Member Info for StreetsOfGold

Zengas,

Agree with the other replies from Komakino, PorscheFund and IlDuc. To add my thoughts post agm rns:-

• Cash generation has accelerated, with collections outpacing revenue growth and driving a reduction in the longstanding Nigerian trade receivables balance.

• Net debt reduction remains slow (~2.6% in 4 months), reflecting heavy allocation of cash toward operations, interest, growth capex, and debt servicing rather than aggressive paydown. How much we don’t know as we’re just not told - but it really surprises me that with this receipt of receivables net debt not down more despite capex spend on upstream - do you agree?

• Major preparatory capex for Uquo compression and early Stubb Creek expansion was largely completed in 2024–H1 2025, so the upcoming July 2026+ production ramps should deliver higher cash flow with relatively contained additional spend. I hope, but noting my above comment - we’re in the dark on this.

• Reaching Nigeria / net debt zero is a multi-year journey (realistically 2029–2032 in my base case guestimate), even with new production volumes, but would represent a major milestone enabling easier cash upstreaming from Nigerian assets to the parent and ultimately a % at least to patient shareholders.

• Post Nigeria / net debt zero (or near-zero at subsidiary level), a sustainable dividend becomes realistic for the first time, though management would likely maintain a conservative payout to retain growth optionality which I don’t object to personally - I am a growth investor - but trust could be rebuilt in this way.

Unfortunately, the points I think you raised about disappearing docs on the website is a continuation of poor behaviours - many prior docs have been disappeared. I will be really unimpressed with Edinburgh agm IF there’s no informal London meeting to quickly follow.

Anyway, to conclude: think this isolated step is a constructive, forward-looking step that costs nothing upfront and strengthens the toolkit for capital returns precisely as operational momentum (receivables, Uquo/Stubb Creek) and potential Chad resolution build. It’s the kind of quiet preparation that prudent management does ahead of a potential re-rating. So I *think* worth supporting at the AGM.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

“…Savannah Energy

Further to its announcement on 3 December 2024, the Company advises that its ordinary shares remain suspended from trading on AIM pending publication of an AIM Admission Document setting out, inter alia, details of a proposed alternative transaction in respect of the ex-PETRONAS assets in South Sudan, should it be concluded, or confirmation is provided that a proposed alternative transaction is not proceeding.

In this regard, since the last announcement, an affiliate of Savannah has signed an agreement with another energy company to discuss collaboration in relation to the potential alternative transaction. A further update on progress, and associated matters, is expected to be made by the end of February 2025.

This announcement must give some cheer to SAVE shareholders for whom the wait for a conclusion of a deal with regard to the ex-Petronas assets in South Sudan has been, like the negotiations, quite protracted. Today it seems that Savannah are now in discussions with another company with regard to a potential transaction to acquire the ex-PETRONAS assets and that the shares remain suspended...”

Just finished reading “Poor Charlie’s Almanack - the essential wit & wisdom of Charlie T Munger” - with some fascinating forewords from Buffett, the editor and his family. I’d thoroughly recommend it to anyone as it’s got something for everyone in it. It’s quite heartening reading for LTHs of SAVE, albeit with some interpretation from Benjamin Graham’s investment views.

CYB your title for this thread is spot on (along with your comments, as usual) The breadcrumb trail of the combined RNSs is hard to follow here!

I think mentally we have to prepare for another 9 months before a high probability of re-listing. I may be wrong & really hope I am. I think as WI’s post 7 Aug stated (the thread of which I re-posted recently) we need to let SS play out. Either way.

Meanwhile as we go into 2025 we are now much much closer to the Chad ICC Award issuance (which will be the prelude to a period of enforcement and, ultimately a settlement of some sort, which will require some patience too) and the improved Nigerian story.

