Savannah Petroleum Share Discussion Threads

[thomasthetank1] 22/12/2017 12:46

Mirabaud note on SAVP this morning.

Savannah Petroleum (SAVP LN) has resumed trading this morning having agreed a transformational reverse takeover of large parts of Seven Energy, a distressed private Nigerian firm, which will see the company acquire Seven’s substantial integrated gas business in the southeast of the Niger Delta. Under the deal terms, Savannah will buy the upstream assets outright and team up with private equity on the midstream assets, retaining a carried minority interest. The result is an enlarged E&P company with a diversified asset portfolio, substantial free cash flow and minimal gearing. In our opinion, this opportunistic acquisition is highly accretive for Savannah shareholders, with a pay-back of ~3 years and a purchase price equivalent to just US$2.9/boe (EV/2P) and around 35% of invested capital.

The Seven transaction marks an acceleration of Savannah’s diversification strategy and follows last year’s entry into Nigeria through an exploration tie-up with the Government. It fundamentally changes the shape of the business, adding material production and reserves to Savannah’s exciting but earlier stage exploration assets in Niger. The enlarged company will rank alongside London’s top listed oil & gas producers, boasting a high quality, stable earnings stream, fully-funded near-term exploration drilling and a progressive dividend policy (yielding 3.2% FY18). Given the compelling acquisition terms and clear strategic merits, we believe the transaction is a game changer for Savannah.

We have yet to run our numbers, but at today’s share price the company is fully supported by its Nigerian business, which the CPR values at US$663m (2P reserves + 20% stake in Accugas) implying a discount of ~62%. At these levels investors are gaining free exposure not only to the development upside potential in Nigeria but also to exploration in Niger. The three well programme expected to start in January will target aggregate mean prospective resources of 110 mmbbls worth US$4.6/boe implying ~US$500m of unrisked value net to Savannah, with individual chances of success of at least 75%. We see the latest transaction as truly transformational for the company ahead of what is setting up to be an exciting 2018 with plenty of exploration driven catalysts.

[ch1rp] 22/12/2017 12:41

What is with all the selling? I think patience will be rewarded here. GLA

[zengas] 22/12/2017 12:24

ngms

I don't need any investment lessons from you, thanks. As for being screwed, I've been a long term holder and before it was fashionable I continued to buy down to the lows of 23p so as for your comment of existing equity being screwed - far from it. Niger risked recoverable numbers up by 700 mmbls this am and with no farmout hasn't done the upside potential much harm at all after this deal. Ho ho ho, Merry Christmas.

[lithological heterogeneities] 22/12/2017 10:59

Don't forget the stock market closes at 12:30 today

LSE Business Times


22 Dec 2017.....Closes at 12:30
25 Dec 2017.....Closed
26 Dec 2017.....Closed
27 Dec 2017.....Open
28 Dec 2017.....Open
29 Dec 2017.....Closes at 12:30
01 Jan 2018.....Closed

[buffythebuffoon] 22/12/2017 10:50

Before the suspension we had the Niger assets and some money and intended to drill 3 wells

After the suspension we have the Niger assets, some money, plus some more money and intend to drill 3 wells.

We suspended at around 35p, we raised money at around 35p we relisted at around 35p

We also have assets in Nigeria that are expected to produce an average free net cash flow per year over the next 5 years of $88m.

All for 35p. The market cap is of course much larger.

Not a disaster is it?

Buffy

[lithological heterogeneities] 22/12/2017 10:48

buffy,

yes, Merry Christmas to you and everyone else involved in the excellent investment!

:0)

[ifthecapfits] 22/12/2017 10:44

AJ Bell still showing holding as Zero - frustrating. But have topped up at these lowly prices.

[lithological heterogeneities] 22/12/2017 10:43

22 Dec 2017 RNS
"We look forward to providing our shareholders with a detailed update presentation at our upcoming general meeting, as well as to the commencement of our drilling operations in Niger. The general meeting will be held on January 8."

08 JAN 2017:
1.....General Meeting.
2.....detailed update presentation
3.....update on commencement of drilling operations in Niger.

Would not want to be out of these over Christmas/New Year.

;0)

[lithological heterogeneities] 22/12/2017 10:38

good post by Z on the other bb this am

[buffythebuffoon] 22/12/2017 10:34

lh, just a heads up...there may well not be an RNS next Weds.

Perhaps you could cut down the word count in your report by 50%.

Have a great Christmas. Hopefully we’ll all have a happy, healthy and prosperous 2018.

Buffy

[lithological heterogeneities] 22/12/2017 10:03

no point in selling now at this price with a detailed presentation and start of drilling in Niger imminent.

[ifthecapfits] 22/12/2017 10:02

Are you sitting tight then LH?

[lithological heterogeneities] 22/12/2017 09:57

22 Dec 2017 RNS

"We look forward to providing our shareholders with a detailed update presentation at our upcoming general meeting, as well as to the commencement of our drilling operations in Niger. The general meeting will be held on January 8."

With most of the sellers now out of the way we could see renewed interest ahead of the detailed presentation and start of drilling in Niger.

[mount teide] 22/12/2017 09:55

Interesting that the price has settled around the level of the average price of the overwhelming majority of the 12.5m short position taken out in Feb/March 2017.

[ngms27] 22/12/2017 09:49

Guys,Like I said when they announced this deal, it's empire building and existing equity would be screwed.Zengas bend over and take what's coming.

[lithological heterogeneities] 22/12/2017 09:49

after waiting everyday for 8 months to sell up I just found out my broker did a new software update in the past couple of days so that those logging in from abroad could no longer log in if they still had their laptops/phones set to local settings !

no warning to anyone. I was the first to have this problem as my laptop/phone is set,as they have always been, to the local settings where I am so when I logged in their new update thought I wa several hours ahead so gave me immediate time-outs !

as I still have these I will now wait for "We look forward to providing our shareholders with a detailed update presentation at our upcoming general meeting, as well as to the commencement of our drilling operations in Niger".

fingers crossed it is soon.

[plentymorefish] 22/12/2017 08:47

Looks like the placing was lucky to get away at even 35p - 20's here we come, gulp!

[dorset64] 22/12/2017 08:45

lH if you had phoned up & sold around 08.15 you could had sold around the 32p mark, now if you get in to your account you can sell at well below that figure, surely if you wanted out so bad a few quid on a phone call wouldn't had mattered??

I think I will wait & let this pan out as we are in a quiet xmas period so any constant selling, or buying will move the price quite quickly. Once this dust settles I would probably look to add to my holding if I can second guess close to the bottom.

[ch1rp] 22/12/2017 08:35

Looks to me like the bottom has formed:)

[lithological heterogeneities] 22/12/2017 08:33

and no, I am not going to do a phone trade as I am abroad so expensive and am not going to pay phone dealing rates to rub salt into a very sore wound.

[lithological heterogeneities] 22/12/2017 08:31

I tried to sell the lot at 08:00am.
But, after waiting 8 agonising months....MY DEALING ACCOUNT WILL NOT LET ME LOG IN !
My broker is trying to sort it out.
Meanwhile....after waiting 8 agonising months...I CANNOT SELL THESE !

[mount teide] 22/12/2017 08:25

Picked up 50K @ 32p. Pleased to add below the playcees - updated CPR figures offer serious upside valuation potential.

[ifthecapfits] 22/12/2017 08:12

Nope. Not worth the wait. But you places your bets and take your chances. Bring on the drilling.

[pembury] 22/12/2017 08:10

32p so worth the wait!