Member Info for ZENGAS

Think about it rather than old news but what's in that news. AK said he still expects a partner to be introduced.

The articles are relevant because Jefferies are handling the farm-out process/timeline.

1) Africa Intelligence reported on 10/9/19 (2 days before Savps RNS) that Savp had appointed Jeffries International to handle the Niger farmout. "In the presentation brochure sent out to potential investors that Africa Energy Intelligence was able to consult " - so it saw the farmout process material.

2) Savp a few days later RNS that they had appointed Jeffries International as joint corporate brokers on 12/9/19.

3) Upstream article of 1 month later 14/10/19 (5 months ago) quoted Asian Conglomerates interested and also mentioned Indias ONGC Videsh. Specifically, it said from sources that the farmout process was ***EXPECTED TO TAKE 3 - 6 MONTHS***. This then keeps us in the current timeframe of up to an expected 6 months to complete a farmout and why nothing is yet announced, possibly until signed off within whatever farmout timeline is defined in the process deadline by Jeffries reporting back to Savp.

4) The previous report 1 year earlier by Africa Intellignce reported the significant links between 2 Savp investors (Azerbaijani ie Asian), also the $50m funding from the Geneva based Oil trading group which AEI reported as being Socar Trading a subsiduary of the Azerbaijan national oil Co/link to Savp investors. Now only 4 months ago on the 14/10/19 'Upstream' reported Asian Conglomerates interested as well as Indias ONGC. So maybe some connection to Socar is in there as a potential partner ?

So while we wait for news on Niger - it may be outside Savps control until whatever process/ timeline/deadline imposed under Jeffries watch is completed. Jeffries farmout process must have got underway by 10/9/19 if Africa Intelligence were able to see the material. Upstream said the process was likely to last 3-6 months. 6 months from 10/9/19 would put us at a 6 month timescale of 10th March 2020 by which we may hear some news or some alternative if no farm-in.

Finally it's interesting to see the February presentation out (even if little changed), the share register update yesterday and the emergence of a New York based investment house having 2.8% or 28m shares in Savp.

Are there any connections to the Upstream report of Asian Conglomerates being interested 5 months ago and to this a year earlier in AEI and Savp connections. Socar/Socar Trading would definitely be Asian ie part of the Azerbaijani national oil Co.

From 16-10-18

The British junior developing its deposit in the Agadem zone has well-heeled shareholders close to Baku.
According to our sources, Turab Musayev, an executive of Azerbaijani group Socar's Genevan trading arm Socar Trading, holds shares in British firm Savannah Petroleum, the latest competitor to join Niger's offshore playing field. While Musayev's stake in Savannah may now be a mere 0.1%, which he owns via his private equity firm Luzon Investments, he has backed the company since its beginning in 2014. As well as its Nigerien blocks, R1, R2, R3, R4, Savannah is also active in Nigeria where it bought Seven Energy's assets.

Turab Musayev's brother Taleh Musayev also holds shares in Savannah via his firms Aralia Capital and Peleng Holding Corp. Taleh Musayev's share of the firm has reportedly fallen from 9% to around 2.5%.

Taleh Musayev has known Savannah founder and chief executive Andrew Knott for over a decade. They were colleagues at corporate bank Merrill Lynch for a spell and in 2013 cofounded Lothian Oil & Gas Partners, which provided the oil and gas junior with financial and administrative support when it was sent up in 2014. It is said that Lothian Oil & Gas Partners no longer works with Savannah.

Socar Trading is a wholly owned subsidiary of Azerbaijani national oil and gas firm Socar, headed by Rovnag Abdullayev. The latter is a MP of the ruling party and part of President Ilham Aliyev's inner circle.

In a press release posted last September, Savannah announced it was in talks with a mystery Genevan trader, which it did not wish to name, to raise $50 million (AEI 825). When contacted, Savannah Petroleum declined to disclose the trader's identity.

ONGC Videsh India mentioned amongst Asian conglomerates as potential farm in partners.
Subscripton based - Quotes a "A well placed industry source."
Partners sought are "large independents and national oil companies" with tech/finance clout.
"Asian Conglomerates" said to be interested, "May include Indias ONGC Videsh which was close to finalising a farm in deal a few years ago" (with Savp).
"You can assume that is a name Savannah will be revisiting this time around" a source.

