Savannah Petroleum Share Discussion Threads

[thelung] 15/12/2017 10:21

I sense a frantic weekend on the boards by 'the crew' educating PI's on why they should sell on relist which will allow them to buy and limit their losses. It's already ratcheted up on L S E.

[zengas] 15/12/2017 10:13

As for the drilling in Niger,

The last estimates by CGG came out around 2.2 billion bls of potentially recoverable oil on a risked basis (1.7 billion net).

We know the company was after an up to $250m farmout figure for 30-50% giveaway.
To get that size of farmout is/was likely in stages depending on the outcome of stage one before committing/releasing more capital to the next phase. On a success case i would still have seen Savp having to raise capital as they would not be carried indefintely beyond X number of wells or infrastructure spend if they had gotten to the successs case. True, if successful they could have gotten cash at a higher price but that's the risk and there's been a few that's been hammered this way - Look at Copl on it's Liberia well and farmin/carry by worlds biggest - Exxon. Well didn't come in and Copl had to come to the market for funds with little in its favour.

Savp wanted to retain operatorship in Niger otherwise a new operator could work to their own designs. Maybe this was why a farmin was not forthcoming (maybe it still will) and we may never know but i don't consider it all to be just that straightforward and maybe Savp didn't want to give up too high a percentage.

Very worst case was if Savp had say gotten carried for first phase of 3- 5 wells and the results were poor -bad and the farrminee didn't proceed to stage 2 or decide to do anything on stage 2 for another 12 months or so. This would have left Savp in a poor negotiating position as well as struggling for cash if early results had gone against them and unable to move on especially if not in control as operator.

Investors who are crying foul now would be gone and looking for the next big play and leaving Savp to it's own devices. But management are right to look to securing and underpinning the company. Let's face it one of the biggest critics (on lse) has said Niger was worth 8p so if it could be driven down to 23p while waiting, one could assume it could go well below 23p if it had failed with nothing else to underpin it and result in as much dilution as there is now as it sought new funds. I don't see anyone who is currently critical, addressing this risk in their thinking.

With this deal - i see the share price being underpinned and can grow from the Nigeria assets regardless.
Although it's cost us dilution at the outset it's also derisked the company by generating cash flow and intended dividend.

Niger is funded. There is ongoing cash flow from this deal not only for future funding but also to bid for/buy more assets. Savp remains in control of Niger and instead of giving up 30-50% - by this strategy they retain a risked recoverable of 500 - 850 mmbls that they would otherwise have signed away to a farminee .That's not to be sniffed at. It also means that with a bigger risked recoverable number to play for, we could get by on having a smaller success rate. Yes the big, big upside will be reduced if it had come in but so many companies get crippled by early poor results when nothing to fall back on. Some can say they were duped or conned as they allege til the cows come home but the bottom line imo is about derisking going forward and building a strong company.

What if Niger delivers handsomely and they then farmout at a much bigger premium that they use to buy more production or other assets? That's why at this stage i don't close my mind to the overall potential or upside limitations as things evolve. Speculators and risk takers who may have bought or spreadbet for 1-3 well plays don't come into consideration when management are serious about trying to deliver over the longer term unfortunately.

[parisv] 15/12/2017 09:53

the farm out would of been a $250m raise also so what's the difference?

So now savp have $250m raise for $88m cash per year and that cash can fund the drilling for 2.2 billion barrels potential!

[honestmarty] 15/12/2017 09:15

You do know I was only joking about Piers et al?

I meant the financial media.

[trulyscrumptious] 15/12/2017 09:10

It's probably too complicated or time consuming for them to digest honestmarty.

[parisv] 14/12/2017 23:43

Good post by olderandwiser on lse....

19SAVP MC pre-suspension: £95mn

Purchase cost of Seven assets: $270mn, equal to £200mn at an exchange rate of 1.35.

Implied MV on re-listing: £375mn to £400mn (@40p-50p).

So, uplift in MV for existing shareholders on placing price: £280mn - £305mn for a purchase cost of new assets of £200mn (uplift: £80mn - £105mn)..

Don't forget, the Seven assets are being purchased at 50% of NPV(10) initially, and are expected to generate a free cash flow of circa $88mn, and pay a dividend of $12.5mn (£9.25mn), which equates to a starting gross dividend yield range of 2.3% to 2.5%.

Plus shareholders get to keep 100% of the upside on the first 3-5 drilled wells on the Agadem Niger prospects, with a target of >250 mmbbls of prospective oil resources.

Using the $2.9/boe for P2 reserves, SAVP in order to double the share price from 40p to 80p, (an uplift in valuation of £375mn) would need to establish P2 reserves of circa 175mmbls from that drilling. This uplift assumes no further value added from the Seven assets.

Doable? Quite possible, based on CNPC historical success rates.

Good valuation base from which to start this new chapter in SAVP's life cycle? You bet ya.

[honestmarty] 14/12/2017 22:13

ParisV
I didn’t say voting no would stop it.
Very odd offer this one.

Give us the money to buy X, but if it doesn’t go through we’ll keep the money and spend it elsewhere. Never seen anything like that before. It’s almost as if you already know who the lucky investors are, and have agree things in advance. I wonder are things done like that in the land of China?