TIL’s helpful posting yesterday was fascinating and there may well be other acquisitions out there too. I suspect bandwidth restrictions will come into play at some point, with Niger and Renewables requiring increasing attention in 2025. And to TILs recent point or prediction in his final 3rd para of thread, which I thought fascinating, if I read correctly, if volumes of hydrocarbons in Nigeria double end 2025/2026

Buffett and Munger would say that you can only really trust a Board where the members have large equity positions. In our SAVE CEO and half the Board (including Chair and Mr Clarkson) we at least have this.

Spot on TIL. 2025 will be big. As one large SAVE shareholder from the Commonwealth regularly reminds me: SAVE only needs one thing to go right (in addition to its core Nigerian business) for a dramatic re-rating. And that’s one thing of a number of current / existing opportunities.

Your posts and your relentless and untiring detective work this year have been very much appreciated.

Have a great Christmas!

I am probably guilty of reading too much into articles re issues in countries potentially impacting SAVE - often I suspect written by journos who’ve either just left school and know little OR by journos with an axe to grind (either way), but, todays article (a) seemed interesting and (b) reminded me of this thread back 7 August.

WI and others - your sage comments are not forgotten! Let’s hope for good things next year.

“Another issue which is of concern is the withdrawal of Petronas and its shares have not yet been sold up to now but the processes are underway and this could not happen because there is a case pending between Petronas and other partners on the shares in the oil sector, so that case is still pending and it is not addressed and as soon as it is addressed then the issue of Petronas may be resolved,” Makuei added.

Full article:-https://www.radiotamazuj.org/en/news/article/cabinet-approves-plan-to-construct-3-billion-oil-refinery

We got a solid high level roadmap in the Annual Report (June 2024). - Pages 57 & 58. 2024 outlook:-

• We intend to commence a flow testing programme on the key R3 East fields in Q4 2024, with first commercial oil production anticipated during H2 2025/H12026.

• Production is expected to ramp up to a plateau rate of approximately 5 Kbopd approximately one year after first oil. The crude is expected to be evacuated via the new Niger-Benin pipeline, which was commissioned in Q4 2023 and became operational in May 2024.

• We plan to conduct an update of the prospectivity of the R1 and R4 areas within the R1234 PSC.

We also expect to undertake an appraisal and exploration programme focusing on the existing discoveries and high-ranked prospects from our exploration portfolio.

Savannah intends to continue work on its Early Production Scheme. The first phase is expected to deliver an initial production of c. 1.5 Kbopd. In this first phase, following well testing, raw crude will be processed in a 5 Kbopd capacity EPF, and the processed crude will be exported via a c. 50 km pipeline connected to the Niger-Benin pipeline. Savannah then anticipates a second phase to drill more wells and build a gathering system to produce from adjacent fields and process the crude at the EPF. Production is then expected to ramp up to c. 5 Kbopd.

The new Niger-Benin pipeline and terminal in Seme, Benin will provide an important export route and the ability to monetise further our existing and future oil discoveries in the ARB.

Phase 1 - first oil

• Expected to deliver up to 1.5 Kbopd.

• 5 Kbopd capacity EPF to be built on site at Amdigh.

• c. 50 km pipeline to be laid between the EPF and Niger-Benin pipeline.

• Oil to be piped to the Niger-Benin pipeline, then sold on the international market.

Phase 2 - ramp up to 5 Kbopd

• Use of existing EPF and c. 50 km pipeline.

• Construction of a gathering system to enable adjacent discovered fields (e.g. Bushiya, Eridal and Kunama) to be tied into the EPF.

• Drilling additional appraisal and development wells.

• Production expected to ramp up to c. 5 Kbopd.

V

3 Dec 2024 Interim Update

“ During 2024, we have sought to optimise the development plan for the R3 East Area and, whilst there is no change to our resources estimate, we now forecast a peak potential production of approximately 10,000 bopd (vs 5,000 bopd in the previous plan). Management estimates of the forecast PV10 value of the R3 East development project has also increased from US$150

million to US$210 million5.”

