Member Info for ZENGAS

Re rookie mistake in 1st RNS re $30m.

We still haven't heard about the intended $30m re the proposed strategic partnership of 18/12/2017. Maybe this is the connection for the same $30m?

In addition to the Placing and the Agreed Transaction, Savannah now announces the formation of a strategic partnership with an investment group led by ASMA Capital Partners B.S.C.(c) ("ASMA") ("the Investors") regarding a potential investment of up to US$90m for new Ordinary Shares at the Placing Price, including (i) an initial US$30m to be invested shortly after the completion of the Placing; and (ii) for a period of 24 months following the completion of the Placing, the Investors will have the right to subscribe for an additional US$60m of new Ordinary Shares at the Placing Price ("Proposed Investment").

Also re the naming of the Geneva based oil trading company at this stage ?

One of our NEDs was the co founder of Vitol the worlds largest oil trading company. He was also associated with Blue Ocean which was one of the largest fuels group.

Irish billionaire Denis O'Brien part owned Blue Ocean.

http://www.finfacts.ie/irelandbusinessnews/publish/article_1012270.shtml

https://www.thetimes.co.uk/article/blue-ocean-shareholders-reel-in-euro124m-following-break-up-v2khbmqtsl6

Re possible placing signs -

Now back at the placing price.

On the back of the success to date, institutions have the option over the remaining 16 weeks to take up their 35p warrants and raise up to $60m. Will they be happy to do so now given the outstanding Niger success and expected closing on the 7E deal this month with a 19% increase in reserves/2C.

They'd also lock in a dividend on those warrants if paid in Q1 from the transaction.

$50m loan funding has been provided with $20m available immediately.

No further details on the strategic partner that was to subscribe $30m into Savp at the placing price and $60m further option.

Access to 7E free cash.

Partner option for Niger .

Mirabaud note this morning says Savp intend to kick off a 12 month drilling campaign in Q1.
Previous interview with AK said he hoped to have two rigs running back end of this year.

Re any crunch - isn't the immediate next step testing and possibly a few production wells mentioned in previous interviews rather than continued exploration drilling. I've never seen an issue with the cash position. Given they have to get the EPS up and running they'd have to have some capital made available for that. They've also said they now have more than enough oil discovered to do that. Perhaps any cash is now better directed to the EPS rather than spending immediately on drilling more exploration wells which takes away from getting that EPS up and running ?.

$20m is immediately available in 'minimum $5m' tranche sizes from up to $50m provided by the lender.

As regards Niger -
100% Success rate.
First 5 with 50-60 mmbls recoverable estimate.
Production near term.
Finding oil for under $1 per barrel.
2.8 billion risked recoverable mid case oil target.
Very low risk exploration re Sokor Alternances.
Each discovery has derisked the licences further.
Planning for major repeatable success.
Major Pipeline in planning.

Given the above i'd be surprised if this hasn't really stirred the interest of other oil companies.

One positive is that they still retain their entire interest had they farmed it out pre drill. Imo they are in a much better position with these discoveries under their belt and a near term EPS that is also going to deliver cash flow.

I've no doubt that Niger will continue to give Savp a major uplift in discoveries.

100% success rate in discovering oil from every prospect drilled. Can't fault it to date given so many prospects to drill and others still emerging.

Possible additional pay in Zomo requires further evaluation or testing to confirm.

Company now saying potentially significant structures for additional oil targets under the Amdigh, Bushiya and Eridal discoveries.

Also new additional exploration targets - "Preliminary work conducted to date has served to revalidate many of the previously identified exploration targets on the area as well as identifying several new targets".

Production to commence from the EPS early 2019

In the process of putting together a large multi well campaign aimed at replicating 2018 success - R3 East and Central, early 2019 drilling.

Fantastic result to date and no reason not to expect at least a 75% success rate going forward on the same Sokor alternances targets that have an estimated risked 1 billion bls recoverable alone.

