Member Info for ZENGAS

Up to $45m earmarked for Capex this year mostly 2nd half as only $1.8m spent in H1.
Haven't seen anything re drilling and no mention in the recent Malcy interview that i could hear. With only 6 weeks of the year remaining i wonder if they can stretch a lot of it over into Q1. If so, it could show the year end accounts for 2020 in a much greater cash/net debt position with the spend coming from next years (2021) revenue just as new contracts kick in with greater increased revenue ?

Saves tweet yesterday where Oge Peters, head of commercial was a speaker on the panel re exploring gas opportunities.

His opening comments were - 'A lot of opportubities for keen, eager focussed independents who are looking for aggressive growth such as Savannah brings a critical opportunity now and in recent times to be able to get a pick of quality assets, assets that still have growth opportunity, assets that will make a significant material difference from a portfolio perspective to smaller sized independents such as Savannah who are looking to grow'

Also think the 52 marginal fields round announcement from the government could be any day now.

November 5, 2020
FG, Transcorp Sign N105bn Agreement on Afam Power Plant Today

https://www.thisdaylive.com/index.php/2020/11/05/fg-transcorp-sign-n105bn-agreement-on-afam-power-plant-today/?

and seperately 8 days ago

Rivers State Agriculture Commissioner Dr. Fred Kpakor stated that the million dollar cassava processing facility in Afam in the Oyigbo region has the capacity to process 45,000 tons of cassava tuber to produce 12,500 tons of high quality cassava flour.
Kpakor added that the plant will create over 3,000 jobs and that the company will add starch to its products as well as glucose in the medium term. The company’s managing director, Reuben Giesen, said the plant will run on environmentally friendly electricity from the independent Rivers State power station in Afam, setting the pace for the area’s industrialization.
https://alkhaleejtoday.co/international/5215094/River%E2%80%99s--12-million-cassava-initiative-to-create-3000-jobs.html

Good posts Agadem/Porschefund.

"Perfect timing to get an oil export pipeline operating in Niger" - Absolutely agree and at a time when they are also seeking to acquire assets from distressed sellers which hopefully will be very much to our advantage.

Re the average the institutions are in at = 36.2p and detailed on page 351 of the prospectus.

I was thinking that myself, though the licences are agreed to being converted into a new 10 year term.

Hopefully hear more by year end and Shore Capital in their buy note have mentioned that Savannah plans to fund development via a deal with an oil trader.

29/10/20 AEI
The state-owned China National Petroleum Corp (CNPC) has been eagerly awaiting the next shipment of equipment from China that will go to build the export pipeline from the Agadem fields in Niger to the Beninese port of Semè. But it may not arrive at the Beninese port of Cotonou before November or even December, much to the chagrin of the ruling Parti nigérien pour la démocratie et le socialisme (PNDS) and its candidate for the December presidential election, Mohamed Bazoum. So far, just one ship loaded with pipes totalling around 100 km - out of a total of 1,980 km needed - has arrived. It docked at the start of the year, before the Covid-19 epidemic exploded. CNPC plans to eventually export 97,000 bpd via the pipeline, which is now likely to go into operation a year later than its planned January 2022 debut due to the health crisis.
Aside from its problems importing equipment from China, CNPC's operations have been further complicated by the drastic restrictions it has imposed on the movements of its employees in Niger. No CNPC executive has visited the oil ministry in Niamey for over eight months, with all discussions between the Nigerien administration and the Chinese firm now taking place via telephone or video-conference. The situation is starting to irk the services of oil minister Pierre Foumakoye Gado, as other Chinese companies in Niger are not subject to this rule. To make matters worse in the Chinese community, no work team has been relieved for eight months in the Agadem production areas and at the Zinder refinery (20,000 bpd), the only outlet in the country for crude since 2011. Chinese workers have been forced to work non-stop for almost a year.

Sonatrach and Savannah in the starting blocks
Aside from the billion barrels expected to be extracted by CNPC from Agadem, other companies could use the export pipeline between Niger and Benin for their future production. This is the case for Savannah Petroleum, which discovered several deposits on its R1, R2, R3, and R4 blocks that CNPC relinquished in Agadem, including one of nearly 50 million barrels, one of the largest in the country. Savannah could easily connect its fields to the existing pipeline via a 50 km pipe.
Another company sitting on a significant quantity of crude is Sipex, the international arm of Algeria's Sonatrach. It made a major discovery in its Kufra block in the north of the country in 2018, but minimised its importance in the media at the time in order to avoid pressure from the Nigerien authorities to develop it as quickly as possible.
The Niger-Benin pipeline, whose cost is estimated at $2.71bn, will have the capacity to carry up to 150,000 bpd.

