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I remember us being interested in Zafiro at one point, one thing is for certain there is a growing theme amongst African countries is they are not to keen on oil majors selling to other international independents and most assets will become either state owned or local players

Oil divestments will happen in africa but i reckon national oil companies or local players will end up with the assets in 95% of the cases. Only 5% of the cases you may see a small incremental deals go through but the bulk of the big deals will be hard to close from an approvals perspective.

The project that matter strategy in Africa may need to be reviewed if Savannah is unable to land hydrocarbon deals in Africa there will come a point where the company might need to pivot and look for assets elsewhere around the globe if possible, or just continue to maximise accugas assets and work up an aggressive exploration, development and production plan for Niger when possible to get to 20,000 bopd per day from Niger.

As far a hydrocarbon deals in Africa go most deals will be similar drag unless consents are granted when SPA is struck otherwise these deals become pointless.

Equatorial Guinea

Teodorin puts finishing touches to ExxonMobil's departure

The US major is selling off all its assets to the Equatorial Guinean government, which is in the process of selecting its future oil partners.

ExxonMobil could sell the Zafiro oil field to Equatorial Guinea as early as 2024. Africa Intelligence understands that Antonio Engonga Oburu's oil ministry is on the point of wrapping up exclusive negotiations with Petrofac to create a partnership to operate Zafiro. The choice is surprising given the British company's plummeting share price following liquidity problems.

According to the terms of the deal, Petrofac would act as technical partner and would have to provide a new floating production storage and offloading (FPSO) platform to collect the crude oil, as the current FPSO is damaged. The state-owned GEPetrol would be the official operator of the field (which produces 25,000-30,000bpd), a solution strongly supported by the vice president and heir to the throne, Teodorin Obiang Nguema. He took over responsibility for oil and gas after his half-brother Gabriel Obiang Lima left the oil ministry in February and now decides on everything in the sector along with Antonio Oburu, with whom he maintains friendly relations.

in 2019-2020, the Equatorial Guinean government - and in particular Nguema - refused to accept Trident Energy as a buyer of (see our previous coverage), and since then ExxonMobil has failed to find an alternative.

ExxonMobil quits exploration

Besides Zafiro, ExxonMobil in early December put the finishing touches to the sale of its two exploration blocks in the Equatorial Guinean offshore fields EG-06 (obtained in 2015) and EG-11 (2017). Chevron will take over these two licences, where gas discoveries have been made, notably in EG-06 in 2017 (Avestruz-1).

Chevron has become a key player in Equatorial Guinea since it took over Noble Energy in 2020. The company owns producing fields at Aseng (oil) and Alen (gas) as well as discovered but as yet undeveloped fields at Yoyo (on the Cameroon side) and Yolanda (Equatorial Guinea), both rich in gas and condensates. An agreement was signed on 17 March in Yaoundé between Cameroon President Paul Biya and his Guinean counterpart Teodoro Obiang Nguema on the sidelines of the 15th summit of the Central African Economic and Monetary Community (Cemac) to jointly develop these deposits.

Https://careers.savannah-energy.com/job/Victoria-Island-Senior-Electrical-Engineer-LA/849288555/

Zengas - It's definitely not the usual wording so you could be right, this time they haven't referenced the admission document date. Could the following be possible:

1) Admission Document is complete except with the formal government approvals. ?

2) Do they want to only release the admission document with approval and not without ?

3) Could they release the admission document still before the 1 Feb 24 i.e this month but still remain suspended for 4 weeks until 1 Feb 24, by pushing the cancellation date. Perhaps this allows them to publish and put pressure on other parties for approval whilst still staying suspended ?

Definitely interesting choice of words used and surely intentional choice of words

All in all extension is not a bad outcome as it will give company time to bring clarity on other areas of the business, whilst they still continue to pursue acquisitions.

1) Debt re-structure RNS hopeful that this completes between now and proposed admission document. Seems like they are drawing up documents forever so it really should be close or shouldn't take that long.

2) If we can squeeze a few more gas contracts that would be a bonus.

3) Clarity and operational plan on Niger, if export pipeline does commence early next year as reported in the media this week than Savannah has to find a way to get equipment into Niger to commence work, i am sure we can work with CNPC in achieving this if they are able to start and ramp up production to 90,000 bopd, than surely they must be getting in equipment into the country somehow so we show explore piggy backing of them. Afterall it's in there interest that we ramp up production seen as we are going to be eventually using their pipeline meaning tariff revenue for them.

