Savannah Petroleum Share Discussion Threads

[bushman1] 24/9/2018 15:41

Mirabaud note on SAVP below:

Following an extended completion process, Savannah Petroleum (SAVP) is now on the cusp of closing the transformational Seven Energy acquisition, with the group’s latest timetable indicating Q4 2018.

As this key milestone approaches, we take a fresh look at the enlarged business, reviewing both the potential of the acquired integrated gas portfolio in Nigeria and recent drill-bit success in neighbouring Niger.

Our conclusion is that SAVP’s portfolio offers a differentiated and scalable cash flow base with material resource growth potential, whilst ‎the shares look attractively valued on both DCF and earnings metrics.

As such, we reiterate our BUY recommendation with an upgraded 72p target price (vs. 66p/shr) – offering 157% upside at current levels.

Solid cash flow base: we expect the base Nigerian business to contribute 26 kboepd of sales and US$65m of post-tax CF in FY19, rising to 32 kboepd and US$98m in FY21 (see Base Nigeria cash flows in Figure 2, below).

This material step-up is driven by two factors:

(1) the ramp up in Uquo field gas sales to full ‘daily contract quantity’ (DCQ) volumes in 2020, and

(2) an in-built price inflator of ~6% per annum across existing gas contracts. Given modest future capex requirements, we expect the Nigeria base to generate cumulative FCF of ~US$177m over FY19-21, underpinning SAVP’s intention to become a dividend payer (maiden dividend of US$12.5m expected to be paid in Q1 2019, implies yield of 4.2%).

Exploiting local gas market opportunity: we see significant potential value in connecting ‘last mile’ industrial customers to Accugas’s existing pipeline network, which transports Uquo gas to market. Typically, these customers are burning diesel for power at an equivalent price of ~US$15/mcf, compared with Accugas’s current average realised price of US$3.5/mcf (US$1.8/mcf of which flows to the upstream).

In the event that new gas contracts are inked at a premium to US$3.5/mcf, the difference is split 50:50 between the midstream and upstream. Already, Accugas has secured heads of terms to supply 5 mmscf/d at prices of ~US$7.5/mcf (im

plying an enhanced upstream price of US$3.8/mcf), prompting the start of work on a new 18km pipeline spur with 20 mmscf/d of capacity (the Calabar Gas Development Project).

We expect this to provide a key new revenue stream, contributing post-tax CF of US$4m in FY20 (5 mmscf/d of sales) and US$13m in FY21 (15 mmscf/d).

Longer term, leveraging off its dominant gas infrastructure position (only significant gas processing and transportation system in southeast Nigeria), Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources.

Creating value through the drill-bit: the economics of SAVP’s Niger business are highly compelling, with basin-wide finding costs of less than US$1 per barrel and an NPV12% of US$5.2 per barrel in the ground at US$70/bbl oil (NPV10% of US$5.9 per barrel).

Thus far, the company has drilled four successful wells (out of four) in the R3 East area, with estimated discovered resources in the range of 40-60 mmbbls (worth 12p/shr risked). Looking ahead, the company is currently drilling its fifth exploration well (Zomo-1) and it has a further four optional rig slots remaining, to be used for a mix of E&A and development drilling.

We see considerable remaining exploration potential in the basin, noting that the R3 East area accounts for less than 10% of SAVP’s overall land bank.

Conservatively, our valuation ascribes 125 mmbbls of unrisked resources to a further ten exploration wells (worth 14p/shr risked) across three high graded areas – R3 East, R3 Central and R1 South.

Early production and cash flows: SAVP has secured Government backing for an early production system with the potential to deliver cash flows from Niger in H1 2019, just 12 months after the first well. The initial development concept is based on leasing surface facilities to keep capital costs low and trucking crude 120km north to CNPC’s domestic pipeline for onward sale at the Zinder refinery.

We forecast 2 kbopd of production and US$11m of post-tax CF in FY19, ramping up to 5 kbopd and US$55m in FY21. Looking further out, following a bilateral agreement between Niger and Nigeria, plans are being prepared to build a major Agadem export pipeline to a new refinery in northern Nigeria which should unlock the wider basin from 2021 onwards.

