Member Info for ZENGAS

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".

Who says paying a dividend is not what we want. Maybe for some where dividends won't mean much, but for those of us that do particularly on a large holding, a dividend is a substantial bonus and incentive to leave your capital invested while earning something semi annually from it for long term holders.

A big chunk of the current debt is looking to be refinanced at a cheaper rate and longer tenure. It's going to carry some debt for a long time as more assets are acquired.

The fact is - the introduction of a second asset was to help commence the payment of a dividend which they stated, as was the reason for cheaper/longer tenure debt financing so anyone that has been following the story closely can't say this hasn't been flagged up for a long time.

While i don't think we'd be on an immediate par with the likes of $58m annual dividends this past number of years from Seplat (and others) who carry significant debt, i do beleive his goal is to introduce the $12.5m DIV promised on the back of the Accugas/Nigerian acquisition. It' also highlighted again in the recent broker notes as an expectation. That kind of amount from i expect an initial $500m+ revenues isn't going to make much difference to our growth at all given that in the next 12-18 months these might be in excess of $1B at $65/b oil.

Check the Africa Intelligence article posted here on the 21st and the Save photos tweeted today with some of those present which AI were able to name which imo proves again the quality of their reporting.

AI 10 days ago - "The deal could be signed rapidly according to our sources".

If both articles correct,

'Esso Tchad has engaged in the deployment of subcontractors to positions occupied by its employees, while organizing a business resumption plan by recruiting employees who are not part of its staff' and also suing for over $50m in damages.

27/10/21
At the request of Esso Tchad, Me Guy Beram, judicial officer, summons before the N'Djaména District Court for the purposes of reparation - compensation, his employees, in particular, the members of the negotiating committee .
By request n ° 715 / GB / CP / 2021 of October 26, 2021, summons to the merits before the Tribunal de grande instance of N'Djaména for the purposes of reparation / compensation, judges that the successive strikes are unlawful for failure to comply with applicable regulations and in particular the requirement to comply with a legal notice period of six clear days. "The blocking of access to the Komé site operated by the company Esso Tchad constitutes a manifestly unlawful exaction and an attack on freedom of work," notes Guy Beram, bailiff of the American giant. Thus, orders the company Esso Tchad to pay damages in the amount of 30,878,400,000 CFA francs in compensation for the operating losses suffered. “To each pay Esso Tchad damages in the amount of 1 million CFA francs to compensate for their damage due to their disorganization. Also, to pay up to 1 million CFA francs for damage to the image of EEPCI given the statements of false allegations made against him by press release of the negotiating committee of July 15, 2021 ”, can we read.

https://lesahel.td/esso-tchad-revendique-plus-de-30-milliards-au-comite-charge-de-negociations/

20/10/21
From the outset, Me Mouné Koudanbé, one of the lawyers criticized the behavior of the leaders of the company Esso Tchad by their bad faith in not fully involving the employees in the plan to sell its assets and by disseminating information voluntarily. blurry. “In truth, this is a very simple matter, but Esso Chad, by its irreducibility vis-à-vis the legitimate industrial actions of its employees, has made it more complex. Indeed, during many years of contractual relationship, its employees have shown exemplarity and abnegation in the work to promote its development ", notes Mouné Koudanbé. And to recall that this is why, in order to preserve their rights, the employees set up an ad hoc negotiating committee to act on their behalf, by entering into talks with their employer. “Basically, the complaints related to seven (07) points which are as follows: the full restitution of the retirement savings plan (PER); the payment by Esso Chad of mortgage loans; the payment of the good separation or completion bonus of 3 months' salary per year of service with a minimum of 18 months, representing the number of years of oil production by EEPCI (Esso Chad); and an exceptional additional bonus of 26 months of average gross salary of the last 12 months for all employees without distinction of seniority (26 months representing 2 years of salary when one considers that EEPCI employees receive 13 months of salary in the 'year) ;

