Member Info for ZENGAS

The latest broker updates post results and relative to the 'current assets' including post Chad-Cameroon deal.
FinnCap 109p, Panmure Gordon 95p, Shore Capital 80p = average 94.5p.
Those same assets tey say will reduce by $210m net debt in 12 months and approx $400m in 24 months. That's another 12p and 24p to add to the above targets on those milestones ie
end 2023 F/Cap 121p, PG 107p, S/Cap 92p = average 106.5p
end 2024 F/Cap 133p, PG 119p, S/Cap 104p = average 118.5p.

By the end of 2023- 2024 to get an overall average of 200p/share requires 93.5p - 81.5p of new value .
Looking at the unrisked -
F/Cap use $4.50/b for new Niger reserves and $3/b for new Doba reserves so on average about $3.75/b for new reserves from Niger/Chad combined.
Every 100 mmbls should be worth about 26-27p - so roughly 300 mmbls reserves needed to reach around 200p.
Not withstanding any other hydrocarbon acquisitions i'm still watching with interest on SAVEs option agreement on 17.14% in theOPL310 Lekoil announcement earlier this year. Potentially with the other partner- there is up to 40% on offer here and this imo is a very big asset that they are chasing and SAVE have already invested cash in this.
17.14% is equal to about 132 mmbls of the estimated 774 mmbo recoverable from the 2 original wells. At 40% it could be over 300 mmbls.
From my 24/3/22 post for reference
26/6/13 "The Ogo-1 well has been drilled to a total measured depth of 10,518 ft (10,402 ft true vertical depth subsea), and has encountered a gross hydrocarbon section of 524 ft, with 216 ft of net stacked pay"
19/11/13 "The Ogo-1ST reached a total measured depth (TD) of 17,987 ft (12,050 ft true vertical depth) and encountered hydrocarbon intervals in the same Turonian, Cenomanian and Albian reservoirs that were successfully drilled and logged at the Ogo-1 well. In addition, the syn-rift section encountered a 280 ft true vertical thickness gross hydrocarbon interval."
"Based on the well data, the Partners estimate the P50 to P10 gross recoverable resources range to be significantly ahead of pre-drill expectations at 774 to 1,180 mmboe across the Ogo four-way dipped closed and syn-rift structures. Additional upside potential is expected in the syn-rift play."
Something to think about just as we have also increased Accugas production to 34,800 average for the last 3 months via a number of new contracts ($60m/yr new revenue ?) .
CEO has mentioned doing the same in Chad as Nigeria re reserves/production growth.
Now if OPL310 comes off - it could be huge. Remember the focus is on discovered reserves/resources that are producing or near production ready.
On the above basis, there's a number of ways in achieving a 200p target (ie not all down to Niger) and something i beleive the brokers will upgrade to over the next 12-24 months in addition to the longer term green energy projects.

Subject to the terms of the Calabar PRG GSA, CGCL can require any gas paid for but not received to be supplied as make-up gas at a later date, for which purpose CGCL may extend the term ofthe Calabar PRG GSA for a further 18 months.

Accugas is really starting to get into gear. The additional 12,300 boepd now reached represents some $60m of new revenue at $2-2.25 mcf and with most of the costs already fixed on the original production profile, there must be about 80% of that going to the bottom line.

Head count increased and invested in for Chad Cameroon take over with more acquisitions reiterated.

Committee reduced from 24 to 3 as they had to take in all of the countrys representative interests and figure agreed and put to Exxon (not stated) - this was previously reported as $30m whereas Exxon reportedly offered $15m.

Delays with Petroleum minister in September gone to UK for Queens funeral and also inauguration of president in Angola.

Glencore rumoured to have paid up to $30m to leave in its sale to Perenco.

Petronas nothing to pay as nothing in contract - but may if it wants quicker exit - conjecture only.

Reported that SHT wre previouly interested in pre-empting 25% of Petronas's stake. (would have reduced Save from approx 35% to approx 26.25% if correct but just says 'were previously planning - obviously reduction for Save in some debt/cost if that happened - though the whole SHT fraud debacle may have affected that ??)