Thoughts

=> confirmation of AGM oral comments around higher peak potential production of approximately 10,000 bopd (vs 5,000 bopd) - this is good

=> disappointing lack of detail around progress on Phase 1

Thanks CYB.

I’m hoping, given SAVE’s ICC case has been made a lot less complex due to what the other side has accepted, so it’s a relatively straightforward arbitration to decide valuation of the expropriated assets for the tribunsl to rule on, that we’ll hear around Easter the initial ruling on the case, rather than next Christmas - but I suppose it’s wise like you say to not get impatient on that and figure we may have to wait til the end of next year.

BTW talking of end next year It’ll be interesting to hear end of next year how Petronas v SS arbitration goes…

On this December 2024 - I’m hoping, in addition to your points about the confirmation that the Kompressor is operational / commissioned (Mercedes have spoilt the regular spelling for me) ie CPF; Plus Stubb acquisition is all wrapped up, that we’ll Additionally have an Operational Update including an update on the transition of debt to NGN...which was due to complete year end too from memory.

Good weekend all

Thanks Rocky.

Weblink ink attached too

https://businessday.ng/companies/article/savannah-energy-h1-scorecard-impresses-as-operating-profit-rises-by-130/?amp

Https://www.ifc.org/en/pressroom/2024/ifc-and-the-central-bank-of-nigeria-partner-to-boost-local-currency-financing-in-nigeria

Washington D.C., USA, October 28, 2024—IFC, a member of the World Bank Group, and the Central Bank of Nigeria (CBN) have signed an agreement to increase local currency financing to enable private businesses in Nigeria to grow and thrive.

The partnership will allow IFC to manage currency risks and increase its investment in Nigerian naira across priority sectors of the economy, including agriculture, housing, infrastructure, energy, small and medium enterprises and the creative and youth economy.

IFC aims to significantly scale up its financing of critical sectors in Nigeria, with a goal of providing more than $1 billion in the coming years. Many of these sectors require local currency financing, and IFC’s partnership with the CBN is a key tool in expanding access.

“This pioneering initiative between the IFC and CBN will unlock much-needed long-term local currency financing for private businesses in Nigeria at economically viable rates,” stated Governor Yemi Cardoso of the Central Bank of Nigeria. “This collaboration marks significant progress in the CBN’s commitment to delivering innovative development initiatives through reputable third-party service providers, moving beyond traditional intervention programs. It will serve as a catalyst for economic growth and advance the Federal Government’s agenda for economic diversification.”

Brilliant script CYB! You have to think a conversation plays out that way IF there’s any sanity in the esteemed multilateral!

Based on the newspaper article you also helpfully put a link to, I can’t see an outcome until well into November-December earliest. And then I have to ask myself whether actually a delay to 2025 is not more likely… Reminds me of Brian’s novel in Family Guy https://youtu.be/d-BfjHbHj60?feature=shared

Thanks affc21 - very interesting posts & publication.

Assuming I read this right, it seems like a smart move from SAVEs management to leverage academic research teams / methods with a view to better defining the Niger opportunity, for the company management to be able to strategize over deploying capital effectively, and better inform its stakeholders (e.g it’s bankers), shareholders & for the market.

Thank you for your reminder of your late July post Zengas. There was a fair bit of 'noise' around the bb 'traps' so didnt comment at the time. Thansk also Scotpak and others for posts on this thread.

I concur with your good thoughts (points 1-7) in general for the different outcomes based on moving parts (CC arbitration, SS, etc) and particularly, for those that are glass half empty, its perhaps worth noting your point "4) If neither S.Sudan or Chad work out - then we need about 3 more years combined with the Sipec Acquistion to leave us net debt free. 
"


I think this is important - that the Interims, with the kind additional comments from the Poster who reproduced the IR 's answer to the questions on the debt (cant recall if it was Scotpak, TIL or Komakino or an other, apologies) showed that the net debt number is ahead of my prediction by about one year. This means with a fair wind and nothing extraordinary happening on the existing Nigerian business plus SIPEC (which one hopes can be closed with Nigerian authority and Chinese authority approval by 2024 end) being debt free within 3 years is realistic. This should be supportive, over the period, of a SP that has a floor price in the 40's, without anything else going right. Of course, we all are looking for this growth stock to be higher, and if any one thing (CC , SS, farm in etc) goes right it will be, but I have found this to be quite cheering as a base case, with re-listing, I am guessing, relatively imminent.