payment of the balance of any account; the regulation of the medical plan; the establishment of a health convention for retirees from Esso Tchad; and the reminder of the difference in salaries for nationals having occupied the same positions as expatriates but not having benefited from the same advantages ”, he informs. Unfortunately, notes Mouné Koudanbé, to date, notwithstanding the salutary intervention of the highest authorities of the Republic that we call for a more flawless involvement, only three (03) points points, out of the seven (07) aforementioned, received a relatively favorable response. While those relating to the completion bonus or good separation bonus, the payment of mortgage loans, the payment of the balance of any account as well as the reminder of the difference in salaries for national employees, have not retained the attention from Esso Chad. "It is on this basis that in compliance with the regulations in force in Chad on social matters, the employees have taken a number of actions. These actions range from attempts at dialogue with their employer under the aegis of the Government and before the Labor Inspectorate, to a series of short strikes, with the double concern of carrying out their demands and avoiding paralyzing the labor market. Esso Chad walk. But Esso Chad, in a posture of incomparable recklessness, has remained unmoved, ”he laments. However, anxious to preserve both their interests and those of their employer and especially to mark their goodwill, the employees Esso Tchad lifted their strike on October 6, 2021 to effectively resume work on October 7, 2021 at the first hour. “But curiously, on the date indicated for the resumption of activities by its striking employees, Esso Chad triggered the lockout despite the effectiveness of the said resumption by closing its sites resulting in the illegal suspension of employees' contracts and salaries. Which decision, manifestly ill-founded, is also the subject of a procedure before the Labor Inspectorate of N'Djaména, seized with the effect of trying to make Esso Chad hear the voice of reason in order to lead to the reestablishment of the employment contracts of its employees on the one hand and, on the other hand, to obtain the payment of their salaries ”, criticizes Me Mouné Koudanbé the behavior of the managers of the company. the first unlawful lockout was denounced to the labor inspectorate. A second lockout this time partial, the most illegal and scandalous has just been pronounced to be effective today Wednesday, October 20, 2021, on the site of N’Djamena

“We are outraged to see that Esso Tchad is carrying out all-round layoffs and recruitments, even though the strike of its employees was lifted 24 hours before the lockout occurred. Which lockout is triggered in the most absolute disregard of the regulations in force which subordinate it to a double condition: existence of a strike on the one hand, and serious dysfunction in the operation of the company due to this strike in 'somewhere else. This is clearly not the case in this case, "insists the lawyer. Despite the fact that the employees exercised their right to strike, three of the employees were dismissed by Esso Chad. “In addition, it also proceeded to recall certain employees as it sees fit while they are also affected by the lockout with the sole aim of destabilizing them in their claims, which are, after all, legal and legitimate. In addition
Esso Chad has engaged in the deployment of subcontractors to positions occupied by its employees, while organizing a business resumption plan by recruiting employees who are not part of its staff ”, denounces- he does. Also, it should be remembered that with regard to the first procedure, that relating to the sale by Esso Chad of its assets, the attempt at conciliation turned out to be unsuccessful in relation to the payment of the completion bonus or separation bonus. ; repayments of employee mortgage loans; the payment of the balance of any account as well as the payment of the difference in salary of national employees. “As a result, the N’Djaména Labor Inspector forwarded the non-conciliation report to the N’Djaména Court of Appeal. Following the transmission of the said report, the Arbitration Council, a body empowered by law to know the rest of the procedure, was set up by the Minister of Public Service, Employment and Consultation Social. But against all expectations, we have learned that Esso Tchad has made a request to the President of the said Council to waive this procedure on the grounds that they could not be imposed an arbitration clause for any arbitration. While it is by no means the case, ”he argues. “Regarding this procedure opposing Esso Tchad to its employees, there was no arbitration clause, much less a compromise, which could be agreed on another arbitration forum than the arbitration board of the Court of Appeal of N'Djamena ”, adds Me Rassemadje Moguenara. It concludes that in Chadian labor law, for any collective dispute as in such a case, the Labor Code gives jurisdiction to the Arbitration Council which, within the meaning of Article 449, is “seized by agreement between the parties in both working days following the non-conciliation report by registered letter addressed to the President of the Court of Appeal ”. It follows that the transmission of the non-conciliation report by the Labor Inspector to the President of the N’Djaména Court of Appeal presumes the parties' acceptance to submit their dispute to the Arbitration Council.

Petronas who are also selling their stake have 35% and the Chad government have 25% so I couldn’t see that happen indefinitely. Mightn’t mean much to Petronas but to the govt it’s a big loss. Not much point having an operator who’s not going to invest further to lift production.

Of course nothing to do with us in the report but in the context of the wider picture and how it all fits in !

Any company buying oil assets needs to use the pipeline for export. Every extra barrel through it is revenue for us as part of the pipeline ownership.