Several alternative pipeline options (via Chad and Benin) are also being worked up, providing multiple possible outlets (CNPC is expected to finish pre-feasibility studies on the pipeline routes by Q4 2018).

Potential partial monetisation: in our opinion, SAVP’s 100% exploration success rate in Niger and the prospect of early cash flows has increased the pool of potential industry partners and the likelihood of a farm-out transaction.

Whilst SAVP has the flexibility to move Niger forward on its own, utilising internally generated cash flows (from Nigeria), a farm-out deal would expedite exploration and production, bringing forward resource additions and cash flow and thus enhancing shareholder value.

In our minds, the most likely potential partners are the major NOCs which have underinvested during the down-cycle and are now hungry to replenish reserves.

Material discount to fair value:

Using a 12% discount rate and a flat oil price of US$70/bbl, we calculate a Total NAV for SAVP of 72p/shr – up marginally from our previous 66p/shr figure.

To illustrate the value on offer, our NAV of either one of SAVP’s businesses underpins the current share price (28p/shr), with Nigeria (2P + 2C) contributing 45p/shr risked (including corporate items) and Niger 27p/shr risked.

Meanwhile, on an earnings basis the stock also looks attractively valued, trading on an EV/EBITDA of 2.8x FY19 falling to 1.2x FY21.

Given continued progress on the Seven Energy transaction, and our confidence that the deal will complete before the year-end, we believe SAVP’s current discount to fair value represents a compelling entry point for investors.

[bushman1] 24/9/2018 15:41

Mirabaud note on SAVP below:

Following an extended completion process, Savannah Petroleum (SAVP) is now on the cusp of closing the transformational Seven Energy acquisition, with the group’s latest timetable indicating Q4 2018.

As this key milestone approaches, we take a fresh look at the enlarged business, reviewing both the potential of the acquired integrated gas portfolio in Nigeria and recent drill-bit success in neighbouring Niger.

Our conclusion is that SAVP’s portfolio offers a differentiated and scalable cash flow base with material resource growth potential, whilst ‎the shares look attractively valued on both DCF and earnings metrics.

As such, we reiterate our BUY recommendation with an upgraded 72p target price (vs. 66p/shr) – offering 157% upside at current levels.

Solid cash flow base: we expect the base Nigerian business to contribute 26 kboepd of sales and US$65m of post-tax CF in FY19, rising to 32 kboepd and US$98m in FY21 (see Base Nigeria cash flows in Figure 2, below).

This material step-up is driven by two factors:

(1) the ramp up in Uquo field gas sales to full ‘daily contract quantity’ (DCQ) volumes in 2020, and

(2) an in-built price inflator of ~6% per annum across existing gas contracts. Given modest future capex requirements, we expect the Nigeria base to generate cumulative FCF of ~US$177m over FY19-21, underpinning SAVP’s intention to become a dividend payer (maiden dividend of US$12.5m expected to be paid in Q1 2019, implies yield of 4.2%).

Exploiting local gas market opportunity: we see significant potential value in connecting ‘last mile’ industrial customers to Accugas’s existing pipeline network, which transports Uquo gas to market. Typically, these customers are burning diesel for power at an equivalent price of ~US$15/mcf, compared with Accugas’s current average realised price of US$3.5/mcf (US$1.8/mcf of which flows to the upstream).

In the event that new gas contracts are inked at a premium to US$3.5/mcf, the difference is split 50:50 between the midstream and upstream. Already, Accugas has secured heads of terms to supply 5 mmscf/d at prices of ~US$7.5/mcf (im

plying an enhanced upstream price of US$3.8/mcf), prompting the start of work on a new 18km pipeline spur with 20 mmscf/d of capacity (the Calabar Gas Development Project).

We expect this to provide a key new revenue stream, contributing post-tax CF of US$4m in FY20 (5 mmscf/d of sales) and US$13m in FY21 (15 mmscf/d).

Longer term, leveraging off its dominant gas infrastructure position (only significant gas processing and transportation system in southeast Nigeria), Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources.

Creating value through the drill-bit: the economics of SAVP’s Niger business are highly compelling, with basin-wide finding costs of less than US$1 per barrel and an NPV12% of US$5.2 per barrel in the ground at US$70/bbl oil (NPV10% of US$5.9 per barrel).

