Savannah Energy Regulatory News (SAVE)

30 September 2022

--Savannah Energy PLC

("Savannah" or "the Company")

2022 Half Year Results

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter in Africa, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.

Andrew Knott, CEO of Savannah Energy, said:

"Our half year results again demonstrate the continued strong underlying progress we have made in our existing producing business with a 10% year-on-year increase reported for both Total Revenues1 (to US$128.7m) and Adjusted EBITDA2 (to US$100.3m). Further, I am pleased to report that our growth trajectory has continued into H2, with average daily production to 26 September 2022 having increased by 55% to 34.8 Kboepd versus the H1 average of 22.5 Kboepd and 118% versus the 16.0 Kboepd level at the time of acquisition in November 2019. This H2-to-date growth reflects the impact of the three new gas sales contracts and the contract extension we have announced in 2022, with Accugas now supplying gas to approximately 24% of Nigeria's thermal power generation capacity as compared to approximately 10% at the time of the original acquisition. In the first half, we also announced agreements for the development of up to 750 MW of large-scale greenfield solar and wind projects in Niger and Chad, which have the potential to transform the electricity access rates in both countries.

Looking forward to the rest of 2022 and 2023, I remain confident in where we are as a business. We look forward to closing our Proposed Acquisitions of the Chad and Cameroon Assets in Q4 of this year. We expect to deliver on or exceed our financial guidance. We expect to announce further hydrocarbon acquisitions and to expand our Renewable Energy Division with several new large-scale greenfield opportunities currently under review and negotiation. We continue to work towards completing the refinancing of our Nigerian debt and to announce the development and exploration plans for our assets in Niger.

Lastly, I would like to express my gratitude to all of those who contributed to the progress in our business in H1 - my incredibly dedicated and passionate colleagues, our host governments, communities, local authorities and regulators, our shareholders and lenders, and our customers, suppliers and partners. Thank you all."

H1 2022 Financial Highlights

· Total Revenues1 of US$128.7m (up 10% on H1 2021: US$116.5m);

· Adjusted EBITDA2 of US$100.3m (up 10% on H1 2021: US$91.5m);

· Operating expenses plus administrative expenses3 of US$24.5m (H1 2021: US$22.4m);

· Loss before tax of US$11.3m (H1 2021 profit before tax: US$7.7m);

· Capital expenditure of US$14.0m (H1 2021: US$5.2m);

· Net debt position as at 30 June 2022 of US$327.1m (Year-end 2021: US$370.0m) with Adjusted Leverage4 of 2.0x (Year-end 2021: 2.5x); and

· Total cash5 of US$182.8m as at 30 June 2022 (Year end 2021: US$154.3m)

H1 2022 Operational Highlights

· New gas sales agreements ("GSAs") were signed with Central Horizon Gas Company Limited ("CHGC"), a major gas distribution company situated in the South-South region of Nigeria, and TransAfam Power Ltd, a licensed power generation company in Nigeria and, post-period-end in August 2022, with Notore Chemical Industries PLC for its fertiliser plant. These customers are accessed via Accugas' pipeline network to Ikot Abasi and on to the Port Harcourt area via third party infrastructure, thus no capital expenditure is required;

· A contract extension was signed with First Independent Power Limited ("FIPL") to supply gas to its Eleme and Trans Amadi power plants, bringing the total number of power plants supplied under the contract to three, including the FIPL Afam power plant;

· During the period, Savannah commenced gas deliveries to three new customers in Nigeria, FIPL's Trans Amadi power plant, TransAfam's power plants in Rivers State, and CHGC. Savannah now has operational GSAs with power plants comprising 24% of Nigeria's thermal generation capacity;

· Average gross daily production, of which 89% was gas, remained almost constant during H1 2022 at 22.5 Kboepd (H1 2021: 22.6 Kboepd). The broadening of our customer base during H1 2022 has enabled us to increase gas deliveries to support Nigeria's power generation needs;

· A new gas production well, Uquo 11, commenced production in April 2022 and produced at an average rate of 68 MMscfpd up to 30 June 2022; and

· Our Renewable Energy Division signed agreements for the development of up to 750 MW large-scale greenfield solar and wind projects with the Governments of Niger (Parc Eolien de la Tarka) and Chad (Centrale Solaire de Komé and Centrales d'Energie Renouvelable de N'Djamena).

