Member Info for Itsriskythat

"Total cash collections from gas sales and oil production amounted to US$169 million in 2019 which was 31 per cent. higher than in 2018."

"Since the Transaction was completed in November 2019, total cash collections from the Nigerian Assets have amounted to US$96 million, the Enlarged Group has paid down US$40 million of the restructured debt taken on as part of the Acquisition."

so was paid at end of 2019 as expected.

"Following a very successful exploration drilling programme in 2018 on the R3 East portion of the R3/R4 PSC, and in accordance with the terms of the respective PSCs, the Exclusive Exploration Authorisation on the R3/R4 PSC was renewed for a further two year term expiring 31 August 2021 and the Company relinquished the R4 area of the R3/R4 PSC. The initial term of the Exclusive Exploration Authorisation on the R1/R2 PSC has expired however, the Company has agreed with the Ministry of Energy and Petroleum that the R4 area will be combined with the R1/R2 PSC Area into a new PSC (the "R1/R2/R4 PSC") to be issued under the Petroleum Code 2017, thus retaining the full acreage position previously covered by the R1/R2 PSC and the R3/R4 PSC. The new R1/R2/R4 PSC covering the R1, R2 and R4 areas is subject to approval by the Council of Ministers and is expected to be formally awarded to Savannah on payment of the signature bonus and a fee in relation to the Government's expenses incurred in connection with the signing of the R1/R2/R4 PSC. The Directors expect that the Council of Ministers approval will be forthcoming shortly after publication of this document. Please refer to Appendix C for the key terms of the Savannah PSCs."

so looking to be on the point of retaining 100% of the original Niger PSC areas.

For the record of promises not kept .......

On a shareholder call from Lagos, AK spoke about "a lot more detail in the upcoming CPR on Niger" as well as "the commencement of gas sales to the Alaoji power station shortly".

Still no sign of the imminent Niger CPR and no evidence yet that Alaoji is receiving the gas.

Interviewed in January this year, AK declared that Savannah would participate in the Nigerian marginal field round when it launches later this year. Now after getting Presidential approval the bid round is to go ahead shortly:

http://africaoilgasreport.com/2020/04/farm-in-farm-out/nigerias-marginal-field-bid-round-approved-may-launch-in-two-weeks/

https://blueprint.ng/buhari-clears-way-for-offer-of-50-fields-in-bidding-round/

One carrot after another has been dangled in front of retail shareholders by AK during his interviews and calls since the Seven Energy completion last November. So any chance that AK delivers on this one and which company will be Savannah's partner?

This is a predominantly liquids based round and any bids are likely to be lower after the current oil price decline than if the round had been held before the Presidential election last year.

First media report that the GenCo's are now working with Ministry of Power and NNPC and are boosting gas supplies to record levels. The N220bn from FG is reported but APGC has yet to confirm it was received.

https://blueprint.ng/fg-to-sustain-peak-power-generation-with-new-gas-deal/

The Nigerian Federal Government has signalled an exceptional payment to the GenCo's of value N200bn, which in dollar terms is roughly $520m. However caution is best used on hearing of any payments to the power sector.

Whilst the Nigerian media has widely reported the Federal Government's message, as was delivered by industry leaders at a press conference, the Association of Power Generation Companies says the N200bn new money is not yet available.

https://economicconfidential.com/2020/04/discos-gencos-deny-n200bn-payment/

This exceptional support to the GenCo's was made by the Government in response to last several weeks of gas shortages and reduced and intermittent power supply to businesses and homes in Nigeria.

But the media has not reported with such eagerness that the reason for the gas shortages is some gas suppliers stopped supplying gas without payment by some of the GenCo's.

https://www.dailytrust.com.ng/power-outages-nnpc-intervenes-to-raise-gas-supply-to-gencos.html

This exceptional payment from the Government is reported to be used for pre-payment by some GenCo’s to those suppliers without a gas sales agreement.

It is probable that Accugas with a sales agreement (that is backed by the Partial Risk Guarantee) is already being paid, because the only mention of problems with power generation are at specific power stations and not those supplied by Accugas.

As reported across the media, the gas supply to the Odukpani/Calabar power station was increased during March and April in response the Federal Government asking for more gas to be available.

As tweeted by Savannah, it is a huge positive that Accugas is now assisting NDPHC and NNPC in increasing the MW of power suppled to the grid.

And importantly it is the politically correct action for Savannah when the Government is under pressure from many sides to keep Nigerians comfortable in their homes and to have them supplied with electricity.

This looks to be a positive development in Nigeria.

Both Azura-Ido NIPP and Odukpani (Calabar) NIPP are currently at full capacity in supplying the national electricity grid whilst all other power stations are affected by a gas shortage.

Coincidentally the companies supplying Azura and Calabar both have a Partial Risk Guarantee.

The Put-Call Option signed with Azura Power, includes a PRG, and covers up to $237m invoices related to the construction of the Azura-Edo NIPP, whereas the PRG signed with Accugas covers up to $112m invoices related to the supply of gas to the Odukpani (Calabar) NIPP.

It's clear that both companies are comfortable increasing their gas supply to make up for the current shortages in gas supply to other power plants, which started on 10th March.

https://www.dailytrust.com.ng/gas-shortage-power-outages-worsen-as-4-gencos-shut-down.html

The above report from TCN suggests that operationally Calabar NIPP is proving crucial in keeping the grid from collapsing into blackouts.