Thus far, the company has drilled four successful wells (out of four) in the R3 East area, with estimated discovered resources in the range of 40-60 mmbbls (worth 12p/shr risked). Looking ahead, the company is currently drilling its fifth exploration well (Zomo-1) and it has a further four optional rig slots remaining, to be used for a mix of E&A and development drilling.

We see considerable remaining exploration potential in the basin, noting that the R3 East area accounts for less than 10% of SAVP’s overall land bank.

Conservatively, our valuation ascribes 125 mmbbls of unrisked resources to a further ten exploration wells (worth 14p/shr risked) across three high graded areas – R3 East, R3 Central and R1 South.

Early production and cash flows: SAVP has secured Government backing for an early production system with the potential to deliver cash flows from Niger in H1 2019, just 12 months after the first well. The initial development concept is based on leasing surface facilities to keep capital costs low and trucking crude 120km north to CNPC’s domestic pipeline for onward sale at the Zinder refinery.

We forecast 2 kbopd of production and US$11m of post-tax CF in FY19, ramping up to 5 kbopd and US$55m in FY21. Looking further out, following a bilateral agreement between Niger and Nigeria, plans are being prepared to build a major Agadem export pipeline to a new refinery in northern Nigeria which should unlock the wider basin from 2021 onwards.

Several alternative pipeline options (via Chad and Benin) are also being worked up, providing multiple possible outlets (CNPC is expected to finish pre-feasibility studies on the pipeline routes by Q4 2018).

Potential partial monetisation: in our opinion, SAVP’s 100% exploration success rate in Niger and the prospect of early cash flows has increased the pool of potential industry partners and the likelihood of a farm-out transaction.

Whilst SAVP has the flexibility to move Niger forward on its own, utilising internally generated cash flows (from Nigeria), a farm-out deal would expedite exploration and production, bringing forward resource additions and cash flow and thus enhancing shareholder value.

In our minds, the most likely potential partners are the major NOCs which have underinvested during the down-cycle and are now hungry to replenish reserves.

Material discount to fair value:

Using a 12% discount rate and a flat oil price of US$70/bbl, we calculate a Total NAV for SAVP of 72p/shr – up marginally from our previous 66p/shr figure.

To illustrate the value on offer, our NAV of either one of SAVP’s businesses underpins the current share price (28p/shr), with Nigeria (2P + 2C) contributing 45p/shr risked (including corporate items) and Niger 27p/shr risked.

Meanwhile, on an earnings basis the stock also looks attractively valued, trading on an EV/EBITDA of 2.8x FY19 falling to 1.2x FY21.

Given continued progress on the Seven Energy transaction, and our confidence that the deal will complete before the year-end, we believe SAVP’s current discount to fair value represents a compelling entry point for investors.

[bushman1] 24/9/2018 15:40

Mirabaud note on SAVP below:

Following an extended completion process, Savannah Petroleum (SAVP) is now on the cusp of closing the transformational Seven Energy acquisition, with the group’s latest timetable indicating Q4 2018.

As this key milestone approaches, we take a fresh look at the enlarged business, reviewing both the potential of the acquired integrated gas portfolio in Nigeria and recent drill-bit success in neighbouring Niger.

Our conclusion is that SAVP’s portfolio offers a differentiated and scalable cash flow base with material resource growth potential, whilst ‎the shares look attractively valued on both DCF and earnings metrics.

As such, we reiterate our BUY recommendation with an upgraded 72p target price (vs. 66p/shr) – offering 157% upside at current levels.

Solid cash flow base: we expect the base Nigerian business to contribute 26 kboepd of sales and US$65m of post-tax CF in FY19, rising to 32 kboepd and US$98m in FY21 (see Base Nigeria cash flows in Figure 2, below).

This material step-up is driven by two factors:

(1) the ramp up in Uquo field gas sales to full ‘daily contract quantity’ (DCQ) volumes in 2020, and

(2) an in-built price inflator of ~6% per annum across existing gas contracts. Given modest future capex requirements, we expect the Nigeria base to generate cumulative FCF of ~US$177m over FY19-21, underpinning SAVP’s intention to become a dividend payer (maiden dividend of US$12.5m expected to be paid in Q1 2019, implies yield of 4.2%).

