Member Info for Porschefund

Prior to the FY2022 update that appeared to have been rushed out before the year end, the annual Trading Update was released in the last week of January:

FY2020 Trading Update issued 25th January 2021 , FY2021 Trading Update issued 24th January 2022.

Will we see a FY2023 Trading Update in the next few days?

SAVE has put the following on its website:

HOAX JOB OFFERS

We are aware that a website is falsely purporting to offer jobs from Savannah Energy relating to positions in South Sudan. This website is NOT affiliated in any way with Savannah Energy.

Please be aware that genuine employment opportunities at Savannah Energy are ONLY accessible via the careers page of our website: Careers – Savannah Energy (savannah-energy.com)

Sorry to have raised your hopes!

If you click on the view all jobs arrow in the top left corner, there are 10 more jobs in South Sudan.

Not sure when this was first advertised but if its current an advert for Head of Production in South Sudan is an encouraging sign

https://savannahenergy.applytojob.com/apply/YTSgQgDuJX/Head-Production

Hi RR - I approve of your taste in Champagne, fingers crossed.

The majority of the difference between gross and net debt relates to allocated funds held for debt service:

From the 2022 AR:

"The Group continues to work with its advisers to refinance the Accugas US$ Facility into Naira. Substantial positive progress has been made to date as an initial step in the refinancing process, the existing Accugas lenders have agreed a new Naira-denominated four year term facility (the “Transitional Facility”) which will be utilised to assist with the full repayment of the Accugas US$ Facility. The Transitional Facility is intended to then be progressively paid down through a combination of long-dated domestic bond issuances and other bilateral facilities (as was detailed in the Group’s Admission Document, published December 2021). The Accugas US$ Facility is currently anticipated to be fully repaid and cancelled during 2023.

Whilst the refinancing process proceeds, Accugas continues to work closely with its lending banks and at 31 December 2022, Accugas had agreed to set aside approximately US$174.8 million for debt service purposes. Completion of the refinancing of the Accugas US$ Facility into the Transitional Facility continues to require access to appropriately priced US dollars and it is anticipated that the refinancing will complete at the point in time that these US dollars are accessed."

RR- your comment “if we are struggling to refinance our gross debt of circa $600m.” prompted me to ponder on why that may be.

The current difficulty in deal financing is well documented and makes me think the delay in getting the SS deal over the line and refinancing the Accugas debt could be linked.

AK has previously ringfenced subsidiary/division debt with only limited PLC exposure but perhaps that is no longer possible? Perhaps Accugas lenders want the comfort of group US$ denominated oil revenue?

The net debt at 30th June 2023 was $443m that figure may have reduced to circa $350m plus Naira FX loss by the year end.

What is the SS deal conclusion debt likely to be?

In September ‘23 Zengas calculated what the SS purchase price might be, based on recent Afrenta/ Chad/ Assala and Seplat acquisition P2 and flowing bbl numbers, net of possible deferred consideration based on oil price/ production.

The mean of the four ranges quoted is $932m. Assuming an effective date of 1/1/22 and using my calculation of 50,000 bbls per day at $20 per bbl ($30m per month) the consideration reduces by $761m to $171m as at 31st January 2024.

Could those figures be prudent?

Petronas’s share was anticipated to be 50k to 55k. Based on 55k bbl/d the net consideration reduces by $76m to $95m.

How prudent is $20 per bbl?

On page 8 of the SAVE 2021 AR a Chad netback per barrel of $36.8/bbl at $60/bbl was quoted based on the CPR forecast. Using the above estimates every extra $1 above $20 reduces the net consideration by circa $40m.

If the net consideration is so low (or even negative) could SAVE be looking to leverage the SS asset to refinance Accugas, fund another acquisition or perhaps to prove to the SS government the funds are available to finance their share of the required increased production costs to ramp up production.

Perhaps I am being optimistic, other posters thoughts would be appreciated.

