Savannah Petroleum Share Discussion Threads

[divmad] 29/1/2019 08:01

Well, just 2 more days before month end. Will we get the IA signed off this time?

[alamaison5] 28/1/2019 15:47

doing good, doing good, lol

[timberwolf3] 25/1/2019 19:19

Jan 24, 2019
The proposed construction of a new refinery in Katsina state has failed to take off one year after agreement for the project was reached between Nigeria and Republic of Niger, Daily Trust reports.

Officials familiar with the project said it has not kicked off because the Nigerian government was yet to secure the commitment of China’s state oil firm the China National Petroleum Corporation (CNPC) to supply its crude share in the Agadem oil field to the proposed refinery in Katsina, Nigeria.

In February last year, Nigeria’s ministry of petroleum resources announced that a mutually beneficial agreement was reached for the construction of a refinery in Mashi, the border town between the Republic of Niger and Katsina State, Nigeria, and a crude oil pipeline from the Republic of Niger to the new refinery.

Later in July, the minister and his Nigerien counterpart, Foumakaye Gado, signed a Memorandum of Understanding (MoU) in Abuja on the construction of the refinery in the presence of both countries’ presidents.

Two committees – a Steering and a Joint Technical Team – were set up to determine the feasibility of the projects and were expected by December 2018 to come up with a detailed road map and guideline leading to actual execution of the projects.

But Daily Trust gathered that the Katsina refinery and pipeline project would not start except the Nigerian government is able to convince CNPC to commit its crude share in the Agadem oil block in Niger for the proposed refinery.

CNPC holds operating permit and 80 per cent of the proven crude oil reserve in the Agadem block located in the semi-arid eastern region of Diffa, bordering Chad with estimated one billion barrels oil reserves. CNPC is already pumping oil in the Agadem block for primarily Niger’s domestic use.

Niger, which owns 20 per cent of the crude, is keen to ramp up its production and had opened talks with its southern neighbour Benin on the possibility to export its oil via a pipeline that will link its oil fields to the port of Cotonou in Benin.

Though safer than the Chado-Cameroonian pipeline route, which already exists, experts said this alternative is much more costly, as Niger would have to double its investment in the project and build a pipeline in its territory, and another one in Benin.

Speaking on some of the challenges holding back the Katsina refinery project, Nigeria’s Engr. Rabiu Suleiman, who heads the Joint Technical Team that is developing a road map and strategy for the refinery and pipeline projects, noted the Nigerien government, as of today, has committed its 20 per cent oil share at the Agadem oil block to Nigeria.

“The owners of the 80 per cent, the Chinese were looking at Nigeria in the first instance, Benin Republic and Cameroon through Chad.

“We are discussing on how the Chinese can withdraw from the understanding they have with Benin Republic without any litigation and come back to Nigeria and dedicate crude for Nigeria,” Suleiman said.

“The minister of Niger confirmed to us he is pushing hard for the Chinese to agree to the Nigerian project rather than Benin,” he added.

“To run a pipeline from Agadem to the Benin Republic sea port is like 2080km which will be very costly compared to Agadem-Katsina which is just 120 to 150km. The cost of 1km pipeline of the size we are talking about is about $1.5m. If you do a 2000km plus pipeline it means you have to invest over $3bn on the pipeline alone,” he said.

Nigeria lobbies China

Engr. Suleiman said a Nigerian delegation, including petroleum ministers of Niger and Nigeria, will head to China between now and March to convince the Chinese authorities to agree to the Nigerian project rather than Benin.

“We had a meeting with the ambassador of China and the minister of foreign affairs on the directive of President Muhammadu Buhari that we should use whatever political and diplomatic pressure on the Chinese government to talk to the company in Niger to bring their crude to Nigeria,” he said.

He added that “the ambassador has been given a letter to send to China to arrange for a meeting between Nigerian and Nigerien delegation led by the two ministers for petroleum to meet with the headquarters of the Chinese company (CNPC) and convince them that the crude to Nigeria is more economical and more beneficial and to come back with the commitment that they have agreed either in whole or in part to give us their 80% and to add to the 20% that Niger has so that we can put a sizeable refinery in Katsina.

“These are the discussions that are going on. Unless we achieve that we may not be able to kick start the project.

“If we had resolved this issues long time ago December was enough to have taken President Buhari to Katsina to go and lay foundation.

“We have gotten extension up to March to go to China to discuss all these with them, come back and report back to the two presidents of Niger and Nigeria,” he said.

Katsina refinery versus Kaduna pipeline project

Daily Trust reports that the initial plan by the federal government to construct about 1,000km pipeline that will convey crude oil from Republic of Niger to the Kaduna refinery in Nigeria has been jettisoned for the Katsina refinery project.

As part of efforts to address frequent disruptions of crude supply to the Kaduna refinery, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, had in November 2016 confirmed that the federal government was planning to construct about 1,000km of pipelines that will transport crude oil from the Nigerien oil field in Agadem to the Kaduna refinery.

To actualize the plan, the NNPC GMD said the corporation would hold discussions with the Chinese firm operating the Agadem oil field.

But it was learnt that the project would no longer go ahead because it would not be economical to run a pipeline all the way from Niger Republic to Kaduna refinery.

NNPC spokesman Ndu Ughamadu said either the Katsina refinery or both projects “are in national interest.”

Engr. Suleiman said it was tested and discovered that Niger crude could not be processed in Kaduna refinery.

