Member Info for ZENGAS

No mutiny Older, but does no harm to show up some of their failings and how some long term investors see things.

AK and SJ need to shake themselves a bit more and deliver on which is a fantastic company making opportunity from Niger. If they're not envious of Recon raising such a wad at $9.50/share they should be embarrassed at their appalling progress to date never mind reminding us of 5 out of 5 successes. For gods sake capitalise on it !.

In light of Recons performance and as i have always argued, 100p for Niger is the tip of the iceberg here. Absolutely no reason why it couldn't be a few multiples of that but it will mean AK/SJ getting their Niger act together and no more excuses post results/come agm !

The Niger opportunity is of the same scale as ReconAfrica in Namibia/Botswana.
Recon at the moment have been drilling to establish if their basin has a working petroleum system which the first well has confirmed and now drilling their 2nd well.
They have achieved a valuation of £1 BILLION in under 2 years.
They raised $3.4m in a pvt placement on 30th Aug 2019 at 20c which has recently 50 bagged and has 35 bagged in the last 12 months from 28.9 cents. Last weeks placing of $36m was at $9.50/share.
For the 100% 'oil' case assumptions, the unrisked recoverable estimate is 1.348 - 2.36 billion bls mid to high case. (Yes UNRISKED). You can get this from the Sproule CPR and Recons own docs on Sedar dated 30/4/21. COS is put at 8.8% and a 37% chance of development. Of course its virgin and early days and these assumptions could go out the window good or bad.
Much has been said by Recon of the assumed generation of 100 billion bls+ in place and Save/CGG have similarly quoted huge oil generation figures but Save hide their light under a bushell. Its only very, very recently AK has put a detailed presentation up showing the fantastic long term revenue stream for Accugas when he equally should be showcasing and highlighting the enormous company making potential from Niger. It won't sell itself if people don't know the kind of value it could make nor if plans to continue exploration are delayed.
By comparrison to Recon, the Agadem basin has an overall 80% success rate on all wells drilled so a working petroleum system well established and verified. Save has continued this trend with 100% discovery success which is fantastic in its own right.
Compared to Recons unrisked oil mid-high case numbers (1.348 -2.36 b), Saves 100% unrisked recoverable oil case is 6.8 - 9.98 billion bls which is at least 3 times greater for Save and has a much higher COS.
Recons broker recently had a discovery of 500 mmbls worth around £1.3b to Recon and Recon have already reached £1b of that from the results of the 1st well. That £1b valuation would be the equivalent for 100p to Save.
Saves broker Finncap in the Feb 2021 note gave 17.6p/share for every 76 mmbls using a lowly $3/b at a $50/b oil price assumption. 500mmbls to Save would be 115p with up to 10 bl bls unrisked to play for. We have not factored in anything for the discoveries never mind any hope value despite an up to expected 80% success rate for the Sokor Alternances alone.
Save could learn a lesson in monentum and in keeping things moving. Recon have moved from 20c to over $10 in less than 2 years. Save have an asset with equally if not greater potential but have done nothing in terms of really getting the story moving this last 3 years never mind slow progress since 2014. Recon have stolen a march, 50 bagged in under 24 months, achieved a £1b valuation and to cap it all raised $36m on minimal dilution at the top of the range at $9.50/share last week.

£1 Billion Valuation reached by Recon.

Surely time that Save by comparrison got the finger out and cracking on with delivering the potential from these world class assets that would equally be worth multiples to its current value.
From Saves presentation - every 20 mmbls tied to the development point worth $100m. (Pro-rata $1.5b valuation requires 300 mmbls from an unrisked 6-10 billion bls mid-high side recoverable to 2.6 - 4 billion bls risked mid-high side recoverable)

Latest as of today from Recon now acheived a £1b valuation (raised $36m today) on a virgin basin that they are drilling with an expected 100 billion bls generated (not recoverable of course) and an expectation of over 1 billion bls recoverable potential. Similar to Saves acerage, but Save acerage already proven and with similar oil quantity generated. Saves unrisked high side recovery could be as much as 10 billion bls.

