Member Info for ZENGAS

The Accugas/Nigeria deal was done at 35p and $540m debt

This is a similar sized deal, expected to more than double production/reserves but with greater revenue etc and the overall debt should be under that $626m given it's back dated to 1/1/21 - possibly the same as the 1st deal.

In addition the net debt has now fallen by $170m to $370m on the first deal (will reduce by a further $100m over the next 12 months).

Given that they appear at a minimum of equal measure, i'd be surprised if this deal can't be done at 30p minimum regardless of the current share price.

Agadem, i've never tried to predict what the readmission price might be at anytime before and i'll still wait this one out given the short time to go.

Whatever any equity raise price, how much and the corresponding number of shares versus overall debt could be any variable.

I said before i'd like to see 30p minimum and 300m shares but the deal size just got bigger by 75 & 85% pipeline/production - though the price for the assets appears better than i had even expected.

We will see the reserves level compared to how much is attributed to the pipeline value for the deal. Maybe part of that infrastructure/pipeline could be sold to someone like AIM . Any farm out of Niger in a roundabout way/part of the equity could be part of a deal. I did say before that Vitol could be our defacto partner in Niger for various reasons.

All last year some of us were raising the question of the battered share price which some of us thought was being held back knowing that a deal was in the making (we do now from 1/1/21 at least) and that cash might be required. This could then influence the financing price imo.

The broker set out a target of 62p prior to this deal.
AK previously said the shareprice was a joke.
He also said any deal would have to be value acrretive to shareholders as well as dividend enhancing.

Previous placings were 56p, 38p (twice), 35p and the last at 28p due to the delay in Nigeria being done.
Once before when the share price had fallen to 23p substantial new money was raised at 38p.

Imo you can't keep adding assets at a discounted share price far removed from previous placings given the CEOs comments about the joke share price, analyst target and the business so far having performed so well with a very substantial improvement in net debt.

Just sitting tight until we see the detail.

Agadem
Most likely when booked as 2P but saying that sentiment always plays a part. Imo it won't take long for 2C to be reclassified to reserves. I think the main thing will be the export pipeline almost upon us and starting to ratchet up discoveries.

On the FCF side, Panoro's West African acquisition of 6900 bopd was expected to throw off $80m/yr @ $55/b oil after tax but before any other capex they might take out of that.

If costs were similar at Doba then 25k moving to 37k bopd might mean $290m - $430m/yr after tax ?

Plus whatever pipeline dividend - maybe $45m+ (not sure if this is before/after tax).

Nigeria up/mid stream assets on current contracts of $150m FCF - less financing, less tax i beleive.

Potentially FCF before any production increases of around $450-$500m post deal ?

Possible that future divestment opporunities could be funded substantially from FCF or debt paid down rapidly particularly if $70b+ is on our side.

SQ320

If it's of any insight my post 26 Nov @ 11:18 shows the scale of Niger on its own and when added to the acquisition strategy depending how far it goes, is anyones guess but £2 target is where i'm comfortable with for now.

June & October '21 posts -
" 'IF' Exxon goes through
13k from Exxon acquisition - 20k bopd possible.
23 - 40k boepd Accugas (40k is entire current processing).
5k bopd to the Niger refinery.
25-50k bopd via CNPC pipeline (Upstream interview with AK).
Above gives a range of 66,000 - 115,000 boepd.
Further acquistions (Eni Tunisia now mentioned) AK confident of closing at least 1 this year and 20+ still being looked at. I wouldn't discount another future 10k+. That should move the range to 75 - 125k boepd. "
----------------------------------------------------
To add today 14/12/21
There's been no investment in the Doba oil fields since about 2016.
Then it was doing over 50,000 bopd - Save think they can materially increase production from the quoted 33.7k bopd last year and a facebook post from some of those after a 3 day strike said production was at 39k bopd.
The increased share to 75% now at Doba could yield a net 37k instead of 25k bopd.
23 - 40k boepd Accugas (40k is entire current processing).
Another 2k bopd nin 23 from S/C debottlenecking.
5k Niger refinery.
25-50k (quoted from Save to Upstream) via CNPC pipeline.
That creates a range of 80 - 130k boepd to grow into - ie more than twice Tullow and Kosmos at the top of the range and $1.3b of less debt .

