Member Info for ZENGAS

A very interesting snippet from Malcy re Utapate

"......and 2 by NPDC one of which includes‘full utilisation of the Uquo Gas Plant to deliver 200 mmscfd through its Utapate gas in OML 13’. This is aimed at bridging the supply shortage in the domestic market and will be achieved by expanding the Uquo gas processing facilities owned by Accugas"

At the moment Uquo currently is capable of processing 200 - 240 mmcf/day.
Our existing 3 core customers take 189.4 mmcf/d
Savp had signed heads of terms with 3 potential customers to sell around 5 mmcf/d at $7.50 which is a big discount to equivalent diesel usage and seeking more so looking imo for 30 mmcf/d within their exising processing capacity.

Now if 200 mmcf/d gas from Utape is going to be processed by expanding the Uqo facility this would be around a further 33,000 boepd. We were taking the gas from the field at $1.70/mcf and selling it out at $3.40/mcf with a 14c/mcf cost to non diesel customers - power generation etc.
If this is correct, that would see an additional jump in revenue of almost $250m/yr to Accugas.

To add into my previous figures that i posted on friday this could see -

Accugas Revenues $550m less gas cost of $260m, 14c/mcf costs $26m = $286m.
Gives $264m less circa $52m/y financing = $212m.
Less 2% Ed tax and 30% corp tax of combined $68m.
Net profit potential of $144m.
Savps overall 30% would get around $43m/yr and pipeline capacity running at circa just over 2/3rds capacity with further upside potential. Accugas i can see being a $2b+ valuation given the $1b+ invested, profit potential and utilisation upside.
Add the Accugas value, our own current Nigerian production, production from the EPS hub in Niger + value from the increased reserves and it starts to look very attractive on all combined fronts.

Lobon

O/topic - I think it doubled almost pre AIM listing. Bit too illiquid for me at current valuation.

"Without 7e cash flow there is a constraint. It’s means a different plan is required. Surely you can see that."

Of course i see that but my point in context and from my previous post - there is/was up to $67.2m available from the funding/existing facility so surely there is no near term immediate constraint nor an immediate change for a plan of action required.

There was $37.4m earmarked from the placing for the Niger drill programme.
Even using $6-$8m/well is $18-$24m and i would have thought run-room for 2 more wells should the deal be further protracted (2-3 months). This is regardles of the pipe in yard from a year ago and no discoveries to test in the upper sokor so far.
They also have an additional $16.8m for working capital/corporate purposes so potentially some cash available from this.
They had a 5 year revolving loan arrangement for $13m.

Part of the reason imo they did not commit to a straight 10 wells was to review the results on the initial wells and why they have the well by well option basis for a further 6 wells.

If the 3 initial wells had been poor or non discoveries in their main target im sure they would have been scratching their heads and reviewed their data and prospect choices before proceeding any further.

The greater number of circa 10 wells keeps costs down to an average $5.8m/well including drilling/testing as per the placing CPR so there may be more value for their money imo by keeping the well programme going on a well by well basis.

I will disagree with you. Im aware of the costs and to my information believe that the $6-$8m is inclusive of testing (see CPR).

$5m + testing - what's that give you towards your $6m - $8m and with supplies in the yard, one already under budget and they plan to test 2 not 3 wells which is about inline with the 70% testing below from the CPR issued in December prior to the placing.
No discovery that we know of to test in the upper sokor for the first 2 wells - so a saving.

Significant pipe already purchased over 6 months prior to suspension as Bushiya was earmarked for August last year.

22nd Dec CPR

" 1) Use a full-size drilling rig. Perform main drilling of a “batch” of wells to full depth, wireline
log, take sidewall cores and sample as required, and then suspend for later re-entry (if not dry).

2) Use a smaller dedicated testing rig to perform wellbore clean-up and well test as
required on a “batch” of wells.

3) Use a smaller work-over rig to complete a batch of wells, ready for production.

On this basis, production wells are estimated to cost $5.8MM, and injection wells $4.8MM. It is assumed that ten wells are drilled by one rig. All wells will be subject to wireline logging, with 70% tested using Drill Stem Testing (DST). "

$5.8m will include drilling logging and testing as average cost per well and if they keep on track for as close to 10 of the wells, I believe we will be in around $5m + testing.

Yes, $5m + testing.

No discovery in the Upper Sokor.

Bushiya under budget.

Didn't we have a significant pipe yard supply 6 months prior to the placing that someone claimed on here would be deteriorating.

I don't disagree on the 7e sign off pre government approval. My take is you can't send anything for approval until everything is factually and legally correct.

There was to be a decision on drilling within the month (stated over a week ago) so my point is not about squeezing in a well, it's meant in terms of continuing the drilling based on results and I believe they have the capital to do so on a well by well option basis.

There was $37.4m earmarked from the placing for the Niger drill programme.

The wells were about $5m plus testing of which 2 will be flow tested. I don't think the $37.4m would all go on 3 wells which for 3 would be an average of almost $12.5m per well.

