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The FinnCap note of 4th January 2022 page 9 at the time of the Petronas & Exxon assets assumed the acquisition price of $3.40 P2 barrel for the 103.8 mmbo 2P reserves with another 82 mmbo 2C.
With 22,500 bopd production = $15,700 flowing bl.
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Afentra 19-7-23 on the Azule offshore Angola acquistion. "The attractive acquisition cost implies approx. $3.7/bbl based on 2P reserves". This is their 3rd acquisition on the same assets and gives them 6,000 bopd + 32 mmbo 2P oil + 20 mmbo 2C all done at $3.90b max which also includes some licence interests over and above production which has a discovery. If oil goes way above in 2 cases $65 and $75/b there are bonus payments to be made for 2 of the acquistions but these are spread out over 3 and 10 years respectively.
Flowing cost per bl approx $20,400.
For South Sudan - SAVE say "UP TO" $1,250m (so doesn't sound definitive to me) where as in the Petronas Chad acquisition it was for a definitive fixed sum when announced, while Exxon Chad was an up to price which included a contingency.
So does the "UP TO" $1250m price tag include possible contingencies for higher oil prices/production profile case ?
We kmnow little other than AI reported the reserves were some 300 mmbls - was this all 2P. There's also likely to be considerable 2C.
Based on what Save were paying for Chad ie an assumed $3.40 this would mean the 300 mmbls 2P in S.Sudan costing $1 billion pro rata. They are landlocked like Chad having to export a considerable distance through another country before reaching the loading terminal.
Based on $3.70 for Afentras offshore Azule acquistion and $3.82 for all - that would imply $1.1 - $1.15 billion for the S.Sudan 300 mmbls 2P - these are offshore and measurably less risk for export.
If you use the Chad price of $15,700 and Angola $20,400 flowing bl price - the 55,000 expected production in South Sudan could be in the $860m - $1.1b range. So on the flowing metric and 2P price examples it doesn't come to the UP TO $1250m and i can't see why SAVE would overpay given the risk never mind the Chad price example and the lower risk offshore Angola price example.
Unless there is signifcantly more reserves, greater production or some other infrastructure in S.Sudan that gives income - therefore on 300 mmbo P2 and 55k production i woukd hope for a $1b price tag with any contingencies taking it to that 'up to' $1250m initially quoted figure.
Apply a discount figure and if it's 1/1/22 then that could be a substantial deduction from $1 billion.
For the money man and deal maker that AK is, surely at some point he would seriously consider a dual listing on the NYSE -not just a move to the main market off AIM.
Oil Company valuations are much better compared to those in the UK. Even Shell is half that of its comparative US cousins.
This would give us even closer to parity on reserves, production, revenue and possible cash flow to Kosmos that has that dual listing.
Given that SAVE is already moving to become one of the biggest renewables investor in Africa and a target of 2.4 GW in motion in the next 17 months alone, surely the appeal for greater investor interest to lift the value must be significant.
AK himself is a very significant holder so i would be surprised if this will not be considered once the next few acquisitions are completed as i'm sure he'd rather have as much as possible for his shares from all possible value creation and recognition angles rather than less in the UK alone.
I think we will be undervalued in the UK alone and we will on all intents be both a very large oil & gas company and a major emerging renewables company.
Two things -
The SAVE oil/gas business should more reflect the growth to match that of Kosmos which itself is solely oil/gas - and by the way has no renewables arm.
KOS currently has a £2.46b m/cap and $2.1b/£1.64b net debt with 580 mmboe 2P & 61K boepd production.
The SAVE renewables arm could be floated off separately - but if not it should attract a significant valuation in its own right but i fear being part of a traditional oil/gas Co might be undervalued/misunderstood by being solely listed in the UK.
There must be valuations attributed to both in time.
Lekela Power with 1GW of operational African wind and a further 225 MW in development was sold for an enterprise value of $1.5b. I would hope to see our renewables division grow to a much greater level given the 240 GW African target by 2030.
https://news.cision.com/aker-horizons/r/mainstream-renewable-power-and-actis-complete-sale-of-lekela-power,c3736799
Right now my wish is to see S. Sudan completed on non recourse debt terms and not so much COTCo given where our size will hopefully soon be.
