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TiL - your last sentence is incorrect. Whilst the Chad issue did not put off interested debt providers but the Sudan war that broke out on 15/4/23 certainly did. Some of the interested debt providers withdrew their interest due to worries over the export pipeline. The debt workstream is far from completed and still needs a significant amount of work.
TiL- I can’t say too much on here but I think you’ll find that the last RNS is solely to do with the extension AIM have allowed to our suspension. I mentioned the RTO 6 month standard suspension time in my recent note on here and we are now 6 months beyond the first 6 month timeframe. The longer a company go past the initial 6 months, the closer AIM look at it and start to put more pressure on wanting to see significant progress being made for any workstreams that still need completion. I believe that if we have not made significant progress by 1st Feb we may be forced back to market by AIM and not that we would voluntarily walk away. To the best of my knowledge we don’t have Government consent and it’s that which is needed before another major workstream could start in earnest. As things stand and on the assumption we make good enough progress to keep AIM happy I don’t think we will see an AD until. Few weeks after 1st Feb at best. If we don’t make enough progress to keep AIM happy, I think we may be back trading and forced out of the deal in early February. In summary, I think it’s going to get harder and harder for Savannah and Strand Hasnson to be granted further suspensions post 1st Feb 2024. But I would say we have the best people we could possibly hope for working in all of our interests.
On another note with regard to the deal, I’m not sure how many options we have for the debt finance. There was initially a lot of interest at the beginning but I think a few interested parties would have walked away when the war broke out in Sudan. I hope we have enough interest left in order to complete on a debt package (getting significantly les and less as the months tick by) and hope we don’t have to issue equity at a discount. If we do need to issue equity I sincerely hope we get a chance to participate and are offered to by 1 share for every so many held. I would also like to think that part of the debt balance due post economic interest discount could be paid for from future production OR taken on by Petronas, similar to what we dis with ExxonMobil for the Doba / Pipeline deal in Chad / Cameroon.
Finally I hope we get an ops / finance update this month which show that production is strong over at Accugas and that we have made strong progress in reducing existing debt after the terrible fx hit we were reported to a few months ago.
Now come on AK lets see your wet ink signature on the debt refinancing before the end of the month.
Somebody very kindly sent me this a little earlier. And to reiterate my previous point without wanting to be defensive or negative, should the SS deal fail, the longer it takes for us to be informed, the higher the re-list price due to the excellent performance of Accugas. I would estimate that the debt being reduced at the moment is adding around 0.5p to 1p to the SP each month. And at this rate, compression will be completed with new customers added before we find out our destiny of the SS deal which is still huge. Whilst a failed deal could relist us lower than 26.35p and a successful deal at 80p, I would be extremely happy for 30p and 60p for the 2 respective scenarios. Here is the SCAP note that I was sent:-
E&P trading comments
Savannah Energy+
South Sudan acquisition update
In a short RNS this morning, Savannah has confirmed that (further to its prior announcements) the company continues to advance the various workstreams required to complete the acquisition of PETRONAS International's South Sudanese portfolio.
Regarding this major proposed reverse takeover transaction, Savannah reports today that AIM has granted a further extension to 1 February 2024, with subsequent updates to be provided as and when appropriate. Given the relatively close proximity of the prior 15 December 2023 extension deadline, and the beginning of February 2024, we maintain confidence in Savannah's ability to publish the related AIM admission document within this newly updated timetable.
Whilst publication of the admission document relating to the South Sudanese reverse takeover deal was previously expected to occur around now, we sense nonetheless that Savannah is pressing on to ensure that this can occur in a matter of weeks - noting AIM's granting of the further extension announced today.
We will obviously continue to look forward to admission document publication, at which point we will be in a position to fully assess the incoming South Sudanese assets. Whilst the shares will naturally remain suspended ahead of this, we continue to forecast material organic revenues and cash flow in the meantime. Our last-published Risked NAV estimate stands at 45p/share.
