Member Info for ZENGAS

Eco listed 8/2/2017 with 118.250m shares in issue at 16p.

One of the hottest exploration plays in Guyana next to Exxons world class Liza and Payara discoveries and within 2 years or so Exxon was on something like 10 major discoveries running into a few billion bls.

Eco were partnered with Tullow on this multi billion bl exploration play and in mid 2019 announced a major discovery followed by a second some months later and of course the price rocketed briefly to over 200p.

A resource increased to 5.1 billion bls (771 mmboe net to Eco). Followed by some drilling failure and issues over oil quality i beleive from memory. By comparrison Save averaged 8 mmbls/well on the low hanging Sokor alternances fruit - steady but nothing to get excited about.

Anyway for ECO, 6 years later and now 365.8m shares in issue and share price today = 19.75p

So again, no possibility of safely saying where we'd be price wise if we solely tied ourselves to Niger ahead of first production next year.

All along i've thought it's all well and good saying Save should have drilled significantly to prove up major Niger reserves but they didn't bring on a partner as hoped for or maybe couldn't find one.

Save were expecting a Niger export pipeline in 2019 to materialise but at least this year it will be completed almost 5 years after their last discovery in October 2018.

Tullow discovered oil in Kenya in 2012 and have 170 mmbo 2C net. 11 years later and still no pipeline built to produce and exit the oil. Could easily have been Save in that position 9+ years later but with no other asset.

In addition there's been no buyer for Tullows Kenyan interest so the acquisition route for Save seeking major assets at a much steeper discount to those made by Kosmos and Tullow in the past looks the more logical and cheaper route imo to building a company of equal/greater size at a lesser net debt profile for Save which they started 4 years ago with Nigeria.

As per my last post showing $2b revenue potential fronm S.Sudan/Cameroon & Nigeria - Niger on 5k bopd will add barely 7% ($135m) to that revenue potential and another year away.

With the Niger pipeline continuing to expand to over 200k bopd+ and Niger expecting to reach 500k+ bopd production this decade, Save can build on its reserves and production to match that expansion with little worry that the assets wouldn't be significantly monetised and attract buyers as well.

Lets say we had done damn all else and sat with 275m shares in issue after the $40m (38p) placing in 2016 to recommence operations in Niger.

We would have needed some more cash along the way but lets say we were at 325m shares in issue. We drilled 5 wells and booked 33 mmbo 2C and need $58m to reach 5k bopd before first income next year.

I posted on the AET thread (637) on 3/4/23 Panoro m/cap £233m, net debt $46.8m, 2P 35.8 mmbo, production 7k bopd.

If you draw that comparrison to Save - then on 325m shares at a similar net debt and a m/cap of £233m would equal about 70p share price but still 9 months away from any production and likey to be half of Panoros to start - so maybe 70p is generous for Save if that's the route they'd gone and waited it out rather than acquisitions at deep discounts and significant revenue as a result plus the market ups and downs/covid etc in the intervening years and keeping the lights on.

Doesn't look like Chad is going to upset Saves growth plans with all that is going on.

Nigers 5k bopd would contribute about $130m revenue @ $75/b oil.
It was previously stated that it would require $57m of cash before it then became self sustaining from 5k bopd.

Save say today it will likely go through the export pipeline so if that's the case it's only about one third of the way to tie into the export pipeline rather than build a 120 km pipeline to Gounmeri that would take it to the Niger refinery. In that case i would have thought there is bound to be decent savings.

At least over $100m back costs to recover so finally good to see well heads ordered.
Ideally imo you'd want up to $100m on a go it alone basis to drive a significant exploration programme on the next 10 wells and further seismic. So perhaps RBL on the existing reserves or cash contributed from a producing asset.

Nigeria appears to be contributing $270m+/yr and Cameroon $80m/yr revenues.
50-60k bopd from S.Sudan at $75b average = $1.35b - $1.65b so could still be looking at overall $1.7b - $2b/yr total revenues ahead of Niger which will be transformational.

