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I know some posters were saying 15p on return if no S.Sudan, but i never seen any workings to say why it's worth that.
Therefore without sticking a finger in the air to get 15p (why not 18 - 13 - 21 compared to a nice round 15p) it's as much for my own benefit not to make a reactionary decision just because others might and try and understand the sum of the parts valuation.
Whatever happens and at some point we get back to being unsuspended, perhaps the directors might show some further support by buying and demondtrating confidence at whatever price.
Last buy was from the new Chairman with 6,095,726 shares at 26.25p for £1.6m.
On a net valuation basis post the latest Nigerian CPR
1413m shares and £1=$1.275
Base case valuation at just over $60/b oil price.
Uquo & Stubb Creek 2P & 2C = $439.4m. Accugas = $636.3m. Total = $1075.7m = 59.7p share.
At end of June 2023 net debt = $443.4m.
If the net debt hasn't reduced and is still the same as of mid year 2023 - then with roughly $59.5m Stubb Creek acquisition costs to add to that ( less almost 7 months reduction for the effective transaction date for 75% of the cost) = approx $55m in total.
Net debt perhaps $498m = minus 27.6p share.
Net value (after debt) for Nigeria around 32p.
In Niger, Reclassifying the 33 mmbo 2C to 2P at $4/b = $132m or 7.3p share.
In the absence of S.Sudan i get an overall value of 67p less 27.6p in debt = just under 40p/share compared to 26p now.
*** Above is my baseline for not making any reactionary decisions re price swings come what may re S.Sudan ***.
Obviously the faster the net debt reduces, this should translate to an increase the share price.
I would like to think that with the S/Creek oil acquisition, it will help to reduce net debt faster, dollar liquidity etc and also from some more gas sales after compression completion etc.
Given the resource upside in Uquo and S.Creek, i'd expect the next few years production to be more than replaced there.
Also the 2C Gas at Stubb Creek when reclassified to 2P should also help increase the valuation beyond the current core value.
With Chad playing out in the background, one other way of significantly or eliminating the net debt is the award (if any) of substantial damages for the loss of the Chad oil fields and pipeline and also the Cameroon pipeline interest in a seperate issue that is not included here - nor have i included the Cameroon valuation.
In the absence of any further acquisitions and as we stand we have the 2 billion bl + exploration potential in Niger - but getting more value there depends on how soon we start to return to proving up barrels and adding to the share price.
The unknown is S.Sudan. If it completes at a $1,250m cost and if this is reduced by now down to a net $400m debt at completion to pay - it might leave up to $850m core value or a net 47p/share provided no dilution etc and if the oil is not shut-in for any length of time.
Roughly equates to 87p net = around RockyRs revaluation estimate with 50p on top for $900m net debt = 137p when net debt eliminated/net cash positive + upside from getting a move on in Niger exploration ?
CPR Figures
All the discovered fields both in Nigeria and Niger offer significant 3C upside (Recovery factor, pressure communication etc ..) as well as substantial exploration potential.
Uquo/Stubb Creek 2P/2C Net = 164 mmboe.
Niger 4 fields 2C Net = 33 mmboe.
Uquo/Stubb Creek additional potential 3C Net = 17.5 mmboe.
Niger 4 existing fields additional potential 3C Net = 75.8 mmbo.
Total 2P/2C Net = 197 mmboe.
Potential Net 3C = 93 mmboe .
Further recoverable exploration potential of Net 93 - 185 mmboe. (on Uquo/Stubb Creek licences mid-high case Net 69 - 114 mmboe + deeper potential in the 4 Niger fields mid-high case Net 24.3 - 71.3 mmboe.)
Good to see the Stubb Creek deal completed with Sinopec though i wasn't expecting the oil element which is a bonus.
My thoughts this past few weeks were on Save possibly doing something in tandem in Niger with Sinopec given they were after 4 neighbouring blocks to us but which the Niger government is rumoured to now want to develop themselves.
That's a lot of gas and oil before any further acquisitions.
Also a welcome dollar income boost from new additional and expected to double oil production.
Sinopecs Sipec made $27.8m after tax profit in 2022 so should overall improve our dollar income/less reliability on the naira and with overall production expected to double should really improve things.
This perhaps looks like the 'at least one further acquisition' which was expected by the end of 2023.
This has moved our net 2P/2C up to over 180 mmboe with Agadem net (220+ mmboe gross).
It' shows how quickly things can take a step change.
If they can push on this year in Niger and if the segments in Amdigh are as hoped for in pressure communication (which were not included in the first time around in the cpr), it could add a sizeable uplift in 2C. Approx 100 mmbo additional to play for in 3 existing fields.
Of course if S.Sudan could only complete and with a rumoured 300 mmbls reserves (A.Intel) would put us in a different 2P/2C and production league.