If as i hope S.Sudan circa 300 mmbls reserves and 50-55k bopd = possible $1.3-$1.5b revenue + i believe Accugas should be circa $300m revenue after that last gas contract = $1.6-$1.8b.
There's a 2nd Hydrocarbon asset top come by year end - but if it's 5-10-15k or more bopd region its possibly another $135m - $400m+ revenue range to think about, it all depends on how small or big the next deal is (and more than 1 possible).
Right now the S.Sudan deal is reducing in cost until completed.
As for Exxon Chad - let'stake it in our stride and context of overall lost immediate revenue - it's with the ICC as the proper course. End of the day we win the case or don't and Chads oil has to load at Kribi and leave the Cameroon coast by ship for international markets if we win.
We lost out on the 22.5K bopd revenue from Chad Exxon/Petronas - about $600m + a combined revenue for TOTCo + COCTCo of $152m - so in all the 2 deals were worth an expected revenue region of $750m.
Overall that would have meant we would have been on a revenue guide of about $2.35b - $2.55b by now ahead of the intended acquistion beyond S.Sudan -so thats how close we were and maybe still are depending on the next deals by this year end and '24.
Our remaining 41% COTCo revenue share should still account for $75-$80m as the pipeline element was about 90% COTCo to 10% TOTCo.
Nigeria/Accugas $300m, S.Sudan estimate $1.3-$1.5b and on deal completion see us on $1.7b - $1.9b revenue ahead of the next follow on hydrocarbon deals.
As for S.Sudan i think they will derisk it further by building on a few more geographically spread hydrocarbon deals ('at least 1' by this year end) and to me its the unfortunate order they come to market in as on how risk is percieved now - versus a few more deals under our belt when non recourse to the company.
There is an excellent lengthy article this morning re Cameroon in todays AI. They’ve just recently been put on the GAFI and EITI grey list for countries since June 23. Also SNH which is part of COTCo wants an investigation authorised by Biya to look into the payment of money to executives at the company of which Glencore had admitted to. Too long to post but shows there is support for SAVE from some inside SNH and with Save being a member of EITI - adds further support
There may be no firm date for S.S govt approval.
Look at 7E they first had Nigerian Govt DPR dd and sent for final approval which bewteen those 2 dats lasted a year and overall the deal took 2.5 years in total to complete from first announced.
Currently the S.Sudan president is involved with a lot of talks and travelling with and to other countries and Sudan itself on ending the war in Sudan - so this could impact timelines.
We are still in the ball park area for resumption of trading timeline based on past suspensions.
The 4 Suspensions
11-1-2016 The Company has entered into non-binding heads of terms regarding a potential transaction which, if completed on the currently proposed terms, would be classified as a reverse takeover under the AIM Rules for Companies. The Company's ordinary shares will remain suspended from trading on AIM until such time as either an admission document setting out details of the proposed transaction is published, which would be no earlier than April 2016, or confirmation is given that the transaction is not proceeding.
5-7-2016 In the event that the Placing does not complete, it is highly likely that the Board will terminate discussions on the potential transaction in order to avoid the Ordinary Shares being cancelled from admission to trading on AIM, which is currently scheduled to take place on 12 July 2016, pursuant to AIM Rule 41. $40m raised at 38p and suspension lifted
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8-6-2017 suspended for 7E takeover.
21-12-2017 Adm doc published.
22-12-2017. $125m raised at 35p. Suspension lifted.
11-10-2018. Nigerian Govts DPR complets DD on deal - sent for final approval.
24-1-2019. $23m raised at 28p.
15-11-2019 Deal approved & Completed
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2-6-2021 suspended for Exxon Chad deal.
13-12-2021 Announced Petronas Chad deal
30-12-2021 $65m raised at 19.35p
31-12-2021 Adm doc published. Suspension lifed/trading restored.