I don't mind as long as they keep increasing the barrels.

If it's 52 mmbls recoverable from 4 prospects, there's serious headroom to increase that from the 120 mapped so far.

Also weren't some of the yogou discoveries up on 60+ mmbls mentioned in relation to CNPC about 12-18 months ago ?

phnom

"As for the comments made below about Zomo having the same results as Amdigh due to the same time to drill there is zero connection. Completely unrelated."

Nobody said that. But if it so happened they hit and tested the same number of levels in Zomo as they did in Amdigh it just could relate as regards time duration. No one knows for sure and and neither do you.

Well we are now just 4 days away from equalling the time to drill/announce Amdigh which was the best discovery so far. Given the close proximity of Zomo to Amdigh both are closely matched on time duration so far.

While Zomo may be an individual low risk prospect, the higher risk upside (stated by the broker not the company as i recall) is that it could be one large structure/all part of Amdigh.

If that was the case and finds the Sokor Alternances oil that we hope for, then perhaps it also opens up the belief for deeper Yogou oil potential as reported for Amdigh.

There is a discovered estimated 52 mmbls recoverable in the 4 prospects to date.

If Zomo is successful in any way it will add to that number.

But If Zomo/Amdigh is one bigger connected structure than mapped the upside may be much better otherwise why does the broker mention it re the higher risk 'upside' ?

Regardless of Zomo having deeper potential, if Amdigh were to have deeper Yogou oil (when there was previously no allowance for this in the CGG CPR) then it could push those estimated 52 mmbo recoverable discovered numbers higher from just 5 prospects out of 120 or so identified so far.

Just says Savp when asked by AEI who the Geneva based trading was that lending them $50m with $20m to start, declined to name them.

Zomo is not going any deeper than Amdigh.

If they haven't drilled the deeper Yogou, it's likely that this is on a cost control basis to get as much of what they call the low hanging fruit first (ie low risk Sokor Alernances play). The deeper they go, the longer it might take eating up cash that could drill more prospects in the earlier stages.

Given that the broker now says Savp believe there is deeper Yogo potential in Amdigh you have to ask where they got this from ?

In the CGG consutlants CPR pre drill, it stated that Savp and CGG didn't estimate any yogou oil presence/volumes for Bushiya, Amdigh, Eridal or Kunama.

So you have to ask why does the broker not long after the Amdigh result now say Savp believe there is deeper yogou oil potential in respect of Amdigh ?

Did they get deeper traces of oil at t/d cut off/well cost budget ?

$77m end of July.

Today - "cash and inventory totalling US$92 million was transferred to Jadestone as a result of the accumulated economic benefits of the Montara assets for the period from the effective date of January 1, 2018 to completion".

That will be $100m in a further month and not including significant Stag production.

The renegotiated 'AK' asset that is also producing, should soon be finalised.

Tullow execs were out there trying to pick up the Savp blocks without success. I posted this at the time maybe over on the ad v fn board

T5 Oil and Gas headed up by an ex Tullow Chairman and other Tullow execs also had a presentation about 2 years ago where they had Savp as a potential target in hoping to build a $1b+ company.

Their ipo was delayed at the time due to market turmoil at that time.

June 2018

"T5 Oil & Gas has kicked off an investor roadshow ahead of a potential stock market listing in Dublin and London.

The company has had preliminary meetings with a number of potential institutional investors as it seeks to advance towards a flotation later this year.

The company, set up by a group of Tullow Oil veterans, has recently taken a stake in an asset in the central African country of Gabon.

Shareholders had previously been told that the company wanted to invest more than $30m in the asset out of the proceeds of a stock market listing.

The asset is already producing oil and the company will look to ramp up production.

Any additional funds raised may be directed towards acquiring new assets as T5 seeks to achieve its stated ambition of "building a publicly-listed billion-dollar Africa and Middle East E&P [exploration and production] company".

https://www.independent.ie/business/irish/irish-oil-veterans-launch-preipo-roadshow-37057495.html

There's 7 billion bls unrisked recoverable mid case in the Niger blocks ($35 billion worth of gross target value using $5/b).

