TIDMSAVE
RNS Number : 5813L
Savannah Energy Plc
01 May 2020
1 May 2020
Savannah Energy PLC
("Savannah" or "the Company")
Financial and Operational Update
Savannah Energy PLC, the British independent energy company
focused around activities in Nigeria and Niger, is pleased to
provide a financial and operational update for the FY 2019 and for
the c.19 week period of ownership of the Nigerian Assets from 15
November 2019 to end March 2020 (the "Savannah Ownership Period").
For an explanation of the defined terms in this announcement
readers should refer to the Supplemental Admission Document
published on 30 April 2020, which is available to download from the
Company's website in full at www.savannah-energy.com
Key Highlights
Nigeria
-- FY 2019 cash collections from the Nigerian Assets were
US$168.8m. Cash collections from the beginning of the Savannah
Ownership Period to date in 2020 total US$96m;
-- Significant deleveraging achieved during the Savannah
Ownership Period, with US$40m of the restructured debt taken on as
part of the Acquisition and the Capital Restructuring paid down by
31 March 2020;
-- As announced on 15 November 2019, African Infrastructure
Investment Managers ("AIIM") acquired 20% interests in Seven Uquo
Gas Limited ("SUGL") and Accugas in return for a US$54m cash
consideration, implying a combined US$270m valuation of those
assets;
-- Average gross daily production has increased 25% during the
Savannah Ownership Period to 19.6 Kboepd compared to 15.7 Kboepd
for the corresponding period in 2018-19. This includes a 34%
increase in Uquo gas production comparing the same periods from
77.7MMscfd (12.9 Kboepd) to 103.8MMscfd (17.3 Kboepd). A peak Q1
daily production rate of 164MMscfd (27.3 Kboepd) was achieved in
February 2020;
-- As announced on 31 January 2020, Accugas entered into the
first new gas sales agreement for the business in over five years
with First Independent Power Limited ("FIPL"), part of the Sahara
Group, for the provision of gas sales to the FIPL Afam power plant
("Afam");
-- Successful transfers of operatorship of both the Uquo Central
Processing Facility ("CPF") and the FUN Manifold crude gathering
station, from Frontier Oil Limited ("Frontier") to Savannah;
and
-- As previously announced and based on the CPR prepared by CGG
and published on 11 December 2019, net asset-level free cash flow
generation, on a maintenance adjusted take-or-pay basis, by the
Nigerian Assets, assessed to be an average of c.US$130m p.a.
(2020-2023)
Niger
-- Updated Competent Person's Report for the Niger assets
compiled by CGG Services (UK) Ltd with highlights available in the
RNS entitled 'Publication of updated Niger CPR' dated 1 May 2020,
both of which are available to download on our website
www.savannah-energy.com ;
-- Plans for delivering the R3 East development continue to
progress with the intention to commence installation of an Early
Production System within the next twelve months, market conditions
and financing permitting; and
-- Following a successful exploration drilling programme in 2018
on the R3 East portion of the R3/R4 PSC, the Company has agreed
with the Ministry of Energy and Petroleum that the R4 area, which
was relinquished at the end of the initial Exclusive Exploration
Authorisation in accordance with the terms of the R3/R4 PSC, will
be combined with the R1/R2 PSC Area into a new R1/R2/R4 PSC to be
issued under the Petroleum Code 2017, thus retaining the full
acreage position previously covered by the R1/R2 PSC and the R3/R4
PSC. Ratification of the new R1/R2/R4 PSC is subject to Council of
Minister approval, and payment of the associated fee.
Andrew Knott, CEO of Savannah Energy, said:
" Power is an essential service for any country. In Nigeria, we
are responsible for the provision of gas supplies to providers of
over 10% of the country's current power generation capacity, a
responsibility we take very seriously. In this time of global
uncertainty, it has been widely reported in the local press that
many companies have struggled to supply gas-for-power in recent
months, which has led to significant power outages in country. In
stark contrast Savannah, working closely with our principal
customer Niger Delta Power Holding Company (NDPHC) and the
Transmission Company of Nigeria (TCN) - who we thank for their
strong cooperation - has increased our gas production levels by 34%
since completing the acquisition of the Nigerian Assets. We
continue to expect to increase production levels further during the
course of this year as we add new customers, such as First
Independent Power Limited who we announced earlier this year.
