Remove ads

Introducing the LemonFools Personal Finance Calculators

SAVP. Amazing Opportunity or a disaster waiting?

Nen2319
Posts: 7
Joined: August 31st, 2018, 3:55 pm
Has thanked: 9 times
Been thanked: 6 times

SAVP. Amazing Opportunity or a disaster waiting?

#163380

Postby Nen2319 » August 31st, 2018, 3:59 pm

What is anyone’s view of SAVP? Once the 7E acquisition completes it should be a tidy little company with assets in Niger and Nigeria? Just wondered what people’s thoughts are?

IronPyrites
Posts: 17
Joined: November 6th, 2016, 2:08 pm
Has thanked: 1 time
Been thanked: 5 times

Re: SAVP. Amazing Opportunity or a disaster waiting?

#163798

Postby IronPyrites » September 2nd, 2018, 10:20 pm

Hi Nen

'SAVP. Amazing Opportunity or a disaster waiting?’

Well probably neither of these.

As you say when the Seven energy deal is completed they have a good foundation for the future.

At the moment the company is valued at £219m
From the results in March:
They made an operating loss of $27m last year and have net cash of $2m
They raised money at the end of last year:
a US$125m equity placing in December, the proceeds of which were designated for partial consideration and costs of the Seven Transaction, our Niger drilling campaign, ongoing working capital requirements and other corporate purposes.

When the 7E deal is complete they will have 92mmboe 2P reserves and 44mmboe 2C resources and a 20% interest in Accugas + 20kboebd net production.

The principal assets which we expect Savannah to acquire from Seven Energy are interests in two large, producing oil & gas fields, Uquo and Stubb Creek.
During 2017 these fields produced, on average, 80 mmcfpd of gas and 3,000 bpd of oil, which is planned to significantly increase during 2018.
Accugas is a highly strategic business, which is capable of supplying c.10% of Nigeria’s available power generation capacity


Of course the market is aware of this and as it is more than likely that the deal will be signed these assets are in the share price and part of the reason the company is valued at £219m.

As with all positive news there may well be a small uplift in the share price when the deal is announced but where Malcy (Malcy’s Oil Blog) gets his valuation from is a mystery:
The shares remain in limbo, I presume waiting for the Seven completion but this surely adds to my confidence that the shares are worth double the current price.

https://www.malcysblog.com/2018/08/oil- ... d-finally/

There are also other opportunities for them which may go some way to explain Malcy’s enthusiasm.
We know, as does the market, that they have hit oil in Niger

https://www.savannah-petroleum.com/down ... 0FINAL.pdf

the well has encountered a total estimated 13.6m of net oil bearing reservoir sandstones in the E1 reservoir unit within the primary Eocene Sokor Alternances objective.

Eridal-1 maintains our 100% exploration success record and marks our fourth discovery in the R3 East Area.
We believe this has contributed meaningful oil resource additions to support the development of our proposed EPS

https://www.savannah-petroleum.com/down ... t-2017.pdf

And next Zomo-1 is up for drilling which could test the possibility of an Amdigh extension
Of course nothing is certain here.

In short the company seems to have set good foundations for future production and exploration and are price accordingly.
Perhaps more of a guarded opportunity than a disaster (assuming the Nigerian political scene doesn’t turn nasty) and if income is your thing the possibility for a maiden dividend once the 7E deal is completed.

I have no position.

Regards
Iron

HaiderAli
Posts: 21
Joined: November 7th, 2016, 6:47 am
Been thanked: 8 times

Re: SAVP. Amazing Opportunity or a disaster waiting?

#165263

Postby HaiderAli » September 9th, 2018, 10:14 am

The curious thing with SAVP is that the share price appears to have been unmoved by the recent Niger discoveries and the implications for future drills. Of course, the expanded number of shares would always have diluted the impact of Niger success, which was a reason why some PIs were very much against it. And going by SP performance in other oil shares that I own, it's not unusual for the market to ignore improved prospects for future discoveries.

There's also been operational improvements the company has made in both Niger and Nigeria. The pipeline from ARB to Katsina is an example of the former and for the latter, for example, they've managed to secure World Bank guarantees regarding payments, something which 7 did not have and suffered as a result. This could have had an impact on the SP, but it has not, again perhaps the market wants to see the actual cash-flows?

All in all, I see a management team that are out there, drilling and doing deals. When the (seemingly complicated) 7E deal completes, I think Andrew Knott should be seen as an extremely competent manager and thus more likely to deliver in the future.

Zengas over on advfn has a fairly bullish outlook for SAVP (e.g. post 2858):

https://uk.advfn.com/forum/search?q=zen ... &offset=10

HaiderAli
Posts: 21
Joined: November 7th, 2016, 6:47 am
Been thanked: 8 times

Re: SAVP. Amazing Opportunity or a disaster waiting?

#192452

Postby HaiderAli » January 10th, 2019, 4:10 pm

The Seven deal closure has been put back to Q1 in 2019, so that's not really helping matters.

But every time Andrew Knott pops up on some investor forum or as he did today in a conference call with PIs, there some tremendous developments going on. I met him late last year at an event where SDX were also presenting.

A poster called Agadem has written up his questions and AKs answers for a conference call that took place earlier today:
http://www.lse.co.uk/ShareChat.asp?ShareTicker=SAVP

There's plenty of potentially transformative newsflow over the next few months I think.

HaiderAli
Posts: 21
Joined: November 7th, 2016, 6:47 am
Been thanked: 8 times

Re: SAVP. Amazing Opportunity or a disaster waiting?

#192642

Postby HaiderAli » January 11th, 2019, 8:56 am

When I prevoiously mentioned the progress the company had been making in the background, this Mirabaud note fleshes out what has been happening (courtesy of thomasthetank1 on advfn).

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.


Return to “Oil & Gas & Energy (Sector & Companies)”

Who is online

Users browsing this forum: No registered users and 4 guests