Savannah Petroleum Share Discussion Threads

[zengas] 01/2/2020 16:33

From Savps partner AIIM indicating huge growth potential from Power and Industry - 'Accugas sees power generation as continuing to dominate demand for its feedstock, at around 75%, while industry will take around 25%.' No wonder we see AK in meetings to secure new additional reserves from idle fields.

31/1/2020
The Nigerian economy has a gas distribution and power generation problem. African Infrastructure Investment Managers (AIIM) is playing a part to tackle this, through its investment alongside Savannah Petroleum in assets previously owned by Seven Energy.

The deal took a while to complete, with talks beginning in 2017 and Savannah finally announcing closing in November 2019. AIIM’s entry closed in January.

Savannah has an 80% stake in the Uquo field and an 80% stake in Accugas, a midstream business with 260 km of pipeline network, with AIIM holding the remainder. The infrastructure investor said it had paid $54 million for the stake, from its pan-African AIIF3 fund. The fund closed in July 2019, raising $320mn.

AIIM’s director for West Africa Sola Lawson told Energy Voice. As such, major producers preferred to export gas via the country’s LNG plant than meet domestic demand. “There was a lack of policy around the power value chain, when power plants were state owned. There are still issues, since those were privatised, but it’s moving in the right direction” Lawson said.

Gas prices for power generation are still regulated, the AIIM official noted, but there is a “recognition of the costs to produce gas, while the non-power side is not regulated”. Accugas sees power generation as continuing to dominate demand for its feedstock, at around 75%, while industry will take around 25%. The investor has knowledge of Nigeria’s power situation having been involved in the construction of the 450 MW Azura-Edo power plant, which was the first – and only to date – project financed project built in the country.

“Growth is around captive power solutions,” Lawson said, given Nigeria’s largely unmet demand. AIIM has put estimated peak demand in the country at around 20,000 MW, while the country’s power plants are capable of reliably providing 4,000-5,000 MW. As a result, the country has a high reliance on back-up diesel generators.

The deal with Sahara’s FIPL is the first signed by Accugas in five years, but Lawson has said the plan is to “keep expanding the customer base”.

Beyond the power sector, there is also scope for fertiliser and petrochemical projects, with Lawson predicting growth over the next 10 years.

Full article

[stockport loser] 01/2/2020 15:28

You got that in writing? Theres many ways you can restructure debt, length of time, APR and equity, dont rule anything out, especially if they are taking on additional licenses in Nigeria.

[andyforster1] 01/2/2020 14:07

From the Savannah twitter feed The meeting centred on how Savannah Petroleum can collaborate with the State government to exploit idle gas fields in Akwa Ibom. The Governor promised to provide the necessary support for sustained investment in the State. #savp #nigeria #savannahpetroleum

[andyforster1] 01/2/2020 10:06

The debt restructuring is referencing the $400M coupon to a better rate now the business is on a strong footing with world bank guarantees. No chance it will be done on a convertible loan

[stockport loser] 31/1/2020 18:13

AK mentioned restructuring the debt, perhaps this has something to do with the downward pressure, new convertible bonds with a Vwap strike price? I think the $5m debt just isnt big enough for the action weve seen. If it is ii selling, then given the amount of them just over 5% , there would need to be some Tr1s soon.

[divmad] 31/1/2020 17:54

So, SAVP is quite possibly trading prospectively at year end at 1 X FCF of its Accugas business alone (200mmcfpd)?

[nametrade] 31/1/2020 17:10

Why am I surprised it finished down on the day...

[andrewsr] 31/1/2020 16:46

Today's contract award alone would justify the present SAVP valuation in most other companies. Bizarre current valuation thanks to our persistent seller(s).

[zengas] 31/1/2020 16:11

141 mmcf/d currently contracted under take or pay.

$104m net expected this year from existing contract cutomers.

The CPF Central Processing Facility is 200 mmcf/d (they previously said as has been tested and able to possibly do 240 mmcf/d) before any new modular bolt on trains are added.

Todays VOX interview at 32:50 in, he says -
"I've consistently said that i expect us to sign many new gas contracts over the course of this year and i certainly expect us to see the CPF fully contracted by the end of this year"
If so that would see a 40% increase and us at full capacity to around 200 mmcf/day.

If todays analysis by the 2 brokers of $10m free cash flow per 10 mmmcf/d to Savp is correct then it should bring in another $60m net at similar pricing/contract terms and leaving 40 mmcf/d tested spare capacity remaining unless they fill some of that too. If so, then circa $170m/yr of free cash flow imo.