As most on here know, AIM mandate suspension and Ad Doc to be issued / resumption of trading within 6 months of suspension date for all RTO’s. We often see extensions being issued to the 6 month rule (VERY OFTEN for Savannah Energy LOL), especially for RTO’s taking place in slow and cumbersome jurisdictions, such as the ones in which we chose to operate.
AIM are quite accommodating and very understanding of the complexities involved in complex deals, especially in African Nations. When extensions are granted, AIM will want to see progress being made and think there is a realistic chance of completion. However, they do not give extensions for fun and they do not grant them ad finitum.
With the date of this latest extension being mid-week and no mention of the Admission Document or re-list (for the first time), I think this RNS is specific to our AIM listed shares and specific to AIM requirements. If so, AIM will want to see significant progress by 1st Feb 2024.
As we move forward I can only see 4 possibilities:-
1 The deal progresses well and Savannah issue an Admission document / re-list date.
2 We make progress, not enough to issue AD but we do make enough for AIM allow another extension.
3 We don’t make enough progress by 1st Feb for AIM to allow extension and we are forced to re-list. Ie SS deal dies!
4 Extremely remote chance of it happening but we could be de-listed from the stock market
I get the feeling that significant work-streams are still being worked on and AIM’s patience are starting to run out. I may be a million miles off the mark here, but in the absence of any meaningful information being provided by AIM - this is my best guess of where we are at following the RNS this morning.
At least Accugas will make another 6 weeks profit helping reduce our current debt. And if SS should eventually close, this new extension will reduce our debt on the deal by another 6 weeks due to the economic interest date. Happy Christmas and Happy New Year - oh unless we do see an ops / finance update or a debt restructure RNS - ZZZZZZzzzzzzzzzzz
Tc - great to read your posts but you can’t be very busy in your day job a Chairman of Wildcat if you can post on here at 40 minute intervals. But good luck with Wildcat and giving it a bit of PR. I’ve looked at it recently and it’s definitely not one anywhere near my watchlist. Maybe when you’re our neighbour I’ll take another look.
And conversely, he may have been refusing to sign, forcing Kiir to bring in a more sensible person who will. We simply know nothing factual that’s going on with our potential deal and I’m surprised our detectives on here have seen hardly anything in trade press publications for what seems like an eternity.
You’d think they’d be keen to sent out a big message to other companies / institutions but then again I am hugely biased. come hell or high water i hope we get a comprehensive update on other parts of our business even if the suspension is extended, although I accept thet we will get nothing of any substance on the 4 x ICC cases.
Let’s hope CNPC say to Mr Kiir et al, we’d love to spend more money in your country but not until you extend the PSC licenses for our current blocks.
Let’s all keep our fingers crossed for SS closing ASAP as well his could mean we end up with around 80kboepd (inc Nigeria) with less than $1bn of debt and very large EBITDA + who knows how much bookable 2P!
Is Nick Beatie still in post as CFO. I’ve always suspected some senior personnel would leave with the 47p and 68p hurdle prices for employee share scheme being so off target since they were launched a few years ago.
I hope there is not a long-stop date that can’t be extended. Alternatively there is also a possibility that Savannah know that the NOMAD will not grant another extension. My thoughts are changing to be that we issue an AD with workstreams outstanding or the deal fails. I hope the former but then the next question would be what would the SP return at and I’d hope for anything above the suspended price. If the later I’d hope return higher than my 15p average.
I also think that with all the bad luck SAVE have had that AK maybe consolidating what we have and biding a bit of time. We’ve spent circa $30m - $40m on Doba / Totco / Cotco / Agadem and SS for now hing at the moment. I think AK will be very nervous of committing to another potential large deal until we see some reward from the above. You can only spend $20m CAPEX adding >$300m to debt with no production so many times and I think we are at our limit ATM. Yes Accugas is stunning but it can only support so much. We need to see red lots from something ASAP as we all know so well.
