Member Info for ZENGAS

This post has appeared on f/book in the last few hours from one poster who is at the Court of Appeal in N'djamena says -

"after 54 days of waiting at the Ndjamena Court of Appeal, in view of the refusal of esso arbitration, the president of the said court has just ruled for the no arbitration"

and which is followed by an official signed letter accompanying the post (which i've used google to translate)

"Consequently, Considering the provisions of articles 443 and following of the labor code; Let us say that there is no need to open an arbitration procedure in this case; say our ordinance enforceable on the minute; order the notification of this order to the parties in dispute.
Done in our office located at the N'djamena courthouse on the day, month and year above.
And after reading, we sign' (This is a stamped letter with the court logo).

Some responses in the comments have called it sickenening/far from happy

Olderandwiser spot on.

In all seriousness, anyone would do well just to look at this months Nov 8 2021 coverage of ReconAfrica and compare it to our Niger opportunity which is far more advanced and look at the valuations.

206m shares fully diluted. Current price $6.50 cdn (£3.85) = £793m m/cap. £32m cash.
$16 cdn target (£9.50) = £1.957 billion m/cap .
"with an unrisked upside $24/sh at a modest field discovery of 500 mmbbls" (£2.9 billion m/cap).
"ReconAfrica is an early-stage resource exploration resource play. As a result, we focus on our total risked NAV for RECO, which includes full value for the prospective recoverable resource potential in the Kavango Basin in NE Namibia and NW Botswana as reported by a NI 51- 101 compliant resource report prepared by Sproule, which shows a total net un-risked mean prospective resource of 1,256 MMbbls of oil."

Page 3
'1.256 billion bls oil Unrisked $US 6.29 = US $7.901 billion' (£5.7 billion).
'Risk factor 36% (450 mmbls) = US $2.824 billion' (£2 billion).
https://clients.haywood.com/uploadfiles/secured_reports/RECONov82021.pdf

SAVE are targetting 5 times greater that amount both in unrisked and risked in the mid case alone at a greater COS.
Un-risked recoverable 6-10 billion bls mid-high case.
Risked recoverable 2.6 -4 billion bls mid-high case.
Basin average of 79% success rate and Save's initial 100% record. Imo that's outstanding testament to the quality of the project and why SAVE themselves call it a compelling opportunity.

Our broker has used $4.50 @ $65/b average price per bl. Perhaps in this environment of stronger oil prices, they might use closer to Haywoods metric ?
Sticking with our broker price of $4.50 per barrel, our net target interest after govt etc for risked is $9b and for unrisked $20 billion mid case - That's £6.5 billion for the risked oil and £14.5 billion for the unrisked all mid case ($1.38/£1).

A target of £1 (based on 1300m shares = £1.3b/$1.8b) represents 400 mmbls @ $4.50/b with obvious multiples still to chase.

Given the chinese success of some 1 billion bls from one predominant target area and 2 lesser explored targets it's not unreasonable to think we could match or better them given the range of plays yet to touch in a basin that has generated well over 100 billion bls and where the possibility of the deeper targets may be filled to spill.

A few f/b posts in the last few hours and seems a new group calling a meeting that the other groups call divisive -

From the 'crisis recovery group' -"Given the stalemate in the situation in which we find ourselves today, the crisis recovery group on the proposal of the union delegates in agreement with the UST and the Petrosynat invites you to a GA this Friday, November 26, 2021 at 10 a.m. at cefod. Agenda: discuss and deliberate on the actions to be taken to end the crisis."

and a reply to this new group -

Dear fellow employees of EEPCI, since this afternoon there has been a message sent by a 'Crisis Out Thinking Group' by the number ESSO-Chad inviting employees to an AG at CEFOD tomorrow November 26 2021 at 10am. This AG would be in agreement with Petrosynat and UST, as the first Manager of our union organisation, I want to reassure each of you that neither PETROSYNAT nor UST are involved in the organisation of this AG. The only committee legally set up by employees recognised by Petrosynat. Under no circimstances Petrosynat can bail the actions of another group not mandate by employees. This is a divisive maneuver we cannot tolerate. (Name & Phone no).

and someone replys to the CRG - 'This case is in the court of appeal which AG with the contracts suspended ? Who gave you the mandate ? Esso or the employees ? Who are you ?'

https://twitter.com/Savannah_Energy/status/1463555432702791689

2 of Savannahs guests were from JP Morgan and BNP Paribas.

