 2023 12:02
'So, I take from today's RNS that the Best estimate of total gas resource, net to PRD, of 615bcf, has a prospective full value using a 25% COS for commerciality, of some £246mn, using the valuation metric of $2/bcf, at today's fx rate. That's 10x today's total MC.'
Nameless: PRD Price: 12.75.5 Feb 2024 08:00
'We are going into a news-rich period in PRD's life cycle now. Hold onto those golden tickets for dear life, tempting as it may be to trade, take profits after a sudden jump or become obsessed with near term developments.'
Scotpak & Tier - Correct, my interpretation is it all depends on how much Naira the company held pre de-valuation that really affects the FX loss, so if we are able to convert naira to usd quickly than it mitigates the risk. Plus one would assume now that naira has de-valued and is in line with the parallel market it can only improve liquidity thus claw back some of the FX loss that occured through the de-valuation process.
The Company may hold onto some naira and the FX book loss if they feel they can claw some of it back through appreciation over the next few months and possibly year.............
As long as the naira is immediately turned into $ upon receipt, but there might be rule stipulating only a certain % is allowed to do so? Anyway it is what it is. Thanks for your replies Scotpak.
The loss was a cash loss related to the specific pile of cash we had sitting in Naira. Post devaluation, in USD terms, that cash is worth less, hence the loss. Ideally savannah would want to hold all of its cash offshore in USD, but I guess a minimum amount needs to be held locally to fund business needs. The offset comes from the fact revenues are fixed at a specific USD rate, thus when local currency devalues, USD revenues - lower amount of local costs = higher profits than before devaluation. This should help offset the cash loss made from holding the Naira cash balance. As I said previously, the offset effect will be much greater once the $300m USD loan facility is refinanced for a local Naira facility.
SAVE shares have been suspended since the YEAR BEFORE LAST.
At what point does continued suspension become taking the proverbial ?
What’s this true up process protecting us? If it does we wouldn’t have suffered such a loss last year?
Meanwhile naira at record low today. New record every day.
He could be prolonging the issue of the AD until a done deal pending SH final approval and then signing an SPA for the ‘2nd deal’. My rationale for this is on the assumption that the ‘2nd deal’ would not constitute a RTO on the enlarged company with SS included but would constitute a RTO without SS in the bag.
Anyway, whatever is going on, the balance payment for SS is reducing by the day and Nigeria is bank shed loads of cash.
I won’t say what I want to happen next, but you know my views.
PS I was first told that AK wants to issue AD with Gov approval at the AGM.
As far as acquisitions go, I fully believe that AK would and will be pushing for an oil acquisition as at the moment we are heavily weighted on gas. I don't think gas is out of the question but he probably feels the gas numbers will grow with time with the accugas asset so the focus is definitely on an oil acquisition.
Even a small acquisition of 5,000 - 10,000 bopd will do wonders in changing our production mix an put the company on a new trajectory. I am sure there must be other small deals to be made for instance we were after ENI Tunisia asset previously which i recall was circa 5,000 bopd of oil.
Moho - I think it's safe to say we all want it back trading however I believe the company is looking to maximise this prolonged suspension window to bring a deal to market as acquisitions is a major part of it's strategy, I am of the opinion that's the intention of the company as they will find it difficult to seek future suspensions if they return without deal and than ask for a another suspension further down the line.
It's perhaps a lot more easier to keep on extending the current suspension window to complete a deal than to return and suspend again.
Zen - Your last comment mirrors my views exactly. Why the preoccupation of not coming back without a deal ? If there's not a deal and the share price tanks it will realign when the deal is announced to something close to what it would relist at if there was a deal. Likewise if never any deal. I don't necessarily understand he logic of those not wanting it back trading. I just want some ops updates on existing business, and at the moment it seems they don't feel inclined or obliged to supply this. If there's any further extension, I would assume AIM being taken for a bit of a ride.