Block H on the Chad side is adjacent to SAVE in Agadem and it alone was marketed at potentially 85,000 bopd. Just wondering if it is a coincidence that it will be finalised by end of this month according to AI ? Block H would need the near 800 km pipeline link to the main Chad-Cameroon pipeline. Possible cost sharing of building a future link ? Either way, if SAVEs acquisition goes through, that potentially opens up a swathe of future tariff oil from that block.

'CHAD. Delonex comes up with a mystery buyer as it prepares to leave Africa

The shareholders of oil junior Delonex Energy have finally found a buyer for their assets in Chad. Now, they only need the approval of the Chadian authorities.

At last ! Delonex Energy, which is being kept alive by US investment firm Warburg Pincus, has found a buyer for its assets in Chad (blocks H, Largeau III, DOC and DOD). The firm obtained the permits in 2017 when it bought United Hydrocarbon Chad for $35m. The buyer's name has been kept secret but, according to our sources, it is a Canadian start-up, recently set up with executives with strong experience in the African oil business. If the transaction is completed, the assets will be the first to be acquired by the new company on the African continent.

Finalised by end of October ?

The two companies have already reached agreement on the price and terms of the sale. All that is left is to obtain the approval of the Chadian government. A request for approval was sent in late September to the hydrocarbons ministry headed by Oumar Torbo Djarma. Delonex is hoping to complete the transaction by the end of October, leaving the Canadian company in sole charge of the oil junior.

Delonex, which has already handed its Ethiopian permits back to the Ethiopian government, also plans to give up its assets in Kenya, which, along with those in Chad, are the only ones left in its portfolio. Another permit it was awarded in Mozambique has not been included since no contract was ever signed on it.

To find a buyer, Delonex called in Scotiabank to advise it in September 2020. Afentra, the new firm set up by former Tullow Oil chief executive Paul McDade, was interested at one point but finally decided not to put in a bid (AI, 07/07/21). Meanwhile, former Delonex chief executive Rahul Dhir has now been chief executive at Tullow Oil for a year. '

In the latest interview the CEO was asked, (other than Buffalo), what's cooking at the moment and he replied 'Cooking quite a lot of stuff'.

Other than the scale of the potential future cash flow, the greatest thing i took away from the interview and presentations is that what ever project they are involved in, it will have discovered oil so very low risk imo and it is not going to be a one asset play.

I beleive ADV will have production before they bring Buffalo on stream and that's why i think the steady buying is not solely for the Buffalo outcome but for what is coming down the pipeline in terms of significant deals which won't imo imply a 20 or 30p price target but a good bit more in terms of growth.

Currently speaking to two parties -
One with 'production'.
The other one a Buffalo lookalike - an 'appraisal situation with a lot of upside associated with it'.
'Two other assets we are very interested in'.

So there is potentially 4 opportunitiies so far on top of Buffalo.

1) "We have no need to build a large and complex organisation keeping our overheads low and preserving value for our shareholders".
2) "We have no need to be geographically constrained".
3) "We target only discovered resources in good fiscal regimes".
4) "No high-risk exploration".
5) "Deliver exceptional project outcomes and exceptional returns ! "

Imo deal flow news is the wider picture for investing at these levels. If Buffalo comes in, a production asset is acquired given the low overheads the company has outlined and a possible 2nd Buffalo lookalike with a lot of upside attached - this company should be on a significant growth trajectory if it only has half the success it expects.

Agadem,

Barely 3 weeks ago Kosmos share price was 160p, 408m shares in issue and a m/cap of £650m. (Tonight it's £1.2b at 270p).

Q2 production was 51,600 boepd ("we remain on track to grow production towards our year-end exit target of 60,000 boepd through our active infill drilling program".)

End of June = Net debt $2.1b.

They've increased their debt today by $400m to take on the 17,000 bopd acquisition and a further 37.5m new shares issued at 240p.
Should put production at around 70,000 boepd with a year end target of reaching 77,000 boepd.
Net debt at about $2.4b/£1.75b now.

445m shares now in issue after the 240p placing today.

Closed at 270p tonight = m/cap £1.2b with about £1.75b of net debt.

As we are the only other operator for now with production, it's seems 30,000 bopd is reserved out of the initial 110,000 bopd.
If it expands as forecast to 300,000 bopd that might mean a spare 80,000 bls+ for other Niger operators.

