Member Info for ZENGAS

Page 17 original CPR
Proved Reserves - Nil. (AAOG Net - Nil).
P2 - 199,000 bls (AAOG Net - 95,000 bls).
2C Mengo mid case - 8.1 mmbls (AAOG Net 3.9 mmbls) Risk factor 60%.
Prospective oil Resources Djeno mid case - 15.9 mmbls (Net - 7.6 mmbls). Risk factor 25%.
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The ZEN deal will leave AAOG with 20% in Tilapia ie
No proven reserves as before.
P2 - 19,000 bls.
2C - 780,000 bls.
Prospective Djeno - 1.5 mmbls.
Plus about 5-6% of Zeniths business re total no of shares in issue and price issued.
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So far AAOG or its original work team there have not managed to get any increase in production from the actual P2 reserves.
With a 60% risk factor in the Mengo - what were they afraid of there to attempt much greater production. This had just over a greater than 50-50 COS.
The Djeno - discovered a reservoir but how producible is it - the goal was 'attempt to produce from it'.
Those risks still persist whether Zen or Align take it over.
Align have no other assets to offer if any drill fails and need to raise future capital and possibly lights out then - Zen do, as a back up even if they aren't without their own difficulties but they do have a lot of P2 reserves.
The bigger prize could be if the govt ever pay up - but given the risk why might they want to and so charge as much as possible for any licence renewal to mitigate that.
Why has no other company even come in ?
Where's New Age that was touted that would pay millions for AAOG ?
In my opinion, it's still a high risk asset and why it's cheap and certainly doesnt seem to be attracting the high valuations that some predicted ie New Age which was mad.
On top of that and as i said before - has anyone looked at the drill results and compared those to the original CPR expectations in terms of areal extent etc in backing up the numbers - I doubt it.
The ZENITH deal just about values it on the state of the current P2/production it will buy with the rest all risk and little premium.

From AEI. Interest in Savp's Niger blocks from a SA Junior on any future relinquishment.

7-1-20
Dig Oil wants Savannah Petroleum's relinquished zones

The South African group is sparing no expenses to push through with its entry into the Sahel region.
According to sources within the Nigerien ministry of petroleum, a Dig Oil board member, Congolese national Alphonse Kisolokele, quietly travelled to Niamey in November to meet with the minister of petroleum Pierre Fumakoye Gado and his powerful director of hydrocarbons Adolphe Gbaguidi.

Kisolokele wanted to get the ball rolling on discussions about the future relinquished zones of blocks R1, R2, R3, R4, currently operated by Savannah Petroleum. China's CNPC, operator of the giant Agadem zone, previously held these four areas. The Dig Oil board member also spoke of Grein and Taffassasset, two blocks that sit near the Algerian border across from the Kufra block operated by Algerian's national oil company Sonatrach. He also raised the idea with the Nigerien ministry officials of a visit from Dig Oil's South African boss Andrea Brown in 2020.

Dig Oil's focus has largely been on block 3 in eastern DRC and three permits in the Central Cuvette basin, blocks 8, 22 and 23. For nearly a year now, it has been negotiating terms for Kinshasa to pay a $600 million fine ruled by the International Chamber of Commerce (ICC) in Paris. The harsh sentence came as a result of the company having to wait more than 10 years for a presidential decree to be able to operate its Cuvette blocks. The hefty fine is also to compensate the fact that Dig Oil never managed to get its hands on Lake Albert block 1 for which it had signed a production sharing contract in 2007. While the junior is not riding much hope on ever seeing the fine paid, it is trying to find a means with the new president Félix Tshisekedi and his teams to compensate the loss with other permits.

Dig Oil has already ventured further afield in Africa, having owned a block in Central African Republic since 2012 and been in talks for another asset in Congo since 2014

Just late reporting by AXA. If you check the ipo doc, AXA are listed as having 5% in late November so already known by the market.

No offence taken telegraphist.

