Member Info for ZENGAS

Should read ‘they’ - apologies Fiah

Fiah

So are you saying the $39,280 valuation for the asset is incorrect ?

I suggest you face the truth and Dyor.

Seems some can't stomach the $39,280 valuation for the Lavaca asset.

Have to tell their American friends but can't tell investors here. Wonder why and wonder how long this post will stay up.

Uncomfortable truths.

Knowing the expected flow rates per well zone, there's not a hope imo of getting to 5k bopd in Niger by Q1 2025.

Should be test oil ahead of full commercial FDP.

RR

I've said myself AK should revisit the acquisition strategy post this deal if it totally fails - a number of times and this past month.

We know the risks and these were imo worth going after. I see no point saying this is his fault with hindsight.

I see little point in going off on one every time a story appears saying what we already know as if it's somehow new re Sudan.

On endless Niger trucking - well we have discussed that umpteen times. 1K would be operational but would it be paying for itself after capex yet ? The refinery is domestic. The Chinese weren't fully paid. 22 months ago we'd have been generating Chad oil cash. So maybe yes we'd have been further along with available cash to do something re more work in time for joining the Niger pipeline.

The Niger pipeline oustide of our control with Covid etc only was operational January with no oil of any sorts out until last month loading at Cotonou.

Chad went against us. Hardly our fault but if so - then why launch a $1.22b claim for where we would have doubled our revenue almost 2 years ago, almost doubled our production and our circumstances been different in the last almost 24 months.

It's easy to say about the share price being half and the shares in issue higher and our net debt static but take that in context post Chad and a claim of nearly 67p/share - We have to take that on the chin re risk.

Yes agree net debt is still a priority but the one off on the likes of the $40m? compression project should be over while Sipec more than doubles our oil and allows us more room to get new gas customers.

Any country could do similar - Look at the share price of the UK operators and JOG this am after their UK update. You don't have to operate in countries with so called corrupt governments to see your assets fleeced at home and no return on your investment and collapsed share prices for UK investors - ohh and put CGT up while their at it maybe nexxt month.

I've seen Emeralds oil assets acquired and burned down in Columbia. Likewise Petrotals only oil field/sales routes blocked in Peru, protestors shot dead, share price collapse to 7p, debt/funding - recovering to 60p, now 40-50p range. Jadestone with a top class industry CEO but Austrailian FSPO issues and share price collapse from over £1 to low 20s. You don't have to just worry about Africa imo versus other parts of the world and blame all at the CEOs door.

Not pretty or happy but it's a delay on performance and value and i still expect SAVE to deliver. As i said a few days back no point commenting until we see the expected update/results/future direction plan this month.

Nice one for Conrad today

As i said on 12th August -

RE: Development funding? 12 Aug 2024 15:25

Yes and neither does Conrad Asia have the development funds for Duyung (215 bcf 2C net) needs $300m gross.

Doesn't have exploration funds/farmout for it's 11 TCF net and 161 Bcf 2C (on over 30 individual drill prospects make up that 11 Tcf) in Aceh.

Valuation A:90c and m/cap £54m down from £100m on funding delay.

---------------------------------------

Today 2/9/24

Still no word on development financing but signed a confidential gas sales agreement with Sembcorp of Singapore announced today.

"This GSA is the essential document that underpins the financial viability and the value of the project"

Closed up 26% at A-114C and a m/cap of just under £70m.

Rocky, that comes across a bit condescending re 'swallow your pride'. If i thought for one moment a CEO was simply pursuing a deal on that basis i'd be gone and would not entertain an investment here.

Seriously do you think AK/Team/acquisition advisors aren't aware of this re the pipeline ?

There's no oil going through the pipeline in nearly 7 months so they haven't been producing whether a team has been sent out to close it off or not at whatever section/source.

No one has any idea of when the Sudan war may end.

As for S.Sudan - what about the other 30-40% of production given the pipeline (as the article sates) accounts for 60-70% ? Is that still not worth a hat in the ring re negotiations depending on cost/structure/if non recourse debt or a possible SC and on which we will all vote on anyway. We're not ware of the nature of discussions so until it's known how can it be possibly judged. I still view any deal being done as slim.

SAs others have said, what about the Trucking negotiations that were started with Kenya and Ethiopia ?

Nigeria hasn't stopped - as seen with Sipec and the compression project and whatever else is happening in the background re other possible deals which we're not privvy too unless discovered by some news outlets.

"We are excited about our growing portfolio which we expect to deliver several value inflection points in the near-term."

ie more than two !

and in the near term !