156.1m shares (178.7m shares fully diluted).
Share price $10.40cdn/610p = M/cap £952m (£1.1 billion fully diluted).

https://reconafrica.com/wp-content/uploads/ReconAfrica-Investor-Presentation.pdf

First well established that there is a working petroleum system from cuttings etc
April 15, 2021 pleased to announce preliminary analysis of the data from the 6-2well, the first of at hree well drilling program, provides clear evidence of a working conventional petroleum system in the Kavango Basin.

https://reconafrica.com/wp-content/uploads/ReconAfrica-Press-Release-041521.pdf

Pt 1
Here's an interesting comparison and why i see the screaming and unrecognised value lag in Save.
Anyone seeing the mention of 100 billion bls generated in the report below might be thinking 'wow' at first glance but infact should see this is exactly no different to Save opportunity in scale and size and Save much further poven in terms of their basin acerage as Recons value is built entirely for now on hope value and an unproved/untested basin.
Recon Africa are a Canadian junior currently drilling what is deemed as the last of the great undrilled deep onshore basins in Africa and hoping to 'prove' a petroleum system (Namibia & Botswana).
They have currently 109m shares in issue and the price is cdn$4 some 5 days after the latest stock coverage. They have cdn$17m cash, no production, no reserves. Puts them at a m/cap value of $436m cdn or £250m and far in excess of SAVE.
A find of 500 mmbls is estimated to be worth $2.6b cdn or $2b US or £1.3 billion. They are using circa US$4 per barrel. Saves analsyts were being conservative in the lower oil price envirnonment and used $3.20/b. The risked recoverable for Save is 2.695 - 3.868 billion bls mid-high case or $8-$12 billion (£5.5b - £8.5b).
" VALUATION
RECO trades at 0.49x our heavily risked NAV of $4.00/share with an unrisked upside ~$24/share at a modest field discovery of 500 mmbbls.
An early 2020 assessment from Sproule underlined the potential with 1,044 mmbbls and 44.9 Tcf of working interest best estimate prospective resource. More recently, noted source rock expert Dan Jarvie has estimated that the basin is capable of generating 100 Billion+ barrels of oil."
We continue to see RECO as a special situational stock that is positioned to deliver on a high-impact exploration program over the first half of 2021 that will substantially de-risk a material resource and drive significant share price appreciation on positive results. We recommend building a position in the name ahead ofexploration resultson all three wells expected in late spring ".
https://reconafrica.com/wp-content/uploads/RECOJan112021.pdf
What's also interesting is the size of our basin (see following post pt 2), but the very big difference is that we have a very substantial and proven working petroleum system.

Pt 2
From Save/CGG CPR-
'The Agadem Rift Basin is a part of the wider Central African Rift System.
The Agadem Rift Basin contains a sedimentary fill of more than 5km.
Shales at Cretaceous level have entered the oil window across much of the basin.
Consequently, the basin offers source and reservoir potential in multiple stratigraphic intervals, including at levels that to date have received few well penetrations. The fault blocks created by late Cenozoic faulting formed the traps targeted by almost all exploration drilling to date, whereas the structures formed by Santonian-Campanian tectonics are essentially unexplored.
The source systems in the Agadem Rift Basin started generating oil relatively recently: The modelled volumes of oil expelled are very large, at up to: 60 mmbbl/km2 (Donga), 80
mmbbl/km2 (Lower Yogou), 97 mmbbl/km2 (Top Yogou), 50 mmbbl/km2 (Base Sokor), 30 mmbbl/km2. These volume estimates suggest that the basin has generated far more oil than is required to fill the traps to spill'. (Dyor)
From the above figures you can see the sheer amount of oil volume generated inside our 13,655 km2 imo in excess of or similar to the 100 billion bls that Don Jarvie talks about for Reco. This is why SAVE have an unrisked recoverable of 6.8 billion - 9.98 billion mid-high case while risked recoverable is 2.69 billion - 3.86 billion bls.
Infact Reco are using a report from the highly respected Wood McKenzie of Nov 2020 (which states "Whilst the current geological understanding across the Kavango Basin is immature, there are preliminary indicators that, should the presence of a working petroleum system be proved, it could provide abundant opportunities for further exploration and appraisal"). They also use the Central African Rift basin has one of three basins to compare to Recos untested/unproven Kavango basin.
Saves m/cap £135m. Reco £250m.
CNPC proved over 1 billion bls from their acreage portion and mostly just from 1 play type - the Sokor Alternannces.
Save 5 out of 5 discoveries recording 33 mmbls 2C so far though Amdigh may lift this depending on pressure communication and other adjacent segments to over 100 mmbls - while not counting the deeper potential in 3 of these discoveries that will be drilled down to.
100p for Niger is the tip of the iceberg in terms of the overall potential and when compared to whats being promoted at Reco and their share price/valuation.

