Savannah Petroleum PLC, the British independent company focused around oil and gas activities in Niger and Nigeria, together with its subsidiaries (the “Group”), is today pleased to announce its unaudited interim results for the six-month period ended 30 June 2018.
First Half Summary
- Successful delivery of drilling campaign in South East Niger, with two oil discoveries (Bushiya and Amdigh) made from two wells on the R3 East portion of the R3/R4 Production Sharing Contract (“PSC”) during the period under review;
- Consistently safe operations, with no lost time incidents and wells drilled within budgeted time;
- One-year extension to the R1/R2 PSC received, providing the Company with greater flexibility to plan follow-on drilling activities, unconstrained by PSC timing issues;
- Strengthening of the executive management team with the appointment of David Clarkson as Chief Operating Officer;
- Strong progress on the acquisition of certain oil and gas assets in South East Nigeria from Seven Energy International Limited (the “Transaction”), with the successful completion of a US$125m equity placing to fund, inter alia, the Transaction and of an exchange offer to acquire Seven's 10.25% Senior Secured Notes;
- Cash position as at 30 June of US$11.7m;
- H1 cash operating costs (excluding Transaction costs) of US$7.3m, consistent with market expectations for pro-forma Enlarged Group cash operating costs (excluding Transaction costs) of c.US$17.5 – 20m for FY 2018.
Post Period Summary
- Continued drilling success in South East Niger, with two further oil discoveries (Kunama and Eridal) delivered safely, with no lost time incidents, and within budgeted time;
- Announcement of agreement with the Government of Niger to implement a domestic-focused Early Production Scheme (“EPS”), utilising crude oil resources associated with the Company's discoveries on R3 East;
- Continued positive developments in relation to Agadem Rift Basin (“ARB”) crude export solution, with the signature of an MOU between the Governments of the Republic of Niger and the Federal Republic of Nigeria envisaging the construction of an export pipeline from the ARB to a refinery in Northern Nigeria;
- Updates to the Seven Energy Transaction announced, increasing the reserves and resources being acquired by 25.1 mmboe (+19%) and affording Savannah increased operational control across the gas value chain in South East Nigeria;
- Commencement of work by Accugas on the Calabar Gas Distribution Project, expected to represent a material new revenue and cash flow stream for the Enlarged Group from H1 2020;
- Cancellation of share premium account confirmed, creating distributable reserves in order to provide the Directors with maximum flexibility to, if appropriate, pay dividends to shareholders, buyback the Company's shares or make other distributions to shareholders;
- Agreement of a term sheet with a leading Geneva-based oil trading firm for a new US$50m debt facility.
- Results of Zomo-1, the fifth well in the Company's ongoing Niger drilling campaign, expected to be announced shortly;
- Four further well options available under the Company's rig contract with Great Wall Drilling Company Niger SARL, each of which can be exercised individually at Savannah's discretion;
- Production test expected to be performed on Savannah's Amdigh-1 discovery well during Q4 2018;
- Seven Energy Transaction expected to be completed during Q4 2018, with the Implementation Agreement anticipated to be signed by end October 2018.
Andrew Knott, CEO of Savannah Petroleum, said:
“I am very pleased with what Savannah has achieved during a very busy first half of 2018. The Company saw considerable drilling success in Niger, with two oil discoveries made during H1 and a further two discoveries post period end. In recent months we have also announced a commitment, alongside the Government of Niger, to install an EPS on R3 East, which will see initial production from our discoveries sold into the domestic market. We continue to see significant resource potential on our wider Niger acreage, and in addition to the upcoming Zomo-1 results we expect to update the market on our plans for further drilling in the coming months.
We continue to advance the Seven Energy Transaction, which is now expected to complete during the fourth quarter of 2018. Earlier this month we announced two additional value accretive deals in relation to the broader Transaction, which will see Savannah increase its anticipated interests in two key assets, via an MOU with Frontier Oil at the Uquo field and the expected buy-out of minority shareholders at Stubb Creek. These transactions are value accretive and afford Savannah increased operational control across the gas value chain.
We strengthened our executive management team with the appointment of David Clarkson to Chief Operating Officer, and have also put in place the ability to return capital to shareholders, if appropriate. I would like to thank all of our stakeholders for their ongoing support, and we look forward to providing further updates on our Niger and Nigeria businesses in the coming weeks and months at what is an exciting time for our Company.”
Unless otherwise defined, capitalised terms are as per the Company's Admission Document dated 22 December 2017.