Member Info for ZENGAS

11 March 2022

Lekoil Limited

("LEKOIL" or the "Company")

Convertible Facility update

LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, is pleased to announce that the Grand Court of the Cayman Islands has discharged the injunction bought by Mr. Akinyanmi on the issuance of shares. The Company has advised the Court that it will be applying to recover its costs from the Plaintiff.

https://www.investegate.co.uk/lekoil-limited--lek-/rns/convertible-facility-update/202203110752164878E/

9/3/22 RNS Number : 2298E

Convertible Facility update

LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, provides the following by way of corporate update.

-- Drawdown under Savannah convertible facility agreement (the "Savannah CFA"): The Company confirms that it has fully drawn down under the Savannah CFA, in the amount of GBP885,672.

-- Injunction on issuance of shares by Mr. Akinyanmi: The Company's application to lift the injunction will be heard on Thursday 10 March. The Company will update the market appropriately following the hearing.

https://www.investegate.co.uk/lekoil-limited--lek-/rns/convertible-facility-update/202203091449522298E/

Was over 100p 6-8 weeks ago on the back of rising oil but had fallen to 95p just pre announcement. Oil price has risen further.

There is a fair bit of production hedged that reduces by Q3. Production for 2021 was 29k oil/liquids + 18k gas. Net debt reducing and down to $426m.

This year guidance is 30-35k oil/liquids + 20-25k gas without the acquisition and also excludes the new ANOH gas plant (which is 87% ready but production slips into next year).

On the above basis alone it has to be great value with over 7% dividend on top of the growth potential and reducing net debt pile imo. The acquisition would be certainly transformational though i'm just wondering with the Q1 surge in oil prices is there the potential that the likes of NNPC or other possible bidders want to make things difficult ?

https://ca.linkedin.com/in/adel-henniche-54568b35

from AI

Savannah Energy sets up dream team for Exxonmobil and Petronas takeover

07/03/2022

'Oil junior Savannah Energy's takeover of the assets of ExxonMobil and Petronas should take effect in June. Savannah chief executive Andrew Knott and his VP Africa Yacine Wafy have already started placing executives in Chad, however, to ensure that the hand-over is carried out in good order. The company has already sent its future country manager to N'Djamena with orders to travel regularly to the Doba production zone in southern Chad. According to our sources, the post has been taken by Adel Henniche, who used to work with Canada's Niko Resources.

Henniche faces a massive task. Exxonmobil's production has been steadily falling and today stands at just 30,000 bpd. When production started in 2003, production stood at more than 100,000 bpd. Many wells, which have been shut down, will be reopened in an attempt to halt the slowdown and increase output a little. Currently, Chad's biggest producer by far is China National Petroleum Corp (CNPC), which is producing 100,000 bpd and is supplying crude oil to the Djermaya refinery, near N'Djamena. '

With the 2 acquisitions 2P = 183.1 mmboe. (2P + 2C = 359 mmboe).

2P might be over 210 mmboe shortly on formal sanctioning re R3 east.

In the footnotes quote - "Upon the formal sanctioning of the R3 East development production (targetted by Savannah in H1 2022) Savannah would expect to move the 2C resources to the 2P reserves category"

NNPC had previously given approval to Seplat/Trident for the Exxon asset. Now Avuru and the Seplat Chaiman have gone/going (jointly started up Seplat years ago).

2Avuru’s Chappal Petroleum in race for ExxonMobil Nigeria assets

Chappal Petroleum Development Company, an indigenous oil and gas company, is one of the strongest bidders for the ExxonMobil Nigeria oil and gas assets that are up for sale, The Business Intelligence Africa (TBI Africa) has learnt.
Chappal Petroleum Development Company reportedly was founded by Mr. Austin Avuru, one of Nigeria’s prominent and respected oil and gas executives, when he left Seplat Energy Plc as the Chief Executive Officer.

Chappal Petroleum stands a good chance to clinch the deal in view of the withdrawal of Warburg Pincus-backed Trident Energy which was Seplat Energy Plc’s partner that was expected to bring a substantial part of the estimated $1.5 billion ExxonMobil Nigeria assets.