Total net debt (before any placings) $626m+$370m = $976m versus $2.3b net debt each for 60-70k boepd Tullow £600m/Kos £1.2b m/caps.
If you now thinks it's pie in the sky - Save should be at 45-47k on completion and by next year end imo be 60k+ before any other acquisitions.

Niger is low risk oil and with the push to honour the commitment to start production in time for export p/line completion - more bopd should ramp up as would more Accugas customers.
Another $1.3b of net debt could effectively buy up a possible further 40-50k bopd and be 2.5-3X the current production of KOS/TLW for the same debt level. We don't know where it's going to stop given the divestment opportunities there to take advantage off (Screening 27+).
I banged on about this in the summer - this is a potential giant in the making.
See the bigger picture and imo try not to get bogged down just because we've hit a new milestone on the growth path.
It's a £2 stock for me on either it's acquisition strategy or huge Niger resource base.

We haven't even thought about the Accugas 100k boepd p/line capacity or the upside from increased throughput from other operators (and ourselves) in C-C P/line for additional tarrif income .

It's both a midstream and upstream company and that imo will give us a further valuation edge !

The biggest thing for me here today is that the deal has increased by a whopping 75% and 85% respectively !

When i factored in my original projections, i said earlier i would have been happy if the deal for the Exxon asset had come in around $600m for the production and the pipeline interest.

(My post on 14/9/21 -" Some analsyts put the cost at a gross $1b+ for the 2 oil Cos interest so Esso Chad might be around $600m if that ball park was right ??" ).

The purchase price is $626m less a handsome discount back to 1/1/21 even allowing for the strike - so nearly 40% cheaper than some analysts projections while at the same time there has been a strong recovery in oil prices.

I also toyed with the idea of an extra 300m shares and hoping for 30p in the form of equity on the original Exxon acquisition - so however the equity size and price pans out it allows significant room for manouvere against that estimate for x amount of new shares in issue v issue price as the deal has actually increased by a whopping 85% in terms of the production assets and 75% for the pipeline asset for the same approx purchase price i was factoring in.

"We expect these assets in aggregate to generate positive free cashflow and fiscal revenues for Chad and Cameroon for a further twenty-five plus years.

For Savannah, these deals are expected to see our production levels and reserve base more than double.

Further, we see strong potential to significantly increase upstream production and midstream throughput volumes from current levels."

For info Saves net current 2P reserves after the 27% upgrade last month are
Nigeria 86 mmboe 2P + Nigeria 79 mmboe 2C + Niger 33 mmboe 2C = 198 mmboe 2P/2C.

If the reserves are to more than double you would think that should be north of 170 mmboe 2P and potentially 3-400 mmboe 2C before any new Niger exploration success.

Roughly just over 25,000+ bopd net being acquired based on 2020. They think they can significantly increase production so we could easily be looking at 30K+ bopd in due course here + Accugas/Nigeria before anything in Niger.

Fantastic news. Much, much better than i thought. This will be some catapult into the big league of E&P. I would have been happy for around $600m for Exxon interest alone.

Over 25,000 bopd net production plus the pipeline interests and with an effective date of 12 months ago so should knock something off that price. (Another $50m contingency linked to higher oil pricing possibly over x no of yrs)

Pipeline interests for the yr/end 2020 (Exxon/Petronas) were a net dividend of $44.6m.

With the pipeline interest, production and Accugas/Nigeria - total revenues should at current prices now be circa $900m baseline before any uplift in production, new Gas customers and Niger production in the wings.

13/12/21
'As part of the one-off renewal of their shared production contract, the Nigerien authorities have agreed to some flexibility with the oil companies in exchange for fast-tracked production plans.
ccording to our sources, both Savannah Energy and Sipex (Sonatrach's international subsidiary) will soon obtain a new eight-year contract to explore their respective licences in Niger. The draft production sharing contract (PSC) is expected to go before the council of ministers in the next few days. The two companies had only two years left before the expiry of their PSC and had expressed at the beginning of the Covid-19 pandemic, at the end of 2019, their wish to be able to benefit from a few more years, which the hydrocarbon code does not allow.
Because of Mohamed Bazoum's excellent relationship with Algeria - one of his first trip as president was to Algiers - it was never likely that he'd refuse to extend a hand to Sipex. This is especially the case since the Algerian state-owned company drilled two wells on Kafra in 2018 and 2019, discovering more than 150 million usable barrels. However, due to the pandemic, it was then impossible to get Sipex staff to travel from Algeria in 2020 to continue the drilling campaign.