From Save that i posted here on 7th June re Niger-Benin pipeline-

"The initial export pipeline capacity will be 110 Kbopd. Alongside the 20 Kbopd capacity of the SORAZ refinery, this will provide an export route (national to Zinder and international to Benin) of around 130 Kbopd. With CNPC’s production expected to ramp up from c. 15 Kbopd to 110 Kbopd, over 30 Kbopd of spare capacity will be available for other operators.
It is also planned that eight pumping stations will then be installed along the 20” Niger-Benin pipeline on average every 250km, which will be linked to tie-in points every 40-50km. The addition of the pumping stations should ultimately increase pipeline capacity to 300 Kbopd in four phases. "
---------------------------------------------

Also from the CPR by CGG on the Chad-Cameroon pipeline .
"The current capacity of the Chad-Cameroon line is 225,000 barrels per day, however, it is understood that this can be increased with the addition of further pumping stations".

Given it's initial size, you would think the C-C pipeline would be capable of an eventual 300,000 bopd+ compared to roughly 129,000 bopd going through it recently.

Occidentals Ghana West Africa assets finally sold to Kosmos today.
Boru Energy & Chinese were previously preferred bidder and Save at one time mentioned in the running over a year ago.

$550m purchase cost using April 1st 2021 effective date.
($90m due to Kosmos from Oxy as of today since effective date = $460m balance due).
104 mmbo P2 = approx $5.50 per barrel.
17,000 bopd = flowing barrel cost of $32,350.
-------------------------------------
18.0% interest in the Jubilee field and an additional 11.0% interest in the TEN fields in Ghana .
Purchase price of $550 million with an effective date of April 1, 2021. Consideration due to OXY at completion was approximately $460 million after taking into account closing adjustments.
Ryder Scott, estimated 2P reserves being acquired as part of today's transaction were approximately 104 million barrels of oil equivalent at year-end 2020. The assets being acquired have a proved and probable (2P) post-tax NPV10 valuation of around $1.6 billion.
The acquired assets are currently producing approximately 17,000 barrels of oil per day net and are expected to generate approximately $325 million of EBITDAX in 2022 at $65 Brent.
To fund the transaction, Barclays and Standard Chartered Bank have provided Kosmos with a $400 million bridge loan, which the Company expects to refinance with the proceeds from a future senior notes offering. The remaining consideration was funded from available liquidity, which the Company expects to re-finance with the proceeds from the equity offering of approximately $100 million announced today.

On the Niger/C-C pipeline question Agadem. It's not one i'm really thinking about in terms for SAVE building.

From a post back in June - and '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.

'IF' on the other hand Save farm out 50% to a partner, then net Niger production would be less but still give a net range potential of 60 - 100k+ on the above.

With a Chad pipeline link and already a near 100k bopd spare capacity, it might cost $1.5b to build but likely capable of finance from infrastructure specialists or a major oil company/partner. That might give Save a further future 100k bopd or with a 50% partner another net 50k bopd.

Personally i'm not looking that far ahead, but i do see SAVE being very capable of being a very major league producer and if all those building blocks are put in place for serious future production it might be a serious contender for a sale when any potential buyer looks at it in terms of scale/revenue whether SAVE were to ever build a pipeline link themselves.

Given the potential from Niger, SAVE or anybody would want as much capacity as possible given the potential for billions of bls there. If a future 1-2 billion bls went through this, it would be serious new additional long term transit revenue for Chad & Cameroon.

Does that really reflect a 20p share price ?, given the institutional averages already at 36-39p as Mount Tiede points out.

Agadem, i've read it as the EPS being started by year end, ie installing the facilities etc but not necessarily bang on production by year end. I don't think it's necessarily Camarco back tracking so to speak. I just think there's a difference between facilities installation and time to being ready and then actual production. Either way i do see it closer than ever as moving forward and as the export pipeline nears completion i would think that Save want to have some wells ready to tie into that. So realistically would need to get moving on exploration or dev wells this coming year.

25/1/21 - Plans for delivering the R3 East development continue to progress with the intention to commence installation of an Early Production Scheme by the end of FY 2021, subject to market conditions and financing.
28/5/21 - Plans for delivering the R3 East development continue to progress with the intention to commence installation of an Early Production Scheme by the end of FY 2021, subject to market conditions and financing.

