Savannah Market Cap18 Dec 2017 08:43
Good post from Z yesterday!
Wittering, good post. Kosmos Energy operating in a number of African states listed in the UK in August what was deemed at the bottom of the cycle. Warburg Pincus who i mentioned a few weeks ago about backing the operator on the Chad block which adjoins our Agadem area is also an investor in KOS. Their admission doc in August 2017 showed 84 mmboe net P1 (145 mmboe net P2) 90% oil/condensate. (Where could a growing increase in reserves/production place Savp ?). Latest revenues announced on 6th November were $151m for the 3 months quarter so at approx $60/boe this indicates around 28,000 boepd (not comparing this oil/gas ratio to Savp by the way - however revenues were only a quarter of this a year earlier). They still made a loss in this quarter of $63m. Net debt was $890m. M/cap at £6.50 share in November was £2.5b (today £2b after 2 x 5500m wells in 2000m and 2600m of water did not come in). So to get 100% upside on your investment money you would need KOS to hit £4-£5 billion valuation. Obviously all the big funds thought it was a good value play even though highly indebted and loss making. Imo for Savp there's much to play for in Nigeria alone in upping both oil and gas production as well as converting the 2C to 2P. Possibility of further producing/reserve based discoveries given the cash generation and intended dividend. Open up the 1.7 billion bl Niger play with a success and i could see this emulating Kosmos valuation range. 70 mmbls found in Niger enough to trigger 20k production. Like SOU there's the impact of someone putting it in their bucket list whether anyone wants to beleive that or not but many do and a company that gets off the ground can forward price some of the expected upside just like SOU. Factor in any posiitive newspaper tips, short term dividend intention, further news flow on acquisitions and high value low cost, low risk drilling and it adds up to the creation of positive sentiment going forward.
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