What did the oil companies get in return?

In order to secure these new contracts, Sipex and Savannah Energy had to make quite radical arrangements on the oil minister Mahamane Sani Mahamadou, known as "Abba". For example, Sipex has committed to drilling four wells in four years on its Kafra licence as soon as the new PSC is validated by the authorities. Sipex's Managing Director, Nacera Meraghni, has travelled to Niamey several times to advance the project by committing her firm to a particularly intensive work programme, and by outlining a plan to develop the oil already discovered after the first four years of the new contract.
As for Savannah Energy, the signing of the new PSC was contingent on a moral, and unwritten, commitment that the 50 million barrels discovered on their permits (R1, R2, R3 and R4) would be brought on stream rapidly. Within a year, the work to connect to the Agadem infrastructure operated by CNPC (AI, 10/06/21) will therefore have to start. Savannah Energy's barrels will need to be transported through the Niger-Benin export pipeline that will link Agadem to Cotonou. CNPC expects this project - some 100,000 bpd - to come on stream by mid-2023.'

Perenco this week have just closed on 8400 bopd production along with 100% of the Cap Lopez terminal in Gabon for up to $350m. https://www.offshore-technology.com/news/totalenergies-gabon-assets-perenco-350m/

You only have to google Perenco in Africa to see stories and allegations of pollution.
I think also there was some disputes in (Tabasco ?) Mexico.

Perenco being a private company perhaps may not come up to the same scrutiny from shareholders on ESG matters.

They are also in talks with ENI (source AI)
03/12/2021
'As we previously revealed, Italian major ENI is expected to shortly complete the sale of its D3/D4 blocks in Gabon, where the company made the Nyonié gas discovery in 2014 (AI, 08/11/21). Discussions between ENI and a potential buyer have been ongoing for the past several months. According to our sources, that buyer is the family-owned Anglo-French business Perenco.
Over the past ten years, the company has been buying permits and facilities in Gabon, such as the Cap Lopez terminal, from TotalEnergies. This new acquisition would strengthen Perenco's position in the country, turning it into the leading oil company there. The deal would also allow it to diversify towards gas. The group is the first to have installed a floating liquefied natural gas unit in Africa in 2018 in Cameroon.
ENI's employees in Gabon, who currently number just over a dozen, fear the transfer will lead to them losing their jobs. On 12 November, union representatives with the help of the Gabon oil union Organisation nationale des employés du pétrole (ONEP), raised the issue with the director of the Italian group's Gabonese subsidiary, Enrico Tavolini. He confirmed that discussions were underway, without however mentioning Perenco, and said that both the possibility of it leaving altogether and a partnership with a future investor was still open. When contacted, ENI did not wish to comment on this information.'

In addition there was also a story of Perenco and Petronor forming a partnership to buy the assets in Tunisia that SAVE are rumoured to be after. You would wonder why they need a small outfit like Norways Petronor. Perhaps Perenco themselves are spreading themselves too thin. Petronor rumoured to be seeking finance.

1/11/21 'ENI has still not finalised the sale of its onshore and offshore Tunisian assets but two offers seem to be taking the lead: one from duo Perenco and Petronor, and another from Andrew Knott's Savannah Energy. For its bid, Petronor has worked on securing external funding. According to our sources, the oil firm has reportedly contacted Shell Trading to obtain an oil-backed loan in order to finance the transaction. However, it is understood Shell Trading will not lend Petronor the whole sum and it is likely it will have to raise capital on the Oslo stock market where it is listed to make up the rest.'

To me, it’s practically a word for word re-run of the Africa Intelligence article ( which it quotes twice in brackets).

I’m sure Perenco would hardly like to see both reports quoting them as their chances being highly unlikely.

I haven’t seen anything that suggests anything different ie exclusive negotiations with Exxon, Vitol charges in the last few days and the intention of a listing document on or around next Friday.

Debt has got nothing to do with the ability to pay dividends.

