Savannah Petroleum Share Discussion Threads

[zengas] 15/8/2018 22:27

That's right Div.
There's 817m shares in issue now.

I was allowing circa 1145m shares in total made up from -

Institutions etc who have 133m warrants exercisable at 35p by 7th Feb - ie 6 months can decide on back of Niger success to use them which would give Savp circa $60m if exercised. I would have thought they would do so in order to share in either the dividends or derisked Niger discoveries.

Asma were to put $30m in shortly after the placing (but no sign of it yet) at 35p so another 66m shares.

Asma could put in a further $60m over 24 months at the same money so another 132m shares.

Total possible new shares 331m roughly but would give $150m of new money. Either none, some or all in terms of new shares but with money to match but it won't be one without the other.

If 331m shares, that brings the shares in issue up to circa 1148m.

My £2 target for 500 mmbls in Niger using the lower $6 quoted in the interviews (ie $6-$8 per bl) gives $3 billion or £2.2b over those 1148m shares which is £2 per share ball park.

Given there's 6 billion bls potential unrisked recoverable in Niger (2.8 billion bls risked recoverable) and now 4 discoveries and moving very close to production and also an MOU on a major pipeline/refinery, it has to be very attractive for a farm in than ever before. No reason to doubt that Savp/Partner could not find 1 billion bls between them from the already risked 2.8 billion bls number.

Would a farm in bring in $100m-$250m to add to the $150m of potential new money ie $250m - $400m for Savp ? (£190m - £300m). Worth 17-26p/share ?

Also given the Niger discoveries it may be possible to borrow perhaps $50m-$100m+ ?

That's not including Nigeria but it was valued at $663m/£490m in the CPR once restructured and has plenty of upside beyond that. The £490m over 1145m shares is another 42p.

For some reason if the deal didn't happen well there'd have to be some compensation over the share issue to bond holders etc - how i don't know but monetary of some kind. I don't see the deal not happening but don't rule out some tweaks or changes possibly to the structure of it.

Nigers EPS up and running will provide useful cash flow as it gains momentum.

If all goes to plan and what was originally envisaged happens and we get our hands on $80m - $100m annual free cash flow and combine that to all or some of the above, then Savp will have a very, very strong hand and there could be a lot more than £2 to be had.

[divmad] 15/8/2018 20:40

Hi Zengas. Just got home and saw your earlier post today.

Just to be clear, you guestimate that in Niger alone, based on certain targets of risked recoverable oil being met, fully diluted for the 7E purchase, but assigning zero value to that transaction, savp shares can still be fully valued at £2 in a few years. Right?

That's what I have been thinking about all day - the upside (or floor) to savp if everything goes pear-shaped at 7E but we keep the share dilution from it. ATB.

[divmad] 15/8/2018 15:57

What's the value of Savp's Niger operations and discoveries in isolation? That's the floor here.

[bushman1] 15/8/2018 14:48

Hard to figure, same old.. the 10,000 trade of a minute ago is a BUY, I made it, showing though as a SELL.

[honestmarty] 15/8/2018 14:26

Orvis, no.
B1tcoin, no. Quite sane, which often leads to friction with the herd.

[orvis] 15/8/2018 13:51

2m shares sold - a half million pounds and change. Is this the end of the selling by whoever has been consistently dropping 25,000,50,000,and 100,000 shares?

[mount teide] 15/8/2018 13:46

The 100% record of exploration drilling success after 4 drills puts even CNPC's astonishing record in this prolific basin in the shade.

If the CEO hasn't got the message yet, the share price reaction to today's news should remove all doubt.

Get the 7E deal over the line and the let loose the volcanic like valuation pressures that continue to build following every drill in Niger.

Globally, new discoveries of conventional oil and gas have fallen sharply since 2015 and last year was particularly bad for drilling results.

According to Rystad, less than 7 billion barrels of conventional oil equivalent was discovered in 2017, the lowest since the 1940's and enough to replace just 11% of global oil and gas production last year.

Further out, it remains to be seen how the current dearth of exploration activity will feed through to booked resources and reserve replacement ratios.

Against this backdrop, I suspect SavP's drilling success in Niger will have not gone unnoticed and significantly raised the farm out prospects and potential long term upside.

[honestmarty] 15/8/2018 10:39

MM games, it appears they are selling below mid.

