LONDON (Alliance News) - Savannah Petroleum PLC said on Friday it posted a widened loss in the first half of 2018 as it prepares to test the Amdigh-1 well in Niger.
The pretax loss for the six months to the end of June was USD17.6 million, widened from USD5.8 million the year before, due to substantially higher operating expenses caused by costs associated with the proposed acquisition of the Seven assets.
Savannah Petroleum made no revenue during the period.
The Amdigh-1 well in Niger is due to be performed in December, with the installation of an electric submersible pump downhole using a workover rig. In addition, Savannah entered an agreement with the Republic of Niger over the implementation of an early production scheme plan.
The scheme is expected to be centred around the Amdigh oil field, and will develop a recoverable resource base of 52 million barrels, with a first phase expected to see production of up of 1,000 barrels per day, from the first quarter of 2019.
Second phase development will ramp up production to 5,000 barrels per day during 2019, with a pipeline being laid to connect Amdigh to the Jaouro export station.
Finally, Savannah Petroleum has signed a term sheet with a Geneva-based oil trading firm for a USD50 million debt facility.
The facility is made up of a committed amount of USD20 million, along with an uncommitted amount of USD30 million, and can be drawn in minimum tranche sizes of USD5 million.
Th interest rate payable under the facility is LIBOR plus 6.0%, with interest payments due annually. Funds from the facility are expected to be used for general corporate purposes, other than debt service.
Should the facility be utilised, the lender will be granted a right of first refusal for any of Savannah's oil trading activities in Nigeria for five years and in Niger.
"I am very pleased with what Savannah has achieved during a very busy first half of 2018. The company saw considerable drilling success in Niger, with two oil discoveries made during H1 and a further two discoveries post period end. In recent months we have also announced a commitment, alongside the Government of Niger, to install an EPS on R3 East, which will see initial production from our discoveries sold into the domestic market," said Chief Executive Andrew Knott.
"We continue to see significant resource potential on our wider Niger acreage, and in addition to the upcoming Zomo-1 results we expect to update the market on our plans for further drilling in the coming months," Knott added.
Shares in Savannah Petroleum were up 9.1% at 32.50 pence on Friday.
