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I would be thrilled if we could just close South Sudan! Can't quite bring myself to imagine it will happen. I could do with a win!
Hey Z - what if all the horses came home together during 2024:-
1 Nigeria compression completed and new customers added taking us over 40kboepd and beyond.
2 Stubb Creek debottlenecked and produces 5kboepd.
3 South Sudan closes with an initial 50kboepd.
4 First oil in Niger at 1.5kboepd growing to 5kboepd very quickly and 33mboepd added to 2P.
5 Partner brought into Niger for >$200m.
6 At least 1 more M&A deal giving 10-20kboepd.
7 ICC x 4 awards in our favour for $400m - $600m.
8 Accugas refinanced on 10-15 year term.
Back to my sweet dreams…
GLA
Nigeria oil Revenue in 2022 was US$29.8 million (2021: US$ 15.0 million) for oil, condensate sales and US$1.6 million (2021: US$1.7 million) was for processing of third-party crude oil.
I would have thought 2023 oil and condensate revenues + 3rd party processing of oil could be around $25m
"It is expected that the existing Stubb Creek production facilities will be debottlenecked in 2024 to increase oil production capacity to c. 5.0 Kbopd."
That would increase oil revenues by about 70% to maybe over $42m.
Surely that must be a priority/close and if not why - opex/capex paid in naira from gas operations and revenue in dollars reducing exposure.
2024 a year to break through $300m revenue in Nigeria plus whatever 2024 holds in terms of new gas contracts with the CPF upgrade.
Would have thought that the longer the delay the actual net cost must have significantly reduced on S.Sudan.
Either we are an 80k boepd producer for 2024 on S.Sudan completion shortly to $1.5b+ revenues which would be transformational (or not > 30k boepd/$300m ).
S.Sudan has a substantive upside opportunity for increased oil production potential even by what would be a modest 50% next 2+ years so not to be underestimated given the purchase price must have significantly reduced by now (and again in the next 6 and 12 months to this year end (ie 3 years) - perhaps fully paid for - see AET and Panoro recently on circa 2 years for asset being repaid).
Would this potentially negate the need for any significant or all Nigerian financing if S.Sudan were to complete ? (Perhaps wishful thinking?)
What is plan - re alternative growth avenue if not completed versus actual completion ?
Niger - pipeline complete and opportunity for bringing in a partner for ongoing exploration at some point - cash injection/share costs ?
From memory 27 opportunities assessed - what else was close/considered with/without S.Sudan ? Where does 1-2 of those now sit ?
With a year passed, will we hear preliminary news mid year on Doba oil ?
Renewables - not attaching any importance right now for major share growth until the above is clearer.
Hi RR - I approve of your taste in Champagne, fingers crossed.
The majority of the difference between gross and net debt relates to allocated funds held for debt service:
From the 2022 AR:
"The Group continues to work with its advisers to refinance the Accugas US$ Facility into Naira. Substantial positive progress has been made to date as an initial step in the refinancing process, the existing Accugas lenders have agreed a new Naira-denominated four year term facility (the “Transitional Facility”) which will be utilised to assist with the full repayment of the Accugas US$ Facility. The Transitional Facility is intended to then be progressively paid down through a combination of long-dated domestic bond issuances and other bilateral facilities (as was detailed in the Group’s Admission Document, published December 2021). The Accugas US$ Facility is currently anticipated to be fully repaid and cancelled during 2023.
Whilst the refinancing process proceeds, Accugas continues to work closely with its lending banks and at 31 December 2022, Accugas had agreed to set aside approximately US$174.8 million for debt service purposes. Completion of the refinancing of the Accugas US$ Facility into the Transitional Facility continues to require access to appropriately priced US dollars and it is anticipated that the refinancing will complete at the point in time that these US dollars are accessed."
Hi PF hope you’re well matey - and hopefully we get chance to have a longer chat this years AGM than last. Even more hopefully we can chat over a glass of Armand de Brignac Brut Gold Champagne Midas!!! Ha ha ha or maybe we will need to stick to the Asti Spumante!!!
Maybe the debt refinance is linked to the SS deal NOW, but an only a few months ago I was CATEGORICALLY assured it was not and a complete stand work-stream.
Yes net debt was last noted at $443m but won’t we have to refinance the gross debt which is around $600m to $650m I think?
RR- your comment “if we are struggling to refinance our gross debt of circa $600m.” prompted me to ponder on why that may be.
The current difficulty in deal financing is well documented and makes me think the delay in getting the SS deal over the line and refinancing the Accugas debt could be linked.
AK has previously ringfenced subsidiary/division debt with only limited PLC exposure but perhaps that is no longer possible? Perhaps Accugas lenders want the comfort of group US$ denominated oil revenue?