Chad (for the moment) on the combined 22.5k bopd production has meant losing out on some $600m/yr oil revenue - though could well be replaced through ongoing other divestments given AIs mention of Save in reporting those. Clearly though it's an annoying setback as that revenue/FCF could have been used now to both increase Chad production and bring the 2 renewables projects forward.

A "SERIES" of new renewable projects expected "over Q2 and Q3" so it's my bet we will see some of those within the next 8 weeks. Results normally end May/early June and AGM consistently end of June.

I see the German Ambassador to Chad has been expelled with 48 hours to leave for some grievance against the country.

Someone has commented on s.media "Anyone who doesn't bail out this famous transition is systematically expelled"

https://www.zawya.com/en/economy/africa/chad-to-expel-german-ambassador-over-impolite-attitude-uznn3rbr

The military junta initially promised to hand power to civilians, however in October, Deby's rule was extended for two years.

'The German embassy joined others, such as France, Spain and The Netherlands, in expressing its concern over the delayed return to democracy.'

On their website they still say they own it but it’s not included in the current operations. Maybe removing it for now to avoid confusion.

Into the 17th week now so 9 weeks left of the 6 months for a listing document to appear. I wonder if the Chad upset had caused any delay to getting it ready or issued.

Results nearly always late May/early June I think and the agm as far as I can remember has always been end of June to accept the accounts etc.

Thanks trustilie for posting that up.

I see Chad removed completely from Saves website.

Cameroon ETS upside and country as opportunity in addition to Nigeria and Niger Ops.

Petronas Block 3/7 = 40%. Block 1,2/4 = 30%. Block 5A = 67.9%

2021/22 Production estimated by WBG to be down from 120k to 103k bopd in blocks 3/7.

53k down to 48k bopd in blocks 1/2/4.

5k bopd in 5A.

Would mean the net Petronas S.Sudan production is roughly 59,000 bopd down from the previous years 67,000 bopd.

AE saying the same as AI that Petronas looking to dispose of parts, if not all of it's African portfolio. AI reporting Friday that Save could be a possible buyer for Egyptian assets where Petronas have 20k bpd to dispose of.

Savannah mentioned in AI today as potential buyers of Petronas 20,000 bopd in Egypt.

From NDJ Chad -
'This Wednesday March 29 2023 - national counsellors consider the draft law on nationalisation of assets and rights of all kinds of Esso Exploration and Production Chad Inc. Esso Pipeline Investments Ltd (and any entitlement) in Chad.'

Tchadinfos.com contibuted piece on the nationalisation (translated).

' Since yesterday, several people have rushed to applaud the decision to nationalise the Esso company. Those who applaud do so under emotion and populism. It must be said that the government has used the strong weapon in it's possesion, but it is without knowing the giant legal battle that will follow at the Paris International Chamber of Commerce. The battle is going to be complex and if we continue to pretend as before, our country will lose again. I recall that this decision to nationalise Esso follows the decision of the International Chamber of Commerce in Paris (January 7), which proved Savannah right in the case against the Chadian state in connection with the purchase of the assets of the American ExxonMobil.

A legal battle broke out between the two parties and on January 7th, the Paris International Chamber of Commerce proved Savannah Energy right. The Chadian state in response nationalised Esso. The decree itself is problematic because it does not clearly identify the target. Knowing that Esso Chad is a subsiduary of ExxonMobil, the objective of the government is not to recognise Savannahs purchase. It must be admitted that the Chadian state missed a great opportunity in front of the International Chamber of Commerce in Paris because if Chads file was well prepared, the country was going to win the round, but alas this part was handled with negilgence and incompetence and which gave Savannah Energy a head start. The idea behind this decree is to push Savannah to the negotiating table with the Chadian government because it feels wronged. It all depends on the legal battle that will now begin between Savannah and the government.

In the short term, nationalising Esso leads to three major problems.

First, SHT's management of oil is a problem because a few months ago, the company was the subject of embezzelment and other mafia practices. Money has disappeared from SHT but so far SHT has not found neither the embezelled amount nor the person or people involved. Globally, which is currently the only better performing Chadian state run company ? None. There is no doubt about the states ability to to manage this optimally.

