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BAML had an UNDERPERFORM rating on Tullow last year. Today they have done a double upgrade to BUY (underperformance > mkt perform> BUY). They have also upgraded their price target from 35p to 55p. As I also explained earlier, they are making the point that given bonds are trading close to par, the equity market isn't pricing in the much improved REFINANCE prospects Tullow now has.

There is a positive BAML note out this morning, and this is why the stock is up sharply. Target price of 55p.

They say CF has reached inflection point, and see strong debt paydown in next 1-2yrs. They also make a point that bonds are now trading close to par, thus there is now a strong disconnect between bonds and equity given that equity is not pricing in much improved REFINANCE prospects.

Thanks for Sharing RR.

Still awaiting soooo much news (Accugas refi, SS aqn completion, Niger production start, Chad legal challenge), but good to hear company is still alive and doing value adding moves like this. As is always the case, the longer we have without any news, the more worried and suspicious we get. So good on the company to provide some marginal relief.

Good luck to all.

Https://www.spglobal.com/commodityinsights/en/ci/research-analysis/petronas-announces-exit-from-south-sudan-noc-evaluates-portfol.html

Old but worth a quick read on Petronas motives for exit

Maybe the minister wants to ask Petronas on reasons they sold and their thoughts on Savannah as an operator for his peace of mind before approving deal? Might not necessarily be to plead for Petronas to come back. Of course Im gonna be biased as I hold a large SAVE share position.

That article references an IMF staff report that was released as a Feb 24 report but contains the following paragraph:

The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on a lapse-of-time basis, following discussions that ended on October 27, 2023, with the officials of Nigeria on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on December 14, 2023.

Thus given the Naira has depreciated around 100% vs the USD since those dates (oct 27 & Dec 14), the 35% depreciation mentioned by that article is very out of date and in fact massively underestimates the amount of actual depreciation that took place.

Just google IMF and Nigeria and you can easily find the IMF staff report.

So many on this forum just spouting garbage. Today was a day when NVIDIA had the largest one day move mkt cap wise in history (still 10mins to US Close). Given the huge moves into tech/AI stocks we have seen over last few days, dont you think this has caused a massive rotation out of underperforming/unloved sectors such as oil? Zero value in just speculating stuff, like oooh I think big news is coming cause we are up or down 5%. How many times has this kind of speculation led to zero developments?? Yes , probably every single time. I have never contributed to this board before, but the sheer annoyance of the constant garbage I read here made me intervene. Lets discuss EBITDA, free CF, liquidity, project developments, potential acquisitions, farm-outs etc etc. Lets try to add value people.

Bottom line is Naira devaluation is now over. Official rate in line with street rate. Balance sheet has taken a hit but it is manageable, and hopefully we can look forward and regard this as a big one-off hit which was necessary to revive the nigerian economy and crucially to allow FX flows to pick up.

Some new research I came across on Naira (summarizing as not able to post exact text) :

> Reform momentum in Nigeria has been strong recently The USDNGN has depreciated by more than 30% over the last 2 weeks, significantly closing its gap with the parallel market rate.

> The Central bank of Nigeria (CBN) has also made important changes on the FX regulatory front, lifting exchange rate restrictions on international money transfer operations and interbank transactions.

> Important changes have also taken place with regards to transparency around oil revenues. Nigeria's state oil company has announced that it had moved a significant portion of its earnings to an account held at the CBN, which should improve transparency around oil-related inflows, and ease pressures on the naira.

> This should allow new sources of FX to the official market, and help unlock a budget support loan from the World Bank

> Given the speed of reform momentum we forecast that the Naira will stabilize by the end of the year, and our new year-end forecast is N1450 (current level is 1514)

The loss was a cash loss related to the specific pile of cash we had sitting in Naira. Post devaluation, in USD terms, that cash is worth less, hence the loss. Ideally savannah would want to hold all of its cash offshore in USD, but I guess a minimum amount needs to be held locally to fund business needs. The offset comes from the fact revenues are fixed at a specific USD rate, thus when local currency devalues, USD revenues - lower amount of local costs = higher profits than before devaluation. This should help offset the cash loss made from holding the Naira cash balance. As I said previously, the offset effect will be much greater once the $300m USD loan facility is refinanced for a local Naira facility.