He goes on to say - "This is the first of several such contracts that we expect to completely transform the cash flow generation outlook of the business."

Niger still very much mentioned both on development and further exploration - i would presume everthing must be in order re the PSCs with the Niger Government as he continues to talk about the plans for there. Possible material asset opportunities through partnering an indigenous oil Co in Nigeria for liquids.

Again re Accugas - if they go beyond 200-240 mmcf/d then id expect they'd be expanding their CPF because there is a huge opportunity out there. Their pipeline distribution network has capacity of 600 mmcf/d (100,000 boepd).

With that cashflow generation it's very compelling and a big opportunity to really expand Accugas alone.

[stockport loser] 31/1/2020 15:42

Sounds like they have a partner for Niger lined up who they will also look to sign deals with in Nigeria also.

[homebrewruss] 31/1/2020 14:33

Andrew Knott on the Vox podcast today:

[stockport loser] 31/1/2020 10:52

theres a seller, we know, still good news.

[ngms27] 31/1/2020 10:47

Wow that's really helped the share price.

[rampair] 31/1/2020 08:52

It certainly helps having extra sales with no capex to add, a potentially very good client - with the prospect of more to add.

Good start! -R.

[itsriskythat] 31/1/2020 08:37

maccamcd, keep posting, very useful information, thanks

[maccamcd] 31/1/2020 08:17

from NumisSAVANNAH PETROLEUM (BUY, PT 40p) - New Nigeria Gas Sales Agreement - positive. Savannah has announced a new gas sales agreement in Nigeria between Accugas (its gas pipeline distribution business) and the FIPL Afam power plant. The agreement is for an initial one year and for up to 35mmscf/d on an interruptible basis. The contracted gas sales price is not disclosed but is stated to augment the current average Accugas sales price, which we model at ~$3.6/mscf for 2019. We currently model an average of 137mmscf/d gas sales through 2020 to Accugas' existing customers and the new FIPL gas sales will potentially increase these volumes by up to 25%, although FIPL's actual off take may be less than this in practice. Incremental gas sales to FIPL will be directly accretive to Savannah's cash flow and earnings for very little additional cost - it will simply use its existing Uquo production capacity and existing spare capacity in its Accugas pipeline network. Every 10mmscf/d of incremental gas sales to FIPL should increase Savannah's operating cash flow by ~$10m. Savannah also states that it is confident that today's announcement will be the first of several new gas sales agreements to be signed through 2020. Savannah's shares have been weak over the last 3 weeks but in practice we think the company is delivering; delivering the expected cash flows in Nigeria with the take-or-pay mechanism working as it is designed to, and now delivering new gas contracts as it said it would. We see significant value in the shares - our risked discovered resource NAV is currently 40p/sh (@ $65/bbl, although Savannah has little oil price sensitivity) implying ~125% share price upside. We believe the valuation gap will close as Savannah continues to deliver cash flows, gas sales agreements and progress the Niger EPS through 2020. Savannah trades at 0.44x our discovered resource NAV, a significant discount to the sector on 0.7x

[itsriskythat] 31/1/2020 08:14

thomasthetank1, keep posting these notes, as the information is very useful, cheers.

[thomasthetank1] 31/1/2020 07:58

All - please see below from Mirabaud this morning.

BST



Savannah Petroleum (SAVP LN) has announced that Accugas, its Nigerian midstream arm, has entered into a fresh gas sales agreement (GSA) with a subsidiary of Sahara Group - owner of the 180MW Afam power plant in Rivers State. Sahara is a major independent energy and infrastructure conglomerate with annual revenue of >US$10bn. The agreement is part of a broader push by SAVP's to add high quality, investment grade customers and diversify its supply base.

The GSA envisages the supply of up to 35 mmscf/d (5.8 kboepd) of gas from the Uquo field to the Afam power plant, which is linked to Accugas infrastructure via the state-owned Nigerian Gas Company's (NGC) Ikot/Obigbo network. Importantly, as no incremental capex is required to supply the gas, first deliveries can be achieved in the relatively near-term - once Sahara has finalised tariff arrangements with NGC to move the gas over its pipeline network. The gas is being supplied on an "interruptible" basis, which means SAVP can tweak deliveries dependent on demand under its existing supply arrangements. Likewise, Afam has the option to take as much or as little gas as it wishes, dependent on plant utilisation (historically ~70%). The GSA is valid for an initial one-year term (extendible by mutual consent) and has the potential to be up-sized, following completion of a 180MW expansion project at Afam (now underway). This represents a major new incremental supply opportunity. SAVP notes that the GSA "augments the weighted average profitability of the Accugas portfolio", though the sales price is undisclosed for commercial reasons.