Could farm out up to half its stake (a source).
Farm out process aided by Geo consultancy Merlin Energy Resources likely to last between 3-6 months. (We do know it started a while back)

'Situation changed with the pipeline deal - now much much more attractive to potential faminees.'
"Interest has increased since the pipeline deal (said a source). It's looking like a very healthy process".

https://www.upstreamonline.com/weekly/savannah-seeks-niger-partner/2-1-685340

The average price of all the placing is around 38 - 42p for most of the institutions. I still have it as a 5 bagger and 200p . The sooner they get cracking on in Niger and build on those reserves the better. At least this months presentation reiterates their core focus is on the low risk Sokor Alternances where they’ve already hit 5 out of 5 for roughly 50 mm bls accumulated.

Page 10 of the PTAL August 2019 presentation of the 2P oil in place was 329 mmbls for year end Dec 2018 by NSAI. PetroTals management estimate then - was up to 367 mmbls.

Today NSAI have increased the oil in place to 364 mmbls and bang on target of Petrotals own internal estimate made last August.

"PetroTal is glad to see that NSAI's 2P OOIP estimate now approximates our internal estimate. We are confident that future production data will substantiate the higher recovery factors"

Page 4 of that August 2019 presentation for the 3P oil in place case showed 500 mmbls. Today the 3P Reserves case increased by 8% and this i like ! The clues are there in looking ahead and how this is way too cheap at the current price.

I would expect later this year to see a management view of increased oil in place against the previous Aug 2019 364 mmbls and Dec 2018 329 mmbls resepectively - maybe to 400 mmbls in place. Also by the end of the year there should be a lot more production data available on existing and new wells.

If they get to 400 mmbls in place and a RF growing to 20% - that's a looming 80 mmbls P2 and surely well beyond the unrisked target of 88p in todays broker note.

Ultimately over time with 500 mmbls in place and a RF of 20-30% is a 100-150 mmbo P2 case without any of the other prospects on this block or the 4 billion bl+ potential on the other.

Still ridiculoulsy cheap at 25.4p and on a P2 reserves basis alone the company is only valued at $4.67 per barrel given it's a major producer, infrastructure developed and debt free while paying a dividend on the march to 20,000 bopd.

At the end year strip price the 2P reserves are valued at over $700m or over $15 per barrel.

Todays Numis buy note re-iterates that serious undervaluation with a target price of 50p and unrisked 88p.

Major upside still to come from any increased recovery which should gather pace leading to further reserves increases.

Still 3-4 exploration structures on the block on trend to Bretana.

Farm out or go it alone potential on the other block of some 4 billion+ bls unrisked.

Fair value currently should now be 40p+

With future excess cash, the potential for buying up further assets exists to grow the share price beyond current broker targets.

They've issued a new presentation in the last day or two because when i last checked the old one was still there (3 pages shorter). Also if there were any changes to the status quo re the Niger blocks, i would have thought it would be mentioned or either have waited to announce any changes.

"Next phase of operations (R3 East well testing) expected to be funded through cash inflows following completion of Seven Energy Transaction". Surely now with that completed we should get word or reasonably expect to see when this will happen.

Appears to be drilling production wells, then further exploration wells and reiterates 50 mmbls to be developed from the 5 discoveries which is in no way priced in to the current lowly valuation.

Just wondering if they are in talks with any partner does that constitute a closed period ?

https://www.savannah-petroleum.com/downloads/07_SVP_Corporate_PPT.pdf

tomorrow since 7e deal completion. One update since and a new customer announcedso one would think they are on top of all issues now re planning etc and especially with the new customer announcement and more in the pipeline to have full utilisation of the CPF by the end of the year.

In this time nothing on Niger progress so i would expect something could just come through at any time on any kind of update, partner or not. But cash flow should be flowing/mounting from Nigeria to begin to pencil in some plan for Niger.

As we use Great Wall, i'm wondering if this will have any impact on timing on work commencement re movement of chinese personnel and movement of equipment such as pipe/drilling supplies if all chinese sourced from Great Wall themselves. There is talk of some equipment shortage at yards for the oil industry in general due to restrictions/slow down. I'm hoping at least we will have an update for operations to start in Q2. Given the size and scope of the completed wells, there should be enough to get on with the testing/completion of 1-2 and perhaps enough pipe/equipment already in country to see through another 5 new wells. All in all it shouldn't affect the announcement of a partner if there is one in the wings. The longer it goes on, at the very least in the background Savps cashflow should be mounting.

Re SAVP tweet last 7 days re AK meeting Akwa Ibom Govenor seeking to exploit idle gas fields.

