Member Info for Porschefund

Tier- Some reading material for you while we wait.
http://info.gorozen.com/2021-q2-market-commentary-iea-ushers-in-coming-oil-crisis?utm_campaign=2021%202Q%20Commentary&utm_medium=email&_hsenc=p2ANqtz-9CJraZwmjCeqxNfTNIJ4hfFJTs9m72q2puvMw6suwjy5Ag8URO0SQHx64Mc1BtO-qNpBHYwWD1CGzBAZ2hJCaKnHII3g&_hsmi=146588065&utm_content=146588065&utm_source=hs_email&hsCtaTracking=4ae10555-2654-4c83-85eb-e67df8c2ca82%7Cb36fa1a4-5d02-4da7-abd6-d10a7da9c590

The obvious answer to OAW's question is it depends if the deal goes through. Whilst the markets have been rocky of late, the intrinsic value of a good deal to acquire the Exxon assets must outweigh the current market weakness.
Whilst accepting the reply Agadem posted regarding the issue of RNA's whilst suspended I am surprised we have only seen compliance RNA's since 2nd June. If SAVE wasn't suspended I believe we would be expecting/pushing for announcements on debt funding/Niger etc, the radio silence leads me to think SAVE does have some control over their timing.

If AK want's a bigger slice of Chad's oil I would have thought acquiring Petronas's 35% share would be the next logical step, it would also give SAVE control. If the Exxon deal goes through then a price precedent will have been established that a motivated seller could justify to its stakeholders regardless of the book loss. In moving a deal from a minority stake to a controlling interest AK does have form.

English translation Part 2
We want them to go through Nigeria. We hope that when we get the railroad to Maradi in place, they will decide to have all their exports run through Nigeria rather than Benin. Because if the railways and roads operate from Maiduguri (main town in Borno State in northeast Nigeria. Editor's note) to Port Harcourt (main city in Rivers State in southern Nigeria. Editor's note) ), from Kano to Lagos and so on, people will be very busy and I believe that if we make the infrastructure, roads, rails operational, I assure you that Nigerians will be very busy and they will leave you in peace .

English translation Part 1
On May 20, 2021, after a few months of delay due to the Coronavirus pandemic, according to the authorities, Benin officially launched the construction work of the 684 km, on the Benin side, of the Niger-Benin Pipeline, in the town of Sèmè-Kpodji . Announced with great media support, this project aims to export crude oil from Niger to the international market via the terminal at the port of Sèmè, in Benin. It will allow Benin to become an actor in the oil sector without producing the slightest drop of oil. The Niger-Benin Export Pipeline project will help further improve the Beninese state's tax revenues with annual transit fees of around 25 million euros, at the same time that it will generate nearly 3,000 jobs during the phase construction and around 300 permanent jobs in the context of its operation. Hence the satisfaction of the Beninese authorities at the announcement of the project which, according to the Rupture government, represents the largest investment ever made in the history of Benin since independence.
But, as soon as the work is announced, does Benin risk finally losing the realization of the Pipeline Export Niger-Benin project? Fears remain that a strong competitor is showing similar interest. Nigeria is joining the project and competing with Benin in the construction of the Pipeline which will allow crude oil from Niger to be exported abroad. In a video posted on June 28, 2021 on YouTube, Nigerian President Muhammadu Buhari clearly announces his intention to steal the limelight in Benin with regard to the realization of the Niger-Benin Pipeline Export project. And to get Niger to prefer Nigeria to Benin for the export of its crude oil, Muhammadu Buhari launched the construction of a railway, worth $ 1.9 billion, to link the city of Kano in Nigeria to that of Maradi in Niger. In response to the criticisms raised by his decision, Muhammadu Buhari justifies the construction of this railway by the fact that the borders drawn by the colonists in Africa did not take into account the anthropological realities of the African peoples. But it is Benin that is directly targeted. After the crisis born from the closure of the Nigerian borders with Benin for 16 months, does not this decision risk again complicating relations between Benin and its giant neighbor to the East?

