TIDMSAVE
RNS Number : 4673N
Savannah Energy Plc
30 September 2021
30 September 2021
Savannah Energy PLC
("Savannah" or "the Company")
2021 Half Year Results and Outlook for the Year
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 its
unaudited interim results for the six months ended 30 June 2021 and
outlook for the FY 2021.
Andrew Knott, CEO of Savannah Energy, said:
"These results show just how far we have come this year, with
US$116.5m of Total Revenues(1) , US$91.5m of Adjusted EBITDA(2) and
strong free cash flow. Our operational performance has been
excellent which is important to all our stakeholders as we continue
to play a vital role in driving economic growth and living
standards in our countries of operation. This growth is set to
continue as we progress discussions with ExxonMobil with respect to
the proposed acquisition of its entire upstream and midstream
assets in Chad and Cameroon and begin an anticipated new investment
programme on our Niger assets, over which we are pleased to have
agreed terms for an extension of up to 10 years.
I'd like to thank all of our shareholders and other stakeholders
for their continued support as we look to capitalise on the
opportunities available to us."
H1 2021 Financial Highlights
-- Total Revenues(1) of US$116.5m (up 2% on H1 2020 Total
Revenues of US$114.6m), in line with 2021 guidance of over US$205m
for the full year;
-- Average realised gas price of US$4.2/Mscf (H1 2020:
US$3.9/Mscf) and an average realised liquids price of US$63.5/bbl
(H1 2020: US$48.3/bbl);
-- Cash collections from the Nigerian Assets in H1 2021 were
US$101.6m compared to US$82.1m in H1 2020;
-- Adjusted EBITDA(2) of US$91.5m (H1 2020: US$89.2m);
-- Adjusted EBITDA margin broadly unchanged at 79% (H1 2020: 78%);
-- Operating expenses plus administrative expenses(3) of
US$22.5m (H1 2020: US$22.7m) being US$1.0/Mscfe (H1 2020:
US$1.1/Mscfe);
-- Profit before tax of US$7.7m (H1 2020: US$1.2m);
-- Drilling of a gas well on the Uquo field commenced in
September 2021 and the non-associated gas compression project at
the Accugas gas processing plant is progressing, full year capital
expenditure guidance of up to US$65m maintained;
-- Net debt position as at 30 June 2021 of US$369.4m (Year-end
2020: US$408.7m) with Adjusted Leverage(4) of 2.3x (Year-end 2020:
2.5x); and
-- Cash at bank(5) of US$135.7m as at 30 June 2021 (Year-end 2020: US$106.0m)
H1 2021 Operational Highlights
-- Average gross daily production, of which 88.6% was gas,
increased 6% during H1 2021 to 22.6 Kboepd (H1 2020: 21.3 Kboepd).
This includes a 6% increase in production from the Uquo gas field
compared to the same period last year, from 113.5 MMscfpd (18.9
Kboepd) to 120.2 MMscfpd (20.0 Kboepd);
-- On 5 February 2021 Accugas signed a new gas sales agreement
("GSA") with Mulak Energy Limited ("Mulak") representing Savannah's
entry into Nigeria's high-growth compressed natural gas ("CNG")
market ;
-- 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; and
-- On 7 June 2021, Savannah published its re-focused
sustainability strategy as part of the 2020 Annual Report focusing
on four key strategic pillars with the strategy anchored around the
13 most relevant UN Sustainable Development Goals where we believe
Savannah can have the biggest economic, environmental, social and
governance impact
Post Period Update
-- Drilling of a new gas production well in the Uquo field, Uquo
11, commenced on 21 September 2021;
-- On 29 September 2021, the Niger Ministry of Petroleum
amalgamated Savannah's four licence areas (covered by the previous
R1/R2 PSC and the R3/R4 PSC) into a single PSC (R1/R2/R3/R4), valid
for up to a further 10 years. This lays the foundation for an
anticipated new investment programme in our R3 East development in
2022;
-- On 12 August 2021 it was announced that, as a result of the
Company's growth in recent years and the planned significant
further expansion, the decision was taken to restructure the
finance function of the Company. As a result, Ms Isatou
Semega-Janneh left, and ceased to be a Director of, the Company;
and
-- On 16 August 2021 His Excellency President Muhammadu Buhari
signed the Petroleum Industry Act 2021 (the "PIA") into law
indicating the government of Nigeria's commitment to enhancing the
governance, administrative and fiscal regimes of the domestic
industry. It is anticipated that the PIA will have a positive
fiscal impact on Savannah
FY 2021 Guidance Reiterated
We reiterate our FY 2021 guidance as follows:
-- Total Revenues(1) 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. Any revenues received from new
additional gas sales agreements would, therefore, be incremental to
this;
-- Operating expenses plus administrative expenses(3) of US$55.0m to US$65.0m;
-- Depreciation, Depletion and Amortisation of US$19m fixed for
infrastructure assets plus US$2.6/boe for oil and gas assets;
and
-- Capital expenditure of up to US$65.0m
For further information, please refer to the Company's website
www.savannah-energy.com or contact:
Savannah Energy +44 (0) 20 3817 9844
Andrew Knott, CEO
Nick Beattie, Deputy CFO
Sally Marshak, Head of IR &
Communications
Strand Hanson (Nominated Adviser) +44 (0) 20 7409 3494
James Spinney
Ritchie Balmer
Rory Murphy
finnCap Ltd (Joint Broker) +44 (0) 20 7220 0500
Christopher Raggett
Tim Redfern
Panmure Gordon (UK) Ltd (Joint
Broker) +44 (0) 20 7886 2500
John Prior
Hugh Rich
Camarco +44 (0) 203 757 4980
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.
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.
H1 2021 Operational Review
Nigeria
Average gross daily production from the Nigerian Assets
increased 6% in H1 2021 to an average of 22.6 Kboepd versus 21.3
Kboepd for H1 2020. This includes a 6% increase in production from
the Uquo gas field compared to the same period last year, from
113.5 MMscfpd (18.9 Kboepd) to 120.2 MMscfpd (20.0 Kboepd). Uquo
gas field production of 20.0 Kboepd represented 88% of total 22.6
Kboepd production in H1 2021.
Average Gross Daily Production
Uquo Gas Uquo Condensate Stubb Creek Total
(MMscfpd) (bopd) Oil (Kbopd) (Kboepd)
------------------ ---------------
1 January-30 June 2021 120.2 110.4 2.5 22.6
---------------- ------------------ ---------------
% of total production 88% 1% 11% 100%
---------------- --------------------- ------------------ ---------------
1 January-30 June 2020 113.5 142.9 2.3 21.3
---------------- --------------------- ------------------ ---------------
% of total production 88% 1% 11% 100%
---------------- --------------------- ------------------ ---------------
% Increase/(Decrease) 6% (23)% 9% 6%
---------------- --------------------- ------------------ ---------------
Gas production levels are driven by customer nominations. During
H1 2021 the Company's subsidiary, Accugas, supplied gas to the
Calabar power station and the Ibom power station to generate an
average of 340MW of electricity per day (H1 2020: 355 MW per day),
representing 11% of the total grid-based thermal power generated in
Nigeria during the period. The peak generation from Accugas
supplied gas was 497MW (H1 2020: 476MW), highlighting Accugas'
continuing position as a principal gas-to-power supplier in
Nigeria.
