Member Info for StreetsOfGold

Oilbagger - the link is much appreciated, thank you. He sounded very optimistic about SS at the start of the section on SAVE, in a somewhat unguarded manner perhaps? Slightly ‘walked it back’ later in the interview, but great colour!

Hi TIL

I’m not an expert in the matter but in the spirit of brainstorming on this bb ( ie not advice/dyor), on scanning the below FCA link

https://www.handbook.fca.org.uk/handbook/LR/5.pdf

And quickly scanning reading other googled articles, I couldn’t see such a restriction.

In openly signaling a possible second hydrocarbon transaction and pursuing other transactions for quite some time while suspended for SS the company (SAVE) seems to not be acting as if this were the case either. So anecdotally this doesn’t seem to be an actual issue; or perhaps another way to look at is it’s not an issue in practice? I don’t know if this helps.

Personal opinion: It would be difficult to imagine being able to credibly approach other sellers to enter into a transaction if this material restriction in completing a transaction were the case.

Again, I’m not an expert, just my 4 penn’orth!

It’s been an exciting week on this share / bb - really appreciated everyone’s posts. This bb continues to be high quality. I’m optimistic on SAVE, and wish the Management Team Godspeed in getting the deals across the line!

LSE bb is showing a SAVE trade yesterday. Solid size. May be an error?

Date Time Trade Prc Volume Buy/Sell Value

02-Jan-24 13:05:38 26.25 1,600,000 Unknown* 420.00k

Really interesting TIL - I think you’re spot on re quiet but important significance of mid stream revenues - thank you for all the articles & sleuthing.

I would love to understand when we might see additional revenue from these flows, and very rough quantum this could mean in terms of monthly income once up & running, to be able to include in a discounted cashflow model for the Nigerian business. Do you reckon we could guestimate end 2024/beginning 2025?

On a separate note - the folks on this bb all contribute to my favourite bb - thank you - and wishing all on this bb a very Happy & Prosperous New Year!

Thanks Rocky.

Saw this tonight on SS

#South_Sudan’s President Kiir dismisses 3 ministers (presidential affairs, trade & industry, public service). The minister of public service J. Bakasoro becomes the new minister of presidential affairs. In addition, Kirr sacked sacked Warrap State Governor

https://x.com/patrickheinisc1/status/1729228672819699808?s=46&t=Lo0qH_1sjMOWHIbbnMFxMA

Thanks CYB. Hopefully it won’t impact SAVE’s negotiations.

Many thanks Rocky; and thanks for comments JDC.

Public info seems to indicate optimism around Nigeria & friends in the know say Naira / $ exchanges becoming a little more orderly if still a waiting game - both of which one imagines is constructive to refi, or in absence thereof allows for repayment month by month (with some months delay in swapping currencies) to see debt reduce.

Share JDC’s concern around Moscow protagonist(s) but hope Petronas stay true to their SPA agreement.

Nothing much to add - watching & waiting.

Thank you Sajy - your update & sharing is v much appreciated!

Agree an update from CEO on strategic deals / progress, would be good, BUT It would be great for the CFO to take us through the interims as would be best practice - other nat resources / commodity names (listed & private) always have the CFO explain the numbers to investors, and, to fold in RR theme from other post, would show team leadership, not just one man show.

It’s going to be a very technical set of interims which a CFO should speak to - eg1 the Nigerian FX piece (I am braced for material negative short term impact, despite the sunny uplands assurances of positive long term); eg2 CC revenues - few months’ upstream and cotco (~40% of $155m treated as receivable?), provisions (?), CC fees; eg3 newly amended pxf terms will show up in numbers(?); eg4 new / renewables fte impact at Head Office on the HO / management costs, etc, etc. At the AGM was poor CFO not present and it was suboptimal not to get a clear and thorough explanation of FX, when everyone on the EM ‘street’ was aware that there were / are big issues with $ in Nigeria, and SAVE had material NGN deposits. To name a few. Not the CEO’s role to explain this stuff.

DYOR Cheers

Thanks so much for sharing Rocky!

LST - I know you’re not being negative, but I am a bit more positive - there will be other avenues / assets / funds to go after in the unlikely event we cannot obtain this- through the supply chain / financial chain. See other posts on Mareva injunctions.