They also have an additional $16.8m for working capital/corporate purposes so potentially some cash available from this. They had a 5 year revolving loan arrangement for $13m.

CNPC granted a string of tax cuts on the Agadem block by the oil minister on June 13th with the aim of speeding up production and pipeline construction for 110,000 bopd by 2021.

Nigeria assets -Gas Production capacity to increase from 200-400 mmcf/day. 22,000 boepd is take or pay so production figures not relevant right now - they get paid that amount regardless. Potential new customers are paying the equivalent of $11-$15/mcf for diesel whenever gas could be supplied at around $7.50 mcf (big mark up for Savp interest/Accugas and huge savings to customers v diesel). Looking to increase production 3 fold. Main focus is on Niger and Nigeria current assets. Did mention on the acquisition front "looking at other deals just now" though going back to previous very recent interviews these may be bolt on opps. Re Niger - Export Pipeline Savp have access to , would get a 12.5% return on that infrastructure investment (more likely to be the benefit to whatever partner Savp bring in). Normal drilling in the Sokor Alternances is 1-2 discoveries from 6 Eocene sequences E0-E5. Want to prove up as much oil as possible. Described as 'World Class' asset. Going back to earlier post regarding even the smallest discovery as an example - all can be commercialised. As i always beleived - drill as many structures as possible to tote up the numbers to as high as possible in terms of reserves/value and over 1 billion bl potential so far in the CPR. R1 wasn't drilled simply because more feasible to drill R3 nearest existing and planned infrastructure. Will be drilled. Govt had no problem in extending it as more reasonable to crack on with R3 from all view points and from what i interpreted it as an agreed strategy. R2 prospects are deeper and more costly to drill and what i heard will be drilled but only with a partner/rest relinquished. (R4 not mentioned in depth from what i recall but same priority as R3). Production via pipeline 2021 (circa 3 years). Plan was alsways to monetise some production regardless of any potential sale and plan to do this a lot earlier via a low tech Early Production System to deliver cash flows earlier. Also re the share price - not concerned on a day to day basis. Don't know who seller is and beieve it's not the note holders. Looking to get more institutions on board and one has bought some 4% of the stock in recent months (though haven't seen a holdings notice). One other thing of my own thoughts is that given the high porosity figures should be more oil relative to net pay versus it being low - average porsity hence earlier comments on size of net pay in the 2 discoveries so far. Also thomasthetanks 'Mirabaud' post (2589) post result, where they believe Amdigh could hold 20-40 mmbls of recoverable oil. Savp beleive Kunama same potential to Amdigh and also in the 93% sweet spot. Personally I was hoping for around 50 mmbls recoverable from the entire 3 well programme.

Edit re risked figure my prior post. On the risked target farmed down by 50%, 1.4 b bls works out at �5.25 per share (817m shares) or �3.76 with 1140m shares in issue. Add on $600m/�425m for Nigeria and using a 50% Niger risked farm down figure and a higher number of shares in issue of 1140m is a �4.15 target risked.

Mirabaud give 20-40 mmbls as worth 7.5p - 15p share. (817m shares) unrisked. There's 6.9 billion mmbls unrisked. We know they intend to farm down as said so in the 2 interviews yesterday. If farmed down by 50% to 3.45 bl bls unrisked, the target is �12.90 @ 817m shares or �9.25 @ 1140m shares using Mirabauds valuation per 20 mmbls. On the risked target farmed down by 50%, 1.72 b bls works out at �6.45 per share ( 817m shares) or �4.60 with 1140m shares in issue. Add on $600m/�425m for Nigeria and using a 50% Niger risked farm down figure and a higher number of shares in issue of 1140m is a �4.97 target - ie 500p. Nothing at all forward priced in despite having a 100% discovery rate to date and a very high chance of success expected to be around 80% on the Sokor Alternances. �2 target for me especially as a significant producer, expected significant cash flow and whatever comes in terms of cash value for the Niger farm out.

1,000 - 3,000 bopd from up to 5E levels combined. Yogou at similar. Savp previously said expect to deliver production of up to 2,000 bopd across 5 E horizons in Sokor alterenances. As regards net pays, it will depend on the size of the prospect and will vary. It's the size of the oil discovery that matters and recovery factor/porosity etc. You could have substantial net pay but factors affecting permeability/porosity etc. Likewise lesser net pay but greater porosity/permeability If it's a very small prospect and has 10-15m net pay, it's going to be very different from a prospect 3 times the size at 10m pay. Sokor alternances discoveries have varied between 10-60 mmbls

Niger Optionality news on the additional 6 wells in the next month or so. They want to get as much as oi as possible on R3 to develop the early production system and trucking option. 'Back end of this year we'd be willing to take on 2 rigs.' Bringing in a Niger partner and with more oil, the better the deal. Huge geological similarities to rest of basin discoveries. Sokor alternances low risk (and this where there is a billion barrel+ risked recoverable). Immediate focus is Niger & Nigeria. No significant acquisitions by the look of it near-medium term other than smaller bolt on opportunities.