Similar investor posting sentiment at Afentra delays for best part of 8-9 months on will they/won't they on negotiation of terms on assets there with share price drift from low 30s to mid 20s.

Patience required until news one way or the other.

No worries Trust, just couldn't figure it to answer as best i could.

I think South Sudans output with the main pipeline shut is about 45-50,000 bopd (About 15k or so net to Petronas approx) down 70% ?

All S.Sudans oil was forward sold to 2027 - or about another 3 years as well as now facing reduced output.

Nilepet were trying to introduce reduced salaries or staff layoffs some months back.

Therefore not much free cash available and a sale could be preferrable.

Handing 15k bopd to Nilepet isn't going to help them right away if they keep it. It would take a while to build up significant cash if production remains flat with the pipeline off. What happens if worst case further oil went offline or a near complete shut down ?.

Depending how long the main pipeline remains off, it could lead to some 2P being valued at 2C. There isn't just the pipeline to worry about but the facilities at Port Sudan to get the oil out. Most will be looking to the war next door ending at some point.

Therefore the Govt may prefer a sale.

Do the partners want to tie themselves up any further. If the govt can demand xyz from Petronas, then surely they can demand similar that won't be agreeable to the remaining partners. It could spur the other partner(s) to walk away. All partners have similar pro-rata share of costs and would be thinking they'd be liable too for similar demands so might say no thanks to taking on more ?? Who knows ??.

A new partner coming in paying a few hundred million (my guess) up front gives the Govt/Nilepet an immediate cash payment. The new partner could come in under lesser historical costs as the govt seems to be assigning those costs to Petronas hence they weren't able to get a sale at fair value, giving them up and taking a case to arbitration.

While SAVE might be pursuing a deal, there could be others eyeing the overall situation to throw their hat in the ring so to speak. Will an oil trader finance us on the reserves/production and control the oil sales for its overall cut ?

Early September if not before for an update on where we stand.

Not sure what your question is re Petronas.

They said they are going to arbitration because they haven’t got the sale or fair value regardless of what S.Sudan now does with them.

I only care that Save get some equity or stake from the present situation if the government sells them or the partners don’t take their respective allocation.

I don't think Petronas have walked away as in giving it up for free.

Haven't they given up it on the basis that S.Sudan aren't going by the rules in the original agreement and are taking it to arbitration which could presumably lumber the government with having to pay compensation at some point in the future.

S.Sudan are now free to do with the assets as they choose for now but arbitration is down the road for what Petronas believe is fair value. Petronas having no other option than to cease participation in the assets is my reading of it.

At some point we will relist so with or without S.Sudan, we will have 200 mmboe 2P/2C post Sipec completion.

Uquo/S.Creek/incl Sipec = 73.2 mmboe 2P.

Uquo/S.Creek/ incl Sipec = 96.9 mmboe 2C.

Niger 2C = 33 mmboe 2C.

Total 203 mmboe 2P/2C (all net to SAVE) less ongoing production. There's a need in getting the bulk of this figure turned into substantial 2P.

A development sanction for Niger would move the 2C to 2P.

Also any earlier development plan of Stubb Creek gas would move it to 2P.

Outside of that is the potential for 68 mmboe mid - 112 mmboe high case still at Uquo re exploration (net to SAVE) - I'd hope some of that replenishes the next few years production to leave us with a very significant 2P number.

As for Niger - 33 mmbo 2C included above but there's potential for this to be above 80 mmbo at Amdigh which only relates to segments 1&2 while 3 is beleived to be in pressure communication and segments 4,5 & 6 so far not being included with the existing discovery.

Amdigh/Bushiya/Eridal existing discoveries deeper targets 24-70 mmbo approx -' medium risk'.

2 'low risk' prospects are Kunkuru and Damissa with 77-210 mmbo mid-high case.

Out of 5 new drills and testing there's potential for to push for 150 - 400 mmbo in Niger from the present 33 mmbo 2C (on top of 170 mmboe at Uquo/S.Creek). I can't recall if the 3 deeper targets on the existing discoveries are to kick off inside the existing wells.

Hopefully we start moving those along to move up to a significant overall 2P level from the above reclassification from Niger & Stubb Creek.

Sipec/Niger production reaching circa 11,700 bopd on their own = $320m of future oil sales revenue to take adavantage from @ $75/b to add to the circa $230m gas revenue before any increased gas sales. Now Q3 2024 so surely some indication of plans for Niger if S.Sudan does not conclude successfully. Could we run it on a service contract at no cost say $5/barrel whether at 5,500 bopd or 55,000 bopd war or no war next door and a share of the future upside above pre war production levels ?. Probably doubtful as the other parties could simply do that but who knows ? Still a lot to play for in terms of growing reserves and production (known published expectation for 11,700 bopd Nigeria/Niger and 20,000+ boe Nigeria Gas) on top of the reneweables kicking in from next year onwards and a comprehensive valuation target.

