Member Info for ZENGAS

Does anyone remember United Hydrocarbon operating the neighbouring block H in Chad next to CNPCs Agadem block - they were bought into by private Delonex Energy just 2 years ago.

Delonex are backed by a private equity firm (not totally unlike Africa Investment Partners in Savp).

Delonex are part of a consortium consisting of Vitol and Africa Oil Corp that jointly paid $1.4b for a 50% interest in POGBV which has an indirect 8% interest in Nigerias OML 127 which contains the producing Agbami field. It also has an indirect 16% interest in OML 130 which contains the producing Akpo field and the Egina field which was to start production around year end 2018.

Agbami and Akpo, have been on production since 2008 and 2009, respectively, and in 2017 averaged a combined gross production rate of approximately 368,000 bopd.

Egina first oil is expected before the end of 2018 and quickly ramp up to plateau production of approximately 200,000 bopd during the first half of 2019.

( 50% of the 368,000 = 184,000 bopd. 8% of that = 14,720 bopd to the the consortium.
50% of 200,000 = 100,000 bopd. 16% of that = 16,000 bopd to the consortium. )

http://www.oilreviewafrica.com/exploration/exploration/consortium-of-africa-oil-delonex-and-vitol-acquires-assets-in-deepwater-Nigeria

In that conext who knows what the future holds in terms of further deals, expansion or growth for Savp backed by Africa Investment Partners (part of Old Mutual) and now Vitol having a holding in Savp post transaction. Perhaps they too see the serious potential from the opportunity to monetise some of that 40 TCF (6.6 billion boe) stranded gas into Savps Accugas system.

Feb 26 2019

Chadian president Idriss Deby has tasked his close guard to find a way to connect into neighbouring Niger's pipeline that transports crude from the Nigerien Agadem field. In early February, the head of state, who recently twice picked out a new minister of petroleum and energy in as many weeks signed a decree to create a committee that will oversee projects to connect Chad's hydrocarbon transportation system to its neighbours' pipelines. This new unit is headed by former prime minister and current secretary general of the president's office, Kalzeube Payimi Deubet. He will be joined by the newest minister of petroleum and energy Mahamat Hamid Koua, who will coordinate the unit, Deby's oil advisor Ateib Abdessalam, the committee rapporteur, the president's son Seid Idriss Deby, who heads Societe des hydrocarbures du Tchad (SHT) and the minister of finance Allali Mahamat Abakar.

The committee's main mission will be to oversee the legal, commercial, technical and tax framework of the pipeline connections in cooperation with Chad's neighbours. Deby is particularly envious of Niger's infrastructure and has been wanting to connect into this pipeline that runs through to Cameroon for several years.

144p per share value Page 5. (total tangigble asset value).

Montara light well intervention Q2 after Stag infill well.

Should add 3,200 bopd Jun-Dec this year.

Saves $38m in capital spend.

Montara infill well to add 1.8 mmbls P2 and up to 3,000 bopd entering next year.

Further $15m of cost savings expected in 2019 (new supply boat/helicopter contracts etc).

Committment to look at introduction of dividend at September 2019.

https://www.jadestone-energy.com/wp-content/uploads/2019/03/2019-guidance-deck-vf.pdf

Buhari and his party have clearly won

Savps non exec director

'David Jamison -?David has had a long career in the oil & gas industry, having acted as Co-Founder and first Managing Director of Vitol (the world’s largest oil trading company).'

With circa over 60% of 3%+ institutional holders this should be voted through in just over 2 weeks and pave the way for completion in just over 4 weeks.

Looks like oil trading company Vitol will become a 3% holder in Savp.

Not of hand, but Glad to see the warrants didn't kick in.

From the adm doc a year ago, the potential was for 1145m shares in issue ie an investment in SAVP by AAIM for up to $90m + the entire warrants.

Since that, Savp were able to renegotiate the deal for an extra 25.1 mmboe 2P/2C in offset cash costs. Increase their holding substantially in Accugas from 20% to 75%. Sell 25% stake to AAIM for $70m and although a $23m placing done at 28p for 62.8m shares, it has resulted in 879.8m shares in issue compared to the 1145m envisaged.

At the same time the new deal structure for the Nigerian assets should give an increase of over 50% in forecast free cash flow of around $153m for next year compared to $98m previously. (Up to $115m compared to $78m this year).