We estimate that the Afam gas contract could be worth around US$25m annually (in post-tax CF), assuming ~70% capacity utilisation and similar margins to SAVP's base integrated gas business. To put this in perspective, our group-level FY20 post-tax CF forecast currently stands at ~US$100m, based solely on existing contracts (141 mmscf/d of Take or Pay volumes, maintenance adjusted). Accordingly, today's news is materially accretive and demonstrates the value of layering in new gas contracts.

[ifthecapfits] 31/1/2020 07:29

RNS Number : 5035B

Savannah Petroleum PLC

31 January 2020

31 January 2020

Savannah Petroleum PLC

("Savannah" or "the Company")

Addition of New Customer to Accugas

Savannah Petroleum PLC, the British independent oil & gas company focused around activities in Niger and Nigeria, is pleased to announce that Accugas has entered into a new interruptible gas sales agreement ("IGSA") with First Independent Power Limited ("FIPL") in relation to the provision of gas sales to the FIPL Afam power plant ("FIPL Afam"). FIPL is an affiliate company of Sahara Group, a leading international energy and infrastructure conglomerate with operations in over 42 countries across Africa, the Middle East, Europe and Asia.

Afam has a current power generation capacity of 180MW. The FIPL IGSA envisages the supply of gas (produced by Uquo, with a maximum daily nominated quantity of 35 mmscfd or approximately 5.8 mmboed) by Accugas to FIPL Afam in order to augment its existing gas supply on an interruptible basis for an initial term of one year with the ability to extend upon mutual agreement. Securing an additional gas supplier to the FIPL Afam plant is another demonstration of FIPL's commitment to its vision of being a stable power generation significantly contributing to the national grid.

Accugas currently sells to three customers, Calabar Nigerian National Integrated Power Plant, National Integrated Power Project (a Niger Delta Power Holding Company-owned power station), the Mfamosing Cement Plant (located in Cross River State, owned by Lafarge Africa Plc) and Ibom Power (a power station owned by Akwa Ibom State), for an aggregate maintenance-adjusted 2020 take or pay volume of 141.4 mmscfd. The commercial terms of the FIPL IGSA are expected to augment the weighted average profitability of the Accugas portfolio while Accugas' sales volumes, revenues and cash flows are expected to increase with no incremental capital expenditure.

Accugas continues to make good progress in relation to gas supply to several other potential new customers and further updates will be provided in due course.

Andrew Knott, CEO of Savannah Petroleum, said:

"I am delighted to announce the IGSA with FIPL, representing the first new gas sales agreement that the Accugas business has signed in over five years, and we look forward to partnering with the Sahara Group, who have notable experience with energy and infrastructure projects in Africa. We are confident that this will be the first of several new gas sales agreements signed over the course of 2020 and, through Accugas, we aim to be seen as the gas supplier of choice to the power sector in Nigeria."

Kola Adesina, Group Managing Director, Sahara Power Group said:

"We are delighted to be working with Accugas on this project. It is another demonstration of our commitment to bringing energy to life by facilitating economic activities through our power business. We remain resolute in our vision to enhance access to sustainable energy in Nigeria and ultimately, across Africa

[haideralifool] 31/1/2020 07:29

New Gas Contract!

Afam has a current power generation capacity of 180MW. The FIPL IGSA envisages the supply of gas (produced by Uquo, with a maximum daily nominated quantity of 35 mmscfd or approximately 5.8 mmboed) by Accugas to FIPL Afam in order to augment its existing gas supply on an interruptible basis for an initial term of one year with the ability to extend upon mutual agreement. ...

Accugas currently sells to three customers...for an aggregate maintenance-adjusted 2020 take or pay volume of 141.4 mmscfd. The commercial terms of the FIPL IGSA are expected to augment the weighted average profitability of the Accugas portfolio while Accugas' sales volumes, revenues and cash flows are expected to increase with no incremental capital expenditure.

Accugas continues to make good progress in relation to gas supply to several other potential new customers and further updates will be provided in due course.

[nen2319] 29/1/2020 15:17

Price is going up HM. You in or out?

[shanur90] 29/1/2020 14:54

Thanks mate ?

[honestmarty] 29/1/2020 14:20

shanur90

That is a roll-over.

[shanur90] 29/1/2020 14:06

Huge trades. Looking like buys