Petronas' 35% stake has been up for sale for quite awhile so who's going to buy it ?

Also who is the Canadian Junior rumoured to be taking over Delonex's blocks ?

The attraction for Chad should be the potential to earn significant revenue from any Niger export oil under pipeline spare capacity well into the future, something i doubt wouldn't happen under Perenco.

Any oil company can say what it likes to feather it's own nest but i doubt if their privy to any financial backing that SAVE has at this transformational time.

7/12/21
'Perenco's aggressive moves to dominate Chadian oil sector

The French family firm Perenco is trying to prevent competitors from entering the country, especially Savannah Energy.

Perenco is just days away from securing its acquisition of Caracal Energy from commodity trader Glencore. The French family-run firm plans to quickly ramp up output from these Chadian assets - currently at around 5,000 bpd - through new investments but has even greater ambitions for its position in the country. Perenco wants to boost its advantage by hindering Savannah Energy's acquisition of ExxonMobil's Doba blocks. According to our sources, the French company would like to take on these assets itself, a possibility which is highly unlikely however.

This transaction would also include ExxonMobil's stake in the pipeline connecting Doba to the Kribi Port in Cameroon, which the US major operates. Perenco does not want to depend on Savannah to export its crude oil production. To thwart Savannah's Chadian plans, it has been trying to spread the message the junior oil company is already too exposed from its blocks in the Agadem Rift Basin, Niger, its activities in the Niger Delta, Nigeria, and on-going talks to acquire ENI's assets in Tunisia (AI, 01/11/21). Perenco would also use Savannah's failure to seal its deal in Chad to weaken the junior's position with ENI in Tunisia as a means to try and acquire the blocks.

Those behind the drive

The move to discredit Savannah's position in Chad, and in Tunisia, is mainly led by Perenco's director of development, Denis Chatelan. Since taking on this role in 2016, Chatelan has taken part in all of the company's negotiations. He has been with the firm for 17 years, gradually becoming one of the key advisers to the son of the company founder and current chairman François Perrodo, a role shared with general manager Benoît de La Fouchardière.
Perenco and Savannah have a complex relationship. Antoine Richard, who worked for Perenco executive from 2006 to 2015 in roles that took him to the DRC, Egypt and Venezuela, joined Savannah, where he is now COO, than a year after his departure from the French firm. Perenco never takes well to former executives who move across to the competition. It can often make the contest that much more personal.
This is something Trident Energy, led by Perenco's former CEO Jean-Michel Jacoulot, has experienced first hand. The Perrodo family that owns Perenco does everything to prevent the firms of its former protégés from growing. Trident Energy had initially been interested in buying Glencore's assets in Chad (AI, 24/09/19). '

Your guess is as good as mine Agadem.

I recall in an interview during the year that AK said there were plenty of funders looking for infrastructure projects so Accugas and CC might fall under that seperately from anything Vitol might be involved in.

My point was that the Niger assets could have a trade-off against some of the costs for the Chad production assets.

After so many years of discussion on farm-outs, where are we on either a Niger partner or going it alone?, given we are at the point where we were to establish the EPS from this year end onwards and the actual Niger-Benin pipeline due to complete in 15 months.

Would Vitol pass up on such a farm-in opportunity or stake in 30-50% of low risk oil and let another company potentially come in ?

SAVEs previous document said approx $125m of back costs in Niger were recoverable to the end of 2019.
There's likely to be some renewal costs to pay for the new 10 yr single PSC ?

So could VITOL be our defacto partner in Niger either by
A cash contribution ?
Further direct stake in SAVE considering they are already an investor ?
Some kind of part swap for funding the Exxon acquisition ?

$125m approx in back costs + minimum of 33 mmbls 2C which will move to P2 once development sanctioned - At $4.60/b in the broker notes that would make those reserves worth $150m plus the back costs.

Surely, given those back costs/2C basic valuation - to get your hands on a share of over 2 billion bls mid case risked recoverable, you would think this could attract north of $100m to let someone like Vitol in, given the scale of Niger ?

Why (for VITOL) buy up production assets in the US, Russia and Africa but let one of the biggest near term opportunities in scale go to someone else ?

I would be surpsrised after all this time if some kind of Niger deal isn't included.