Nigeria has now said it has secured the remaining investment for the $2.5b 614 km AKK pipeline and to start imminently.
Will deliver up to 600,000 boepd including the supply to 3 new major gas fired power stations and "will ultimately link southern Nigeria with customers in Europe".

"is expected to transport 3.5bn ft³/d of dehydrated wet gas from ****multiple projects in the SOUTHERN part of the country "****
https://www.petroleum-economist.com/articles/midstream-downstream/pipelines/2020/nigeria-secures-25bn-gas-pipeline-finance

Can't post the pipeline map but (look up AKK pipeline) Accugas network is shown in the Calabar area amongst others and ideal to be linked - ie via a spur. Our own network has 100,000 boepd capacity so scope for incremental feed supply or tarriff as transporter so we could be one of the multiple projects in the southern part of the country where the gas will originate from. Timely or co-incidental that AK should be tweeting re holding meetings with the Akwa Ibom State Govenor seeking to exploit idle gas fields. It's a regular feature in Savps presentations and indeed interviews where we are told that there is circa 40 TCF undeveloped gas in proximity to the Accugas network (ie some 6.6 billion boe).

Huge growth potential from Power and Industry - 'Accugas sees power generation as continuing to dominate demand for its feedstock, at around 75%, while industry will take around 25%.' No wonder we see AK in meetings to secure new additional reserves from idle fields.

31/1/2020
The Nigerian economy has a gas distribution and power generation problem. African Infrastructure Investment Managers (AIIM) is playing a part to tackle this, through its investment alongside Savannah Petroleum in assets previously owned by Seven Energy.

The deal took a while to complete, with talks beginning in 2017 and Savannah finally announcing closing in November 2019. AIIM’s entry closed in January.

Savannah has an 80% stake in the Uquo field and an 80% stake in Accugas, a midstream business with 260 km of pipeline network, with AIIM holding the remainder. The infrastructure investor said it had paid $54 million for the stake, from its pan-African AIIF3 fund. The fund closed in July 2019, raising $320mn.

AIIM’s director for West Africa Sola Lawson told Energy Voice. As such, major producers preferred to export gas via the country’s LNG plant than meet domestic demand. “There was a lack of policy around the power value chain, when power plants were state owned. There are still issues, since those were privatised, but it’s moving in the right direction” Lawson said.

Gas prices for power generation are still regulated, the AIIM official noted, but there is a “recognition of the costs to produce gas, while the non-power side is not regulated”. Accugas sees power generation as continuing to dominate demand for its feedstock, at around 75%, while industry will take around 25%. The investor has knowledge of Nigeria’s power situation having been involved in the construction of the 450 MW Azura-Edo power plant, which was the first – and only to date – project financed project built in the country.

“Growth is around captive power solutions,” Lawson said, given Nigeria’s largely unmet demand. AIIM has put estimated peak demand in the country at around 20,000 MW, while the country’s power plants are capable of reliably providing 4,000-5,000 MW. As a result, the country has a high reliance on back-up diesel generators.

The deal with Sahara’s FIPL is the first signed by Accugas in five years, but Lawson has said the plan is to “keep expanding the customer base”.

Beyond the power sector, there is also scope for fertiliser and petrochemical projects, with Lawson predicting growth over the next 10 years.

Full article https://www.energyvoice.com/oilandgas/africa/221501/aiim-and-navigating-nigerias-gas-infrastructure-challenge/

141 mmcf/d currently contracted under take or pay.

$104m net expected this year from existing contract cutomers.

The CPF Central Processing Facility is 200 mmcf/d (they previously said as has been tested and able to possibly do 240 mmcf/d) before any new modular bolt on trains are added.

Todays VOX interview at 32:50 in, he says -
"I've consistently said that i expect us to sign many new gas contracts over the course of this year and i certainly expect us to see the CPF fully contracted by the end of this year"
If so that would see a 40% increase and us at full capacity to around 200 mmcf/day.

If todays analysis by the 2 brokers of $10m free cash flow per 10 mmmcf/d to Savp is correct then it should bring in another $60m net at similar pricing/contract terms and leaving 40 mmcf/d tested spare capacity remaining unless they fill some of that too. If so, then circa $170m/yr of free cash flow imo.

He goes on to say - "This is the first of several such contracts that we expect to completely transform the cash flow generation outlook of the business."

Niger still very much mentioned both on development and further exploration - i would presume everthing must be in order re the PSCs with the Niger Government as he continues to talk about the plans for there. Possible material asset opportunities through partnering an indigenous oil Co in Nigeria for liquids.