If he gets a further performance bonus for this compared to the original deal I won't mind as long as we start to deliver on serious share price growth from the performance of both sets of assets.

I stated in my previous post on Friday that VR Global were not on the shareholder list and may have been the seller -

"Don't know what the story is with VR Global - I actually think they are or could have been a seller. They were last showing 37m and on todays 879m shares in issue would mean a holding of 4.2% but they are not in the main shareholder list as of today".

Well they are on the list and they haven't sold a single share as their holding is unchanged since 12 months ago at 37.322m ie 4.24%. VR Global is run by one of the worlds top hedge fund managers, Richard Deitz.

8 Major shareholders now own over half the company.

10 major shareholders own over 60%.

4 major institutions have added substantially.

Miton have added another 40m since previous.
Standard life have bought a further 27m.
TT International added 7m.
Hambro added 15m compared to previous filings.

Petro Ventures had originally I believe 17m and would be outside the 3% reporting level as per previous.

Miton 87.8m = 9.98%
Standard Life 73.629m = 8.37%.
Ashmore Investment 57.257m = 6.51%.
JO Hambro Capital 55.335m = 6.29%.
Capital Group 50.742m = 5.77%.
TT International 48.8m = 5.55%.
IFC (World Bank Arm) 38.986m = 4.43%.
Fidelity 38.888m = 4.42%.
VR Global 37.322m = 4.24%.
Legal & General 31.731m = 3.61%

(CEO 3.15%)

https://www.savannah-petroleum.com/en/major-shareholders

8 Major shareholders now own over half the company. 4 major institutions have added substantially

Miton have added another 40m since previous.
Standard life have bought a further 27m.
TT International added 7m.
Hambro added 15m compared to previous filings.

Petro Ventures had originally I believe 17m and would be outside the 3% reporting level as per previous.

Don't know what the story is with VR Global - I actually think they are or could have been a seller. They were last showing 37m and on todays 879m shares in issue would mean a holding of 4.2% but they are not in the main shareholder list as of today.

Miton 87.8m = 9.98%
Standard Life 73.629m = 8.37%.
Ashmore Investment 57.257m = 6.51%.
JO Hambro Capital 55.335m = 6.29%.
Capital Group 50.742m = 5.77%.
TT International 48.8m = 5.55%.
IFC (World Bank Arm) 38.986m = 4.43%.
Fidelity 38.888m = 4.42%.
Legal & General 31.731m = 3.61%

(CEO 3.15%)

https://www.savannah-petroleum.com/en/major-shareholders

3rd parties could be those shareholders in Seven which did not consent to the transaction at the time (2017). They have approval rights to certain steps of the transaction. They have no economic interest in Seven and we were told would suffer no loss.

Other aspects have clearly moved on ie the widening of the deal re Frontier and us buying out the minority interets of another party.

They say everything is procedural now with the exception of some 3rd parties to approve it. They expect this to be forthcoming and after such a long period of time and negotiation and changes (for the better) to the original deal i expect that to be the case or these would have been blocked by now. While perhaps the statement may have unsettled some, i think it is merely pointing out what is procedural and what isn't. Also at the end of the day, Seven as it stands is finished and after 24 months this appears to be the only deal available.

Totalnew

I invested in Cove Energy in 2009. The share price varied between 9p and 21p. In 2012 it was sold to PTTEP at 240p ie £1.2 billion.

Mozambique didn't have an oil/gas industry as such. Cove, Annadarko and Mitsui drilled and discovered huge amounts of offshore gas. Cove was the minority partner. People queried where would any gas could go but if it's big enough bigger people will come. It can be easier to spend $4-$6 per barrel for major discoveries, replace or grow your reserve numbers than have to find it yourself from scratch and put capital to good use.
None of it was remotely close to production back then and is only now gearing up for a final investment decision 7 years later.
If anyone thinks the security situation is bad in Niger or Nigeria or elsewhere in Africa (take your pick), it's just as bad in Mozambique with Anadarko tendering for armoured vehicles due to regional violence. It's about to spend $20 billion on the gas project. Pttep a pro-rata amount. It's just signed deals to sell over 12 million tonnes LNG per year to China and elsewhere so likely will go to full development decision.

