Unpopular Questions3 May 2020 11:38
Imo SAVE (SAVP) have now been captured by the Nigerian state, drip-fed funds when it suits - and there will not be enough income to advance much in Nigeria, let alone Niger, until they get out of the FG grip, take on better-paying customers, and get some large funding in (Niger farm-out?). Their situation is similar to VOG in Cameroon, now being paid in arrears by 'promissory notes' [though, I think VOG will soon get large funding through a merger - see my recent posts on LSE chat, on VOG and SEY].
The 01/05/20 RNS raises many questions. (NB: I have not read the 240 page document - the answers may be there?):
a) Why was the supplemental admission document sneaked out on Thursday after hours? Why was the $65m unpaid invoices buried on page 64 of that document? When were we paid that $96m - by the promised regular $10m monthly cash inflow? (doubtful imo)
b) Whatever 'cash collection' is, precisely, (and it is certainly is not the same as FCF) we had $168.8m of it last year, and $96m for the last 5.5 months. Pro-rata that will give us a projected comparative $209.4m for 2020, a 24% increase on 2019. However, imo this is unlikely. Note how daily peak production in Feb was 27.3K boepd, but only 19K on average. There must have been a large fall-off since February imo. And just what effect will a CV-19 recession have? My guess is that 'cash collection' for 2020 will come in lower than 2019.[ Note: I would ignore the smokescreen of the projected FCF of a projected $104m for 2020 and a 4-year average of $128.7m, for what is the point if you are not getting paid (currently $65m unpaid), and just how effective is a PRG if, triggering it, you lose the goodwill of the Nigerian Govt.?]
c) Whatever happened to the $74m we received on completion of the 7E deal? Presumably $40m went to pay off the $350m+ debt (not funded by 'cash collection' as, perhaps, the RNS implies?). And there certainly hasn't been much change over the last 5.5 months in reducing the $65m unpaid invoices. And why was the toxic $5m Riverfort loan not paid off in January? - if its not paid off this July, for sure, SAVE is in big cash-trouble.
d) No mention of Aloaji power station - do we not want another non-paying customer? No mention of re-scheduling debt - are we not creditworthy (with an irregular income)? What gas price will we have to negotiate for new industrial customers, given they know our predicament? Operations for Niger have been mothballed for possibly a year or more - with the admission we might not have the cash to go ahead with this. No mention of farm-out.
e) No plans announced as how to respond to the coming CV-19 recession and, noticeably, no director pay-cut.
Not long now until the Finals and AGM - will they attempt to fudge it, or just hide, yet again?
Sign In
Follow the stocks
