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Share Name Share Symbol Market Type Share ISIN Share Description
Savannah Petrol LSE:SAVP London Ordinary Share GB00BP41S218 ORD GBP0.001
  Price Change % Change Share Price Shares Traded Last Trade
  +0.10p +0.39% 25.50p 1,219,356 16:29:16
Bid Price Offer Price High Price Low Price Open Price
25.40p 25.50p 25.50p 24.20p 25.00p
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers -20.26 -7.40 224.3

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22/3/201923:02◄ SAVANNAH PETROLEUM PLC ►3,352
20/3/201910:04Savannah Petroleum Plc347
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23/3/2019
08:20
Savannah Petrol Daily Update: Savannah Petrol is listed in the Oil & Gas Producers sector of the London Stock Exchange with ticker SAVP. The last closing price for Savannah Petrol was 25.40p.
Savannah Petrol has a 4 week average price of 23.50p and a 12 week average price of 23.50p.
The 1 year high share price is 35p while the 1 year low share price is currently 23.30p.
There are currently 879,769,427 shares in issue and the average daily traded volume is 1,006,439 shares. The market capitalisation of Savannah Petrol is £224,341,203.89.
09/3/2019
12:36
honestmarty: Thanks Zengas. Another pointer to the telephone numbers of potential that could be realised here over the next 2-3 years. I'm a bit irked that a Niger drilling plan and timetable hasn't been released. The current poor share price will dictate the dilution when we issue the new shares. Hurry up AK . We are mid H1. Get the finger out!
08/2/2019
15:46
thomasthetank1: Article on Savannah Petroleum in Alliance News today. Alliance News TAKING AIM: Savannah Petroleum Passes "Milestone" In West Africa By George Collard 8 February 2019 Savannah Petroleum has reached a "hugely" important milestone in Nigeria, Shore Capital said on Friday, while there is also promise in Niger. Shore Capital provides issuer sponsored research on Savannah, and was lead manager on its USD23 million placing in January. Savannah shares were 1.6% higher on Friday afternoon at a price of 25.10 pence each. The stock is down 5.3% so far in 2019. On Monday, Savannah announced the signing of an implementation agreement with Seven Energy, which legal aspects and provisions for Savannah's acquisition of some Nigerian assets from Seven. An amended deal with Seven Energy, announced at the end of December, will see Savannah take 55% of midstream business Accugas, increasing its holding to 75%. Savannah also is under the new deal to provide a facility of up to USD28 million to Seven Energy. "In our opinion, signature of the implementation agreement is a hugely important milestone as Savannah progresses towards final completion, providing a legally binding template and securing commitments from all parties to deliver the Seven deal," said Shore's Craig Howie. "The receipt of ministerial approval is a key next step, and we are confident this will be received timeously, highlighting the fact the ministry has already completed its due diligence and written to confirm its satisfaction with the transaction." The deal was first announced in June 2017, and Savannah expects it to finally complete in the first quarter of 2019. Howie, despite the long time-frame, is confident changes made to the deal during the takeover timetable are both "accretive and strategically important", meaning the delays have been for solid reasons. "With relevant amendments now agreed and incorporated into the implementation agreement, Savannah is firmly positioned to press on with the remaining transaction workstreams, which it describes as being largely legal and procedural in nature," commented Howie. The amendments to the deal are cash flow and net present value accretive to Savannah, Howie continued, and also grant the firm full control of Accugas. Shore has made some changes to its forecasts on the back of both the amendments and timing of the deal, saying timing is important as Savannah will be entitled to revenue. Shore is forecasting revenue of USD186.0 million in 2019, which would be Savannah's maiden revenue. This is expected to surge to USD344.2 million in 2020. As a result, the broker expects Savannah to swing to a GBP30.0 million pretax profit in 2019 from a USD35.9 million forecast loss in 2018. In 2020, pretax profit is expected to surge to USD106.2 million. These forecasts also reflect Shore's "very high hopes" for Savannah's operations in Niger, focused on the Agadem Rift basin, given discoveries made and "excellent" drilling results. Savannah made a discovery in all five of its drilled wells at Agadem in 2018, and it is lining up a second drilling programme this year made up of both exploration and development wells. Howie expects more detailed plans for 2019 in Niger to come soon, but given Savannah has already successfully handed over an early production system pre-feasibility study to the Niger government, he is confident the discoveries can be commercialised. Shore's forecasts include expected first oil from Niger this year. These is also the possibility for a farm-out in Niger, Shore's Howie continued, and he believes that sort of arrangement might be the most suitable for Savannah as it would provide the cash to accelerate exploration. "We had been of the view delivery of deal-related milestones could provide some important event-driven catalysts for investors, and have therefore been slightly disappointed to see the muted share price response following Monday's news," said Howie. Notwithstanding this, final Seven completion remains the main corporate event for Savannah in the shorter term and we fully anticipate a much higher share price once the deal is done and dusted." "In the meantime, we have overhauled our models to reflect the final transaction terms and timing and confidently upgrade our risked net asset value estimate to 80p per share from 75p per share. We firmly reiterate our Buy recommendation," he concluded.