Chad and Cameroon Assets

· Work continues to complete our proposed acquisitions of ExxonMobil's and PETRONAS' assets in Chad and Cameroon (the "Chad and Cameroon Assets") by the end of the year.

· Savannah has undertaken significant preparation work ahead of completion including recruitment of the operational team and enhancements to organisational systems to ensure that the transition of operatorship can be completed.

FY 2022 Guidance Reiterated

Savannah reiterates full year 2022 guidance as follows:

· Total Revenues1 greater than US$215.0m;

· Group Operating expenses plus administrative expenses3 of up to US$75.0m;

· Group Depreciation, Depletion and Amortisation of US$21m fixed for infrastructure assets plus US$2.3/boe for oil and gas assets; and

· Capital expenditure of up to US$85.0m.

H1 2022 Corporate Events

· In June 2022, Savannah announced several changes to the Board:

o  Nick Beattie was appointed as Chief Financial Officer and was appointed to the Board of Directors;

o  David Jamison retired from the Board at the Annual General Meeting on 30 June 2022, and assumed the (non-board) role as Honorary President of Savannah;

o  Steve Jenkins will step down from his role as Non-Executive Chairman at or prior to the 2023 Annual General Meeting. A search for a Chair-Designate is underway and it is anticipated that an appointment will be made during H2 2022, and

o  It is intended that three new non-executive directors (Sylvie Rucar, Sarah Clark and Dr Djamila Ferdjani) will be appointed to the Board following completion of the proposed acquisition of the ExxonMobil upstream and midstream assets in Chad and Cameroon.

For further information, please refer to the Company's website www.savannah-energy.com or contact:

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

 About Savannah Energy:

Savannah Energy PLC is an AIM quoted British independent energy company focused around the delivery of Projects that Matter in Africa, active in Cameroon, Chad, Niger and Nigeria.

Further information on Savannah Energy PLC can be found on the Company's website: www.savannah-energy.com.

H1 2022 Operational Review

Nigeria

Average gross daily production was flat in H1 2022 with an average of 22.5 Kboepd (H1 2021: 22.6 Kboepd). During H1 2022, the Company's subsidiary, Accugas, supplied gas to the Calabar, Ibom, TransAfam, FIPL Afam and FIPL Trans Amadi power stations. Gas was delivered throughout the period to Lafarge's Mfamosing cement factory in Cross Rivers State and deliveries to CHGC, a distributor of gas to industrial and commercial customers in the Port Harcourt area, commenced in June 2022.

Niger

During H1 2022, the four licence areas in Niger were amalgamated into a single PSC (R1234) valid for up to a further 10 years. This has laid the foundation to progress plans for the R3 East Early Production Scheme and we expect to announce further details of this project later in the year.

Renewable Energy Division

Savannah's Renewable Energy division was established in 2021 and during H1 2022 signed three agreements for the development of a total of up to 750MW large-scale greenfield solar and wind projects with the governments of Chad and Niger.

The agreement signed in Chad covers two projects. The first comprises an up to 300 MW photovoltaic solar farm and battery energy storage system located in Komé, Southern Chad (the "Centrale Solaire de Komé"). This project is being developed to provide clean, reliable power generation for the Doba Oil Project and the surrounding towns of Moundou and Doba. The second involves the development of solar and wind projects of up to 100 MW each to supply power to the country's capital city, N'Djamena (the "Centrales d'Energie Renouvelable de N'Djamena").  The Centrale Solaire de Komé project would represent the largest solar plant in sub-Saharan Africa (excluding South Africa) and potentially the largest battery storage project on the continent. The Centrales d'Energie Renouvelable de N'Djamena would more than double the existing installed generation capacity supplying the capital city and increase the total installed on-grid power generation capacity in Chad by up to an estimated 63%.

In Niger, an agreement was signed with the Ministry of Petroleum, Energy and Renewable Energies of the Republic of Niger for the construction and operation of the country's first wind farm, with a proposed installed power generation capacity of up to 250 MW on an independent power producer basis in the Tahoua Region of Southern Niger. This is targeted to increase the country's on-grid electricity supply by up to 40%. Project sanction is targeted for 2023 with first wind power in 2025.

These projects represent potentially substantial foreign direct investments that would make significant contributions to the economic development of the regions where they will be situated. 