Agadem, if i remember correctly the company was to come to some decision on dividends at the end of 2020 and i would have thought they'd have to update us one way or the other in the forthcoming results.

They will be going into its 8th year of listing this August and they need to start addressing institutions and long term shareholders. Because so far, no dividend and share price has substantially underperformed way below the deal price despite being told it would be worth waiting for.

Company does not have to be debt free to pay either a dividend or buy back shares and no reason why they can't do one of those. A dividend i beleive is more attractive. It will look odd buying shares back if on the other hand they decide to issue some shares to help fund an acquisition which is and was talked about as enhancing a dividend pay out.
$12.5m was indicated from the FCF from the Nigerian acquisition. Surely if the debt restructuring takes place then this should open up a payment on account of assumed cheaper financing and it would also kick start further investor interest.
I've already highlighted other companies and their dividends/debt/profitability by comparrison. But now in the 8th year they need to step up a gear on delivering.
Canacols results and presentation this week so Save need to really address things that will improve their share price performance by comparrison here and to other similar companies with similar/greater debt levels.
Canacol Energy M/cap us$518m (£375m).
Cash $68m. Long term debt $360m and liabilities $182m.
Quarterly dividend 5.2c. Yield 5.8%.
Share buy back programme for 11.3m shares limited to 60,132 shares per day.
2021 guidance 190 nmmcf/d
2P Reserves 637 bcf (106 mmboe)
https://canacolenergy.com/site/assets/files/2954/canacol_energy_corporate_presentation_april_2021_final_2_-_ingles_-_apr_23-_2021_website.pdf
2020 Revenue $277.6m less Opex $18m, Transport $32m, G&A $26.8m, Depletion/Depreciation $64.5m, FX loss $6m, Other expenses $16.9m, Net finance expense $31m.
Income before tax $77.39m Dividends paid $27.9m
https://canacolenergy.com/site/assets/files/3517/eeff_-_ingles_-_4q2020.pdf

I think it was a rerun of this November 2020 article on the planned power plants sale

https://nairametrics.com/2020/11/17/fg-to-sell-geregu-2-omotosho-2-and-calabar-power-plants-for-n434-billion/

Totally agree Trek.

Seplats dividend paid quartely as it has been this past few years. Circa $14.75m this quarter in dividends ($58m annually this past 2 years).

I would have thought that the debt refinancing at a longer tenure and cheaper rate would have more than freed up SAVEs ability to pay their intended $12.5m annual dividend from $130m FCF and current operations as was the original intention.

Goldman Sachs upping their forecast for oil to exceeed $80/b this year and given Save were stating the Niger EPS was dependent on the oil price recovery from almost a year ago and subject to financing, you would think that there is no room now for them to have any reason not to get the EPS started. Oil price well ahead already of SAVEs own price assumptions and only $14m needed with $8m of that in lease costs over 24 months.

Cuurrent gas revenue/stubb creek oil in excess of $200m/yr. Phase 1& 2 of Niger at a domestic price will add around $75m/yr revenue so potentially $300m in revenue and half of Seplats current revenue where they pay $58m ($29m pro-rata) by comparrison.

I listened yesterday again to AKs 18th March (6 weeks today) Proactive presentation - he states more gas growth in the short term and also at 12 mins in, he states with the export pipeline in place ' enable ramp up into the hundreds of thousands of barrels a day' of which we have guaranteed access to.

