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Let’s hope Saudi can broker a truce
https://apnews.com/article/sudan-generals-war-military-rsf-civilian-ceasefire-7386cd646fc23d7d8066da6eb5d19d97
Looking quite dim. Chad’s p gone SS hangs in the balance. Can’t imagine what price will be with no SS on reopening.
6 weeks till admission deadline will be interesting now clearly the Sudan conflict will not improve in the period as these thing takes months to resolve if not years so clearly there is a quick decision to be made here.
I would like to think and hope that the pipeline would be protected as things deteriorate in Sudan. As you say oil is both Sudan and SS’s main revenue earner and without it both countries would suffer greatly.
My concern is that if the two generals continue this conflict and a deep civil war ensues then the pipeline might become a target for which ever side felt they were perhaps losing the upper hand. It’s been targeted in the past and it might get damaged again in order to inflict maximum damage to the country / economy.
At the end of the day nobody knows what is going to happen. We can only hope that the conflict settles down in the coming weeks and months prior to the SS oil conference otherwise it could be a bit of a damp squib.
I certainly wouldn’t like to be in AK’s shoes at the present time. A lot on his plate at the moment.
Fingers crossed for a positive outcome.
Regardless of the situation in Sudan I would like savannah still push ahead and complete the deal perhaps reduce the overall purchase price and on favourable debt terms. Yes there is a risk of exports being halted through Sudan however it’s important to remember that they may be dispruptions but can’t see a total halt as that would break Sudan and South Sudan with oil being there major revenue earner. Savannah are here for the long haul so I believe they should still press ahead with the acquisition these deals take time and are negotiated over a long period it would be as shame to put all that to waste and frankly I can’t stand another suspension if this one fails and we got for something else
It wouldn’t surprise me know if we use the full 6 months window to see how things develop in Sudan before making an admission document and re-list we could perhaps ask for an extension as well. I personally feel with latest developments in Sudan we may be prepared to walkway if things continue an peace is not forthcoming. I honestly can’t see us completing the deal against the current backdrop things in Sudan would need to drastically improve, the only way we continue this deal is if Petronas give us incredible discount and favourable debt payment structure cause they want to move on quickly…….. the risk vs reward works both ways I suppose especially with the geo political risk of the assets. As of today I put the chance of completion at 5% with 95% chance of waking up one morning to see a termination of spa on South Sudan. Hope I am wrong but just the timing feels off. Savannah luck has been poor recent time first with chad where the president died whom we initially agreed the deal with and now Sudan unrest Sod’s law is Sudan was quiet all this time since break up with South Sudan and as luck has it it happens when we are acquiring Petronas assets in South Sudan you can make it up lol
Perenco finger prints all over this as expected awhile back
According to our information, Nathalie Moudiki has therefore mobilised her networks to promote Savannah Energy in Chad with, in mind, the interests of the SNH. A friend of Chantal Biya, she has a significant influence with Samuel Mvondo Ayolo, Paul Biya's Chief of Staff, but also with Ferdinand Ngoh Ngoh, Secretary General of the Presidency and also close to the First Lady.
Did these networks help push Franck Biya, the son of the Cameroonian Head of State, to get involved in the file? If the latter went to N'Djamena in September 2022 and was received by Mahamat Idriss Déby Itno, the Savannah Energy file was not mentioned during this meeting. In addition, the disagreement between Franck Biya and Nathalie Moudiki is notorious in Yaoundé.
Did interests other than those of the SNH play? A Chadian source close to the file says that Franck Hertz, Chantal Biya's thread from the latter's first marriage - and a former SNH executive - is among Savannah Energy's shareholders. However, the latter denied this information to Jeune Afrique, saying that all of its shareholding was public.
Savannah Energy management sees Perenco's hand behind Chad's opposition to its agreements with ExxonMobil and then the SNH. The Franco-British society, annoyed at having been supplanted in the file, would seek, according to the same internal source, to torpedo competition in order to return to the Tchado-Camerounese oil game.
Interesting to see Perenco as the ones who have thrown spanner in our deal and pretty much influenced chad
Since the recall for consultations of the Chad's ambassador to Cameroun on April 20, the tea towel has been burning between the two neighbouring countries. N'Djamena accuses Yaoundé of supporting an illegal takeover of oil assets on its territory by the British company Savannah Energy and its Baham Bahamas-owned subsidiary, Savannah Midstream Investment Limited (SMIL).
