Savannah Petroleum Share Discussion Threads

[zengas] 29/6/2015 08:26

Latest presentation shows that CNPC outside of the R1/R2 area has increased their P2 to 975 mmbo (from 823 mmbo at the time of SAVPs IPO last year). Oil in place is just shy of 4 billion bls for the CNPC area. Based on these facts, R1/ R2 should prove very enticing for any major farm-in partner.

SAVPs R1/R2 described as a potential world class asset and is almost as big as the CNPC licence area that surrounds R1/R2.

Multiple new play types identified since original CPR and IPO which dealt with the Eocene play only (At IPO 12 months ago = 573 mmbo risked/819 mmbo unrisked with an 81% chance of success for R1 and 60% for R2).

[taudelta1] 26/6/2015 16:45

Bien trouvé cher Thomas! I suspect the "well placed" source may well have been pretty close to the "officials" i.e. civil servants that are said to have met with the Petronas team. This might not be the best news if they bid (high) for R3/R4 in which SAVP is interested, but would be good news if they are more interested in farming into R1/R2 ... time will tell, maybe this year! GLA

[thomasthetank1] 26/6/2015 09:27

Just spotted this article - Suggests that PETRONAS might be thinking about re-entering Niger. V promising if true.

hxxp://www.lesahel.org/index.php/component/k2/item/9191-energie--des-perspectives-r%C3%A9jouissantes-pour-lindustrie-p%C3%A9troli%C3%A8re-nig%C3%A9rienne

[dalesman] 23/6/2015 20:31

I have with Zengas' permission tidied up his post a little and the text can be read at Dalesmann.com with his post below mine.

[zengas] 17/6/2015 13:31

Dalesman

Re your post over on L S E and a couple of points - should be over 800 million bls P2 (not 800,000 as you've written) and that was as of 1 year ago when the IPO and CPR was prepared. CNPC have added to this number with additional discoveries.

Eocene is a 1300m -1800m target zone range so they will be circa 2,000m wells to encompass that but still within 25 days and under $5m and then to take in any deeper targets/pro-rata costs.

Re holdings - Directors hold 19-20% the rest is institutions in that 52% you quote (it's actually reported as 56.1% for the top 6 shareholdings including the CEO).

One point is you've posted that they have R1 315m bls and R2 257m 'contingent' resources (Total risked = 572 mmbls).
These aren't contingent as no discovery is yet made but the COS is rated very high at 81% on R1 and 60% on R2.

The figure is correct but they are 'risked' prospective resources arrived at from last years CPR and the higher 819 mmbls 'unrisked' figure. What we are seeing now in the early resource upgrade as mentioned in the broker note released recently is that so far it is emerging that there is over 3 times more oil potential per km2 than prepared for the original CPR.

Well flow rates from the Eocence from up to 5 reservoir intervals (so fairly prolific in terms of numerous reservoir intervals and not just one) are 1,000 - 3,000 bopd/well.

The Chinese have made deeper discoveries but prior to this they were concentrating on the Eocene bonanza due to low risk, near 80% discovery rate, cost and the ability to add some 820 mmbo of P2 reserves at a phenomenal rate.

The deeper targets have thrown up similar API oil and similar flow rates to the Eocene. That 820 mmbo P2 figure was at the time of last years CPR and apparently discoveries have continued to be made.

I'm expecting circa 1 billion barrel recoverable potential to emerge here (ie twice that of last years CPR) across SAVPs R1/R2 and at the very minimum a 25% success rate even though 60% (R2) and 81% (R1) is estimated by the CPR. The CPR has only dealt with the expected Eocence potential and has not done any work on the deeper potential to which the Chinese have made adjacent discoveries.

I put a post above here that they had sent people out in May this year to negotiate for the R3/R4 blocks so these guys are obviously very confident and the rumoured (it was published in a press article - above also) was for seeking a $170m - $200m farmout. Not out of the question considering Glencore 2 years earlier farmed in for 25% - 33% at a cost of $300m in Caracal Energy in neighbouring Chad with virtually, if not identical terms as those here in Niger. Glencore then bought Caracal out mid last year for $1.44 billion and they had just under 90 mmbls P2 reserves (equates to $16/b).

I'm looking for something similar here along those lines and in this current environment, if we get a similar 90 mmbls net of P2 and at $8/b the share price target would be over £3.
(90m bls @ $8/b = $720m @ ex rate £1=$1.6 and 131.34m shares = £3.42)
Even allowing another future 43.56m shares to 175m shares = target of £2.57.

If we get a sizeable farm-in along the rumoured $170m - $200m would be phenomenal and considering that under $5m/well to the Eocence - $100m would target 20 wells to that depth and 200 mmbls or 10-15 wells at a greater resource number encompassing the deeper targets.