Another $2-$300m of annual revenue at $55/b oil needs 10-15,000 bopd - which would put us at a similar revenue stream as Seplat. Either that comes longer term from the export pipeline or we add via an acquisition remains to be seen but he also said they screen a lot of acquisition opportunities so imo something will come at some point.

He also previously outlined another prize of more than $40m+ of additional FCF from new gas contracts that they were working on last year. There should be a major step change for the company if only half these initiatives complete.

1) Cove Energy 9p - 240p (25+ bagger) and taken over at £1.22b
'John Craven, Cove's chief executive and veteran geologist, is line for a £18m payout less than three years after he created the African-focus explorer. Michael Blaha, Cove's chairman and Shell's former head of Alergia, holds shares and options worth £13.5m under the 195p-a-share cash offer Shell. The company's finance director, Michael Nolan, is in line for £7.1m.' https://www.theguardian.com/business/2012/feb/22/cover-energy-shell-bosses-windfall
There were 509m shares fully diluted incl options and take out value £1.22b
They were eventually sold for 240p in the takeover ie 23% more than the Guardian coverage when the offer was 195p. This increased the CEOs payout to £22m. Chairman getting £16.6m and the Finance director getting £8.7m meaning the CEO held only approx 1.8% in shares and options, the Chairman holding 1.36% and the Chief financial officer with 0.72%. Coves other directors Frank Moxon held 57,100 shares, Steve Staley 9500 shares.

2) Sibir Energy - Henry Cameron CEO for over 9 years. Sold for £2b and circa £5/share
"Mr Cameron's holding in the Company is 1,516,976 Ordinary Shares, representing approximately 0.39% of the issued ordinary share capital. He also holds 300,000 options. "
https://www.investegate.co.uk/sibir-energy-plc--sbe-/rns/director-pdmr-shareholding/200810271531547744G/

3) Imperial Energy (50 bagger) sold for £1.4b at 1250p/share in 2009 yet the shares started off at 25p in April 2004 and there was little buying by any of the directors other than the CEO who made a rumoured £90m+
30/5/2008 Imperial Energy Corporation PLC (the "Company") today confirms the Directors now hold the following interests in the Company: Peter Levine CEO 6,268,000 = 6.13%, John Hamilton CFO 2,800 = 0.003%, Chris Hopkinson 11,706 = 0.01%, Denis Kurochkin 1,716 = 0.002%, Ekaterina Kirsanova 2,500 = 0.002%, Kenneth Forrest 48,414 = 0.05%, Pierre Godec 74,784 = 0.07%, Robert Shepherd 4,814 = 0.005%
https://www.investegate.co.uk/imperial-energy-corp--iec-/rns/director-pdmr-shareholding/200805300700065698V/

(Incidentally John Hamilton now CEO at Panoro who are also buying up West African assets yet only held a small amount at Imperial despite being CFO there - ""He was also Chief Financial Officer of UK FTSE 250 listed Imperial Energy PLC, until its sale for over USD 2 billion in 2008." https://www.panoroenergy.com/about-panoro/management/ )

Agadem 'im a substantial holder myself and beyond that of most of the directors other than AK. You beat us all with your holding on that front. Personally i've never got too concerned about this aspect re holding size and they actually hold quite a lot in comparrison to some previous star performers that i followed/was in over the years. My main investing concern anywhere has always been ie, am i following high probability star quality assets (100% convinced here) and the main mans stake and capability in delivering/ultimate financial reward for him/us (if somewhat slower than hoped) making him take a careful and steadying approach to delivery. AKs incentive rewards for those he's appointed are 47p and 68p. Broker notes whether anyone believes them or not, modestly point to over 100p u/risked for just a small fraction of the assets.

Three first rate performers/examples of similar/less skin in the game so one could ask the same question why many directors, CEOs, CFOs etc didn't buy more even in the face of good on going results. So personally im not concerned about the level of holdings by directors in SAVE which totals 4.36% (AK has 3.71% =36.9m shares,M. Lannotti 0.37% = 3.67m, David Clarkson 0.11% = 1.11m, Chairman 0.07% = 651k).