Verbatim of the words of Muhammadu Buhari
"You see, I spoke to a French guy and you know he was saying anything. I told him you guys in 1885, you sat down with a ruler and a pencil and you drew lines. I told him that I had first cousins ??in Niger. There are Kanuri, there are Hausa, there are Fulanis in the Republic of Niger, just as there are Yoruba in the Republic of Benin and so on. You cannot be completely cut off from them. But the rails, look at the plan, if you look at the plan, how we rehabilitate the rails, as you know, Niger also discovered oil. And we don't want them to go through the Republic of Benin.

LST- I agree with you on new gas customers but AK did say he didn't expect the new Credit Rating until the end of July and it follows that the Debt Restructure will be dependant on the Credit Rating. I also suspect that the Niger Plans will be dependant on the additional free cash generated by the Debt Restructure. A potential positive of waiting another 2 to 3 months for conclusion of the Exxon deal is that when it drops it could be a monster RNS incorporating all of the above.

Tier - the easiest way is from the front page of the SAVE website.

Me too Ghastly, I have emailed IR.

The recomposition of the Exxon Board to include a third board seat to an activist investor to "steer the company through the choppy waters of the energy transition"was confirmed on Wednesday following last weeks AGM.
Perhaps the board composition change was expected by Friday after the Exxon AGM last week. Perhaps the climate focussed Director's confirmation means a pre-negotiated deal was suddenly back on the table on Wednesday?
Regardless of the timing the Board changes should improve the likelihood of approval of the disposal.
Not sure if this is a coincidence Agadem?

https://www.nsenergybusiness.com/news/company-news/exxon-board-change-karsner/

An old article but interesting background on the original deal.

https://www.hydrocarbons-technology.com/projects/chadcameroon/

I am not sure the announcement that the timing of the release of the results has been narrowed down to the afternoon is significant. I doubt they will be released at 4.30pm as attendees of the presentation would not have time to read them.

In 2020 SAVE gave notice that the results would be issued on 19th August, when they didn’t appear at 7am the market reacted negatively but recovered when the RNA was issued at about 11am.Perhaps the notice of timing is just to avoid a 7am disappointment and market reaction.

If we are only getting results tomorrow, I do not think the presentation would be so soon after release. Could the presentation be a reaction to the build-up of pressure on this board? I doubt it, AK has always focussed on II investors and would not demean himself by answering the criticisms directly.

With the share price range having been controlled by the BOTS for several months, the guidance on the timelines for debt refinancing, the Vitol involvement, the PR driven Niger recommencement anticipation and the desire for cash positive acquisitive growth, my gut feeling is there will be audited results dependant news.

Thanks Homebrewruss much appreciated.

Does anyone have a link to this evening’s presentation please?

Agreed I do not read “restrictions on the repayment of shareholder loans and
dividends until the facility is fully repaid” as a ban on dividends but the clause will be there to ensure the lenders get their fair share of any surplus cash. The cash sweep is an important part of the Term Facility and in my view a reason why we have seen slow progress in Niger.

We do not know the details of the cash sweep but the $30.9 cash restriction on the December 2020 cash balance for scheduled principal repayments could be an indication of the cash sweep liability and its impact on true cash availability. This figure is high in 2020 because of the improved liquidity from better debt collection and efficient expenditure management.

Accugas will not achieve that level of cash surplus in future years until the new contracts start to bear fruit and when they do most shareholders will want the surplus cash to be used for growth, dividends etc and not used to accelerate debt repayment.

Cash management until the debt is refinanced is imperative and I think the board should be applauded for their cash management to hopefully achieve the refinancing objective.

When the Accugas deal was finalised in November 2019 AK prioritised debt restructuring giving a 12-to-18-month window to prove the serviceability of a longer-term debt at an improved coupon rate.

