Agadem, it's a compelling investment for me and why I continued to average down and with Nigeria we should get a £2 valuation from both in time.
Many seem to forget the extremely low exploration risk in Niger and the huge upside for multiple similar and deeper discoveries.
Not only an oil and gas producer in Nigeria but a separate gas supply business as well - both offering significant growth in their own right.
This would be transformational once we got access to the enormous free cash flow.
I think we are the 2nd-3rd major player in Niger so in time, any prospective buyer is going to see Savp as having a future 50-100k bopd potential as part of Nigers 500k bopd plan.
Every 1k bopd was potentially worth $10m free cash flow - but even at half that ($5m) and on 50k bopd it's worth $250m/yr plus circa $150m/yr from current fields/supply in Nigeria yet still has more than 50% spare capacity I believe on the gas supply side - so room for both new production, reserves growth and gas supply output.
Just out of interest Africa Oil Corp (founded by Lundin) which has a stake in Eco Atlantic has major operations in Kenya, South Africa and elsewhere is also waiting on sign off on a major offshore Nigerian Oil deal with an effective date 1/1/2018 which was announced on 31/10/2018 and the acquisition involves Africa Oil Corp, Delonex and Vitol as the consortium buyers with a purchase price of $1.4 billion - so if any consolation, we are not alone in terms of sizeable deals awaiting sign off.
14th August 2019 update - "In October 2018, the Company announced it had entered into a share purchase agreement to acquire an effective 12.5% ownership interest in a company who holds interests in multiple producing and developing fields offshore Nigeria (please refer to press release dated 31st October 2018). Completion of the transaction is subject to customary conditions precedent, including Nigerian Government consent."
500,000 bopd in the next 6 years - that's 1.8 billion bls in a single year.
5 years of that would mean 9 billion bls being produced so a bold statement/expectation that there is yet to be a lot more oil to be found.
Savps chasing 2.8 billion bls unrisked with 4 billion bls unrisked mid case.
50 mbbls discovered at a 100% success rate (from a 79% discovery rate on all wells drilled previous).
Once we get going, who's to say we won't be sitting with 500 mmbls reserves @ $4/b and $2billion (£1.5 billion) of value which is just 18% of the 2.8 billion bls recoverable that we are chasing.
We have 10% of that discovery figure now.
I don't think my numbers are optimistic at all Older. Some of the analysts and Savp have been using $6/barrel (Im using $4/b). Savp has an immediate production outlet for it's oil via truck in Niger.
I think it is more to do with liquidity. The institutions hold quite a whack and you could easily argue that the market was ascribing a very healthy discount at 23p yet Savp conducted a placing at 35p shortly afterwards a few years ago. They might be unfairly beaten down to 12p just as back then and they could quite easily come out and possibly surprise to the upside. No matter what is going on in Nigeria, I think AK/Chairman etc will not give up the value from Niger too easily or cheaply.
There's some 50m barrels discovered in Niger so there's value in that alone never mind any priced in hope value given the success rate is deemed 80%+ which Savp at least have proven so far at 100% with 5 out of 5 fields discovered.
Some stocks will depending on any particular moment in time be in or out of favour with PIs according to sentiment. A case in point is SEY with no debt or commitments but with 15p cash versus a share price of 9.72p and a carried interest in an asset. The so called market isn't always correct otherwise value opportunities would not exist imo.
1-8-14 = $50m raised at 56p = 131.337 shares in issue.
10-7-15 = $36m at 38p = 175.1m shares in issue.
7-7-16 = $40m at 38p = 273m shares in issue.
22-12-17 = $125m at 35p = 817m shares in issue.
24-1-19 = $23m at 28p = 879m shares in issue.
Most if not all of the money has come from institutional investors and for a great number of them, their averages will be much higher than the last funding at 28p.
In my opinion most of the bigger subscribers average is closer to 38p - 40p.
I haven't seen many institutions leave. Two or so sold down but others took their place.
I worked on around 1b shares in issue.
If the 7E deal goes ahead as expected $12.5m was intended as a dividend, but in future years with annual free cash flow of up to $150m from Nigeria some 30% of that could be returned as a dividend. $45m at a longer term exch rate of £1/$1.40 is about 3.2p/share ie 10% yield on a share price of 32p or 5% yield on a share price of 64p (excluding anything in Niger).
Niger on a billion shares to get a £1-£2 share price target ie $1.4b -$2.8b of value on a similar longer term exch rate of £1/$1.40 would need to realise some 350-700 mmbls at $4/barrel and we've notched up about 50 mmbls already there so far according to the analysts from a total potential of 2.8 billion bls RISKED recoverable (From memory circa 4 billion bls UNRISKED) mid case and plenty to go round even with a farm in partner.