Considering that the 'risked' play is for 573 mmbls based on 81% and 60% success rate from 819 mmbls total Eocence oil ONLY (at time of last years CPR) - a 50% farmout would reduce that to a rounded 400 mmbls unrisked and at a 60-81% success rate give SAVP some 280 mmbls P2 net potential (AND to reiterate, this is from the Eocence ONLY). If we were to reduce the 81% and 60% success rate to 25% - we would get 100 mmbls net and in my belief a share price target that i've highlighted above in the 90 mmbls scenario plus 10%.

Obviously if the success rate matches that given in the CPR then one could be looking at 3 times the net P2 and 3 times the £3.42 or £2.57 target above depending on any future dilution (ie over 750p potential and this from just those Eocene numbers). The greater the amount received for any farm-in, the better as this could eradicate or limit any early dilution.

1) In the above i've used $8/b P2 (Caracal take out was $16/b mid 2014 and only one and a half years after their partner farmed in).

2) I've assumed 50% maximum farmout. (Glencore farm in to Caracal was for $300m and 25% - 33% across their licence interests). If SAVP farm out less than 50% then the economics improve by about 22% for every 10% not farmed out below my 50% max farm-out expectation. These blocks are considered pretty unique so i would think having to give away more than 50% is very slim (though not guaranteed).

3) The CPR figures above relate only to the Eocene play and there have been deeper discoveries already found in the basin and by the CNPC on the adjacent acrerage.

4) The recent resource upgrade in May was stated by the analyst as showing, for now initially some 3 times more oil resource per Km2 than that in last years CPR.

5) Stock is tighly held (131.34m in issue) and this in my view is representative of the belief in and quality of the licences. According to their investor page -

Top 6 shareholders at 4.78% cut-off hold 56.1% = 73.6m shares.
Another 30.81% not in public hands = 40.459m shares. (total 114.059m shares)
An approx public free float therefore of around 17m shares (until any update says otherwise).

As regards your 10 bagger potential (floated at 56p) now 40p - success as a 10 bagger from here at 40p would only put this as a £525m m/cap company and that is not an extravagant valuation. I've used worst case target scenario on a £3.42/£2.57 basis (and on any future dilution) in getting a £450m valuation.
SAVPs chairman sold Nautical Petroleum for £414m in late 2012.

Glencore paid $1.44b for Caracal (over £800m). Cove as a pure gas discovery/undeveloped went for £1.22 billion (in less than 3 years from ipo) Cove fell from 25p - 17p and sold for 240p. All those examples were backed for their potential and just as at the outset no one new how well those examples would ultimately perform. SAVP will be one or it won't but with such a high COS rating by one of the top geological and reservoir consultants that's been around for some 50 years the potential for even modest success could make a 10 bagger very possible.

Obviously my own thoughts for why i like the potential here and anyone should do his/her own research accordingly.

(PS I don't like the format over there and this post exceeds characters limit).

[aim_trader] 11/6/2015 13:09

Savannah Petroleum to present at the Chesterfield Hotel in Mayfair, to register to attend please click here:

[newnaija] 09/6/2015 13:12

I have been invested since IPO, this stock is a no-brainer in my view and very simple. Management are all heavy hitters who have invested a ton of their own cash here. The last deal in the basin was done at US$8/b, CGG estimated 573mb recoverable oil prior to the positive update last month and so you can do the maths yourself. No brainer.

Obviously farm-in will be key first step, but very clear that the big guys are moving onshore to focus. Assets like these are unicorns: world-class scale (573mb of oil so far), low cost, and low risk - 75% well success rate for the Chinese apparently.

At Nautical Jenkins farmed out nearly all their exploration wells and ended up selling the business for something like 6x cash - Savannah may want to farm-out but unless the shares go up a lot they will end up selling the Company at north of a quid... mkt cap is tiny relative to asset value so the big guys are going to buy it rather than farm in in my view. Look what happened to Caracal. Same thing here.

[thomasthetank1] 08/6/2015 12:01

Good interview of Savannah's CEO, Andrew Knott, on IG Group's website and Youtube feed.



hxxps://www.ig.com/uk/market-insight-videos?bctid=4282694522001&bclid=3671160850001

[zengas] 08/6/2015 09:51

Article in subscription based Africa Intelligence on 2/6/15. Won't post verbatim on account of copywright.

States they understand SAVP is in talks with the Niger Government on acquiring the R3/R4 blocks which CNPC had to hand back as part of the acreage reliquishment conditions. Senior SAVP executives were sent to Niamey in the middle of May to meet with Adolphe Gbaguidi, Nigers hydrocarbons director and also with one of the heads at Drake and Bart (who are the consultants contracted by Niger).

