Member Info for ZENGAS

Given the go ahead to invest overseas - they've been overseas for along time. That wasn't the nature of the link but a unique quick call method of additional funding whenever required at 5-10 days notice so i wouldn't say that was beaurocratic.

What's Colombia got to do with it? Can you say what the actual reason is why they are slow ?
(One of 40+ overseas projects including Africa)

They aren't one of the worlds biggest oil companies for nothing. FWIW i thought they had 2 wells drilled there and were stopped to do seismic.

If a Niger farmout is conducted the Upstream article states a planned 10-15 well campaign is to kick off.

What would be the point of a doing a farmout if that was going to be the case and sit on your hands. There's a high number of actual drill ready prospects. Part of the farmout also was in the past to include provision for additional ongoing seismic.

'ONGC, India's top oil and gas producer, is implementing multi-billion dollar projects within the country to bring to production new discoveries or prolong output from existing fields. Its overseas arm is on the prowl for acquisitions besides having funding requirements for the 41 projects it has in 20 countries.
https://www.business-standard.com/article/pti-stories/ongc-to-borrow-2bn-through-unique-overseas-debt-programme-119082900710_1.html

It's only one company mentioned by name. As reported in the past, Tullow execs went to seek licences there but were unsuccessful.

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 by 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".

Article in AEI subscription today basically outlining

CNPCs first production via their new pipeline forecast Jan 2022.
Profitability projections are
First 2 years production from CNPC forecast at 90,000 bopd rising to a peak at 97,000 bopd bewteen 2026 and 2029. Output then decreases to circa 10,000 bopd by 2043.
Lions share to come from Agadem and a few k bl from the Bilma block.
Will take 8.4 years to absorb all expenditure.
China Petroleum Planning and Engineering institute and China Petrlm Pipeline Engineering have drawn up the assessment. Total cost = $2.71b ($1.18b for Niger & $970m for Benin sections). Additional 62c/bl Benin transit fee. CNPC to pay the wages for 352 new employees (197 Niger/155 Benin).
CNPC funding 30% internally. 70% to come from China Petroleum Finance Co (headed by a CNPC board member who is also CNPCs CFO.
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No mention of Savp as it's CNPCs own oil costing from it's own production ( likely rather than relying on any other operators input/capacity re finacial returns).
If correct - shows CNPC at no more than 97,000 bopd/peak but im sure they leave room to improve on this and are going on a base case re costings.
Also if as claimed the p/line cpacity is 200,000 bopd before compression expansion, this leaves significant room for other operators.
Above prod figures show about 245m bls exported to 2029 (7 years) from CNPC.
If Savp were added into the mix and pay a pipeline transit fee of say as an e.g of $10/b on 10-25k bopd would be 3.6 - 10m bls/yr giving $36m-$100m/yr in pipeline fees ?.

One thing that does stand out in terms of additional info is that from the earlier January 2019 presentation the number of drilling targets has increased by around 23% ie an increase of 27 targets from 119 to 146 now. Haven't seen any official RNS highlighting any change but it appeares to have crept in with the broker note (newly recently appointed broker - Numis) of 17th September 2019 and again in this weeks presentation.

Numis note of 17th Sept 2019 - "Savannah has no less than 146 prospects identified in Niger"

119 mapped potential drilling targets (Jan 2019 Presentation ).
146 mapped potential drilling targets (Oct 2019 Presentation).

The Mengo fallback poition may be fine re the production scenario that you outline but if the reserves are as low as the original CPR then that is never going to push the valuation up as far as some think. 400m shares over XYZ P2 will determine that.
Also if as they say they get 500 bopd that's not going to produce significant free cash to keep drilling wells in a timely fashion so i could see an ongoing future requirement to raise more funds through debt or equity. Again having sufficient reserves would say whether it's worth continuing down that road or not. The Company would survive but to me it could well turn out to be a stagnant situation and that's why i beleive there's been no rush for any directors to put their hands in their pockets.