(Cont)

…we may need to be patient given all these multiparty negotiations (presumably) on each of the SS portfolio assets. Interesting btw to read the ONGC websites you refer to. Also worth a read of ONGC’s prior glossies - quite a lot of detail around SS. I’m really curious about capex commitments and operatorship where we are majority owner for example. Also, like Zengas, I’m very curious on the topic of purchase formula! Let’s hope capped at maximum $50m upside…

I’m also very hopeful on the CC arbitration going SAVE’s way and being enforceable - following reported comments from the AGM on this bb end July - and then researching successful direct expropriation arbitration history through this summer. I’m feeling much more confident on this and it’ll be really interesting to see the published award and view the arbitrators take on the valuation : ie the March 2023 ‘default’ / direct expropriation date value of the assets versus the 1 Jan 2021 purchase price. This could positively surprise.

Hopefully we’ve had all the “twists and turns” on this company for a corporate lifetime - one could not have made up the extraordinarily challenging last 18 months geopolitical / expropriation events - Chad, Niger, Nigeria, Sudan. RockyRoad is aptly named indeed!

Dyor

Thank you CYB - you’ve obviously thought long and hard about this, have made conservative assumptions and, importantly, made a decision - for current model purposes only - as to where to park the material, substantial, ($35m from memory, fast rising towards $40m given recent hires?) head office cost.

It’s a PV15 model as I understand it, to start with, which is, as you say, conservatively assuming the business stops end 2028. So it’s conservative but makes sense given (a) with 15% discount cash flows for later years aren’t significant (b) given the Emerging Market nature of businesses.

On reflection of your assumptions and model inputs: It makes total sense to me that Nigeria is allocated the head office cost. I ask myself where else one could put this? We now know the CC refi means Cameroon biz / revenues is effectively working for XOM. This changes when SAVE wins and receives settlement for the arbitration over the expropriation by Chad. Then it could bear a share of overhead. It would also change if SAVE closes SS - HO overhead would then be attributed to Nigeria and Sudan businesses. But until then, right now, SAVE effectively has one business. I’m not sure where else it can go. And it’s s big drag on a business that has material debt at a high 15% carry / price. Niger will take years now to get up the j curve and assume a portion of overhead.

On this point, btw: It’s confronting to see the 15% assumption in your model on interest rates after we’ve been used to 10% - but again, on reflection, after swingeing interest rate rises over the last 12 months - this is spot on. Quite a shock to see it though! Any debt at these levels is a serious dead horse being dragged along on any business. Agree on the positive side AK nailed LEK - a real win - but due to the dramatic turn of events in Nigeria (which could not be controlled) and potential impact on our NGN cash at bank and the FX loss we have no idea SAVE’s net debt there - post devaluation of the currency - impact on deposit - I note btw you used a gross debt number for this reason but am guessing your net debt number is similar to other posters.

I would agree that a cashflow model is appropriate: Turnover is vanity, profit is sanity, cash is reality! The energy market looks at / values purely discounted cash flows, not NAV - I’m painfully aware of this on RSE - anyone taking a look at this energy fund can see the massive discount to NAV attributed - because the discounted cash flows don’t support a higher SP. SAVE isn’t an exception.

Anyway, thought I’d share some quick thoughts since your thoughtful post.

This bb is the highest quality I read and all posters are very respectful & thoughtful- which I really appreciate.

Here’s hoping for some good news on the very complex portfolio of assets wrt SS negotiations - with multiple stakeholders on each project, discussion on capex commitments & operatorship responsibilities,

Thanks Rocky - all that & your conclusions make perfect sense. Your sharing is very much appreciated.

One assumes/hope Petronas is also pretty engaged with SAVE in requesting SS Gov for timely signing. I hope also reassuring SS Gov over the potential off-take for the Pre-Export Financing. But these are my guesses only.

DYOR

Good weekend all!

Bloomberg reporting Niger Presidency Says Leader ‘Doing Well’ After Reported Capture - President Bazoum reported seized by Presidential Guard. West African regional bloc condemns attempted military.

https://www.bloomberg.com/news/articles/2023-07-26/niger-presidency-says-leader-doing-well-after-reported-capture#:~:text=Niger's%20presidency%20said%20the%20West,President%20Mohamed%20Bazoum's%20official%20residence.

TIL - see RockyRide’s post 14 July with quote from IR:-

From: RockyRide

RE: Observation on timings14 Jul 2023 12:27

Spooky - Just got a reply from IR and not Camarco. Adding to the reply below, I did not hear the 28th July mentioned one single time at the AGM but I did hear Q3 mentioned a few times. Looks like they are sticking to Q3 but that does not necessarily mean it will go past 28th July. However, if it does pass that date I wonder if they will be obliged to issue another RNS as they have definitely published the date of 28th July in other correspondence. Wish they would stick to one set of timeline guidance and use the same words in all correspondence to us.