28/9/22

'ExxonMobil and oil minister near agreement on departure bonus'

The general manager of ExxonMobil's local office and Chad's oil and energy minister were able to meet on 24 September. That encounter may spell progress in the debate over the fiscal terms of the US major's withdrawal from the country.

After several false starts, the head of ExxonMobil in Chad, French national Cécile Rauline, was finally able to obtain a meeting with the Chadian minister of petroleum and energy, Djerassem Le Bemadjiel, on 24 September. The purpose of their encounter, held at the end of the day, was to determine the separation bonus Chad would take for Savannah Energy's purchase of ExxonMobil's Doba basin assets (AI, 16/06/22) as well as the tax clearance the US firm would need to pay to withdraw from the country. Le Bemadjiel however decided not to communicate on his offer, which he is said to have finally sent to ExxonMobil's chief in Chad in a letter this week. Whether ExxonMobil agrees to the amount requested by the government should become known in the days to come.

Once the three government officials were able to agree to an amount in early September, Le Bemadjiel was forced to further postpone his meeting with Rauline due to various travel imperatives. The minister, who speaks English fluently and previously worked for oil services firm Schlumberger, was sent by transitional president Mahamat Idriss Déby to represent Chad at the inauguration ceremony of Angolan president João Lourenço's second mandate on 15 September. Four days later, he was in London to lead the Chadian delegation for the state funeral of Queen Elizabeth II.

Leaving Doba

ExxonMobil is not the only major pulling out of their Doba fields. Petronas also wants to leave the basin, but still needs the government's green light to do so. The authorities were planning to pre-empt 25% of its Doba assets via Société des hydrocarbures du Tchad. While Petronas does not believe it has to pay a departure bonus to the state, as it was not written into its contract, it may have to change its tune if it wants to withdraw from the country quickly. The only firm to have managed to pull out of Chad recently is Glencore. The Swiss trader sold his local subsidiary Caracal Energy to Perenco by agreeing to pay a bonus - some sources speak of $30m - to the Chadian treasury.'

Snaffleman just seen your earlier comment do i think £2 is still achievable.
Yes i do based on the assets we have and are acquiring - they aren't small and thats one of the main reasons why so much value should be released.
Won't repost it but it's covered in my posts
'Save Valuation' - 30/8/22 and 'Re FinnCap Billion Dollar Baby' - 16/7/22.
We just need to get on with extracting value on the assets we have, deal closure on those expected and the oil price to be in the range given.
Can't do nothing about market turbulence, sentiment or other investor nervousness in the short term, world politics or any early take out so certainly looking forward to seeing what updates are provided shortly and how the Accugas business with the new deals may be faring.
FT article this week on Nigers projected population explosion (worlds fastest) to 68m in the next 25 years given it was 18m or so when Save entered the country - so a big onus on whoever is in power to keep managing and growing their demand for energy provision.
https://www.ft.com/content/312e4f7f-69a6-4a21-91a2-2657249fd6b4

What is stopping Cameroon ?????
Cameroon represents 80% of a pipeline and the offshore storage and loading facility. Cameroon has no oil production that SAVE are acquiring.
Cameroon is Cotco only whereas Chad is Totco.
Might be no word on Petronas yet because it was my interpretation that SAVE wants to be operator via Exxons stake, wheras if they only have the Petronas stake they are unlikely to be.
Perenco recently took over the Glencore assets so i don't get why some think the country risk is something all beholden to SAVE. (CNPC there as well). In addition some Perenco staff have gone to SAVE. Nicolas de Blanpre is the Chad country manager (ex Perenco).
Acquiring -
from Exxon Mobil Corporation, of a 100 per cent. shareholding interest in EEPCI, which
holds a 40 per cent. participating interest in, and is operator of, the Doba OFDA; and
from ExxonMobil International Holdings Inc. and Esso Exploration Holdings Inc., of a 100 per cent. shareholding interest in EPIL, which in turn holds a:
40.19 per cent. shareholding interest in TOTCo; and 41.06 per cent. shareholding interest in COTCo.