In February 2021, Savannah announced that Accugas had entered
into a new GSA with Mulak. The GSA is initially for a seven-year
term to supply gas produced by Savannah's majority-owned Uquo field
for an initial two-year period on an interruptible basis (the
"Interruptible Gas Delivery Period") starting in 2022 and the
subsequent five years on a firm contract basis (the "Firm Delivery
Period"). During the Interruptible Gas Delivery Period, Mulak is
able to nominate a maximum daily quantity of up to 2.5 MMscfpd.
Volumes in the Firm Delivery Period will be agreed by the parties
before the end of the Interruptible Gas Delivery Period. Sales
under the GSA benefit from a bank guarantee arrangement from an
investment grade credit rated international bank.
The Company commenced drilling of a new gas production well,
Uquo 11, in the Uquo field on 21 September 2021. 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 order to be delivered 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.
Niger
During H1 2021, the Company agreed in principle with the
Ministry of Petroleum to amalgamate the four licence areas (covered
by the R1/R2 PSC and the R3/R4 PSC) into a single PSC rather than
the previous proposal of two PSCs. Post-period reporting end on 29
September 2021, 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. It will enter into force following ratification
in early October 2021 by the Council of Ministers and the payment
of the associated fee within 30 business days. This lays the
foundation for an anticipated new investment programme in our R3
East development in 2022.
Proposed Acquisition in Chad and Cameroon
Savannah announced in June 2021 that the Company is in advanced
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 would include a 40% operated interest in the
Doba Oil Project, and an effective c.40% interest in the
Chad-Cameroon oil transportation pipeline. For reference, in 2020
the Doba Oil Project produced an average gross 33.7 Kbopd and the
Chad-Cameroon pipeline transported a gross 129.2 Kbopd.
If completed on the currently proposed terms, the Proposed
Acquisition would be classified as a reverse takeover transaction
in accordance with the AIM Rule 14, and accordingly, the Company's
ordinary shares were suspended from trading on AIM and will remain
so pending publication of an AIM admission document setting out,
inter alia, details of the Proposed Acquisition, or confirmation is
provided that discussions around the Proposed Acquisition have been
terminated. There can be no assurance that agreement between the
parties will be reached on mutually acceptable terms and that the
Proposed Acquisition will complete. The Company will update
shareholders as to progress made in relation to the Proposed
Acquisition as appropriate.
Update on Savannah's Sustainability Strategy
In June 2021 Savannah published our re-focused sustainability
strategy 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. Our 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"). 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.
Petroleum Industry Act ("PIA")
We are pleased to note that on 16 August 2021 His Excellency
President Muhammadu Buhari signed the Petroleum Industry Act 2021
into law. The PIA is an overhaul of the administrative, regulatory
and fiscal regime of the Nigerian oil and gas industry in order to
create a framework to attract additional investment into the
country, which is Africa's largest producer and with the continents
largest oil and gas reserves.
Overall, we anticipate that t he PIA will have a positive fiscal
impact on Savannah, with lower gas royalties offsetting higher oil
and condensate royalties and additional levies. Furthermore, a
reduction in tax rates for upstream oil operations as a result of
the replacement of Petroleum Profits Tax with a combination of
Corporate Income Tax and a new Hydrocarbon Tax is expected to
reduce cash tax costs over the life of the assets, although the
lower tax rates will reduce the carrying value of deferred tax
assets on upstream oil operations.
H1 2021 Financial Review
The Group reports Total Revenues(1) of US$116.5 million for the
six months ended 30 June 2021, up 2% on H1 2020 and an Adjusted
EBITDA(2) of US$91.5 million up 3% on H1 2020. This performance
continues to reflect the strong cash generative quality of our gas
producing assets in Nigeria.
As previously highlighted, it is important to note the impact of
take-or-pay accounting rules under IFRS 15 on our Income Statement
as regards to revenue recognition for our gas sales agreements. The
Revenue of US$99.4 million shown in the Condensed Consolidated
Statement of Comprehensive Income includes only the gas, oil and
condensate that has been delivered. The Total Revenues(1) of
US$116.5 million includes the volume of gas that customers are
committed to pay for under the take-or-pay terms of the gas sales
agreements, which includes gas that has been delivered plus gas
invoiced but yet to be delivered, plus oil and condensate
revenues.
Summary of result for H1 2021
The table below provides an overview of our results for H1 2021
with a comparison for H1 2020.
Financial highlights
Six months ended Six months ended
30 June 2021 30 June 2020
US$ million US$ million
Total Revenues(1) 116.5 114.6
----------------- -----------------
Revenue 99.4 91.7
----------------- -----------------
Operating expenses plus administrative
expenses(3) 22.5 22.7
----------------- -----------------
Operating profit 54.0 47.9
----------------- -----------------
Profit before tax 7.7 1.2
----------------- -----------------
(Loss)/profit after tax (1.4) 1.8
----------------- -----------------
Adjusted EBITDA(2) 91.5 89.2
----------------- -----------------
Cash collections 101.6 82.1
----------------- -----------------
The Group's operating profit for the six months ended 30 June
2021 was US$54.0 million (H1 2020: US$47.9 million), a 13%
improvement between periods reflecting the increased revenues in
the period combined with the ongoing control of operating expenses
and administrative expenses, which remained flat.
The Group's profit before tax was US$7.7 million (H1 2020:
US$1.2 million) and the loss after tax was US$1.4 million (H1 2020
profit: US$1.8 million). The increased tax charge year-on-year was
primarily a result of profits generated in Nigeria.
Adjusted EBITDA(2) , described in further detail below, for H1
2021 was US$91.5 million, up 3% on US$89.2 million for H1 2020.