In the context of SAVP, to me it represents a similar opportunity. This is multi billion bls potential. I don't worry unduly about Niger pipelines because i believe with significant oil finds such a project will be too big for SAVP to perhaps want to pursue (though on paper they will plan/talk about sales routes). Niger will want to get it's oil out and transform its economy. If we were only targeting small reserves, i would say it's a risky strategy but for something like 2.8 billion bls risked recoverable it moves it into a different league considering the chinese also have 1 billion+ bls. There were more hurdles for Cove than i see for Savp, but if you were to put up all the same obstacles for SAVP well you'd never invest in anything or find potential gems. Yes there are risks - but are they any more risky than what happened at big name blue chips such as BP (DW Horizon), VW (emissions), BT (Italian acquisition/accounting), Tesco (accounting). When the CEO talks of an inground value of around $6/b that's what i want to hear. He knows as most people that have invested in big low risk finding opportunities, that's potential telephone numbers. When your also sitting on circa 25m shares it's a huge incentive to deliver and let somebody with deeper pockets carry the project further. With 880m shares - if we find only 500 mmbls at $4-$6/b that's around 175p-260p for Niger. That's only touching on 20% of the risked recoverable or less than 10% of the unrisked and Nigeria for free. They've already had outstanding success with 5 out of 5 and a highly repeatable follow through imo. Bottom line is that I expect this to eventually be a sale/takeover with major developments for others to undertake .

You're asking a pretty irrelevant question re trucking imo. This is only a short term plan.

They've said they plan to truck circa 1,000 bopd. In the overall context of the Niger opportunity that's 365,000 bls per year. Think about that in terms of the 50 mmbls we have or if we have 500 mmbls. It's only part of the overall plan to start bringing cash in asap along with the Nigerian assets to pump back ino the business.

It's being trucked 120 km as per the presentation and mentioned here before very recently, to the Goumeri/Jaouro export station then piped to Zinder. They then plan to replace that with a pipeline for greater quantities in phase 2.

Many companies truck oil. In Russia and other countries many load them onto river barges and trains. In the US there is a significant amount of trucking. Many pipelines are actually full due to the rapid rise in production over the years and the only option is trucking.

You can't put it down to trucking cost. First of all - oil quality, finding costs in the 1st place. Big difference between finding it for under a dollar or over $10/b as part of the overall picture.

Tullow in Kenya are currently trucking over 1,000 km - "Crude oil from Turkana to Mombasa by road continues as part of the Early Oil Pilot Scheme. This is expected to increase to 2,000 bopd from April 2019". They are chasing 80,000 bopd in 3 years by pipeline which may be something similar for Savp (or an acquirer) as discoveries ramp up.

GKP/MOL trucked the majority of 33,000 bopd 120 km to Fishkabour into the transfer pipe to Turkey. It's down to about 15,000 bopd now from memory.

Savp expected $10m/yr free cash flow from trucking 1,000 bopd.at around $70/b
.
I'm not here personally to make any money from production. Like others i've invested in before, for me it's to build major reserves and production potential and ultimately be taken over. While the company should now make a lot of money and pay a dividend, i see it only as a function to finance most of its way in proving up existing and to buy additional assets in creating a high value company.

shareminator

It might help if you understood that sales revenue was $32m for the quarter to give a $3.2m (not £3m as you state) maiden pre tax profit. They had only owned Montara for 3 days.

Revenue now should be in excess of $300m per year from the 2 producing assets.

If the Ogan Kommering PSC is successfully renegotiated this should add further immediate sales revenue from production and the booking of additional reserves.

I wish some people would cut the crap about Bribery. Ridiculous comments in the extreme without evidence of same so catch a grip as you only make yourselves look stupid.

Don't forget on completion of the transaction SAVP has to pay $3m to the UERL minorities to buy out their interests in the Stubb Creek field from 32% to 51%.

$20m is also to be paid on completion of the transaction to Frontier.

TOTAL $23m = what was raised today meaning the closure of the deal is imminent !

See details in RNS re amended transaction of 20/9/18 giving Savp increased control or can some of your minds not go back that far.

Although we raise this money, it's offset by the anticipated future savings of not having to drill/complete certain oil wells at UQO which was previously budgeted for in the original CPR.

Agree with you Kalan.

This is nowhere near as bad as some see it. The big picture has not changed other than getting the transaction closed.