Secondly there is a shortage of manpower and materials for proper management of Doba oil by SHT.

Thirdly, there is the risk of losing the social benefits of the current Doba employees. Will they be thanked? Will the employees agree to continue? If so, at what price ?

We must not forget the decision on economic attractiveness, hence the business climate in our country.

The euphoria over the decision is likely to be short term.'

Looking through FinnCaps note

The removal of the Doba 2P/2C etc reduces from 91p to 70p RISKED.

(Unrisked reduced from 133p to 105p)

There is a further 21p of net debt falling incrementally over the next 1-3 years so potentially worth 91p risked as we 'presently' stand.

Doing the maths on the basis of the 'Doba oil valuation' for S.Sudan, i beleive this could see around 45p net added ie moving from todays 70p to 115p on deal closure and basing it on the AI articles quoting around 300 mmbo reserves and 60k production.

If so, a possible new 115p risked target to emerge imo with around 80p in net debt reducing over 1-4 years potentially worth up to 185p in a net debt free position or with the cash directed into new assets such as the renewables division.

Showing $6.20 EV applied to new Niger bls - on a net basis of circa $4.60/b it will take around 185 - 370m new reserves to create 50p - 100p additional value.

L/term oil price $70/b used.

For now it's an inconvenience. We have the Cameroon assets that have sizeable value and at least we are progressing other acquisitions with hopefully S.Sudan well advanced. On top of that ENI was reported as having agreed to sell their Tunisian assets to Save but put on hold with the stagnant government so maybe that will still return to the table. They have Accugas operating at near max capacity and Niger pipeline completion this year. Overall not worried about the state of play other than dissapointed with the position Chad has taken.

We know from AI on 10/1/23 that Save initiated an emergency procedure at the ICC.
Then the ICC 'appointed' Philip Landolt of Landolt & Koch as arbitrator.
Landolt concluded that the ruling by Chad was illegitimate and that any contractual dispute should be resolved at the ICC as stipulated in the contract.
The emergency procedure only allows for the issuance of opinions and not definitive rulings, no financial penalties can be imposed via this mechanism.
-----------------------
By seizing the upstream assets it's seems that Chad didn't feel it might win its case. From all the articles posted by AI re the departure bonus which went from $30m to $160m it almost seems like a demand to let the sale go through. AI reported that the contracts did not have a departure bonus written in so again this looks like the current Chad junta making it up as they go along.
With the assets seized will Chad even bother working with the ICC, perhaps shortening the time to a decision. On ythe basis that we win some ask if there is an award how will Save even recover it ?
The oil has to be exported from landlocked Chad to the the loading vessel and i'm sure it will be possible to seize part or all of a cargo at a future point if things go that far or other assets outside the country. Early days in this dispute and it certainly will do Chad no favours in attracting ongoing investment when the junta acts at will to get its own way and doesn't play by the accepted norm.
The Indian Government eventually relented in it's case with Cairn.
2/6/21
"A Scottish company with only 180 employees seizing the planes of India’s national airline may seem an unlikely scenario.
The oil and gas company launched legal proceedings against Air India in New York last month in an effort to enforce an international arbitration tribunal’s ruling that New Delhi should pay the company $1.2bn plus interest to settle the historic tax dispute.
As it seeks to secure a sum now worth $1.7bn, Cairn is trying to prove Air India is an “alter ego” of India’s government and is “therefore jointly?.?.?.?liable for the debts and obligations of India itself”, a move that could pave the way for US marshals to seize the carrier’s jets. The Edinburgh-based company has even hired lawyer Dennis Hranitzky, who in 2012 helped seize an Argentine naval vessel in Ghana as part of a long battle between US hedge fund Elliott Capital Management and Buenos Aires. "
https://www.ft.com/content/df184784-447e-4944-9bcd-def96b59c29d
8/7/21
"UK oil firm Cairn Energy has gained the right to seize Indian state assets in France worth more than €20m (£17m) as part of a long-running tax row. A French tribunal ordered a freeze on about 20 properties in central Paris as Cairn increases pressure on the Indian government over disputed tax claims.
https://www.bbc.co.uk/news/business-57742080

The valuation for the combined 40% Exxon interests of the pipeline companies on P. 112 of the admission doc shows the NPV 10 net to SAVE

Chad Pipeline Co (TOTCo) base case $10.8m with the upside to $11m.