Revenue
Revenue during the period was 8% higher than the prior year
comparable at US$99.4 million (H1 2020: US$91.7 million) on stable
overall sales volumes. The increase is a result of higher realised
prices and the following tables summarise the sales volumes and
prices achieved during H1 2021 and H1 2020:
Sales volumes, average prices and revenue for H1 2021
Sales volume Average price Revenue
US$ million
Gas 21,774 MMscf US$4.2/Mcf 91.7
-------------- ------------------ -------------
Oil and condensate 107 kbbl US$63.5/bbl 6.8
-------------- ------------------ -------------
Crude oil processing - - 0.9
-------------- ------------------ -------------
US$26.4/boe
Total 3.74 MMboe* or US$4.4/Mscfe 99.4
-------------- ------------------ -------------
*1 boe equivalent to 6 Mscf of gas
Sales volumes, average prices and revenue for H1 2020
Sales volume Average price Revenue
US$ million
Gas 21,476 MMscf US$3.9/Mcf 83.6
-------------- ------------------ -------------
Oil and condensate 163 kbbl US$48.3/bbl 7.9
-------------- ------------------ -------------
Crude oil processing - - 0.2
-------------- ------------------ -------------
US$24.5/boe
Total 3.74 MMboe or US$4.1/Mscfe 91.7
-------------- ------------------ -------------
The gas revenue stream, which represents 92% of H1 2021 revenue
(H1 2020: 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.
Additionally, 95% of the gas sales are backed by investment grade
credit guarantees, including a World Bank supported Partial Risk
Guarantee in the case of the Calabar power station gas sales
agreement.
Cost of Sales, administrative and other operating expenses
Cost of sales amounted to US$34.3 million (H1 2020: US$32.3
million) which includes US$13.8 million (H1 2020: US$11.8 million)
for facility operating and maintenance costs, US$2.2 million (H1
2020: US$2.2 million) royalty expenses and US$18.3 million (H1
2020: US$18.3 million) depletion and depreciation.
Administrative and other operating expenses for the period were
US$11.8 million (H1 2020: US$11.5 million), which includes US$0.9
million (H1 2020: US$0.6 million) of depreciation. Of the total,
US$2.3 million (H1 2020: nil) were transaction costs incurred in
relation to the Proposed Acquisition.
Group operating expenses plus administrative expenses(3) were
US$22.5 million (H1 2020: US$22.7 million), reflecting strong cost
control across the Group. This amounts to a unit cost of
US$1.0/Mscfe (H1 2020: US$1.1/Mscfe) which compares favourably with
our average sales price of US$4.4/Mscfe (H1 2020:
US$4.1/Mscfe).
EBITDA and Adjusted EBITDA(2)
Presented below is the calculation of EBITDA and Adjusted
EBITDA(2) . Management believes that the alternative performance
measure of Adjusted EBITDA(2) more accurately reflects the cash
generating capacity of the business. Adjusted EBITDA(2) includes
gas that has been invoiced under take-or-pay contracts but not yet
delivered and is adjusted for transaction costs, and expected
credit losses to provide a meaningful comparison between
periods.
Calculation of EBITDA and Adjusted EBITDA(2)
Six months ended Six months ended
30 June 2021 30 June 2020
US$ million US$ million
Operating profit 54.0 47.9
Add: depletion, depreciation and amortisation 19.2 18.9
EBITDA 73.2 66.8
Add: other invoiced amounts 17.1 22.9
Deduct: royalty payable on additional gas (0.4) (0.5)
volume
Add: transaction costs associated with the 2.3 -
Proposed Acquisition
Deduct: expected credit loss & other related (0.7) -
adjustments
Adjusted EBITDA (2) 91.5 89.2
Finance Costs
Finance costs of US$38.7 million (H1 2020: US$36.3 million) were
partially offset by finance income of US$0.3 million (H1 2020:
US$0.4 million). Of these costs US$26.8 million (H1 2020: US$32.0
million) related to bank and loan note interest. The average
interest rate was 10.3% (H1 2020: 11.9%) reflecting lower US Libor
rates during 2021. The remainder of the finance costs are primarily
a number of non-cash items which are itemised in Note 8 of the
financial statements.
The interest cover ratio, on an Adjusted EBITDA(2) basis is 2.9
times versus 2.5 times in H1 2020.
Foreign Exchange loss
Foreign exchange losses amounted to US$10.9 million (H1 2020:
US$7.1 million).
An unrealised loss of US$7.0 million (H1 2020 gain: US$1.7
million) was mainly a result of revaluation of monetary items held
in Nigerian Naira following the devaluation of the Naira from
approximately 380 Naira/US$ to 410 Naira/US$ in May 2021. The
realised losses of US$4.0 million (H1 2020: US$8.8 million) arise
mainly from US dollar gas sales invoices which are collected in
local currency and then converted at the Central Bank of Nigeria
("CBN") official rate to settle US dollar invoices. In order to
purchase US dollars to service US dollar obligations, Savannah
accesses foreign exchange at market rate and there is typically a
differential between this rate and the CBN rate. The majority of
these losses are recoverable through a foreign exchange "true-up"
clause in the Calabar GSA.
Taxation
The tax charge of US$9.1 million (H1 2020: credit US$0.6
million) was made up of a current tax charge of US$2.2 million (H1
2020: US$1.8 million) and a deferred tax charge of US$6.9 million
(H1 2020: credit US$2.3 million). The current tax charge
principally arises on Nigerian profits and the deferred tax charge
is a result of utilisation of unused losses in Nigeria.
Condensed Consolidated Statement of Financial Position
Group Assets
30 June 2021 31 December
US$ million 2020
US$ million
Property, Plant and Equipment 604.1 612.7
------------- -------------
Exploration and evaluation assets 160.1 159.6
------------- -------------
Deferred tax asset 190.1 197.0
------------- -------------
Other non-current assets 7.6 8.2
------------- -------------
Total non-current assets 961.9 977.5
------------- -------------
Inventory 3.6 2.9
------------- -------------
Trade and other receivables 138.6 122.4
------------- -------------
Cash and cash equivalents 134.1 104.4
------------- -------------
Total current assets 276.3 229.7
------------- -------------
Total assets 1,238.2 1,207.2
------------- -------------
Total assets increased to US$1,238.2 million (31 December 2020:
US$1,207.2 million) principally due to a US$29.7 million increase
in cash balances held in Nigeria.
As was noted in our 2020 Annual Report & Accounts, there has
been a reduction seen in foreign exchange liquidity in Nigeria
since the first half of 2020. The Company anticipates that
liquidity will return to the FX market in the near-term and in the
meantime, Savannah has agreed with the Accugas lenders to retain a
sufficient balance in Naira to cover the US$ denominated debt
service amounts. This is reflected in the Adjusted net debt figure
shown in the table below.
The Group has Trade and other receivables of US$138.6 million
(31 December 2020: US$122.4 million). The trade receivables and
contract assets (from sales) of US$146.3 million (31 December 2020:
US$131.1 million) represent a net increase of US$15.2 million
mainly due from customers in Nigeria under the GSAs in place.
The Group has trade and other payables of US$108.9 million (31
December 2020: US$106.6 million). These amounts will be settled in
the normal course of business. The increase is primarily a result
of capital investment activities including the drilling of a gas
well at Uquo and the compression project at the Accugas processing
facility.
