Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
that level of cashflow allows more than doubling the current committed dividend FY 19 also.
IA signed this month, SP has to move on, expect options to be taken up and a lot of short term and long term growth. current MCAP is very cheap for this kind of potential. if the IA is signed this has to start being valued on whats going to be delivered.
there is a fair bit of credibility at stake here.
the debt facility is for the drilling campaign, to be used if warrants are not taken up.
EPS to be funded by a infrastructure finance fund and or/liquidity provided from the 7e transaction (ie the infrastructure fund add a cost per bbl going through the eps etc in return for funding the eps - not clear if that can include completions, esp's, testing etc). I expect if 7e completes it will be funded from existing cash reserves.
in the event 7e falls through, the warrants will not be converted (as SP will be low) so this facility covers this. there will be a 30m minimum placing which appears to be a condition of the finance agreement (rookie mistake in the initial RNS - bet the board are a bit embarrassed by that one....). this ensures Niger can still be developed on track and provides funds to allow SAVP to continue to operate.
IA signed this month and this really should be off to the races. I would expect 3-4x (fully diluted) YE2019 SP based on delivering the current plan. I would also expect some farm down of niger to deliver FFD by 2021.
This news derisks this and really would deserve a pretty decent uplift in the SP - remember this is due to be delivering 150m+ (US) free cash by mid 2019 with an expected partner, dividend and plenty of options.
if not, its going to get interesting.
Note: External financing requirement is defined as amount of capital expenditure incurred prior to the project becoming self-financing.
Savannah expects the external financing requirement associated with the EPS to be financeable from a combination of the Enlarged Group's anticipated liquidity resources and/or a partnership with a third-party infrastructure finance fund
sorry, perhaps I should have been clearer. completion of the 7e transaction I believe should be the value trigger.
OAW mentioned the placing possible signs - that's possible should there be a delay, and that has to be planned for. 11.8 m in the bank on 30 June. 3 wells drilled since then etc etc. any cashflow forecast would show what area needs to be concentrated on.
I think the downside there is not a raise, but the fact that it could have the effect of delaying progress in Niger.
Currently, from the way I look at it, that has to be a possibility. I cant see into the future, and I don't have all the facts.
we all know the success case. its why I am invested. just thinking out loud really
Agadem was saying that last year!!!!
That’s been the decision all along really hasn’t it? How to get yourself comfortable with the risk/reward of the deal completing.
Just getting a few suspicions triggered the last few weeks though, as OAW identified too. There are two ways to deliver a business. Capital appreciation or income. You can do both, but you have to be clear about how you do it. Here income has been chosen. To maintain that model (generate income) then the EWT/EPF has to be delivered. Even if the deal is delayed. There is a value trigger here for me, but I think there is a possible downside too. And I think I can see the preparations being put in place for that.
happysparrow - I will be honest here. when agadem mentioned that I got very suspicious, it is very important that the remaining steps are completed swiftly. keeping the SP momentum is important for a few different scenarios (they should be clear) so comments like that should be viewed with suspicion. whats the angle?
I am suspicious anyway, and anyone who has been here for a while will remember some of Agadems historic claims.
either way, after a year and a half odd, it all comes down to the completion of the 7e transaction. The scenery has been nice along the way though. Niger is turning out to be as good (if not better) as investors had hoped I am sure - many on here from before the announcement of the 7e transaction. nobody has been rewarded for carrying the risk this year though. each well carries a risk and to invest before the result assumes you are happy with the risk/reward. we have take the risk with our cash and come out the other side in the same position. that's a bit frustrating.
and when is that available to them feelinglucky?
so, to add, the current timeline is focused around the completion of the transaction (not the signing of the implementation agreement), which should release funds, which then go towards well testing - so we can assume they are targeting December for this still (as previously RNS'ed but today confirmed WT still planned for Dec) and also assumed first oil in early 2019 is contingent on funds from the completion of the acquisition.
this will then allow the 2m arrangement fee to be paid on the 50m facility which I assume goes towards drilling, phase 2 of the EWT (5k bbl/d ramp up late 2019) and anything else that comes up.
But now it’s come to the crunch.
Zen has disagreed with me before on the cash position, but the interims demonstrated this would likely be the last Well in the current campaign. It was clear they are waiting for funds from the 7e transaction to be able to continue drilling. I am pretty sure the continued activity (including well testing) relies on this.