Besides, it was learnt that the United Kingdom’s Cairn Energy, with about US$908billion market capitalization, has teamed up with Chappal Petroleum to bid for the assets.

With the backing of Cairn Energy, Chappal Petroleum is also said to be chasing several other Nigerian assets, which some of the International Oil Companies (IOCs) in Nigeria want to divest especially on onshore and swamp areas.
The participation of Avuru’s company in bidding for the assets, it was gathered, was the major reason Avuru was asked to step down from the Board of Seplat Energy Plc, when Seplat discovered his (Avuru’s) company was a key contender for the assets. Avuru was a non-executive director on the board of Seplat Energy Plc.

Meanwhile, an industry source stated that other firms are vying for the assets but top of the list and ExxonMobil’s preferred bidders are Seplat Energy Plc and Chappal Petroleum Development Company. ExxonMobil is still processing all the bids, he said, adding that offer is still open but the oil giant will close transaction between now and end of February as the senior partner in the assets ownership, the Nigerian National Petroleum Company Limited (NNPC) had earlier given approval for sale to Seplat but that was before the pull out of Trident Energy from the deal.

It would be recalled that Seplat Energy Plc was set up in 2010 by Avuru and Ambrose Bryant Orjiako "

https://tbiafrica.com/2022/01/03/avurus-chappal-petroleum-in-race-for-exxonmobil-nigeria-assets/

Chappal is working on its first series of acquisitions.

http://www.chappalpetroleum.com/

How can you ride two horses at once ?

Seplat was originally bidding with a partner in their 29/11/21 RNS for the assets as you can see, but now announced with no partner (believed to be Trident Energy). It was rumoured back in January this partner was pulling out back in January.

The strangest thing is that in the Seplat RNS there was no mention anywhere that i can see of pre-emption rights yet these stories now circulate.

Seplat must obviously beleive there is none and you don't do these kind of deals with the likes of Exxon, your legal counsel etc in doing such a deal and not be aware of them or report them. So i'm very surprised to see this circulating but knowing the Nigerian press they like to run stories sometimes regardless of full facts. In addition NNPC owes a lot of cash and a reported $1.2b to SPDC as they too seek to divest some assets of around $3b (which Seplat were reported to have shown interest probably with a partner). How does it look if it does, but where does NNPC find cash to buy assests while reportedly struggling to pay others on top of it's debt pile ?

Seplat were hoping to beat off a bid by local firm Chappal which they obviously did and a company such as Exxon will be very careful who it chooses to sell to particulary as the buyer needs to have strong ESG credentials. Selling an asset to just about anyone doesn't fit with shareholders incase that asset is not properly maintained or improved upon in terms of ESG. Knowing Nigeria, I wonder is there a back door attempt/sour grapes re this deal.

There appears to have been some internal turmoil at Seplat. This leaves one of the founders gone and another founder, the chairman going shortly too and the 3rd director in a short time frame all while this deal was going on.

12/11/21 - announces that Mr. Xavier Rolet, KBE, an Independent Non-Executive Director ("INED"), has decided to step down from the Board of Seplat Energy effective 11th November 2021 for personal reasons.

17/11/21 - today announces that its co-founder and pioneer Chairman, Dr. A.B.C. Orjiako has decided to step down as Chairman and from the Board of Directors of Seplat Energy Plc at the next Annual General Meeting (AGM) in May 2022. In order to ensure an orderly transition, Dr A.B.C. Orjiako will remain the Chairman of Seplat Energy until the AGM, when he will be succeeded by an Independent Chairperson in line with Seplat Energy's succession plan.

29/11/21 - Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, notes the recent press speculation and confirms that Seplat Energy, together with a partner, is in competitive discussions to acquire ExxonMobil's Nigerian shallow water business. Deliberations are ongoing and accordingly, there can be no certainty as to the outcome.

23/12/21 - December 23, 2021: The Board of Seplat Energy announces that it has terminated the contract of appointment of Mr. Austin Avuru as a Non-Executive Director on 22nd December 2021, due to breaches of the Company's corporate governance policies and his fiduciary duties. The Board has called for his resignation as a Director of Seplat Energy.

and he goes - 2nd March 2022: Seplat Energy Plc today announces the resignation of Mr. Austin Avuru, a Non-Executive Director ("NED") from the Board of SEPLAT Energy with effect from 1st March 2022. In line with the provisions of the Company's Memorandum and Articles of Association, his replacement will be nominated to the Board.
The Board wishes to sincerely thank Mr. Avuru for his founding role and contribution to SEPLAT Energy for the past decade.