Debt
The Group net debt as at 30 June 2021 was US$369.4 million (31
December 2020: US$408.7 million). During the period our leverage
ratio, and our adjusted leverage ratio, both based on Adjusted
EBITDA(2) improved as shown in the table below.
Leverage
30 June 31 December
2021 2020
US$ million US$ million
Adjusted EBITDA(2 #) 91.5 183.6
------------- -------------
Net debt 369.4 408.7
------------- -------------
Naira held in cash for interest 58.7 48.0
------------- -------------
Adjusted net debt 428.1 456.7
------------- -------------
Leverage (Net debt/Adjusted EBITDA
(2) ) 2.0 2.2
------------- -------------
Adjusted Leverage(4) (Adjusted
net debt/Adjusted EBITDA (2)
) 2.3 2.5
------------- -------------
# Adjusted EBITDA(2) for 6 months to 30 June 2021 and for 12
months to 31 December 2020
Cashflow
A summary of the cashflows for the period is as follows:
Six months ended Six months ended
30 June 2021 30 June 2020
US$ million US$ million
Net cash generated from operating activities 65.2 45.6
Net cash used in investing activities (4.8) (1.0)
Finance costs paid (22.8)(a) (39.4)(b)
Impact of exchange rate changes on cash (7.9) -
balances
----------------- -----------------
Net increase in cash 29.7 5.2
----------------- -----------------
Cash balances at start of period (5) 106.0 48.1
----------------- -----------------
Cash balances at end of period 5 135.7 53.3
----------------- -----------------
(a) excludes US$31.0 million moved to debt service accounts
(b) excludes US$0.2 million moved from restricted balances
The net cash inflow from operating activities was US$65.2
million (H1 2020: US$45.6 million) with the increase being driven
by improved cash collections from customers which totalled US$101.6
million compared to US$82.1 million in H1 2020.
Net cash used in investing activities includes payments for
property, plant and equipment of US$4.1 million (H1 2020: US$0.9
million) and US$1.1 million (H1 2020: US$0.1 million) incurred on
exploration and evaluation assets.
Total cash balances of the Group at the end of the period
increased to US$135.7m (H1 2020: US$53.3m).
Nick Beattie
Deputy Chief Financial Officer
30 September 2021
Footnotes
[1] 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.
2 Adjusted EBITDA is calculated as profit or loss before finance
costs, investment revenue, foreign exchange gains or losses,
expected credit loss and other related adjustments, fair value
adjustments, gain on acquisition, taxes, transaction costs,
depreciation, depletion and amortisation and adjusted to include
deferred revenue and other invoiced amounts. Management believes
that the alternative performance measure of Adjusted EBITDA more
accurately reflects the cash-generating capacity of the
business.
3 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.
(4) Adjusted Leverage is defined as Adjusted net debt/Adjusted
EBITDA. Adjusted net debt is calculated as the net debt balance
adjusted for the Naira held in cash for interest (as shown in the
table on page 8).
5 Within cash at bank, US$1.6m is restricted cash which includes
deposits and stamp duty escrow balances.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
SIX MONTH PERIODED 30
JUNE 2021
Six months ended Six months ended
30 June 30 June
2021 2020
US$ ' 000 US$ ' 000
Note Unaudited Unaudited
-------------------------------------------------- -------- --------------------- --------------------
Revenue 4 99,386 91,676
Cost of sales 5 (34,286) (32,293)
-------------------------------------------------- -------- --------------------- --------------------
Gross profit 65,100 59,383
Administrative and other operating expenses (11,846) (11,456)
Expected credit loss and other related
adjustments 14 739 -
Operating profit 6 53,993 47,927
Finance income 7 328 354
Finance costs 8 (38,732) (36,291)
Fair value adjustment 9 3,042 (3,674)
Foreign translation loss 10 (10,943) (7,092)
-------------------------------------------------- -------- --------------------- --------------------
Profit before tax 7,688 1,224
Current tax expense 11 (2,172) (1,750)
Deferred tax (expense)/credit 11 (6,893) 2,334
-------------------------------------------------- -------- --------------------- --------------------
Tax ( expense)/credit 11 (9,065) 584
-------------------------------------------------- -------- --------------------- --------------------
Net ( loss)/profit and total comprehensive
( loss)/profit (1,377) 1,808
-------------------------------------------------- -------- --------------------- --------------------
Total comprehensive (loss)/profit attributable
to:
Owners of the Company (3,109) 1,712
Non-controlling interests 1,732 96
-------------------------------------------------- -------- --------------------- --------------------
(1,377) 1,808
-------------------------------------------------- -------- --------------------- --------------------
(Loss)/earnings per share US cents US cents
-------------------------------------------------- -------- --------------------- --------------------
Basic 12 (0.33) 0.17
Diluted 12 (0.33) 0.17
-------------------------------------------------- -------- --------------------- --------------------
All results derive from continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 June 31 December
2021 2020
US$'000 US$'000
Note Unaudited Audited
---------------------------------------------- -------- --------------------- -----------------------
Assets
Non-current assets
Property, plant and equipment 13 604,104 612,707
Exploration and evaluation assets 160,135 159,572
Deferred tax assets 190,093 196,986
Right-of-use assets 5,074 5,581
Restricted cash 1,635 1,635
Finance lease receivable 864 1,049
---------------------------------------------- -------- --------------------- -----------------------
Total non-current assets 961,905 977,530
---------------------------------------------- -------- --------------------- -----------------------
Current assets
Inventory 3,605 2,916
Trade and other receivables 14 138,670 122,400
Cash at bank 15 134,050 104,363
---------------------------------------------- -------- --------------------- -----------------------
Total current assets 276,325 229,679
---------------------------------------------- -------- --------------------- -----------------------
Total assets 1,238,230 1,207,209
---------------------------------------------- -------- --------------------- -----------------------
Equity and liabilities
Capital and reserves
Share capital 1,409 1,409
Share premium 62,263 62,092
Treasury shares (58) (59)
Capital contribution 458 458
Share-based payment reserve 8,479 7,104
Retained earnings 155,561 158,670
---------------------------------------------- -------- --------------------- -----------------------
Equity attributable to owners of
the Company 228,112 229,674
Non-controlling interests (1,005) (2,737)
---------------------------------------------- -------- --------------------- -----------------------
Total e quity 227,107 226,937
---------------------------------------------- -------- --------------------- -----------------------
Non-current liabilities
Other payables 16 4,884 4,648
Borrowings 17 405,433 424,667
Lease liabilities 6,352 7,057
Provisions 108,342 106,606
Contract liabilities 18 201,970 185,172
---------------------------------------------- -------- --------------------- -----------------------
Total non- current liabilities 726,981 728,150
---------------------------------------------- -------- --------------------- -----------------------
Current l iabilities
Trade and other payables 16 104,063 101,975
Borrowings 17 99,689 89,995
Interest payable 66,498 51,544
Tax liabilities 3,640 2,539