Yes another 8 to 9 boe gas per day from October will go down a treat if successful. Partners missing out by not participating.
Moved into our 16th month now for suspension and i do wonder how long it can go on. While the company surely knows what the delays are, shareholders are in the dark and limbo.
I wonder if there is another acquisition being worked up but surely this would have been newsworthy and announced by now (the 'at least 1 other hydrocarbon asset by end 2023').
While not suspended, Seplat is till trying to get its Nigerian acquisition over the line from Exxon which was announced 25 months ago despite them being in the country over 10 years.
Paul1
Zenith have agreed to ship the rig, but it would be madness to do so without (as they say) "the reciept of all necessary regulatory approvals in the republic of Kazakhstan" for the approval of the acquisition.
60 days to complete legal and technical dd (from approx 20th Dec 2023) but there's actually no timeline when the Kazakhs will grant approval.
Niger/Sinopec -
What now for Sinopecs hopes to enter Niger given the apparent decsion to award them to their state oil company. This is adjacent to both Save and CNPC blocks.
5/6/23
'China's state-run oil major Sinopec has set it sights on the western African country, where it is poised to become the second largest Chinese firm operating there behind China National Petroleum Corp (CNPC), an old hand in Niger.
Africa Intelligence understands that Sinopec wants to take over three areas in the region of Agadem which were handed back to the Nigerien authorities by CNPC. These areas, known as R5, R6 and R7, contain proven reserves.... '
Today 11/3/23
'General Tchiani's government intends to develop the blocks where discoveries have already been made by the Chinese oil giant. The awarding of the Bilma block to SONIDEP presents Niger's state-owned company with a huge challenge....'
From a former South Sudan oil minister who puts Sudans losses at approx $192m/month if the oil is not kept running.
' As a former Minister of Petroleum, let me attempt to shade light on the benefits for Sudan from the oil of South Sudan:
A. The production of DPOC, GPOC, and SPOC used to be 210,000 barrels per a day (2016 to 2019) but it has now decreased to 170, 000 barrels per day as per the latest statistics by the Ministry of Petroleum.
With the $25 (fees) per barrel going to Sudan multiplify by 170,000 barrels per day and a month. Sudan is getting roughly about $127 million USD a month.
B. The 28,000 barrels a day being refined at Khartoum Refinery at Al-jaili, and with it came along, petroleum products are being consumed and used by Sudan. South Sudan gets the normal price of their crude oil barrels of 840,000 a month, which is roughly about 65 million USD a month.
C. The Central Processing Facility at Al-Jabalain and Heglig processing facility
The South Sudan Oil in DPOC and GPOC is being operated by Sudanese, and they are making a living there
D. The marine terminal at Port Sudan where Oil is being shipped to the international markets the workers there (truck drivers, storage facilities, chemicals being brought via Port Sudan, and many logistical operations) are being handled by Sudanese and they are making a living there.
This really needs only mathematics to know the profits of Sudan. With the listed profits above the two Leaders Gen. Burhan and Gen. Hemetti should protect the pipelines and the facilities at all costs.
Yes, South Sudan is benefiting a lot from the oil. The budget of South Sudan is being run and financed by oil. So the biggest loser is South Sudan, and that is the reason for my appeal to our brothers in Sudan.
This oil is our “Food Union” where all of us (South Sudanese and Sudanese) are benefiting.
This “Food Union” shutdown can be a loss not only to South Sudan and Sudan but also our International Oil Partners like CNPC of China, PETEONAS of Malaysia, and ONGC of India.
I know some South Sudanese will ask me why you never built an alternative pipeline as South Sudan? The answer is our pipeline will also either go through Kenya or Ethiopia and Djibouti. We will also have to manage relations there. '
https://blnews.net/2024/01/threats-of-shutting-down-south-sudan-oil-by-sudan/
That's been discussed since 27th Feb here
"F/book 1 hour ago reporting on an interview with the minister of information saying the 23-24 budget will not be met as oil production reduced, gelling in 2 pipeline stations and difficulty getting oil out from port sudan due to the attacks on shipping in the red sea."
and in the same post
' this article on the challenges for S.Sudan via the red sea/houthi attcks on shipping.
https://bnnbreaking.com/world/yemen/south-sudan-oil-exports-hit-by-yemeni-houthi-attacks-amid-sudan-conflict '
hence the discussion on 1/3/24 and 1/5/23 re ring fenced financing and risk
As for what's AK doing - I'm sure that has been considered and it's been more than a month since these issues initially started.
"Can any deal be structured in a way that Save can continue say if oil exports were offline for 3-6-12 months at any point ? and it might not happen - totally unknown but i'm sure that risk has been considered. "
With Great Wall drilling having a base and rigs i'd say this is the best option in the immediate term.
We'd need a crew and how experienced might they be plus spares etc and pipe where that's probably already carried and with GWs success/experience it might be better to rely on them on a per well basis.