It is about $120m FCF average at the moment.

FCF from the the current Nigerian operations page 63 of yesterdays CPR.

Upstream Production (U/S) & Midstream volumes (M/S Accugas) -

2022 U/S 21.9K b/d = $38.8m. M/S 19.3K b/d = $42.6m. Total $81.4m.
2023 U/S 27.3k b/d = $54.4m. M/S 23.6k b/d = $98.3m. Total $152.7m.
2024 U/S 26k b/d = $54.2m. M/S 21.2k b/d = $96.1m. Total $150.3m.
2025 U/S 26.1k b/d = $51.7m. M/S 21.3k b/d = $98.9m. Total $150.6m.

I understand this is after all capex/opex (why 2022 shows as such) etc other than finance payments then tax.

The Upstream volume is greater due to the Stubb Creek oil production which has nothing to do with Accugas and that jumps in 2023 when those 2 wells that are already drilled are tied in. They are using a brent price of $75/b falling to $65/b in the above. Oil carries an approx $2/b premium to Brent.

If you look at the lowest and highest volumes for Accugas for the next 4 years, this equates to an average of just 128 mmcf/d compared to capacity of 200 mmcf/d (up to 240 mmcf/d with compression). So any new contracts or increase to the DCQ particularly as most of the costs are fixed should add materially depending on the volume/average price.

(Every 5 mmcf/d @ $5 mcf is worth $9m+ and at 80% to bottom line should be giving $7m+ FCF so lets hope the opening of the new line to the Port Harcourt area brings in a few significant industrial customers as time progresses.)

The Cement factory is priced at $5/mcf (25 mmcf/d DCQ) and Mulak @ $5.15 mcf so i can't see any industrial customers being priced lower than that.

Also if the gap is closed from the TOP to the DCQ that is an uplift of another 25% in revenues and corresponding FCF - so the sooner the government targets on generation are met the better imo. ( 25 GW+ from the current 4-7 GW available and the significantly growing population). Imo it's not hard to see it for the huge cash cow that it can become.

Seperately and my own expectation for Chad if it goes through - Panoros estimate in Guinea was $80m FCF after tax but before any new capex at $55/b oil and 6900 bopd. As for Chad at 13,000 bpd. I would think perhaps $150m at a similar oil price plus whatever the pipeline throws off. I'd like to think they could increase production to 18-20k bopd (FCF $200m+ @ $55/b ?).

Off topic Agadem, but one to watch is ADV Advance Energy. Redevelopment of an oil field. No exploration. Well spud into attic oil imminent and should be done and dusted by end December.

Working from Tennysons research https://www.advanceplc.com/media/1081/210420_recipe-for-success-2.pdf

1027.6m shares in issue and with fully diluted options/warrants included = 1182m which would bring in some $5.6m cash.

In table 8 & 9 they value the net 50% of the 34.4 mmbls expected ie 17.2 mmbls with a 48% COS Risked. Therefore 48% of 17.2 mmbls = 8.25 mmbls only.

$132.4m is attributed to this including the option/warrant proceeds and net cash (debt) = 8p/share. This is at $60/b oil. Every $5 increase per bl adds around $10m to the valuation, so therefore approx -

$65/b = $143.8m= 8.8p
$70/b = $155.3m = 9.52p.
$75/b = $166.7m = 10.2p.
$80/b = $178.1m = 10.9p

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

On the full 17.2 mmbls net,they give the valuation at $242.1m or 14.6p/share at $60/b oil including the net cash (debt) & warrants/options proceeds.

With this level of oil it should be worth an extra $20m (because it's now 17.2 mmbls instead of 8.25 mmbls) for every $5/b price increase i beleive. Therefore -

$65/b = 15.8p
$70/b = 17p.
$75/b = 18.2p.
$80/b = 19.5p.
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A producing asset could and should add to any of the above share price scenarios given ADV wouldn't be an operator and have only 6 staff.

In addition they say they are looking at a Buffalo lookalike asset. If Buffalo comes in this will reinforce the beleif in their strategy and potentially forward price some of that potential in a look-alike asset.

One of these upcoming assets that they hope to announce was supposedly production.