Exploiting local gas market opportunity: we see significant potential value in connecting ‘last mile’ industrial customers to Accugas’s existing pipeline network, which transports Uquo gas to market. Typically, these customers are burning diesel for power at an equivalent price of ~US$15/mcf, compared with Accugas’s current average realised price of US$3.5/mcf (US$1.8/mcf of which flows to the upstream).

In the event that new gas contracts are inked at a premium to US$3.5/mcf, the difference is split 50:50 between the midstream and upstream. Already, Accugas has secured heads of terms to supply 5 mmscf/d at prices of ~US$7.5/mcf (im

plying an enhanced upstream price of US$3.8/mcf), prompting the start of work on a new 18km pipeline spur with 20 mmscf/d of capacity (the Calabar Gas Development Project).

We expect this to provide a key new revenue stream, contributing post-tax CF of US$4m in FY20 (5 mmscf/d of sales) and US$13m in FY21 (15 mmscf/d).

Longer term, leveraging off its dominant gas infrastructure position (only significant gas processing and transportation system in southeast Nigeria), Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources.

Creating value through the drill-bit: the economics of SAVP’s Niger business are highly compelling, with basin-wide finding costs of less than US$1 per barrel and an NPV12% of US$5.2 per barrel in the ground at US$70/bbl oil (NPV10% of US$5.9 per barrel).

Thus far, the company has drilled four successful wells (out of four) in the R3 East area, with estimated discovered resources in the range of 40-60 mmbbls (worth 12p/shr risked). Looking ahead, the company is currently drilling its fifth exploration well (Zomo-1) and it has a further four optional rig slots remaining, to be used for a mix of E&A and development drilling.

We see considerable remaining exploration potential in the basin, noting that the R3 East area accounts for less than 10% of SAVP’s overall land bank.

Conservatively, our valuation ascribes 125 mmbbls of unrisked resources to a further ten exploration wells (worth 14p/shr risked) across three high graded areas – R3 East, R3 Central and R1 South.

Early production and cash flows: SAVP has secured Government backing for an early production system with the potential to deliver cash flows from Niger in H1 2019, just 12 months after the first well. The initial development concept is based on leasing surface facilities to keep capital costs low and trucking crude 120km north to CNPC’s domestic pipeline for onward sale at the Zinder refinery.

We forecast 2 kbopd of production and US$11m of post-tax CF in FY19, ramping up to 5 kbopd and US$55m in FY21. Looking further out, following a bilateral agreement between Niger and Nigeria, plans are being prepared to build a major Agadem export pipeline to a new refinery in northern Nigeria which should unlock the wider basin from 2021 onwards.

Several alternative pipeline options (via Chad and Benin) are also being worked up, providing multiple possible outlets (CNPC is expected to finish pre-feasibility studies on the pipeline routes by Q4 2018).

Potential partial monetisation: in our opinion, SAVP’s 100% exploration success rate in Niger and the prospect of early cash flows has increased the pool of potential industry partners and the likelihood of a farm-out transaction.

Whilst SAVP has the flexibility to move Niger forward on its own, utilising internally generated cash flows (from Nigeria), a farm-out deal would expedite exploration and production, bringing forward resource additions and cash flow and thus enhancing shareholder value.

In our minds, the most likely potential partners are the major NOCs which have underinvested during the down-cycle and are now hungry to replenish reserves.

Material discount to fair value:

Using a 12% discount rate and a flat oil price of US$70/bbl, we calculate a Total NAV for SAVP of 72p/shr – up marginally from our previous 66p/shr figure.

To illustrate the value on offer, our NAV of either one of SAVP’s businesses underpins the current share price (28p/shr), with Nigeria (2P + 2C) contributing 45p/shr risked (including corporate items) and Niger 27p/shr risked.

Meanwhile, on an earnings basis the stock also looks attractively valued, trading on an EV/EBITDA of 2.8x FY19 falling to 1.2x FY21.