For now they are hoping to complete with 13,000 bopd of Chad production and reported in the press as after ENIs 4,000 bopd+ in Tunisia. Both would be a serious uplift particularly if they could increase that production by 40-50% through previous lack of work. Whatever happens i think it will be likely we could have 20,000 bopd production, (plus Accugas 22k+) through various acquisitions as we build to 5,000 bopd in Niger and before the serious exploration gets going.

25,000 - 50,000 bpd via the pipeline as it expands.

My post from 12th June -
---------------------------------------------
First time i heard this from Save -

the plan is to route between 25,000 and 50,000 bpd through the Niger-Benin pipeline.

'UK-based Savannah Energy has five discoveries in the Agadem.
All have targeted mostly shallow Tertiary sequences and Hamani points to untapped potential in adjacent basins and the deeper Cretaceous.
AIM-listed Savannah holds two large production sharing agreements in the Agadem Rift basin where an additional 146 exploration targets have been identified, all within access range to CNPC's oilfield development and pipeline infrastructure.
Savannah operates blocks R1/R2 and R3/R4, covering half of the basin, with an early production scheme focused on producing 5000 bpd from R3 East block before the end of 2021 with capacity to ramp up to 10,000 bpd as step-out discoveries are tied in.

The oil initially will flow through the existing 463-kilometre pipeline to the Soraz refinery at Zinder.

However, the plan is to route between 25,000 and 50,000 bpd through the Niger-Benin pipeline, constrained only by possible bottlenecks in planned infrastructure.
“The pipeline represents a huge opportunity for other operators who can have access to this infrastructure, like Savannah Energy, and will encourage new oil investors,” says Hamani.

Savannah chief executive Andrew Knott tells Upstream that phase two will likely involve more exploration drilling.
“Most of the 140 or so prospective targets are analogous to structures found elsewhere on Agadem, where each discovery holds some 8 million barrels, so we have the makings of a huge multiple hub on the R3 block,” Knott says.

https://www.upstreamonline.com/field-development/crude-pipeline-the-driving-force-in-niger/2-1-886779

CNPC kicks off construction of Africa crude pipeline
1950-kilometre Niger-Benin pipeline scheduled for completion in 2022
11 October 2021 3:55 GMT Updated 11 October 2021 8:44 GMT

China National Petroleum Corporation (CNPC) has started construction of a transnational pipeline that will carry crude from Niger's Agadem basin to Benin's Port Seme.
The construction start in early October is intended to ensure a first oil shipment in 2022 through the 1950-kilometre pipeline, which includes 675 kilometres running through Benin and 1275 kilometres through Niger. The workscope being handled by CNPC pipeline outfit China Petroleum Pipeline Engineering includes engineering of the pipeline as well as procurement and construction of the Niger section and an offshore terminal, the company said.
Australian engineering house Worley carried out basic design of an offshore pipeline from Port Seme extending about 14.8 kilometres out to sea that will load the oil onto tankers for export via a single-buoy mooring system, sources said.
The offshore terminal will include one single-buoy mooring system with six mooring anchors, a pipeline-end manifold and two parallel 28-inch subsea pipelines.
The pipeline, which will include nine pumping stations, is designed to have an annual throughput capacity of around 90,000 barrels per day, with oil primarily coming from CNPC's second-phase development in the Agadem basin.
CNPC achieved first oil from Agadem’s first phase in Niger in 2011. The second phase is planned to increase production capacity to more than 40 million barrels per annum
https://www.upstreamonline.com/field-development/cnpc-kicks-off-construction-of-africa-crude-pipeline/2-1-1079811
CNPC Begins Construction of Niger-Benin Crude Pipeline Scheduled for 2022 Completion

Tue, 10/12/2021 - 09:29
https://www.pipeline-journal.net/news/cnpc-begins-construction-niger-benin-crude-pipeline-scheduled-2022-completion

7/9/21
Niger currently produces 20,000 barrels of oil per day. However, this is expected to rise to 120,000 by 2023 upon the completion of an over 2000km, US$4.5 billion crude oil pipeline linking the highly prospective Agadem Rift Basin in Niger to the Beninese Coast. The completion of the pipeline is expected to trigger further investments in the development of existing discoveries, taking production to close to 300,000 barrels per day by 2030.
https://www.africanews.com/2021/09/07/niger-s-petroleum-minister-holds-bilateral-meeting-with-the-energy-chamber-reaffirms-commitment-to-african-energy-week-and-its-growing-energy-services-sector/

ie meaning Save are fully aware of what’s been going on.