Savannah Energy (SAVE ) said its performance to date and in the six months to 30 June 2021 is a reflection of 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. 

The Company reported its operating expenses plus administrative expenses to be at US$22.5m (1H20: US$22.7m) which it said reflects strong cost control across the Group.

This amounts to a unit cost of US$1.0/Mscfe (1H20: US$1.1/Mscfe) which compares favourably with our average sales price of US$4.4/Mscfe (1H20: US$4.1/Mscfe), it said.

“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 the firm’s operational performance has been “excellent” as Savannah continues to play “a vital role in driving economic growth and living standards in our countries of operation.”

Operationally, average gross daily production, of which 88.6% was gas, increased 6% to 22.6 Kboepd (1H20: 21.3 Kboepd), including a 6% increase in production from the Uquo gas field.

In February 2021, Accugas signed a new gas sales agreement with Mulak Energy representing Savannah’s entry into Nigeria’s high-growth compressed natural gas market. 

Post-period, Savannah started drilling the gas well, Uquo 11, on the Uquo field. The Group also started ordering compression equipment for the Accugas gas processing plant in 1H.
During 1H21, the Company agreed in principle with the Ministry of Petroleum to amalgamate the four licence areas into a single PSC rather than the previous proposal of two PSCs.

Last month, the Ministry of Petroleum amalgamated the four licence areas into a single PSC (R1/R2/R3/R4) valid for up to a further 10 years. The Company said this lays the foundation for an anticipated new investment programme in our R3 East development in 2022.

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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