H1 2022 Financial Review

The Group reports Total Revenues1 of US$128.7 million for the six months ended 30 June 2022, up 10% on H1 2021 and an Adjusted EBITDA2 of US$100.3 million also up 10% on H1 2021, reflecting the quality of our gas producing assets in Nigeria as we broaden and diversify our customer base.

We have invested heavily during the period to scale up the business ahead of completion of the proposed acquisition of the Chad and Cameroon Assets and to enable the delivery of our wider business development plans. This has included a 21% increase in headcount in H1 2022, alongside a large investment into new systems and processes that will be required to support the enlarged scale of the Group.

Summary of results for H1 2022

The table below provides an overview of our results for H1 2022 with a comparison for H1 2021.

Financial highlights

The Group's operating profit for the six months ended 30 June 2022 was US$27.9 million (H1 2021: US$54.0 million). The decrease resulted from a combination of lower revenues resulting from unscheduled downtime suffered by certain of our customers (which does not reduce Total Revenues1 under the terms of the take-or-pay gas contracts) and a 10% increase in operating expenses plus administrative expenses3. The increase in these costs is a result of the investment being made in growing the business infrastructure in preparation for completion of the acquisition of the Chad and Cameroon Assets and continued investment into the efficiency of the Nigerian assets.

The Group's loss before tax was US$11.3 million (H1 2021 profit: US$7.7 million) and the loss after tax was US$20.5 million (H1 2021 loss: US$1.4 million). 

Adjusted EBITDA2 for H1 2022 was US$100.3 million, compared to US$91.5 million for H1 2021. 

Revenue

Revenue during the period was 14% lower than the comparable prior year period at US$85.8 million (H1 2021: US$99.4 million). As previously highlighted, it is important to note the impact of take-or-pay accounting rules under IFRS 15 on our Income Statement as regards to revenue recognition for our gas sales agreements. The Revenue shown in the Condensed Consolidated Statement of Comprehensive Income includes only the gas, oil and condensate that has been delivered. The Total Revenues1 of US$128.7 million (H1 2021: US$116.5m) includes the volume of gas that customers are committed to pay for under the take-or-pay terms of the gas sales agreements, which includes gas that has been delivered plus gas invoiced but yet to be delivered, plus oil and condensate revenues. Total Revenues1 showed a 10% increase compared to H1 2021. Management believes that Total Revenues1 is the most appropriate method of reflecting the underlying cash generation capacity of the business.

Savannah continues to benefit from over US$4 billion of contracted future gas revenues in Accugas with annual price escalation clauses related to US consumer price inflation.

Cost of Sales, administrative and other operating expenses

Cost of sales amounted to US$33.1 million (H1 2021: US$34.3 million) which includes US$13.8 million (H1 2021: US$13.8 million) for facility operating and maintenance costs, US$2.9 million (H1 2021: US$2.2 million) royalty expenses and US$16.4 million (H1 2021: US$18.3 million) depletion and depreciation. 

Administrative and other operating expenses for the period were US$11.7 million (H1 2021: US$9.5 million), which includes US$0.9 million (H1 2021: US$0.9 million) of depreciation. 

Group Operating expenses plus administrative expenses3 were US$24.5 million (H1 2021: US$22.4 million). 

EBITDA and Adjusted EBITDA2

Presented below is the calculation of EBITDA and Adjusted EBITDA2. Management believes that the alternative performance measure of Adjusted EBITDA2 more accurately reflects the cash generating capacity of the business. Adjusted EBITDA2 includes gas that has been invoiced under take-or-pay contracts but not yet delivered and is adjusted for transaction and other related expenses to provide a meaningful comparison between periods.

Calculation of EBITDA and Adjusted EBITDA2 for the Group

Finance Costs

Finance costs were US$36.8 million (H1 2021: US$38.7 million) - of these costs US$27.9 million (H1 2021: US$26.8 million) related to bank and loan note interest. The average interest rate was 10.7% (H1 2021: 10.3%) reflecting the higher US Libor rates during the period compared to prior year. The remainder of the finance costs are primarily a number of non-cash items which are itemised in Note 8 of the financial statements. 

The interest cover ratio, on an Adjusted EBITDA2 basis is 3.1 times (H1 2021: 2.9 times).

