Savannah Energy (SAVE ) has released an updated competent person’s report (“CPR”) covering its assets in Nigeria, whereby gross 2P reserves have now increased by 27%.
The African-focused British independent energy firm said revenue for the first 10 months of the year was up on a year-on-year basis to $192.5m from $180.2m while its cash balance sheet stood at $130.8m, with net debt declining to $382.7m from $433.3m in the prior year.
Total cash collections from its Nigerian assets were up 6% to $149.2m from $141.1m. Savannah said it remains confident in its outlook, thereby reiterating its full-year guidance.
The CPR, which was compiled by CGG Services, an independent third-party reserves auditor, demonstrated a 27% organic increase in Group 2P reserves in Savannah’s Nigerian assets.
“This progression shown in the heart of our business has been replicated in our financials as we maintain a positive year of growth with total revenues up 7% against the same period last year as we reiterate guidance for 2021,” noted Andrew Knott, CEO of Savannah Energy.
Savannah has successfully drilled and completed the Uquo-11 gas production well, “below budget and at a significantly lower cost than previous Uquo wells” drilled by its subsidiary.
Average gross daily Nigeria production in the year-to-date to 31 October 2021 was 21.9 Kboepd, a 16% rise fromaverage gross daily production of 19.0 Kboepd in the prior period.
Of the total average gross daily production of 21.9 Kboepd in the year-to-date period, 88% was gas, including a 16% increase in production from the Uquo gas field compared to the same period last year, from 99.5 MMscfpd (16.6 Kboepd) to 115.6 MMscfpd (19.3 Kboepd).
In June 2021, Savannah entered exclusive discussions with ExxonMobil Corporation with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon. The group said the proposed acquisition continues to progress.
Knott added, “We look forward to continuing our positive progress through the rest of the year and we expect to update shareholders as to progress made in relation to the Proposed Acquisition when appropriate. We remain confident in our Company’s outlook.”
Earlier this month, Savannah announced that its Accugas subsidiary had commenced gas sales to First Independent Power Limited’s (“FIPL”) power plant, FIPL Afam, in Nigeria.
In 2020, Savannah, an African-focused British independent energy company which is focused on developing energy projects in Nigeria and Niger, signed a gas sales agreement with FIPL Afam marking, which, at the time, marked its first new gas sales agreement in five years.
FIPL is an affiliate company of Sahara Group, an international energy and infrastructure conglomerate which holds operations in over 42 countries. Sahara Power Group, which is the largest privately-owned, vertically integrated power firm in Sub-Saharan Africa, plans to expand its power generation capacity in Africa to more than 5,000 megawatt by 2023.
After successfully constructing a short pipeline to establish connection, and recommissioning of the third-party pipeline linking FIPL Afam to Accugas’ network, Accugas finally commenced gas deliveries to FIPL Afam of up to a maximum daily nominated quantity of 35 MMscfpd.
In total, the FIPL Afam plant has a power generation capacity of 180MW while the average daily nomination for this week is 25 million standard cubic feet of gas per day (MMscfpd).
In September, Savannah Energy said its performance to date and in the six months to 30 June 2021 reflected the strong cash generative quality of its gas producing assets in Nigeria.
In its half-year results, the African-focused British independent energy firm reported total revenues at $116.5m, up 2% on 1H20 and an Adjusted EBITDA of $91.5m up 3% on 1H20.
The increase in revenues was largely a result of higher realised prices, the Group explained.
Operating profit was $54m, a 13% increase on 1H20, to reflect the rising revenues with the ongoing control of operating expenses and administrative expenses, which remained flat.
The Company’s profit before tax was $7.7m, up from US$1.2m in 1H20 while the loss after tax was $1.4m compared to a profit of $1.8m in 1H20. The Company highlighted that the increased tax charge year-on-year was primarily a result of profits generated in Nigeria.
In particular, the Group’s gas revenue stream, which represents 92% of 1H21 revenue (1H 20: 91%), is insulated from fluctuations in oil price as the gas contracts are all priced independently of oil prices with escalation clauses related to US consumer price inflation.
“These results show just how far we have come this year, with US$116.5m of Total Revenues, $91.5m of Adjusted EBITDA and strong free cash flow,” commented CEO, Andrew Knott.
Knott said growth is also “set to continue” as Savannah progresses the proposed acquisition of its entire upstream and midstream assets in Chad and Cameroon alongside ExxonMobil.
Savannah has reiterated its FY21 guidance of total Revenues greater than US$205.0m from upstream and midstream activities associated with the Company’s three active Nigerian gas sales agreements and liquids sales from the Company’s Stubb Creek and Uquo fields.
In addition, the Group said progress continues to be made in rolling out its new sustainability performance and reporting framework with a view to reporting on this from 2022 onwards.
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