Savannah Petroleum, Chariot Oil & Gas, DGO

Savannah Petroleum

An update from Savannah this morning in which the company announces that it is extremely close to obtaining Ministerial Consent in relation to the approval of  the Seven Energy transaction.

The company has submitted the the revised terms as announced on 20th September to the DPR and has been informed that the ministry has completed its due diligence in relation to, and is fully satisfied with the transaction. Indeed, the application is being processed and will imminently be with the Minister for final approval.

There are no added comments from the company, as one might expect, as whilst the deal is not yet  rubber stamped it would be premature to celebrate early but they are surely nearly over the line. This has taken a lot of hard graft and more time than the market and investors had expected but it will undoubtedly bear significant fruit over pretty much any timescale. On a day when markets around the world are falling rapidly and the oil price has had a bad couple of days I am not surprised at the muted response but expect a significant rise before long.

Chariot Oil & Gas

Chariot has announced that the Prospect S well offshore Namibia did not encounter hydrocarbons and whilst the well penetrated the anticipated turbidite sands the reservoirs were water bearing. This is a major disappointment even though drilling in frontier acreage carries with it more than the usual risk.

For Chariot this is probably time to retrench and whilst there are still other opportunities in the portfolio and it is ‘fully funded' to progress assets in Morocco and Brazil I don't expect much imminent activity.

For all those others who have recently taken positions offshore Namibia there will be a lot of analysis of data but I don't expect this to write off the basin, indeed others may consider their acreage to have been enhanced in a tangential way.

Diversified Gas & Oil

DGO has announced yet another acquisition, this time paying $183m for Core Appalachia Holding Co with assets in Kentucky, West Virginia and Virginia. With production of ~11,200 boe/d from ~5000 wells and upside possibilities from theNGL's cash margins are high and the deal is immediately accretive to cash flow and earnings. In addition the assets are apparently highly complementary to those of EQ! Acquired in July and value will be added by consolidating to a single operator.

The company has added midstream assets as part of the deal including moving third party volumes that enhance the economics. DGO has found a niche that investors like and seems to be a gift that keeps on giving, what's not to like?

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