Our risked NAV and price target falls 13p to 74p/sh primarily as a result of a lower Cascadura valuation, although potential remedial actions being considered for the Cas Deep-1 well could reverse this cut.

2024 guidance and ops update Touchstone’s 2024 capex and production guidance confirms a return to an active drilling programme with another year of very strong growth ahead. A six-well programme is planned next year that will contribute to more than a doubling of average production y-o-y and a 2024 exit rate over 3.5x higher in its pursuit to fill existing production infrastructure capacity. - Active drilling programme, strong growth. TXP has set a 2024 capex budget of US$33m to drill six wells – two Cascadura development wells, two legacy block oil development wells, one Coho development well and one Coho exploration well. The first of these (Cas-2) is expected to spud in early Q1 2024 and will mark the onset of the next leg of growth as Touchstone looks to fill its c17,250 boepd of existing infrastructure capacity. The drilling will contribute to another year of strong volume growth, with the 9,400 boepd mid-point of 2024 production guidance representing 135% annual growth and the 2024 exit rate of c14,500 boepd 260% above average 2023 production. To fund this programme, TXP will need to increase its revolving credit facility and management is in advanced discussions, which it expects to complete in Q1 2024. - Operations update. Commissioning of the Cascadura natural gas facility is complete and uptime has been strong. However, November net sales fell 7% m-o-m to 8,268 boepd, with Cascadura volumes down 8% on the prior month. The Cascadura Deep-1 well into the lower thrust formation is performing below expectation, with gas production of 11.4 mmcfd some way below Cascadura-1ST1 (35.7 mmcfd) and our expectation (c20 mmcfd). To remedy this, management is evaluating increasing the perforated section of the well in H1 2024, which should boost production. The Coho-1 well workover was successfully completed in early December, isolating the water-producing zones and increasing gas production by 15% to 4.6 mmcfd. The first Cascadura development well (Cas-2) is expected to spud in early Q1 2024 and rig mobilisation is expected this month for the two legacy oil block wells. Drilling of the Coho-2 development well and the Gibba-1 exploration well is planned for Q4 2024. Production testing of the Royston-1X exploration well has been suspended after it failed to deliver economic flow rates. - Estimates and valuation. We have updated our forecasts and valuation to reflect Touchstone’s 2024 guidance and ops update. The biggest adjustments are to production (lower Cas Deep-1 production) and capex, with additional wells now expected in 2024. All told, our net revenue forecasts decline 11% and 23% in 2023 and 2024, to US$35m and US$61m, respectively. EBITDA falls 20% in 2023 to US$15.1m and 32% in 2024 to US$39.3m. Net debt is little changed in 2023 but increases in 2024 from US$13m to US$30m, assuming the company secures the planned increase to its revolving credit facility.

Interesting points on the RNS for me are:

It’s exactly six weeks from today.

1st Feb is a Thursday rather than the end of a week or month.

The words “further extension to the Company's cancellation date has been granted” rather than the anticipated date for the issue of the Admission Document.

Ordinarily wouldn’t Petronas also have been a party to such a meeting?

As of today Julian Horn is no longer a Director of three SAVE renewables subsidiaries. However his LinkedIn profile still records him as a SAVE employee. To paraphrase Ali G s it because he is French?

https://find-and-update.company-information.service.gov.uk/officers/Sl_xR894lgKS0g-cJM0yTTTP15E/appointments

Could the Director Share Plan announcement have been rushed out at 6.20pm tonight rather than at the normal 7.00am time, perhaps planned tomorrow, to avoid the (incorrect) accusations of insider knowledge if the Canada rise tonight is ahead of a positive RNS tomorrow.

Thanks Rocky much appreciated.

Interesting to see the Afentra are up 23% today following the issue of an updated Admission Document following completion of their Sonogol and Azule acquisitions without Government approval that is expected after Shareholder approval.

TIL – “returning with approval or approval pending will still be positive for sp” – I hope you are right but if IR are correct that “AK will def not want to comeback without ALL approvals inc. Gov consent” the recent challenge to deemed approval in Chad and the approximately 50% gradual SP reduction( and subsequent reversal) while we waited for the approval of the Accugas deal suggests it is by no means certain.