Trust

Those meetings with the Calabar power plant and us in attendance is significant as well as the visits to Accugas. There's no reason why Accugas would be standing still given the size of the market.

$2.4b electricity subsidy went in April and electricity prices have been increased as were gas prices. This in addition to the few $billions in fuel subsidy scrapped so the push is on to make big inroads into the electricity network, while the new Dangote refinery alleviates expensive government buying of foreign fuel and helps the access to dollars and govt coffers for investment.

Condensed from those articles -

Govt wants power generation meeting 6GW before this year end.

Calabar plant one of the best but largely under utilised and is a 634 MW plant.

Cross Rivers State seems to be in the running to buy it and take it over though after that who knows re partnership/part equity sale ?.

Therefore gas feed could significantly go up to run at 90% capacity (the plan is still to get to 13-20-40 GW in stages). Cross Rivers State expects to draw more gas later in the year for another smaller plant coming on stream.

The last CPR on Nigeria was 18/3/24 this year.

Page 51 - Average gas price across the contracts is: 2024 $4.80/mcf. 2025 $5/mcf.

Selling 200 mmcf/d consistently as power generation increases at $4.50/mcf = $330m.

4700 bopd of Nigerian oil in 12 months @ $70/b is $120m.

Versus circa $250m now.

We've also started dealing in 3rd party gas re revenue.

As power generation increases it's should only be natural that our gas output should increase to match at under utilised p/plants - so where does our gas revenue potentially still climb to ?

We're only constrained by the hold-up in power generation that must be met and increased 10 fold.

Not sure what the story could be re buying a power generating company but at a wholesale $60/MW/hr, 500 MW from a plant could have revenue of $250m+. Not sure where to tie down the 3 new SAVE power company registrations to.

Plenty going on and every division was meant to stand on it's own two feet for growth.

Hazdogg - whether you think there's a positive spin on my posts or not - it's my investment decision. I know and recognise the potential and still recognise it - end off "! You can think and make your own decsions whether it agrees with you or not. Like i said i'm not bothered about others emotions towards a stock. It's mine that counts for me.

Rocky, As i said re the share price on the 12th incase you missed it in my post - 'no one as dissapointed as myself'.

At IPO in August 2014 my investment period was 3 years on Niger.

And as in the 'Intelligent Investor' book (Ben Graham - Buffet recommeded) you've got to decide if you recognise a company/stock that makes you change your mind for good or worse if the potential changes in some way and rule out other peoples emotions how they may be caught longer than they wish that makes you want to hold.

17 months later in January 2016 it became clear acquisitions would follow (suspension/RTO that month).

So on that strategy and as most of the intstituins were onboard i was happy seeing the potential for acquisitions to move to a serious revenue generating company from Zero to $250m+ post 7e, $1b+ post Chad, $2.5b post S.Sudan and bolts ons/smaller deals such as Sipec for $100m+.

Failure for a Niger farmout, Pipeline delay, Covid, crashed oil price held up a certain amount of progress.

Finding oil at a $1/b or less from the S/alts in Niger at an 80% sucess rate means you'd need to have $200-$300m to find 2-300 mmbls oil. 5,000 bopd to the domestic refinery and another $50m needed to 5k oil wasn't going to bring those funds and discoveries any closer without a partner (No oil still being exported - where would we be ?). We'd need to find 2X the amount if we farmed down 50% to get the s/price return therefore a lot more drilling/time again.

Best possible route imo was to have reserves/production bought in given the majors divestment programmes and later life assets.

$3-$500m annual FCF from acquisitions more than enough to fund both the renewables and go to town on Niger with the new amalgamated PSC and initial dividend .

Like i say, i see the same potential though i did say same post maybe that they might need a strategy rethink on major deals if S.Sudan doesnt complete to some degree. I'm not changing my outlook and will be here until ICC outcomes hopefully later next year.

With compression completing and a major pipeline network for 3rd party gas there's huge upside potential from Accugas - I know being positivre - but the size of the electricity market exits and the CNG market is now taking off given the fuel subsidy cut and a 40% saving on CNG via govt subsidised conversions. Hopefully this presidents policies make a real impact.

Yes i could simply sell up - but i have to risk it all again somewhere else for 1-2-3-4 years/lose it/treble it or stay with what i know. No sure things on the market so good luck - you too Haz.