4) If out of court settlement can be reached on Doba than that should be the preferred route. Even if it means that we sell the asset onto chad government. We paid $407m for the Exxon Chad asset with economic adjust at closing the outstanding balance was circa $175m outstanding to Exxon, so effectively $232m difference. There was talk that chad will compensate Exxon for the asset if they compensate the full $407m if not more and with Exxon outstanding balance of $175m at closing, we should pocket the difference of circa $200m. Obviously retaining the asset would be ideal but if we are getting a decent exit with a cash lump sum than I think we should take it as the cash could be used to pay down debt, share buybacks or any other potential acquisitions.

Personally I wouldn't even mind if we were suspended beyond 1 Feb 2024 to let's say April 2024 (i.e when Q1 2024 results) or June 2024 (i.e FY2023 full year results). This will sure up the company further, through additional cash collections, potential new gas contracts, compression facility completion, Niger progress, Chad progress.

I have always maintained and still continue to main that Savannah Energy, the board and AK have this window of suspension to deliver a transformational deal in which they can bring to market through an admission document, the confidence on M&A deals that have become a core part of it's strategy hinges on this suspension window, so whether they deliver SS towards admission document or another deal elsewhere simply put a deal via an admission document has to come to market. There are many reasons for this first of all they wouldn't want to waste a significant suspension window which has turned to over 1 year now to come to market with nothing as the strategy than get's put to question, second i don't think the board or institutional shareholders, nomad, regulator will be willing to grant another speculative long and drawn out suspension if this

JD - Personally SS or not I would hope that during the 12 months they have had the opportunity to work up other value accretive updates. Perhaps going for development assets might be easier rather than producing assets in africa who knows. Here is hoping to Savannah under promising throughout the year with limited updates turns to over delivering in reality.

I am sure there is plenty of proved up oil and gas reserves in Africa that are at development stage which requires capital to bring on stream, these assets may be easier to go for as governments are likely to approve development assets which are not producing yet as it drives new capital as supposed to investment in already producing assets.

Separately as for SS can an alternative deal be done, i.e a partial acquisition or perhaps a a joint acquisition with the government as supposed to the entire acquisition. Even if we are to end up with 10,000 - 20,000 bopd of the 50,000 - 60,000 bopd which is the entire petronas portfolio it would still be a good deal for us....................

Zenith Energy - is another company wanting to gain entry into South Sudan - https://www.lse.co.uk/rns/ZEN/mou-22683648220-south-sudan-3bzbhpeiubyz8oo.html

Niger Pipeline will start to export from Jan 2024 according to the below Reuters article. If it happens we need to find a way to get equipment into Niger to do the well test perhaps we can use CNPC to get what we need to carry on with our operations in Niger, as I am sure they will be able to source equipment and get into country considering the bulk of the production of crude will be theirs through the pipeline so if they are due to start production than I am sure there will be certain exceptions to the sanctions.

News from Niger side -

https://www.reuters.com/business/energy/niger-aims-start-oil-exports-benin-pipeline-january-leader-says-2023-12-11/

News from Benin side -

https://www.linkedin.com/posts/adamou-boubacar-572a3016_le-p%C3%A9trole-aplanit-le-contentieux-entre-le-activity-7138588585275834368-aBO1?utm_source=share&utm_medium=member_desktop

Let's hope savannah are quick to progress in any case and are fully able to capitalise on the commencing of the export pipeline.

Rockyride as far as I can tell there is strong demand for our gas, and that demand will continue so i don't see demand tailing off, I think there may be some customers that might wanted treated gas rather than untreated and hence our CPF facility coming online H1 2024 will massively drive additional gas contracts, obviously one would expect the pricing of treated gas to be higher than untreated gas.

However signing additional untreated gas and stranded gas contracts to flow through our pipeline until the CPF facility is online isn't out the question.Personally I would like to get to 300 - 350 MMSCFD at some point next year which would equate to 53,172 - 62,034 BOEPD.

Rocky I refer to your update from IR post on 27 Nov 2023 17:21 where it provide update from accugas contracts

175 MMscfpd (Take or Pay) equates to 31,017 BOEPD. If that's correct and if that's fixed take or pay that means we are getting paid for 31,017 BOEPD per day at present, which is already a massive increment from our full year FY22 average of 25-26K

91 MMscfpd (Interruptible) equates to 16,129 BOEPD. So if you total 31,017 BOEPD take up and pay up + 16,129 BOEPD interruptible = 47,146 BOEPD.

Rocky - If your IR update is accurate than on a full take up basis we could be selling 47,146 BOEPD. Even if you factor in a 30% take up of the interruptible gas quota 16,129 BOEPD * 30% = 4,838 BOEPD + 31,017 BOEPD Take up gas = 35,855 BOEPD.

I am intrigued on the accugas front if that's our current run rate as we are massively outperforming even on FY22 numbers, unless I am missing something or unless there was something that was misinterpreted on the IR update ?

"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."

I was just looking at the full year report and it has some detail on the proposed intention of how they are planning to re-structure.