On a more positive note Zengas recently highlighted how the half year figures due at the end of this month should show the full benefit of the recent new gas contracts. Hopefully the results will be sufficient to at least underwrite the current share price regardless of the timing of the completion of the SS deal.

Recalling RockyRides post of 6th September following his conversation with I.R.

“AK still in SS and been thee most of the summer

Working flat out to complete by end Sept and company still hopeful it will be done by then

I don't know if have Gov approval but could not be told anyway

NOMAD will decide on further extn if not completed by end Sept but AK will def not want to comeback without ALL approvals inc. Gov consent

I think if not fully completed we will see further extn until everything completed apart from shareholder approval”

If all workstreams are complete and deal completion is dependant only on SS and shareholder sign off I think the uncertainty of the timing of the SS sign off would make it too difficult for the NOMAD to give a further extension.

AK is on record in the 8th June RNS that “at least one further hydrocarbon asset deal” is a key project before the year end. The wording does not say completion of one further project, but the announcement of another signed conditional SPA would fulfil that objective.

In my opinion the timing of the flurry of activity and RNS announcements between 8th December and 13th December resulting in the planned commencement of trading on 13th December and subsequent Petronas RTO announcement suspension cannot have been a coincidence. AK knew that Chad questioning the legitimacy of the Doba fields and TOTCO pipeline deal would damage the share price.

If the “one further hydrocarbon deal” is signed by both parties but is being held by lawyers awaiting the two parties’ instructions, the next deal could be announced at the same time as a default return to market to avoid share price weakness from the uncertainty of SS approval.

Getting the SS deal over the line ASAP and a prompt return to the market not only keeps the NOMAD happy but also helps to bolster the numbers on the 2023 P&L account to avoid potentially failing the Turnover and Profit Class Tests on any 2024 acquisitions. A SS deal completion by the end of this month and the announcement of another signed conditional SPA at the end of the year could fulfil both the RTO Class Tests and one of the Key Project objectives.

Thanks Zengas. I would also add that as Accugas was an insolvency induced distressed sale to SAVE, the relative value growth curve, based on production and customer sales having reached and passed through critical mass, should be exponential rather than linear.

I believe that once Accugas’ debt servicing ability is proven to the market, value will out.

Thanks for sharing RR, much appreciated.

I see this as a very positive development. Whether the cash would have ever benefited the people of chad is a moot point, but the ICC could perceive any delay in judgement would have a negative impact on the lives of the ordinary people of Chad.

Chad may also now see the merit of getting around the negotiating table.

Whether SAVE would want to negotiate is open to question. Talking to SJ at the AGM he reiterated that the Board are very confident of success and guided me to review the outcome of all similar arbitration hearings and quoted claimants 100% success rate.

AK has referred to further hydrocarbon acquisitions in 2023 and 2024. My understanding is to avoid a further suspension the acquisition cannot exceed 100% of the five class tests based on the year ended 31st December 2022 figures and in the case of the Consideration Test and Gross Capital Test - market value at date of acquisition.

1 Gross Assets Test- $1.761bn

2 Profits test - loss before tax and extraordinary items $53m

3 Turnover test - $212.5m

4 Consideration and

5 Gross Capital Test - MV £344m

The Profits Test and Turnover test appear to be the problem tests i.e. the acquisitions making a loss in excess of $53m and have a turnover of less than £212.5m (circa 8000bopd).

To avoid a further suspension there appear to be three options:

1 The next acquisition is in 2024 and the class tests are based on the 2023 figures (hopefully including SS) and hopefully a higher MV.

2 The acquisition is small and loss making.

3 An unconditional contract is signed and all due diligence completed by the time the SS contract completes and the next acquisition details are included in the Admission Document.

It is also possible the next conditional acquisition is announced at the same time SS completes or is abandoned and we are bounced straight into another suspension.