Older

First of all i think the chance of completing the deal is a lot, lot slimmer but i would have thought the company would have and are following a risk profile and have had an alternative proposal in mind as a plan B or C to closing a deal if it can be done and they think it's going to be approved by shareholders at the end of the day.

Other's may be peed off at the wait and their cash tied up but as for a headache for the company? Really, why ?? I hope they have more than S.Sudan on their mind. I view it as getting on with business and i just take the emotion out of it.

It hasn't stopped us doing the Sipec deal and i doubt it will stop other potential deals in the pipeline.

In the scheme of things as in running the company, depending on how S.sudan is financed/structured is a different matter and whether we act as operator or partner is another aspect re risk.

It's not as if the complexities of Africa and the litigous nature in Nigeria even in getting SevenE over the line were not known. It's no more lawless than the UK govt fleecing investors in the North Sea and dipping in and out on tax takes when it suits them. Investors take the risk and the govt screws you over at will when you've made your investment. I'd say the headaches for those companies are just as great ? It's certainly pretty evident in their share prices regardless and it's the share price that counts.

So no, i don't see an issue until i actually see the S.Sudan deal (if it even makes it that far) on the table, presented to us all ie PIs & Institutions and our ability to vote on it then whether any proposed deal is acceptable or not.

Seplat listed in May 2014 at 210p per share after raising £300m to pay down debt.

Reserves 281 mmboe 2P and production 30.8k boepd. It's net debt was $304m.

Despite a number of acquisitions such as Eland - production has not grown proportinately.

In 2016 it had lost 65% of its oil production through pipeline force majeure (blown up).

End of 2023 it was producing 44,000 boepd as it was 6 years earlier in 2018.

10 years on its net debt is greater than at listing now at $366m despite not materially increasing production. Reserves have grown to 478 mmboe 2P though.

From 210p listing the share price was regularly down more than 60% and 70%.

Only 8 years later did it's share price spike back up from 80p - 120p on the proposed Exonn deal before falling sub £1 on deal not being approved and pre-emption rights only in this year for the deal to be somewhat back on and now at 185p today.

But for the £300m odd of dividends over the last 10 years shareholders would not be much better off and you could ask why has net debt not improved despite the acquisitions of production and reserves and 48k boepd production 10 years later. You could say they'd be net cash positive rather than having paid out dividends.

There's little mention of the pipeline disruption that happened on and off there. It didn't need to be a full blown war, the oil pipeline was inoperable regardless at the time until they made lenghty efforts to derisk their dependence on that one.

In H1 of last year - pipeline losses overall were a whopping 26% but we heard no description of this when Seplat is put forward as a well run company. It may be and to me it is, but it came in for criticism after the Eland takeover as reported in AI - not withstanding all the infighting, numerous court cases, efforts to deport the CEO etc. But these are challenges for it and others like them, SAVE included. Worth remembering that Nigeria is Seplats only area of interest and core ground being there since 2010 (14 odd years) but yet they still face issues from many quarters there. The share price has done absolutely nothing in 10 years.

I disagree with that when taking into account how deals are structured.

You split your operations over too many small deals at perhaps greater cost and management either as operator or non operator to take into account.

I ask where are all the small deals ? They also attracts a lot more competition when they do appear from smaller Cos.

You talk about risk on scale - well if the deal is structured on non recourse finance to the parent co and the other assets, i think that's fair risk management.

There's no reduced risk on small deals.

How many small deals are actually available is another point ? Where are they ? Who's been buying them up and how much greater competition is there for them ? It's not the small players selling off assets, it's majors and late life assets that are usually up for grabs on the energy transition.

We succeeded on a discounted $1b deal remember in Nigeria.

Did we get the ENI 4.5k boepd deal in Tunisia ?

Trust - Very enlightening. Though Petronas are walking away it's not for free as i see it. They've already filed a case against the SS Govt and imo it's likely to be a $1b+ headache for the government to deal with all the way to the postponed elections.

The other partners may run down their investment on seeing this or curtail any further investment under the JOAs.

A 40% disposal by Petronas to the remaining partners immediately lifts their commitments by around 50% and do they want to be harnessed with a similar screw being turned on them at a future date. They won't like the look of that.

No cash to pay civil servants or military this past 9 months. Oil production down by 70% due to the Sudan pipeline issues.

They already forward sold all their oil to 2027 or so which will take longer to repay.

Whatever S.Sudan decide to do, they've just opened themselves up to a hefty potential future compensation award against them for oil that has to leave a landlocked country and on to open sea export where it could be seized (as Chad).

I think it shows clearly that the deal was on both for Savannah and Petronas under the laws of the country but which the government is trying to circumvent unlawfully.