TIDMSAVE
RNS Number : 1978T
Savannah Energy Plc
23 November 2021
23 November 2021
Savannah Energy PLC
("Savannah" or "the Company")
Publication of Updated Nigeria CPR with 27% Gross 2P Reserves
Upgrade
Financial and Operational Update Year to Date
Successful Drilling and Completion of Uquo-11 Gas Production
Well Below Budget
Savannah Energy PLC the African-focused British independent
energy company sustainably developing high quality, high potential
energy projects in Nigeria and Niger, is pleased to announce the
publication of an updated Competent Person's Report ("CPR")
covering the Company's assets in Nigeria, whereby Gross 2P Reserves
increased 27%, together with a financial and operational update for
the year to date.
The CPR was compiled by CGG Services (UK) Ltd ("CGG"), a
well-known independent third-party reserves auditor. For an
explanation of the defined terms in this announcement readers
should refer to the updated Nigeria CPR, which is available to
download from the Company's website at www.savannah-energy.com
Andrew Knott, CEO of Savannah Energy, said:
"I am extremely pleased to announce the publication of our
updated CPR covering the Company's asset in Nigeria, showing a 27%
organic increase in Group 2P reserves. 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. Operationally we have successfully drilled and completed the
Uquo-11 gas production well, below budget and at a significantly
lower cost than previous Uquo wells drilled by our subsidiary
company. 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 (as
defined below) when appropriate. We remain confident in our
Company's outlook."
Key Highlights
Updated Competent Persons Report for Nigeria
-- Certification by CGG of 108.6 MMboe 2P Reserves (2019 CPR[1]:
85.5MMboe) with additional 99.7 MMboe 2C Contingent Resources (2019
CPR(1) : 98.0MMboe);
-- Significant 27% increase to Gross Uquo 2P Reserves driven by
the new Pre-Stack Depth Migration ("PSDM")
re-processing/re-interpretation of the Uquo 3D seismic survey and
better than prognosis from the newly drilled Uquo-11 well; and
-- Nigerian Assets[2] gross NPV10 of US$1.2bn assessed by CGG
(NPV10 net to Savannah of US$954m).
Financial Highlights
-- Total Revenues[3] up 7% y-o-y to US$192.5m for the 10 months
ended 31 October 2021 (year-to-date period ended 31 October 2020:
US$180.2m);
-- Group cash balance of US$130.8m[4] and net debt of US$382.7m
as at 31 October 2021 (as at 31 October 2020: US$80.7m and
US$433.3m respectively);
-- Total cash collections from the Nigerian Assets up 6% to
US$149.2m for the 10 months ended 31 October 2021 (year-to-date
period ended 31 October 2020: US$141.1m);
-- We reiterate our FY 2021 guidance for the following:
o Total Revenues(3) of 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;
o Group Administrative and Operating Costs(5) of US$55.0m - US$65.0m;
o Group capital expenditure of up to US$65.0m; and
-- We are revising our Group Depreciation, Depletion and
Amortisation guidance from US$19m fixed for infrastructure assets
plus US$2.6/boe, to US$20m fixed for infrastructure assets plus
US$2.3/boe primarily as a result of the reserves increase at the
Uquo field.
Operational Highlights
-- Successful drilling and completion of the Uquo-11 gas production well, below budget;
-- Average gross daily Nigeria production in the year-to-date
period ended 31 October 2021 was 21.9 Kboepd, a 16% increase from
the average gross daily production of 19.0 Kboepd in the same
period last year;
-- 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);
-- Front End Engineering Design ("FEED") progressing for the Uquo compression project; and
-- On 2 June 2021, Savannah announced that the Company is in
exclusive discussions with ExxonMobil Corporation with respect to
the proposed acquisition of its entire upstream and midstream asset
portfolio in Chad and Cameroon (the "Proposed Acquisition"). The
Proposed Acquisition continues to progress, and the Company expects
to provide a further update in the coming weeks.