All i'm saying is $5m retained as cash might be useful and could be put to use with so much that needs to be done.
A 50p share price on 1b shares, becomes 49p with an extra 19m issued.
I had a 200p target on circa 1b shares in issue - if it was 1019m shares in issue it's 196p.

Nothing in the scheme of things if your looking at the loss of 1p - 4p over that price range.

Therefore, $5m might be well worth retaining to bolster the cash pile from as early as possible and get things done for us and no excuse re shortage of cash. They have access to a second tranche of $5m - so they could in theory issue the shares for repaying the first $5m tranche and drawdown later on the 2nd tranche of an additional $5m and repay that from cash. In theory there's $10m to play with earlier than waiting for cashflow to accumulate.

Re the share price, i don't disagree as we all know it's been underperforming and i too would like to see (and still press for) the dividend to be paid.

It's just my thought, it may/may not happen but in the scheme of things when you study it, it could be an option that the board could take.

Either way i'm fine with it. If it was paid back in shares for very small dilution, it might be a welcome boost to build up a sizeable cash position with ongoing cashflow with or without a Niger partner and the EPS to come shortly even with the other facility.

A $5m well in Niger could be worth $30-$40m if 6-10 mmbls discovered.

14 days time should determine if Savp pay off the $5m unsecured loan facility or issue shares as payment and retain the cash.
As it stands it would be around 19m shares or 1.9% dilution.

Given the facility is for $10m in two $5m tranches, i think there could be a fair chance they might issue shares for the first tranche and later use the 2nd tranche option if need be at some point.

"The lower of (a) 125% of the 10-day volume weighted average price ("VWAP") as at the date of the Facility agreement; and (b) 125% of the 10-day VWAP as at 16 January 2020; or

93% of the lowest daily VWAP of the 7 business days preceding the date of the conversion notice issued to the Company by the Facility provider "

1) It could go bust earlier on it's own bat without Zen and even with a new dilutionary funding package wiping most higher up holders out anyway .

2) Via the Zen deal, it has 11% in Tilapia plus a stake in the Zen assets through it's shares.

3) Being a cash shell might or may not bring in new management and assets to inject in the future.

I said many posts ago that the government could set a high figure for the licence renewal and potentially wipe out all or most of it's debt to AAOG. This was dismissed as deramping/trolls/green boxes from the usual suspects who are now quiet. I beleived that this was one case why no more payments came into AAOG and put them in a catch 22 situation at the time.

Zen have slipped in a clause that they won't pay more than $2m. Anything more and it is AAOGs problem.

"In addition, Zenith will fund AAOG's share of an up to US$5.5 million work programme to be agreed post-Completion, and the amount of any signature bonus required for the renewal of the License as agreed with the Congolese Ministry of Hydrocarbons, subject to a cap of US$2 million if the signature bonus is payable in a single instalment and otherwise at an amount to be agreed between the AAOG and Zenith if the signature bonus is payable in multiple instalments. "

If the ZEN/AAOG deal does not go through, it will take serious dilution to fund the well/pay the licence fee for AAOG to go it alone even with new management. Are they willing to take the high risk for the Djeno and come up with a similar result as before and then game over.

Zen can peddle along with it's mediocre assets and combine it with a few hundred bls of production from the Mengo/R1-3 zones. AAOG would remain on the merry go round of always needing further funding to get a further well away as imo anything under 500 bls still won't cut it for them. This is why i think the Align proposal (though well intentioned) is all wrong and too high risk.

Despite countless posts about New Age and how they would pay millions for AAOG, IMO it just goes to show how poor the assets are when Zenith comes up with a realistic offer re risk/reward in terms of what has gone before. As for Aligns proposal, I view it as bordering on ridiculous.

The IMF have only given 10% of the intended bailout funds to Congo and i'm doubtful if it can be used or help to pay debts to oil companies.

From AEI- West Africa Newsletter 18/12/2019

Snubbed by the IMF, Denis Sassou Nguesso calls his teams to account.