No need for an apology Swindon. End of the day, everyone is entitled to their opinion and how they see things from their own perspective at any given time. Best of luck to you.

Share register last updated today 23/4/21

TT International down 868k to 9.11% from 9.2%
Miton up 5.2m from 8.58% to 9.11%
Standard Life unchanged at 8.31%
JO Hambro down 24.54m from 7.63% to 5.17%
Capital Group unchanged at 6.48%
VR Global down 215.5k from 5.75% to 5.73%
Ingalls & Snyder up 10.952m from 4.17% to 5.27%
Cavendish down 657.9k from 5.21% to 5.14%

Total held previously by above 8 was 55.33%. Now 54.32%
Looks like a net change of down 1% since 9th December though sales seem to be taken up by others in the same group.

So top 8 holders holding more than 3% have 54.32% which is still a huge vote of confidence. Directors holding a further 4.36% leaves that group of 9 in total holding just shy of 60%.

Be interesting to see how the Sahel region reacts with Chads president Idriss Deby having died after fighting at the weekend with a group formed in 2016 by former army officers in northern Chad. He was projected to win his 6th term in office. His son will lead the country under military rule for 18 months. He had come in for criticism on the handling of Chads oil. CNPC chose Benin over Chad for the Agadem, Niger pipeline.

A lot of the 2C gas is classed as such, solely because they are not sanctioned for development yet (ie pipeline/processing from Stubb Creek) and will move to 2P reserves.

They are intended to be developed in 2030 with a 31 km pipeline. Once the Stubb Creek pipeline/link is under development those should move to 2P. The gas there isn't in any doubt. It's all non associated gas but with no pipeline obviously classed as 2C. This will more than see all the current GSAs through to 2037 and beyond as Uquo comes off plateau.

Over and above the 2C, there is a greater 3C figure which might increase the 2C further.

In addition there's approx 100-150 mmboe of recoverable exploration potential on Uquo with varying degree of risk from 25-75%.

Sinopec owns Addax. I see the DPR took 4 blocks off them and gave them to their contractor partner on account of failure to develop them. Wasn't that long ago that AK said Sinopec was expected to be pulling out. Sinopec Oil/Gas partner on Stubb Creek.

26/3/2021

How Benin will become an actor in the African oil sector without producing a drop of oil

(Ecofin Agency) - In January 2019, Benin and Niger signed a bilateral agreement for the construction and operation of an oil pipeline transport system. In the opinion of many international institutions, this project should allow the two countries not only to benefit from substantial income, but also to boost their economic growth in the coming years. Having no exploitable resources in large quantities in its basement, this contract looks like a godsend for Benin, the authorities of which are already welcoming the benefits. Nothing, however, predestined this West African state to be the transit country for Africa's longest pipeline.

The largest private investment in Benin since 1960
Almost 2,000 km long, the Niger-Benin pipeline, at an estimated cost of FCFA 2,300 billion ($ 4.5 billion), is one of the largest oil transactions of 2019. While most of the The infrastructure will be located in Niger, Benin, which hosts 675 km of the pipeline, hopes to reap big profits.
According to the Beninese authorities, the construction of the structure will attract upstream more than 600 billion FCFA, or $ 1.08 billion. According to Benin’s Minister of Water and Mines, this is Benin’s largest direct private investment since independence in 1960.
During its construction phase, it is estimated that the structure will generate more than 3,000 jobs and more than 500 other permanent in the operational phase. Moreover, on March 15, the Beninese government launched a process to recruit 2,000 workers to carry out work on the future site, which has already started on the other side of the border.