Figures from Shore Capitals 19th Oct buy note

2020 Revenue = $208m. Net debt $417m. Adj Net profit after tax = $8.867m.
2021 Revenue = $233m. Net debt $356m. Adj Net profit after tax = $28.31m.
Even though revenue is forecast to be up 12% next year - production expenses which are forecast as $45.96m for 2020 only rise by just over 1.25% by comparrison to $46.53m for 2021.
G&A remains the same for each year at $22m.
Interest of $57.5m for 2020 reduces by $7.5m for 2021 to $50m.
$3m dividend 2021 though 30% payout assumed from profit.

This is why increasing the gas revenue will add significantly to profit and the bottom line or a major reduction in debt as a lot of the costs are already fixed, given $28.31m after tax profit is expected for next year on revenues of $233m.

If those contracts come through this year and next according to AKs Malcy interview, there is major head room to beat Shore Capitals forecast.

35p Risked NAV with a further 25p for net Accugas debt.
$1.20 unrisked which only includes the next phase of Niger exploration. They use an ex rate of £1/$1.35 so works out at 89p with an additional 25p once Accugas debt is paid down.

If proof were needed, the last few weeks should be a wake up call to the government that they must press on harder and faster than ever before to more rapidly address the under current in the country. The near total reliance on an oil based economy and lack of delivery on jobs and basic services for so many has exposed the various governments to date, inefficiencies.
Power generation and delivery from it's own huge gas resources and the elimination of $28b annually in lost GDP should now be of even greater paramount priority more so than ever. It's key to job creation, reducing poverty and enabling a better sense of well being and thus enabling an overall greater level of stability.
9m free meters on the way, manufactured and distributed in country. It's a good job that Siemens has already started the contracted phases for growth to 25,000 MW otherwise the government would have been accused of not acting quickly enough if this was only to come about after the events. Hopefully this generates a get it done mentality and that various agencies and those in the entire value chain all work in unison rather than some of the issues in the past of passing the buck and responsibility.

Re top E&P Pick.

Risked NAV = 35p

25p has already been substracted for net debt so if cleared/reduced - this would increase the current NAV from 35p up to 60p over time.
In the current NAV they ascribe just 60% COS to the Niger EPS - would add a further 5p on 100% COS.

We know there is 33 mmbo 2C Niger and for the EPS has $166m given to it so works out at $5/b.

For phase 2 exploration, $427.5m ascribed to it and not sure what price per bl used but if at $4 or at $5/b in line with the EPS that would equate to 85-105 mmbls.
At $3/b it would account for 142 mmbls and only a small fraction of the over 2.5 billion bl Risked recoverable Niger potential.

They've given COS of 60% and 20% for Uquo contingent and prospective. 20% COS given to Stubb Creek 2C and $427m for that phase 2 of Niger exploration and 60% for the Niger EPS.

The unrisked NAV is $1193m and they've used £1/$1.35 ex rate.

On the 996m shares in issue that works out at 88.7p. This also has 25p already deducted for net debt.

35 mins ago

' Savannah is pleased to announce that Shore Capital has published an updated research note on the Company . 'A top E&P pick'. The note includes fully updated financial forecasts and takes a very constructive view on Savannahs investment proposition. '

From Upstream
Infrastructure commitments pay off in CNPC's Niger-to-Benin project, while resource-rich neighbours struggle to attract investment.

Highlight: Savannah’s Eridal field in Niger Photo: SAVANNAH ENERGY

By Barry Morgan and Xu Yihe in Paris and Singapore 15-10-2020

A new 1950-kilometre pipeline being built by China National Petroleum Corporation to carry crude from Niger's Agadem basin to Port Seme in Benin will cut through a well established Sub-Saharan Africa oil region and will serve as a symbolic barrier of sorts marking vastly different approaches to the oil and gas industry.
Challenges are not unknown in Niger, Benin and Nigeria, which the new pipeline will traverse.
But the three nations are mostly business friendly and relatively welcoming to international companies.
The six-nation bloc known as Cemac, also resource-rich, is implementing new monetary rules that could discourage new investment, however — just at a time when many agree that it is sorely needed to maintain production.
In this four-page feature, Upstream correspondents Barry Morgan and Xu Yihe take a look at the key issues at play in Central Africa's oil and gas sector.
1: The long and short of energy in Africa's heartland
Comparatively business-friendly Benin, Niger and Nigeria contrast with more bureaucratic and authoritarian oil regimes in the sub-region.
2: CNPC mapping out route for Niger-Benin pipe plans
Chinese state giant driving forward plans for a $7 billion pipeline from Niger's Agadem basin to Port Seme in Benin.
3: Crude pipeline the driving force in Niger
Huge oil and gas infrastructure investment from China's CNPC shoring up investor confidence in landlocked African nation.
4: Industry investment under threat in Central Africa
Capital control proposals to reform monetary rules raise alarms for region’s precariously balanced oil and gas industry.
5: Rule change riles international players
New rule requiring companies operating in Cemac countries to retain revenues in the Central African CFA franc (XAF) currency could produce a windfall in exchange fees for local banks — and headaches for international businesses in the region.
https://www.upstreamonline.com/politics/new-african-oil-pipeline-traces-a-regional-divide-on-energy-policy/2-1-893469

