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SIPEC Acquisition
SIPEC's principal asset is a 49% non-operated interest in the Stubb Creek oil and gas field ("Stubb Creek"), located in Akwa Ibom State, Nigeria. An affiliate of Savannah, Universal Energy Resources Limited, is the 51% owner and operator.
The SIPC SPA will see Savannah Energy SC Limited (a wholly owned subsidiary of Savannah) acquire a 75% equity interest in SIPEC for cash consideration of US$52 million, payable on completion and subject to customary adjustments for a transaction of this nature from 1 September 2023. The Jagal SPA will see Savannah Energy SC Limited acquire a 25% equity interest in SIPEC for cash consideration of US$7.5 million (without adjustment), payable on completion, plus US$2 million in deferred cash consideration payable in eight equal quarterly instalments post-completion. The transaction consideration is expected to be funded through a new bank debt facility arranged by The Standard Bank of South Africa Limited and the existing cash resources of the Company. Completion under each of the SPAs is subject to the parties' satisfaction of customary conditions precedent, including certain regulatory approvals, as well as a mechanism ensuring that completion under both SPAs occurs simultaneously.
March 2024
Savannah Energy PLC
("Savannah" or "the Company")
Consolidation of Stubb Creek Field Interest
Share Purchase Agreements Signed to Acquire a 49% Participating Interest in
Stubb Creek Field, Nigeria and Updated Nigerian CPR Published
Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, announces that it has signed separate Share Purchase Agreements ("SPAs") with Sinopec International Petroleum Exploration and Production Corporation ("SIPC") and Jagal Ventures Limited ("Jagal") to acquire 100% of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited ("SIPEC") (the "SIPEC Acquisition").
Savannah also announces that it has today published an updated Competent Persons Report ("CPR"), compiled by CGG Services (UK) Ltd, covering its assets in Nigeria.
I’d prefer the US to be there.
Niger's junta revokes military agreement with US https://www.bbc.co.uk/news/world-africa-68590531
TiL - yes it is a very good paper on what’s going on in Africa and as we have been involved with SAVE for some time, we are reasonably educated on what the paper is saying.
I wonder that if AIM push us in to resisting on AIM we could go down this route again and from the paper:-
“The period between signing and completion has also become longer. The government consent process is dictated by law in many jurisdictions, with a “deemed” consent if not approved within a specified time period, but it takes a brave buyer to agree to complete a deal without formal approval.”
If we did go down the deemed consent route in SS, personally I would see it a less of a risk with SAVE not being operator. I don’t think the SS Government would / could just re-nationalise or portions.
Fianlly, if we do go down the deemed route, it will be very interesting how the market take it. Would they respond better if we walked away or continued with deemed consent? But with every month that goes by (assuming production is still taking place) our debt liability at the end of the deal is getting smaller.
We simply KNOW nothing!
TiL - I’m sure there must be reasons why we have not progressed Niger a bit more even taking into consideration the wait for pipeline and recent coup. Back in 2015/16 AK told me in a 1 to 1 he was going to dril dril drill and prove prove prove and then sell without ever producing a single barrel and i quote ‘why would I ever want all the hassle of being a producer’!!! How times change eh?
Am bit disappointed to be promised 1.5k trucked for so so long and then a total backtrack without any explanation. I am guessing it either was not worth the hassle or to do with SAVE’s overall ESG calculations.
But with 5 from 5 nearly 6 years ago, 33m 2C, 6.8bn unrisked and an export pipeline operational I also would like to see some short-term decent size projects being delivered here including 1.5k to 5k in the shortest time possible along with an aggressive drilling program.
For all the bad luck and high risk stuff we’ve had and taken on, a good result in Niger in the short term, on it’s own could make our SP move in a very positive direction.
I never thought that this would be so high to the top of my thoughts again so soon. Just goes to show though, in Africa, you need lots of irons in the fire to give you a good chance on the law of averages of something landing.
Anyway, only 9 trading days to go before we get news on 2nd April and who knows maybe before.
GLA
Bola Tinubu's U-turn on Niger sanctions received with relief in northern Nigeria https://www.bbc.co.uk/news/world-africa-68563579
I just put my 2 penneth in to a debate on the other board and I thought I’d pop a copy of what I wrote on here. Maybe useful to any new people who are in research mode…
As a long term holder (first purchase at 40p and bought all the way down to 8p) I clearly understand and respect everyone’s view on this debate. All views will differ significantly based on many things but 3 of the main things will generally be, when people invested, what was their investment period and what they deemed success to look like.
However, in the cold light of day, this year SAVE (formerly SAVP) will see its 10th anniversary since its IPO. At the time of IPO 218.4m shares were issued and the SP was 56p.
Whilst I clearly understand that Rome was not built in a day and that businesses are not grown out of bottle tops, IMHO, LTH’s here do have the right to be disappointed as to where we are at. I guess any BOD member, any II or any PI who invested at day one would have ever dreamed that the SP would now be 26p with 1.3bn shares in issue.
Over a shorter period, which in Africa may not be fair to mention, but I will - 2023 was a disaster. With AK often saying ‘we do what we say we will do’ and that ‘we are an AND company not an OR company, 2023 was horrific.