from PETRONAS of a 100 per cent. shareholding interest in
PCCEPI, which holds: a 100 per cent. shareholding interest in PC Chad, which holds a non-operating 35 per cent participating interest in the Doba OFDA;
a 100 per cent. shareholding interest in Doba Pipeline, which in turn holds a:
30.16 per cent. shareholding interest in TOTCo; and
29.77 per cent. shareholding interest in COTCo; and
2.1.3. a 100 per cent. shareholding interest in PC Marketing, which purchases all of PC Chad’s entitlement to crude oil under an offtake agreement. PC Marketing has appointed PETCO Trading (UK) Limited (PETRONAS’ marketing entity) to market such offtake, such marketing agency agreement will be terminated at Completion.

As for the refinancing - this is/was to be a bonus if completed but to me that's all it is.
The main thrust was some $280m FCF from all assets base case $60/b. (54% non oil).
At $80-$90/b it moves to $322-$349m FCF.

I'd rather see them take contrl of the assets then materially ramp up production from their own drilling rig and also hopefully add a material reserves increase as they did by 27% (after allowing for production) in Nigeria within barely 18 months.

I posted here on the TCC case 5/9/22 .

AIs update today though now about 2 weeks behind any further development. Seems Exxon have paid 16.1m euros last month (basically $16m) or 95% of the full amount with about $400k frozen under a validity technicality on exxons part - i think on where the balance has to go to what recipient demanding it ?

Whatever, it seems no doubt that Exxon is edging closer to concluding the deal and this is almost 2 weeks old now.

20/9/22

'ExxonMobil battle with N'Djamena prosecutor heats up

The boss of the US major's subsidiary in Chad is under pressure from the prosecutor's office, which accuses ExxonMobil of withholding money owed to former employees. The company says it has done no wrong.

"Denunciation of threats with a request for protection" is the unambiguous subject line of a letter sent on 8 September by Cécile Rauline, the head of ExxonMobil subsidiary Esso Exploration et Production Chad Inc. (EEPCI), to Justice Minister Mahamat Ahmat Alhabo. Rauline wrote that she was receiving threats from the public prosecutor at the N'Djamena Court of Appeal, Guiralta Yadjibert, who is not mentioned by name in the document. He had sent her a summons the day before ordering her to appear in person before him or be prosecuted "in accordance with the provisions of Article 139 of the penal code". This article says that refusal to respond to a summons can lead to imprisonment of between 15 days and three months, Rauline stated in her letter, adding that she was completely unaware of the offence that justified her summons.

Unpaid compensation?

ExxonMobil is in the middle of its withdrawal from Chad and has been trying for months to complete the sale of its Chadian assets to Savannah Energy. But several issues are slowing down its definitive departure, including the payment of compensation to former employees of its construction subsidiary, Tchad Cameroun Constructor (TCC, AI, 20/06/22). The payment is at the centre of the conflict between ExxonMobil and the prosecutor. The oil major was ordered in October 2020 to pay 10.5bn CFA francs (€16.1m) to its subsidiary's former employees. Most of this sum, 10.1bn CFA francs, was transferred by ExxonMobil to the account of bailiff Hisseine N'Garo in late August.

Rauline specified in her letter that the remaining 471m CFA francs was "duly frozen by EEPCI" after a seizure of debts notification presented on 5 August by another bailiff, Félix Djounfoune Golbassia. According to our information, this amount corresponds to the money borrowed by TCC employees to pay their legal fees, but the latter, as well as the first bailiff, contest the validity of this seizure.
But it is precisely this remaining sum that, according to ExxonMobil, led to the prosecutor's summons. "EEPCI had no other choice but to carry out this blocking [of the sum], otherwise it would be liable to conviction for the causes of this blocking," Rauline wrote. She pointed out that the case was purely a matter of litigation and enforcement, and not of criminal law. "We cannot therefore understand the summons of the prosecutor, which would only be justified in the context of a procedure for an offence punishable by a criminal penalty," she concluded. She asked the minister to "put an end to these extremely serious threats".

ExxonMobil did not respond when contacted for comment by Africa Intelligence.'