Reports that Nigerian junior Oranto (headed by billionaire Arthur Eze) is also chasing them but unlikely may not win them due to Oranto losing blocks in Gambia, Mali and the Ivory Coast. In a previous report Oranto wanted the blocks but to stagger the payment mechanism.

CNPC also reportedly interested in getting R3 and R4 but may be handicapped due to its already dominant position on Agadem.

[taudelta1] 05/6/2015 08:09

annual report posted this morning ... no surprises but re-emphasises SAVP's expectation that next tranche of finance will come by way of farm-out to a partner (singular) ... also implication is that a drill will take place in 4Q this year (as analysis of FTG survey will be completed in "late summer") ... also there is encouraging discussion re availability & timing of the pipeline .. GLA

[zengas] 04/6/2015 14:57

If true, it appears they are not going for a cheap farmout when it is reported they are seeking a $170m - $200m farmout deal particularly in light of the almost 80% success rate on the adjacent acreage by CNPC which booked over 800 mmbo of P2 reserves. What a farmout deal of that magnitude would do for the share price if achieved is anyones guess.

Glencore bought their farmout partner Caracal barely 2 years later for $1.44b.

Just under 90m bls P2 paying $16/b (neighbouring Chad with similar if not identical fiscal terms).

Last updated: April 14, 2014 7:56 pm
Glencore Xstrata buys Chad-focused oil and gas group Caracal
By Neil Hume and Xan Rice

Glencore Xstrata has offered $1.35bn to buy
Caracal Energy, a Chad-focused exploration company, in a deal that underscores its ambitions to build a sizeable oil and gas business.

The Swiss-based commodities group said it had agreed to pay 550p a share in cash for Caracal, which has been its partner in Chad since 2012. The offer of 550p a share is a 61 per cent premium to the closing price of Caracal shares on Friday.

Analysts said the deal was consistent with Glencore’s intent to grow its energy business, which is headed by former BP oil trader Alex Beard.

Although Glencore is one of the world’s largest oil traders it has a much smaller presence in upstream oil exploration and production. Its oil interests are in a cluster of west African countries, including Equatorial Guinea, Cameroon and Chad.

While the commodities group has reduced capital expenditure in other business, it has said it will invest $650m to expand its upstream oil business during the next two years.

“It is a logical use of capital by Glencore, increasing its ownership in assets it already owned 25 per cent of and understood,” they added.
Glencore is a partner of Caracal and holds 25 per cent of several oilfields in Chad following a $300m financing deal in 2012, when the group was known as Griffiths Energy.

Caracal’s oilfields are close to those operated by ExxonMobil, which pumps about 100,000b/d in Chad. The oil is exported by pipeline through Cameroon.
“We believe the combined business will be even better placed to take advantage of the long-term opportunities across the African oil sector,” Mr Beard said.

Jason Fairclough, analyst at Bank of America Merrill Lynch, said Glencore was paying the equivalent of $16 a barrel for Caracal, based on attributable proven and probable reserves of almost 90m barrels.

[thomasthetank1] 04/6/2015 13:11

Good note from Mirabaud today.

Shares in Savannah Petroleum (SAVP LN) - up 9.5% yesterday - were helped by a report in the Nigerien press speculating that farm-out talks are attracting a wide range of interest. Citing ‘informed sources’, the article suggested that potential partners have been contacted over a 100bn CFA francs investment (~US$170m) in the R1/R2 licence, with a deal expected to be wrapped up before the year-end. The article went on to say that these potential partners are both European and American firms, as well as Asian state-owned companies, with which discussions are progressing well.

Savannah is actively seeking a farm-out to fund an extensive, multi-year exploration programme on R1/R2 including new 2D and 3D seismic and the drilling of 20 exploration wells (with drilling potentially starting as early as H2 2015). The move follows 10 months of technical work since award of the licences last summer, leading to the identification of 14 drill ready prospects on existing 3D seismic (covering just 8% of the licence area) containing 215 mmbbls of prospective resources and a broad inventory of leads on legacy 2D data. The company is seeking to emulate the success of Caracal Energy - the Main Board-listed E&P acquired by Glencore last year for US$1.4bn - which had earlier secured a US$300m farm-in deal from the commodities giant to drill out its similar rift basin assets in neighbouring Chad (in exchange for a 25-33% stake).

[dalesman] 03/6/2015 12:32

Double post

[dalesman] 03/6/2015 12:32

Hi All

I also have taken a small position here. With the CEOs options vesting at £1.68 and with the field being on trend with large discoveries made by the Chinese, I see this as a low risk geological play. I like the Full Tensor Survey. Arkex has just completed a survey for LGO Energy with good results.