Net closing adjustment of $560m less to find against the $1.36b purchase price from an effective date of 1/1/21 to /1/3/22.

March 3, 2022, by Melisa Cavcic

Oil major ConocoPhillips has sold its oil and gas assets in Indonesia for $1.36 billion to Medco Energi, an Indonesian energy firm, after reassessing its asset portfolio in a bid to pursue energy transition opportunities, which would allow it to amass assets with lower GHG intensity, such as LNG.
ConocoPhillips reported on Wednesday that it had completed the sale of the subsidiary to Medco Energi for $1.36 billion, with an effective date of 1 January 2021. The firm also explained that, after customary closing adjustments, net cash from the sale is approximately $0.8 billion,

The sold assets produced 51 thousand barrels of oil equivalent per day (MBOED) during 2021 and had year-end 2021 proved reserves of approximately 70 million barrels of oil equivalent.

https://www.offshore-energy.biz/conocophillips-exits-indonesia-assets-to-focus-on-low-cost-supply-options/

should read 1/1/21 to /1/3/22

Net closing adjustment of $560m less to find against the $1.36b purchase price from an effective date of 1/1/21 to /1/1/31. Will be interesting to see what the Seplat Exxon net cost will be come sign off.

March 3, 2022, by Melisa Cavcic

Oil major ConocoPhillips has sold its oil and gas assets in Indonesia for $1.36 billion to Medco Energi, an Indonesian energy firm, after reassessing its asset portfolio in a bid to pursue energy transition opportunities, which would allow it to amass assets with lower GHG intensity, such as LNG.
ConocoPhillips reported on Wednesday that it had completed the sale of the subsidiary to Medco Energi for $1.36 billion, with an effective date of 1 January 2021. The firm also explained that, after customary closing adjustments, net cash from the sale is approximately $0.8 billion,
The sold assets produced 51 thousand barrels of oil equivalent per day (MBOED) during 2021 and had year-end 2021 proved reserves of approximately 70 million barrels of oil equivalent.

https://www.offshore-energy.biz/conocophillips-exits-indonesia-assets-to-focus-on-low-cost-supply-options/

The likes of Exxon and other supermajors/majors are divesting assets and long flagged up. There's $100b in assets from 4 of them flagged up. Despite strong oil prices, there aren't buyers everywhere that can find financing or have good ESG credentials in being favoured to take the likes of these assets over.

To comply with their energy transition and also to focus on new early life assets that they hold or no longer fit their profile.I'm in Save and they are picking up Exxon/Petronas Chad assets. Petronor, Vaalco, Afentra, Seplat, Jadestone, others and some non listed private equity backed companies have either acquired or are all on the look out for mid life-maturer fields that are being disposed of. Many of them haven't been invested in over 5 years and ripe for re-investment. ((Look at what Jadestone did on the purchase cost profile achieving increased reserves and production on Montara/Stag assets that were underinvested in and no longer fitted the original operators business). There's no reason for majors to invest when many of those factors are considered. They can become to labour intensive for big outfits when there are younger opportunities. These assets suit more nimble companies that can lift production and extend field life well into the future.
There's 400 mmbls of 2P liquids alone here not counting the gas, net to Seplat so they should be productive for many years even if not at their past peak which would be impossible. We haven't see the CPR but likely to have 2C upside, some exploration and the the huge gas potential which basically comes for free for Seplat as a major gas supplier is hard to overlook given the low cost base.
re the finals damo - You miss the point on downwards adjustment on the payment reduction outlay come H2 that sees what Seplat actually pays.

Re the 16/2/22 Vaalco eyes Chevron and ExxonMobil's assets
'According to our sources, Vaalco is interested in buying the Zafiro oil field currently operated by ExxonMobil. The field, which is also coveted by Trident Energy, and at one time by Tullow Oil, has been on the market since 2019 although Malabo has not yet approved any of the potential buyers who have expressed an interest'

17/2/22 article on Exxons Zafior field Trident bids again for ExxonMobil's Zafiro as Savannah lies in wait
According to our sources, another party has started discussions with ExxonMobil about buying Zafiro: Savannah Energy.