Has anyone given any thought what the size of any production asset could be. Because anything would be fairly material for a company of ADVs size given they are a non operator and have only 6 staff. If it was announced before Buffalo then it might be classed as a RTO ? If as they beleive Buffalo will be successful, then that would mean no RTO clause reason for suspension/prospectus therefore delay signing off by all parties on the deal until results are known ?

I just wondered why they said they expect to announce something Jan/Feb which is very soon after the Buffalo results. Obviously on the back of a successful outcome at Buffalo the company would be more highly valued making any acquisition cheaper in terms of any dilution/debt.

They've mentioned a few places and from looking at recent deals they could potentially pick up material production/reserves relatively cheaply.

Success at Buffalo and a follow on near term production asset could be 2 major near term catalysts for the share price.

Haven't seen any new comment all week but I thought there was a hearing today 15th for Arbitration.

Interesting to see the nearby village comment in the press. Worth remembering that Uquo could be a much bigger field than present.
Saves net Uquo P2 is 400 bcf ie 67 mmboe.
It has a further net 3P upside potential of 177 bcf (29.5 mmboe).
There's a further net 2C & 3C attributable contingent resource of 58 - 92.5 bcf (9.5 - 15 mmboe).

Exploration upside net attribuatble 463 - 737 bcf mid/high case (77-122 mmboe).
The first new Uquo well was to be in the Uquo 2 area targetting the proven reserves in the D1 reservoir.
With so much production data this past 2 years, pressure measurements and the impact of the new well, it will be interesting to see if the recovery factor has been increased leading to a a possible increase in reserves. All good for long life and RBL. The field has the potential to be 3 times larger for Save than the original reserves figure when acquired.
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CGG have carried out an independent analysis of the Uquo Marginal Field Licence using the 195 km2 3D seismic volume supplied by Seven. The survey was acquired during 2006 and 2007. Around 24.5 km2 of the licence is not covered by seismic, due to the presence of the Eket Airfield to the west of the licence. In addition, there are areas within the dataset that suffer from poor fold coverage due to the presence of villages.

It is CGG’s opinion that the accuracy of the tabulated volumetrics would
be improved if the volume were to be re-processed to PSDM (Pre-Stack Depth Migration) which Savannah is planning to conduct in 2020.

The ultimate areal extent of the Uquo NE shallow gas discovery is unknown, as it extends outside the area of 3D seismic coverage, as shown below in Figure 3-7.
The seismic over Uquo NE is quite poor (shown in Figure 3-8) in places due to an overlying village, although this is mitigated by the data provided by the exploration well on the structure (Uquo 9/9ST).

The Agbada C and D sand reservoirs are of high quality at the Uquo Field; NTG (Net-To-Gross) is generally in excess of 90% and porosity is usually 27% or higher. In addition to the discovered volumes, Seven have identified a series of additional prospects, as seen in Figure 3-9.

Four wells are currently producing gas and one is a marginal oil producer. The following is a brief summary of the producing wells:
?? Uquo-2 is producing gas from the D2.0 reservoir in the Uquo-2 area.
?? Uquo-4 is producing gas from the D1.0 reservoir in the Uquo-2 area.
?? Uquo-7 and Uquo-8ST are producing gas from the D1.0 reservoir in the Uquo-3 area.
?? Uquo-3 is producing oil at marginal rate from the D5.0 reservoir in the Uquo-3 area. There is an opportunity to workover this well and convert it to a gas producer in the D1.3/D1.4 reservoirs.

Agree with you there Champagne. It's turning into a headache for Exxon whether accidental or deliberate. Fixable, but how long before tanks repaired or replaced and safe storage for production or fuel oil for electricity. The generation plant at Kome i think all runs on oil after being changed over from gas some years back so what does that do for power if that is needed for the wells and plant ?

Also anything as serious as this might hold up financing/admission doc for Save until a full assessment ???

From djerdjere.com

'Thank god the kome fire has been brought under control. The losses at the present time are around several tens of millions of dollars without counting the stop of the production of oil which loses approximately 1.5 billion CFA francs every day. A thought for the poor peasants without water or electricity and who have inhaled all these dangerous fumes.

Strongly that esso and its employees find a solution as soon as possible otherwise it is chad that will continue to fail'.

That's 3 sales in progress.

Delonex to an unnamed Canadian buyer. Glencore to Perenco and Exxon subsiduary to Save.

Delonex as far as i know had no production but since Glencore have been there almost 10 years and a fair bit of production, will the Glencore workers make the same demands or show up the actions of the EssoTchad employees as opportunist?