Given continued progress on the Seven Energy transaction, and our confidence that the deal will complete before the year-end, we believe SAVP’s current discount to fair value represents a compelling entry point for investors.

[shareideas1] 24/9/2018 15:01

Either that or someone has an inkling re Zomo-1

[mount teide] 24/9/2018 15:00

Chart back at the 200 ma - seems to be getting onto more radars since the reported interest of some very well heeled sector majors as potential asset development partners, following the continued 100% exploration success rate in Niger.

[ifthecapfits] 24/9/2018 13:52

thanks TTT1 - great read!

[thomasthetank1] 24/9/2018 13:10

Mirabaud note on SAVP below:

Following an extended completion process, Savannah Petroleum (SAVP) is now on the cusp of closing the transformational Seven Energy acquisition, with the group’s latest timetable indicating Q4 2018. As this key milestone approaches, we take a fresh look at the enlarged business, reviewing both the potential of the acquired integrated gas portfolio in Nigeria and recent drill-bit success in neighbouring Niger. Our conclusion is that SAVP’s portfolio offers a differentiated and scalable cash flow base with material resource growth potential, whilst ‎the shares look attractively valued on both DCF and earnings metrics. As such, we reiterate our BUY recommendation with an upgraded 72p target price (vs. 66p/shr) – offering 157% upside at current levels.

Solid cash flow base: we expect the base Nigerian business to contribute 26 kboepd of sales and US$65m of post-tax CF in FY19, rising to 32 kboepd and US$98m in FY21 (see Base Nigeria cash flows in Figure 2, below). This material step-up is driven by two factors: (1) the ramp up in Uquo field gas sales to full ‘daily contract quantity’ (DCQ) volumes in 2020, and (2) an in-built price inflator of ~6% per annum across existing gas contracts. Given modest future capex requirements, we expect the Nigeria base to generate cumulative FCF of ~US$177m over FY19-21, underpinning SAVP’s intention to become a dividend payer (maiden dividend of US$12.5m expected to be paid in Q1 2019, implies yield of 4.2%).

Exploiting local gas market opportunity: we see significant potential value in connecting ‘last mile’ industrial customers to Accugas’s existing pipeline network, which transports Uquo gas to market. Typically, these customers are burning diesel for power at an equivalent price of ~US$15/mcf, compared with Accugas’s current average realised price of US$3.5/mcf (US$1.8/mcf of which flows to the upstream). In the event that new gas contracts are inked at a premium to US$3.5/mcf, the difference is split 50:50 between the midstream and upstream. Already, Accugas has secured heads of terms to supply 5 mmscf/d at prices of ~US$7.5/mcf (implying an enhanced upstream price of US$3.8/mcf), prompting the start of work on a new 18km pipeline spur with 20 mmscf/d of capacity (the Calabar Gas Development Project). We expect this to provide a key new revenue stream, contributing post-tax CF of US$4m in FY20 (5 mmscf/d of sales) and US$13m in FY21 (15 mmscf/d).

Longer term, leveraging off its dominant gas infrastructure position (only significant gas processing and transportation system in southeast Nigeria), Savannah is also well placed to tap new upstream opportunities at low cost in the surrounding area, where were is an estimated 40 tcf of discovered undeveloped gas resources.

Creating value through the drill-bit: the economics of SAVP’s Niger business are highly compelling, with basin-wide finding costs of less than US$1 per barrel and an NPV12% of US$5.2 per barrel in the ground at US$70/bbl oil (NPV10% of US$5.9 per barrel). Thus far, the company has drilled four successful wells (out of four) in the R3 East area, with estimated discovered resources in the range of 40-60 mmbbls (worth 12p/shr risked). Looking ahead, the company is currently drilling its fifth exploration well (Zomo-1) and it has a further four optional rig slots remaining, to be used for a mix of E&A and development drilling. We see considerable remaining exploration potential in the basin, noting that the R3 East area accounts for less than 10% of SAVP’s overall land bank. Conservatively, our valuation ascribes 125 mmbbls of unrisked resources to a further ten exploration wells (worth 14p/shr risked) across three high graded areas – R3 East, R3 Central and R1 South.

