Member Info for cautionyourblast

Https://x.com/Real_AEW/status/1846853319479660955

https://x.com/Savannah_Energy/status/1846857237001609664

Https://x.com/PatrickHeinisc1/status/1846904360959111296

Https://x.com/Frank_Stones/status/1846487227280335348

Hehe! Thanks, komakino.

Here's another post from Patrick Heinisch setting out the parlous state of production by the JOCs.

https://x.com/PatrickHeinisc1/status/1846313112216973443

Https://x.com/PatrickHeinisc1/status/1846197391734485287

Will the saga soon be over?

Will I die before the relist?

Will I have to update my model (oh, God!)?

Hi TIL

First of all, I'm delighted you're still with us and hope work isn't impeding real life too heavily.

Thanks for your super insight on Nigeria and, more widely, for your thoughtful post here. There's a *lot* of frustration amongst the BB members with the continued suspension, but your approach is sound and down-to-earth. I do hope we'll continue to get your insight, but understand you might want to limit some comments to protect your hard-worked-for research.

I have a fairly detailed DCF model, but am not going to dust it off until the RNS (RNSs?) detailing the relisting emerge. I will probably share some of it as I have in the past (though it didn't generate much interest, I seem to recall). One thing about that model: the incremental pennies per share added to the share price is extremely sensitive to Nigerian mmscfs sold. I've talked at length here about deferred revenue, counterparty credit risk mitigants, catch-up gas and the likelihood of growth in gas sold once the CPF is commissioned. I agree with you that this could be very positive.

Joe Pagop's title for his chairman's report in the glossy is also worth dwelling upon.

Anyway, great to get your views and best wishes...

...and another.

https://x.com/Savannah_Energy/status/1844409741558124976

I did have a chuckle at the comment.

While I'm here: TrustILie, I've missed your insight and comment this week. Do hope all is well.

Https://x.com/Real_AEW/status/1843927669865333024

Thanks for your top-notch input, Streets.

Does anyone out there have a more elegant explanation of "Cash transferred from debt service accounts" than what Streets and I have managed?

I think this expires today or tomorrow. Goodness knows if it's still relevant.

That was supposed to say c0ck-up which, of course, isn't an expletive; but in today's world of idiocy everything that should be censored isn't and that which shouldn't be censored is.

it would also help if every agm wasn't an administrative ****-up on the comms front and if the ir department (how many of them are there?) actually had the professionalism to answer investor questions.

Https://x.com/PatrickHeinisc1/status/1841548939272847660

Thanks, rumpel: these terms are well worth re-reading.

Of course if the debtors don't pay and have catch-up gas to take (represented by the deferred revenue in the balance sheet), then in extremis the receivable gets written off against the liability and the balance sheet gets netted down: no p&l impact. Obviously you need the analysis on a counterparty-by-counterparty basis. I'm guessing this may be where we're at with some customers: they may just be saying "we're struggling because of the domestic situation too; we don't need the gas right now, so we're not paying right now." Maybe I'm imagining too much, but it sounds plausible to me.

There's a bit more....

3/3

18. P13 Segmental reporting. Very interesting that this is P&L only and not balance sheet! Last year’s Interims had the balance sheet too.

Finally, I think everyone’s patience has been sorely tested in recent months. Please keep posting (nearly) everyone. I like to try to keep a bit of humour in my posts if I can. We’re lucky: we could be ordinary people in the countries where we’re investing.

2/2

10. P5 Revenue is now complicated to say the least (and yes, I fully understand the TOP approach). We know (from Zengas’ question to IR) that the FX true-up invoices have not been paid by 30 June. Who is/are the debtor(s)? What are the debtor days on the invoice(s)? This is a huge outstanding amount and we have little visibility on recoverability. Are counterparties able to call an FM on this given the huge move in FX rather than just a “normal” fluctuation? Hope not.

11. P20 Contract liabilities only marginally up from 364m to 375m. So for the 12 months to June 2024, customers have largely been taking what they’re paying for (though this will undoubtedly be a bit of an over-simplification). The CPF may well allow more catch-up gas to be delivered more quickly to anyone wanting it going forward. If customers start taking catch-up gas, this will seriously boost the bottom line (though of course it’s a non-cash item): that would make potential new investors really take note of SAVE.

