Savannah Petroleum Share Discussion Threads

[dalesman] 29/8/2016 20:21

The lung

LOL

From memory the oil price had rallied to over $50 at the time of my post.

The company had previously put out guidance that their break even was at $43 / barrel however since their own guidance was posted global oil costs for drilling and seismic have gone down, hence my estimate of around $10 profit per barrel at the time of posting. Perhaps someone could ask IR if this is indeed the case.

Or..... Lung could give his own opinion - just for a change! :0)

Phil

[zengas] 17/8/2016 07:49

Div, my view hasn't altered.

We have 100% as it stands (rather than say 70% or 50%) and capital to drill so not at the mercy of waiting for a farmin partner to get the drilling underway.

They've now got $40m irrespective of a farmout and will be drilling come Q1.
CNPC are there and already produce oil and a pipeline agreed.
Savp used their airfield and are using their seismic subsidiary.
There was absolutely no infrastructure never mind industry re Coves offshore deepwater gas discovery off Mozambique that was proved up and sold in 2012 (first gas 2018 ?).

To get institutions putting up $40m at 38p when the share price was 23p last month is a significant vote of confidence that they weren't pushed into a big discounted placing.

[divmad] 17/8/2016 07:32

Zengas, how would your view on SAVP alter if they were not able to conclude a farm-out deal by year end?

And why did the IIs rush to pay a premium of 45% for an oil exploration company in virgin territory with no infrastructure to speak of?

[zengas] 17/8/2016 07:23

Div

Where you quote me, that was November 2015 and based on their cost projections of around a year earlier when oil was in the $90+ range.

Costs have fallen across the board re seismic/drilling services in line with reduced oil prices.
In July this year, they announced "in a prevailing lower oil price environment result in the cost recovery ceiling in the Savannah PSCs being increased to 80% from the current 70%".
The latest presentation last month quoted the value of the oil in the ground to be worth in the $4-$6 per barrel range. That's in the the ground. While i'm not invested for a production outcome, i would expect a profit in excess of $10/b if the oil in ground value is stated as such.

[thelung] 17/8/2016 07:21

Ignore Dalesman. Simples

[divmad] 17/8/2016 07:05

Zengas wrote on November 9th,

"Savannah estimate the break even on their Agadem R1/R2 blocks as $43/b so one would think this would be very attractive for any farminee."

Dalesman wrote on July 8th,

"At the current oil price we could expect a profit of say $10 / barrel per produced barrel."

Can someone please reconcile these two conflicting statements?

[zengas] 16/8/2016 18:18

Todays option issue of 526,315 options to a newly joined member of its senior management team.

"The options have been issued under the Company's Supplementary Plan, the key terms of which were announced on 30 July 2015.

Hurdle price as of 30th July 2015 was set at 114p.

[thomasthetank1] 15/8/2016 10:25

Morning all - just clocked an upbeat note from Stifel on Savannah this morning. Please see below for the details.

BUY recommendation
Target price of 55p

SAVP - Line of sight to drilling

Our positive thesis on Savannah relates to the very large resource potential and the likely low finding, development and extraction costs of its Niger acreage position. With no export line in place, the difficulty is, of course, the distance from international markets, which means that it's imperative to discover a sizeable volume of oil. Taking an equity position in the pipeline consortium is a positive step towards protecting its economic interest in this regard - Nigerien Government ratification is expected shortly.

The talking point: will Niger become un-ignorable?

In a period of low commodity prices, it is relatively easy to overlook a remote, pre-export oil province such as the Agadem region of Niger. We are therefore not particularly surprised that Savannah has thus far had a degree of difficulty in attracting the limited exploration dollars of the international oil companies.

Nevertheless, finding and development costs are likely to be low by international standards thanks to the established service industry and favourable on-the-ground conditions, and the resource base across the 13,655 sq km acreage position could be sizeable if nearby discoveries prove a valid analogue.

The driver: resource adding potential upon drilling

As such, we think a combination of modestly rising oil prices and the making of initial discoveries could see an improvement in interest levels in the region, to the point where it is indeed 'un-ignorable'. Nevertheless, an export route is key. Savannah envisages taking an ownership stake in such a project (via a special purpose vehicle), which would likely link to international markets via existing infrastructure in Chad.

