Savannah Energy (SAVE ), an Africa-focused oil and gas company, announced final audited results for the year ended 31 December 2022. Savannah's total revenues grew 26% to US$290.4m (from US$230.5m in 2021), ahead of previously issued guidance of US$215m. Adjusted EBITDA likewise rose 27% to US$222.4m (FY21: US$175m), and EBITDA margin remained unchanged at 77%.
Operating and administrative expenses came in at US$66.2m and capex for the year was US$23.6m, both significantly under previous guidance. Savannah's cash balance on 31 December 2022 was US$240m, up 56% from last year, compared to its current market cap of US$420m. Total group assets amounted to US$1.76bn, compared to US$1.35m in FY21.
Average daily gross production from Savannah's Nigerian operations stood at 26.8 Kboepd, a 20% increase from 22.3 Kboepd in FY21. Of that, 90% of was gas, including a 23% increase in gas production from the Uquo gas field.
The company scored 4 new gas sales agreements in FY22 with Central Horizon Gas, Trans Afam Power, Notore Chemical Industries, and Shell Petroleum Development for a total of 53 MMscfpd of supply contracted. Additionally, a contract extension with First Independent Power Limited increased the quantity of gas supplied from 35 MMscfpd to up to 65 MMscfpd
In March 2022, Savannah announced its inaugural renewable energy project, the 250 MW Parc Eolien de la Tarka wind farm project in Niger. This is targeted to increase the country's on-grid electricity supply by up to 40% with project sanction expected in 2024.
Following the signing of two new renewable energy agreements post-period, Savannah currently has up to 525 MW of hydroelectric, solar photovoltaic and wind projects in motion in Cameroon and Niger.
Overall, Savannah delivered strong operational and financial performance in 2022, with results outperforming the guidance it set for the year. Total revenues grew by over 25% to US$290.4m with a resulting rise in adjusted EBITDA of 27% to US$222.4m. This makes FY22 the sixth consecutive year of total revenue growth for Savannah's Nigerian business, representing a CAGR of 21% since the business was acquired in 2017.
In that six years, Savannah has doubled its number of customers and increased the share of Nigeria's thermal power generation capacity that it supplies from 10% to 24%. Its Nigerian business continues to be underpinned by long-dated, take-or-pay contracts that have no linkage to commodity pricing and provide stable, predictable cashflows. At the end of 2022, Savannah had over US$3.8bn of future contracted revenues with contracts having average weighted remaining life of 15 years.
Savannah's goals for 2023 and 2024 include closing of its proposed acquisition of PETRONAS' assets in South Sudan in Q3 2023, further hydrocarbon acquisitions, progressing its R3 East development, refinancing its US$359m Nigerian debt, and expansion of its renewable energy business with a target of having 1GW+ of renewable energy projects in motion by end of 2023.
As indicated by the aforementioned material investments in renewables, Savannah is a strong believer in Africa's transition to renewable energy. The company aims to become one of the largest renewable energy development companies in Africa over the next 2 years with a rapidly growing pipeline of solar, wind, and hydro power projects, aiming for 1 GW+ of projects in motion by end of 2023 and 2 GW+ by end of 2024. Savannah believes the African renewable energy market represents a significant opportunity of 242 GW by 2030, requiring an investment of over US$40bn in 2026-2030, and that its experience in hydrocarbons is directly transferable to this space.
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