Proof of the seriousness of the project, the country was delivered in early 2020, nearly 17,000 tons of pipes, materials and equipment for its implementation. "The unloading operations are underway and it is urgent to proceed to their transport to the planned storage sites" indicates the government.
In the long run, a precious financial windfall
While it is true that the creation of jobs and the various economic activities induced will have an immediate impact on the country's economy, it is in the long term that Benin will benefit the most from the affair. In total, the infrastructure is expected to bring in more than 300 billion FCFA ($ 540 million) in Benin during the first twenty years of its operation, without the country producing a single barrel of black gold. These profits will come from transit fees and tax revenues that the Beninese state will collect from the operation of the pipeline. Finally, the benefits will also be visible in terms of economic growth. For Niger, the IMF expects an average growth of 9% over the next few years. The operation of the pipeline should contribute to the growth of Benin, expected by the AfDB at more than 6.5% in 2022.

Over 2,000 jobs advertised in the 675km Benin section for the Agadem, Niger - Contonou, Benin with a closing date of April 21st 2021

https://www.24haubenin.info/?Offre-d-emplois-dans-le-cadre-du-Pipeline-Benin-Niger

Nigeria: Govt to End Electricity Subsidies By December 2021
23 March 2021

The federal government intends to end the current subsidy being paid on electricity by the end of the year, Special Adviser to President Muhammadu Buhari on Infrastructure, Mr. Ahmad Zakari, has said.
He also said that following the recent intervention by the Central Bank of Nigeria (CBN), the government was expecting collections on electricity tariffs to hit N100 billion in the short to medium term, adding that the amount it pays monthly to subsidise the sector was gradually reducing.
Speaking during a recent webinar organised by the Abuja Chamber of Commerce and Industry (AICC), Zakari, explained that the collection efficiency of the Distribution Companies (Discos), has significantly improved since the CBN started warehousing the funds.
Zakari stated that the Buhari-led administration was focused on moving from the traditional way of funding subsidies or using the liquidity in the sector to fund consumption, rather than using it to provide infrastructure that will ultimately lead to growth.
He said the federal government recently got a nod from the World Bank to fund the distribution and rehabilitation of the sector to the tune of $500 million, which he said is a reflection of the donor community's confidence in the reforms being carried out by the administration.
According to Zakari, the government at the centre was expecting to spend over the next 24 months, between $2.5 billion to $3 billion in the sector, adding that in less than a year, the power being wheeled by the Transmission Company of Nigeria (TCN) will exceed 7,000MW.
"With this enhanced metering on the service-based tariff, we can see the Nigerian electricity supply industry generating over N100 billion in the near to mid-term. This is very impressive. "The hypothesis that we have is that if you enhance payment discipline through metering the population, revenue will go up. We have proven that," he stated.
Zakari stated that the second hypothesis that the government has was that if Discos are given incentives, they would be able to improve supply, explaining that the power being wheeled which is in the region of 4,900MW will soon be raised to 7,000MW.
He added: "We plan to eliminate subsidy by the end of the year. People will say if you eliminate subsidies, you will have poor people pay more. But our argument is that the only reason the power prices in Nigeria are high is because we don't generate enough.
"If you generate 10GW of power, tariff will be half of what it costs. So, keeping the prices very low is not the approach, but delivering adequate power," he argued.

https://allafrica.com/stories/202103230689.html

Save - 8 months ago 12/7/20

"Our shareholder register is primarily comprised of long-term orientated financial investors. We have a significant corporate treasury capacity that already manages over US$500 million of well-structured debt facilities. We have long-held relationships, and have completed transactions with oil trading and energy-focused private equity firms. I believe that this places us in a strong position to source, execute and finance such dividend-enhancing transactions. It is not possible to predict the exact timing or nature of the opportunities that we will potentially pursue. I believe an abundance of robust, cashflow generative and high-quality assets will potentially become available for acquisition over the course of the next 12 months.'

From the prospectus last May

Borrowing powers
The Board shall restrict the borrowings of the Company, and exercise all voting or powers of control exercisable by the Company in relation to its subsidiary undertakings (if any) so as to secure (but as regards the subsidiary undertakings only so far as by such exercise it can secure) that the aggregate of the amounts borrowed by the Group and remaining outstanding at any time (excluding intra-Group borrowings) shall not without the previous sanction of an ordinary resolution of the Company exceed US$2.5 billion.