“The design of Kaduna refinery cannot process Niger crude 100 per cent. You have to blend it with Nigerian crude coming from Warri and Escravos. You can only blend 8% of Niger crude with 92% of Nigerian crude. 8% of Niger crude means only about 5000 barrels per day if Kaduna refinery is running at 100% capacity. So, 5000 barrels per day is not economical to run a pipeline all the way from Niger to Kaduna,” Suleiman said.

“That is why we are looking at the option of a border town like Katsina to do a brand new refinery that will process entirely Niger crude. That will save the cost of pipeline to Kaduna and will save the cost of upgrading Kaduna refinery to satisfy Niger crude. If you upgrade Kaduna refinery to satisfy Niger crude you have jettisoned the pipeline from Warri to Kaduna. What would you do with the pipeline and crude that we have spent money to build a refinery for and a pipeline for that?” he added.

[nen2319] 24/1/2019 16:47

Zengas, what do you recall about the debt facility? Is it dependant on this fund raise and is now accessible for example?

[zengas] 24/1/2019 15:40

About 71m shares less, though still 14 days to go.

If 62.5m warrants had been taken up at 35p we would have gotten £21.8m instead of £17.5m at 28p in the placing.

[buffythebuffoon] 24/1/2019 14:54

Isn’t the dilution less than if the warrants were all taken up?

Buffy

[nen2319] 24/1/2019 12:14

Don’t believe they have had to issue another RNS correction! Does nobody check these?

[gozo] 24/1/2019 11:45

Strange that (according to that broker note) they're intending to pay a divi in the not too distant future.Also planning a drilling campaign in Q2 2018!!

[divmad] 24/1/2019 11:36

I've added yet again here. Happy to buy at the same price as the IIs. The prize hasn't changed but maybe the potential warrant dilution has, so what's a LTH not to like?

[alamaison5] 24/1/2019 11:09

alamaison521 Dec '18 - 09:10 - 183 of 224 Edit
0 0 2
No deal done until it's done, lol.
Back to 25p. Trap is set.

[jnbrw] 24/1/2019 10:14

If this Nigerian escapade is such a winner perhaps someone could tell me why nearly two years on from the date it was first announced, we are still diluting with millions of shares at such a depressed price to fund a rig to drill in Niger? We could have done this when the share price was in the 30s two years ago and we had only 283 m shares ( instead of nearly a billion)

[honestmarty] 24/1/2019 08:30

Looking at unbelievably pathetic trading volume.

It would appear that nobody gives a flying F.

AK MUST produce this IA before February 1st.

Back to hibernation.

[divmad] 24/1/2019 08:30

It's not that bad really. I'm unfazed by this placing actually, given that we now have a stronger deal about to close off whilst in the meantime those hungry lawyers need their fees paid upfront, just in case! And securing the Niger rig to avoid any delays there in Q2 is also sound planning for the future.

[thomasthetank1] 24/1/2019 08:18

Mirabaud note on SAVP fundraise.

SAVANNAH PETROLEUM – A BRIDGE TO COMPLETION

Savannah Petroleum (SAVP LN) has announced a US$23m equity placing at 28p in order to boost its working capital position ahead of closing the Seven Energy transaction. Whilst a raise had not been foreseen, the level of dilution is very modest (7.7%) and, most importantly, it keeps the company on track to deliver key near term milestones. US$6.5m will be used to pay legal fees on the Seven transaction, clearing the path for the Implementation Agreement to be signed by end of January and closing by end March - once the formality of Government approval is complete (we note that all DD is complete and sign off from the Department of Petroleum Resource has already been granted). A further US$13m will be allocated to Niger including a down payment for a drilling rig for the forthcoming multi-well programme starting in Q2 2018, with the remainder (US$3.5m) set aside for working capital. We note that Directors of the company, including the CEO Andrew Knott, have subscribed to ~US$750k (equivalent to 3.3% of the gross proceeds).

In essence, the equity raise comprises bridge funding through closing of the Seven transaction, whereupon SAVP will be in a significantly better liquidity position. Following the recent improvement of the deal terms, announced in December, SAVP will receive a cash injection of some US$90m on completion (including US$70m from partner AIIM). In addition, following the legal transfer of ownership, SAVP will assume control of Seven's cash flow stream transforming the company into a full cycle E&P with over US$170m of EBITDA in year 1 (FY19 pro-forma estimate). Far from being capital constrained, we believe that SAVP will be in a position to consider shareholder returns at this point. Indeed, the company is likely to reaffirm its intention to paying a dividend alongside its FY18 results in May (we forecast a CY19 US$12.5m dividend pay-out in, implying a yield of 3.9% at the placing price).

[timberwolf3] 24/1/2019 08:18

This is what they said yesterday :

Savannah confirms that it remains on schedule to sign the Implementation Agreement by the end of January 2019

I would of expected the share price would of been higher after confirmation of that news, but oh no they couldn't wait a bloody week could they. Diluting us while enriching themselves, not a good look Mr Knott.

[plentymorefish] 24/1/2019 08:12

Well, not too big a discount to yesterday's share price - less than 10%, still don't like being diluted though. Unclear as to what is so urgent on the working capex front that they needed it before the 7 energy monies come through (allegedly) in Q1?

[buffythebuffoon] 24/1/2019 08:01

Big sum of course.

A bit too big for an envelope; may need to be an electronic transfer into a Swiss bank account.

Buffy

[honestmarty] 24/1/2019 07:59

28p, a nice floor in the current climate

No more games AK

Time to deliver

[honestmarty] 23/1/2019 22:48

As I now understand it.

We will hear before the 8am bell.

Fingers and toes crossed.