(1-5 are all links to more of the story and subscription based)

Niceto, They emphasise the expectation of lots of asset sales and fewer buyers and the rumour they were in for Oxy by AEI 2 months ago makes me think this is a priority for them now to build while things are cheap/distressed and take advantage and already on the hunt. It was AEI who first named Savp as the buyer of 7E before it was later confirmed in Jul 2017. If it''s correct that they were in the running to get in on some 30,000 bopd then that would be a major step change and suggests they are not after small scale assets. Look at the first deal size in Nigeria by comparrison. Not saying they would get Oxys and CNOOC and Boru both now reported as preferred bidders by AEI.

Just going on the purchase by Carlyle of $825m for 33k bopd and AEIs latest expectation of $800m for Oxys 30k bopd - At $42/b, $800-$825m is buying $460m - $500m revenue.

Maybe as an eg for $250-$500m of debt/raise, they picked up pro-rata approx 10-20k bopd production and reserves this might be a better option that wouldn't have been possible a year ago. They pick up *instant production/reserves/revenue* -a possible bonus if the assets have further reserve/production growth upside as Oxys do and also if there is a recovery in the oil price. For that kind of money, by comparrison how long to build to that production level solely from exploration when the max they can get out is around 5k bopd phase 1/2 until that pipeline opens so is it value for money spent on exploration right now hence the delay and that's the question ?

Imo it's possibly as cheap to buy production/reserves rather than spend on exploration.
It's going to take about $14m for phase 1 in first year to get to 1500 bopd then move to 5k at a cost of circa $53m in total, both phases.
With revenue expected in excess of $200m this year - it's likely those further contracts this year and next that he expects and the doubling of Stubb Creek oil should eventually push that to in excess of $300m. 1.5k - 5k bopd phase 1&2 Niger at $42/b worth about $23m - $76m. Buying 10-20k of production pro rata worth around $150-$300m at $42/b. A company possibly in excess of $500m+ revenues. If the oil price recovered some more as hoped for in 2022+ then a lot more cash could come in and still with all to play for in Niger and further growth from Nigeria and whatever they acquire ?

Not sure why the price is where it is, but Savp was in the hunt for assets in 2016/7 and the share price had sunk to 23p before the 7E deal was announced with financings at 38p and 35p.

TXP listed on AIM at 7.25p with 103m shares just slightly over 3 years ago at the end of June 2017 at 7.25p with some 1300 bopd.
Had high hopes for it and got in at 7.5p. After 2 years and in 2019 , deciding that it was 2 steps forwards and 1 back and not able to significantly break the 2k bopd barrier, and some consistent knocking of the company about profitablity, some saying not worth investing in with the debt and needing to raise cash by a few (they did eventually raise - now 184m shares), i got out at just over 20p as i too wanted to take what i believed was advantage of SAVEs completion of the 7E deal and restart of the massive low risk COS exploration assets.
The rest is history. What were very good exploration prospects and with some old oil discoveries, has now been proved worth hanging on for and the share price has now 16 bagged to 119.5p this morning and almost twice as many shares while the debt level hasn't much changed. Very likely more mileage there.
Hopefully we'll get rewarded here in due course and TXP serves as a reminder about patience.

The sooner we get a date for Niger resumption the better because there's examples of where explo/v.small producers have overtaken us imo - see the 2 EGs below regardless of the current oil/gas price.
Save, while they have debt that is non recourse, have purchased infrastructure to the value of over $1b (never mind the value of the 2 fields), produce around 22k boepd and have no value as yet attributed to the S.Creek gas element.
We lag at £85m m/cap.
In the FinnCap note it highlights Agadem with a further 2.5 billion bls mid case of already RISKED recoverable oil and not an OIP figure with an NPV expected of $5/barell and one of the highest COS rates in the world.
If you were to ignore Nigeria and run with the present £85m m/cap solely for the Niger potential where we have already demonstrated a 100% success rate that alone should be worth a figure of 20p. (£200m)
I think the sooner AK get's back to the significant exploration potential of Niger, the better - and see that huge exploration numbers drive investor sentiment particularly with our high rate of success.