Lease liabilities 1,424 1,004
Contract liabilities 18 8,828 5,065
Total current liabilities 284,142 252,122
---------------------------------------------- -------- --------------------- -----------------------
Total liabilities 1,011,123 980,272
---------------------------------------------- -------- --------------------- -----------------------
Total e quity and l iabilities 1,238,230 1,207,209
---------------------------------------------- -------- --------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Six months ended Six months ended
30 June 30 June
2021 2020
US$'000 US$'000
Note Unaudited Unaudited
----------------------------------------------------------- ---- -------------------------- -----------------------
Cash flows from operating activities:
Profit before tax 7,688 1,224
Adjustments for:
Depreciation 888 602
Depletion 18,335 18,310
Finance income (124) -
Finance costs 8 38,732 36,064
Fair value adjustment (3,042) 3,674
Unrealised foreign exchange loss/(gain) 10 6,981 (1,659)
IFRS 16 sub-lease recognition - 71
Share option charge 1,375 318
Expected credit loss and other related
adjustments 14 (739) -
Operating cash flows before movements in working capital 70,094 58,604
Increase in trade and other receivables (16,610) (29,248)
Decrease in trade and other payables (4,467) (6,113)
Increase in contract liabilities 16,798 22,293
Income tax (payments)/rebates (632) 60
----------------------------------------------------------- ---- -------------------------- -----------------------
Net cash generated from operating activities 65,183 45,596
----------------------------------------------------------- ---- -------------------------- -----------------------
Cash flows from investing activities:
Interest received 98 -
Payments for property, plant and equipment (4,109) (901)
Payments for exploration and evaluation assets (1,118) (68)
Lessor receipts 280 11
----------------------------------------------------------- ---- -------------------------- -----------------------
Net cash used in investing activities (4,849) (958)
----------------------------------------------------------- ---- -------------------------- -----------------------
Cash flows from financing activities:
Finance costs (13,580) (21,068)
Borrowing proceeds 19 - 3,835
Borrowing repayments 19 (8,794) (22,107)
Lease payments 19 (335) (76)
Cash to debt service accounts (30,973) -
Cash from restricted cash accounts - 193
----------------------------------------------------------- ---- -------------------------- -----------------------
Net cash used in financing activities (53,682) (39,223)
----------------------------------------------------------- ---- -------------------------- -----------------------
Net increase in cash and cash equivalents 6,652 5,415
Effect of exchange rate changes on cash and cash (7,938) -
equivalents
Cash and cash equivalents at beginning of period 74,258 46,256
Cash and cash equivalents at end of period 15 72,972 51,671
----------------------------------------------------------- ---- -------------------------- -----------------------
Amounts held for debt service at end of period 15 61,078 -
----------------------------------------------------------- ---- -------------------------- -----------------------
Cash at bank at end of period 15 134,050 51,671
----------------------------------------------------------- ---- -------------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Equity
attributable
to the
Share-based owners
Share Share Treasury Capital payment Retained of the Non-controlling Total
capital premium shares contribution reserve earnings Company interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January
2021 (audited) 1,409 62,092 (59) 458 7,104 158,670 229,674 (2,737) 226,937
Profit/(loss)
for
the period - - - - - (3,109) (3,109) 1,732 (1,377)
---------------- -------- -------- --------- ------------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
profit/(loss)
for
the period - - - - - (3,109) (3,109) 1,732 (1,377)
Transactions
with
shareholders:
Equity-settled
bonus payments - 171 1 - - - 172 - 172
Equity-settled
share-based
payments - - - - 1,375 - 1,375 - 1,375
Balance at 30
June
2021
(unaudited) 1,409 62,263 (58) 458 8,479 155,561 228,112 (1,005) 227,107
---------------- -------- -------- --------- ------------- ------------ --------- ------------- ---------------- --------
Equity
attributable
to the
Share-based owners
Share Share Treasury Capital payment Retained of the Non-controlling Total
capital premium shares contribution reserve earnings Company interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January
2020 (audited) 1,393 61,204 - 458 6,448 164,885 234,388 (2,983) 231,405
Profit for the
period - - - - - 1,712 1,712 96 1,808
---------------- -------- -------- --------- ------------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
profit for the
period - - - - - 1,712 1,712 96 1,808
Transactions
with
shareholders:
Equity-settled
share-based
payments - - - - 318 - 318 - 318
Balance at 30
June
2020
(unaudited) 1,393 61,204 - 458 6,766 166,597 236,418 (2,887) 233,531
---------------- -------- -------- --------- ------------- ------------ --------- ------------- ---------------- --------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information
Savannah Energy PLC ("Savannah" or "the Company") and its
subsidiaries (together, the "Group") was incorporated in the United
Kingdom on 3 July 2014. On 16 April 2020, the Company changed its
name from Savannah Petroleum PLC to Savannah Energy PLC.
Savannah's principal activity of these entities is the
exploration, development and production of crude oil and natural
gas in Nigeria and Niger.
The Company is domiciled in the UK for tax purposes and its
shares were listed on the Alternative Investment Market ("AIM") of
the London Stock Exchange on 1 August 2014. The Company's
registered address is 40 Bank Street, London, E14 5NR.
2. Accounting policies
Basis of Preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became International
Financial Reporting Standards ("IFRS") as adopted by the United
Kingdom ("UK-adopted IFRS"), with future changes being subject to
endorsement by the UK Endorsement Board. The Group transitions to
UK-adopted IFRS in its consolidated financial statements from 1
January 2021. There was no impact on the Group from this
transition, nor any changes in accounting policy. These condensed
consolidated financial statements have been prepared in accordance
with UK-adopted IFRS. The provisions of IAS 34: Interim Financial
Reporting have not been applied.
The condensed consolidated financial statements do not include
all disclosures that would otherwise be required in a complete set
of financial statements and should be read in conjunction with the
Group's 2020 Annual Report and audited financial statements for the
year ended 31 December 2020 ("the Group's 2020 Annual Report"). The
financial information for the six months ended 30 June 2021 does
not constitute statutory accounts within the meaning of Section
434(3) of the Companies Act 2006 and is unaudited.
The annual financial statements of Savannah for the year ended
31 December 2020 were prepared in accordance with International
accounting standards in conformity with the requirements of the
Companies Act 2006. The Independent Auditors' Report on the Group's
2020 Annual Report was unqualified and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006. The Independent
Auditors' Report contained a material uncertainty related to going
concern.
The Group's statutory financial statements for the year ended 31
December 2020 have been
filed with the Registrar of Companies.