“As per Andrew’s letter to shareholders in the 2022 Annual Report, page 19, we are guiding that the transaction is expected to complete in the third quarter of 2023, alongside the publication of a new Admission Document.”

Thanks Rocky.

So an interpretation of that pretty clear msg is - investors should ‘stand down’ any expectations of 28 July /immediate relisting and wait for Q3, as advised by the CEO most recently.

This makes total sense now. Thanks for sharing.

DYOR

Thanks Rocky. Interesting.

Great to see you back RR!

Thanks Zengas, really good summary notes. For those in the meeting room the sound quality on the AK Zoom dial in was very poor, so Zengas has picked up good detail which I reckon at least half the room couldn’t hear.

To add to below notes - not in any order other than meeting order - so points aren’t linked consecutively:-

-$8m cost of pipeline

- Renewables - envisaged timeline 2024->2026 - debt financing not foreseen to be an issue given liquidity for renewables excellent - projects involve partnerships

- question on share dilution - AK said would only ever happen if material deal that was In interests of the shareholders

- gas trade receivables increases as 25% increase in commitments and commensurate increase in credit provision

- naira - usd denominated gas sales meant v positive moving forwards for save . Also- means refinance opportunity. Prior to devaluation save converted deposits into dollars and also used some for Compression project as required significant CapEx

- Nigerian diesel and petrol subsidies removed by Gov means increase doubling of petrol and diesel prices to the consumer. Diesel used for generators as well as transport - quite different to Europe. On other hand, this makes electricity from gas more attractive as has only increased by 40% with fx adjustment.

I’d add that

1 - the IR team clearly we’re trying their best to get people in to the meeting - it was flagged that comms were sn issue and Sally & team did her best.

2 - existing and new Chairman attended in person

3 - the new Chairman is very impressive

4 - - most unfortunate AK/CEO and NB/CFO not there in person - but some new NEDs there in person - assume it was because of a very important conflict for ask and NB - it would have been good if this had been explained / apology given

5 - brilliant to hear so much today from CEO who we know is ‘across’ everything but also important to demonstrate a broader and senior team - CFO should have presented financials / numbers / Naira issue & thrown back to CEO - but not the end of the world - just an opportunity missed

CYB - all good points, thank you.

Totally agree - underlying Nigerian business financials look solid. So an underlying business that is materially improving, with increased diversity of end buyers, and looks highly bankable for this key strategic segment within Nigeria.

To your main concern you surfaced: I think (hope) local banks eg Nigerian FIs will take a view of ring-fenced domestic assets in their lending and would hope they look through the lack of a clean auditors opinion and ‘get’ the broader context of the breach / misappropriation in other countries.

Confirmation of this pretty key question that emerged from the qualified auditors numbers and impact on the Nigerian refi is a question that remains unanswered in the FY22 glossy - for understandable reasons given events were in FY23 - however, I would hope this is addressed at the AGM if not before.

I’m personally keen to understand the numbers around the Exxon PXF - not just because of the obvious reasons shareholders would have for having transparency on this (vis a vis debt position (local and group) as well as whether partially or fully unencumbered now so shareholders can understand bottom line impact to the company of a positive / expected ICC Award in save’s favour (should settlement occur); but also as it’s presumably the template for SS.

I am trusting this will be made clear at AGM - if not it will be asked.

BTW I really hope people focus on key questions like this in the AGM rather than less key / material questions, as time Will be short.

Personally, questions around relatively small dividends for a growth company such as this are simply not interesting, & repeated questions on this topic at the AGM could waste precious time.

I’m keen to understand lessons learned from CC / applied to SS and the key high level principles to apply for what we are all guessing is a large Petronas PXF - key to know what SAVE SS is on hook for, what the proforma repayment schedule looks like, particularly should there be any disruption of the exports or in case of misappropriation.

Both questions on the Nigerian refi and the 2 PXFs are key as the company’s debt load and increasing costs with current interest rates having materially increased.

Would be good to understand how much cash is surplus to the debt servicing and free to invest now in preparing to ‘release’ & monetize Niger barrels in 2024, which will take investment in capex NOW - eg 30km of pipes, etc etc.