TXP/PANR equally have to deal with low oil prices just as much as us but it hasn't harmed their progress (see also TXPs gas price) so imo the Save board should think about this. If they were looking to raise cash for other acquisitions, how much stronger might the share price have been in the circumstances if exploration had continued in some form to ramp up discoveries.
TXP 184.4m shares 119p this am = m/cap £219.5m
1396 bopd. Cash $6.8m. Debt $15.2m.
2P reserves 67 mmboe (before todays Chinook gas discovery).
Their 20th July valuation for their significant gas is based on Henry Hub between $2.08 - $3.19 per mcf from 2020-2029 - less than Nigeria but still doesn't take away from the profitability of it all.
------------
Pantheon Res 503m shares 39.5p = £199m m/cap
Revenue down to $78k for 6 months end Dec 2019
$6.1m cash at March 2020 and seeking a farmout.
Talitha project -
Kuparuk formation targetting 341 mmbo prospective recoverable with an NPV of $6/barell.
Shelf Margin targetting 483 mmbo recoverable and an NPV of $5.75/b.
While it quotes the above figures, it doesn't seem to offer an unrisked/risked set of figures re COS.
In their Sep 19 presentation they estimate up to 7 b bls OIP on their acerage with a recovery factor of 10-20% page 12 . If all oil found on the plays, then on those recovery rates somewhere between 700m-1.4 billion bls could be recoverable but still well below our own 2.5 b/bls risked recoverable estimate. What seems to excite a lot of people is the oil in place figure and different to the risked recoverable.
I think alot of potential investors have lost sight of us and this is something the board needs to change.
They've been promising alot on Niger, our flagship world class asset, so it's really time to deliver on this which imo will also address sentiment and in turn the share price which has been stagnant much too long.

News appearing recently on the 150,000 bopd Mashi refinery in Katsina state (the presidents home state) close to the Niger border. Seems a rail line is being built/proposed that Buhari has since cleared up by saying it will go only to the Niger border with Niger building the rest to Maradi.

On top of the Niger/Benin 100k bopd pipeline that can be increased to circa 200k bopd with compression, this would open up another significant future sales route.

“There is a private sector-driven refinery billed to be completed in 2021 in Mashi, Katsina State, facilitated by the Niger Republic at a cost of $2 billion, which has a capacity for 150,000bpd. The Federal Government, in a bid to link the refinery to crude feedstock in Agadem, Niger Republic, announced the construction of Kano-Jigawa-Katsina-Jibia to Maradi rail line in the Niger Republic. Maradi is about 759 kilometres from Agadem.

“This rail line will serve the dual purpose of transporting the crude feedstock from Agadem oil fields to the Mashi refinery. At the same time, it will also distribute the refined petroleum products from the Mashi refinery to other parts of the North. A whopping sum of $1.96 billion is to be borrowed and spent on the railway. This will ensure a steady supply of petroleum products to the North at stable prices."
https://guardian.ng/news/nigeria-niger-refinery-train-link-favours-north-against-south/

https://nairametrics.com/2020/09/25/presidency-denies-building-rail-line-from-nigeria-to-niger-republic/

'Going by this, the two nations would each build a rail track of the same standard to meet at Maradi, Niger. It will be the first railway tracks that will be constructed in the Republic of Niger. It will consolidate the huge economic, commercial and cultural ties between the two friendly nations.
An explanatory note issued by the Federal Government on the project emphasised that, “The objective of the rail is the harnessing of raw materials, mineral resources and agricultural produce.”

"Nigerian Railways Modernisation and Expansion
Crude oil from the Republic of Niger to feed a proposed refinery in Mashi, Katsina State, and the transportation of other cargo and people between the two countries, are additional reasons for doing the project."
https://economicconfidential.com/2020/09/nigerian-railways-modernisation-and-expansion/

Carlyle purchase price was $825m so working out at $25k per bl for 33,000 bopd. Can’t find Oxys breakdown for Colombia reserves other than a grouped figure for all it’s international operations outside of the US.

Tony Haywood ex BP CEO who was there at time of deep water horizon appointed to run the show. After BP, went on to head Genel Energy.

Referring back to my earlier post on their stated acquisition intention and how it could match other producers.