Foreign Exchange loss

Foreign exchange losses amounted to US$0.8 million (H1 2021: US$10.9 million). These losses were realised losses arising from US Dollar gas sales invoices which are settled in local currency, and from the translation of Naira into US Dollars to service US Dollar denominated obligations. Realised foreign exchange losses can be recovered through the "true up" mechanism in the Calabar GSA

In order to purchase US dollars to service US dollar obligations, Savannah accesses foreign exchange at market rates and there is typically a differential between this rate and the Central Bank of Nigeria exchange rate. The majority of these losses are recoverable through a foreign exchange "true-up" clause in the Calabar GSA.

Taxation

The tax charge of US$9.2 million (H1 2021: US$9.1 million) was made up of a current tax charge of US$2.8 million (H1 2021: US$2.2 million) and a deferred tax charge of US$6.4 million (H1 2021: US$6.9 million). The current tax charge principally arises on Nigerian profits and the deferred tax charge is a result of utilisation of unused losses in Nigeria.

Debt

The Group net debt as at 30 June 2022 was US$327.1 million (31 December 2021: US$370.0 million). During the period, the leverage ratio, and Adjusted Leverage ratio, improved as shown in the table below.

Work continues on the proposed refinancing of the Accugas debt facility as was detailed in the 2021 Annual Report and Accounts.

Leverage

# Adjusted EBITDA2 for 6 months to 30 June 2022 and for 12 months to 31 December 2021

Cash flow

A summary of the cash flows for the period is as follows:

(a) excludes US$32.2 million (H1 2021: US$31.0 million) transferred to debt service accounts

The net cash inflow from operating activities was US$41.9 million (H1 2021: US$65.2 million).

Net cash used in investing activities includes US$14.6 million deposits paid towards the acquisition of the Chad and Cameroon Assets (H1 2021: nil), payments for property, plant and equipment of US$9.1 million (H1 2021: US$4.1 million) and US$4.9 million (H1 2021: US$1.1 million) incurred on exploration and evaluation assets.

The net cash generated from and used in financing activities includes equity proceeds of US$61.1 million (H1 2021: nil), principal debt repayments of US$17.1 million (H1 2021: US$8.8 million) and finance costs of US$24.8 million (H1 2021: US$13.6 million).

Total Cash balances of the Group at the end of the period increased to US$182.8 million (H1 2021: US$135.7 million). 

Nick Beattie

Chief Financial Officer

30 September 2022

Footnotes

1 Total Revenues are defined as the total amount of invoiced sales during the period. This number is seen by management as more accurately reflecting the underlying cash generation capacity of the business as opposed to Revenue recognised in the Condensed Consolidated Statement of Comprehensive Income. A detailed explanation of the impact of IFRS 15 revenue recognition rules on our Consolidated Statement of Comprehensive Income is provided in the Financial Review section of the Annual Report and Accounts 2020.

2 Adjusted EBITDA is calculated as profit or loss before finance costs, investment revenue, foreign exchange gains or losses, expected credit loss and other related adjustments, fair value adjustments, gain on acquisition, taxes, transaction and other related expenses, depreciation, depletion and amortisation and adjusted to include deferred revenue and other invoiced amounts. Management believes that the alternative performance measure of Adjusted EBITDA more accurately reflects the cash-generating capacity of the business.

3 Group operating expenses plus administrative expenses are defined as total cost of sales, administrative and other operating expenses excluding royalty and depletion, depreciation and amortisation and transaction costs.

4 Adjusted Leverage is defined as Adjusted net debt/Adjusted EBITDA. Adjusted net debt is calculated as the net debt balance adjusted for the Naira held in cash for interest (as shown in the financial review). For the 6 month period ended 30 June 2022, the Adjusted Leverage calculation is prepared on an annualised EBITDA basis

5 Within Cash balances, US$1.6m is restricted cash which includes deposits and stamp duty escrow balances.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2022

All results derive from continuing operations.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2022

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. General information

Savannah Energy PLC ("Savannah" or "the Company") was incorporated in the United Kingdom on 3 July 2014. The principal activity of Savannah and its subsidiaries (together, the "Group") is the exploration, development and production of natural gas and crude oil and development of other energy related projects in Africa.

The Company is domiciled in the UK for tax purposes and its shares were admitted to trading on the AIM market ("AIM") of the London Stock Exchange plc on 1 August 2014. The Company's registered address is 40 Bank Street, London, E14 5NR.