I suppose its a case of sitting back and waiting now but it would be nice if the CEO could announce a farm in partner at the AGM.

Kind regards

Dalesman

[taudelta1] 03/6/2015 10:43

good spot TT, thanks, GLA

[zengas] 03/6/2015 10:02

100b CFA Francs - that's $200m they are seeking from farm-in partners. I would have thought even 25-30% of that amount would be a game changer considering Eocene wells are circa $4.5m.

[thomasthetank1] 03/6/2015 09:41

Interesting article on a Niger news channel.

hxxp://lesahel.org/index.php/component/k2/item/8959-savannah-petroleum-niger-sa--vers-des-perspectives-prometteuses


The Sahel
Savannah Niger Petroleum SA: Towards promising prospects
By Seini Seydou Zakaria

Following the publication of its annual review 14 May 2015, NIGER SAVANNAH PETROLEUM SA has had discussion meetings with Nigerian officials of the Ministry of Energy and Petroleum.

The aim was to present the annual report of activities of this company, who signed with the State of Niger a Production Sharing Contract 3 July 2014 on blocks R1 and R2 of the Agadem. Before starting operations, the company has paid a signing bonus of $ 34 million (17 billion CFA francs) paid to the State of Niger.

A degree rarely seen at this level commitment except by the Chinese CNPC.

The year was also marked by the use of FTG survey (Full Tensor Gravity Gradiometry) in conjunction with the British company ARKeX for the geological survey on its license. The use of this innovative technology, was a historic first in Niger, which led to significant advances in the field of oil exploration. This resulted in the creation of a geological model which contains at least 14 prospects, ready to be drilled.

As she prepares to begin the second year of its operations in Niger, Savannah Petroleum appears enter a new dimension. Indeed, informed sources tell us that potential partners have been contacted for an introduction capital to fund the operating program at 100 billion CFA francs for the second phase, which should come before the end of the year. These potential partners are from both European and American private companies, as Asian state-owned companies, with which discussions are progressing well.

The introduction of a partner is common practice in the field of research and exploitation oil; it helps to provide additional technical expertise, while sharing risks.

[zengas] 27/5/2015 13:49

Been watching this one since float. Bought in here 2 weeks ago when the new resource update came out.

CNPC had 77 neighbouring successful discoveries from 99 in the last 3 years alone resulting in over 820 mmbo P2 booked from just the Eocene layer targets and finding it at under $1/b. ($4.5m/well - 24 days at 1200m - 1800m reservoir target depths and flow rates of 1000-3000 bopd from 5 Eocene reservoir intervals). There have been deeper CNPC Cretaceous discoveries and the Yogou formation where discoveries were made at 2500m - 3000m with similar flow rates to the Eocene - is an emerging play for SAVP but not included in any of the resource figures given by Robertson CGG.

81% COS given to 3D backed Eocene prospects on R1 and 60% for R2.

At the time of CGG Robertson CPR last year - based on initial Eocene targets only = 545 mmbo net 'risked' (12 months ago). Latest drill ready prospects out 2 weeks ago and more targets identified with a further resource upgrade due by late summer.

Just 131.337m shares in issue. Top 6 shareholders (at 4.5% cut off) including CEO hold 56.1% of the stock so means a low free float.

[thomasthetank1] 27/5/2015 11:50

Positive research note from Mirabaud today. TP of 115p.

Investment case - Resource-full

Since listing on AIM last year, Savannah has made substantial progress. The company, which has exclusive rights to 95% of the R1/R2 PSC, covering 8,406 sq km in the Agadem rift basin of eastern Niger (see Figure 1, below), has recently completed analysis of a broad suite of geological data, made available to the company since signing the PSC last year. This data included some 680 sq km of modern 3D seismic data, as well as an extensive set of well logs, and modern and vintage 2D data. By analysing this data, Savannah has identified 14 drill ready prospects, with gross mean prospective resources of 215 mmbbls on just 8% of the licence area. This represents a resource density of 0.316 mmbo/km2 – more than three times the density used for resource estimates at the time of the IPO (0.097 mmbo/km2). These technical advances are particularly timely as the company sets to embark on a partnering process which could facilitate exploration drilling later in the year. With this in mind, we maintain our BUY recommendation with an updated 115p/shr target price.

[taudelta1] 14/5/2015 08:31

New annual report today, and reappraisal of prospects, drilling 4Q ... excellent progress ...

[taudelta1] 13/5/2015 17:42

down on no volume ... so topped up ... GLA

[taudelta1] 16/4/2015 19:09

hi bushman ... new to advfn but not new to SAVP, have posted a couple of times on LSE ... SAVP is my sleeper, have seen value here and I'm patient! GL