Savannah is currently set to acquire 3D seismic data over a 800 sq km portion of its acreage (around 6%), ahead of planned drilling in Q1 2017.

We think the play reasonably low risk, geologically, with the bigger challenge for a capital constrained company being one of resource aggregation across multiple potential pools and intervals.

Valuation

The scale of resource to which we assign value, Figure 1, is in line with the company's new estimate for an inventory of 10 comparatively low-risk prospects, c.500 mmbbls, and therefore leaves as upside the remainder of a far greater volume, 2.2bn bbls, that independent consultant CGG Geoconsulting believes could result from a complete drill-out of the acreage.

[thomasthetank1] 11/8/2016 08:48

Morning all - just seen an updated note on SAVP by Shore Capital. They continue to have a BUY recommendation on the Company and have upgraded Savannah's Risked NAV to 80p/share.

Shore Capital

Savannah Petroleum – Ramping up activity in Niger

In July, Savannah shares came out of their long period of suspension with confirmation of a US$40m equity fundraising. A reverse takeover deal had previously been envisaged and, although this didn’t materialise, Savannah is now positioned to crack on with an active work programme through FY2016/17. Since IPO in FY2014, ground operations had largely been limited to an airborne geophysical survey, although we were impressed by the way in which Savannah tied up the remaining open acreage (with the acquisition of blocks R3/R4) and established a strategic position in Niger. With a significantly expanded lead and prospect inventory and confirmation of a proven new play type, prospective resources have increased significantly. Farm-out options remain on the agenda but Savannah is already positioned to proceed with a 3D seismic survey and drilling of up to six wells; we believe that the latter is likely to be a particularly important share price driver. In the meantime, we upgrade our Risked NAV estimate to 80p/share (from 58p/share pre-suspension) and reiterate our BUY recommendation.

Ground operations to commence imminently: With US$40m raised, Savannah is now funded to commence ground operations incorporating a 3D seismic survey and (from early FY2017) drilling of up to six exploration wells. Although a successful farm-out could lead to the work programme being expanded in due course, we already see much improved visibility on the commencement of drilling.

Other positive developments: At the time of the placing, Savannah confirmed a significant prospective resource upgrade, enhanced PSC terms (subject to final approval) and a proposed new right of equity participation in CNPC’s planned export pipeline. These developments are positive, although the key takeaway for us was receipt of the funding required to implement an active work programme.

Risked NAV upgraded to 80p/share: Funds raised result in some dilution, although this is broadly offset by dollar strength and we have also updated our valuation to reflect higher NPVs per barrel and our latest understanding of the volumetric potential; our Risked NAV estimate consequently increases to 80p/share (compared to 58p/share pre-suspension). Reiterated BUY.

[laptop15] 05/8/2016 22:21

Very steady share price now and i have a feeling we are going to slowly increase as we push towards Christmas and the ever closing drill campaign :))Another plus by is the energy prices both gas and oil will have also risen in price by then so this operation will become ever more valuable!Buy now and reap the rewards in the coming months :))Good luck to all

[laptop15] 01/8/2016 10:00

Thanks for sharing Thomas :)The future looks very bright here and I'm looking forward to the drill campaign starting!

[thomasthetank1] 01/8/2016 09:03

Morning all - just clocked a positive article on SAVP in this week's edition of Investors Chronicle. The article looks at 27 London listed E&P's, with Savannah being ranked number one.

Bubbling Away
By Alex Newman

1. Throughout the oil price fall, Savannah Petroleum (SAVP) has maintained an enviable track record of attracting funding to develop its interests in the Agadem rift basin in southeast Niger. Most recently, that included a $40m (GBP30m) fundraising at a 45 per cent premium to the share price, on the back of a near-doubling in the company's resource base to 2.2bn barrels. The money will be used to recommence 3D seismic studies ahead of a drilling campaign in 2017, before which point there is a "high possibility" of a partner coming on board, according to chief executive Andrew Knott.

[laptop15] 29/7/2016 19:42

Bought in today here guys :)) Looks like a good investment to me!Read the article in shares magazine and i thought it was a great opportunity with the drilling campaign starting in approximately 6 months. A lot lower than the 38p institution deal....strange to see the share price drop so low! I'm sure it won't take long for this to get noticed as being very undervalued.