2. Accounting policies

On 31 December 2020, International Financial Reporting Standards ("IFRS") as adopted by the European Union at that date was brought into UK law and became international accounting standards as adopted by the United Kingdom ("UK-adopted IAS"), with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted IAS in its consolidated financial statements from 1 January 2021. There was no impact on the Group from this transition, nor any changes in accounting policy. These condensed consolidated financial statements have been prepared in accordance with UK-adopted IAS. The provisions of IAS 34: Interim Financial Reporting have not been applied.

The condensed consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the Group's 2021 Annual Report and audited financial statements for the year ended 31 December 2021 ("the Group's 2021 Annual Report"). The financial information for the six months ended 30 June 2022 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Savannah for the year ended 31 December 2021 were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2021 Annual Report was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditors' Report contained a material uncertainty related to going concern.

The Group's statutory financial statements for the year ended 31 December 2021 have been filed with the Registrar of Companies.

All the Group's subsidiaries' functional currency is US Dollars ("US$"), and the consolidated financial statements are presented in US Dollars and all values are rounded to the nearest thousand (US$'000), except when otherwise stated.

The financial information presented herein has been prepared in accordance with the accounting policies used in preparing the Group's 2021 Annual Report. There are no other new or amended standards or interpretations adopted from 1 January 2022 that have a significant impact on the interim financial information.

The Group places significant importance in managing its liquidity position and ensuring that all parts of the business have appropriate funding as needed to meet their obligations. The Directors have considered the Group's forecasted cash flows and funding requirements for the twelve months from the date of publication of this Interim Report (including sensitivity analysis of key assumptions which has been undertaken) and in addition the Directors have considered the range of risks facing the business on an ongoing basis. The principal assumptions made in relation to the going concern assessment relate to: (1) the timely payments of our gas invoices by our customers, (2) the forecast commodity price environment and (3) continued access to FX markets. Considering this last point, the Directors are highly confident that the Group will continue to be able to access US dollars as required to maintain going concern status. However, a minimal risk exists that the Group may not be able to continue to do so and/or the Group may not be able to amend its debt facilities and/or complete its planned debt refinancing as described in the Group's 2021 Annual Report. These facts indicate that a material uncertainty exists that may cast significant doubt on the Group's, ability to continue to apply the going concern basis of accounting. Notwithstanding this, the Directors have full confidence in the Group's forecasts and have continued to adopt the going concern basis in preparing the consolidated financial statements.

3. Segmental reporting

For the purposes of resource allocation and assessment of segment performance, the operations of the Group are divided into three segments: two geographical locations and an Unallocated segment. The two geographical segments are Nigeria and Niger, and their principal activities are the exploration, development and extraction of oil and gas. These make up the total revenue generating operations of the Group. The Unallocated segments principal activities are the governance and financing of the Group as well as undertaking business development opportunities. Items not included within Operating profit/(loss) are reviewed at a Group level and therefore there is no segmental analysis for this information.

The following is an analysis of the Group's results by reportable segment for the six months ended 30 June 2022:

1. Refer to note 5 for items included within Cost of Sales.

2. Includes Third party investments, Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.

The following is an analysis of the Group's results by reportable segment for the six months ended 30 June 2021:

The following is an analysis of the Group's results by reportable segment at 31 December 2021:

1. Refer to note 5 for items included within Cost of Sales.

2. Includes Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.

4. Revenue

Set out below is the disaggregation of the Group's revenue from contracts with customers:

Gas sales represents gas deliveries made to the Group's customers under long term take or pay gas sale agreements. The Group sells oil and condensates at prevailing market prices.

Included within revenue from contracts with customers is revenue of US$83.8 million (30 June 2021: US$89.6 million) relating to four (30 June 2021: two) of the Group's customers who each contribute more than 10% of revenue US$36.6 million, US$21.7 million, US$13.2 million, and US$12.3 million respectively (30 June 2021: US$61.3 million and US$28.3 million, respectively).

5. Cost of sales

6. Operating profit

Operating profit has been arrived at after charging:

1. Included within Transaction and other related expenses are costs incurred with respect of the Group's proposed acquisitions of the Chad and Cameroon Assets, integration and IT activities and other business development opportunities.

7. Finance income

8. Finance costs

1. Includes amounts due to unwinding of a discount on a long-term payable, contract liabilities (note 18) and amortisation of debt fees.