Following the postponement of the vote, initially scheduled for this week, on the second instalment of the $448.6 million programme agreed over the summer between the International Monetary Fund (IMF) and Congo, an angry president Denis Sassou Nguesso called an emergency meeting at the presidency on the morning of 18 December. Discussion are scheduled to focus on how to mend relations with the institution, whose mission to Brazzaville in November went extremely badly (WAN 812). The government wants to appoint a new coordinator of dialogue with the FMI, a role that for a time was played the trader and CEO of Orion Oil, Lucien Ebata, until he was sidelined at the start of the year. This latest setback comes a few weeks after the farewell tour of the French banker Matthieu Pigasse, who for a long time was in charge of the Congolese dossier at Brazzaville's financial advisor, Lazard. The IMF snub is all the harder to bear in Brazzaville since the institution has simultaneously released $368.4 million in emergency credit to neighbouring DRC following an IMF visit to Kinshasa in November and active lobbying by France.

The 16th Dec production update and 5H well said new record production of over 9,000 bopd.

5H came in at 8,250 bopd and if it's anything like 4H over the next 30 days should stay close to that for a month perhaps.

Only 2 wells online on the 16th - ie the new 5H and the original 1XD which was doing 800 bopd back in April giving over 9,000 bopd.

Not online at 16th Dec were -
4H was completed in October at an initial 6200 bopd with a 30 day average of 6,000 bopd.
3D earlier in the year at a 24 day average of 2875 bopd.
2XD prior to that at an initial 2250 bopd with a 30 day average of 2300 bopd.
The water disposal well converted mid year to a producer renamed BN 95-1 was brought on at 2700 bopd.

Those 4 recent wells shut in while 5H came on line account for 13,875 bopd. With facilities completion, those wells should all or most of them soon be back on line.
If their production rate has fallen by 50% by now, which i doubt - it would mean about 6,500 bopd shut in to add to about 9,000 bopd from 5H and 1XD = over 15,000 bopd.
They beleive the facilities can handle 15,000 bopd upon completion even though production guidance is for 11,000 - 13,000 bopd.

Maybe a month or two of top end production near the 15,000 bopd facilities limit which would greatly boost cash.

Rig going for a 6 weeks maintenance progamme before a water disposal well is drilled, after which followed by additional oil wells.

Next facilities in place for 20,000 bopd by Sept (and perhaps these might stretch to 25,000 bopd short term ).

If the above programme is followed it's likely that 2 new horizontals would be completed by September at 8 weeks duration each after the water disposal well. If those again are 6-8,k bopd each it would be a fresh 12-16,000 bopd to add to the wells above that would add to at least 8-12k of worst case production from the 2018/19 wells imo.

A new water disposal well ($10m max) and 2 horizontals at circa $12m each = total $36m plus facilities upgrade - overall maybe $50m spend in total against $180m - $200m net backs on $60-$65/b oil at 15k bopd average for 2020 before reaching the 20,000 bopd target.

Appears to be 2 things that could drive a substantial increase in reserves towards 80 mmbls medium term (not counting the potential 3P case).

Recovery factory similarities to analogue fields and higher net to gross pay ratio in wells drilled.

Netherland Sewells CPR 2P reserves is based on a 68% Net to Gross and just 3 wells + a core and a 12% recovery factor.

Company has since stated 2XD well was almost 20% greater in net to gross pay and that "recent wells" support a recovery factor of up to 24%.

Next data from latest wells will be interesting.

Numis 55p. Malcys 80p when he earlier advised watching Ptal.
I said in previous posts if success keeps coming then those targets may have to be revised upwards.

1. BGH latest report above for Bretana based on 380 mmbls OOIP and 24% RF = $1.84 cdn = 106p risked at current ex rates.

2. BGH also say they are using circa $27/b net back which is $10-$15/b less than what PTAL are using which should kick in with lower lifting/transportation costs - so if that was to be the case it would represent significant material upside alone.