08/2/2019
11:42
gmr64: Shore Cap: SAVANNAH PETROLEUM+ (SAVP, 24.7p, BUY) On the home straight We have this morning published a note on Savannah Petroleum, entitled “On the home straight”. This follows an important announcement from the company on 4 February, when Savannah confirmed successful signature of the Seven Energy implementation agreement, paving the way for ministerial consent and final completion of this transformational deal in Q1 2019. Highly accretive transaction amendments have resulted in an extended completion timetable although, with these changes now incorporated into the signed implementation agreement, we share Savannah’s confidence that the transaction will be fully consummated in the current quarter (in line with prior guidance). We had been of the view that delivery of deal-related milestones could provide some important event-driven catalysts for investors, and have therefore been slightly disappointed to see the muted share price response following Monday’s news. Notwithstanding this, final Seven completion remains the main corporate event for Savannah in the shorter term and we fully anticipate a much higher share price once the deal is done and dusted. In the meantime, we have overhauled our models to reflect the final transaction terms and timing and confidently upgrade our Risked NAV estimate to 80p/share (from 75p/share). We firmly reiterate our BUY recommendation.
04/2/2019
08:22
thomasthetank1: 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.
31/1/2019
12:38
gmr64: 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.
11/1/2019
08:41
thomasthetank1: Mirabaud - Savannah Petroleum GETTING MORE FOR LESS Following news in December of further positive changes to the Seven Energy transaction we are upgrading numbers on SAVP. Our EBITDA estimates for FY19 & FY20 rise 79% & 81%, respectively, to US$173m & US308m, reflecting SAVP’s enlarged 75% share of cash flows and full consolidation of Seven into SAVP’s financial accounts. In parallel, under the revised structure, our Total NAV increases 24% to 89p/shr, suggesting fair value approaching 3x the current share price. With the Seven deal now in final form and expected to close this quarter, in our opinion, the scene is set for a material re-rating in the near-term. Accordingly, we maintain our BUY recommendation with a refreshed target price of 89p/shr – up from 72p/shr previously. Revised terms deliver control of infrastructure and equity alignment: through a series of deal modifications agreed with PE partner African Infrastructure Investment Managers (AIIM) SAVP has recast the terms of the Seven Energy acquisition. The revised structure will see SAVP acquire an incremental 55% of Accugas and in parallel divest 25% of the Uquo gas field, resulting in SAVP owning 75% of Seven’s midstream (Accugas) and upstream (Uquo gas) units, and AIIM the remaining 25%. Through increased ownership of Accugas (20% to 75%), SAVP gains control of a key piece of regional infrastructure which acts as the gateway to energy hungry gas customers in southeast Nigeria (see Accugas’s pipeline network in map in Figure 4, below). In our view, this is key to capturing the longer term growth opportunity around consolidating stranded gas resources (estimated at >40 tcf in the wider area), tapping into new regional power stations (such as Alaoji) and supplying high-paying industrial customers (currently burning diesel for an equivalent cost of >US$10/mcf – versus Accugas’s current weighted average sales price of US$3.5/mcf). Furthermore, equity alignment across Seven’s integrated gas business ensures the wider operation can be run as efficiently as possible. AIIM cash consideration boosts liquidity and supports our wider valuation case: in consideration for its 25% stake in Seven’s Uquo and Accugas assets, AIIM has agreed to pay SAVP US$70m in cash on deal completion. This provides SAVP with a fresh source of liquidity coming out of the deal, bolstering the group’s finances and providing growth capital for Nigeria and/or Niger. Furthermore, by paying US$70m for 25%, AIIM has in effect franked the value of SAVP’s Accugas and Uquo stakes at US$280m/21p (including US$70m of cash receipts). This compares to SAVP’s current share price of 31.5p – implying little value for the Stubb Creek field (in Nigeria) or the potential in Niger. To put this in perspective, our aggregate NAV for the Niger portfolio and Stubb Creek field stands at 36p risked.