One of the EssoTchad employess claiming that after the last strike they had production optimised after 3 days and running at 39,000 bopd which would have been 15,600 bopd for Exxons share.

5/11/21
A fire of unknown origin has just occurred at the Miandoum oil site in Eastern Logone. According to an employee contacted by Tchadinfos, an on-site team is working to contain the blaze.
https://tchadinfos.com/politique/une-station-petroliere-de-miandoum-a-pris-feu/

5/11/21
A large fire broke out on the morning of Friday, November 5 in one of the Miandoum oil fields, operated by the US company Esso. Last I heard, four tanks went up in smoke. According to our information, firefighters from Moundou currently on site are still trying to contain the blaze. "The surrounding villages are not in danger at the moment," confirms a source.

https://tchadinfos.com/politique/quatre-cuves-partis-en-fumee-dans-lincendie-du-champ-petrolier-desso-tchad/

6/11/21
Esso and employees case: bargaining committee asks CEO to lift lockout.
The Esso Company Employee Representatives Negotiating Committee sent a memo on November 6 to senior management. He asks the CEO to lift the lockout in order to allow employees to intervene to limit the impact of the fire that broke out yesterday on the Miandoum site.
The negotiating committee said to have learned with sorrow and great desolation "the disastrous incident" which is currently taking place at the Miandoum collection station and in general in the oil installations through various degradations.
Concerned about the integrity of oil infrastructure, the committee calls on the CEO to lift the lockout.
This "in order to allow national employees, who know and master this equipment well, to intervene to possibly limit the impact of this incident and help restart in a healthy way, to restart production".
The bargaining committee says it lifted the October 6 strike notice. He reiterates his availability to help so that employees return to work with confidence.
https://tchadinfos.com/emploi/affaire-esso-et-ses-employes-le-comite-de-negociation-demande-a-la-pdg-de-lever-le-lock-out/

Ibom was always $2.18.
I beleive Calabar is set under a different contract otherwise i think this would have been addressed by AK in subsequent interviews since and in the guidance since that happened.

Also isn't it willing seller/willing buyer and Sahara Group a private enterprise.

There's also an upper price cap plus our gas is as far as i know is non associated gas and that's why we were able to offer guarantee of supply because it doesn't go offline when oil production slumps or stops.

From today they say it opens the high growth Port Harcourt area. With patience i see Accugas generating over $200m+ FCF/yr.
Todays news will also make another dent i expect in the recently forecast net debt of $266m at end of next year.

15 months ago -

'Given the spare CPF capacity, a low-cost opportunity exists to increase utilisation of our existing infrastructure by targeting customers who are either connected, or located in close proximity to, our pipeline network. Further, it should be noted that the industrial gas price in Nigeria is typically significantly higher (approximately 50% to 150% dependent on location) than that paid by power stations, which creates a significant opportunity to increase our weighted average gas sales price over the course of the coming years.

At the time of writing, Accugas is in discussions with multiple potential new customers, both industrial and power stations, and I expect this to result in the addition of further new Gas Sales Agreements over the course of 2020/21.

To "size the prize" we would estimate this opportunity to potentially represent more than US$40 million of incremental annualised free cashflow associated with new annualised take-or-pay cash receipts to Accugas. To put this in context the Nigerian Assets have been assessed by the well-respected geo-technical consultancy CGG Services (UK) Ltd ("CGG") as being expected to generate US$130 million of near-term annualised cashflows, on a maintenance adjusted take-or-pay basis.

A substantial longer-term opportunity to potentially transport third party gas through the Accugas pipeline network also exists. Given the likely third-party field development timelines involved, coupled with the current COVID-19 and oil price driven downturn in industrial activity and investment, I see this as a meaningful medium-to-longer term, as opposed to nearer term, opportunity.

However, given that our pipeline network is the only network of its type in South East Nigeria, we provide the most cost effective and, likely, only realistic option for third party gas owners seeking a gas-to-power monetisation solution in the region. Moreover, for South East Nigeria to meaningfully industrialise, additional gas-to-power development appears to be essential, providing a strong long-term demand dynamic for Accugas' infrastructure.'

MT.

The same applies if we can notch up a number of industrial customers to take a combined 20-30 mmcf/d.
At $5.50+/mcf it's another $40-$60m revenue and well inside our current processing capacity.