12. P6 FX loss. Much higher than I expected. USDNGN at 897.5 on 28 Dec 23; 1534 on 30 June 2024. Looking back at the segmental reporting for FY23, I think it is because you can’t just look at the USD equivalent of the NGN cash; you have to also look at the USD equivalent of the NGN receivables, which were much higher at y/e 23 than y/e 22. I *think* we’re now past the worst of this, but the FX true-up receivable is….very large: this is the key takeaway from these interims for me - can we recover it. NGN is now 1672-ish.

13. P6 Cash Note. Capex for the period is low at USD14m - mostly on Uquo. Unsurprising given cash-depletion from Naira mess. Cash is getting a bit low - Mavis in Accounts Receivable is probably spending a lot of time in the boardroom.

14. P6 Debt. Good to see gross debt not going up, but net debt of course is getting hit by the NGN collapse: that should end this year. Interesting that the TF has had 196bNGN drawn ytd: this must be at least USD130m, I reckon and possibly quite a bit more. USD480m of Nigeria borrowings and interest payable existed at year-end (glossy P164): perhaps this wasn’t all Naira. This is probably a massive oversimplification by me. The “Amounts held for debt service” have reduced for USD59m to under USD2m: this may suggest that the Naira exposure is close to being finished - hope so. Asking for help on same issue under 19 below.

15. Debt - Company stressing non-recourse nature of CC and other debt. They’re obviously wanting to stress it - I imagine Instits are all over this issue: rightly so.

16. P18 Trade receivables are now USD477m. Increase in trade and other receivables during the 6 month period is USD95m.

17. P10 CF statement. Does anyone understand the “Cash transferred from debt service accounts”, please? See 14 above.

Here are my notes after reviewing the interims: partly it’s notes for myself and partly questions where some of you may be more expert.

There are two big issues for me:

Debt is now getting towards Icarus levels. We’re not there yet but the NGN collapse has been wounding. I think management totally get this and the brutally low capex for the period reflects that. It may also partially explain the apparently downed-tools in Niger for the past year or so. TrustILie made a good and positive post on this this morning.

B. Recoverability of debtors. This number just keeps growing. We can’t have received much cash during the period given the growth in trade receivables compared to the revenue for the period. The expected credit loss provision has been upped a bit. I know we’ve got counterparties who are either (i) decently rated or (ii) credit-enhanced, but the growth in the receivable is significant.

Debt could look much more manageable in a year or two.

My general notes as I read through follow below.

1. I note there is no limited review by the auditor as there was in the 2023 interims. Why, I wonder? Easy way to save money on a non-value-added report, perhaps.

2. P1 “Three contracts with customers agreed and extended in the year-to-date for a total of up to 105 MMscfpd” How does this tie in with the long-held claim of secured gas revenue streams for another 13 years or so (P49 of the FY23 accounts)? I note the new 24-month Ibom contract has increased the TOP gas from 20mmscfpd to 30mmscfpd: good.

3. P3 Uquo CPF requires regulatory approval once commissioning works complete. I hope this will be a formality.

4. P3 Uquo additional wells 2025/26: good. Suggests that the pipeline network and that (creditworthy?) customer demand is not a limiting factor.

5. P3 SIPEC acquisition. “We currently expect completion to occur in Q4 2024.” That sounds a bit dubious to me. Good to see the plans post-acquisition being reiterated.

6. P3 “ Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger” is the first sentence. The delay here has been enormous and this wording remains weak, imo. Something is “off” here; possibly related to the change in government, but we’re not being given the full picture. Interesting that the wind farm seems to be progressing faster than the oil now (to me, at least). Obviously the lack of spend might simply be down to management trying to conserve cash given the NGN collapse. Has to get moving soon or be farmed out imo.

7. I want some projected mathematics on the renewables. Also, once commissioned, the revenue from these assets is far easier to expropriate or be sequestered by some other form of government intervention than oil and gas, I imagine.

8. P4 Cameroon hydro. First power now 2028/9. One wonders what the maths looks like.

9. P4 Chad arbitration largely reiterates year-end position. OK.

Apparently, we're all private equity investors...

SS next update pushed to early Nov. No comment on the lack of interims...

Good grief.

I suspect the delay to the interims is either:

1. An approved extension for a few days to determine the outcome at the end of the SS 60-day pre-emption period (which I think may end next weekend); or

2. Some sort of bun fight with the auditor on the wording of the opinion in the "limited review" report.

Either way, it's now sadly typical of Savannah comms.

Carry on up the Nilepet indeed. You can determine your own dramatis personae, but I'm imagining Sid James, Kenneth Williams and Hattie Jacques starring... perhaps Bernard Bresslaw as Salva Kiir.