Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Following completion of the Seven Energy deal last month, Savannah Petroleum (SAVP LN) has announced a welcome update on its newly acquired assets in Nigeria and fresh CPR numbers. According to reserve auditor CGG, the Nigerian assets hold 99.6 mmboe of gross 2P reserves (71.0 mmboe net to SAVP) - broadly the same as the Dec 2017 CPR (after adjusting for interim production) - worth US$957m net to SAVP's including value attached to the Accugas midstream business (under a take or pay / ToP scenario and contracted gas prices). To put this in perspective, SAVP has an EV of ~US$670m at today's share price, implying zero value for the group's promising assets in Niger (which we value at US$360m/25p risked). Meanwhile, projected FCF in Nigeria is seen climbing from US$104m in 2020 to US$141m in 2022, according to GCC, reflecting a combination of higher sales volumes and rising gas prices - not dissimilar to that envisaged last time around.
Alongside the revamped CPR, SAVP also provided a window into the performance of the Nigerian assets in 2019, which is arguably the key piece of news in today's announcement. Gross production year to date has averaged 17.3 kboepd, broadly flat on the last reported numbers for Jan-April 2019 (17.7 kboepd), but up strongly on 2018 (+33%). This includes gas production of 87.8 mmscf/d which is still some way below ToP levels (129 mmscf/d), although we expect alignment following the connection of the Alaoji power plant in Q1 2020. Importantly, SAVP continues to be paid for ToP volumes as per its gas contract terms, with the group expecting cash receipts of US$190m for 2019. On the back of strong FCF positive, we note that the business has been able to pay off meaningful amounts of debt in the past year. SAVP anticipates debt reduction of US$40m in 2019, with the Nigerian unit closing out the financial year with outstanding debt of US$511m and cash of at least US$15m. This implies net debt at the Nigeria level of US$397m to SAVP’s 80% interest, compared with own YE19 estimate of US$384m, so not markedly different to what we were hoping for.
Looking ahead, the scene is set for a ramp up in cash flow in Nigeria, in line with the group's business plan. The company expects to spend US$41.5m of capex in Nigeria in 2020 as it looks to build up production capacity behind pipe in advance of higher off-take volumes. We note that, up until SAVP assumed ownership of the Seven assets, its ability to secure new gas customers in Nigeria has been constrained and, with the shackles now removed, we see the potential for rapid progress on this front in the months ahead. Overall, today's news serves as a timely reminder of the value proposition and cash flow potential of the Nigerian assets, with the ink only just dried on deal completion.