9-12-2022 Exxon deal announced as completed. (Petronas subsequently abandoned).
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12-12-2022 suspended for Petronas South Sudan deal.
Adm doc to be published by 28-7-2023.
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In the very first RTO they were mindful to be back from suspension within 6 months which they were, though the deal terminated so no adm doc = 25 weeks.
In the 7E RTO they were back trading just 2 weeks beyond the 6 month rule and adm doc published at the same time level of just beyond 6 months = 29 weeks though another almost 2 years before deal completed.
Re Exxon Chad - Adm doc published at 2 weeks beyond the 6 month rule and back from suspension at the same time = 30 weeks.
South Sudan - adm doc intends to be published next week by 28th which shows that it will be 32 weeks lapsed (or if by this coming Friday would be 31 weeks).
No price target on relist from me RR but this is what i see as reasonable parity post closure.
Tullows July 12th trading statement showed they certainly struggled in H1 2023 with production averaging 53,000 bopd (down from 61k 2022 ) with their net debt at $1.9b.
Their estimate average for all of 2023 is for circa 58-64k boepd and todays announcement reinforces that guidance after the 2nd phase of Jubilee start-up..
1.448b shares and back up from the low 20s to 31p today so a market cap of £450m + £1.49b debt = £1.94b They had fallen from 55p less than 9 months ago presumably with the large fall in half 1 '23 production now to be corrected and with Jeffries downgrading them in April from 40 to 25p.
Peel Hunts price target went up to 80p in May based on executing todays news and there was a fair amount of some recent director buying. Cannacords target back in March was reiterated at 54p. Davys target May 100p.
Save some 55,000 bopd from S.Sudan. Add Accugas, Niger and with the existing debt should be in a range of $1-$1.2b some $7-$900m lower than TLW.
If you use the current metric on todays TLW valuation at £1.94b and deduct Saves expected net debt of £785 - £940m - leaves £1b - £1.15b for Save across it's 1.4b shares fully diluted.
So I get 71p - 82p (And If you extrapolate to the Cannacord/Peel Hunt/Davy targets then Saves target compared to the lowest 54p TLW target alone should be worth another 23p to Save - ie 100p range. So i wouldn't be surprised to see our coverage beginning at 90p risked again as when it reflected Chad alone on the same number of shares.
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As for Kosmos on todays joint Jubilee news and late 23 early 24 first Tortue gas which should take them from the current circa 58,800 bopd in Q1 to 90k+ boepd in the next 6-9 months.
460m shares at todays £5.08 price = £2.34b + £1.65b net debt = £3.99b.
100p Target for Save on the same KOS production levels as of now = £1.4b + net debt range of £785m - £940m = valuation just shy of almost half of KOS and again KOS b/targets are much greater than its share price of today.
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So i can't see any broker for Save, given the previous guidance on Chad revenue/FCF/Production etc, being much less than above compared to what i have given.
I fully expect Save on the back of S.Sudan to lift them into parity with the revenues of KOS/TLW - given our other income streams.
In addition to keep pace with TLW/KOS over the next 6-9 months targets - we have Niger start-up and a further - at least one hydrocarbon acquisition. I would say if our net debt stands still as the above estimate we could theoretically add up to 10k bopd from revenue/FCF alone.
Worst case if there was 10% share dilution for any raise - then roughly you could cut 7-10% of the share price target in the short term.
At the same time nothing for the renewables, the delayed Niger exploration and the possible upside that could come from S.Suda
I could be wrong but i hope we are looking at the $1.25b headline price in a slightly incorrect 'immediate cost context'. The use of the term 'UP TO' or similar by Save is shown in the Afentra, Panoro and Saves Exxon Chad acquisitions (There was no 'UP TO' in the Petronas Chad SPA when announced).
We will no doubt be discounted by the effective transaction date (if it is 1/1/22) but also the use of the wording "UP TO" $1.25b consideration - could there be cost contingency built in to that $1.25b figure used. You can see how this works in a number of other deals recently. Not a given but i think the actual starting price could be less say $1 billion and then $250m for contingencies as seen in the other deal examples. From that starting point of say $1B then deduct just over 1.5 years of contributions.