So the sell off is not what it appears.

Still think a good flush is needed.

[honestmarty] 15/8/2018 10:27

Everything in Niger is first class, hard to see how it could have gone any better.

No, the problem is Gingenstein, and Andrew's failure to finish the deal.

[gisjob2] 15/8/2018 10:22

Haider it happens regularly. The testing rig is cheaper. Why waste money. SAVP drilling has mirrored CPNC next door and they've had no issues with testing and producing.

[haideralifool] 15/8/2018 10:16

I don't have as wide a spread of O&G as others here, but the two-stage drill process they are using is new to me (perhaps suspicious to the cynical) and could it be that others are waiting for the volumetric results?

[thomasthetank1] 15/8/2018 10:12

Comment by Shore Capital on this morning's news below.

Savannah has released what is, in our view, another excellent result from its drilling programme in Niger, where the Eridal-1 exploration well has been declared a discovery. Eridal-1 is the fourth consecutive discovery made by Savannah in its ongoing Niger exploration campaign and, as with the previous three wells, available data at this stage includes wireline logging, fluid sampling and pressure data. These indicate that the well has encountered an estimated 13.6m of net oil bearing reservoir in the “E1” reservoir unit within the primary “Sokor Alternances” objective. The result from Eridal-1 is very consistent with Savannah’s existing subsurface understanding and reflects, in our opinion, the technical team’s highly effective assessment of up-dip potential at this location. Oil and reservoir quality are considered to be high and, with drilling having been undertaken faster than previously guided, we remain impressed by Savannah’s execution on this valuable and strategically important project in Niger. We believe that this latest well result provides further strong evidence of the repeatable success that is being achieved by Savannah in Niger and also highlight the company’s decision to exercise the second of its six individual rig options and extend the drilling programme to target the Zomo prospect. Zomo is 12km from Eridal-1 and could be followed by further wells. With Eridal-1 being suspended for future re-entry, the rig will shortly mobilise to the Zomo-1 wellsite, where preparations are in the final stages of completion and will be accompanied by an estimated 10-15 day rig move. Savannah is planning a flow testing programme for at least two of its discovery wells (and a subsequent resource assessment) later this year. The company is also actively pursuing its plans to establish an early production scheme and we continue to see excellent scope for early oil monetisation in Niger. Our last published Risked NAV estimate for Savannah stands at circa 75p/share and we firmly reiterate our BUY recommendation.

[thegreatgeraldo] 15/8/2018 09:59

Even turning dusters into discoveries doesn't help.....

[pembury] 15/8/2018 09:45

no surprise noone bothers with aim these days

[honestmarty] 15/8/2018 09:37

Selling off as predicted.

Clearly Andrew has created a monster from the stinking corpse that was 7E.

Gingenstein is its name, and it is a frightening monster let loose upon the earth.

I feel a mighty flush on the share price is coming.

[thomasthetank1] 15/8/2018 08:34

Mirabaud note on this morning’s news below.

This morning Savannah Petroleum (SAVP LN) announced its fourth successive light oil discovery in the Agadem Basin, Niger. The Eridal-1 well encountered c.14 metres of net oil pay in the primary target, with logs confirming the characteristically high quality sands observed in preceding three discoveries. The Eridal structure is situated in the R3 East area, in-between Amdigh and Kunama, and as such it will almost certainly be included in the first phase of development. As with earlier discoveries, Savannah is awaiting testing results before publishing volumetric estimates, however, we believe that cumulative discovered oil resources in the R3 East area may now exceed the top end of our earlier range of 30-50 mmbbls.

Operationally, Eridal continued the run of faster than expected drilling times seen in earlier wells. The well reached target depth within 14 days and operations are expected to conclude within 23 days - compared to the 30-35 day budget. Notably, the well was located up-dip of a dry hole drilled by CNPC prior to relinquishment of the R3 area. After acquiring and interpreting new 3D data, Savannah correctly concluded that CNPC's well had likely missed the crest of the structure, and the prospect remained robust. The company's confidence in this interpretation has clearly paid off, with Eridal-1 recording the second thickest pay section of the campaign to date (only behind the 22 metres at Amdigh). Unsurprisingly Savannah has elected to exercise the second of its six option slots on the rig, to drill Zomo (c.12 km south of Eridal). This well will spud over the next 10-15 days

[zengas] 15/8/2018 08:06

Another great result at 4 out of 4.

