Savannah Petroleum Share Discussion Threads

[diversification] 15/6/2017 22:31

Dgoc RTO completion

It has been reported, Aim listed DGOC (diversified oil and gas) restarts trading tomorrow following completion of its RTO. Whilst this asset is prodominatly gas it was interesting reading the structure of the deal. Look forward to seeing how the share price reacts.

This share has very little exposure and a small PI following, unlike SAVP which you would expect to be extremely active when they re-list. Especially when you consider the size of the deal and other news flow.

[divmad] 15/6/2017 16:08

Well I missed out on the 4-bagger over there, so I'm hoping I can play catch up here in due course.

[buffythebuffoon] 15/6/2017 15:24

Ngms, I know where you are coming from, and I agree with the broad thrust of what you are saying. However, it is genuinely rare for a CEO to actually stump up a sum as large as AK has. It does seem to be the case that his interests are aligned with ours.

Now it's been confirmed that the farm in talks are in addition to this asset acquisition I am quite looking forward to seeing what deals AK has come up with. I think that it's highly likely that the asset deal is with the same party that caused the last suspension.

To be candid, I prefer AK's style of management to James Parsons at SOU, even though I'm extremely confident both will make me a large sum.

Buffy

[buffythebuffoon] 15/6/2017 15:16

Coronary artery stents Family Values!

Buffy

[lithological heterogeneities] 15/6/2017 13:58

New Age seems the most likely to me as well.

[ifthecapfits] 15/6/2017 13:45

Cruising around google I find it most peculiar that there is not much more speculation about the parties involved in this deal. Being kept very quiet. I'm for the New Age theory personally.

[ngms27] 15/6/2017 08:50

The BoD never lose out, bigger company bigger remuneration, bigger options.Let the proof be in the pudding and see what price the shares trade at post suspension

[lithological heterogeneities] 15/6/2017 08:35

have we completed the Tullow Oil RTO yet ?:0)

[diversification] 15/6/2017 08:22

Ngms - The board have significant number of shares themselves . I believe the boards interests are very much aligned with the shareholders, especially when they paid for these shares.

Divmad, exactly, unluckily eh!! The institutional investors are unaware of what this deal entails, as confirmed by Jessica. I think the cash on the balance sheet becomes avalible for this transaction as a JV is completed meaning forward costs are then covered. A debt facility is raised against a producing asset and equity speaks for itself. Surely to book build for a private equity placing the II's would have to be aware of the transaction.

LH, yes I am assuming that the target attributes an asset valuation on Niger of £195m due to completion of JV. At this point a 0p valuation is put on the target asset and therefore 0 shares are taken into consideration. What I am saying is as you point out if the JV is value accretive and secured at a premium to current market cap. Why would they be value regressive and assume current market cap when completing the target transaction. AK will want the target company to assume our asset is worth min £195m due to completion of JV and therefore irrespective of number of new shares in circulation we would have doubled our money as a starting point.

Lots of guessing on my behalf though as I attempt to put a valuation on this deal with little to no information.

[family values] 15/6/2017 07:50

Oil price in free fall.
Sometimes it's good to have your share suspended.
Better for the heart stents anyway.

[lithological heterogeneities] 15/6/2017 06:43

"£195m or 71p"you are assuming we will have the same amount of shares in issue but we will not as we are issuing shares as part of the RTO so £195m will not equal 71p. it will be lower than 71p,either a little,a fair amount or alot depending on the dilution.

[diversification] 14/6/2017 21:11

What we know

- £95m market cap
- AK suggested $250m (£195m) JV at a premium, we assume for 50%
- We know the 'Target is worth more than £95m market cap.
- Previous Drilling was scheduled for June (unexpected rig upgrade, drilling August)

Well the JV partner was working to June. AK is assuming a premium for the JV so is unlikely to be 'value regressive' when it comes to the RTO.

We know on completion of a JV the assets at these levels could be worth min £195m or 71p. Could it be with the update on the RTO coming in a 'few weeks' or end of June, and the JV was expected to be completed by end of June, the RTO partner wants confirmation of the JV to justify its higher value. This confirms the level of equity exposure the 'target' would have after completion of the RTO or its assets that include that all important equity exposure to SAVP.