Saves 3 acquisitions
Exxon Chad for the sum of US$360 million (with a further oil-price contingent payment of up to US$50 million), subject to other adjustments ie $410m.
Petronas Chad for the sum of US$266 million, subject to working capital and customary adjustments
Petronas South Sudan for a *total* cash consideration of *up to* US$1.25 billion, subject to certain completion adjustments.
There remains a possibility that perhaps as much as 20% of that headline price could be inclusive of contingencies - ie for certain production levels being met as well as the oil price for x years.
Panoro Feb 2021
Equatorial Guinea and Gabon oil producing assets $180m - for an initial US$ 140 million and aggregate contingent consideration of up to US$ 40 million, based on an effective date of 1 July 2020.
The EG Contingent Consideration is up to US$ 16 million in aggregate payable only in years where the average annual net production of the acquired interests is in excess of 5,500 bopd. Once this initial net production threshold has been reached, in that year, and for the four consecutive subsequent annual periods, annual contingent consideration of US$ 5.5 million will be payable to Tullow provided that the production threshold is met in such annual period and the average daily Dated Brent oil prices in respect of the annual period is in excess of US$ 60/bbl, subject to the aforementioned cap of US$ 16 million.
The consideration for the Dussafu Acquisition consists of an initial cash consideration of US$ 46 million (to be adjusted at completion for working capital and other customary adjustments) and a contingent consideration of up to US$ 24 million (the “Dussafu Contingent Consideration”).
Afentra April 2022
Sonagol transaction $80.5m upfront with a $50m contingency (up to $130m) (Contingency is $5m annually for 10 years subject to above $65/b oil price and being over 15k bopd gross production).
INA transaction $12m cash upfront plus $21m contingency (Contingency is $10m licence extension, plus $2m/yr x 3 yrs on 30% of the revenue upside if oil price above $65/b. Further $5m if any new discovery subject
Let's see how he deals with the debt repayment in the meantime TYB.
The last pvt placement was .054 in Februray and that was a long time after no oil was sold in Tunisia by Sept 22 when looking at the accounts and then told in June 2023 that no oil was sold.
The VWA is now at .035 - 0.375 ahead of completion of the US deals. It is as low as it is for now but id wait to see what dilutuion might happen given the RNS, also if there is a need for cash given the debt and if the original funders will help out but want a discount to their original price in February given what has happened since and all we have is likely make or break production to keep the lights on for 12 months until a result comes out at arbitration (or if it resolved before hand).
I'd wait for a decent meaningful asset to appear such as Benin and at the minute they dont have the cash as i see, for it.
I'd be happy investing at a higher price than now rather than looking for the bottom but it all comes down to the asset - and im mindful that Benin could be off the table given that we are using cash/dilution to take up our time on a low base in the USA which after all are fairly small wells - i don't say that to be negative just to appear so, but i beleive they will be a long time in creating any significant value and take too much of the companys time given the geographical split - and if Benin was close as in 3-6 months there's no point in heading to the US if that was the case.
If i had listened to some that are here since 1p back in 2020 when i studied up on investing on Tilapia with AC after AAOGs mess of things, that this was going to 3-5p i'd be down 66% of my cash and diluted into the bargain. It's the reason you ask questions and share things which BBs are intended for. Answer that !
The point that is wrong with some of you is if you see any percieved negative questions or points put up for discussion, you would rather bury your heads in the sand and think everything will be just dandy and hope it goes away.
It's got nothing to do with Azerbaijan. We were well aware of the asset hopping long before that.
The point is the threat of very significant dilution is still there. When that is removed, and there are decent assets on the table and potential new mangement added, then i might be interested in investing significantly.
Where on earth does it say that you must own shares in a company to be allowed to discuss it's potential - answer that please. It just shows how naive some of you are when it comes to investing.
