SAVP.L Share News (SAVP)

(Sharecast News) - Oil and gas company Savannah Petroleum announced the signature of a legally-binding memorandum of understanding (MoU) between its Niger subsidiary, Savannah Niger, and the Republic of Niger on Wednesday.The AIM-traded firm said the MoU affirmed both parties' commitment to the realisation of a proposed early production scheme (EPS) utilising crude oil resources associated with Savannah's recent discoveries in the R3 portion of the R3/R4 production sharing contract area in the Agadem Rift Basin of South East Niger.It said the MoU further bound both parties to work together towards the realisation of the EPS, and contains specific provisions relating to the actions each party had undertaken to conduct, as well as setting out the key timelines associated with the project.The EPS was intended to be domestically-focussed, with oil produced from Savannah Niger's R3 area discoveries expected to be sold at the Société de Raffinage de Zinder (SORAZ) refinery, which was connected to the Agadem Rift Basin via the third-party owned 463 km Agadem-Zinder crude oil transportation pipeline.As part of the memorandum, the Republic of Niger had confirmed its intention to facilitate the conclusion of a crude oil marketing agreement between Savannah Niger and SORAZ.It would also facilitate the conclusion of an infrastructure access agreement between Savannah Niger and the owner of third-party crude oil processing and transportation infrastructure, subject to confirmation of the compatibility of the proposed crude oil Savannah Niger intends to include in the EPS, and those crude oils currently being processed and transported through that infrastructure.For its part, Savannah had undertaken to submit a pre-feasibility study to the Republic of Niger within 90 days of the signature of the MoU in relation to the discovered crude oil resources in the R3 area anticipated to be included in the EPS.It also agreed to submit an application to the Republic of Niger for the issuance of an exclusive exploitation authorisation within 90 days of the finalisation of commercial documentation between Savannah Niger, SORAZ and the third-party infrastructure owner."Our Niger project team is highly focused around the delivery of near-term production and cash flows from existing and future discoveries in the R3 area; and further material reserve adds through our ongoing exploration and appraisal drilling program," said Savannah chief executive officer Andrew Knott."The signature of the MoU provides a clear pathway in relation to our first objective and is a major milestone."In relation to the second objective, Savannah benefits from the large bank of drill-ready exploration prospects that our technical team has mapped within our PSC areas."Knott said the board believed the "vast majority" of the prospects had similar risk profiles to the ones the firm had already successfully drilled, and therefore it "looked forward with confidence" to the results of the wells still to come in the campaign."It is an exciting period for Savannah and our stakeholders and I look forward to providing further updates as our Niger project progresses over the course of the coming months."