Sokor Alternaces basin wide and 80% low risk and was always stated the creaming curve was not reached with fantastic opportunity to replicate CNPCs success.
Over 1.7 billion bls unrisked recoverable in the Sokor Alternaces alone ( over 1 billion bls risked recoverable )out of a 6 billion unrisked/2.8 billion risked recoverable for all formations on a mid case basis.

Last few interviews indicating $6-$8 used for each barrel given the pipeline news.
Toting up the numbers to just 500 mmbls of discoveries using $4/b gives a value of $2/b or £1.5b in Niger (Use the company and analysts $6/b and there's $3/b£2.2b value). With time/patience each discovery keeps adding to the numbers. Meanwhile we go onto the next prospect.

Use the fully diluted share issue for the Seven Energy fields/Accugas purchase and that gets you to over £2 using the analysts/companys $6 per bl - just for Niger and the Sokor Alternaces alone.

Regardless of the delay in 7E transaction, Niger upside can outweigh the issue and is my reason to firmly hold and my explanation for my £2 target.

With patience i think this could reward very handsomely. Above leaves major room to still farmout and deliver huge upside.

[gmr64] 15/8/2018 07:53

Note from Hannam Partners this mornings:
SAVP announced that their Eridal well in Niger has yielded the fourth discovery (100% hit rate) in the campaign. The well hit 13 meters of net light oil pay in good quality reservoir within the primary Eocene Sokor Alternances objective. This makes Eridal the second thickest net pay encountered in the campaign so far after the Amdigh discovery.

Importantly, we estimate that this result takes total discovered resources in SAVP’s blocks to 50-70mmbbls of light oil. This is close to the P50 pre-drill estimates for the 4 prospects in the Alternances objective and enhances the commercial robustness of the project.

The wells are yet to be tested, which we expect take place over the next months. Considering the recently signed MoU with the government of Niger to establish an early production system for the discoveries, we would expect SAVP management to move quickly to try to start commercialising the discoveries before year end. The refinery has spare capacity of 5-7kb/d and SAVP aims to initially truck its production from Amdigh to the processing facilities (some 60km away from the find).

Since the re-listing if the shares (January-18), SAVP has underperformed its Nigerian-focused peers (Lekoil, Seplat & Eland) by 30% and the broader AIM/FTSE oil indices by some 10%, reflecting the protracted completion of the Seven Energy deal.

Given that over the period SAVP has discovered an estimated 50-70mmbbls of oil resources in Niger with a clear commercialisation path, we believe that this has now opened an attractive valuation gap. Assuming the conservative US$4.1/bbl NPV of generic economics for Niger indicated in the CPR based on US$60/bbl oil and trucking into Kaduna (oil prices are higher now and the commercial solution will involve access to third party infrastructure, significantly improving NPV for the project), we could see SAVP’s Niger discoveries so far being worth US$205-287m (19-27p/sh at current FX).

Given the success in the drilling campaign, unsurprisingly SAVP has triggered another rig option to drill the Zomo prospect, south of the Amdigh discovery. While Zomo appears to be an interesting prospect on its own right, we believe that it is key to test the extension of Amdigh to the south.

Meanwhile, SAVP continues to target completion for their Seven Energy deal in Nigeria this quarter. This is probably the most expected piece of newsflows from SAVP and we believe that once this is out of the way, we could see the shares reacting positively and starting to close the valuation gap.

[honestmarty] 15/8/2018 07:45

Another fantastic discovery, and the EPS and early access to income are starting to feature. Pretty clear too that drilling will continue. It could end up 9 from 9 here.

And production testing flagged on at least 2 wells.

But shackled to Gingernuts 7E corpse as we are, I predict any rise will be heavily sold into by the quisling bondholders.

Andrew you plonker!

[lithological heterogeneities] 15/8/2018 07:17

RNS - another oil discovery. Now 4 discoveries in a row.

No doubt share price will drop on the news again.

Market does not like SAVP continually announcing oil discoveries.

Just how long can they keep ignoring the constant successes

Has to re-rate at some point, even with the 7E uncertainty.

[divmad] 14/8/2018 21:51

I bet the IIs know what's the status of the 7E deal.