Savannah Petroleum Share Discussion Threads

[alamaison5] 06/2/2019 12:17

Now, the question is: 25p or 24p?
We'll know by tomorrow, cos if 24p breaks then who knows? 20p?

[thomasthetank1] 04/2/2019 08:22

Hannam & Partners - Savannah Petroleum

Implementation agreement signed for Seven deal

Implementation agreement: key milestone ahead of deal completion

Savannah has entered into an Implementation Agreement with Seven Energy. The Agreement is legally binding and details the legal terms and steps according to which the acquisition of the Seven Assets will be implemented and includes various agreed legal documents required to complete the Transaction. It also includes provisions which commit the parties to support and deliver the Transaction. Savannah will also increase the liquidity facility provided to Seven Energy to US$30mm from US$20mm in order to fund advisory fees that come due as a result of signing the Implementation agreement.

Transaction remains on track to close by end Q1’19

The road to the Seven deal closing now looks clear, with remaining steps being largely procedural and subject to a pre-agreed sequence of events, which will now commence. In addition, good progress has been made regarding securing the key Ministerial Consent, which Savannah expects to receive shortly. The Company continues to expect that the Seven Energy Transaction will complete during Q1 2019.

Updating our estimates to reflect recent equity raise

We have updated our model to reflect the recent placing of 62.8mm shares which raised US$23mm in gross proceeds at 28p/sh. We have also removed the dilutive impact of 132mm warrants at 35p/sh, which are now unlikely to convert before expiry. The net impact of these two things more or less cancel each other out and hence our NAV rises slightly to 90p/sh from 89p/sh.

Niger catalysts to watch for: well test and further exploration

The planned well test at the Amdigh is expected in mid-H1’19 meaning subsequent production from the Early Production system should follow in Q2’19 We carry 14p/sh in risked value for the EPS. Further exploration wells (new multi-well drilling campaign expected to commence in H1 2019) and seismic are also likely in 2019, as is the potential to bring in a partner.

Valuation: company remains on a large discount to NAV

We believe Savannah offers a combination of solid free cash flow generation funding cash returns to shareholders, growth from new developments and exploration upside. The company is trading at 50% discount to our core NAV of 55p/sh. SAVP is trading on relatively low cash flow multiples already in 2019 before substantial growth in earnings and cash flow in 2020 puts it on very low multiples (e.g. EV/EBITDA multiple of 4x in 2019, dropping to just 2.5x in 2020). We believe that stable cash flow from gas sales in Nigeria, notably underwritten by payment guarantees, including from the World Bank, will unlock material value in the share price.

[thomasthetank1] 04/2/2019 08:12

Mirabaud note on SAVP below.

SAVANNAH PETROLEUM - SIGNED, SEALED, DELIVERED

In a major step forward, Savannah Petroleum (SAVP LN) has announced the signing of the Implementation Agreement with counterparties to the Seven Energy acquisition, including Seven’s main creditors. The agreement is legally binding and sets forth the legal & procedural steps required to effect the transaction – including the controlled insolvency process of Seven and the restructuring of its intra-group debt. Over the past year this agreement has taken on growing importance in the market, since it binds all parties to the transaction, removing any perceived uncertainty around deal execution. Further to signing the implementation agreement, Savannah noted today that it remains confident of completing the overall transaction in Q1 2019. The last remaining step in this hard-won acquisition is Ministerial consent which the company expects "shortly". This rubber stamping process follows extensive due diligence and earlier sign off by the Department of Petroleum Resources (DPR) in October.

[alamaison5] 04/2/2019 07:52

A dog is a dog, lol.

[honestmarty] 04/2/2019 07:43

Excellent news today.

A slow burner over the next few months.

It won't excite the rabid mob that infests AIM, but I hope to see some very clever money start to trickle in.

Next news will be Niger,

[divmad] 04/2/2019 07:13

RNS on IA being signed, is out. The last paragraph sounds loaded though. Not a done and dusted deal yet. Cigars kept firmly in the box for now.

[buffythebuffoon] 04/2/2019 02:14

Oh yes. Food and drink, and no sign of Malcy.

Regards

Buffy

[xxnjr] 04/2/2019 01:07

Hi buffy,

Wise words. Good to know you are still enjoying free tea and biscuits! xx

[thelung] 03/2/2019 09:32

West Africa: Niger's oil will pass through Benin

2019/31/01 - An agreement was signed to build a pipeline between the two countries to export Nigerian oil.

The document was initialed in Niamey by the Nigerian Oil Ministers, Foumakoye Gado, and Beninese Mines, Samou Séidou Adambi. Work will start this year. The infrastructure would deliver crude oil to the port of Cotonou from the Agadem fields

[buffythebuffoon] 02/2/2019 15:57

Yeah, I think I said that Jonny

Buffy

[ngms27] 02/2/2019 14:33

NPV means nothing in this sector. Best ignored.

[divmad] 02/2/2019 10:51

I wonder if end goes into the same category as zen when it comes to share price and npv mismatch.

[buffythebuffoon] 02/2/2019 08:00

Hi xxnjr,

I’ve always relegated the NPV figure to ‘oh really’ status.

At the Proactive Investors meeting last Thursday, the suave (best thing I can say about him) Andrea Cattaneo gave a presentation on ‘his’ company Zenith Energy. Having finally given up on the workovers in Azerbaijan as a waste of resources (having realised he was lied to, and the data they gave him was about as reliable as Kim Jong Un’s nuclear inventory) they are now focusing on the new drills. Despite this, he proudly showed a slide which showed the market cap at £9m and the NPV10 of the Azerbaijan asset at £469m I think it was. What a wonderful opportunity the NPV was telling us...