The licence still needs to be agreed at what cost but hopefully soon?

Also the comments about why are SMPC paying up if Tilapia were no good ? Even if the well had found nothing of interest SMPC are still liable for their share no matter who they were partnered with and whether oil is/was found or not.

Bottom line imo if there is not sufficient production/oil reserves in the Djeno(and not predominantly gas) then the Mengo isn't going to be worth sticking around for as an investment.

Totalnew -

Yes I was aware of it and I asked the company about it before the 1st period would expire. I posted on ADVFN in July and I posted here in August.

"12-8-2019
Agadem, I posted this on Ad v F n back in July -

' R1/R2 (8406 km2 permit) was issued in July 2014.

On the 3/5/18 (RNS) it was granted an extension.
The 1st phase period runs to 5/8/2019.
2nd phase runs to 5/8/2021.
3rd phase runs to 5/8/2023.

50% of the permit less any discoveries must be relinquished at the end of each phase. If they lost 50% at 5/8/2019 they would still have all their mapped prospects. I know they were planning on seeking a 2nd extension when I enquired about this.

R3/R4 (5260 km2 permit) has had the minimum work compliance exceeded in the 1st 4 year term and has exceeded this by 3 wells. It was granted in July 2015.

As far as I see it, they are comfortable on the Niger assets in terms of time/relinquishment requirements. It was late last year that AK said from memory that he wanted to see a number of rigs operating at once. More than 2 rigs operating, I would think you would want to bring in a partner. '
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Todays interims mention the discussions on same - but use the word 'amalgamation'

R1/R2 had different terms to R3/R4 when originally granted. If they are stated today as being in "advanced discussions" on amalgamation they aren't going to have an RNS out saying they have been concluded.

COSTS (3 things) - "We also incurred costs during the period relating to the preparation for our negotiations for the new licence, the legal dispute with SMP and the aborted reverse take-over involving assets in Tunisia. "
LICENCE - " A final round of negotiations is scheduled for October to ensure that the optimal position for both parties can be finalised."
SIDETRACK - " These funds, ***alongside continued anticipated receipts*** from our partner Société Nationale des Pétroles du Congo ('SNPC'), the Congolese national oil company, are expected to enable the Company to re-enter the TLP-103C well at Tilapia with a view to producing oil from the Djeno horizon. "
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For anyone to say it was wiser for the company to produce from the Djeno rather than the Mengo on account of greater revenues - that did not work and proved vastly coststly as they gave away an enormous chunk of the company via dilution in fundraisings.
No mention of the legal dispute - has it been quietly put to bed ? They do say the legal dispute incurred costs = more unnesscary burn.
Also the aborted reverse takeover to AAOGs detriment - yet still this can still enrich the same directors/ATOG no matter how you look at it.
The sidetrack depends on both funding to come in as well as future Government payments for past drilling so imo the wishy washiness about 2 rigs and now looking at scouting other options re minimal mobilisation costs.
If the 2 rigs are already in Congo what mobiliastion costs will be significantly different to scouting a 3rd option in the country This all points to delaying tactics and at worst not having enough capital to carry out the drilling - Get on with it ! The oil they produce does not cover their cash burn and the longer they take to get that rig the more cash is burned in costs and admin in the meantime - which if you look at for the last 3 years are brutal and the reporting period showed another £2m+ burned for 6 months. Imo it's delayed because they do not have sufficient capital room.
Still no director buys at this level to show any confidence.
Cash at end June £739k. Miton fundraise £2.5m, Sept SMPC payment £500k = £3.73m.
If they are burning £330k/month Jul/Aug/Sep = £1m - so may have around £2.7m but reducing by £300k each month this goes on but might be helped/offset by the disastourous funding arrangement.
They may have a licence renewal fee coming up/offset maybe by some of outstanding debt ?
Is the legal case dropped quietly to preserve cash?
£2.9m provision to rehabiltate mining and drilling sites - doesn't say when some of this has to be covered but there have been variables in this, the past 3 years so must be some ongoing spend.

e/stevens - There was no £5m option (it was $5m) but like over there and now here, no one has even considered it which will potentially refect on possible cash needs.