As for the majors' mature fields in West Africa, these are to be sold off to smaller companies. Although they could be potential candidates, US juniors are not jostling for the African assets of their larger rivals. Marathon Oil has drastically reduced its investments on the continent, keeping only a presence in Equatorial Guinea. Its departure from Libya inspired Hess to follow suit, leaving Conoco Philipps as the last US group operating in the country (on Waha).

In exploration-production, Kosmos Energy and Apex International Energy are also tentatively making their presence felt, the former thanks to its presence on the Senegalese-Mauritanian cross-border Tortue gas field, the latter thanks to its activity in Egypt (AI, 17/01/22). In Ivory Coast, the junior Murphy Oil covets, according to our sources, five offshore blocks (CI-102, CI-103, CI-503, CI-531 and CI-709), but negotiations have yet to be concluded. '

Lengthy article in AI this am about US giants exiting African continent. Can't post it all but brief mention of Chad.
13/9/22
ExxonMobil, Chevron, Marathon... US giants start mass exodus from the continent
With the exception of Namibia and Mozambique, Africa has ceased to be attractive to US oil companies, which are gradually withdrawing from the market. This strategy is the opposite of that adopted by the Chinese and Russians, which are continuing to push ahead.
A few isolated ventures could lead one to believe that a new momentum is underway. In particular, Chevron is preparing to announce in the next few weeks that it will acquire a stake in Namibia's Block 2813B (PEL 90), close to TotalEnergies' Venus discovery
West Africa withdrawal
This opportunistic move does not, however, affect the overall strategy of the major, which is engaged in a process of withdrawal from the continent. It has been seeking to divest its Equatorial Guinea assets for months (AI, 03/05/22). In 2021, Chevron also sold its 40% stake in OML 86 and 88 in Nigeria to the NNPC. In the space of a decade, it has reduced its portfolio in the country from 13 to 8 onshore and nearshore concessions in the Niger Delta. It operates only a handful of fields and blocks in Nigeria (three deepwater blocks), Angola (blocks 0 and 14) and Cameroon (YoYo). It is also facing a continuous decline in its production volumes since 2017 on the continent (AI, 03/02/22). When contacted by Africa Intelligence, Chevron refused, however, to talk about a withdrawal and maintained that "the continent continues to be a region of vital interest".
At the same time, its counterpart ExxonMobil is following a similar path, painstakingly working on the sale of its shallow offshore blocks in Nigeria - whose planned sale to Seplat is causing a mammoth legal and financial mess (AI, 21/07/22) - and the never-ending saga of the sale of Zafiro in Equatorial Guinea. The company is also in the preparing the last leg of its final departure from Chad. The same goes for Ghana and Mauritania, where ExxonMobil had pushed for higher signing bonuses, before abandoning its blocks without drilling a single well. When contacted, the company did not respond to our line of enquiry.
Lack of heirs
That leaves Tanzania (block 2) and Mozambique (block 4), where ExxonMobil remains in the shadow of the operators, Equinor and ENI respectively. The US major nevertheless seems keen to invest in other blocks in Mozambique: it has been shortlisted in the country's sixth licensing round, still underway.
Southern Africa (Tanzania, Mozambique, Namibia) is one of the few areas on the continent that Chevron and ExxonMobil still find attractive because of its unexplored nature and vast reserves. Once interested in exploring the South African offshore, which meets these criteria, ExxonMobil finally abandoned its blocks in 2020, discouraged by the sanitary conditions and the administrative and legal uncertainty surrounding the oil sector

Now appointed managing director for Nigeria.

re 8/9/22 13:53 post
'In that same RNS Olapade Durotoye became Non Exec Chairman of Lekoil.
In a further 29/7/22 Lekoil RNS - Durotoye was to take up a significant role with Savannah Energy.'