All the Group's subsidiaries' functional currency is US Dollars
("US$"), and the consolidated financial statements are presented in
US Dollars and all values are rounded to the nearest thousand
(US$'000), except when otherwise stated.
The financial information presented herein has been prepared in
accordance with the accounting policies used in preparing the
Group's 2020 Annual Report. There are no other new or amended
standards or interpretations adopted from 1 January 2021 that have
a significant impact on the interim financial information.
Going concern
The Group continues to trade strongly throughout 2021 with total
balance sheet cash amounting to US$135.7 million at the reporting
date and a significant volume of receivables that are anticipated
to be collected from customers during the remaining part of the
year.
The Directors have reviewed the Group's forecasted cash flows
for the twelve months from the date of publication of this Interim
Report. When reviewing the forecasts the Directors have considered
the Group's current trading performance, and considered the
potential impact from certain sensitivities on the forecasted cash
flows related to: commodity pricing, foreign currency transactions
(including the ability to access US dollars as required to pay
non-Naira denominated expenditures), timing for completing a
refinancing of certain debt facilities, payments from customers and
potential impact on demand resulting from the ongoing COVID-19
virus.
As a result, the Directors have confidence in the Group's
forecasts and have a reasonable expectation that the Group will
continue in operational existence for the going concern assessment
period and have therefore used the going concern basis in preparing
these Interim Financial Statements.
3. Segmental reporting
For the purposes of resource allocation and assessment of
segment performance, the operations of the Group are divided into
three segments: two geographical locations and an Unallocated
segment. The two geographical segments are Nigeria and Niger, and
their principal activities are the exploration, development and
extraction of oil and gas. These make up the total revenue
generating operations of the Group. The Unallocated segments
principal activities are the governance and financing of the Group
as well as undertaking business development opportunities. Items
not included within Operating profit/(loss) are reviewed at a Group
level and therefore there is no segmental analysis for this
information. As such, the comparative segmental reporting has been
restated to remove these amounts from the segments and show only
the totals to provide better comparability of the Group's 2021
results.
The following is an analysis of the Group's results by
reportable segment for the six months ended 30 June 2021:
Nigeria Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000
Unaudited Unaudited Unaudited Unaudited
------------------------------------ ----------- ----------- ------------- -------------
Revenue 99,386 - - 99,386
Cost of sales(1) (34,286) - - (34,286)
------------------------------------ ----------- ----------- ------------- -------------
Gross profit 65,100 - - 65,100
Administrative and other operating
expenses (2,748) (2,410) (6,688) (11,846)
Expected credit loss and other
related adjustments 739 - - 739
Operating profit/(loss) 63,091 (2,410) (6,688) 53,993
------------------------------------ ----------- ----------- ------------- -------------
Finance income 328
Finance costs (38,732)
Fair value adjustment 3,042
Foreign translation loss (10,943)
------------------------------------ ----------- ----------- ------------- -------------
Profit before tax 7,688
------------------------------------ ----------- ----------- ------------- -------------
Segment non-current assets(2) 604,741 161,554 3,018 769,313
Segment total assets 1,069,494 162,229 6,507 1,238,230
Segment total liabilities (948,557) (30,754) (31,812) (1,011,123)
------------------------------------ ----------- ----------- ------------- -------------
1. Refer to note 5 for material items included within Cost of Sales.
2. Includes Property, plant and equipment, Exploration and
evaluation assets and Right-of-use assets.
For non-current asset additions in Nigeria, refer to Oil &
gas assets and Infrastructure asset additions in note 13.
Non-current asset additions in Niger relate to additions in
Exploration & evaluation amounting to US$0.6 million.
Non-current additions in Unallocated relate to Other asset
additions in note 13 and Right-of-use additions amounting to
US$nil.
The following is an analysis of the Group's results by
reportable segment for the six months ended 30 June 2020. This has
been re-presented to allow for improved consistency to the current
period.
Nigeria Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000
Unaudited Unaudited Unaudited Unaudited
------------------------------------ ----------- ----------- ------------- -----------
Revenue 91,676 - - 91,676
Cost of sales(1) (32,293) - - (32,293)
------------------------------------ ----------- ----------- ------------- -----------
Gross profit 59,383 - - 59,383
Administrative and other operating
expenses (9,515) (1,164) (777) (11,456)
Operating profit/(loss) 49,868 (1,164) (777) 47,927
------------------------------------ ----------- ----------- ------------- -----------
Finance income 354
Finance costs (36,291)
Fair value adjustment (3,674)
Foreign translation loss (7,092)
------------------------------------ ----------- ----------- ------------- -----------
Profit before tax 1,224
------------------------------------ ----------- ----------- ------------- -----------
The following is an analysis of the Group's results by
reportable segment at 31 December 2020:
Nigeria Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000
Audited Audited Audited Audited
----------------------------------- ----------- ---------- ------------- -----------
Segment non-current additions(2) 613,439 161,147 3,274 777,860
Segment total assets 1,039,653 161,778 5,778 1,207,209
Segment total liabilities (919,067) (30,274) (30,931) (980,272)
----------------------------------- ----------- ---------- ------------- -----------
1. Refer to note 5 for material items included within Cost of Sales.
2. Includes Property, plant and equipment, Exploration and
evaluation assets and Right-of-use assets.
For non-current asset additions in Nigeria, refer to Oil &
gas assets and Infrastructure asset additions in note 13.
Non-current asset additions in Niger relate to additions in
Exploration & evaluation totalling US$4.5 million. Non-current
additions in Unallocated relate to Other asset additions in note
13, and Right-of-use additions totalling US$3.0 million.
4. Revenue
Set out below is the disaggregation of the Group's revenue from
contracts with customers:
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
---------------------------------------- ----------- -----------
Gas sales 91,675 83,622
Oil and condensates sales 7,711 8,054
---------------------------------------- ----------- -----------
Revenue from contracts with customers 99,386 91,676
---------------------------------------- ----------- -----------
Gas sales represents gas deliveries made to the Group's
customers under long term take or pay gas sale agreements; these
comprise two power stations and a cement production facility. The
Group sells oil and condensates under a sales and purchase
agreement with ExxonMobil Sales & Supply LLC at prevailing
market prices.
Included within revenue from contracts with customers is revenue
of US$89.6 million (30 June 2020: US$79.6 million) relating to the
Group's customers who each contribute more than 10% of revenue
5. Cost of sales
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
----------------------------------------------------- ----------- -----------
Depletion - oil and gas, and infrastructure assets
(note 13) 18,335 18,310
Facility operation and maintenance costs 13,794 11,830
Royalties 2,157 2,153
34,286 32,293
----------------------------------------------------- ----------- -----------
6. Operating profit
Operating profit has been arrived at after charging:
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
---------------------------------------- ----------- -----------
Staff costs 12,112 8,815
Depreciation - other assets (note 13) 380 338
Depreciation - right-of-use assets 508 264
Transaction expenses(1) 2,277 -
---------------------------------------- ----------- -----------
1. Transaction expenses primarily relate to expenses incurred
relating to the proposed acquisition of ExxonMobil's upstream and
midstream asset portfolio in Chad and Cameroon (as announced on 2
June 2021).