The Cameroon Pipeline Co (COTCo) base case $277.5m with the upside to $358.3m.

Then on P.289 of the Competent Person Report by CGG shows the combined revenue for both pipeline companies on Saves 40% interest as $88.5m and cash flow of $34.4m.

Given the base case NPV valuation differences on both pipeline companies, i assume the revenue from the Cameroon ownership should be about $80m region with about $30m cash flow and irrespective of oil price.

In relation to COTCo of which Save owns 41.06%

"3.2. In relation to the Enlarged Group's interests in COTCo and TOTCo, it should be noted that:

3.2.1. Savannah does not control a majority of the voting rights in these entities and will require the support of another shareholder or director (as applicable) in order to pass resolutions;"

==============================================
If Petronas hasn't sold or let go of it's Cameroon interest to SHT (Chad) i wonder if it's possible that Petronas through it's interest in COTCo could excercise some kind of vote with SAVE which could effectively land lock Chad forcing a reconsideration of Chads recent actions.

The pipeline is 1,081 km pipeline long (178 km in Chad, 903km in Cameroon).
The export terminal is in Cameroon at the port of Kribi.

As it stands Save owns a 41.06% interest in Cotco.
Doba pipeline (Petronas) owns 29.77%, SHT owns 21.26%, Cameroon 5.17% and Chad 2.74%

The Junta supposedly transitioning to a demecratic set of free elections. yet by taking the upstream assets they have defeated their case for waiting for an outcome at the ICC and shows them as having something to hide imo in this deal given the various reports of leaving bonuses required all along. This bears similarities to 2006 and the underhand tactics then as the opening paragraph from AI.

6/9/2006

"Why Deby Kicked Out Chevron

Ordered last week to quit the country and abandon their stakes in the Doba concession, Chevron and Petronas fell victim to a campaign by several oil companies to woo Chad president Idriss Deby.

Among the candidates to succeed the American and Malaysian oil groups are the China National Petroleum Co (Chad has just recognized Beijing (see AEI 422) but also the private Saudi concern Delta Oil headed by Badr Al Aiban, son of one of king Abdallah Ben Abdelaziz’s closest advisers.

Delta pursues its own projects in Africa and also holds a stake in the Canadian group Centurion chaired by Said Arrata that operates in North and West Africa.
Egged on by the two groups, the Chad president’s office conducted a legal audit of the contracts governing the participation of Chevron and Petronas on the concession operated by Exxon. The audit pointed to the extremely advantageous conditions enjoyed by the two groups, namely that they could deduct depreciation of their oil assets from their corporate tax. Several of the president’s advisers, including oil minister Mahamat Nasser Hassan, suggested the contracts could be re-negotiated or even cancelled on condition that Chevron and Petronas were compensated for the move.
Deby rejected the advice, fired the oil minister and told Chevron and Petronas to quit the country, claiming that the two groups owed Chad nearly CFA 250 billion ($486.2 million) in back taxes, a figure that seemed to have been snatched out of the air.

The Chad government plans to award the stakes of Chevron and Petronas in the Doba field to the new Societe Nationale des Hydrocarbures du Tchad (Africa Energy Intelligence announced its forthcoming creation in July). The new Chad group will then team up with foreign partners who would help to develop the field alongside Exxon, which will remain operator.

Weakened by a rebellion which has recruited in the ethnic group to which he belongs, the Zagawas, the Chad president played as much as possible on nationalist sentiments in kicking out Petronas and Chevron. The eviction of the two groups was announced by the president himself in a speech in which he also complained that Chad picked only the crumbs from oil extracted in the country and that it was determined to be involved in developing the fields."

Savannah Energy unaffected by row with junta over ExxonMobil asset transfer

Its weeks-long legal battle with Chad's government has not impacted the British junior's bottom line. Even without its own employees on site, it continues its activities as if the transfer from ExxonMobil were not in dispute.