I've been using a maximum of 950m shares in issue with all the warrants issued from the current 817m.
Todays raise brings in $23m and 62m shares so basically 880m rounded in issue. Wait and see game if any warrants will exercise over the next 14 days (hopefully not too many).

$90m to come from 7E/AAIM.
$50m loan funding.
ie about $140m availability over the coming year while also pulling in a possible similar amount from Nigeria ie.
Available cash over 12 months = possible $250m region.
Plus EPS on 1k bopd expected to yield $10m/yr from Niger.
Possibility of any farmout in Niger on an at least similar value to the $70m they got for Uquo part sale.

There's no change to the story and I don't in any shape or form see this raise as impacting the potential here. Short term pain for those that don't like a few extra shares being issued at 28p instead of a hoped for 30p+. Worth remembering also the delays to date albeit for a better deal. Also the fact that institutions have supported this heavily at 56p, 38p and 35p so i'm not surprised to see a cheaper raise hammered out in short order at a discount and sweetener. Personally hope that not too many warrants will see the light of day.

Have they sounded out the warrant subscribers ie 133m at 35p with just 2 weeks to do so, which would have brought in about $60m max ?

$23m of a raise between today and tomorrow at the current £1/$1.30 ex rate and if at a price range of 30-35p = 50.5m - 59m new shares.

(previous post should end - wherever your share price might be at any time).

Have to agree with Agadem. These people have the capacity to create weatlh for both themselves and us. People couldn't grumble how good they'd done at Imperial Energy, Heritage Oil or Cove Energy with multi baggers and how well their CEOs/Directors fared/rewarded. There's also plenty £billion+ oil/gas companies out there to serve as comparable potential for Savp.

Tony Buckingham or Peter Levine were not oil men but had good teams.

Savps CEO has created a business capable of multi £billion potential. Holds 26.3m shares plus options - seeing the potential of the business and what others have created, could be capable of netting a £100m pay off and good luck to him if he significantly increases my wealth.

30/10/ 2009
Peter Levine, the oil tycoon who made at least £120 million in the sale of Imperial Energy to the Indians (FT), Went from AIM to FTSE 250 sold for £1.4b in just over 3.5 years.

07/11/2010
The CEO of Dana Petroleum, Tom Cross, made more than £50m when his company was sold to KNOC Dana Petroleum for £1.87bn (Telegraph).

30/4/2014
Qatari fund buys Heritage Oil for $1.6 billion.
Jersey-based Heritage bought into a Nigerian oilfield which had been owned by oil major Shell (RDSa.L) in a $850 million deal in 2012 while it sold out of a gas field it had discovered in Kurdistan. It had previously sold oil fields it had found in Uganda.

Heritage was founded by Buckingham, a former North Sea diver who went on to provide mercenary fighters in Africa when he was a partner in the military contracting firm Executive Outcomes.
https://uk.reuters.com/article/uk-global-oil/oil-falls-nearly-two-percent-amid-global-economy-concerns-but-ends-week-higher-idUKKCN1P502K
(Previously sold its Ugandan oil finds rather than develop them for $1.4b (majority distributed to shareholders so makes a total of circa $3b sale value).
-----------------------------------
Profile: Tony Buckingham, chief executive of Heritage Oil
Tony to his friends – is Jersey's richest resident with an estimated £565m fortune.
https://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8283204/Profile-Tony-Buckingham-chief-executive-of-Heritage-Oil.html

Example - Cove Energy v Savp.

29/6/2009 - 35m shares placed @ 12p raising £4.2m. 3m warrants also granted @ 1p and a further 6m @ 22p = 58m shares in issue.
18/9/10 - 210m shares placed at 20p raising £42m = 268m shares in issue.
11/3/10 - 64.3m shares placed at 40p raising £25.7m = 338.6m shares in issue including the 6m warrants @ 22p now exercised as were the 3m @ 1p earlier = 338.64m shares in issue.
4/11/10 - 144.736m shares placed @ 76p raising £110m = 491m shares in issue. Directors also awarded themselves 1.36m more options at 78.62p strike price.
22/2/12 - 195p/share offer by Shell for Cove (value £995m) representing a 73.3% premium to the closing price of 112.5p on 4/1/12.
23-5-12- PTTEP buy Cover for 240p/share valuing the company at £1.22 billion.