The net debt at 30th June 2023 was $443m that figure may have reduced to circa $350m plus Naira FX loss by the year end.
What is the SS deal conclusion debt likely to be?
In September ‘23 Zengas calculated what the SS purchase price might be, based on recent Afrenta/ Chad/ Assala and Seplat acquisition P2 and flowing bbl numbers, net of possible deferred consideration based on oil price/ production.
The mean of the four ranges quoted is $932m. Assuming an effective date of 1/1/22 and using my calculation of 50,000 bbls per day at $20 per bbl ($30m per month) the consideration reduces by $761m to $171m as at 31st January 2024.
Could those figures be prudent?
Petronas’s share was anticipated to be 50k to 55k. Based on 55k bbl/d the net consideration reduces by $76m to $95m.
How prudent is $20 per bbl?
On page 8 of the SAVE 2021 AR a Chad netback per barrel of $36.8/bbl at $60/bbl was quoted based on the CPR forecast. Using the above estimates every extra $1 above $20 reduces the net consideration by circa $40m.
If the net consideration is so low (or even negative) could SAVE be looking to leverage the SS asset to refinance Accugas, fund another acquisition or perhaps to prove to the SS government the funds are available to finance their share of the required increased production costs to ramp up production.
Perhaps I am being optimistic, other posters thoughts would be appreciated.
I’d like us to do something in partnership in Niger with CNPC. Maybe it could go ‘full circle’ after we acquired our first ever PSC in Niger after CNPC failed to hit their drilling requirements in the ARB. After all, they know the ARB better than anybody and we’ve proven our credibility with our 5 from 5 wells and 33m of unrisked contingent resources. Now they’ve built and commissioned the $4bn pipeline I’d love us to de-risk our company and bring them back in to R1, 2,3 & 4 as partner with a large drilling program. Yes I fully agree we could sit it out and going alone for a great deal more EBITDA but a large cash injection at the moment would be ideal for me, especially if we are struggling to refinance our gross debt of circa $600m.
Additionally, as CNPC are operator in South Sudan, let’s hope they’re pulling their weight to help us to get our RTO from Petronas over the line.
In summary, I’d like to see us build an African wide strategic partnership with CNPC. I don’t know anything about their presence in Nigeria but I’m sure there must be avenues to explore.
Now the pipeline is near completion is it possible we may seek a partner for couple hundred million reducing our exposure and debt, and therfore releasing some value at the same time. ?
Hi Sailplane
This is unlikely to be too popular, but it's probably worthless until oil starts flowing from R1234. My model had minus 2.4 pence per share. Given where it is, I think the market just values it at zero until there's some production.
From my late August posts:
"My model shows the following valuation.
Nigeria (including central corporate overhead) 9.4p
Niger -2.4p
Chad 16.2p
Cameroon 9.1p
South Sudan 54.8p
Total 87.2p
It’s a discounted cashflow model. Here are some of the inputs.
All cashflows cease on 1 January 2029.
Interest rate on debt 15%
Discount factor on future cashflows 15%
Crude price USD80/bbl
Direct cost USD40/bbl
South Sudan closes effective 1 Jan 2022
Nigerian gas sales grow at 6% p.a.
All renewables ignored."
And explanatory assumptions:
"Niger: 1,500 bopd from Q4 2024, 5,000 bopd from Q4 25. Capex total $48m to Q4 2025. A bit brutal, perhaps, but intended to reflect building pipeline, tie-in, overall establishment of operations from...sand."
We can also push the Niger cashflows back a bit now, I think. Other matters seem more pressing: NGN/USD mismatch; SS; etc. Savannah will want to keep their end of the bargain in Niger, but will be limited in bandwidth, I think. They may be seeking a partner, of course. Yacine's world, I think.
Now that it appears ‘the border brakes’ on the Niger project should have been released, what value might we attribute to it?
Back in the pre-Nigeria days, when the Niger project was the then named Savannah Petroleum, an
RNS dated: 1 August, 2014, First Day of Dealings on AIM – it says: The number of ordinary shares in issue immediately after admission will be 131,337,172 giving the Company a Market Capitalisation of £73.5 million at the Placing Price. [56p]
But that was before they went on to drill 5 out of 5 successful Niger oil wells and before Niger got the export oil pipeline through Benin, due to come on-line this month.
Of course, we do now have ~ 10x more shares in issue.
So, any thoughts/calculations - What Value Niger?
Where's Andrew?
Kind regards,
Hundreds of shareholders
LSE bb is showing a SAVE trade yesterday. Solid size. May be an error?