2.8 billion bls risked = some $14 billion of value in the ground to transfer to the share price depending how much they can prove up or decide to farm out.

Yesterday in the interview at 4:30 in, re Accugas network AK repeated that from a supply perspective there was 40 tcf of gas that could be tied in - that's a discovered resource of over 6.5 billion boe. If Accugas was doing 100,000 boepd it would only use 15% of that figure in 25 years.

I could see from both Niger & Nigeria, Savp realistically attaining 1 billion boe of reserves based on 1) High COS in Niger and 2) the number of Nigerian fields looking to monetise those huge discovered gas resources.

Given Savps holding in Accugas it would only be rational imo for Savp to pick up more reserves/JVs to supply some of that gas to Accugas. There would imo be a scramble from such a large number of discoveries to do a deal with Savp/Accugas in monetising some of that gas. The warrant money if exercised would be very useful.

With the gasification of the country Accugas in it's own right could be the big winner which we have 20% off fully carried (plus a low cost option for a further 10%). Our interest in Accugas alone could eventually be worth a lot more than the current share price.

Just over 4 months left.

133m @ 35p by 8th Feb worth some $60m if all taken up.

Agadem - No need to really, I would expect their targets to progressively change.

By the way - " Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources."

That's some 6.6 billion boe of "discovered undeveloped resources" that Savannah is well placed to tap.

We've picked up some 150 mmboe there and wouldn't surprise me if we pick up much more given the importance of Accugas to supply them. Why would we not attempt to be in on securing more reserves/2C given the Accugas pipeline capacity of some 80,000 boepd. At that capacity it's 30 mmboe year.

40-60 mmboe guess so far from 2.8 biilion bls risked in Niger plus early production and a major pipeline route now envisaged.

When you look at the combined opportunities, who's to say we won't approach 1 billion boe reserves in time ?.

Accugas could be a £1-2b business on it's own when you look at it's operations and how these might grow. We have 20% of that and an option on a further 10%. Doing near full capacity at current $3.50/mcf gas prices would be over $600m revenues. Current pricing contracts are escalating at 5%. If 10-15% of supply is at much higher margins, Accugas could be doing north of $700m and they have the region sown up as the cost and barrier to entry is too prohibitive as a new entrant would have to start from scratch (some $1b+ invested in Accugas to date)

This is why Savp imo will become very attractive as a future takeover on 3 separate business fronts. Niger oil, Nigeria upstream gas and oil production and downstream segment via Accugas.

I'm personally excited about the building blocks being put in place here.

Glad to see this mentioned again in the broker coverage. You might want to read this paragraph a few times to let the importance of it sink in -

"Longer term, leveraging off its dominant gas infrastructure position (only significant gas processing and transportation system in southeast Nigeria), Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources."

Current take or pay is for some 25,300 boepd and the plant has a 200 mcf/d (33,000 boepd) capacity.

We will now will have full control of the Uquo gas processing plant as stated a few days ago in the RNS without any other party having an interest to hold back plans or decision making.

From the CPR - "The Uquo CPF has production capacity of 200 MMscfd, (33,000 boepd gas) and were designed and built by respected industry contractor Petrofac. The Uquo CPF is modular in nature, with the flexibility to add additional gas processing capacity."

"The Uquo CPF consists of two identical gas processing trains, each designed to process up to 100 MMscfd. One train has been tested at levels up to 120 MMscfd, and the Directors believe that the Uquo CPF, with limited optimisation, could operate at up to 240 MMscfd on a continuous basis. As such, spare capacity of up to circa 50 MMscfd is intended to be used by Savannah and the Investors as part of the development of the Accugas Midstream Business going forward". (40,000 boepd).