From Coves initial placing and 58m shares in issue under 3 years earlier, or when 268m in issue 2.5 years earlier to take out, they doubled or increased it's shares in issue to just under 9 fold.

Savps strategy so far - started out with 131.4m in issue but only had the R1 & R2 blocks.
When it acquired R3 & R4 it had 193.3m shares in issue.
Currently 817m shares in issue (possibly 950m post all warrants but with more cash of up to $58m). But think this through - We've bought a material asset base while also throwing off $150m/£120m year and growing free cash - which is year on year where we would have to issue shares to get that kind of money. They've bought assets that can be resold yet a valuable source of free financing for Niger. It's also giving us a $70m cash injection from AIIM as well.

If we had not bought into Nigeria, what would £120m of new money cost us for Niger at say 80p/share? ie 160m shares. Perhaps sitting around 360m shares in issue but still not delivering us much cash.

Say another £120m new money @ 150p = maybe 80m more shares and maybe up to 450m in issue.

The total of £240m/$320m of new money where they say their finding costs are $1/b implies they find 320m barrels. If you use the $4/b i've always used = $1280m/£1,000m valuation.
Over 440m shares = target of circa 225p.

If they had farmed it out say 50% they would likely have less shares than that but then again only half the reserves which reduces the target value.

As a Niger only company, they could have gone for debt (Cove didn't from memory because it was going to be too expensive and 10 years from development) but they need something - ie cash or debt to build production and a hefty wad to get into/take part in a major pipeline. 5k bopd production wouldn't be enough to finance their way without more significant cash via share issues or debt.

If anyone thinks they've been diluted, i'd say think again. Yes you may have gotten a sharp increase on a spike and sold but the company can't work like that in dealing with financiers etc and pipeline issues/constraints in Niger. Cove hit 110p but fell back for the 75p placing so shows you cant get cash just where your share price might

Yes, but you don't get it

If you think we have been diluted then why are the institutions so heavily backing this company?
Aug 2014 - The IPO was 56p. = 131m in issue.
July 2015 - 61.69m new shares/$36m @ 38p to buy R3/R4 blocks.
July 2016 - $40m raised at 38p = 274m shares in issue
December 2017 - $125m raised @ 35p = brought us Nigeria business = 817m shares in issue.
***There are two substantial businesses now rather than one.***
On completion we will have gone from zero to circa $150m cash flow this year, a dividend payment this quarter and next year possibly over $200m/yr combined from both operations. We would not be near that cash flow yet from Niger regardless and we would still have had to raise cash to continue drilling so many structures and be a one asset business. I posted a number of times on this and taking into account the institutional support, many of them average around 42p. You could have bought at 23-24p and i know i did a few times over this past 2 years.

The hurdle price was reduced by a factor of 4 from 168p to 42p allowing for a near 4 fold rise in shares in issue.
At 42p it means a very good payout if the company reached 168p alone or a m/cap of £1.6b.
That's still tremendous upside from here at 30p.
I have a target of 250p (currently 89p yesterdays fair value).
There is tremendous growth potential beyond that broker coverage of 89p.
You only have to look at the expected growth for Nigeria as a whole in terms of gas usage. Electricity demand forecast to rise exponentially year on year - something any takeover entity will be watching for that element of the business. Our partners here are a subsiduary of Old Mutual. This has the potential to be a £billion+ for Savps share which could be a £1/share alone. Where we are getting $150m-$200m now, over the next 3-5 years this could rise massively. We already see the massive electricity demand growth projection and we've just added a new power station - look ahead and you could see how these could be $3-$500m/yr free cash flow- maybe not for us but that's what an acquirer will be looking at in terms of the big picture in line with that huge estimated electricity demand growth. Separately we have 2 substantial gas fields, likely will acquire more = further value creation. We're on the cusp of those free cash flows and that's the totally transformational change of where we now are compared to where we've been.

Niger business will shortly be a producer and on 5k bopd estimated to generate circa $50m/yr free cash flow next year. With 2.8 billion bls risked recoverable and a 100% success rate so far and a finding cost of $1 for a value of around $6/barrel it's not hard to work out the value potential from here on given the high success rate.
As for any early bid, we just have to hope they deal with that as best they can for maximising value given how carefully they put it together in the first place.