Savannah is, and will continue to be, the partner of choice for
customers seeking reliable gas-for-power in Nigeria.
In Niger, we are pleased to publish a new CPR this morning, to
confirm the robust commerciality of our planned early production
system and to reiterate our previously stated views on the wider
potential of our asset base. We strongly hope to return to an
operational phase in Niger in 2020, economic conditions
permitting.
Across our business we will continue to work collaboratively
with our key stakeholders (employees, customers, governments,
communities and our supply chain) to navigate our way through the
challenges and opportunities raised by the current period of
economic uncertainty. I believe we have the right management team,
corporate culture and purpose that will ensure we manage to do this
successfully. I would like to take the opportunity to thank these
stakeholders for their continuing support."
Financial Update
Total cash collections from the Nigerian Assets for FY2019 were
US$168.8m while cash collections to date from the Nigerian assets
since the start of the Savannah Ownership Period were US$96m. Cash
generated by the Nigerian Assets has been directed to funding
operating and maintenance costs and debt service. Savannah has
achieved a significant deleveraging during the Savannah Ownership
Period with US$40m of the restructured debt taken on as part of the
Acquisition and the Capital Restructuring paid down by 31 March
2020
As previously announced and based on the CPR prepared by CGG and
published on 11 December 2019, net asset-level free cash flow
generation, on a maintenance adjusted take-or-pay basis, by the
Nigerian Assets, is assessed by CGG to be an average of c.US$130m
p.a. (2020-2023).
Summary of Expected Net Asset Free Cash Flows from Nigerian
Assets
Year US$m
2020 104.2
-----------
2021 128.1
-----------
2022 141.3
-----------
2023 141.3
-----------
Average 128.7
-----------
Operational Update
Average gross daily production from the Nigerian Assets has
increased 25 per cent. during the Savannah Ownership Period to an
average of 19.6 Kboepd versus 15.7 Kboepd for the corresponding
period (15 November 2018 to 31 March 2019). In particular, this
includes a 34 per cent increase in Uquo gas production over the
same periods from 77.7MMscfd (12.9 Kboepd) to 103.8MMscfd (17.3
Kboepd). Average gross daily production from the Nigerian Assets
for FY 2019 rose 32 per cent. to 17.2 Kboepd from 13.0 Kboepd for
FY 2018. In addition, in February 2020 Savannah achieved a Q1 daily
gas peak production rate from the Nigerian assets of 164MMscfd
(27.3 Kboepd).
Nigeria Average Gross Daily Production
Stubb Creek Uquo Condensate Uquo Gas Total (Kboepd)
Oil (Kbopd) (blpd) (MMscfd)
------------------ --------------------- --------------- --------------------
FY2018 2.3 105.0 63.5 13.0
------------------ --------------------- --------------- --------------------
FY2019 2.4 136.0 88.1 17.2
------------------ --------------------- --------------- --------------------
% Increase 4% 30% 39% 32%
------------------ --------------------- --------------- --------------------
15 November 2018-31
March 2019 (c. 19 wks) 2.6 123.9 77.7 15.7
15 November 2019-
31 March 2020 (c.19
wks) 2.2 152.7 103.8 19.6
------------------ --------------------- --------------- --------------------
% Increase -16% 23% 34% 25%
------------------ --------------------- --------------- --------------------
Production levels are driven by customer nomination levels,
while cash collections are largely driven by contractual
maintenance adjusted take-or-pay provisions of 130- 152 MMscfpd in
aggregate. As previously announced on 31 January 2020, Accugas
entered into a new interruptible gas sales agreement ("IGSA") with
FIPL in relation to the provision of gas sales to its Afam power
plant in Nigeria. FIPL is an affiliate company of Sahara Group, a
leading international energy and infrastructure conglomerate with
operations in over 38 countries across Africa, the Middle East,
Europe and Asia. This represented the first new gas sales agreement
to be signed by Accugas in over five years and is on commercial
terms which are expected to augment the weighted average
profitability of the Accugas portfolio. Savannah remains highly
focused on adding new gas customers this year which are expected to
be announced in due course.