CYB - Good point - good reminder - I do think this is highly relevant to the current share suspension. An annoucement either way should precede imminent re-list. So I am watching with acute interest to see if any news released.

CYB,

Late response to this but a very big *thank you* for your *epic* and thoughtful notes on the Interims.

A couple quick responses: in reverse order of your email-

1 - Your last point in thread on "if the debtors don't pay and have catch-up gas to take (represented by the deferred revenue in the balance sheet), then in extremis the receivable gets written off against the liability and the balance sheet gets netted down: no p&l impact." is well thought through and very helpful. In essence SAVE has ownership of the gas, so it is fully secured.

2 - Your Point 12 FX - I also was surprised at this and I too hope the worst is now over and that repayment through true up of FX losses doesnt put undue credit pressure on SAVE's clients

3 - Your "17. P10 CF statement. Does anyone understand the “Cash transferred from debt service accounts”, please?" No, I also dont fully understand this. I can only assume like you that the need for this dissipates as the Transition Facility is fully deployed.

4 - Your points 7 & 8 - Renewables business models - looking forward like you and other posters to economics and returns gradually being shared with Investors in due course. I can understand why these might need to be very high level - eg returns expected to be in excess of X% RoE...etc

DYOR

Interesting tweet on X by the company, Rocky, thanks for sharing.

The reason I find it interesting is because it was specifically shared in the June’24 AGM that the Niger 5k BBL / day plateau was the former repeat former plan, based on trucking crude, prior to the Niger-Benin pipeline. That the plan now, post the Niger-Benin pipeline was for a much higher plateau number, more commensurate or representative of the size of the material reserves / fields. That the company was now working on and planned to share with shareholders the new plan for a higher plateau number with returns which would be quite different from the prior plans.

When asked about the procurement, shipping and laying of the pipeline spur to the pipeline from SAVE fields, this was not considered a rate limiting step due to the pipe technology readily available. Intimation was it was quickly deployable.

I’m interested to hear others views on the steps, timing and reasonable plateau level we could guestimate for this project - as am aware many Long term investors came in precisely because of this very interesting Opportunity.

For me, 5k bbl per day is probably not a short to medium term SP game changer on a DCF model basis - the j curve probably means it’s irrelevant for 3 -5 years post production starting.

But a “proper” or more material plateau level of say 15k+ could hugely change the model and returns I would guess, but struggling to put the numbers together (guestimate) to DCF model this without knowing key inputs.

Would be grateful for others thoughts.

TIL - to your point of presentation at re-admission - exert of my 12 July post on the bb as follows:-

B - Progress since share suspension

==============================

1 - Announcement of South Sudan acquisition

2 - Chad Cameroon acquisition and subsequent dispute

3 - Addition of Bini a Warak project

4 - Addition of Niger solar projects

5 - Accugas debt refinancing

6 - Announcement of SIPEC acquisition

7 - Niger export pipeline operationalising

C - Post suspension period

======================

1 - Further development of existing assets

2 - Further hydrocarbon deals

3 - Further renewable energy deals

AK shared that on (B) above, Progress Since Suspension, there were material positive developments for each of the 7 bullet points which the company had been unable to update investors on, due in large part to being suspended. That the company would set out to Investors the detailed investment case for each of B (1 through 7) in detail at re-admission

“…From all accounts, it looks like #Cameroon has pressed pause on oil and gas. Chevron is ready to invest big to move on the Yoyo Yolanda Unitization. This is a joint development of the Chevron-operated Yoyo (in the Douala Basin offshore Cameroon) and Yolanda (offshore #EquatorialGuinea) gas fields.