Nigeria CPR Summary
The Nigerian CPR has been published by CGG and is available to
download on the Company's website
(https://www.savannah-petroleum.com/en/key-documents). A summary of
the gross reserves and contingent resources associated with the
Uquo and Stubb Creek fields in South East Nigeria, in accordance
with the 2018 Petroleum Resource Management System ("PRMS") is set
out in the table below, along with a comparison vs. the numbers
presented in the Company's December 2019 CPR as adjusted for
production since its publication.
Summary of Nigeria Gross Reserves and Contingent Resources
Gross 2P Reserves Gross 2C Resources
-----------------------------------------------------------------------
CPR Dec-19 CPR Dec-19
Changes Changes
CPR Nov-21 (adj.) (%) CPR Nov-21 (adj.) (%)
-------------------- --------------------- ---------------------- ---------------------- -----------------------
Oil &
Condensate
(MMstb)
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Stubb Creek 13.4 13.7 (2)% - - -
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Uquo 0.6 0.6 - - - -
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Gas (Bscf)
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Uquo 567.3 427.2 33% 82.8 72.5 14%
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Stubb Creek - 515.3 515.3
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
Total
(MMboe) 108.6 85.5 27% 99.7 98.0 2%
---------------------- -------------------- --------------------- ---------------------- ---------------------- -----------------------
All Reserves presented above are as at 30 September 2021. Please
note for comparison purposes, the production between the two CPRs
has been deducted from the Reserves in the Nigeria CPR dated
December 2019.
Operational Update
Average gross daily Nigeria production in the year-to-date
period ended 31 October 2021 was 21.9 Kboepd, a 16% increase on the
average gross daily production of 19.0 Kboepd in same period last
year.
Of the total average gross daily production of 21.9 Kboepd in
the year-to-date period ended 31 October 2021, 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). Gas production levels are
driven by customer nomination levels.
Nigeria Average Gross Daily Production
Uquo Gas Uquo Condensate Stubb Creek Total
(MMscfpd) (bopd) Oil (Kbopd) (Kboepd)
------------------ ---------------
1 January-31 October
2021 115.6 115 2.5 21.9
---------------- ------------------ ---------------
% of total production 88% 1% 12% 100%
---------------- --------------------- ------------------ ---------------
1 January-31 October
2020 99.5 122 2.2 19.0
---------------- --------------------- ------------------ ---------------
% of total production 87% 1% 12% 100%
---------------- --------------------- ------------------ ---------------
% Increase / (decrease) +16% (6)% +13% +16%
---------------- --------------------- ------------------ ---------------
Accugas commenced first gas sales to FIPL, an affiliate company
of the Sahara Group, in November 2021 for the provision of gas to
the FIPL Afam power plant.
The Uquo-11 gas producer well has been drilled and was completed
in the D1.0 and D1.3/D1.4 reservoirs on 16 November 2021. The well
total net pay thickness came 71ft above prognosis, with a total
thickness of 355ft for the main reservoirs' targets (i.e. C9.0,
D1.0 and D1.3/D1.4 reservoirs).
The Company also started ordering compression equipment for the
Accugas gas processing plant during the first half of 2021. Factory
Acceptance Tests for the two compressor packages have been
successfully carried out, the Front End Engineering Design is in
progress and we expect the Long Lead Items to be ordered before the
year end. Both the drilling and compression projects will ensure
our continued ability to deliver gas at current and anticipated
future increased contracted volumes to satisfy customer demand.