Also as to further possible upside -
3. Potential Bretana 3P case is 500 mmbo in place (32% greater OOIP potential).
4. Potential for RF going beyond 24% over time.

5. Additional leads on block 95 some similar in size and on trend to Bretana.
6. Block 107 prospects and high case of over 4.5 billion bls (seeking farmout).

7. The use of cash from current production to buy into further assets which could mean additional production. They are debt free so would not surprise me to think that they could take on a sizeable production asset on a debt basis at some point like JSE from a high production level already (recently stated they were looking at opportunities to become one of the biggest oil producers in Peru).

Im still of the opinion that there may be little Djeno oil there if any and it is extremely high risk.

I beleive their position clearly changed in their belief and no longer as much hype when they said in the 12/11 RNS said "The objective is to determine whether the Djeno can be brought into production from either horizon. Drilling activity is never without risk. However, the Directors believe that the sidetrack operations have an attractive risk/reward profile."

Never mind payments due to date from SNPC, SNPC may not wish to be involved in a high risk play to be on the hook for further costs so god only knows what the licence situation is - maybe AAOG will get it but on terms that all but wipe out SNPCs past debt hence the delay in paying up to date as i said so some months back but was ridiculed for suggesting it.
AAOG could be in a real catch 22 situation.
Is there anyone skilled or patient enough at the company to risk taking AAOG forward with this particular asset given the web of problems it has ? Who's in a position to now negotiate with the government and can they perhaps see the clearer debacle of this asset that has so far produced nothing more than the day they acquired it ?
I was always sceptical when no CPR was forth coming and imo it was an attempt to beef up a faltering share price with no CPR and turning to Berwicks ex buddies from Ophir for the Independent report who all head up Havoc Partners which still only could conclude "to seek to produce" meaning if there's anything actually in the reservoir other than a leak from god knows where. It was imo an attempt by AAOG to shore up the company but Havoc couldn't put any meat on the bones.
The Chairman and CEO set up ATOG at AAOG shareholders expense and now belatedly pay AAOG some cash. Make your own minds up why now and not earlier and how hot Kitchens can get. They wouldn't put their hands in their pockets to buy into their own story here. Berwicks last RNS about drilling stating they had identified 2 further rigs but these are now imo going to be less than the reason they favoured the best one fit for the job in the first place - ie countering the previous drilling problems/so called rig performance.
To get this back on the road, they need funds/paying and of course it would be lights out if the well did not come in or mediocre result. In the absence of recieving those funds they are going to have raise new money at an absolute catastrophic rate of dilution which will only suit new shareholders.
There's not enough oil production to run the company. Everything to date operationally has been a failure.
Every reason to go into possible suspension/possible shell company situation or delist and that any future repayments (if any) will be distributed to shareholders.

Re bigspikes post again and link (new build Tinapa and Ayade power plants nearing completion)

I noticed in Maclys interview he mentioned at 5:30 in - in addition to Alaoji power station - expecting to sign up a combination of *Governmental power stations and private sector customers* at various pricing points and cotractual structures.

'A lot of that preparation work has been done and we are hopefully in the period where we can just annouce that'

Another fantstic result and a whopping 20% ($3m) cost saving.

11,000-13,000 bopd imminent and only for the constrained facilities to play catch up, we'd be at 20,000 bopd a lot sooner in the coming year.

Vista -

This is the maiden dividend. It's only for the 6 month period which will end Dec 31 2019 but it's being paid in ***2 amounts*** ie 1/3rd on 20th Jan, the other 2/3rds sometime after April 2020. It's 2% for the 6 month period or an annualised 4%.

With the dividend announced, i think any potential investor should consider where this is going. Look at 2019 production figures compared to 2020 average guidance of over 3X and a looming exit target of 20,000 bopd in 12 months.

From my post on 3rd December

'With 3 previous targets achieved, on track in next few weeks to reach target no 4 and over the course of the next year the year end exit is for 20,000+ bopd.