SAVE set themselves a suite of KPI’s for the year and from memory as i can’t be bothered to check, the 2023 KPI’s were:-
1 to close South Sudan RTO deal from Petronas
2 to close one other hydrocarbon acquisition
3 restructure Accugas debt
4 end the year with 1GW of renewable deals underway
5 complete a well test program in Niger
As far as I know, all the above is factually correct and everyone is allowed to draw their own conclusions from it all.
Personally, I am extremely disappointed as to where we are at but I will certainly not be making any panic sells whenever we should re-list. If SS should fail, everyone will be disappointed and the SP way take a knock, but with all the following seemingly improving, I see the medium term to be very rosy for our Market Cap and subsequnt SP:-
1 CPF to complete soon in Nigeria which i think is more significant that a lot of people realise
2 First oil in Niger and could be higher than 1.5kboepd from day one IMHO
3 I believe the 4 x ICC cases are looking very favourable le for us and I expect a minimum of $500m being awarded. If the oil revenue is being held on account, I firmly believe we will see a large one-off distribution
4 Other hydrocarbon deals could be very well worked up
5 Our renewable team in SAVE is strong and although I’ve never attributed anything to it, it could be huge in the future and as Z says, potentially be floated off in it’s own right
6 Dare I say we may even close the Accugas debt deal. The NGN has improved from 1,624 to 1,604 today - GREEN SHOOTS? PMSL
Anyway, thats enough from me, I’m sick and tired of typing and only just got in from watching The Christians!
BLOODY BRILLIANT?
We covered a lot of ground on a country by country tour of Africa. There were lots and lots of smaller convos but here are the main snippets:-
SS
“AK backwards and forwards from SS whilst conducting other work in different African places.”
“That’s, very astute of you to say that. And yes, IdEALLY AK is pushing very hard for a strong Government commitment before any issue of AD”
NIGER
“Things are going well again and we do expect first oil this year although we could not give a date as to when”
“Savannah have recently spoken to the Government who are keen to see first oil from Savannah TY but more importantly want to see more drilling from out company”
CHAD / CAMEROON
“We have the same set of attorneys working on the case since they were first appointed. AK is happy with the work they are doing and they will be retained until ICC decisions are made”
NIGERIA
“BAU is going well and debt restructure is still very high up on the agenda”
GLA
A very knowledgeable and well articulated post:-
My understanding is that AK was a multi millionaire prior to founding Save at age32, presumably from having been a very skilful investor in the o&g sector. He has invested his own funds heavily in the company. These are the attributes as investors we seek in our entrepreneurs. The company was established to take advantage of the unique oppotunities thoughtto be arising in Africa, an area well known for political risks.
He subsequently acquired a very impressive oil licence in Niger on what appears to be favourable terms which has subseqently yielded five out of five discoveries and has the potential to be enormously rewarding, particularly with the pipeline to the coast now in operation.
Despite wide initial scepticism the Accugas acquisition was acquired imo very skilfully and has proved extremely successful.
The transactions in Chad and SS both appeared to offer very rewarding opportunities and SS may still prove to be just that. They also appeared to offer superb opportunities to both countries in terms of further investment, management and diversification into employment in green energy. It seems astonishing that both regimes are/were not falling over themselves to grasp the opportunities on offer for their economies.
As far as I can see AK is very risk averse in the way that he structures the deals, minimising company cash and placing emphasis in deploying vendors' funds and risks.
While the delays are frustrating, the fact is that while the shares are suspended there is not much point in putting management time and costs into providing information to holders while they are unable to transact.
Although the outcome of the Chad venture remains uncertain there is the prospect of a substantial court award in due course.
I really cannot see the justification for the criticism of management. Agree that the SP has not made progress so far, indeed the opposite, but then progress of the business is a different matter. AK has suffered the setbacks as a shreholder like the rest of us and we should all have been aware of the risks that were involved by investing in Africa. So if we take risks we must accept the disappointments that may follow.
In my view the company has suffered a degree of bad luck but there is hope that the future will bring more favouable outcomes with potentially disproportionate rewards.
w
We were told we had bought the asset.
And while the ICC cases are going on, surely we should be informed as to where the revenues are going to.
I get extremely frustrated when we are told that anything material will still be RNS’d while we are suspended but how many material events have happened since suspension? And how many RNS’s have been issued?
CYB - well, in Africa he knows the threats of Wars, Coups, Nationalisations and violent FX swings as well as the best of us. I just hope he is growing our underlying businesses well enough to counteract all the issues he has and that we come back a stronger company then pre-suspension whenever we re-emerge to trading.
Super-excited to see the new report which is due out before the end of March and I think we will move through our current 52 week high of 26.25p which was set last May / June. I know Arrow have to draw a line in the sand as to when the new reserves are calculated which based on 31/12/2023 but it’s a shame we can not count the 2 wells drilled to date in 2024 - especially CN5.
Tick tock…
Once in a lifetime opportunities
We have more access to capital than our competitors
It all comes down to your relationships now AK
IMHO time is running out for the next decent deal after 7E
No pressure
Let’s hope for a strong CN5 production RNS this week with >300boepd. That along with CN6, OP3&4 could well take us beyond 4,000boed as we quickly approach SPUD of first HZ well which we should hopefully see happen in early Q2.
Whatever is going on there is a lot of discontent and anything can happen when this gets out of control in African countries as we have seen all to often over recent times:-
https://www.bbc.co.uk/news/world-africa-68402662