“Wheels within wheels here “as my old KungFu master used to say, that and ‘ Stop eating bread fat white boy’

Still, I don’t see the IIs signing up unless it’s good

Ready to drill, fully funded, dividend paying oil producer.

Did I mention we also sell gas and own a pipeline?

[stephen2010] 14/12/2017 22:04

ALBA currently trading at 0.39p target price 6p making a nice 15 bagger. Please read the following:

MARKET CAP PUZZLE
❖ Alba (market cap £8.4m) is in a resources neighbourhood populated with listed
companies with much enhanced market capitalisations, such as UKOG.L (£134m) and
JAY.L (£172m). With either shared project interests or adjacent tenements to these
companies, Alba should trade at a much higher valuation than its current token value.
Like Bluejay, Alba owns 100% of its ilmenite project. Direct comparisons with UKOG
are also instructive. While both companies own other projects, UKOG’s 49.9% of Horse
Hill Developments Limited (HHDL), when compared to Alba’s 18.1% means that Alba
has approximately one third of the value of Horse Hill compared to UKOG but only
about 7% of the market capitalisation. Once the market recognises these disparities,
the room for growth in Alba’s share price is undeniable.

VALUATION RATIONALE - Our valuation in this First Equity Limited initiation note
uses a risked valuation approach for Alba’s two main projects, at Horse Hill and TBS. The
Horse Hill licences are valued using independent published technical data from
Schlumberger, Xodus and Nutech on the oil potential of the licences, along with our own
assumptions on recovery rates, oil discovery value, resource and development risks
factors. From this a risked value of $127m net to Alba on a ‘Base Case’ basis is derived
for Horse Hill.

Given the similar geology and economic potential of both TBS and Dundas, we have
adopted a risked closeology valuation approach, by computing an NPV for Dundas of
$223m and then applying a three-tiered risked probability calculation to arrive at a value
of $54.7m for TBS. Once Alba announce its JORC resource and exploration target at TBS
and Bluejay its Feasibility Study results, this number is likely to be revised upwards very
rapidly, possibly up to $200m, representing up to 7p per share in additional shareholder
value.

We compute a valuation of $185m (£139m) for Alba, equating to 6.0p per share, of which
4.1p is attributed to the stake in Horse Hill, 1.8p for TBS. Given this analysis and wealth
of valuation catalysts anticipated across the project portfolio in the coming months, we
recommend the shares as a ‘BUY, with a Target Price of 6.0p, representing a potential
15 times plus uplift from the current share price.

[parisv] 14/12/2017 21:49

lol with 71% of shares held with ii's and directors good luck with that.

[honestmarty] 14/12/2017 17:59

Much crying over on the other site.

Let's all vote no.

[honestmarty] 14/12/2017 17:55

40 to 50p is the indicative range.
If there is an over subscription in the book build I assume the final price could be higher?
Anyone any experience in these matters?

[honestmarty] 14/12/2017 17:27

Ngms, yes, a positive drill result will have a lesser effect. But given the size of the resource we are targeting, good news should still have a dramatic effect.
The downside associated with asset location is already fully reflected in the placing price range.

It was never just the drill bit findings, the value will also be reflective of funding, development plans, access to capital. And the deal enhances those aspects lessening the dilution concern.
Not only that but it is clear value opportunities await in Nigeria to excite, never mind Niger

To repeat

Drill ready, fully funded, dividend generating, oil producer. Much to admire.

Did I mention we also sell gas and own a pipeline?.

[ifthecapfits] 14/12/2017 16:33

Nothing from Malcy yet? Love him or hate him - I do quite like his views.

[ngms27] 14/12/2017 16:27

Horrible dilution for the drilling which will now be low impact.It's against all the reasons why I'm invested.As soon as I can be I'm out, possibly even at a loss as this will not trade at a premium to the placing IMHO given the location of the acquired assets.

[lithological heterogeneities] 14/12/2017 14:36

honestmarty

Very good point about the shorters.
they will be forced to bail out on Tuesday causing a big spike.
if the placing is at a discount to value we could also see a double whammy with Institutions buying as well.
Tuesday should be a very interesting day.

[lithological heterogeneities] 14/12/2017 14:20

So re-listed/trading again on Tuesday, 19 Dec.

Just 3 working days away.

Atleast we can get our money back in time for Christmas.

[lithological heterogeneities] 14/12/2017 14:17

"The final price for the Placing (the "Placing Price") is expected to be announced on or around 18 December 2017, with publication of the admission document in respect of the Placing and the Agreed Transaction (the "Admission Document") and restoration of Savannah's shares to trading expected on 19 December 2017."

[honestmarty] 14/12/2017 12:37

So they will issue about 500 million shares.
I think the market could easily price this 20% above the offer price.

So 55p to 60p seems an early target.

We are cash generative, dividend paying, fully funded , and about to drill.

[trulyscrumptious] 14/12/2017 12:22

It looks positive but I had decided to stay with this one for the long run anyway and not jump ship on the back of the share price increase.
parisv. Loads of cash to start dishing out in dividends!

[honestmarty] 14/12/2017 12:20

How much would you pay for 100 pounds worth of assets in a bankrupt Nigerian oil company and some undrilled Niger desert?
They were always going to only pay a very discounted price. If we get 45p + I’m happy.
Yes, a few people will rush to hit the sell button, but don’t forget a mob of very ill looking shorters.
I hope they give us a spud date.