I don't think too many have cottoned on to the potential of this deal here and a possible revaluation in the QTZ (being the SPAC) share price.

TAP has about 25% less customers than rival Ziglu.

Ziglu valued at £85m recently pre new money according to the 3/12/21 tweet by Chris Akers on Twitter (Holds 16% of QTZ)
'Quetzal Capital Plc - £1.5m CLN and Call Option to Acquire Tap Global. TAP is very well positioned compared to other opportunities arising in the De-Fi and crypto settlement space. Rival Ziglu recently raised £7.3m at £85m pre-money.'
https://twitter.com/sportschris/

7/10/21 - Ziglu has seen rapid growth, with a total of 80,000+ customer sign-ups, at an average 20% MoM growth rate in 2021.
https://www.thearmchairtrader.com/ziglu-scale-up-seedrs-fundraiser/

3/12/21 - Since launching to the public in February 2020, TAP Global has grown to now having over 58,000 registered users and is a revenue and cash flow generating business that currently operates in 28 countries across the globe. The funding will assist TAP Global’s continued rapid expansion. TAP Global has also signed a call option in favour of Quetzal (“Call Option”), that gives Quetzal the right to acquire 100% of the issued share capital of TAP Global, subject to certain terms being agreed on a Sale and Purchase Agreement (“SPA”). One such term will be the achievement of a minimum valuation for TAP Global of £26.5m as a result of any conversion event.
https://www.investegate.co.uk/quetzal-capital-plc--qtz-/prn/-1.5m-cln-and-call-option-to-acquire-tap-global/20211203070000P76C6/

There were 2 further parts to that press release a before and after part -

before -
'We have handed the baton to the interministerial committee decreed to guarantee the interests of the state and those of national workers. We thus put an end to the struggle'

after -
'it emerges from this general assembly as a resolution, that the interministerial committee has full mandate to negotiate on behalf of the national employees of esso. The General Assembly adopted by acclamation this resolution'

It looks like action has ended by the original strike committee and the interministerial committee (government participation ?) will deal with it to resolve.

The other two deals will have new operators.

Both will be looking to improve (and start) production which has to be positive news for pipeline tarriff earnings.

Perenco is one but the Canadian junior is a mystery on Block H which was marketed as 80,000+ bopd potential. This block needs a link to either Agadem or the Chad-Cameroon pipeline itself. In the context of Save buying the majority C-C pipeline interest and the amount of oil Save should ultimately find/produce from Agadem, i would say it's a future no brainer that a connection to the Chad Cameroon pipeline will be the objective given its 225,000+ bopd capacity

2/12/21

The political void created by the death of the president and patriarch Idriss Déby has enabled new players to take in hand the most lucrative sector of the local economy.
Ever since oil production began in Chad back in 2003, decisions concerning the sector have been made almost exclusively by the president's office, consigning the ministry nominally responsible for it and the Société des hydrocarbures du Tchad (SHT) to the role of mere spectators. And the new presidency of Mahamat Idriss Déby, who was sworn in in April following the death of his father Idriss Déby, is no exception to this rule that so often applies in highly presidential regimes. According to our sources, the new president's private secretary, Idriss Youssouf Boy, is now the focal point for dealings with the oil companies. Any operator wishing to make headway on a particular issue is obliged to go via his office, or run the risk of running into a dead end.

An army general from the Zaghawa community like his childhood friend Mahamat Idriss Déby, Boy previously served as one of the heads of the feared Agence nationale de sécurité (ANS), which was responsible for both internal and external intelligence under Idriss Déby. He was also the country's consul in Douala, an unrivalled observation post from which to keep an eye on Chadians living or doing business in Cameroon.

A crowded in-tray

Between now and the end of the year, the oil dossiers are going to be piling up on Idriss Youssouf Boy's desk. The oil ministry, which is run by the largely powerless engineer Oumar Torbo Djarma, is due to approve the sale of the fields of Caracal Energy (part of Glencore) to Perenco. But it also has to come to a decision on the difficult transaction between ExxonMobil and Savannah Energy in the Doba basin as well as on Delonex's deal with an as yet unknown Canadian junior on block H (AI, 26/10/21).
Given the country's financial situation, Boy may be tempted on each of these transactions to demand a bonus payment from the seller, even though this is not provided for in the regulations currently in force.