The additional sweetener to the Target company that could stand to lose production assets at a favourable price resulting in a 'transformational' transaction is of course Niger. So at 71p, an asset fully funded for a 2 year drilling campaign and a producing asset to boot, I think it safe to say from current market cap our current investor base stands to make a minimum of 100% return all else being equal. I personally ascertain a value of at least 17.5p to the fact Niger would be fully funded, let alone the fact we would have exposure to we assume a value acretive (profitable) asset in the 'target'.

Without knowing what additional value the transaction can provide and associating a 0p return for current shareholders at today's market cap for the value accretive producing asset the questions I am left asking myself is.

- Did the last proposed RTO break down due to the lack of a JV which has over the years been expected to be completed sooner?
- Was this RTO forced upon them as the JV hit a significant milestone in terms of completion of a JV?
- After all this added value creation SAVP has completed after purchasing R3/R4, interpreting 3D siesmic, finally got the JV partners tail waggling as they can now justify the $250m AK valuation?

Of course these are my thoughts when it's comes to my research, I could be 100% wrong which is more likely than not.

[buffythebuffoon] 14/6/2017 18:29

Jessica didn't actually answer the question as to whether the two transactions were with separate organisations. She just confirmed they were two distinct transactions. You can draw your own conclusions about the likelihood of the same company doing two separate deals.

Or you can ask lithological heterogeneities; he's always correct.

Buffy

[lithological heterogeneities] 14/6/2017 15:49

i am always correct.:0)

[cloudburst] 14/6/2017 15:49

litho hetero
If it makes you feel better, yes, you were finally correct.

[lithological heterogeneities] 14/6/2017 15:46

so my post 760 was correct about this being seperate to the JV with the JV still to come.

[buffythebuffoon] 14/6/2017 14:27

I guess the next question is, who is backing into what in this reverse takeover; and surely whoever farms in to our Niger assets must be party to this as well (I'm assuming they are a different party, obviously).

So, good news....I think.


Buffy

[diversification] 14/6/2017 14:23

Jessica,

Ok fair enough, thank you. Can I ask if this transaction forms part of a JV into Niger or will a JV be considered as a separate transaction with an alternative organisation?

We must be entitled to an update on this front given Andrew says he hopes to complete a JV before drilling starts which is weeks away. Are talks even still active?

Regards,

James

----

James

This is a separate transaction to the potential Niger farm-out. Our guidance on the potential farm-out has not changed, we still expect this to be completed before we start drilling. The guidance for drilling start-up remains August.

Kind regards
Jessica

----

She also said we can expect an update in a few weeks. The fact that the JV is separate to the target transaction and this transaction includes equity. This deal must be considered with our market cap at a premium.

[cloudburst] 14/6/2017 14:14

Interesting company emails on a separate site.

News out in a few weeks.
It is a side deal.
Remains on track for drilling in August.
Expect separate farm-out before drilling starts.

Anyone care to speculate on the share price if we have a juicy RTO, a 250 million dollar farm-out with an oil major.

Half decent hydrocarbon results from the first well by mid-September?

I hope it will be North of 34.5p

[cloudburst] 13/6/2017 23:41

Has anyone spoken to SAVP directly?

They may give us some hints on likely updates.

I've never spoken to them before, but someone with a track record or relationship?

A number of posters claim to have met company officers at meetings?

It must be worth a try? Whilst I am optimistic, the news blackout is killing me, LOL.

[lithological heterogeneities] 13/6/2017 12:29

in one of the SAVP interviews earlier this year he said he was hoping to announce something strategic. i took this to mean that this was in addition to a JV/ farm in.considering this is NOT a farm-in (as we are paying money,debt &shares) then i can ony assume a JV will still be announced after the strategic deal is completed.

[lithological heterogeneities] 13/6/2017 11:28

Today 10:50Price: 34.63excellent post from lse bb:"TheBuffoonRe NNDCWe seem to have gone from expecting a partner to farm in with $250m to fund 20 drills, to us taking on debt and offering equity and our own cash to take on more assets! It had better be as good for us as it is for Andrew Knott! Buffy"totally agree. good post buffy.