Savp to be fair have concentrated on the low risk drills to start with. They always said they'd start with the low risk stuff and that the creaming curve for those discoveries had not been reached - meaning many more of them to drill. Average size 11-60 mmbls (and not over 60 mmbls) for the sokor alternances and they can target 1 billion bls risked recoverable from these due to their low risk. The unrisked recoverable mid case is 6.9 billion bls (almost 7 billion) and 2.8 billions bls risked. They aren't without high impact plays and prospects themselves .They have the higher risk Koro for example which is a 326 mmbo recoverable stratigraphic play and not as low risk as these sokor alternances. The Upper Sokor were high risk in the Bushiya and Amdigh (and upcoming Kunama) prospects and so far I haven't seem them having any discoveries in them other than the E sands of the alternances as hoped for. The CPR also had no prospective Yogou target in Bushiya, Amdigh or Kunama. Probably a wiser stratetgy to build on the easier stuff first before putting funds towards the higher risk, but greater numbers play in one prospect too early ?

Only if your impatient Phoebus in my view as the growth story unfolds and it will happen i've no doubt. Parislse - production is gas and at an increasing yearly price so not tied to oil other than circa 700 bopd of the 23,000 boepd but oil production set to grow. The overall prize from Niger is 2.8 billion bls recoverable much of it low risk and this already the risked recoverable figure (from a much greater unrisked total). We only need a fraction of that and that's only one asset. This is going to ramp up with patience. What the first two discoveries have done is open up the potential of many repeatable successes and derisk many other structures. The success rate has been 75% by the chinese in gaining over 1 billion bls as of 2 years ago just from the sokor alternances so there's no reason to think we won't do as good on the back of CGG Roberstons report and our own geologists and technical people given 2 out of 2 already. We're waiting on the 7e asset deal to fully close, when it does it will be giving us $60m/yr and within 15 months circa $100m/yr free cash and what this might help buy or finance is anyones guess. I've no doubt there will be significiant additional acquisitions as they have said. The institutions have the opportunity over the next 7-8 months to exercise their options and provide in total from all sources up to $155m approx of new money at 35p and why won't they when they can get a significant dividend as well. Combine that with $100m/yr free cash and any possible form of farm out value in Niger plus a possible source of minor debt = multiple options - which in turn could double the free yearly cash and this company will grow significantly. I see a �2b+ valuation (and �2+ from the current 30p) as per the likes of Kosmos (�2.4b). Building blocks firmly in place imo.

parisle, Page 13 of the then presentation "Paying $280m to acquire hard assets with CPR valuation of $663m".

2 successes out of 2. Now moving on to Kunama prospect which is described in the CPR as "a simple horst block much like the Goumeri field". Bushiya had 10m net pay combined. Amdigh today 22m combined and notably Steve Jenkins says this one is a significant discovery and prompting them to engage outside contractors already for the development study. Also makes any potential farm-out much more valuable with upfront successes. As they say not trying to re-invent the wheel. They've always believed the oil is there and are are intending to have multiple repeatable discoveries. 2.8 billion bls risked recoverable on offer, much of it very low risk and one of the biggest opportunities anywhere to be found.

2P = 46.3 mmboe, 2C = 95.3 mmboe = 141.6 mmboe 2P/2C. + significant exploration. M/cap still only �71m made up of �24m cash (31/12/17) and a �5.5m valuation of its current share stake in Faroe = �41m valuation for the assets of a company that has profitable increasing production. 2P/2C valued at under 40c/boe. Still at a 40% discount to it's last placing at 120p. Added a further field of 21.4 mmboe 2C field and appraised by 5 wells that lean to a development of the GPA hub otherwise why specifically target additional fields in this proximity. Also contains a a further discovery in the block. This surely must increase the chances of the GPA development and enhance the outcome of the study agreement signed with Nexen (China National Oil Corp) of which some of the 35 companies in the FEED study have offered financing for the project. To be offered financing back in February surely must imply an expected outcome of success imo and to add a further field to the network greatly improves such a study.

47/10D - Parkmead (operator) 75% and Cluff 25%. Discovery 100% Chance success Bob/Teviot . P50 Net to PMG 16.5 Bcf. On 48/6D same terms as above, Blackadder prospect with 45% COS. P50 85 bcf net to PMG.

No worries ghost, the 2 examples had 2 valuation metrics one based on 2P per boe price and the other on per flowing boe to get to roughly the same valuation but not a combination of adding both together.

Very far from optimistic. I've only valued the 2P not the 2C in that post and it all relates to 2P. The Ithaca acquisition was early in 2017 at lower o/g prices and was reported as being on the low side. If you apply similar to HNLs 12 mmboe 2P you may get a figure of around $180m (�130m). Whether the market applies that right away is another thing when they come back and I've not looked into what debt they have or may need (if any) ? The prices shown were acquisition prices and were trading at a discount to that before a bid came in. Cashcard posted another eg this am over on the i3e bb on A D VFN "IGAS 2,300boepd. 13.6mln 2P reserves. Marketcap > �100mln+ (based on shale potential)."