9. Fair value adjustment 

During 2019 the Group issued a Senior Secured Note of US$20 million that includes a voluntary prepayment option whereby early repayment will result in a discount to the contractual loan value. As an embedded derivative, the option has been separated from the host loan instrument and valued separately and accounted for as fair value through profit or loss. As at 30 June 2022 the option value was approximately US$3.0 million (31 December 2021 audited: US$4.8 million), resulting in a charge of US$1.8 million (30 June 2021: gain of US$3.0 million). The decrease in the option value was due to a worsening in credit bond spreads observed during the period as well as an increase in market expectations around interest rates. The increase in the option value during the prior period was principally due to an improvement in credit bond spreads observed during the period.

10.  Foreign translation loss

Realised foreign translation loss for the six months ended 30 June 2022 mainly relates to Nigerian trade receivables which are invoiced in US Dollars and where customers are able to pay in Naira. Foreign translation loss for the six months ended 30 June 2021 mainly relate to the translation of Naira into US Dollars to service US Dollar denominated obligations.

Unrealised foreign translation loss relates to the revaluation of monetary items held in currencies other than US Dollars. During the six months ended 30 June 2021 the Nigerian Naira devalued against the US Dollar in May 2021 which created a significant unrealised loss on monetary items held in Naira.

11.  Taxation

The tax expense for the Group is:

Income tax expense is recognised based on the actual results for the period. 

The tax charge for the period of US$9.2 million (30 June 2021: charge of US$9.1 million) is made up of a current tax charge of US$2.8 million (30 June 2021: US$2.2 million) and a deferred tax charge of US$6.4 million (30 June 2021: charge of US$6.9 million). The current tax charge principally arises on Nigerian profits. The deferred tax charge principally relates to the utilisation of losses in Nigeria, as well as a write down of deferred tax assets.

12.  Loss per share

Basic earnings per share amounts are calculated by dividing the profit or loss for the period attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the profit or loss for the periods attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. As there is a loss attributable to the owners of the Company for the six months ended 30 June 2022, the diluted weighted average number of shares would reduce the loss per share. Therefore, the basic weighted average number of shares has been used to calculate the diluted loss per share.

The weighted average number of shares outstanding excludes treasury shares of 99,858,893 (30 June 2021: 41,966,942).

50,233,574 options granted under share option schemes are not included in the calculation of diluted earnings per share because they are anti-dilutive for the six months ended 30 June 2022 (30 June 2021: 50,233,574). These options could potentially dilute basic earnings per share in the future.

13.  Property, plant and equipment

Upstream assets principally comprise the well and field development costs relating to the Uquo and Stubb Creek oil and gas fields in Nigeria. The Infrastructure assets principally comprise the Nigerian midstream assets associated with the Group's network of gas transportation pipelines, oil and gas processing facilities and gas receiving facilities. Other assets typically include vehicles, office equipment (including IT software) and building improvements.

14.  Trade and other receivables

The following has been recognised in the Condensed Statement of Comprehensive Income relating to expected credit losses for the period:

15.  Cash at bank

Cash and cash equivalents include US$1.2 million (31 December 2021: US$1.1 million) of cash collateral on the Orabank revolving facility. The cash collateral was at a value of XOF758.3 million (31 December 2020: XOF626.4 million).

Amounts held for debt service represents Naira denominated cash which is held by the Group for debt service, and this has been separately disclosed from Cash and cash equivalents. In total, approximately US$149.0 million (31 December 2021: US$132.8 million) will be paid for the debt service from bank accounts designated as Amounts held for debt service, and from Cash and cash equivalents.

16.  Trade and other payables

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

17. Borrowings

18. Contract liabilities

Contract liabilities represents the value of gas supply commitment to the Group's customers for gas not taken but invoiced under the terms of the contracts. The amount has been analysed between current and non-current, based on the customers' expected future usage gas delivery profile. This expected usage is updated periodically with the customer.

The unwinding of the discount on contract liabilities relates to the fair value adjustments made under IFRS 3: Business Combinations following the acquisition of the Nigerian assets and entities in 2019. The fair value adjustment was calculated as the discounted, expected cost of the future deliveries of gas volumes under the terms of customer take-or-pay contracts. This discounted amount unwinds relative to an apportioned amount of the contract liabilities volumes at the date of acquisition that have subsequently been utilised.

19. Cash flow reconciliations

The changes in the Group's liabilities arising from financing activities can be classified as follows:

20. Capital commitments

At 30 June 2022, capital commitments amounted to US$4.8 million (30 June 2021: US$13.0 million).

21. Events after the reporting date

There are no events after the reporting date other than those described within this announcement.