7. Finance income
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------- ----------- -----------
Lease income 26 16
Bank interest income 98 74
Other interest income 204 264
328 354
--------------------------- ----------- -----------
8. Finance costs
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
------------------------------------------------- ----------- -----------
Interest on bank borrowings and loan notes 26,826 31,983
Amortisation of balances measured at amortised
cost(1) 7,004 2,038
Unwinding of decommissioning discount 2,488 904
Interest expense on lease liabilities 262 144
Bank charges 131 219
Other finance costs 2,021 1,003
------------------------------------------------- ----------- -----------
38,732 36,291
------------------------------------------------- ----------- -----------
1. Includes amounts due to unwinding of a discount on a
long-term payable, contract liabilities (note 18) and amortisation
of debt fees.
9. Fair value adjustment
During 2019 the Group issued a Senior Secured Note of US$20
million that includes a voluntary prepayment option whereby early
repayment will result in a discount to the contractual loan value.
As an embedded derivative, the option has been separated from the
host loan instrument and valued separately and accounted for as
fair value through profit or loss ("FVTPL"). As at 30 June 2021 the
option value was approximately US$8.4 million (31 December 2020
audited: US$5.4 million), resulting in a gain of US$3.0 million (30
June 2020: charge of US$3.7 million). The increase in the option
value was principally due to an improvement in credit bond spreads
observed during the period. The reduction in the option value in
the prior period was principally due to the deteriorating credit
bond spread observed.
10. Foreign translation loss
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------- ----------- -----------
Realised loss 3,962 8,751
Unrealised loss/(gain) 6,981 (1,659)
--------------------------- ----------- -----------
10,943 7,092
--------------------------- ----------- -----------
Unrealised foreign translation loss for the six months ended 30
June 2021 mainly relates to the revaluation of monetary items held
in Nigerian Naira following the devaluation of the Naira against
the US Dollar in May 2021. Realised foreign translation loss mainly
relates to Nigerian trade receivables which are invoiced in US
Dollars and where customers are able to pay in Naira.
11. Taxation
The tax expense/(credit) for the Group is:
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
------------------------------------------ ----------- -----------
Current tax
- Adjustments in respect of prior years 3 (28)
- Current year 2,169 1,778
------------------------------------------ ----------- -----------
2,172 1,750
Deferred tax
- Adjustments in respect of prior years 15 423
- Current year 6,878 (2,757)
------------------------------------------ ----------- -----------
6,893 (2,334)
------------------------------------------ ----------- -----------
9,065 (584)
------------------------------------------ ----------- -----------
Income tax credit or expense is recognised based on the actual
results for the period.
The tax expense for the period of US$9.1 million (30 June 2020:
credit of US$0.6 million) is made up of a current tax charge of
US$2.2 million (30 June 2020: US$1.8 million) and a deferred tax
charge of US$6.9 million (30 June 2020: credit of US$2.3 million).
The current tax charge principally arises on Nigerian profits. The
deferred tax charge principally relates to the utilisation of
losses in Nigeria.
12. (Loss)/earnings per share
Basic earnings per share amounts are calculated by dividing the
profit or loss for the period attributable to owners of the Company
by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share amounts are calculated by dividing
the profit or loss for the periods attributable to owners of the
Company by the weighted average number of ordinary shares
outstanding during the period, plus the weighted average number of
shares that would be issued on the conversion of dilutive potential
ordinary shares into ordinary shares. As there is a loss
attributable to the owners of the Company for the six months ended
30 June 2021, the diluted weighted average number of shares would
reduce the loss per share. Therefore, the basic weighted average
number of shares has been used to calculate the diluted loss per
share.
The weighted average number of shares outstanding excludes
treasury shares of 41,966,942 (30 June 2020: nil).
2021 2020
Unaudited Unaudited
Six months ended 30 June US$'000 US$'000
------------------------------------------------------ ----------- -----------
(Loss)/profit
(Loss)/profit attributable to owners of the Company (3,109) 1,712
------------------------------------------------------ ----------- -----------
Number of Number of
shares shares
-------------------------------------------- ------------- -------------
Basic weighted average number of shares 954,116,177 996,408,412
Diluted weighted average number of shares 957,956,201 996,541,577
-------------------------------------------- ------------- -------------
US cents US cents
------------------------------------ ---------- ----------
(Loss)/earnings per share
Basic (loss)/earnings per share (0.33) 0.17
Diluted (loss)/earnings per share (0.33) 0.17
------------------------------------ ---------- ----------
50,233,574 options granted under share option schemes are not
included in the calculation of diluted earnings per share because
they are anti-dilutive for the six months ended 30 June 2021 (30
June 2020: 49,973,168). These options could potentially dilute
basic earnings per share in the future.
The weighted average number of shares for the period is lower
than the prior period due to the consolidation of an Employee
Benefit Trust holding shares in treasury from 31 December 2020.
These shares have been excluded for the six months ended 30 June
2021 where they were previously included for the prior period.
13. Property, plant and equipment
Oil and Infrastructure Other Total
gas assets assets assets
US$'000 US$'000 US$'000 US$'000
------------------------------------------- ------------- ---------------- --------- ----------
Cost
Balance at 1 January 2020 (audited) 167,890 457,414 2,879 628,183
Additions 1,757 1,831 534 4,122
Disposals - - (59) (59)
Decommissioning remeasurement adjustment (14,914) 10,236 - (4,678)
Transfer from Receivables from
a joint arrangement 30,844 - - 30,844
Transfers to Exploration and evaluation
assets - (284) - (284)
Reclassification of assets(1) (1,725) 720 1,005 -
------------------------------------------- ------------- ---------------- --------- ----------
Balance at 31 December 2020 (audited) 183,852 469,917 4,359 658,128
Additions 761 8,991 360 10,112
Balance at 30 June 2021 (unaudited) 184,613 478,908 4,719 668,240
------------------------------------------- ------------- ---------------- --------- ----------
Accumulated depreciation
Balance at 1 January 2020 (audited) (3,269) (5,671) (957) (9,897)
Depletion and depreciation charge (17,234) (17,555) (751) (35,540)
Adjustment to accumulated depreciation 176 56 (216) 16
------------------------------------------- ------------- ---------------- --------- ----------
Balance at 31 December 2020 (audited) (20,327) (23,170) (1,924) (45,421)
Depletion and depreciation charge (9,467) (8,868) (380) (18,715)
------------------------------------------- ------------- ---------------- --------- ----------
Balance at 30 June 2021 (unaudited) (29,794) (32,038) (2,304) (64,136)
------------------------------------------- ------------- ---------------- --------- ----------
Net book value
31 December 2020 (audited) 163,525 446,747 2,435 612,707
------------------------------------------- ------------- ---------------- --------- ----------
30 June 2021 (unaudited) 154,819 446,870 2,415 604,104
------------------------------------------- ------------- ---------------- --------- ----------
1. Certain assets have been reclassified between the various
asset classes to ensure they are reported in the most appropriate
class.