As we all knew, it comes down to the 7e deal completing. Needs to happen soon as they need cash.
The sharper ones on here will have noted the mistake on the RNS announcing the funding they have secured. They only have access to that if the transaction completes or they raise a minimum 30 million through a placing. Once we start drilling we don’t expect to stop we’re the words from the boss I think.
Not trying to be negative, but I think I have summed up our current position clearly. So, in one respect nothing has changed. We need the 7e deal to complete. I hope it is a mechanical
Process like AK has said, and I hope it’s on time. Hmmmm. Few thought from me this morning. I am sure not everyone will see it like I do....
It’s good enough go for a B.B. phnom. I didn’t feel the need to explain how to carry out your initial base log and that the log is recorded whilst POOH at a constant speed with a steady weight to ensure the cable is in tension so you are accurate in depth measurement etc etc, then you need to come OOH to change the tool string etc - thought that was a bit pedantic.
Yep, agree 3 days is about right, however No idea what tools are available to them. I have flown a FTT halfway round the world before and spent in excess of 3 days running that on multiple runs in a subsea well before on on campaign i worked on. I can’t really know what they are doing in terms of wireline (perhaps you do???). But in the spud runs they say the following ‘......to be drilled to a total depth of 2,438 metres. The Company plans to log all prospective sections within the well, with further logging employed for hydrocarbon bearing sections. In the success case, the well will be...’
So I kinda just went with that really.
I have been following it, missed the recent jump. Great exploration play, excellent acerage, From investing point of view it’s in a great position as a discovery is going to be huge. If I invest in that type of play I would generally get in early and ride it up to drilling and then exit. Development there is complex, and that’s if you a major with the means (technical and financial) so investing through the development journey for eco would not necessarily be my cup of tea. The actual value creation point for them will be the discovery though so I would expect that to start being reflected in the SP the closer those events get.
Wireline programme will be longer the more zoned of interest they are logging. Especially if they are taking sidewall cores etc (as I expect they are based on info released to date. The longer the interval, the longer the logging programme (potentially) but if they have a few different zones they will have an extended wireline programme as they will simply have more runs. Assuming drilling performance is the same, and they have not decided on a coring programme whilst drilling (I expect not as there is no need for it when sidewall cores can be taken if there is a requirement for it and it’s cheaper) then I expect the logging programme to take longer.
Sorry, not really interested in getting too personal on a B.B. happy to post and discuss SAVP though.
I am an oil and gas explorer (as you put it)
If they go back and deepen a well they will be admitting they made a mistake, and it will waste 3m + by not doing it first time.
It’s not going to happen.
Use the boards for the knowledge on here, not arguing. If you have already made your mind up, why post and try and wind people up?
no, not really. without well testing it will not be possible to prove 100%, but seismic clearly infers a possibility (that means it has been interpreted to suggest that, seismic is not an absolute), then the discovery being made in the same sands ant the expect pre drill depth based on seismic, and finally logs plus any recovered oil will help firm up the model.
SAVP own the asset. I think savannah Niger is 95% owned by SAVP (the parent) so it could be 95%. The detail you are referring to is a licence term set which means half the average has to be relenquished and certain intervals. Previously SAVPs average was held by CNPC who were required to give up half of their acerage after a certain period of time.
You can look at the terms of SAVPs licences to get an understanding of this process.
it’s bbl, not boe. BOE means barrel of oil equalivent. This is an oil asset so current indications from the CPR are 2.8billion bbl recoverable estimated using yet to find analysis. It makes a huge difference to revenue.... for example, 1boe (at 2500 per mmscf) is 15 dollars. 1 bbl is currently 80 dollars odd (for Brent).
thanks Hereandnow
Per BOE? That sounds like gas pricing. (Ie 7k per mmscf). Do you mean per bbl? Can you point to we’re you got that info please?
https://www.investegate.co.uk/savannah-petroleum--savp-/rns/new-us-50m-debt-facility/201809280700092549C/
https://www.investegate.co.uk/savannah-petroleum--savp-/rns/niger-early-production-scheme---exploration-update/201809280700092550C/
https://www.investegate.co.uk/savannah-petroleum--savp-/rns/half-year-results/201809280701012546C/