HappySparrow. Having checked back over my posts ...

I said "Savannah have navigated these issues successfully during 2019 not least because of the partial risk guarantee, which has worked well." On the evidence available, and taking into consideration that article, this is still the case.

The NOMAD has a duty to ensure that Savannah reports to the market without delay any developments that may lead to a significant movement in its share price, including a change in its financial condition. So I reasoned that any material shortfall in the expected cash receipts at year end would be reported by now.

On the subject of a privatisation of Calabar NIPP ... if Calabar were to be sold by its owner NDPHC, then the Partial Risk Guarantee PRG documentation ensures that NBET is responsible for the gas sales agreement between Accugas and NDPHC:

"the privatisation of the Calabar NIPP is being considered by the Nigerian government. In the situation that the privatisation proceeds, then the relevant PRG documentation envisages that Nigerian Bulk Electricity Trading plc (“NBET”), a Federal Government of Nigeria owned public liability company which is a party to the PRG documentation, will assume all of the obligations of NDPHC under those documents at the point in time at which privatisation occurs."

from the AIM admission document page 50.

Even with Accugas immunity from the current oil price, as per figure 10 of the Numis report, the market still wants to hear it directly from AK.

I don’t know why it was thought prudent by Savannah to say anything at all about a loan that is no longer material to the company.

Friday’s late news about the Riverfort Global and Yorkville loan facility is bizarre, because I believed it had been repaid. The loan had an initial maturity date of 17th January and Riverfort and Yorkville chose not to convert the loan into shares on that date, thereby requiring the maturity date to be extended.

I can’t ignore the fact that from looking at the share trades on 16th January, the day prior to the maturity date, I came to the conclusion that half of the loan had been converted using the VWAP formula. Thus it appeared to me that either Riverfort Global or Yorkville had converted their half of the loan into shares. As any shares issued as a result of a half or full loan conversion must be informed to the market, it appears I was wrong.

It has transpired that the outstanding loan was not converted by Riverfort and Yorkville on 17th, and that the maturity date was extended, but the terms for an extension were never given in news to the market. Did Riverfort and Yorkville lose their one opportunity to convert into Savannah shares?

Last Friday’s news states the loan maturity date has been extended again, this time by three months from 6th March to 6th June. Now nothing about this episode is material any longer to Savannah so I suppose no-one will get to know what has happened or what the terms are of an extension.

AF, I don't know if HS is referring to that article in The Cable which is a paper that backs the government ....

I raised that same Cable article with Jessica when it was published on 3rd December and I am satisfied by what was said to me Savannah's NOMAD had seen evidence to support the RNS about $190m of cash collections expected before year end.

There was a big delay in Nigerian government funds being distributed to the power station operators in 2019 and the delay arose because of the Presidential elections, and then the new funding package needed approval by the Nigerian Senate in its budget for 2020. The budget was signed on 5th December.

I believe from other articles that distributions were made within days and that Accugas has received all its outstanding cash.

I am not worrying NOW about historical invoices being paid because the partial risk guarantee being in place was effective although it was not called on.

Hs, you can't say that without saying where the article is or what it's about? I'm guessing it's about the government's payment assurance facility.

HS, that's my experience over the past year of following the Nigerian news on Accugas

https://twitter.com/NCDCgov/status/1235258899147694084?s=20

Nigeria versus Niger

It strikes me that it's not possible to have too much knowledge when it comes to understanding Nigerian operations and its risks. There's tons of information available about the Nigerian power sector.

Despite it being a changing landscape, I'm pretty well up to speed in things relating to the Nigerian power plant sector payments and lack of liquidity in the sector. Savannah have navigated these issues successfully during 2019 not least because of the partial risk guarantee, which has worked well. Despite this big win in the power sector, it would be excellent news now to sign up a couple of new industrial customers; not only to diversify from a dependence on its power plant customers Calabar and Ibom, but also because of the high sales prices into the Calabar industrial zone.

So there's no need to rely on a company RNS to get a handle on how things are for the Accugas business currently and how it should pan out going forward into 2020.

By contrast in Niger there's too little information that I can see.

I don't want to hear another wish list of timescales and milestones for Niger, but that actual operational progress has occurred. I can't find facts to say that anything has been achieved in the past few months.

Is there still a farmout process for the PSC's in Niger ongoing at present or has it stalled?

I'd say that currently too little is known about current operations in Niger and an update is well overdue. Will the AGM at the end of June come and go without any operational news on Niger?

I can’t see any link between low global gas prices and the cash collection model at Accugas. It has been RNS’d that the historical cash payments have all been made for a minimum of Take or Pay volumes at gas prices agreed under long term contracts.

Simple answer is that 90% of the Savannah shares are held in the Miton UK Income Fund and only 10% in the Miton UK Smaller Companies Fund.

A bright future ..

https://m.guardian.ng/sport/accugas-edinburgh-judo-club-boost-athletes-skills-at-master-class-weekend/

Impressive line-up ..

https://www.sports247.ng/bill-cusack-and-sarah-clark-judo-master-class-ends-in-uyo/

thomasthetank, keep posting these notes, as the information is very useful, cheers.