If you add the potential from the 2 projects together there's a serious amount of combined upside potential from 12p currently given 7E production/immediate cash flow and substantial low risk Sokor Alternances play in Niger both in dividend and capital growth and that's why imo we havent seen many TR1s because unlike many PIs they can afford to take a longer term view on both sets of assets re risk profile.
Unless there's any change to 7E, I still stick with my £2 target. While the delay isn't comfortable to bear and we should be getting on with things it's allowed me to average down in to the mid teens. Nigeria cash flow would be immediate and a high portion of the Niger exploration extremely low risk at 80% COS and as evidenced by the 5 out of 5 discoveries from scratch.
Agadem, I posted this on Ad v F n back in July -
' R1/R2 (8406 km2 permit) was issued in July 2014.
On the 3/5/18 (RNS) it was granted an extension.
The 1st phase period runs to 5/8/2019.
2nd phase runs to 5/8/2021.
3rd phase runs to 5/8/2023.
50% of the permit less any discoveries must be relinquished at the end of each phase. If they lost 50% at 5/8/2019 they would still have all their mapped prospects. I know they were planning on seeking a 2nd extension when I enquired about this.
R3/R4 (5260 km2 permit) has had the minimum work compliance exceeded in the 1st 4 year term and has exceeded this by 3 wells. It was granted in July 2015.
As far as I see it, they are comfortable on the Niger assets in terms of time/relinquishment requirements. It was late last year that AK said from memory that he wanted to see a number of rigs operating at once. More than 2 rigs operating, I would think you would want to bring in a partner. '
China's CNPC to build Niger-Benin crude oil pipeline
BEIJING, Aug 6 (Reuters) -
* China National Petroleum Corp (CNPC) signed a contract with the government of Benin in West Africa to build and operate a crude oil pipeline in the region, the company said in a statement on Tuesday
* The 1,980-kilometres pipeline will start from the Agadem oil field in neighbouring Niger and end at the port of Seme Terminal in Benin, aiming to help Niger to export its crude oil
* It is the biggest investment in a cross-nation oil pipeline CNPC has made in Africa, the company said, but it did not give further details
* The pipeline project comes after CNPC launched an oil refinery with annual throughput capacity of 1 million tonnes in Zinder in southern Niger in 2011
* Last week, CNPC had set a 2020 production target of more than 2 million barrels oil equivalent per day from overseas oil and gas operations (Reporting by Muyu Xu and Tom Daly; editing by Uttaresh.V)
"Its an interesting change to the note to editors as you highlight, stating for the first time that the 12m Djeno reserves value “with gross prospective resources of 58.4m barrels, in the productive Djeno interval from which the adjacent Minsala field produces. “
They must have been doing some extensive modelling to claim this scale of reserve now, but are not making a big deal of it yet, as per previous 300m barrel reserves estimates in presentations – indicative of work done in the background. "
Unfortunately no extensive modelling, - the paragraph about the 58.4 m barrels in the Djeno today is exactly the same wording as they put out 2 and a half years ago - Here's the RNS to prove it.
..... has an undeveloped discovery in the lower Mengo sands with gross contingent resources of 8.1m barrels; and a deeper exploration prospect with gross prospective resources of 58.4m barrels in the productive Djeno interval from which the adjacent Minsala field produces.
"The Company is seeking the revocation of the order at a hearing in Pointe Noire this week on several grounds including that the equipment and oil at the site is the joint property of SPNC, the Government (in the case of the oil) and the Company, and therefore has been wrongfully seized. The judgment of the court may take a few days to be delivered."
That's 3 working weeks now passed. Imo if this drags on it will prove difficult to get a rig quote from another supplier. Any drilling company will want to see full funds secured in black and white (will they have full funds incl govt carry portion by xyz date if they want to get this sidetrack done by year end ?).
Also any drilling company would be wary imo of carrying out work while legal action is dragging on at another driller with basically their rig being held by AAOG. Does any other drilling company want to get caught up in a similar scenario where they may have a lot less rigs and where the supplied rig could be held in any similar dispute jeapordising well work for other oil Cos. Other drilling companies may infact be less willing to get involved. This is something AAOG need to put to bed asap if they want to get anything done before year end (but use the caveat "subject to rig availability").
"The side-track is a 25-30-day programme and we intend to complete this work before the end of the year, subject to rig availability. "
No rig availability and it could drag on into next year. I have the impression they will try and let cash build for a number of months, but also will have to consider the implications for any licence renewal so won't want to let it drag on either.
"This oil along with attendant gas continues to flow to surface under its own pressure with minimal water content."