12,500 bopd on $60-$65/b oil = $33.50 - $38.50/b net backs.
That's $152m - $175m of net back. (At 20,000 bopd = $244m - $280m).
Also have $310m to offset against future taxation.

From the last conference call CEO stated - "turn this into a cashflow machine for years to come". '

Production for 2019 -
Q1 944 bopd.
Q2 3100 bopd.
Q3 4760 bopd
Q4 8,000 bopd estimate.
Total 2019 = approx 4200 bopd.

Todays maiden dividend announcement represents 4% yield on the 15p placing price or 2.4% at 25p range now. Significantly the interim dividend only amounts to circa $870,000 US with a total div around $5.5m and are average bopd for 2019 is about 4,200 bopd.

With 20,000 bopd expected/target in the next 12 months and "a cashflow machine for years to come" ie a future $25m (2.6p) in divs is only a fraction of the above net backs even if the oil price was sub $50/b.

Broker targets were over 50p which if targets/performance being met, i expect to be substantially increased. Malcy had 80p and i definitely see north of 60p.

Definitely a stock with opportunity for both significant capital growth, growing dividends with significant exploration upside and farmin/acquisition opportunities from cashflow.

In arriving at the cashflow generation, the CPR has given the oil price assumptions as
$59.30 - 2020.
$57.40 - 2021.
$56.90 - 2022.
$57.10 - 2023.
$57.70 - 2024.
Like before in past cycles i expect more efficiences and cost savings will be made in any changing environment ie rig costs, service companies etc as everyone competes for business and in turn have to shave/reduce their costs. That goes for pipeline tarriff costs too.
As for Niger, if they can find it for anything around a dollar per barrel and sell it for $4+/b (AK said $6 in the latest Vox podcast), there's a lot of money to be made from toting up reserve numbers and selling on.
As for Nigeria and even with the debottlenecking in the year after next, we should be around 2,500 bopd net. The bulk of the cashflows are coming fom gas and 2 of the contracts are escalatory with Calabar alone growing by 43% in price over 4 years so cashflow should increase rather than be impacted by the smaller percentage from oil production.
In addition higher margin gas customers switching from diesel and new power station/industrial clients should ramp up cash flow even higher.
On that basis i'm not worried about where the oil price trends as i expect Savp will make more from selling siszeable reserves onto a bigger company while going through the motions of building initial production.

Good find and i think a significant chance that Savp could be supplying the gas given Tianapa is right in the middle of our infrastructure at Calabar/Unicem Plants.

In fact Savps October 2019 presentation page 22 shows a small proposed pipeline of about 15-20km down towards Calabar. There's no other infrastructure in the area by any other competitor that we know off according to Savp, so looks like this could be very likely. It's 23 MW so not large scale in comparrison to the size/output of the Calabar, Ibom and Alaoji plants but still significant.
The 26 MW diesel powered Ayade plant also nearing completion is not far away either so i wonder if this could be a candidate to convert to gas at a much cheaper rate than diesel. If diesel is costing $10+/mcf equivalent and maybe more, then a switch to gas would have compelling economics.
Savp said they were unable to sign up customers until the 7E deal was completed as no one could deal with Seven Energy in its distressed state and from memory on the CEO intereview he did say i beleive 2 gas customers 1 of which before Christmas maybe. Alaoji was already announced some months back.

nenn, No.
A lot happier now RE Nigeria and with Agadems post on 5/12 re CPR updates so looking forward to the Niger one.

Debottlenecking for Stubb Creek oil in 2021 is around $28m gross (circa $14m net) for the facilities and a water disposal well to take production from 3k to 5k bopd. 3 wells are producing 1k bopd each. 2 further wells are already drilled and completed so that should see a further 1,000 bopd net of additional oil for Savp. Potential for further upside there.

With Aloaji Power Station to come on in H1 and smaller but higher margin smaller gas customers to sign up, its all about delivery on upside now from this current base case in Nigeria