Early production and cash flows: SAVP has secured Government backing for an early production system with the potential to deliver cash flows from Niger in H1 2019, just 12 months after the first well. The initial development concept is based on leasing surface facilities to keep capital costs low and trucking crude 120km north to CNPC’s domestic pipeline for onward sale at the Zinder refinery. We forecast 2 kbopd of production and US$11m of post-tax CF in FY19, ramping up to 5 kbopd and US$55m in FY21. Looking further out, following a bilateral agreement between Niger and Nigeria, plans are being prepared to build a major Agadem export pipeline to a new refinery in northern Nigeria which should unlock the wider basin from 2021 onwards. Several alternative pipeline options (via Chad and Benin) are also being worked up, providing multiple possible outlets (CNPC is expected to finish pre-feasibility studies on the pipeline routes by Q4 2018).

Potential partial monetisation: in our opinion, SAVP’s 100% exploration success rate in Niger and the prospect of early cash flows has increased the pool of potential industry partners and the likelihood of a farm-out transaction. Whilst SAVP has the flexibility to move Niger forward on its own, utilising internally generated cash flows (from Nigeria), a farm-out deal would expedite exploration and production, bringing forward resource additions and cash flow and thus enhancing shareholder value. In our minds, the most likely potential partners are the major NOCs which have underinvested during the down-cycle and are now hungry to replenish reserves.

Material discount to fair value: Using a 12% discount rate and a flat oil price of US$70/bbl, we calculate a Total NAV for SAVP of 72p/shr – up marginally from our previous 66p/shr figure. To illustrate the value on offer, our NAV of either one of SAVP’s businesses underpins the current share price (28p/shr), with Nigeria (2P + 2C) contributing 45p/shr risked (including corporate items) and Niger 27p/shr risked. Meanwhile, on an earnings basis the stock also looks attractively valued, trading on an EV/EBITDA of 2.8x FY19 falling to 1.2x FY21. Given continued progress on the Seven Energy transaction, and our confidence that the deal will complete before the year-end, we believe SAVP’s current discount to fair value represents a compelling entry point for investors.

[bushman1] 24/9/2018 07:41

Tullow / PCL Cormorant 1 well offshore Namibia has been announced as a dry hole.

ONGC Videsh the Indian conglomerate allegedly looking at SAVP Niger assets hold a 30 % WI.

[bushman1] 24/9/2018 07:41

Tullow / PCL Cormorant 1 well offshore Namibia has been announced as a dry hole.

ONGC Videsh the Indian conglomerate allegedly looking at SAVP Niger assets hold a 30 % WI.

[bushman1] 24/9/2018 03:41

Tullow / PCL Cormorant 1 well offshore Namibia has been announced as a dry hole. ONGC Videsh the Indian conglomerate allegedly looking at SAVP Niger assets hold a 30 % WI.

[bushman1] 22/9/2018 14:36

Posted by happysparrow on LSE : excellent !

'' Upcoming news :


A fuller list:

- Interims (last year 20/09/17)

- Niger/(Nigeria) rumoured talks with ONGC end of Sept - leading to possible Farm-out or asset swap JV (Chinese / Indian interest) in Q418; even a takeover of SAVP in the long-run?

- Zomo well 5 preliminary results 1st week of Oct

- Spud of well 6 in 3rd week of Oct (then 3 more wells drilled Nov / Dec / Jan)

- AK presenting at LSE oil and gas investor evening 16th Oct

- Frontier gas for oil swap completed by 20th Oct

- 7E transaction Implementation agreement by 31 Oct (and completion in Q418)

- well production testing of at least 2 wells, submission of pre-feasibility study of the discovered crude oil resources in the R3 area + application for Exclusive Exploitation Authorisation - all by 5th Nov

- Africa Oil Week - Steve Jenkins on M&A in the African O&G sector - 7th Nov

- Nigeria gas production update for Sept-Dec 18 in Jan 2019

Oh, and a £1 a share by Xmas ! ''

[thelung] 22/9/2018 00:06

Zomo spud 8th Sept so should reach TD at 2,438m by Monday / Tuesday (if it hasn't done so already) with a discovery announcement in w/b Monday 1st Oct. AK describes Zomo as similar to Amdigh in terms of location, size and potential significance so discovery announcement may not come until the end of that week.