While thinking it's all oil - it's worth remembering the effect of gas being a hydrocarbon in this 10 or 14m net pay reservoir depending what view is correct. This will have a bearing on actual oil reserves. There's gas coming to surface.
They don't say how much but imo looks like if they are convinced about being from the Djeno, it's possible that it is like the other fields - ie gas with an oil rim as per the original CPR. This is why they need hard data - they have no fluid samples - yes oil/gas flowing to surface but what determination in that pay relative to sufficient oil reserves.
I've queried the current net pay against the gross in order to get any idea of what the potential reservoir(s) might hold in terms of oil reserves. These estimates are fully available in that original CPR but no one has commented other than accusations of trolling. One poster has consistently talked of 50,000 bopd from 10 wells and if anyone cared to address the original CPR assumptions you'd see 50,000 bopd would equate to over 18 million barrels of oil in one year and simply there's no way imo that could be (on current assumptions, pay and unknown areal extent while taking into account the actual licence area - more likely 10 wells to keep production maintained at 5-10k while thinking of an oil rim and gas.
They aren't by the look of it in an optimal position so the need for a sidetrack.
While there well be decent production, until they clarify gas/oil ratio in that pay and areal extent, the ultimate reserves may or may not support a much higher valuation over a longer sustained period. Instead of ignoring this and assuming grand oil production numbers, it's worth investors looking at the original CPR in terms of pay/area extent relative to reserves/production and asking questions of how much gas/oil is coming to surface and the ratio. The CPI mentions nothing other than hydrocarbons that I can see . The lack of a CPR means there is no idea at this point how much gas is actually in that reservoir payzone along with oil.
Agadem-Seme pipeline: Patrice Talon speeds up process with CNPC
West African Oil Pipeline Benin Co (WAPCO Benin) and China National Petroleum Corp (CNPC) are poised to sign a deal to create a network of exportation pipelines between Niger and Benin. During the July 17 cabinet meeting, President Patrice Talon approved the outcome of the talks made with the Chinese partner and ordered his minister of mines,Samou Seidou Adambi, to get the deal signed as soon as possible. The future pipeline will be used to export crude oil produced by CNPC on its Nigerien block Agadem. As we revealed ( AEI 843), the Chinese group opted for the Benin route after a round of hard-nosed negotiations with Chad, which had fought to have the facility built via Doba before heading to Cameroon's coastline. WAPCO Benin has now been contracted to build, operate and upkeep the Beninese transport system stretching nearly 800 km from the north of the country out to the port of Seme. CPNC's internal calculations estimated the project will cost $2.25 billion. The major is counting on output for export reaching at least at 90,000 bpd and hopes to see the route up and running by January 2022.
"Only then could this negative view have any possible credence or be comparable in any way to the combined evidence presented, unsubstantiated negative opinion without agenda is of course absolutely fine as a viewpoint, but has no objective depth or foundation and so should be treated with extreme caution by others."
Was that £1 expectation before or after he decided to issue a further 160m shares ?
Finncaps detailed analysis was based on 162.1m shares (now circa 400m after last weeks financing).
Don't let the facts get in the way of presenting a balanced view.
26 November 2018
The drilling contractor, SMP, have accepted that this delay is entirely their fault and have agreed that, in addition to the rig being on zero rate during the delay, they will compensate AAOG for a substantial amount of AAOG's additional costs which have been incurred with respect to this delay. The mechanism for this compensation is through a significantly reduced day rate for the rig going forward.
15th July 2019
Following poor performance by SMP in the drilling of wells TLP-103 and TLP-103C the Company attempted to enter into negotiations with SMP to recover some of the cost overruns incurred by the Company. SMP refused to engage in such negotiations.
One minute they say they agreed cost overruns via a reduced day rate then nearly 8 months later they say they tried to recover SOME of the cost overruns - therefore they can't be looking for all of the cost overruns when it is only some.
It's what AAOG don't say that seems to be the issue. I can't understand why SMP took the case to court if AAOG believe they are in the right, yet mention nothing in the subsequent events of their accounts at end of June when they had the chance as they also should have done ATOG re no longer pursuing the acquisition that the £580k of funds were spent on.
First AAOG said SMP had a topside issue - then 2 days later the drill was actually affected by movement in the choice of site - did that damage the rig. AAOG never said anything beyond "initial inspections show no damage" Why did AAOG mention insurance polices but right up to the accounts and subsquent events section in the accounts no mention of an insurance claim appears anywhere to have been further mentioned if being pursued ?.
Could it be that SMP holds AAOG responsible for the topside issue and perhaps actual rig damage ? Otherwise why have SMP taken AAOG to court to freeze assets ?