I’ve spoken to many Oil and Gas Company CEOs and Chairmen, and most proudly quote the NPV. Quite a number (including several with high NPVs relative to their market cap) candidly say it’s often what the market wants to hear, but in small oil companies it’s not that worthy a figure to base an investment on.

As an aside, barely a few minutes into the first talk a flash mob stood up and started chanting ‘No more oil’ and they all read a written statement that droned on. After literally half an hour they were eased out; presumably taking their oil derived possessions with them into the diesel powered 76 or 141 bus nearby.

Buffy

[xxnjr] 02/2/2019 01:57

"Savannah Petroleum was the company with the highest value creation per barrel of oil equivalent (boe) last year thanks to its work in Africa. Rystad Energy estimates the resources discovered in Niger Block R3/R4 have a net present value of more than $10 per boe."

Have no idea how Rystad arrived at a value added number for SAVP of $1.368bn!!!
If only.

[alamaison5] 01/2/2019 11:00

25p here I come...

[pembury] 01/2/2019 07:56

yes not impressed

[divmad] 01/2/2019 07:41

Very disappointed that AK has let us down here yet again with missed deadlines. I don't care if the whole transaction is supposed to close in A1, savp just cannot be trusted with pr grand words, in the murky world of Nigerian business.

[gmr64] 31/1/2019 12:38

Shares Magazine
Savannah raises funds as it targets Seven deal completion
By Tom Sieber
31 January 2019

Nigerian assets should generate healthy cash flow once the acquisition finally goes through

Savannah Petroleum (SAVP:AIM) 27.1p
Gain to date: 1.9%
Original entry price: Buy at 26.6p, 6 September 2018

The decline in oil prices and news of a dilutive share placing (24 Jan) have taken some of the wind out of the sails of oil and gas producer Savannah Petroleum (SAVP:AIM). As a result, the healthy early gains we recorded following our positive call have largely been erased.

Delays in concluding the acquisition of a basket of assets from Seven Energy in Nigeria have also not helped the share price; this acquisition is now anticipated to complete before the end of the first quarter.

The company expects to receive $90m in cash when this deal goes through. For now it has raised around $23m through a placing at 28p per share. Investors can take some comfort from the fact the board itself had a healthy participation in the fundraising.

Regardless of the frustration at the hold-up in getting the Seven deal over the line, we continue to like the medium-term story, where the company should be able to generate significant cash flow from the Seven Energy portfolio which it can invest in developing its exploration and appraisal assets in both Nigeria and Niger.

SHARES SAYS:

Investors should (eventually) be rewarded for their patience.

Keep buying.

[thomasthetank1] 31/1/2019 08:11

Barclays note on a savannah Petroleum


Savannah Petroleum: Still an attractive concept

Stock Rating: Overweight
Industry View: Positive
Price Target: GBp 55 (from GBp 38)
Price (29-Jan-2019): GBp 26
Potential Upside/Downside: +111.5%
Tickers: SAVP LN / SAVP.L

We are updating our valuation and financial estimates to reflect the improved structure for Savannah's acquisition of upstream and midstream assets from the creditors of Seven Energy in Nigeria. Our price target increases to 55p from 38p, in line with the change in our tangible NAV that now reflects Savannah's larger stake in the Accugas midstream business – a strategic asset within the company's gas monetization plans. We continue to rate the stock Overweight, but our analysis comes with the caveat that it remains largely conceptual ahead of deal completion.

Nigeria: The acquisition from the creditors of Seven Energy was announced in November 2017. Subsequent transactions with its new partners have enhanced the value of the business being acquired, but have also contributed to a prolonged deal completion process that is now scheduled to conclude by end-Q1/19. At this stage, any analysis of the Nigerian gas business is largely conceptual – Accugas owns a regional gas pipeline distribution network and its three Gas Sales Agreements (GSAs) provide contracted demand of 1.1Tcf, which is currently being supplied by Savannah's own upstream assets (0.9Tcf of 2P+2C). Longer term, these GSAs (and new GSAs) can be supplied by the multi-Tcf uncontracted resource in the region that Savannah can seek to acquire and develop. We believe it is likely to take 6-12 months after deal completion for Savannah to begin demonstrating the cash flow generation of the existing operations and start delivering on its growth ambitions – converting Heads of Terms into new GSAs and securing additional upstream gas resources.

Niger: The current focus is on converting 2018 exploration success into a ~50mmbbl Early Production Scheme (EPS) supplying the country's Zinder refinery. Management aims to begin commercial oil sales during H2/19, ramping up to 5kb/d. Further exploration success in 2019 could support an expansion of the scheme to ~10kb/d.

Equity raise: Last week, Savannah raised gross proceeds of $23m at 28p/shr. This satisfies working capital needs arising alongside the prolonged completion schedule in Nigeria. A further ~$90m cash injection that comes with deal completion should be sufficient to fund management's 2019 investment activity in both Nigeria and Niger.

[plentymorefish] 29/1/2019 09:05

Why?....what will you do to him?!

[pembury] 29/1/2019 08:48

it better be for his sake!

[bushman1] 29/1/2019 08:45

Divmad, AK is confident as we know. The DD's have been completed, now it's the formalities. He has said several times it would be at the end of January which suggests the IA announcement has been planned well in advance with SAVP's PR team / media coverage being arranged .

[plentymorefish] 29/1/2019 08:05

I doubt it.....