Yesterdays Save tweet - "The newly-appointed Managing Director of #Savannah Energy, #Nigeria, Pade Durotoye, paying a visit to His Excellency Ben Llewellyn-Jones OBE, the British Deputy High Commissioner to Nigeria and Head of the UK in Nigeria’s #Sustainable Economic Transformation Block."

https://twitter.com/Savannah_Energy/status/1567810257287528448

In the context of Lekoil

Dipo Sofola (Savannah) is a non exec director of Lekoil and described in the Lekoil RNS 9/6/22 as business development manager at SAVE.
In that same RNS Olapade Durotoye became Non Exec Chairman of Lekoil.
In a further 29/7/22 Lekoil RNS - Durotoye was to take up a significant role with Savannah Energy.
---------------------------
Yesterdays tweet of a pic at the Westminster Africa Business Group bash where they appear to have been a sponsor, shows Dipo Sofala (Savannah) now described as 'Mergers and Acquisition manager'.

https://twitter.com/Savannah_Energy/status/1567452790833774592/photo/1

Not sure Komakino

One thing i noted was this from the adm doc -
Ministerial consent was expected by March 2022 for both Petronas and Exxon acquisitions.
Merger approval from the Cemac Council for Competition June 2022
Completion of both acquisitions June 2022.
------------------------------------
I was under the impression from AK interviews that Cemac approval would follow after and maybe just not right away.
I don't know what Shore Capital are inferring by 'fully' completing this quarter (ie Cemac done as well ?).
Given that there's only three and a half weeks left of the quarter it's a strong reiteration to buy by SC and that the proposition has yet to be fully appreciated. (I'd say 20 main investors holding 80% of stock get it and it's some of the PIs who maybe don't see the enormous step change this will bring).

If it's due to complete within the next 3 and a half weeks then surely there must be no known issues to impediment as SAVE were happy to publically tweet the coverage.

Well there is only 4 weeks left of the quarter -

From SC - 5/9/22

Chad and Cameroon expected to fully omplete in the current quarter.

We see a business which has serious ambitions to become a scaled diversified player with strong competitive advantages.

We beleive that our forecasts frame an outstanding investment proposition that has yet to be fully appreciated.

We see continued strong momentum in the Nigerian business, the excellent strategic fit by the incoming Chad and Cameroon assets and a strong renewables straegy.
Savannahs recently establsihed renewables division is already pressing on with three exciting greenfield projects.

We look forward to further updates relating to the R3 East development.
The company has flagged the liklihood of further hydrocarbon acquisitions too and we expect a maiden dividend with its FY22f results.

We forecast revenues in excess of $1b in FY 2023f.

Valuation and recommendation

Our prevailing 80p/share Risked NAV estimate suggests that Savannah is undertaking a very vaue accretive deal which will drive substantial implied upside in share price terms. However, our explicit financial forecasts arguably do an even better job of demonstrating the proposition.

05 September 22, 3:45 pm

#SAVE features in @ShoreCapital's latest “mid-markets stock picks” report as an "outstanding investment proposition" with an 80p/share Risked NAV and as a company "serious ambitions to become a leading player in African energy"

https://bit.ly/3erCX1b

I think that relates to payment for subcontractors that Esso wanted to pay directly to those emploees rather than go through a lump sum - presumably maybe incasesit went astray. Look what happened re the corruption at SHT. I also don't think this is anything to do with the $30m some govt officials (since sacked though not sure now whos who ?) wanted for a leaving bonus from the country when there is nothing in the contracts to warrant any.

Also i wouldn't think this would delay Exxon leaving if this was agreed into an escrow account or similar for future payment.

On timing, it's worth remembering that the Nigeria acquisition took from July 2017 until completion in November 2019 and there was much concern from PIs similarly about the delay/lack of news. If alls ok here, the effective date reduces the balance regardless as times goes on. It just means that Save could be behind in ramping up new drilling and doing their own thing re improving production.

Niger may tie into the news blackout as i'm sure the financial income from Chad etc affects making a possible timing decision (just my thought).