Again re Accugas - if they go beyond 200-240 mmcf/d then id expect they'd be expanding their CPF because there is a huge opportunity out there. Their pipeline distribution network has capacity of 600 mmcf/d (100,000 boepd).

With that cashflow generation it's very compelling and a big opportunity to really expand Accugas alone.

This is a great start to have secured the first new contract within just 10 weeks of concluding the 7E transaction. Delivery of this should finally start to cement investor confidence and no reason not to expect that more contracts will now be secured in building out Accugas into what it was intended to be - a giant gas supply business.

News on Niger still to come and expecting a comprehensive update.

“a third train to be built”

We already have 2 trains of 100 mmcfd each and capable of up to 240 mmcfd combined (40,000 boepd).

Hasn't moved as fast as we like but i still view the investment as compelling. I actually think some investors understand the simpler form of just investing in a pure exploration company such as the Niger assets - ie find lots of oil, increase the value and sell on to a bigger player and i think this is one of the main drags on the performance of the share price for the company as Niger progress has been slow.
I remain firmly convinced that this is a big company in the making and that means studying all the elements and strands of the business.
If we were just an oil/gas explorer - that's one thing.
But also a significant gas producer (and oil producer in the making).
Accugas - an opportunity as big in sales/revenue as to being just an explorer/producer.
Calabar Cross River state - 561 MW power station. 5 gas turbines of 25-30 mmcf/d each. 125 - 150 mmcf/d (20,800 - 25,000 boepd).
Alaoji Ibom state - 450 MW (currently avaialbile) power station. 4 gas turbines of 25-30 mmcf/d each. 100-120 mmcf/d (16,600 - 20,000 boepd).
Alaoji design cpacity is 1,074 MW so in effect a future full potential with additional turbines installed would mean an additional potential supply requirement of 23,000 - 27,500 boepd in addtion to above.

That is down the road but with 25,000 MW planned - Siemens apparently supported by the German government is to help build a 1350 MW p/station at Abuja, 1350 MW at Kaduna, 1350 MW at Kano and 450 MW at Lagos. The shortfall to 25,000 MW will be made up from upgrading existing stations and building new smaller stations with investment funding.
It's clear that existing power stations also have to be upgraded if they are to deliver. Siemens aren't only involved with new power stations but entire infrastructure from lines, sub-stations to metering etc.
We also supply Ibom Power as well as the Unicem cement plant on long term contracts.

In the Accugas element -Through it's existing customers Savp could more than double or triple it's production over time and this i beleive is why AAIM have been a significant direct investor. We have key infrastructure. That's a big buisness oppportunity solely for the Accugas side that we own (80%).

Seperate to Accugas - additional gas and oil field opportunities down the road to grow reserves/production.
I remain firmly convinced that this is a big company in the making and that means studying all the elements and strands of the business.

If we were just an oil/gas explorer as an investment case - that's one thing.
But also a significant gas producer (and oil producer in the making).
Accugas - an opportunity as big in sales/revenue as to being just a stand alone explorer/producer.

Q&W Not watching the individual trades so much , still looks low volume in context of shares in issue. Add that to low volume liquidity and mms can walk it down this past while. Roll on some news !

Given that we are seeking a farm-in partner, the status and duration of the blocks will need to be tied down. We haven't heard anything on these since the first period ended so maybe thats why we haven't had any news of a partner so far.

Going back to that $5m short term loan, this is something that could be needed to perhaps pay towards any extension. There's no way DIG Oil would have been getting any relinquished parts for free so begs the question why not try and farm in with SAVP ?
Uunless Savp already have a partner in waiting now that these blocks are supposedly no longer on the negotiation table ?
Or they are off the negotiation table due to some other unknow company coming in, but i'm sure AEI would have picked up on this by now.

from a post re Dig Oil in early January where they were interested in any hive off of relinquished zones of Savps 4 blocks in Niger -

From AEI today

To increase its chances of obtaining blocks in Niger, the South African junior Dig Oil has joined forces with a firm well-connected in West Africa.
Trade Oil
that is who Andrea Brown's firm Dig Oil sought out for help to pick up the northern Nigerien blocks Grein and Taffassasset. The trading house headed by Ivorian businessman Namory Kone has been active in West Africa since 2003. Trade Oil debuted its activities in Niger in 2018 with the offshoot Trade Oil Niger, headed by Traore Abdoulaye Whakhan, who previously directed Ivorian trader Aureole.