Would you take the same attitude if your company pension pot provider or money manager invested willy nilly with your hard earned and never asked questions first and batted away any discussion from the rest of the organisation about a companies performance - past, present and future trend under the same leader who has never delivered any meaningful growth and no shareholder return on the substantial number of assets that this company has been involved with.
(callit - by the way thank you. I would prefer to see workovers and performance upside targets replaced by a share of production achieved rather than dilution by more equity).
Just out of interest on the 41p overheard s/p, 41p was reached back in June 2022 when the Chad deals were due for completion and thereafter started to fall possibly on some having knowledge that the deals were struggling. I would expect the cash flow to be greater than the Chad deals. On the other hand if there is some dilution I could live with it as any debt will be lower and we know a further hydrocarbon acquisition is expected to follow by year end.
The price was a penny then Florida when Africa Intelligence published that article and were able to produce the letter - which is incidentally still there. Tell me who's false - you or AI ?
They've ran a few articles on the Tilapia case and Zenith and his then focus on Gabon as well (2020) but i'd say you prefer to keep your head somewhere where the Florida sun doesn't shine.
0.35p of a penny.
Yes, but look at the management announcements and changes over the years at ANGS. Imo there is much better governance on an AIM listed stock such as ANGS rather than on the standard list - yet some think a standard list is better when it clearly isn't.
AC has been delivering the same unchallenged performance imo year in year out for the last 14 years and continues in doing so. He should step down, let the company build a better team and take it forward - but the company as i see it, is just really him - where's the challenge to seek change. 14 years and he's chasing 60 bopd deals where 24 of those bls have to paid for in equity at an all time low. I see no justification for 3 small deals over such a geographical spread at a time when they are trying to preserve cash. These kind of US deals are two a penny in the US trade and industry divestment mags. How much from a distance is he prepared to pay to have them managed is another thing.
While Angus might have the onshore gas pricing on their side in the current environment at a current m/cap of £33m.
The dilution ignores the obvious fact that Angus Energy's share price was 11p (Eleven pence) in March 2017 and yes as you point out there is 3.6 billion in issue today and the share price is 0.9p (nine tenths of a penny). That's not how it's meant to work in delivering shareholder value.
Good luck to ANGR from here but for now I see no end in sight to Zeniths capacity to keep eroding shareholder value to keep them in the game and the reasons i pointed out earlier.
1. " In May, Chad took steps to seize control of bank accounts held in COTCO’s name. Letters were sent to a number of banks saying Chad and Société des Hydrocarbures du Tchad (SHT) owned 53.77% stake in COTCO. This followed the nationalisation of Exxon’s assets and acquisition of Petronas’. "
(Therefore on the above statement SHT 53.77%, Cameroon 15.17% and SAVE 31.06% = 100% ???)
and
2. " According to correspondence reported in the local press, Chad may transfer a 20% stake in COTCO to Cameroon. This would take Cameroon’s stake to 35.17% and Chad’s to 33.77%. "
If you read the above it seems Saves assumed sale of 10% is factored in point 1 above. It also appears as having been agreed and still leaving them with 31.06% in point 2.
I think Chad has ended up with better voting arrangements in COTCo that it otherwise would not have had. It has to release 20% under CEMAC to Cameroon under the agreement for allowing the deal to go through.
Cameroon wanted the matter brought back to a normal ownership structure and what the recent two-ing and fro-ing spat seemed to be about.
If this is as they say "marked the final stage in the nationalisation of what had been ExxonMobil's assets" then where is the 31.06% - beccause this seems to still rest in SAVEs hands looking at the percentages above. This does not seem to be taken from SAVE - how can it have been by Chad in another jurisdiction unless Cameroon does it and which there is no mention of Cameroon doing this. There may be not as many SAVE directors as envisaged and the (SAVEs) Chair and managing director of COTCo has changed to that of Chads oil minister.
This is over 3 days old so if there was a major problem i would have expected SAVE to say something if their ownership stake in COTCo was affected by now.
If they get the $48m/£37m full claim it's about 1.6p before debt repayment and tax on 2.3b shares prior to the 2 US deals.