TIPTOP
"AAOG own 56%of this project but that could well increase to circa 80% in a deal with SNPC"

Have you or anyone considered the licence renewal cost and how much that might be ?
These are a source of government income and usually are not given away for free.
Could it be $1-$2m-$3m + ?

There's been talk about AAOG forgiving SNPCs debt to get a bigger stake in exchange for past drilling costs owed, but that imo won't take into account what the government may charge in terms of a renewal fee for a completely new licence term.
Last year or earlier this year was there not talk of potentially there being another oil company being introduced as a partner ie taking some of the government/SNPC stake ? Does anyone know/recall who that company was or if it still is something in the background ?

Savp hoped to be able to sign up additional gas customers in place of diesel at much higher gas prices but still at a big discount to diesel which would make the switch compelling.
From Numis
"there is an estimated 20GW of off-grid power generation capacity in Nigeria that is currently burning oil products), which in a $60/bbl Brent oil price environment, corresponds to ~$8.0-12.5/mscf gas price in energy equivalent terms."

Savannah is actively looking for new industrial customers to take additional gas volumes, at potentially much higher prices than the current $3.6/mscf average sales price because these incremental volumes would be substituting for oil-price-linked products, such as diesel or fuel oil. We do not include any such upside in our base case Discovered Resource NAV but to the extent that Savannah can indeed achieve such sales then there is material potential value upside – we show the impact of additional Accugas volumes at various prices on 2021e net EBITDA in figure 36, where our base case 2021e net EBITDA rises from ~$231m to as high as ~$346m in a scenario where an additional 45mmscf/d is sold at
$10.0/mscf. That is a blue-sky scenario, but even an additional $20mmsf/d at $8.0/mscf, which does not seem like an unreasonable expectation over the next few years to us, would add $35m, or 15% to our base case group 2021e EBITDA forecast.

From Reuters 2 hours ago -
Nigeria's diesel-dependent economy braces for clean-fuel rules
Diesel prices are expected to surge as United Nations rules aimed at cleaning up international shipping come into effect on Jan. 1, with many ships expected to burn distillates instead of dirtier fuel oil.
Estimates vary widely, but observers warn that prices could surge by nearly 20%
While many Nigerian household and small business generators are powered by price-capped gasoline, the big generators for larger firms, apartment complexes and more substantial homes can only run on diesel.
“Businesses may struggle to survive, or in the best case scenario, would at least downsize,” said Tunde Leye, a Lagos-based analyst with SBM Intelligence. Diesel is the second or third biggest cost for many Nigerian firms, he said.
Other heavyweight industries would feel pain. Bank branches rely on generators, with diesel often accounting for 20-30% of banks’ operating expenses, according to Popoola.
Telecommunications companies need them to run their mobile phone towers across the country. Telecoms giant MTN (MTNJ.J) told local media in 2015 that it spends 8 billion naira ($26 million annualy on diesel.
Even bakeries need diesel. At Rehoboth Chops & Confectioneries Ltd, a bakery in the Ogba district of Lagos, giant diesel-powered ovens bake hundreds of loaves of bread. The factory runs 24 hours a day, six-and-a-half days a week.
The ovens run directly on diesel, so they never cut out.
https://uk.reuters.com/article/us-nigeria-power-diesel/nigerias-diesel-dependent-economy-braces-for-clean-fuel-rules-idUK

A study back in 2016 envisaged Savp getting into the Chad-Cameroon pipeline with CNPC.
Savps share was a conceptualised 18,000 bopd but Exxon, Petronas, Chevron (who later sold out to the government) and others had a share of throughput in the 225,000 bopd pipeline.