The new gas well from proven reserves should be capable of ensuring the supply.

It was signed at $2.50/mcf so 25 mmcfd is worth over $22min sales and with most of the fixed costs already taken for it was said any new gas sales would predominantly go to the bottom line where the margin was already at 79%.

On top of the $2.5O sales price is an unstated gas transportation price.

Either way, great news after so long and if we can get more industrial customers added at lesser volume but greater price, then Accugas could be well on its way to getting to that $300m revenue level from the present $200m+.

The Mulak deal is still to kiick off next year and over time it has the potential to be huge. Didn’t the broker say long term it could be worth 80p on its own at full capacity if most of those generators it handles all went to gas.

The question is how many assets are we after in terms of achieving very material size in terms of production/reserves ?

They said 6 assets from 2020 were still active into 2021 with 27 this year expected to be evaluated. The intention is is to close 'at least 1 this year' .

So by saying 'at least one this year' it means more are hoped to be closed.

Haven't delved deeper since but buried away in all their articles of association is their ability to borrow up to $2.5b without seeking shareholder approval. Doesn't mean though that they borrow that amount but it shows what plans they had in place from the outset.

We're doing 22,000 boepd from Nigeria. (There's still 2 oil wells drilled at Stubb Creek that are waiting to be tied in re debottlenecking. No news of late on that and in partnership with Sinopec).

But back to the acquisitions of divestments. Current net debt is estimated to be $370m in 2 months time and at $260m end next year.

Therefore it's down to how much production/reserves can we buy to reach very material size from the Majors divestments at lower cost than those with much greater net debt burdens at $2-$2.5b but a similar production profile ?

Using the Panoro deal and last months Oxy Ghana disposal - it might be possible to buy up to 30,000 bopd of production/180 mmbo reserves + upside for around $1b. If they can increase production from those kind of under-invested assets like Accugas, then potentially it could grow to 40-45,000 bopd + the Accugas production and then the big follow on from Niger.

You then have a similar sized company to the level of production that either Tullow or Kosmos are doing but for potentially $1 billion less of debt. I would have thought that level of debt differential alone might be worth north of 50p to Save.

1/11/21

British-Dutch major Shell may indirectly invest back in Tunisia after announcing its withdrawal from the country. Petronor has contacted Shell Trading in search of financing to acquire ENI's Tunisian assets.

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.

Shell had decided to leave Tunisia when its Miskar permit expires in 2022. The oil company indicated its decision in mid-2021, hoping to obtain an extension from the Tunisian authorities for the block, but the communication strategy failed to hit its mark (AI, 24/05/21). Shell arrived in Tunisia when it tookover BG Group in 2015 but has never really wanted to invest in the country. The oil firm has since tried to sell its Tunisian portfolio but with no success. Rothschild had declined a contract to help it find a buyer.

No repeat Trident affair
This is ENI's second attempt to pull out of Tunisia after a failed initial try in 2018. At the time, the ministry of energy had refused to let Trident Energy buy the Italian major's assets on the grounds that it did not believe it had the capacity to operate the blocks previously managed by a firm the size of ENI. Trident Energy is financed by US investment firm Warburg Pincus and run by former Perenco CEO, Jean-Michel Jacoulot.

28/5/21

"The commencement of a policy of delivering shareholder distributions, by way of dividends and/or share buybacks, is a key pillar of our strategy.
We will continue to review the most appropriate time for such distributions to commence, with key considerations around the timing of this being:
(1) our confidence in the outlook of the global economy and impact of the ongoing Covid-19 pandemic;
2) Accugas completing the refinancing of its existing US$371 million debt facility, into a longer-dated debt structure which will "free-up" substantial cash flows each year; and
3) whether we successfully acquire additional cash flow generative assets.

In addition to the above points and most tellingly, he previously said in 2020 - "We have seen self-sustaining dividend paying companies as increasingly valued versus non-dividend payers (a reversal of the pre-2014 investor attitude)." So if that's not reason enough to expect a dividend soon being introduced (6-12 months) i don't know what is.

and continuing from that statement in 2020 where we are now actually on the cusp of more acquisitions - "From a Savannah perspective, our business development efforts are now firmly focused around cashflow generative, or near-term cashflow generative assets which significantly enhance our ability to commence the payment of a progressive dividend to our shareholders".