As part of the ongoing gas field development plan at Uquo, plans
are being made for the drilling and completion of an additional gas
production well to be drilled in a timely manner to ensure that
sufficient gas deliverability is available to meet all contractual
commitments. In addition, work is underway for facility upgrades to
increase production capability at Accugas following the successful
transfer of operatorship of the processing plant to Savannah from
Frontier in January this year. Also, Savannah Energy, through its
subsidiary, Universal Energy Resources Limited, took over the
operatorship of the FUN Manifold from Frontier on 24 April 2020 for
a period of three years under the terms of the Amended and Restated
Joint Operating Agreement of the FUN Group. The FUN Manifold is a
receiving facility where crude oil and condensate from the Uquo,
Stubb Creek and Qua Iboe Marginal Fields is commingled and pumped
through a common pipeline to the Mobil Producing Nigeria Qua Iboe
Terminal for export. The FUN Manifold is jointly owned by Frontier,
Universal Energy Resources Limited and Network Exploration and
Production Limited.
In Niger, following a successful exploration drilling programme
in 2018 on the R3 East portion of the R3/R4 PSC, the Company has
agreed with the Ministry of Energy and Petroleum that the R4 area,
which was relinquished at the end of the initial term of the
Exclusive Exploration Authorisation in accordance with the terms of
the R3/R4 PSC, will be combined with the R1/R2 PSC Area into a new
R1/R2/R4 PSC to be issued under the Petroleum Code 2017, thus
retaining the full acreage position previously covered by the R1/R2
PSC and the R3/R4 PSC. Ratification of the new R1/R2/R4 PSC is
subject to Council of Minister approval, and payment of the
associated fee.
In terms of the plans for delivering the R3 East development,
Savannah intends to commence installation of an Early Production
System within the next twelve months, market conditions and
financing permitting. Also, as per the updated CPR dated 30 April
2020, the Company seismically identified a portfolio of 146
prospects and leads which serves to demonstrate the strong future
potential of the Niger assets. Savannah intends to deliver its
initial production to the Zinder refinery in Niger. Meanwhile in
September 2019, the Transportation Convention was signed between
China National Petroleum Corporation ("CNPC") and the Republic of
Niger in relation to a crude oil export pipeline from the ARB to
the Atlantic coast in Benin (the "Niger-Benin Export Pipeline" or
the "Pipeline"). The Pipeline is expected to run for c. 2,000km
from the ARB in Niger to Port Seme on the Atlantic coast in Benin.
CNPC has confirmed that the pipeline construction is expected to
complete in 2021/22, which should further allow Savannah to
monetise the planned ramp-up in oil production from its discoveries
to c.5000bopd from around that time.
For further information contact:
+44 (0) 20 3817
Savannah Energy 9844
----------------
Andrew Knott, CEO
----------------
Isatou Semega-Janneh, CFO
----------------
Sally Marshak, Communications
Consultant
----------------
+44 (0) 20 7409
Strand Hanson (Nominated Adviser) 3494
----------------
James Spinney
----------------
Ritchie Balmer
----------------
Rory Murphy
----------------
+44 (0) 20 7878
Mirabaud (Joint Broker) 3362
----------------
Peter Krens
----------------
Ed Haig-Thomas
----------------
+44 (0) 20 7260
Numis Securities (Joint Broker) 1000
----------------
John Prior
----------------
Emily Morris
----------------
Alamgir Ahmed
----------------
+44 (0) 20 8434
Celicourt Communications 2754
----------------
Mark Antelme
----------------
Jimmy Lea
Ollie Mills
----------------
The information contained within this announcement is considered
to be inside information prior to its
release, as defined in Article 7 of the Market Abuse Regulation
No.596/2014, and is disclosed in accordance with the Company's
obligations under Article 17 of those Regulations.
Notes to Editors:
About Savannah Energy
Savannah Energy PLC is an AIM listed energy company with
exploration and production assets in Nigeria and Niger. In Nigeria,
the Company has controlling interests in the cash flow generative
Uquo and Stubb Creek oil and gas fields, and the Accugas midstream
business in South East Nigeria, which provides gas to approximately
10% of Nigeria's available power generation capacity. In Niger, the
Company has interests in two large PSC areas located in the highly
oil prolific Agadem Rift Basin of South East Niger, where the
Company has made five oil discoveries and seismically identified a
large exploration prospect inventory, consisting of 146 prospects
and leads to be considered for potential future drilling
activity.
Further information on Savannah Energy PLC can be found on the
Company's website: www.savannah-energy.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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