Arbitration/Chad3 Mar 2026 19:47
On 09/12/2022 SAVE RNS'd "We are delighted to announce the completion of our US$407 million acquisition of ExxonMobil's upstream and midstream businesses in Chad and Cameroon."
4 days later on 13/12/2022 noting press reports of Chad objections SAVE RNS'd that the deal was a "Fait Accompli" and Chad would have to suck it up. 3 months later Chad nationalised the assets.
SAVE's $1.34B (inc interest) compensation claim seems ABSURD.
Generally there can be a difference between historic costs and FMV (Fair Market Value) but given that the assets were held only fleetingly I don't see how such a disparity can have arisen. The 09/12/2022 deal was mutually agreed at $407m, neither party was under duress, the 24/03/2023 nationalisation happened shortly thereafter. Whether Chad said the operations were shockingly unprofitable ( 2021 LOSS before/after tax $13.1/$113.6m, 2020 LOSS before/after tax $601.4/$241.3m ) and not worth $407m or SAVE said we have a secret sauce that would make them profitable and deserve a premium for AK's negotiating wizardry I'd be hard to convince that FMV was not $407m (adjusted for inflation). Meanwhile Chad are counter claiming something like $900m. Cancel the two claims and we are back in $407m territory.
I'd not be betting on a slam dunk bumper win for SAVE which even if factored was a sizeable sum. I'd suspect the government of Chad had very reasonable and legitimate concerns. There is a balance to be struck between protecting company interests and national interests.
On the $407m acquisition cost Savannah seems to have paid $237m from existing resources and were extended a $170m 'Prepayment Facility' by Exxon. Originally this was to repaid from proceeds of oil sales (torpedoed by the nationalisation). At the 2025 interims the balance due was $142.4m with $37m guaranteed by SAVE. Exxon have a charge against SAVE for the outstanding dues.
My guess would be
SAVE LOSE
- Their subsidiary welshes on the 'Prepayment Facility' and SAVE owe Exxon $37m.
- Balance sheet write offs ?
SAVE WIN
- they will get something considerably less than demanded
- $142.4m+ of that will go to Exxon
- While a big cheque would be nice for SAVE's $700m debt mountain as one of the poorest countries on the planet Chad will not be writing one.
- A payment plan will probably play out like the Nigerian receivables saga.
The arbitration is not a worst case SAVE don't win. It could actually go badly for them
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