[thomasthetank1] 26/7/2016 09:54

Panmure Gordon - Making it Happen

BUY recommendation with a Target Price of 70p.

Following shareholder approval of its successful US$40m raise, Savannah is now funded to start an initial exploration programme, including drilling, that should help validate the inherent value in its Nigerien acreage position. CGG has now confirmed 2bnbbl plus risked resource potential. Savannah continues to target a farm-out and we believe it is credible to anticipate a deal before year end, benefitting from potential favourable changes to Savannah's terms. While we find it easy to generate value multiples above the current share price, we have simply adjusted our former valuation for the impact of the dilution from the placing and our revised macro forecasts. On that basis we set a target price of 70p per share (from 75p) and reinstate coverage with a Buy recommendation.

Successful US$40m raise. Following the shareholder vote yesterday, Savannah has now successfully raised US$40m at a 61% premium above the price at which the stock was suspended in January and in line with the raise last year which secured the R3/R4 contract.

Funds initial exploration programme. Savannah is now funded for an initial exploration programme which we expect to include new 3D seismic focusing on the R3 licence this year, together with an initial drilling programme next year, whether or not farm-out terms have been concluded.

Farm-out likely. Savannah continues to pursue farm-out terms and is in discussion with a number of well capitalized counter-parties. We believe it is credible that the company will be able to conclude terms, at least equivalent to those it previously sought.

[taudelta1] 26/7/2016 07:49

Proactive Investors reports that the Mirabaud analyst seems to endorse the credibility of the speculation re ONGC farm-in.

[thelung] 08/7/2016 18:25

Phew! Good luck with this one.

[dalesman] 08/7/2016 17:04

Hi the Lung

My success rate is just fine but thanks for asking.

[dalesman] 08/7/2016 17:03

This afternoon's new RNS details that the board and in particular Andrew have taken up 1,444,318 new ordinary shares at the placing price of 38p. Andrew now holds 8.81% of the shares in issue - a vote of confidence if ever I saw one.

[thomasthetank1] 08/7/2016 13:58

Positive mention of this week's announcements in Investors Chronicle.

What a week it has been for Savannah Petroleum (SAVP). The Niger-based company managed to raise $40m at a 45 per cent premium to its share price from investors who clearly believe in the prospects for drilling at the Agadem basin, and the chance of a good farm-out deal before the end of 2016. What’s more, the company’s reserve base has almost doubled from 1.2bn to 2.2bn barrels of risked resources, further supporting the 48 per cent jump in the stock morning.

[thelung] 08/7/2016 13:23

Hello dalesman. I see your modus operandi hasn't changed recently, has your success rate?

[thomasthetank1] 08/7/2016 07:42

Mirabaud - Cashed up & drill ready

BUY recommendation / Target Price of 125p

Savannah has announced a US$40m equity placing at 38p/shr (a 61% premium) alongside the termination of reverse takeover talks, with major existing institutional holders and management both following their money. We view the financing as a strong vote of confidence in the Niger-focused explorer and its Agadem basin blocks, providing the funds to acquire a new 3D seismic survey and drill 4 to 6 low-risk exploration wells, starting in Q1 2017. In parallel, SAVP continues in advanced farm-out talks and hopes to secure a deal before year-end. It is envisaged that the introduction of a partner would involve a major capital injection and further acceleration of exploration drilling activities. Alongside the placing, Savannah also unveiled a positive technical update, including a near doubling of risked resources to 2.2bn bbls (vs. 1.2bn bbls), as well as the relaxation of licences terms which are NPV enhancing and allow more time to undertake exploration activities. With the shares likely to run-up ahead of drilling in six months’ time.

[thomasthetank1] 08/7/2016 07:03

A video interview of the CEO, Andrew Knott, just went live on the Company's website.

hxxp://www.savannah-petroleum.com/en/index.php

[zengas] 07/7/2016 17:25

Raised in record time and just a formality re the 2nd tranche given the high institutional and director holdings that will vote this through at 38p compared to 24p today.

A big vote of confidence and imo speaks volumes for the assets in that no one took advantage of the lower share price re subscribing.