23/12/2018
12:48
zengas: Re Fridays RNS and the $70m cash payment to Savp ($54m + $16m) by Africa Investment Managers. It's through the sale of an interest in Uquo to AIIM and not a placing of shares to them in Savp plc which i miss read. I was working on the basis of last Decembers deal document which would have seen circa 1145m shares in issue including warrants. Currently 817m shares in issue. Six and a half weeks left for 133m instituional warrants to expire at 35p exercise price. Warrants would generate £46.5m/$58.5m (£1/$1.26) and equal 950m shares in issue some 200m less than the 1145m originally envisaged. If bulk of those warrants not taken up would mean we are still around the 817m shares in issue. Transaction closure would see $115m/yr this current year 2019 from Nigeria ie almost $10m month free cash flow (not counting early production scheme from Niger Q2/19). Nigeria free cash flow to $153m/yr in 12+ months time = almost $13m/month + Niger at 4-5 X increase. $70m of near immediate cash ($54m+$16m) re 25% Uquo sale to AIIM. $50m draw down facility available from Geneva based funder. $10m monthly free cash from Nigeria. Warrants = more cash but more shares if exercised (ie upside of circa max $58.5m additional cash + 133m shares = 950m total shares). So going forward = about $120m of cash + $10m/month ie $240m free cash over the next 12 months and surely enough to put a huge future dent in Niger drilling. This is without any allowance of any Niger farmout, or Niger production or warrant exercise. Given the Niger target of 2.8 billion bls risked recoverable @ $4/b in the ground, a success on under 20% of that - ie 500m bls would mean a share price target for Niger alone of 188p (817m shares) or 162p (950m shares) using an exchange rate of £1 = US$1.30. The company is using a figure of $6/barrel (I've used $4/b) so those share price targets could be 25% more at $5/b and 50% more at $6/b . Even with a farmout there is some serious headroom for success based on the 2.8 billion barrel risked number (The unrisked numbers being much higher). Also where else do you get exploration potential with 80% COS (100% so far). The Nigeria business of both up and downstream should be worth 100p in its own right as it evolves, given the cash flow, reserves, distribution business etc and cost for any competitor to develop a similar foot print. Previously i was using 200p combined for moderate success, so now beleive 250p is more realistic considering all of the factors above. During these renegotiations, we've seen institutions adding (where the sales came from is anyones guess - forward selling of some minorities/parties to the transaction?). It's also one of the most heavily invested companies by a wide range of institutions. Once the transaction is concluded, hopefully the potential will transform into a future 10 bag opportunity and it's certainly got the forward cash and assets to do so as well as the promise of a $12.5m 2019 dividend, which should be even better on less shares in issue and favouable exchange rate.
26/9/2018
09:25
zengas: There's 7 billion bls unrisked recoverable mid case in the Niger blocks ($35 billion worth of gross target value using $5/b). 2.8 billion bls risked = some $14 billion of value in the ground to transfer to the share price depending how much they can prove up or decide to farm out. Yesterday in the interview at 4:30 in, re Accugas network AK repeated that from a supply perspective there was 40 tcf of gas that could be tied in - that's a discovered resource of over 6.5 billion boe. If Accugas was doing 100,000 boepd it would only use 15% of that figure in 25 years. I could see from both Niger & Nigeria, Savp realistically attaining 1 billion boe of reserves based on 1) High COS in Niger and 2) the number of Nigerian fields looking to monetise those huge discovered gas resources. Given Savps holding in Accugas it would only be rational imo for Savp to pick up more reserves/JVs to supply some of that gas to Accugas. There would imo be a scramble from such a large number of discoveries to do a deal with Savp/Accugas in monetising some of that gas. With the gasification of the country Accugas in it's own right could be the big winner which we have 20% off fully carried (plus a low cost option for a further 10%). Our interest in Accugas alone could eventually be worth a lot more than the current share price.
24/9/2018
14:40
bushman1: 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.
24/9/2018
12:10
thomasthetank1: 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.
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