Given that CNPCs pipeline will have no other major producers to share with yet and has a 200,000 bopd capacity before it can be increased with compression - surely could be an ample outlet for Savp and some others who might later join and much greater than the originally envisaged 18k bopd into the Chad-Cameroon pipeline.

The pipeline capacity is away much better than i thought.

I believed it was around 100k bopd capacity but Mirabuad state it will have an "initial capacity of 200k bopd", expandable with compression.
While i don't know how much it would do with compression, it tallies in some part with Nigers intention to become an Opec member and 500k+ bopd production in the next 5 years.
Oil has been found in the North of the ****ry (Kaffra by Sonatrach near the Algerian border).

This is getting very interesting because if Savp get 10-20% capacity of a 250k bopd pipeline this would be a huge value driver on top of it's Nigeria operations.

In addition Savp are expected to supply 5k bopd to the Zinder refinery.

The 100k+ bopd refinery at Mashi in Katsina state would unlock more potential and this is already endorsed by President Buhari of Nigeria (who is from Katsina). The intention is to build it once an oil supply is agreed and a further likely sales outlet.

Up to $10m/yr free cash flow per 1k bopd was expected to be possible dependent on long term oil prices.
25k - 50k bopd output from Savp in Niger could provide significant free cash flow on top of Nigeria operations.

Niger farm in potential has to be looking much more attractive and perhaps why Jeffries has been employed to seek out the best possibilities for one.

Existing GSAs Daily Contract Quantities.
Calabar 131 mmcf/d.
Unicem 38.7 mmcf/d.
Ibom 19.7 mmcf/d
Total = 189.4 mmcf/d/ = 31,500 boepd.

75% = 23,625 boepd net.

New Alaoji Power Station expected to supply 50 mmcf/day = 8,300 boepd (6,250 boepd net).
Total net gas before any new gas customers = 29,875 boepd.
2-3,000 bopd from Stubb Creek oil field (once debottlenecked).
Circa 32,000 boepd in total net from Nigeria to Savp.

Niger Zinder phase 1&2 = circa 5,000 bopd expected.
Pipeline access to Benin maybe 10,000 bopd.
Possible 47,000 boepd expectation before any other uplift or growth.

Worth noting that Calabar and Alaoji power plants could do 45,000 boepd alone at full current spare capacity.
Savp/Accugas pipeline capacity circa 80-100k boepd and intention is to add further customers.

Excellent news and when combined with ops in Nigeria, this is gearing up towards a 50,000 boepd producer over the next 2 years.

Given the huge amount of oil that's been found and a major pipeline now being built by the Chinese, it shouldn't be forgotten that there are actually 2 National Oil Cos operating in Niger. If they're there, what's to say more of that size and calibre won't follow and buy out the likes of Savp in due course or farm in.

In the background is Niger/Nigerias goal to build a major refinery at Mashi in Katsina state and Nigers goal to become an Opec member and major oil exporter.

'Sonatrach is the national state-owned oil company of Algeria. Founded in 1963, it is known today to be the largest company in Africa with 154 subsidiaries, and often referred as the first African oil "major". https://en.wikipedia.org/wiki/Sonatrach'

'The China National Petroleum Corporation is a major national oil and gas corporation of China PR and one of the largest integrated energy groups in the world. Its headquarters are in Dongcheng District, Beijing. CNPC was ranked fourth in 2017 Fortune Global 500, a global ranking of the largest corporations by revenue.
Number of employees: 1,636,532 (2014)
Subsidiaries: PetroChina, Kunlun Energy.
China National Petroleum is the world's fourth-largest company by revenue.'
Wikipedia.

13-9-2019
"Niger is preparing to become a significant energy exporter. Its electricity deficits are expected to decrease sharply with the start-ups of the Gorou Banda (thermal) and Malbaza (solar) plants, and especially with the future Kandadji dam, with a capacity of 130 megawatts (MW), which should produce electricity ten times cheaper than that obtained with turbines running on fuel.