4/3/22 Vaalco ditches Zafiro to zoom in on Chevron's assets
In its rush to acquire new productive assets in Equatorial Guinea (AI, 16/02/22) Vaalco Energy seems to be changing tack. The Houston-headquartered junior initially had its eyes set on both ExxonMobil's Zafiro fields as well as Chevron assets previously owned by Noble Energy. For the past decade, the latter have produced via the Aseng and Alen wells, whose gas has supplied the LNG train in Malabo since last year.
But now it looks like Vaalco is aiming to buy only Chevron's assets in Equatorial Guinea. There are several reasons for this strategic retreat. First, Vaalco's executives have strong ties with the Californian major. Board chairman Andrew Fawthrop spent most of his career at Chevron, and notably its Nigerian subsidiary, between 2009 and 2014. Between 2014 and 2019, Thor Pruckl, now Vaalco's executive VP for international operations, served as director and VP of Noble's subsidiary in Malabo. So he knows his former employer's fields backwards and is keen on his new firm taking them on.
Chevron made it clear when it took over Noble in 2020 (for $13bn) that it did not want to keep certain assets in its portfolio, such as those located in Equatorial Guinea. Vaalco therefore has a window of opportunity, provided the Equatorial Guinean government does not oppose the transaction. But it's been tricky in recent years to get official green lights for oil sector sales. Zafiro has been up for grabs since 2019, but repeated political intervention derailed would-be deals. Even though ExxonMobil had agreed a price with Trident Energy, the French nationality of the latter's executives scuppered its chances, despite repeated mediation efforts: vice-president Teodorin Obiang Nguema has had no time for new French investors in his country since a Paris court slapped him with a three-year suspended jail sentence in the "ill-gotten gains" case in 2020.
Oil is a such a political issue in Equatorial Guinea largely because production has plummeted over the past decade, now barely reaching 113,000 bpd, and the government is very averse to letting the majors go, believing that the juniors who replace them won't invest as much. However, the majors are hardly investing in the country anymore, due to a lack of prospects, as the fields have almost all become mature.

Yet the 2 acquisitions are accumulating more cash. The sooner these are signed off the better imo.

Kosmos now £4, m/cap £1.8b and net debt increased to over $2.5b. They’ve put on the entire m/cap of Save in a week.

I think the actual purchase price by mid year could be $400m less than the headline $1,258m.

Saves announced purchase of 22.5k bopd and pipeline interest from Exxon & Petronas in Chad for $658m (with a potential extra $50m to pay for oil up to $80/b over 2 years to Exxon only). It is anticipated to give a downwards adjustment of $321m whch is from 1/1/21 to closing at 30/6/22. (slide 4). This was announced when oil was in the $80/b range in December 2021.

At the least, half the downwards adjustment will be from the production ie $160m.
For Seplat, given there's about 4x as much oil production in the Exxon Nigerian asset and a similar time period from 1/1/21 to completion in half 2 this year, it wouldn't surprise me that $400m+ may be taken off the $1258m base price.

Current net debt end '21 = $426m. Possibly sub $400m by June this year from the existing assets then a net purchase cost to Exxon of $850m = overall net debt $1.25b range which has to make it very cheap when completed.

Had posted this over on ADv n f on the 28th but i think this puchase price can still be improved by another $200m in a follow up post above

Sepl Revenue results this am end 2021 = $733m. Net debt $426m.
Acquisition costs $1283m - expect a reduction of about $200m due to consideration effective from 1/1/21.

Overall net debt becomes circa $1.5b. (Other $300m contingent consideration would be paid from share of oil above $70/b and non material as it works out at just paying $1-$2 per barrel extra from income above that $70/b mark.

2P OIL reserves = 650 mmbls (945 mmboe incl gas).
Oil production rises to about 115,000 bopd (146k boepd incl gas).
Would expect revenues to be $2+ billion.

Overtakes KOS/TLW at a stroke with i expect $500m - $1b less net debt yet 1.5 - 2X production and 2 - 4.5X reserves.