Transitional Facility Agreement: The existing Accugas lenders have agreed to terms for a Transitional Facility. This facility is expected to be utilized in 2023 to repay the existing US Dollar Facility. The completion of this refinancing will align Accugas' principal revenue streams with its debt service obligations, reducing the Group's exposure to foreign exchange risks. It will also increase the tenor and enhance the structure of the debt facilities​​.

Refinancing of the Accugas US Dollar Facility: The company continued to work on refinancing the Accugas US Dollar Facility throughout 2022. The plan is to refinance this into a multi-tranche Naira-denominated borrowing structure with an average tenor of over 10 years. The initial step involves refinancing the current facility into a medium-term Naira bank debt facility (the Transitional Facility). This Transitional Facility will then be progressively paid down through the issuance of longer-dated debt instruments​​.

Repayment and Cancellation of Accugas US Dollar Facility: The Transitional Facility, which has a term of four years, will assist in fully repaying the Accugas US Dollar Facility. This repayment is planned to be done through a combination of long-dated domestic bond issuances and other bilateral facilities. The Accugas US Dollar Facility is expected to be fully repaid and cancelled in 2023.

If they can execute the above than that would be a brilliant outcome, as it will massively de-leverage our balance sheet to align the accugas debt with reserve life of the asset.

Https://theafricanstime.com/story/South%20Sudan:%20IMF%20Team%20Meets%20Finance%20Minister%20to%20Discuss%20Soliciting%20More%20Funds

"ensuring that South Sudan can solicit more funds from the global financial institutions and channel them to support the national budget and boost developmental activities."

Interesting quote - I am sure approving a transparent deal like Savannah will go along way in soliciting more funds from global financial institutions and bring confidence

Personally don't see CNPC and ONGC wanting to takeover Petronas stake, don't believe they would want to increase their current exposure as it is.

Nilepet meetings with CNPC are not uncommon after all they are partners. They even had a meeting in October where Nilepet execs flew out to China so nothing new.

Interesting take by Anas Alhajji on this, saying increasing production in South Sudan is not a priority for CNPC.

https://twitter.com/anasalhajji/status/1717025605869346933

Rocky - He is still CFO so no change there, my guess is the company is at a stage where it needs a dedicated company secretary and Nick doesn't have to do both roles.

Looks like we also have a new company secretary, looks like Nick Beattie has stepped down as company secretary and Lauren Kelsall has been appointed company secretary

https://find-and-update.company-information.service.gov.uk/company/09115262/officers

She is assistant general counsel who joined from Bracewell LLP 5 months ago. And we know Bracewell is basically our M&A transaction lawyers.

https://www.linkedin.com/in/lauren-kelsall-a69b258b/

Fingers crossed that positive things are to come whether in the form of south sudan deal or anything else which we may not be aware of..........

Thanks Sajy - I guess the main takeaway for me is getting the debt restructuring completed that in itself would be worth 4-5p to our share price perhaps more depending on the terms of the restructure especially if the restructure is fully aligned with our contracted revenues over 15yrs etc……

Https://www.cio.com/article/1249292/a-cloud-based-solution-to-rescue-millions-from-energy-poverty.html/amp/

The biggest winners of the oil major divestment in Africa will be local African independents not international independents. May seem like a small difference but quite material in terms of getting government approvals.

Strange thing is Chappal Energies is a newcomer and if they are able to acquire assets producing 25,000 bopd, it just goes to show deal making is art form and not science majors are willing to sell to local new players, it does not matter whether they have previous experience or any of the other criteria

Plus I feel majors might be willing to sell to new african independents if it means the likelihood of government approval is higher regardless of there is experience, as long as they are able to put the capital for acquisition up.

Rocky - would love a deal in Nigeria, I know we had reviewed the Equinor assets in Nigeria OML 128 & OML 129.

Looks like those assets are being sold to a local player Chappal Energies in Nigeria.

https://www.offshore-energy.biz/equinor-disposes-of-its-nigerian-business-and-stake-in-chevrons-offshore-oil-field/

I am sure there are other assets that we could go for.......

Komakino - If we go down the route of deemed vs explicit consent it will all depend on the perception of investment climate South Sudan wants to create in it's oil and gas industry and also it's appetite for a long and drawn out arbitration process and also it will highly depend on the banking structure and how the funds are distributed to all shareholders in the holding companies.

When the government which is highly dependent on the oil industry for it's economy, having funds frozen in the event or arbitration and going into a election year could be a political gamble to far, and safe option may be an approval.

However lets wait and see, of course I am still expecting approval to come after the admission document and not in tandem as many have suggested, but nevertheless will not complain if it came all in one although it's not the usual course of how oil and gas deals are completed.