The good news is also growing in the oil field. Sonatrach has discovered a significant deposit in Kafra on the Algerian border, and the China National Petroleum Corporation (CNPC) is starting a second well at Agadem.

The prospect of completing the production of hydrocarbons from 20,000 to 100,000 barrels per day pushed the Nigerian government to agree with Benin for the construction of a pipeline 2,000 km long, for an estimated cost to $ 2 billion, to export its surpluses in good security.

Development of the oil sector

In January, the government published the broad outlines of its policy aimed at "making the Nigerian oil sector an engine of economic and social development", which implies a more favorable income distribution in Niamey. It intends to expand the number of its partners, now three in number: CNPC, Sonatrach, and the British Savannah Petroleum. "

https://www.jeuneafrique.com/mag/825549/economie/le-niger-aura-de-lenergie-a-revendre/

"Where are you going to find a company worth £15m that has already drilled into the world class Djeno reservoir which flowed naturally without stimulation."

The only problem was it didn't flow with or without stimulation on drilling completion but only 45 days later did oil come up through a fracture in the concrete under associated gas pressure.

While they say they bleed it off, they haven't quantified how much oil they get or have gotten. Has it been sub 1 barrel, 50 barrels or more in each bleed off time period. A lot of the pressure build up is caused as much by the gas.

Agadem

Re Niger production
16-11-2016 - "Indicatively, the external financing requirement for the field facilities (i.e. the maximum cashflow drawdown) is estimated at c.US$200m for a c.75 mmbbl development under the new CDS, versus c.US$410m under the prior CDS."

31-5-2019 - "Net capital expenditure to first oil expected to be less than US$5m, with external financing requirement 60% lower vs. the Company's conceptual development solution announced in November 2016;"

If latest figures are correct - it's $5m expenditure for first oil up to 1,000 bopd.

Previously $200m (in Nov 2016) for a development of 75 mmbls. If the cost is now 60% lower, then that's come down to around $80m in total (May 2019).

As regards the farmout, I think it's been further along than just yesterdays announcement re joint brokers imo.

Also I don't believe the farmout will stop SAVP from drilling at least 5 wells as there will be an introduction of $50m-$70m plus ongoing cashflow so I'm looking for them to soon announce a drilling contract for Niger and also get the EPS up and running for first oil sales.

I note that Mirabaud state that completion will immediately propel Savp into the top ten of producers listed in London. I wonder will AK at some future date take the company on to the main market for greater exposure.

Will he resign from or still find the time to work at Anglo Tunisian Oil & Gas ?

Regardless of his departure, where does this leave the following -

circa £600k tied up in the dd for the Tunisian assets that AAOG paid that ATOG now pursue with a full suite of directors but covered it by saying AAOG might not get it back.
A court case for pursuit of alleged damages for drilling against SMP drilling (that he said they could pay at any time to resolve the asset freeze -scant details on what has happened to date even though its been stated as lifted but what are the details). This also dragged the government partner into the matter.
Further payments from SNPC/Government - what's happening ?
If AAOG end up with a greater interest then surely they need greater funds for drilling ?
Licence terms still not out.
He dismissed the lack of a much awaited CPR that could no longer come, as not important.
The oil coming into the well i still have my doubts about where it might be from. They think it's the Djeno but what if it's from a thin reservoir bed close by of similar oil quality to what's known emanates from other Djeno reservoirs elsewhere.
I've always regarded some of the statements as fast and loose and a bit scatter gun and when i take in the points i highlight above i see reason for me personally to have doubts about the Djeno oil claim - others are entitled to think differently and take it as face value but to me there has been such a catalogue of incidents and ATOG matter, that im not surprised he's finally gone.
After all this time they still haven't signed up a drill rig despite 2 in country but do plenty of talking about it.
The financing has been gruesome. He never saw fit to put his hand in his pocket to buy into what he beleived in - will any of the rest of them, or will we see a complete refocus to look for additional assets.