The reason the nigerian central bank is devaluating the currency is to bring it more in line with the street rate (i.e. to close the FX gap). They do this to ensure currency is at correct value. This will make foreign investor more willing to invest USD into the local economy. Often the IMF push countries to do this as a pre-condition to giving them more loans. Post these recent devaluations Nigeria's FX flows should improve, and it may actually help get save's deal refininanced (given FX gap is closed). In terms of devaluation being a good thing. This is definitely true and not just mgmt talk. As revenue are in contracts fixed in USD, this means when the local currency devalues, and local currency costs are paid, this will generate an FX profit. Currently local costs likely consist of wages, and costs of local contractor. The main problem SAVE has is that there biggest cost is the USD interest paid on their $300m bank facility. Once this is refinanced into Naira, SAVE will be in a much better position, given stonger Fx offset.

Our gas contracts are paid at a rate fixed to dollars, so revenue isnt affected by the naira devaluation. Any oil and gas revenues received will also be in USD. The main negative effect is on the pile of cash Savannah hold locally at Nigerian banks denominated in Naira to pay local costs.

Ian Stalker, Executive Chairman, commented:

"The results from this first-ever gravity based geophysical survey in our

Basin district in Arizona USA add to our confidence to reach our new target

resource no. of 2.5mt of LCE with a limited amount of further drilling. This

cost-effective campaign is designed to allow us to unlock a further US$3m

payment from LRC, the royalty company that has an existing royalty agreement

with us.

 

"The potential existence of thicker clay beds in both Upper and Lower Clay

sequences is hugely encouraging and reaffirms our understanding of our Basin

Project as an important resource for lithium-in-clay. The additional discovery

of the new clay and silica nodule beds to the north is indicative of

favourable open pit based mining conditions, further promoting the value of

this project.

Hi RR

Good colour on your chat from the NOMAD. Fingers crossed for all those projects you listed.

With reference to the Shore Capital note, they are just a sponsored broker, hence why their notes always have a disclaimer for investors to view it as marketing communication. ("This material is considered to be a marketing

communication and accordingly it has not been prepared in accordance with legal requirements designed to promote the independence of investment research nor is it subject to any prohibition on dealing ahead of the dissemination of investment research. This material is issuer sponsored and has been prepared pursuant to an agreement between

Shore Capital and the issuer in relation to the production of research".)

Thus would not attached too much significance to it.

The other brokers who seem to cover SAVE are "Cavendish" and "Hannam & Partners" who might be independent and not hired by Savannah directly however cannot see anything published by them (which I guess is not a surprise as we have no data/ financials to analyse!)

Given the nationalisation of Chad and the huge uncertainty over the closing of the South Sudan acquisition, why would Savannah even entertain this transaction. This isn't Andrew's personal gambling vehicle, this is a listed company with a group of shareholders. Aside from my annoyance, the question also has to be asked why they would even consider being involved. Is it because SS is also close to falling through? If we had done zero M&A, and just focused on generating free CF from nigerian business and paying down debt, perhaps we could have been in a much better position. Sorry guys, just typing out my thoughts. Obviously frustrated like many here given 2 years + of suspension.

Massive thank you from me too RR.

Https://www.reuters.com/world/africa/moodys-upgrades-outlook-nigeria-positive-2023-12-08/

Hi Noix

I'm far from being a Nigerian expert but if you look at Nigerian USD bond spreads (nigerian bond spread - US treasury bond spreads) they continue to tighten. There are several reasons for this. There is of course the recent pivot by US FED who are now signalling rate cuts for 2024 which has put downward pressure on the USD which has been positive for all Emerging mkts including Nigeria. More specific to Nigeria, Moodys upgraded Nigeria's credit outlook from stable to positive. Although the rating is still very low (Caa1) its still a positive development recognising the recent positive momentum from recent fiscal reforms. In addition, Nigeria's current account has improved massively to a surplus of +3.5% of GDP. All these development should help stabilize the Naira, and should help attract more foreign inflows. To conclude many fundamental and mkt pricing signals which indicate things in Nigeria continue to improve.

100% full agreement with all your comments FFT.

He must have Rishi Sunak's team working for him! :)