Savannah Energy is, according to our sources, still receiving the crude oil proceeds from the 40% stake in the Doha basin it bought from ExxonMobil. Adverse court rulings in N'Djamena have had no impact on the British junior's oil lifts, the most recent of which took place with no problems in mid-February in Kribi, Cameroon - the end of the pipeline from Doba in Chad.

Savannah Energy continues to operate as normal, in parallel with the arbitration procedure launched in December before the International Chamber of Commerce (ICC) against the Chadian state, which it accuses of obstructing its purchase of ExxonMobil's interests in the Doba basin. The Société des Hydrocarbures du Tchad (SHT) had this takeover blocked twice in the N'Djamena courts, on 14 December and 25 January ), on the grounds that its right of pre-emption had not been respected.

Absent on the ground

The situation is all the more unusual in that no Savannah Energy employees remain in Chad. The 10 or so expatriates who had settled there last year were all told to pack up in mid-December, after the announcement of the deal between the two companies on 9 December and then the first court decision in N'Djamena. At Doba, work is being carried out by former ExxonMobil employees, who are now being paid by Savannah as if there were no conflict going on. In the meantime, however, the ICC ruled, in an emergency arbitration on 7 January, that the initial court ruling in Chad was illegal. The Chadian state, via the SHT, then requested the suspension of the asset transfer.

The ICC arbitration between Savannah and SHT is expected to take several months, if not years, to reach its conclusion. By then, if no amicable agreement is reached, production, which currently stands at around 30,000 bpd, could slowly decline due to the lack of heavy investment needed to maintain this level.

I see the share register last updated 4 days ago on 16th March but don’t have the previous figures. Just wondering if it’s anything to do with readying the admission document.

Sorry the links didn't appear in previous post

https://www.fitchratings.com/research/corporate-finance/european-gas-spot-price-down-due-to-warm-weather-vast-lng-supplies-20-10-2022

and

https://www.fitchratings.com/research/corporate-finance/fitch-ratings-raises-mid-term-oil-cuts-near-term-gas-price-assumptions-13-03-2023

I don't see what your point is re pulling out of deals. That wasn't my point whether they did or didn't. My point is that exclusivity agreements don't mean they are over the line until signed and sealed whether its on the part of the buyer or the seller. The Benin government has yet to approve their offer terms which they may or may not agree to - thats the point.

You said ZEN on its italian assets now generates $3.5m per annum. I do not see anywhere near that now and it is not a constant re pricing.

They sold 137 bls condensate for 6 months (under a barrel/day)
They sold 5,623 mcf of gas (937 boe or about 5 boe/day).

European gas prices per mcf fell 4 fold in October from it's peak in August european-gas-spot-price-down-due-to-warm-weather-vast-lng-supplies-20-10-2022 which was down to about $130/boe

"We have halved our 2023 European TTF gas price assumption to USD20/mcf on higher-than-expected gas levels in storage in the EU, supported by demand destruction and ample LNG supplies. We expect the market in Europe to be balanced in 2023," fitch-ratings-raises-mid-term-oil-cuts-near-term-gas-price-assumptions-13-03-2023

That's about $120/boe and corresponds to the falling electricity price received Jan/Feb that ZEN recently announced. They have fallen from E419 in July-September to Euro156 last month.

Until they ramp up gas production, the above gas/condensate production figures of a total approx 1100 bls for 6 months = $132,000/6 months with almost 3 months of 2023 gone).

Taking the electricity average that you query and along with the current gas production - I see the 'current' run rate as i said at $1.8m/yr in the context of lower electricity and gas prices. You say "now generates $3.5m per annum" - I beg to differ until they increase gas production significantly. There is a chance that gas prices may continue to fall back to longer term past averages in the next 2 years so something to watch .

No need to respond to the more critical matter of dilution if you think it will happen significantly again (257+ to 1 previously).

The running costs for the company are still too high after all this time.

Regardless i think Yemen could be the game changer and perhaps come at a good time with improved relations between SA & Iran.