They've already started diluting on the first 2 US deals.
I reckon we will head for 3b shares and if another deal is done ultimatelty about 3.7 b shares could be in play in a year or so if he wants to acquire about 500 bopd at the same cost implications in the US. They need to be up about 500 bopd paying for the running of the company etc keeping the lights on. I haven't factored any cash raises to pay debt or needed for capex/working capital.
3.7b shares on $48m/£37m is about 1p/share compared to .375 of a penny now.
What's the debt level to come out of that ?
On the other hand if that claim is not fully successful, its a long climb on the US alone and if they are prepared to dilute for that, they imo will certainly dilute for any new deals in Africa.
You may not care about how many shares he issues but i do and sure a few others do. You may end up in the exact same position as those 10 years ago or 6 years ago because the same thing is already happening ie massive share dilution to pay for pitiful assets that imo will not or barely keep the lights on when you look at the costs of running the company.
If you can't see how issuing shares in this case, at these prices of imo 86m shares for 24 bopd oil you're missing the point.
If 86m shares can be issued to what they are paying for 24 bopd, what do you think the bonuses paid in shares will be for each 50 bopd reached from 75-125-175-225 bopd for the first deal in Oklahoma alone.
Imo it could be 100m at least for each 50 bopd and i can see this at 3b shares MINIMUM in no time alone. Heaven forbid he needs cash to spend on working them over if they can't pay for themselves.
If they go on to do a simalr deal and was expanded to 500 bopd overall on the the 3 deals (ie buying another 400 bopd - 160 bopd paid in equity would give away some 570m shares again at todays vwap share price).
A few hundred bopd barely pays admin alone never mind ongoing capex etc that has to come from production.
I've mentioned their history of asset hoppping before - and this might as well be doing 3 small deals splitting them in Poland, Germany or Spain from London.
Now they've split themselves operationally in Oklahoma and now Midland Texas with Midland being over 400 miles away at least to the Oklahoma Texas state line and looking at assets in California another 1,000 miles away from Midland.
Absolute madness when they are trying to conserve cash but hey forget about more confetti when you have licence to do so.
If they get the $48m it will be a lot less when it's taxed and then split over 3-4 billion shares compared to 2.3 billion before these 2 small US deals.
My condensed take on the Q&A
Nigeria - Phenomenal opportunities in the power sector. Hyrocarbon space - opportunities for assets that will be sold to raise funds for Government. Last gas customer that opened up a completely new revenue stream paid all pipeline connection costs to supply gas. Naira peg removal good for us. No loss from true-up clause.
No further Uquo exploration planned as a lot of nearby available gas (my take it is cheaper to buy in than spend drilling funds to explore for new gas other than the 2C). Biggest focus is getting more gas and more customers. Magin 77% and a lot more growth to come via pipeline capacity at 400-600 mmcf/d (66-100k boepd) depending on supply route (for 3rd party gas and our own CPF.
Niger - Flow tseting in Q4. Book up to 35 mmbls as reserves by year end/early 2024. First oil earlier than previously indicated. As for further exploration, waiting for development up and runnning - pacing it on self funding or bringing in a partner.
Company has as much focus on hyrocarbons as renewables.
Looking for 2 types of hydrocarbon assets. If i heard correctly smilar to S.Sudan/Chad size and also bolt-ons. Not thinking about net debt limitations. Thinking only of 'risk and exposure' and returns perspective on investment and being accretive to shareholders. Riskier assets non recourse debt to the company. Would only issue equity if deals are worth it for investors - so imo i think we could be possibly buying 100k boepd+ as time goes on and maybe a lot more - if they are the right deals in the context already given.
Dividend (non payment) comment - Significant growth coming for the company given as alternative - though in my own capacity would still like to see maiden dividend of at least $10m - I think Chad issue put paid to this.
With that - waiting for lifting of suspension, S.Sudan conclusion, possible operational news/deals from Accugas, Niger operations start and at least one further hydocarbon deal over the coming 2nd half.