05 September 2018
Anglo African Oil & Gas plc, an independent oil and gas developer, announces that the Company has been informed by its drilling contractor, SMP, that they have experienced a topside issue that has affected the rig. As a result, the Company has taken the decision to temporarily suspend drilling TLP-103 while a specialist review of the various solutions is undertaken.
07 September 2018
Whilst drilling through the shallow section a number of drilling challenges were encountered, caused by localised geological conditions, which resulted in ground movement that impacted the safe operation of the rig. Initial inspections show no damage to the rig.
In addition to contingencies in the drilling budget and potential offsets and claims under insurance policies, the Company has available to it offers of debt finance sufficient to meet any cost overruns due to the delay and need to re-spud.
"The Truth will set you free"
Sure it will - especially when factual posts are removed by the rampers !
Rather than discuss the actual CPR from IPO and the latest Mengo /Djeno result they get the post removed.
To the poster who said Schlumberger must be wrong then - that's not what I said at all if you open your one brain cell. There's a reservoir but there is nothing from anyone including Schlumberger on areal extent to back up the ridiculous claims of supporting 50,000 bopd from 10 wells compared to the assumptions and metrics in the ipo CPR..
"empty vessels make the most noise ".
If some of those so called empty vessels hadn't brought this into the open re ATOG when do you think AAOG would have given clarity ? (4 days later). That's almost £600k of AAOG shareholders money that they could damn well use right now !!!
Also no prior mention of legal action re SMP. On both those points absolutely nothing in the subsequent events section of the accounts which is and was appalling. £500k held back from SMP - that's over £1m of ballsed up funds that they could certainly now use to speed up drilling. Let's hope they don't have to pay that £500k right away to SMP or that will tear a hole in their finances.
As for ostriches - that' describes some of you fittingly that you can't see the wood for the trees. Everyone keeps talking about production - well unless they issue some news on the size and areal extent of the reservoir you're not going to get a notion of how much oil can realistically be produced over any length of time. If it doesn't come close to the original CPR reserves/resources estimate, it may be in danger of being not far off fair value post drill when the funds are used up (even if they get all those funds in). I also wonder if the lack of detail in the licence re the PSC is contingent on any Djeno flow rates/size of resource and they won't know that until the sidetrack. Therefore how long will it take them to have enough funds together and drill and will they be able to source a decent contractor after the SMP debacle.
Tilburn - in answer to your question - NO I am not invested nor short and I post out of interest and for that matter I didn't see you find or post anything of substance on the ATOG matter as I did prior to the company having to come out and clarify it 4 days later or question any of the matters in the accounts re subsequent events.
4 days after that post AAOG had to issue an RNS to clarify that - everything has to be dragged out of these guys.
The 3 directors of the financing company have been installed at ATOG .
It will be interesting to see if AAOG get their £580k back if the Medco/ATOG deal goes ahead.
"The Company will continue to review whether any transaction between ATOG and AAOG should be treated as a related party transaction pursuant to the AIM Rules for Companies." - How long will they take to review that ?. Any watering down to AAOG of course dilutes ATOG interest.
As for the 6-8 minutes interview on the CPR - that's absolute not worth listening to anymore. If he hadn't any useful data he shouldn't have pursued a CPR. The CPI incidentally put together by Havoc Partners (all ex Ophir where Berwick was also) emphasises the lack of data (and im not talking about the licence term/issue).
Given the lack of data, no director participation that I can see, the lack of mention in the accounts of subsequent events etc, I have little faith in what the company says or does under current management. It is not crystal clear if that is Djeno oil.
"The oil that flowed to the surface has an API of 43, and it is considered very likely that it flowed from the Djeno"
" The oil has been collected and then tested by both the Total laboratory in Pointe Noire and the Congolese state refinery. Both tests show an oil quality of 43 API; due to the characteristics of the oil and the well design, it is calculated that this oil is from the Djeno reservoir,"
Hopefully it is but no CPR and hard data missing. It's ok saying to produce from the Djeno but given they think they are not at an optimum location, how does this tally with the original CPR projected reserves ? If they are happy with this why not participate in the funding ? Why also not ensure that the asset comes to AAOG as originally pursued but the same funders etc with Berwick and Sefton all gone into a newly set up separate company ?
The CPI - I can't for the life of me see anything uplifting in it and a pity when AAOG couldn't manage to get a CPR out which was the stated objective. I still think it's like starting from scratch re the Djeno other than a reservoir being there. I also think the Mengo could be possibly compartmentalised - productive, needing fracced but individually maybe too small - my theory when reading the original CPR on that.
It would have given a bit of confidence if Havoc had taken a stake in AAOG when given the task to produce the CPI (as they have in some other companies). The guys who run Havoc were all ex Ophir where AAOGs James Berwick also was employed at a time.
Also have any of the directors participated in the funding this time ?