"There also exists at least 300 MMscfd spare capacity in Accugas Limited’s pipeline network" ie 60,000 boepd spare on top of 25,000 boepd current take-or pay.

Importantly if you remember back in July, agreement was signed on 7 critical gas projects to deliver 3.4 bcf/day by 2020 amongst them "cluster development of 5 Tcf (OML 13) to support the expansion of the seven energy Uquo gas plant."

5 TCF is circa 833 mmboe. We have currently about 150 mmboe 2P/2C gas.
The agreement is there to upgrade the Uquo gas facility from its current capacity. Will there be a future deal in the offing for SAVP at the supply level to take an interest with NPDC thus book more reserves?

If there is a huge increase in feed into the Accugas system it will be transformational imo and i'm sure Savp will want to get a part of that at supply level and would be a win-win for both up and downstream interests.

Going back to what I said last week and possiblitily for deal making (in context of press speculation on Sinopec and others re discussions around the end of this month).

"That's why im wondering if the other 3 oilfields/OMLs that i previously mentioned where Universal had an interest (but not part of the transaction) might be in some sort of deal. It required about $200m if a deal could be agreed, so who knows maybe there could be some deal/asset swap with the chinese or others to allow them into Niger which at the same time would also boost SAVPs production and reserves from additional Nigerian fields ?.

All speculation for now but 2 Chinese and an Indian oil Company mentioned and no doubt a lot going on behind the scenes."

That leaves us and Sinopec running Stubb Creek and no longer any minority Universal Energy interest that had to be considered.

Anyone else think that by us buying out the minority interest holders in Universal Energy it removes those minorities from any discussion and their obvious restrictions/limitations in the minorities coming up with the resources to do a deal. It might pave the way for a deal to be done on those SAA oilfields that we were originally interested in and then had to move to discuss these outside of the 7E transaction.

Sinopec/ONGC/Savp take over the Universal Energy interest/re-instate the 3 OMLs. ?
We possibly swap Niger farmout for immediate reserves/production on those fields financed by Sinopec or other Niger partner such as ONGC deal ?

Would be value accretive from the outset, increase our cashflow and self finance forward drilling on Niger (which are also near early production) on a reduced 50-50 basis ?

Would be easier Kalahri once we had an idea of the reserves.

I've never understood the report about bringing in partners ie quote from the translation "This is intended to lead to a partnership through which the CGSB will buy back shares in Savannah's R1 / R2 and R3 / R4 license areas in Niger and eventually in the Uquo and Stubb Creek fields in Nigeria". I think that might or could be the reference to the strategic partnership which was ongoing with ASMA? Maybe the proposed strategic partnership has shifted in favour of a large oil company such as the chinese or indians taking a stake?

As for Sinopec, they already have 49% of Stubb Creek. Universal holds the 51% that we are buying. That's why im wondering if the other 3 oilfields/OMLs that i previously mentioned where Universal had an interest (but not part of the transaction) might be in some sort of deal. It required about $200m if a deal could be agreed, so who knows maybe there could be some deal/asset swap with the chinese or others to allow them into Niger which at the same time would also boost SAVPs production and reserves from additional Nigerian fields ?.

All speculation for now but 2 Chinese and an Indian oil Company mentioned and no doubt a lot going on behind the scenes.

From November 2015 note from Panmure Gordon re Niger fields.

"Prior to CNPC acquiring the rights to the Block, only five fields had been
discovered with reserves reported at 325 mmbbl of oil."

6th June 2018 Steve Jenkins Chairman - "Amdigh is a significant discovery for Savannah".
From some of the interviews since then, they have said how Amdigh stood out from the discoveries to date (certainly in terms of net pay).

From the article re Chinese and Indian Oil Companies - "The Amdigh field in particular is the culmination of this success because it is considered one of the greatest discoveries ever made in Niger. It is therefore not surprising that these successive discoveries fuel the lust of certain "majors".