They announced, in December 2022, that ExxonMobil had agreed to sell to them, for €407 million, all the assets of Esso Exploration and Production Chad, as well as a stake in the Chad Cameroun pipeline to eventually transport crude oil to the Cameroonian port of Kribi. But N'Djamena opposes this transaction.
The Chadian authorities explain that they have not given their approval and that they have a right of pre-emption on the assets concerned - which they have therefore decided to nationalise. Above all, they oppose another deal, later concluded between the British company and the National Hydrocarbon Society (SNH) of Cameroun.
On April 20, SMIL made public a new agreement by which the Savannah Energy subsidiary sells 10% of its assets in the Cameroun Oil Transportation Company (COTCO, operating the Cameroonian part of the Chad Cameroun pipeline) to the SNH for an amount of 40.95 million euros.
N'Djamena therefore accused Cameroonian personalities without naming them of being involved in Savannah Energy's affairs and of having subtised this company to the detriment of Chadian interests and in favour of the SNH.
In an attempt to settle the dispute, Chadian President Mahamat Idriss Déby Itno approached his Cameroonian counterpart Paul Biya and he sent his Secretary General Ferdinand Ngoh Ngoh to Chad on April 26 with a mission to discuss the file. But the suspicions are not dispelled and are directed towards relatives of the Cameroonian First Lady, Chantal Biya.
According to our information, the case, which has degenerated into a diplomatic quarrel in recent days, actually dates back more than a year, at the beginning of 2022. The assets of Esso Exploration and Production in Chad, which will eventually be sold to Savannah Energy, were then of interest to another company in the sector: Perenco.
The Franco-British company had even approached Adolphe Moudiki, the general manager of the SNH, to express his interest. A letter was even sent to this effect to the Presidency of the Republic in early February 2022. But the case went unsuited and Perenco, failing to acquire the assets of Esso Exploration and Production, withdrew.
"Perenco, however, offered the SNH the same market that Savannah put on the table later," explains a player in the file. A few months later, Savannah Energy, on the other hand, succeeded where her rival failed, this time getting closer to Nathalie Moudiki, wife of Adolphe Moudiki, and true boss of the SNH.
thanks caution - that is the nub of it. Who has control of the accounts of the acquired sub? If Chad then i expect we will see nothing more. I try to keep on top of things as much as possible but I dont recall a definitive position regarding how this payment / non payment is managed. Much remains opaque!
I was chatting to a friend yesterday and mulling it all over. Share price and potential wealth aside, imagine being on the inside of this story. Dealing with govts in Africa, causing diplomatic spats, Chad and Cameroon recalling ambassadors, civil war in Sudan. Chinese involvement in Niger, pipeline building, renewable projects transforming thousands of lives! What a rollercoaster! The politics, the manouvering, the personal risk! It must be so exciting! Looking forward to the book.
Hi hubenstein. I may be wrong, but I think it's this (much of which I'm sure you're well-aware):
Contribution from Jan 21 to Dec 22 is a reduction to the consideration. Jan-Mar 23 is money in the bag for Savannah (probably). April 23 onwards, money is still going to a bank account of the Savannah-acquired sub. I *think* Shore Capital is assuming that the ICC ruling compensates Savannah for the contribution paid at Dec 22 but gets nothing beyond that. The Savannah compensation for the contribution is likely to come out of (get kept from) the funds received in the acquired sub. Chances of Chad actually paying Savannah anything are zero, I think. I imagine Savannah continues as treasurer for upstream Doba until it has been made whole under the ICC settlement. I think this is the most likely.
Happy to hear other interpretations, of course.
"Having made a contribution from deal completion in December 2022 through to nationalisation in March 2023, Savannah's upstream and midstream assets in Chad will obviously fall away completely in FY24F"
If I understand this correctly, this analyst doesn't think we are still getting paid for the Chad Oil. The suspicion was that given the accounts were in Barbados? the revenue was still coming our way?? Did I miss something?
Re South Sudan valuation if successful yet to be added to the valuation
"we would expect South Sudan to have a material impact on our valuation following forthcoming publication of the AIM Admission Document. "
I think the new Risked core valuation should add about 30p and worth about 15p/yr in net debt reduction at least.