In the last Proactive interview AK said he expected significant progress with refinancing in the first half of this year. The end of Q2 is now only six weeks away and I believe the lifting of cash use restrictions from Accugas refinancing will be the trigger for development and acquisition growth.

Personally I hope the results are the w/c 24th May or later. Any earlier and AK will be able to hide at a virtual AGM. I am hoping that the fourth relaxation of Covid rules on 21st June will allow me to attend as I have a long list of questions to ask him.

CYB - $50m profit after tax is IMO a little optimistic. Finncap's estimate for PBT on their 24th Feb note was $11.9m.
The accounting treatment of the paid but not taken volumes will distort the figures downwards until the surplus gas is either taken or timed out.
If revenue could be measured based on invoiced sales (total revenues), a figure that is seen by management as more accurately reflecting the underlying cash generation, IMO your $50m profit after tax would look pessimistic!

The article is behind a registration firewall, but this is what the tweet was about :
https://businessday.ng/energy/power/article/nigeria-puts-5-power-plants-up-for-sale-completes-yola-disco-privatisation/?login=success

"10m barrel cumulative crude oil production milestone reached by the #FUNManifold, operated by Savannah since April 2020. FUN collects crude from Savannah’s UERL plus Frontier Oil and Network Exploration & Production #Nigeria which is exported to Exxon Mobil’s Qua Iboe Terminal."

Africa News article on the development of the Agadem basin including the mention of SAVE and quote from Yacine Wafy, Vice President for West Africa at Savannah Energy PLC. Hopefully further Niger news soon.

The pipeline is also likely to trigger additional investment into exploration and drilling in Niger, which now represents a proven petroleum system. Additional recent discoveries from British independent Savannah Energy estimated to hold hundreds of millions of barrels of oil to only increase interest in Niger as one of Africa’s next oil frontiers. Savannah Energy holds several permits in the prolific Agadem Rift Basim. “We are very excited about our assets in Niger and are currently exploring a number of development options” said Yacine Wafy, Vice President for West Africa at Savannah Energy PLC. “We are also extremely encouraged by initial discussions we have had with the new administration, and look forward to a fruitful collaboration”, Mr. Wafy added.
https://www.africanews.com/2021/04/14/new-leadership-and-energy-sector-restructuring-is-expected-to-boost-energy-investments-into-niger-by-verner-ayukegba/

Touchstone has announced the completion of flowback testing of the Cascadura Deep-1 well, confirming a liquids rich natural gas discovery on the Ortoire block onshore Trinidad. The company perforated the top 199 feet of the 449 feet identified as potential pay in sheet four of the overthrust Herrera formation on April 8, 2021.

The average flowback rate during the extended 24-hour test period was approximately 4,262 boe/d, including 22.9 MMcf/d of natural gas and 449 bbls/d of NGLs. Peak flowback rate of approximately 4,567 boe/d was observed, comprised of 24.5 MMcf/d of natural gas and 477 bbls/d of NGLs.

Approximately 48.8 MMcf of natural gas (8,138 boe) and 1,081 barrels of NGLs were produced during the testing period with field analysis indicating liquids rich gas with no hydrogen sulfide and no produced water. The well is currently shut-in for a minimum four-week pressure build-up test.

Paul Baay, President and Chief Executive Officer, commented:

“The positive test results from Cascadura Deep-1 further expands the opportunity on the Ortoire block as we now expect to have two distinct and separate sheets producing from two wells in the Cascadura structure. We will accelerate operations required to bring the two Cascadura wells onto production as the test results allow us to properly size surface facilities for reservoir management. We are also moving forward with the required applications to establish a second Cascadura surface location, designed for up to four development wells. The test results demonstrate the clear future production opportunities for the Company.”

I said last week when the market gave TXP a spanking that it was unnecessary especially given the nature of the block. This is good news as expected, and only when the whole block is assessed will the market find out quite how much in the way of hydrocarbons there are in there. Put together I expect a number of very substantial discoveries and for me that makes the shares still way too cheap.