Date Time Trade Prc Volume Buy/Sell Value
02-Jan-24 13:05:38 26.25 1,600,000 Unknown* 420.00k
Https://energycapitalpower.com/attractive-investment-destinations-africa-2024/
I think the only country that we have had break interactions with is Senegal where we signed an MOU in July 2023 so I wonder if we have been able to identify opportunities in Senegal since I am sure there are plenty of opportunities up for grabs
https://twitter.com/GregoireTour/status/1678453479696736268
TIL: You would like to think so . Hoping for trading update 2/3rd week Jan , AD doc fri 26th , trade mon 29th, with fingers and toes tightly crossed.
Not to mention the Akwa Ibom refinery due to commence shortly as well. 2 refineries commencing in our OML 13 licence area with accugas pipeline with 10TCf of gas potential and CPF facility to come on stream in a few months. Surely we will be able to wrap a material additional gas contracts this year.
Port Harcourt refinery due to come online, I wonder if demand for our gas will increase as I am sure a refinery needs a lot stable power supply and plenty of power stations in and around port harcourt and linked through 3rd party pipelines connecting to accugas pipeline as per the map attached provided by savannah below.
https://punchng.com/pharcourt-refinery-begins-test-run-rivers-11-others-get-supply-soon/
https://wp-savannah-2020.s3.eu-west-2.amazonaws.com/media/2023/05/New-Natural-Gas-Sales-and-Purchase-Agreement-signed-with-Amalgamated-Oil-Company-Nigeria-Limited-Final.pdf
As per savannah website port harcourt is a significant customer base
The Accugas facilities and pipelines have significant spare capacity and are strategically located in South East Nigeria, an area where there is both substantial undeveloped gas resources (c. 10 Tscf undeveloped gas estimated to be located within tie-in radius of Accugas pipelines) and significant expected demand for gas from power stations and industrial off-takers in the Calabar, Port Harcourt, Aba and Uyo areas.
Looks like Niger more or less coming online in the next few weeks, with the export pipeline.
https://www.facebook.com/100001187690951/posts/pfbid0w43oKCBWc6VGPJBL684KRaR1QZf8cChjFHkB81rN7ejmQyPnHX114XTASLff8SMdl/?d=n&mibextid=WC7FNe
Also port of Benin restrictions being lifted will slowly start to see progress in Niger.
Happy New Year All,
I wonder if AK stayed in South Sudan during the holiday period, or perhaps he returned with a view to go back this week…….,………
Surely if we are to see progress than you would hear from the company or other news sources within 2 / 3 weeks and if not that we are where we have always been with 1 February deadline likely to be missed
Rockyride - good to hear from you mate and I am sure we will hear a lot more from you in the new year.
We have all been really patient in 2023 let’s hope our patience is rewarded in the new year 2024.
Happy new year all
I've got a bit lost with all the changes and updates since suspension. Will we start 2024 as a bigger business or are we significantly smaller without Chad assets? Does anyone have realistic idea of market cap potential now etc? Thanks
Sp - David Clarkson told me that the tie in pipeline is of a very simple and fast modular design. I can’t remember exactly how long he said it would take to lay but my memory is telling be he said a month or two but definitely no more than two months if all supplies we in Niger and ready to lay.
On another note, a friend of mine has mentioned a potential reason why we’ve not had any updates on “BAU stuff”! Maybe wishful thinking but if SS is expected to close, it would take quite big news in order to be classed as material. Ie if we are to become a >$1bn company, deals in the $10’s of millions maybe not be classed as material and in need of RNS by NOMAD / SAVE.
Very disappointed that we’ve not seen debt deal closed as expected. Let’s hope we see it early in January.
Happy New Year to one and all and GOOD LUCK for 2024.
Also the naira has the chance of strengthening as Dangote refinery starts regulator mandates supply to refinery
https://www.arise.tv/in-compliance-with-petroleum-act-nigerian-regulator-mandates-oil-companies-to-supply-483000-bpd-of-crude-oil-to-local-refineries/
The start up of the Dangote refinery in Nigeria could potentially have a few impacts on the USD to Naira exchange rate:
Reduced demand for foreign currency: Nigeria currently imports the majority of its refined fuel products. The Dangote refinery with a capacity of 650,000 barrels per day could eliminate the need to import a significant amount of refined fuel, reducing demand for foreign currency like the US Dollar. This could strengthen the Naira.
Increased FX inflows: The refinery could also increase foreign capital inflows into Nigeria as foreign investors seek to invest in supporting industries and services around the refinery. More dollar inflows could lead to Naira appreciation.
Revenue source for government: The refinery is expected to generate significant tax revenue for the government. This additional Naira revenue source could support the central bank's efforts to defend and stabilize the currency.
Longshort - not sure but if terms have been agreed than surely it doesn’t take that long to do debt restructure so I wonder if they are controlling the timing of the announcement intentionally