When it first opened its doors, Trade Oil Niger's corporate mandate only covered downstream activities. Kone is now branching its activities out into exploration & production. Trade Oil will not just act as an intermediary for Dig Oil but will be its partner if the two firms get the Nigerien blocks in current negotiation. One of Trade Oil's vice presidents is Barinder Dhami, who is also the business development manager for the Venezuelan trading house Venro Petroleum.

Dig Oil, Trade Oil and Niger entered a new round of talks in January in South Africa. As we revealed (AEI 855), Dig Oil board member Alphonse Kisolokele jetted off to Niamey in November to discuss investment opportunities with the minister for petroleum Pierre Foumakoye Gado and his powerful director of hydrocarbons Adolphe Gbaguidi. Considering the future relinquished zones on blocks R1, R2, R3 and R4 of the Agadem field operated by Savannah Petroleum, blocks that were apparently no longer on the negotiation table, the two parties agreed to focus their meeting on Grein et Taffassasset.

Dig Oil holds a stake in DRC block 3 in the east of the country, on which Total was also active. The company has assets in Central African Republic and is working to get a block in Congo.

I posted my reservations about the use of an independent report at the time considering James Berwicks connection to Ophir and all the main team at Havoc Partners who are ex Ophir. It didn't sit well at all with me. Others here ignored it or buried it as being trolling etc.

I found it surprising that AAOG in the absence of a CPR (which they claimed was coming) turned to Havoc Partners for an independent report which i felt was aimed at bolstering the company due to the CPR failure.

It just didn't happen that they could get any other independent company and i always felt it looked more like an excercise in 'help us out here' given all their links to Ophir (ie Havoc/Berwick) . Havoc actually take stakes in projects if you read their website - it obviously wasn't interesting enough for Havoc to take a stake in AAOG !

The main people at Havoc Partners are ex Ophir including Jonathan Taylor who is now a director at ATOG Sahara.
Havoc are investors in Calima Energy - of which Taylor is also a director.

If the Tilapia field was so good and ultimately so cheap, i just wonder why someone like Havoc didn't step in to take a stake

https://www.havocpartners.com/profiles

https://www.havocpartners.com/projects

I said a while back Savp could issue the shares simply because they have a lot of work to get on with and in a meaningful way.
Reasons - They have a 2 x $5m tranche = $10m available.
Why pay off the first one in cash when you could do this in shares and retain the cash and make use of the 2nd tranche later on and choose to pay it off in cash.

My reasons for them keeping the cash (at least the 1st $5m tranche) - Build up a sufficient cash pile and start the Niger drilling campaign/1st oil. How long are they really prepared to hold off for a partner ?

We know they got something like $74m cash inflow. (any deal outflow costs ?)
$15m cash on the books of the assets year end 2019.
$103m forecast cash this year from Nigeria (before new customers).
$50m facility from the oil trading group (1st tranche available is $20m).
There's a work programme to conduct this H1 for Nigeria so not sure if that's from the $103m cashflow or that cashflow is net after all expenditure.

I think they said it was circa a net $10m to first oil in Niger re the EPS via truck.
New drilling and seismic campaign in Niger.

Savp could perhaps see the short term funding as better in the bank to bolster its coffers with or without a Niger partner.

A share price of 25p/50p/100p on 994m shares reduces to 24.5p/49p/98p with an extra 20m shares issued. That's how they could view it as a small price to pay to keep this $5m, use the 2nd $5m tranche in due course but repay the 2nd one.

I could be wrong, but that's been my thinking this last number of months.

Tiburn- "Why hasn't ZEN progressed Azer assets in 3 years?"

Because they are notoriouly difficult and others tried before on the same assets and did not succeed so i think the Azeri government is just happy to let whoever plod along and provide some useful employment to the local workforce etc.

Ramco Energy had good offshore Azeri success in the 90s and sold out and held onto these onshore assets that Zen now have but were unable to get much out of them either and why i think Zen have always been on the look out for other stuff. They haven't increased any production of note in the 3 years they are there. Still all it would take is one good well - there's supposedly 33 mmbo P2 net to Zenith but given the lack of recovery success, it's not or cant be reflected in the valuation.

Zens not ideal deal but no one else really would be interested in AAOG or offer anything better and i always felt the Align deal was a complete non starter. I reckon New Age will eventually clear out of the RoC and they are scaling back eleswhere under the chinese management.