[thelung] 22/9/2018 00:02

Bushiya reached TD at 2,200m on the 16th day & well result announced on the 25th day

Amdigh reached TD at 2,469m on the 24th day & well result announced on the 31st day

Kunama reached TD at 2,460m on the 14th day & well result announced on the 25th day

Eridal reached TD at 2,542m on the 14th day & well result announced on the 19th day

[rampair] 21/9/2018 23:37

Amazing volume and second the Zengas comment - I do my best on another company website
and know the amount of work it takes to write to that standard (I didn’t say I was any good !) so, much appreciated. As are some of the ones serving longer sentences lol who
make me smile....

R.:-)

[timberwolf3] 21/9/2018 18:06

Yes 15 million traded today, expect we will get another holdings rns sooner or later.

[xxnjr1] 21/9/2018 17:03

Nice volume today. Thanks, once again Zengas, for your analysis. Much appreciated.

[ifthecapfits] 21/9/2018 16:08

Seems the word might be getting out ;)

[professor x] 21/9/2018 15:50

Over 10 million traded today as well! Highest volume since back from suspension.

[ifthecapfits] 21/9/2018 15:20

Thanks. All coming together nicely.

[buffythebuffoon] 21/9/2018 15:11

It's fascinating to watch the way AK is developing this company.

I always thought that a man with his background would be a good strategist.

The way he's going, we will be a very significant high end African mid-cap exploration and production company.

Wherever you look there's good news. I can't recall any company I've invested in that has built such a tremendous portfolio of assets

Taking Zengas' comment:

"It might pave the way for a deal to be done on those SAA oilfields that we were originally interested in and then had to move to discuss these outside of the 7E transaction."

Just take a look at the numbers presented in the first RNS discussing the Seven deal......

Hold, sit on your hands, and only set them free to buy some more.

Damn, having lectured someone recently about the inadvisability of falling in love with a company, I seem to be enamoured.

Still, it couldn't happened to a more attractive investment...

Buffy

[bushman1] 21/9/2018 15:09

Andrew Knott CEO SAVP interview : Friday 21st September : ( 27 minutes )



Malcy blog : Friday 21st September

Savannah Petroleum

SAVP announced two strategic updates to the Seven Energy transaction yesterday, increasing its stakes in both the Uquo field and the Stubb Creek field, and also announcing that Accugas had commenced work on the Calabar pipeline extension which will open up new gas customers from H1 2020.

An MOU has been signed with Frontier Oil Limited to conduct a gas for oil swap at the Uquo field increasing SUGL’s rights to gas production to 100% from the current 87.7%.

econdly, an agreement has been reached to acquire the 37.5% minority shareholders interest in Universal Energy Resources Limited, increasing the enlarged group’s interest to a 51% operated interest from the current 32%.

The cost of these deals will be a payment on completion of $20m and $14m in Naira over three years – which is expected to be offset against capex which was due to be spent on the oil project.

The combination of these two deals will add 25.1 mmboe 2P reserves and 2C resources increasing reserves and resources being acquired in the transaction by c.19%. These deals will not only reduce forward capex by c.$35m but also ‘serve to secure effective control over the full gas value chain in South East Nigeria’.

These deals have obviously delayed the final completion of the wider transaction, but for good reason as they leave SAVP in control of their own destiny, and the deal is now expected to complete ‘in Q4 2018’ with the Implementation agreement anticipated to be signed by the end of October 2018.

Finally, right of way works have commenced in relation to the construction of the 18km pipeline extension into the Calabar Free Trade Zone and the greater Calabar area which should be able to supply new customers from H1 2020, adding another revenue and cash flow string to SAVP’s bow.

These deals are of considerable strategic significance to SAVP as they give increased operational control across the gas value train and enable the company to reduce costs at Uquo and Stubb Creek and deliver profitable growth through Accugas from the Calabar Gas Distribution Project.

Combined I expect a material source of new revenue for SAVP which significantly enhances the value in the Seven assets across the board.