My notes after the Amdigh discovery were -
'Optionality news on 6 wells in next month or so.'
'Back end of this year we'd be willing to take 2 rigs on contract.'
'Bringing in a partner and with more oil, the better the deal.'
'It is likely that will include the intoduction of a partner.'

What i'm not sure about is why as the report said they were interested in a stake in the 2 Nigerian fields (Stubb Creek and Uquo) ?. For now, i don't see it making a lot of sense giving up some of our interest unless they intend taking up some of the partners stakes or it involves something re Accugas ?

Or , could the other oilfields outside of the transaction still be on the cards - ie those that SAVP said they would persue seperately if a deal could be reached.

Universal Energy had 55% interest in OML 4, 38 & 41 while Seven Energy held 62.5% of Universal so about 34.375% effective interest in the blocks.

15/11/2017
"Whilst discussions are still ongoing, and there can be no certainty that a satisfactory resolution is reached, Seven Energy anticipates that reinstatement of the SAA, which is held by Seven Exploration & Production Limited, would require, inter alia, a substantial front-end cash payment with respect to accrued legacy costs and a working capital injection. The quantum of this is still subject to negotiation and agreement with NPDC, however it is likely that the net investment required, including working capital, will be up to US$200 million.

Savannah and Seven Energy have agreed that the Agreed Transaction will proceed on the basis that the SAA is not acquired by Savannah. However, were a resolution to be reached in relation to the reinstatement of the SAA, Savannah would have the right to acquire the SAA."

Definitely interesting news and some very, very high profile companies mentioned

From 20/8/18 post -

'…. You have to take into account what effect new money could/will do for the company?

Diversify into additional ssets ? (in turn generating more value or cash if production)
Potential money from Asma of $30m + $60m = $90m.
Potential exercise of institutional warrants = $60m.
Possibility of $150m - $250m Niger farmout and whether they want or need it ? (but doesn't do any harm to derisk, ie take in some cash without all your eggs in one basket there, given there's a huge 2.8 billion bls risked number to go for. You could apply some of that cash to somewhere/something else.

All of the above is $300m - $450m potential new money not counting possible borrowing potential of perhaps up to $100m+ (possible cash availability up to $400-$500m).

Cash value alone could be worth the current share price.

That's why i think AK meant by having plenty of corpporate options or similar to that affect.

In turn if the transaction is signed off that will provide up to $100m/yr cash flow. That cash flow and early start up of production in Niger would more than likely finance all of Savps drilling in Niger.

Drilling another 25 wells in Niger is about $100m minimum to the sokor alternances without flow testing them all. Possibly another $20m+ on 3D and i would expect the EPS up and running from borrowing while it in turn generates revenue. That might eat up $150m minimum of the farm out if it happens. Cost of ongoing wells expensed on a 50-50 basis if it was 50% farmout. '

While not part of the current transaction, I wonder if there has been any movement on OMLs 4, 38 & 41. There has been no update from Seven Energy on these or any matters. You have to wonder what Seven Energy will be left with or will it continue to exist in any shape or form ?

Universal Energy had 55% interest in OML 4, 38 & 41 while Seven Energy held 62.5% of Universal so about 34.375% effective interest in the blocks.

15/11/2017
Whilst discussions are still ongoing, and there can be no certainty that a satisfactory resolution is reached, Seven Energy anticipates that reinstatement of the SAA, which is held by Seven Exploration & Production Limited, would require, inter alia, a substantial front-end cash payment with respect to accrued legacy costs and a working capital injection. The quantum of this is still subject to negotiation and agreement with NPDC, however it is likely that the net investment required, including working capital, will be up to US$200 million.

Savannah and Seven Energy have agreed that the Agreed Transaction will proceed on the basis that the SAA is not acquired by Savannah. However, were a resolution to be reached in relation to the reinstatement of the SAA, Savannah would have the right to acquire the SAA.

It should be noted that Savannah will not be acquiring Seven Exploration & Production Limited as part of the Agreed Transaction.