Kos at the end of Q2 had net debt of $2b.
Net production was 60,100 boepd with net sales (from storage) bringing it up to 67,100 boepd.
For 2019 on $1.5b revenue, they paid a dividend of 18c or about 13.5p which on 404m shares was $72m/£55m.
--------------------------------
Sepl for 2019 on revenue of $698m.
Oil production was 24,000 bopd net and 21,800 boepd gas.
Oil/gas price recieved was $64.70 and $2.84/mcf
With 588m shares they paid out 10c/divs totalling $58.8m.

Ok it will take awhile for a recovery, but we know Saves intention - do we buy assets in this 12 month time frame when at their lowest value from severely cash strapped companies needing to reduce over leveraged subsbtantial debt - or do nothing, sit it out and assets are costing much more in a couple of years in a recovery and obviously not as plentiful.

This is why and where i see a chance to really increase Saves production/revenues at a stroke to bring us into the KOS/Tullow production range especially with assets so cheap.

As i said in an earlier post we could quickly get to $600m revenue and still have a modest debt level at the bottom of this market compared to those sitting on 2 and 3 times that.

Dividends would be nowhere near that outlined above with a reduced oil price, but if they were expecting to give $12.5m from $130m FCF average on the original acquisition prior to further growth from mainly gas, then i feel this would bolster that significantly even at current oil prices. Any decent recovery in oil demand/prices and you could see a much greater future dividend so it would seem logical to pursue assets now that may be of interest.

At the end of the day it will depend on how its financed, but it won't be bought unless it's value enhancing.

Back in July in which AEI reported Save was also in the running for the Ghana assets of Oxy (which as yet have not been sold) it said Oxy could expect between $800m - $1b. Oxys net production was circa 30,000 bopd with significant upside.
Carlyle Group in the last week bought Oxys 33,000 bopd producing Colombian assets for $700m now + future $150m = $850m.
Not sure what the entire reserves figures are so can't use that metric per P2, but on a producing bl
33,000 bopd for $850m = $25,750 per bl in Colombia.
30,000 bopd for either $800m-$1b = $26,650 - $33,250 per bl in Ghana.
Save acquired a gas plant, pipeline delivery network and circa 20,000 boepd before so what would or could they acquire this time around ?.
Using a figure of $26,500 per producing bl, $250m - $500m could possibly buy 10-20,000 bls of additional production ?
10-20,000 bls of production at $42/b would generate over $150m-$300m revenue for both cases (on top of $300m+ gas/S.Creek). Imo it would have to be something of scale as too little production is unlikely to be worth it in terms of profitability and the goal for enhancing dividends - unless production has the potential to significantly ramp up. If they were able to get something in this range and if a future oil prices grow into the mid $50s/b it greatly increases revenue.
If net debt is down to $400m and say a further $250-$500m to buy 10- 20k = circa $650m- $900m debt.
New production of 10-20k.
Stubb Creek from 2.5k when debottle-necked.
Net gas 20,000 boepd min before further growth.
If 10-20k acquired, it could push Save to 32.5k - 42.5k boepd production at a stroke.
Niger phase 1+2 of 1.5k - 5k.
Pipeline access 10k ?
44-54,000 boepd .
Would bring us close to Kosmos/Tullow output range/reserves but both they have a debt figure of $2-$3 billion
KOS 404.7m shares. Share price & M/cap 12/11/19 580p = £2.347b. 20/2/20 410p = £1.659b. 20/3/20 59p = £239m. 8/6/20 268p = £1.08b.
552 mmboe P2. 26,500 bopd Ghana, 11,600 bopd Guinea, 28,300 boepd GOM = 66,400 boepd.$130m cash. $2.2 billion debt when i posted 20/7/20.

They've clearly indicated and said they were "firmly focussed" re looking for a dividend enhancing production asset.

AEI already reported that they were in the running (as were others) for Oxys Ghana assets back in July so imo the hunt has clearly begun and assets have never been cheaper.
You can't go shopping unless you've some heads up from financiers or possible partners.

They said this 2 months ago and expected material assets to appear in the then, next 12 months.

SJ -'We also remain nimble and opportunistic for inorganic growth opportunities that are likely to arise in the current economic and sector environment'.
AK - '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.

In this context, we see the net impact of the industrial trends I have outlined above as resulting in: a period of significantly reduced competition levels for such assets in our core Africa-focused area of operation; the expected return potential of such opportunities increasing significantly as a result; and a significant increase in the absolute number of such assets available for sale.
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. This said, as ever with new business transactions, it is not possible to predict the exact timing or nature of the opportunities that we will potentially pursue. However, in the current period of financial distress and business model change faced by many oil and gas companies, 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.'