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That is the million dollar question - it is why the incremental analysis needed and I clearly don’t know the answer. It also potentially feeds into phase 1 plans so it’s unlikely they will procrastinate too long...
There is no doubt that despite the 49 ft gas column, Harvey was at the lower end of hopes/expectations (management pretty much said as much) - albeit likely still commercial given the tie back option.
I am sticking to the facts. No opinion. No misleading. Purely facts. The share price is a function of near time supply and demand. At the moment LCF are selling so shares are not moving. When they stop we will move higher. Is Harvey in the price? Time will tell - that’s purely subjective. If it is in the price then the core business is even more undervalued. Anyways you clearly know more than most
Technically the dilution took place when the converts and warrants were issued so there is no further dilution so that’s nonsense. If you are talking about the overhang effect of LOG/LCF converting and selling down then that is valid but is “a significant technical stock overhang” rather than incremental dilution
Shows the other side of some of the sells, with a 2.5m share buy at 19.75
Let’s agree to disagree - if on a fully diluted basis (583m shares) it’s worth 52p ex Harvey then it’s not “in the price”... As the farmout completes and we move to FID the story will continue to derisk - with or without Harvey upside... All IMHO
Also the 8p on Harvey was a risked mid case... so assuming Harvey not commercial would take their target down to 52p... however derisked lower end estimate (if commercial for tie back) could still be worth 8p ... arguably academic if none of it really in the price...
There is no further dilution from here - the extra shares you mention are already captured in a fully diluted share count which is why that market prices off...
Well there is a big buyer sitting at 19.5p hoovering up all these sales
Well the bond was the primary precondition so may be waiting for final settlement (20th Sept) or just finalising some paperwork? Alternatively (but less likely in my mind) they are also deciding what to do with Harvey...
Clearly still a buyer in the market for these shares... feels like path of least resistance is probably higher now - at least until LOG get their next tranche to sell down (“subject to standard orderly market conditions”)
Extremely exciting times ahead - good to see the new broker earning its bacon ;)
Lombard Odier clearly confident in adding 1% to 19.36%... now we just need confirmation of completion of farmout, followed by FID and FDP... I suspect the CER decision on Harvey May take longer ...
I guess it is technically possible for accugas and frontier to land at the same time but my bet would be frontier comes first. As I understand it, only once these docs are both signed can the company request a court date. Once the court has approved it then the deal can complete. So my guess is four separate milestone RNSs over a period of a month or so...
I think the “profit taking” you mention at the end of the day is actually just trades printed late... it’s clear market makers are hiding their hand, walking up bid and mopping up shares for an as yet unknown size buyer (imho)
LOG administrators will most likely sell down as and when the market allows given they are tasked with returning as much cash to LCF investors as quickly as possible. They are mandated to do this in an “orderly manner” which most likely will involve off market placings with institutional investors (or potentially to a trade buyer in the case of a takeover closer to fair value).
Clearly this holding remains a technical overhang - even if they don’t sell on the open market, big institutions know they can potentially buy off-market (potentially at a discount) which limits insto demand on market.
However, irrespective of the flows - as value is derisked over the coming months the price instos are prepared to pay for LOGs holding will increase
Title: Ready for Lift-off
Transformational Nigeria asset acquisitions: Savannah is now on the verge of completing its acquisition of gas and oil producing fields and a gas pipeline network from Seven Energy in the West Nigeria Delta, following Ministerial Consent for the deal on 19th Aug. The assets will take Savannah from zero production in 2019e to ~20kboe/d in 2020e, and will underpin free cash flow generation of $110-125m p.a. medium term.
Defensive cash flows: The Nigeria production is predominantly gas, sold on fixed price contracts underpinned by a World Bank guarantee and take-or-pay contracted volumes. This makes Savannah relatively less cash flow-geared to oil prices. Debt to fall swiftly: The Nigeria cash flows should pay down non-recourse ~$540m consolidated debt (post-Seven-deal-completion) at a swift pace regardless of oil price, leaving Savannah net-cash by 2025.
Niger production to start in 2020, with 'multi-bagger' upside: Following 5/5 exploration successes in 2018, Savannah plans its maiden Niger production in 2020 (pending Seven deal completion). This will be low cost, low risk and relatively high value oil and is a positive in its own right, but in potential value terms is eclipsed by the ~1bn+ bbls of further relatively low risks prospects Savannah has identified on its acreage in the country.
Deep value...: Our 41p/sh Discovered Resource NAV for Savannah is 82% above the current share price (using 15% WACC and $75/bbl). Even at a more conservative $50/bbl, this NAV would still be 34p/sh, (implying 51% upside).
...with significant further upside: On top of our base price target upside, we see material further potential valuation upside from: 1) de-risking the 1bn bbls of Niger prospects (worth an estimated 115p/sh on an un-risked basis); and/or, 2) from increasing Nigeria downstream gas sales via the currently under-utilized Accugas pipeline network, worth up to 31p/sh in, again, an un-risked scenario. We do not include any of this significant further upside in our price target for now, but we think it gives a useful sense of the scale of value creation opportunities that management now has access to.
Multiple potential near and medium share price catalysts: We see multiple potential near-medium catalysts, including Seven deal completion, continued Niger oil export pipeline progress news, Niger farm down news flow, additional Accugas sales contracts and a dividend or a buyback in respect of 2020.
Numis Initiate SAVP on Buy. 41p discovered core NAV, 80p risked NAV, 198p unrisked. “Multibag potential”
Savannah Petroleum
After a dearth of good news from Savannah things are looking up, big time, indeed the shares have doubled in exactly a month and will justify going a lot higher again before long. Today they announce the signature of a Niger-Benin pipeline transportation convention between CNPC and the Republic of Niger. The plan is for a 2,000km pipeline from the Agadem Rift Basin to the Atlantic coast in Benin.
The pipeline is expected to be complete by the end of 2021 which should be a huge incentive to domestic exploration and production and will ‘transform Niger into a major regional oil producer and deliver an increase in the country’s growth rate’, according to SAVP CEO Andrew Knott. For Savannah this will mean a significant addition to its options for markets for its crude in the future and adds to the domestic option of the Zinder refinery for existing and future crude discoveries.
Agadem - agree the delays have been very frustrating! Hopefully next week we hear something on 7E - I’m expecting RNS’s on (1) the Frontier sign-off, (2) the Accugas sign-off, (3) the UK court date, (4) the UK court approval, and last but not least (5) formal deal completion over the coming 4-6 weeks.
Add to that the interim results (probably not saying much new but likely confirming bridge funding in place through deal completion), the likely initiations by Numis and/or Jefferies, and before year end an update on niger drilling plans (with or without a farmout partner).
On the latter point of the farmout, don’t underestimate the amount of work AK and team have done on this over the past couple of years and the asset and savp are both well known to potential partners... as such I would view the involvement of Jefferies as the end of the beauty parade process rather than the beginning!
With a bit of luck we are in for an exciting end to the year! AIMHO