588m shares @ 110p = £650m m/cap.
Already paying $58m/yr dividend worth 7.4p/share.
Transformational deal so fair value should become £2-£2.50 (£2.50 = £1.47b m/cap).
Plus effect of having $500m minimum of less net debt is worth another 50p on the s/p in comparing to TLW/KOS.
===============================================

Kosmos listed in London Aug 2017 with 389m shares and £5.20 = £2b m/cap + $1.28b net debt. Now 452m shares F/D and results out this am.

From 110 mmbls P2 in 2017 and today = 580 mmboe P2.

Year/Revenue/Production/Net Debt with (£ M/Cap in brackets).
2016 $310m/18,500 bopd/ $1.32b
2017 $578m/30,500 bopd /$1.28b (110 mmbls P2) (£2b m/cap)
2018 $886m/50,500 bopd/$2.12b (£2.8b m/cap)
2019 $1.5b/68,000 bopd/$2b (£2.1b m/cap)
2020* $804m/60,800 bopd/$2b (£2b - £350m/cap)
2021 $$1.32b/70,000 boepd/$2.59b (£1.53b m/cap)

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

Tullow from end 2016 with 914m shares , 2017 = 1386m shares and currently 1.43b shares in issue.
Also 550 mmbls reserves/resources end 2016 to 220 mmbls P2 now.
Year/Revenue/Production/Net Debt with (£ M/Cap in brackets).
2016 $1.27b/67,100 boepd/$4.8b (£3b m/cap)
2017 $1.7b/89,000 boepd/$3.5b (£2.7b m/cap)
2018 $1.9b/88,200 boepd/$3.1b (£2.43b m/cap)
2019 $1.68b/86,800 boepd/$2.8b (£989m m/cap)
2020* $1.396b/74,900 boepd/$2.37b (£425m - £140m m/cap)
2021 'Expected to be $1.3b/59,200 boepd/$2.1b' (£745m m/cap) .
"Oil production guidance is 55 to 61 kboepd 2022"
==============================

OilPrice.com historic Brent chart used . April 2017 $55/b with an average Nov 2017 - Jan 2020 of approx $65/b. Substantial crater in 2020 with recovery to and stayed over $65/b since March 2021. (2020* = Price crash/revenue & m/cap range).

Assuming stable Chad prduction and with February now over it looks like the average was $93/b so worth about $3.4m on top of $1.6m for January at an $84/b average so should be an accumulated extra $5m as a bonus since 1/1/22.

Only the 1st day of March but hit $105/b and If we were to average $100/b for this month it might be worth close to another $5m.

Iran nuclear deal worth keeping an eye on. Analysts say it might tame the price by 5-10% regardless of Russia oil backlash ? https://oilprice.com/Energy/Energy-General/Iran-Is-Tantalizingly-Close-To-A-Nuclear-Deal-That-Could-Drag-Oil-Prices-Down.html

and current state of play
https://www.reuters.com/world/middle-east/iran-says-three-key-issues-remain-unresolved-vienna-nuclear-talks-2022-02-28/

No worries Tier. I think Agadem is bang on the money re getting involved here. I doubt they would unless it's going to be pretty material if all strands of it come together.

Unlikely we would have heard anything about this other than the fact LEK had to release that restructuring news to its shareholders and SAVE had to likely acknowledge it to us.

If Save did pull of 40% of OGO and 300 mmbls it would drive up the reserves/2C imo to over 650 mmbls at this stage ahead of anything else in the pipeline. Given the 2 discovery wells at OGO and 80% of OPL 310 covered by seismic, a development plan would move some of that into the 2P reserves category. Maybe this is one of the assets in the 27 or so that have been screened.

I've been posting for along time about SAVE potentially attaining 1 billion bls 2P/2C here. It could well get there without anything from Niger and reinforces my thoughts on TLW/KOS comparrison.

Who knows but if they end up owning 25% of LEK itself that future $50m royalty payment is effectively just $37.5m and perhaps what's to stop them buying out the remaining 75% of LEK post a successful restructure in 1-2 years where they could keep that royalty payment and gain future production of up to 8k bopd from Leks other asset ? Still early days though.