ESG Reporting Update
Progress continues to be made in rolling out our new
sustainability performance and reporting framework across the Group
with a view to reporting on this from 2022 onwards. This reporting
framework was presented in our re-focused sustainability strategy
published in June 2021 which is based on four key strategic
pillars: (1) promoting socio-economic prosperity; (2) ensuring safe
and secure operations; (3) supporting and developing our people;
and (4) respecting the environment. These four strategic pillars
are aligned with 13 key United Nations Sustainable Development
Goals ("UN SDGs"), where we believe Savannah can have the biggest
economic, environmental, social and governance impact to achieve a
better and more sustainable future for all. While anchoring our
strategy around these 13 UN SDGs, we have chosen to integrate six
additional sustainability reporting standards into our new
performance and reporting framework. These have been selected on
the basis of those most relevant for our sector and of most
importance to our stakeholders and include those for: the Global
Reporting Index ("GRI"); the eight International Finance
Corporation Performance Standards ("IFC PS"); the International
Association of Oil and Gas Producers ("IOGP"); the International
Petroleum Industry Environmental Conservation Association
("IPIECA"); the Sustainability Accounting Standards Board ("SASB");
and the Task Force on Climate-related Financial Disclosures
("TCFD").
For further information, please refer to the Company's website
www.savannah-energy.com or contact:
+44 (0) 20 3817
Savannah Energy 9844
Andrew Knott, CEO
Nick Beattie, Deputy CFO
Sally Marshak, Head of IR &
Communications
+44 (0) 20 7409
Strand Hanson (Nominated Adviser) 3494
James Spinney
Ritchie Balmer
Rory Murphy
finnCap Ltd (Joint Broker)
Christopher Raggett +44 (0) 20 7220
Tim Redfern 0500
Panmure Gordon (UK) Ltd (Joint
Broker)
John Prior +44 (0) 20 7886
Hugo Rich 2500
+44 (0) 20 3757
Camarco 4983
Billy Clegg
Owen Roberts
Violet Wilson
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Dr Christophe Ribeiro, Savannah's VP Technical, has approved the
technical disclosure in this regulatory announcement in his
capacity as a qualified person under the AIM Rules. Dr Ribeiro is a
qualified geoscientist with 20 years' experience in the oil and gas
industry. He holds an MSc in Geophysics from the Institut de
Physique du Globe de Paris and an MSc in Petroleum Engineering and
a PhD in Reservoir Geophysics from Heriot-Watt University. Dr
Ribeiro is a member of the European Association of Geoscientists
and Engineers (EAGE) and Society of Petroleum Engineers (SPE).
About Savannah Energy:
Savannah Energy PLC is an AIM listed African-focused British
independent energy company sustainably developing high quality,
high potential energy projects in Nigeria and Niger, with a focus
on delivering material long term returns for stakeholders. In
Nigeria, the Company has controlling interests in the cash flow
generative Uquo and Stubb Creek oil and gas fields, and the Accugas
midstream business in South East Nigeria, which provides gas
enabling over 10% of Nigeria's thermal power generation. In Niger,
the Company has licence interests covering approximately 50% of the
highly oil prolific Agadem Rift Basin of South East Niger, where
the Company has made five oil discoveries and seismically
identified a large exploration prospect inventory consisting of 146
exploration targets to be considered for potential future drilling
activity.
Further information on Savannah Energy PLC can be found on the
Company's website: www.savannah-energy.com .
[1] 2019 CPR Reserves adjusted for production for the period
between the updated and 2019 CPRs.
[2] Nigerian assets defined as the interest in the Uquo Gas
Project owned by SEUGL, the interest in the Stubb Creek Field owned
by Universal Energy Resources and the interest in the Accugas
Midstream Business owned by Accugas Limited.
[3] Total Revenues are defined as the total amount of invoiced
sales during the period. This number is seen by management as more
accurately reflecting the underlying cash generation capacity of
the business as opposed to Revenue recognised in the Condensed
Consolidated Statement of Comprehensive Income. A detailed
explanation of the impact of IFRS 15 revenue recognition rules on
our Consolidated Statement of Comprehensive Income is provided in
the Financial Review section of the Savannah Annual Report and
Accounts 2020.
([4]) The cash balance of US$130.8m includes US$80.7m set aside
to cover interest due and US$1.6m held in escrow accounts for stamp
duty relating to loan security packages.
(5) Group operating expenses plus administrative expenses are
defined as total cost of sales, administrative and other operating
expenses excluding royalty and depletion, depreciation and
amortisation and transaction costs.
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END
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