[bushman1] 21/9/2018 15:08

Andrew Knott CEO SAVP interview : Friday 21st September : ( 27 minutes )



Malcy blog : Friday 21st September

Savannah Petroleum

SAVP announced two strategic updates to the Seven Energy transaction yesterday, increasing its stakes in both the Uquo field and the Stubb Creek field, and also announcing that Accugas had commenced work on the Calabar pipeline extension which will open up new gas customers from H1 2020.

An MOU has been signed with Frontier Oil Limited to conduct a gas for oil swap at the Uquo field increasing SUGL’s rights to gas production to 100% from the current 87.7%.

Secondly, an agreement has been reached to acquire the 37.5% minority shareholders interest in Universal Energy Resources Limited, increasing the enlarged group’s interest to a 51% operated interest from the current 32%.

The cost of these deals will be a payment on completion of $20m and $14m in Naira over three years – which is expected to be offset against capex which was due to be spent on the oil project.

The combination of these two deals will add 25.1 mmboe 2P reserves and 2C resources increasing reserves and resources being acquired in the transaction by c.19%.

These deals will not only reduce forward capex by c.$35m but also ‘serve to secure effective control over the full gas value chain in South East Nigeria’.

These deals have obviously delayed the final completion of the wider transaction, but for good reason as they leave SAVP in control of their own destiny, and the deal is now expected to complete ‘in Q4 2018’ with the Implementation agreement anticipated to be signed by the end of October 2018.

Finally, right of way works have commenced in relation to the construction of the 18km pipeline extension into the Calabar Free Trade Zone and the greater Calabar area which should be able to supply new customers from H1 2020, adding another revenue and cash flow string to SAVP’s bow.


These deals are of considerable strategic significance to SAVP as they give increased operational control across the gas value train and enable the company to reduce costs at Uquo and Stubb Creek and deliver profitable growth through Accugas from the Calabar Gas Distribution Project.

Combined I expect a material source of new revenue for SAVP which significantly enhances the value in the Seven assets across the board.

[zengas] 21/9/2018 10:28

As for 200p, I'm using the full diluted share issue in my calculations and the introduction of new money.
New money may happen fully, in part or may not.
Just 4 months now until the warrant exercise for those that want to or not.

Investors are getting excited over at Eco Atlantic at £80m and 15% interest at Guyana for potentially 450+ mmbls net across 9 prospects from memory. No production and of course plenty of upside and good COS on some of those but risk at that m/cap is no asset to fall back on if a dent in drilling results.
In Comparison we won't be far off 30,000 boepd, 100 mmboe 2P (possibly 200 mmboe 2P/2C already given latest 4 Niger discoveries) paying a dividend, generating significant cash and a 20% seperate interest in a significant gas business.

Current m/cap £216m at 26.5p and exposure to 7 billion bls mid case unrisked (2.8 billion bls risked). No other company has that level of exposure to such significant resources.
CPR Valuation on Nigerian assets was $663m/£490m (what value now with 20% greater 2P/2C ?).
Applying the fully diluted 1145m shares - that CPR valuation would be 43p for Nigeria before any pick up in development and bringing both segments of that business forward post takeover. They have told us that basically the company has 2 seperate business operations and no reason that they can't drive the Nigerian side to around 100p of value fully diluted.

There also has to be some value for any additional money brought in as a result of the greater number of shares (if that happens).
That leaves Niger not priced in at all - not even hope value such as Eco has.
Where else do you get 7 billion bls unrisked exposure (2.8 billion risked) mid case and such a high COS as already demonstrated in the 100% exploration drilling success so far with 4 discoveries ?

They are using a valuation of $6-$8/b.
Using $5/b instead, every 100 mmbls = $500m/£370m (using £1=$1.35). On 1145m shares that is 32p/share.

Just 350 mmbls in Niger at $5/b and not the $6-$8/b used gives 112p. Even 700 mmbls on a 50-50 farm out basis is only 25% of the risked figure and 10% of the unrisked figure. (There's actually a 450p potential value on a 50-50 farm out on the risked figure using $5/b and not the $6-$8/b that the company and some analysts are using. That's also not valuing the impact of any farmout cash/reducing our costs). So if you add Nigeria to that it's in excess of 500p.

Using the above gives me my £2 investment target with plenty of upside beyond that. I beleive in time Savp will become a takeover target.