I’d like to see us buy in to an oil play in Nigeria with a chunk of renewable projects bolted on to sweeten the Government.
Nigeria budget: President Tinubu says budget offers 'renewed hope' https://www.bbc.co.uk/news/world-africa-67567480
PART 2
5 - how are the 4 x ICC cases going and with all the changes going on in Chad (energy minister being sacked due to trying to nationalise Doba), are we talking directly to the Chad Government and trying to reach out of court settlements? I guess with the TOTCO/COTCO revenues being frozen that it's it hitting Government finances quite hard.
We will provide further updates as appropriate in relation to the progress of these matters.
6 - will the company be releasing a Q3 operations / finance update and if so when will this be issued?
We do not typically provide a Q3 update but we will of course update the market on any material news.
7 - if all customers took their full take or pay quotas from Accugas, would we be at full capacity or do we still have spare capacity to add new customers prior to the compression project being completed?
The nameplate capacity of Accugas’ central processing facility is 200 MMscfpd, although it can process up to 240 MMscfpd. Our current take or pay customers amount to 175 MMscfpd, while our interruptible customers account for up to an additional 91 MMscfpd. The volumes supplied on a daily basis to customers vary based on a number of factors. We also distribute third-party gas, via our 260 km pipeline network, to our customers, following the ten-year agreement signed with Amalgamated Oil Company Nigeria Limited (“AMOCON”) earlier this year for the supply of up to 20 MMscfpd. There may be further opportunities for us to commercialise other stranded gas resources in South East Nigeria in this way, which represents a potentially significant opportunity for Accugas.
Nothing for us to get too excited about really but it’s good to stay in touch with IR every now and again.
1 - are Savannah still on track for the South Sudan deal and expecting to issue an Admission Document on or by 15/12/23? What are the work streams that are still being worked on?
We continue to progress the various workstreams for the publication of the Admission Document and will communicate with the market in due course.
2 - as we issued a term-sheet to a consortium of lenders quite some time ago, I'd have expected this to have completed by now. Where are we with the Accugas debt re-finance and is it still expected to close in Q4/23?
The documentation is being finalised and we continue to anticipate this will be completed in Q4 2023.
3 - as part of the companies FY23 objectives, one was stated to be 'close at least one more hydrocarbon M&A deal in addition to South Sudan. Is this still expected to happen before the end of this calendar and how many deals are we working on?
As you can appreciate, any material announcements must made to the market as a whole. A key pillar of our strategy, as set out in our Annual Report and Accounts 2022, is to deliver value accretive inorganic growth and, as such, our business development teams review numerous opportunities each year.
4 - how are things going on with well testing in Niger and has the new $4bn pipeline been completed and commissioned?
As detailed in our recent 2023 Half Year Results announcement, Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South East Niger. As previously announced, the intention was to carry out a well test programme on our principal discoveries in Q4 2023. However, following political events earlier this year, this timeline has been subject to further revision due to restrictions imposed by the Economic Community of West African States on Niger, which has resulted in the continued closure of the border between Benin and Niger. This has created logistical challenges for companies operating in Niger and, specifically for Savannah, in relation to the importation of the necessary equipment to complete our planned well test programme.
With regard to the Niger Benin pipeline, we understand that the pipeline is almost complete and note that an inauguration ceremony was held on 1 November 2023 but the Niger authorities.
And this just goes to show the size of our renewable projects in Niger. The note below is singing from the hill tops about 30MW of renewables and we have 15 x that signed with our 450MW of renewable projects in Niger. Exactly where we are at with those is debatable but hopefully we’ll get an update on all this stuff before YE. I did not hear from IR last wee as I was promised and sent a nice reminder note on Friday. I’ll post on here as soon as, if and when I get a reply.
Less than 3 weeks to 15th December so at least we have to get some sort on RNS by that date at the very latest and hopefully before. Still wanting to see debt re-structure first as a matter of urgency now.
As ever GLA