Re todays ShoreCaps risked NAV of 45p.
I did this exercise on the back of the FinnCap note on 3/4/23 (post 1079 on the other board) so in comparing the two here's my take.
I got core risked value 44.8p. Since then Save have sold 10% of their COTCo shares so i'd remove another 1.6p so overall 43.2p versus todays ShoreCaps 45p so i'm more than happy. I think the rest of the figures below will play out on S.Sudan & ongoing debt reduction plus the end of year small figure attributed to the renewables.
Post 1079
Post Chad nationalisation, FinnCaps note didn't take into account the impact of the TOTco loss (Chad Pipeline).
They attributed 17.6p risked to the combined pipeline. If you go to the CPR valuation on the 2 pipeline sections re valuation/revenue. TOTCo worth $10.8m/COTCo $277.5m.
Likewise ShoreCap say TOTCo only generates a 'small proportion' whereas they say COTCo "generates the vast majority" - Again refer to the CPR of a combined $88.5m revenue and $34.4m cash flow for the 2 pipeline interests. I assume and believe it will be a loss of about $4m cash flow.
On that basis i believe FinnCaps valuation for the pipeline should drop from a risked 17.6p to about 15.8p.
All from FinnCap -
Accugas 31p, Nigeria 2P reserves 24.8p, COTCo 15.8p, Warrants if excercised 1.7p = 73.3p.
Net debt is 21.3p. G&A takes away 6.9p = minus 28.2p.
Core risked valuation = 73.3p less net debt & G&A of 28.2p = 44.8p. (VERSUS 26p now).
That's without anything of the contingent value included. In 2 years approx while there may still be debt on the Nigerian assets, the net debt position should be neutral or moving into a net cash position so from 44.8p there's up to 21.3p of the net debt to add to this if Accugas keeps performing as it does - ie meaning core value of 66p is possible on that.
The Nigeria and and Niger contingent resources add 11.7p and the TOTCo upside about 0.5p.
A further 8.1p is attributed to a fraction of prospective resources being discovered plus 1.4p at this stage for the Niger windfarm.
That takes the total to 66.5p (instead of last weeks F/Cap risked valuation of 69.6p).
As of now, forgetting about S.Sudan - if the net debt of 21.3p reduces on a net cash position in 24 months approx = 87.8p risked. (Unrisked is 29.3p higher to 117p if they find a further 76 mmbls net in Niger - lets hope that the upside hoped for in Amdigh alone representing those barrels could be already there from the other segments beleived to be in contact with the existing discovery).
Interesting article but nothing new.
It’s too long to post but here’s an extract…
‘The Chad and South Sudan issues – notwithstanding the vagaries of dealing with Cameroonian, Nigerien and Nigerian politicians – puts Savannah in the ‘high risk’ category. If things come off for Savannah, the junior could become a significant energy operator and the valuation of the company – around GBP340m before suspension – should be massively increased when the company eventually comes back to market post-suspension. However, there are a lot of spinning plates in this game of pan-African cosmic juggling and dropping one could be a very costly mistake for both Savannah’s management and shareholders.’
https://www.thearmchairtrader.com/savannah-stuck-in-limbo-in-chad-and-south-sudan/
You are all welcome. We just need Zengas to do some number crunching when he gets round to it.
Thanks, Mr B. So kind of you.
Tier - the suspended sp did not really factor in chad deal anyway so doesn't really tell us much anyway or nothing we don't know already.
We need SS deal completion. Otherwise just doesn’t sound too exciting.
Thanks Mr.B.
Zengas now has a competitor! We love you all the same.
Thanks Mr B, Roll on Admission Doc
Mr B, thank you for the brokers note, it's appreciated...
Just had a quick read , some letters and numbers appear to be missing but you get the general gist. If further clarification required let me know and I’ll repost
Thanks Mr. B. That will take some digesting ;-)
I hope it’s all come out and makes sense. Sometimes copy and paste isn’t 100% accurate and numbers and letters get left out, apologies for long post but I know some folk don’t have access to broker notes so it’s for their benefit.
I’ve not read through it yet it see if it makes sense , if not let me know and I’ll repost that bit again.