In 2021 completion and production testing of Amdigh, Eridal, Bushiya and Kunama was costed at $7.7m.
EPF $4.3m.
Other Capex for flowlines between the 4 fields, the export station and civil works $5.4m.
Total $17.4m.
We are supposed to be within 30km of the export pipeline though no cost for this connection given.
However in the costings Save were going to build a pipeline from Amdigh to Gounmeri at a cost of $16.9m (bringing the overall total up to $34.3m).
In another slide (Fig 6:3) this was shown as 90 km from Amdigh to Gounmeri.
Also the flow lines were approx 25km between the fields tying to Amdigh ie 7 km Kunama to Eridal. Another 7 km onward flowline Eridal to Amdigh and an 11 km flowline from Bushiya straight to Amdigh.
The 90km $16.9m pipeline from Amdigh to Gounmeri shows that you could reasonably connect more distant satellite fields of 50-100+ mmmbls (if discovered) at low cost imo.
With Sinopec after 4 adjacent Agadem blocks, surely it could be an attractive deal to do something with us. Perhaps a swap on their 30+ million boe 2C gas at Stubb Creek and a bit more in exchange for onward 50% cost of drilling etc. Stubb Creek would convert to 2P once we had a sanctioned development plan as in Niger.
' Obviously figured out something and came to the wrong conclusion, "again". '
Yes, just as i did Tilapia.
Lack of oil sales long before it was reported Tunisia was in trouble.
Benin.
Yemen.
Called the 3 US acquisitions absolute crazy at the time for spreading the company across 2 states - since cancelled.
Consolidation.
Dilution.
Yes very wrong.
Why would such a long established international Oil Co that has operated in, and done deals (sorry MOUs) in numerous countries need to establish itself "as part of the oil trading community with a foot in the door so to speak".
Why the need to whack out $2000 short of $400,000 to acquire a company on the pink sheets to "acquire production and development opportunities" on 29/8/23 and now tell us on 18/1/24 that their focus is to pick up royalty interests.
If you haven't realised what that leaves the company at the mercy off, then you haven't thought it through.
If the royalty interest was of any significance, they'd have stated what it cost and what the 5% royalty (revenue) was on x number of bls - but No !
Also just reverting back to Niger,
Saves Chinese partner in Stubb Creek were negotiating for R5, 6 & 7 in Agadem last May. Surely if anyone is negotiating for those blocks there could surely be some partner interest for our block previously known as R1, 2, 3 & 4.
Trust - I can't see Gran Tierra or any publically listed company getting involved in a disputed asset until the case is resolved.
The Petronas Doba fields and pipeline share in Chad is a different matter.
Nothing on GTEs website at all but they are still looking for assets and i think SHT have inadvertently put those discussions up on facebook.
This from AI just under 2 years ago ( i didn't renew a subscription at their exorbitant prices) 18 months ago.
' New kid on the African blocks
In addition to Tullow Oil, another Canadian firm will potentially join the Elumelu venture to take over SPDC: Gran Tierra. This company produces around 30,000 b/d in Colombia and Ecuador but has never been in business in Africa. However, the elections in Colombia at the end of May 2022 have raised concerns that the oil sector could be put at risk if the radical left-wing candidate Gustavo Petro is elected. Petro, a senator and former mayor of Bogotá, has hammered home the point that he would invest massively in renewable energy and block any new hydrocarbon exploration in the country. Gran Tierra is thus counting on Nigeria to flourish in the event of a change of policy in Colombia.
Although Gran Tierra does not yet have a stake in Africa, its chairman and CEO Gary S. Guidry knows the continent well, as he is also a director of Africa Oil (which bought Petrobras in Nigeria and is engaged in exploration in Namibia, South Africa and Kenya). Guidry was also CEO of Caracal Energy between 2011 and 2014, which operates blocks in southern Chad that were sold to Glencore. The trader himself has just concluded the sale of his assets to Perenco in 2021 (AI, 19/01/22).'
Seriously, forget about the USA.
Buying royalty interests isn't going to make any serious money for investors or the company. PIs would be far better off putting their money in an oil and gas royalty fund.
Begs the question why did Zenith buy CYAP at all and not just buy the royalty interests directly. Strange they pulled out of the much hyped three number other US acquisitions just 8 days after AC and Co lost the Reabold vote and now resorting to royalties.
They haven't even given any detail on the first royalty interest on either cost or revenue generation from almost 2 months ago which in all honesty is quite incredible towards investors.
It would be interesting to see the full progamme and speakers and if Save are on it.
No sign of too many sponsors yet either and again if Save will be one (they were lasyt year).
About 15-16 weeks away with tickets on sale for the SSOP 2024.
There's a news link to tiddler Wildcat Petroleum a few weeks ago getting clearance to take part for oil/gas assets but still nothing on Save after all this time.