Also can they really announce another hydrocarbon acquisition as until Chad completes this could maybe trigger a suspension (RTO) as it may be bigger than the current size/value of the company until Chad is done and dusted as by then any new deal may be big but smaller than Chad/Niger/Nigeria assets combined.

yet a work of hard work and endurance of the association for 6 years of assiduous work.
Fortunately, the law triumphed, then that the association of demobilized victims, was restored in its rights by the judicial decisions of the judgments of inadmissibility, rejection and cancellation of all the actions. From the foregoing, one is entitled to ask the question whether the ministry, through its General Inspectorate, is entitled to fall back on Me Mandembete Masrabaye Lucie, member of the collective of lawyers of the association of demobilized of TCC, to file a complaint and request the opening of an investigation in this case on the nature of the agreements signed by the parties, to justify its services and others in this file?
In this case, can we not wonder if the cause of the late payment in this case does not also fall to the Ministry of Justice, to ESSO, then manipulated them, wonders Toloumdongarti Gilbert ?

https://tchadinfos.com/politique/affaire-tcc-des-mains-invisibles-empechent-lexecution-de-la-decision-de-justice/

As part of their claims, the former employees of TCC obtained the joint order of their employer and Esso, to pay them damages by court decisions that became final in 2021. Legally, the execution of this decision was entrusted to the bailiff, Me Hissein Ngaro, appointed by court order, at the request of the Association of former employees of TCC, beneficiary of the enforceable title of the judgment of the conviction in this case.
Although the execution having been initiated since 2020 by the bailiff, it did not result in payment for cause, invisible hands prevent the execution of the said decision. These maneuvers, manipulation and arrangements began to begin execution just after the announcement of the fund transfer by the Chairwoman and Chief Executive Officer of Esso in May 2022. Thus and since then, execution difficulties have arisen from all sides. regard to the interference of the Ministry of Justice through its instructions asking Esso to transfer the funds to its own account and to designate an enforcement agent to pay the ex-employees in place of the Bailiff.
Faced with this violation of the execution law, voices were raised to denounce what could be a scheme used to refuse to continue the execution. This led the Ministry of Justice to return to legality to instruct Esso again to execute the file in the hands of the bailiff in charge of the case in accordance with the law. But against all expectations, the same Ministry of Justice made an untimely reversal to resume enforcement in order to designate, via the President of the Court of Appeal of Moundou, an enforcement agent, the Chief Registrar of the Court of Appeal of Moundou to practice the execution of this same case in replacement of the Bailiff in charge of the case, Me Hissein Ngaro.
"These facts and troubles, maintained organized by the Ministry of Justice, Esso, part of the ex-employees assembled for the need of the cause to snatch whatever the execution of the conviction of this case in flagrant and renewed violation of the law to delay and completely divert the execution of the file”, notes with regret the president of the association, Toloumdongarti Gilbert.
Since then, these manipulations have been growing in this final phase of the execution of the case against the association, making the public believe that the delay in payment is the responsibility of this association. Taking advantage of these turpitudes, another group which had asked in its time before the courts, the dismissal of the present case, returned in force to invade the various institutions, both administrative and judicial, by vexatious and reckless actions followed by demonstrations of a public nature. with the support of certain ex-employees, invited by them to the provinces, it seems, first for payment and then to mount them for the need of the cause in order to disavow the association in order to eject it definitively from this file and the payment, yet a work of hard work and endurance of the associati

The 2 part Afentra acquisition announced in April/July 2022 in Angola of a mature asset 24 mmbo P2 and 4,680 bopd for $102m works out at -

just over $4/b P2.
$21,800 per flowing barrel.

Effective dates 30/9/21 and 20/4/22 expected closure Q4 this year.

Based on $75/b oil - expected FCF after capex of $35m/yr (haven't got the capex figure) and payback in less than 3 years.
----------------------------------------------------------

As to SAVE - Unless it's something from Lekoil, CEO said further hydrocarbon assets to come.

Net Debt this year end post Chad deals = $566m reducing to $134m in 24 months.

On the basis of Afentras deal, it could be possible to add another or combination of mid life/mature assets of up to 250 mmbo P2/40k bopd for $1 billion or less when considering also a downwards adjustment on the effective transaction date.

On that basis, that's potentially more production and less net debt than where KOS is now.

That's part of my rationale to see us emulate KOS production/reserves/similar growth valuation and a lower net debt profile.

Hopefully more bookable reserves to come when Niger exploration gets underway and the option on the 2 discovery wells and very significant resource in OPL310 via Lekoil has the potential to add material P2 if successful.