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.pdfthe 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.pdfAnd 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