Perenco started to acquire New Age Energy and work with LUKOIL to develop the Etinde license and bring gas into Equatorial Guinea ( EGLNG Operations S.A. operated by Marathon Oil Corp) or Cameroon, yet the deal died on the vine.

And we saw its last oil licensing round go wrong. In early 2018, for example, only one company responded to Cameroon’s licensing round, in which eight blocks had been available.

Production has declined, and no exploration wells are being drilled. Exploration is the life blood of the Oil and Gas industry and upstream development has met roadblocks and red tape.

To close this out I want to emphasize one point: The challenges currently hindering Cameroon’s progress are speed bumps, not death knells. While in the short term, doing business especially in oil and gas in Cameroon may not be as lucrative as years prior, in the long term there are oceans of economic potential waiting to be tapped. Not just in oil and gas, but many other sectors beyond. For that very reason it would be foolish to count Cameroon out yet, even despite this seeming pause.

African Energy Chamber AEC African Energy Week

https://lnkd.in/dy-FVcZN …”

WI - welcome to the bb and thank you for the comments. Fascinating. Please do contribute again!

TIL - thank you for your posts and particularly the Petronas RNS. Am on the road and so this & your view was particularly useful.

CYB - your thoughts as usual insightfu - as (1) balance optimism & realism and (2) mixed with commercial & EM experience

I’m reading all this late but fwiw, my guestimate / view of where we’re at now aligns with WI’s expressed view.

This to me is classic end state brinkmanship with multiple parties with different interests jostling at the last stages to get to a deal - to WIs point - everyone considering their Best Alternative to Negotiated Agreement and gaming out their positions.

In addition to the good points made by WI and above/below / by others, let me add a couple:-

This dual RNS, the careful wording of both, the continued suspension and so many factors contained within the carefully worded SAVE RNS are totally different (to me) from the Chad CC Petronas SPA termination RNS. Worth reviewing that RNS I think. It was brutal & terminal in all respects in contrast.

The Petronas RNS piece on “Policy” is to communicate in my view no ‘funny business’ is permitted in this sale/“transfer” of THEIR assets. Petronas intimating also with the RNS perhaps that they are concerned for and want the best for their “employees” in country - to be transferred to a decent company too…like SAVE?

After all the effort and opportunity cost of developing the opportunity it would be good to see a final successful push and the deal given some ‘air in the tyres’ to allow a successful conclusion for all parties - SS (new investor in SAVE to sponsor additional optimization and exploration) boosting treasury royalty revenues, Petronas strategic re-positioning & clean/responsible exit, Petronas employee personnel transferred to SAVE, and SAVE leadership & shareholders. The maintenance of suspension for I would guess a short while has been agreed to by the SAVE BoD, after due consideration and knowing much, much more than we’ll ever know as SHs, and secondly supported by the Nomad et Al to AIM, and supported by AIM. This is no small set of steps.

Incidentally: This should be something the WB and other interested governments such as Malaysian & UK should support and may have time to add their voice too…

Let’s hope so but I suspect to CYBs point ( in different words) it’ll be “fish or cut bait” point soon! I’m hoping for fish!

As an aside: it may be a ridiculous “pipe dream” (pun intended) but I’d personally like to understand if SS can be linked to EACOP (Uganda-Tanzania pipeline) as this could potentially relieve the pressure on the Sudan pipes in future.

CYB - agree your points / post today.

RNS is as expected given the circumstances and reporting schedule set by prior RNS, which suspect informed by guidance from 3rd parties. No surprises at all.

No, it’s not exhaustive - but it can’t be at this Time. Feedback from AGM was widely shared on this bb for those that couldn’t attend due to comms. CEO shared afterwards he was heading / flying straight out to work through our summer on SS etc. shared in AGM meeting that detailed analysis of all new aspects of the business post suspension date would be delivered to all investors prior to re-listing.