Upstream assets principally comprise the well and field
development costs relating to the Uquo and Stubb Creek oil and gas
fields in Nigeria. The Infrastructure assets principally comprise
the Nigerian midstream assets associated with the Group's network
of gas transportation pipelines, oil and gas processing facilities
and gas receiving facilities. Other assets typically include
vehicles, office equipment and building improvements.
Following management's assessment of the gas pipelines, the
expected useful life of these pipelines was increased from 25 to 40
years from the comparative of the reporting period. This had the
effect of reducing the depreciation charge for the year ended 31
December 2020. This change resulted in a reduction in the
Infrastructure assets depreciation charge amounting to US$8.5
million, had no change in useful life been made.
During 2020, the Group undertook a more detailed technical
assessment of the decommissioning provision cost estimates using an
independent contractor. The associated decommissioning asset has
been adjusted to reflect the new cost estimates. The new asset
value will be depreciated over the remaining life of the respective
assets.
Following the acquisition of the Nigerian assets in 2019, the
Group completed the restructuring of economic interests in the Uquo
field with its partner, Frontier Oil Limited. The agreement granted
economic ownership and control of 100% of the gas operations, and
its partner was granted economic ownership and control of 100% of
the oil operations at the Uquo field. Under the terms of the
restructuring, the Group made an advance payment of cash calls of
US$20.0 million to its partner. A further US$14.1 million of
advance cash calls is payable in three yearly instalments, with the
first instalment of US$5.0 million paid in December 2020. The
advanced cash call amounts were recorded within Receivables from a
joint arrangement in 2019. During 2020, these receivables
(amounting to US$30.8 million) were reclassified to Oil and gas
assets as the substance of this agreement was determined to be a
re-alignment of the respective parties' economic interests and
therefore similar in nature to a "signature bonus". It is being
depleted in line with similar assets.
14. Trade and other receivables
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
--------------------------------------- ----------- -------------
Trade receivables 62,564 72,832
Contract assets 83,687 58,246
Receivables from a joint arrangement 396 419
Other receivables 5,496 5,548
--------------------------------------- ----------- -------------
152,143 137,045
Expected credit loss (16,474) (17,213)
--------------------------------------- ----------- -------------
135,669 119,832
VAT receivables 251 185
Prepayments 2,750 2,383
--------------------------------------- ----------- -------------
138,670 122,400
--------------------------------------- ----------- -------------
The following has been recognised in the Condensed Statement of
Comprehensive Income relating to expected credit losses for the
period:
2021 2020
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
---------------------------------------------------- ----------- -----------
Net release of expected credit losses 739 -
Expected credit loss and other related adjustments 739 -
---------------------------------------------------- ----------- -----------
15. Cash at bank
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
-------------------------------- ----------- -------------
Cash and cash equivalents 72,972 74,258
Amounts held for debt service 61,078 30,105
134,050 104,363
-------------------------------- ----------- -------------
Cash and cash equivalents includes US$1.1 million (31 December
2020: US$1.2 million) of cash collateral on the Orabank revolving
facility. The cash collateral was at a value of XOF629.4 million
(31 December 2020: XOF621.7 million).
Amounts held for debt service represents Naira denominated cash
which is held by the Group for debt service, and this has been
separately disclosed from Cash and cash equivalents. In total,
approximately US$100.8 million (31 December 2020: US$78.9 million)
will be paid for the debt service from bank accounts designated as
Amounts held for debt service, and from Cash and cash
equivalents.
16. Trade and other payables
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
------------------------------- ----------- -------------
Trade and other payables
Trade payables 41,426 40,590
Accruals 37,126 35,565
VAT and WHT payable 7,743 7,825
Royalty and levies 6,062 6,261
Employee benefits 73 74
Deferred consideration 7,500 7,500
Other payables 4,133 4,160
------------------------------- ----------- -------------
104,063 101,975
Other payables - non-current
Employee benefits 4,884 4,648
4,884 4,648
------------------------------- ----------- -------------
108,947 106,623
------------------------------- ----------- -------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
17. Borrowings
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
---------------------------- ----------- -------------
Revolving credit facility 12,568 12,998
Bank loans 377,647 376,509
Senior Secured Notes 96,029 106,513
Other loan notes 18,878 18,642
505,122 514,662
---------------------------- ----------- -------------
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
------------------------- ----------- -------------
Current borrowings 99,689 89,995
Non-current borrowings 405,433 424,667
505,122 514,662
------------------------- ----------- -------------
18. Contract liabilities
Contract liabilities represents the value of gas supply
commitment to the Group's customers for gas not taken but invoiced
under the terms of the contracts. The amount has been analysed
between current and non-current, based on the customers' expected
future usage gas delivery profile. This expected usage is updated
periodically with the customer.
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
------------------------------------------- ----------- -------------
Amount due for delivery within 12 months 8,828 5,065
Amount due for delivery after 12 months 201,970 185,172
210,798 190,237
------------------------------------------- ----------- -------------
30 June 31 December
2021 2020
US$'000 US$'000
Unaudited Audited
------------------------------------------------ ----------- -------------
As at 1 January 190,237 121,994
Additional contract liabilities 27,281 86,881
Contract liabilities utilised (10,483) (23,632)
Unwinding of discount on contract liabilities 3,763 4,994
As at end of period 210,798 190,237
------------------------------------------------ ----------- -------------
The unwinding of the discount on contract liabilities relates to
the fair value adjustments made under IFRS 3: Business Combinations
following the acquisition of the Nigerian assets and entities in
2019. The fair value adjustment was calculated as the discounted,
expected cost of the future deliveries of gas volumes under the
terms of customer take-or-pay contracts. This discounted amount
unwinds relative to an apportioned amount of the contract
liabilities volumes at the date of acquisition that have
subsequently been utilised.
19. Cash flow reconciliations
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Borrowings Lease liabilities Total
US$'000 US$'000 US$'000
--------------------------------------------------- ------------ ------------------- ---------
At 1 January 2021 (audited) 514,662 8,061 522,723
--------------------------------------------------- ------------ ------------------- ---------
Cash flows
Repayment (8,794) (335) (9,129)
Realised loss on loan repayment 175 - 175
--------------------------------------------------- ------------ ------------------- ---------
(8,619) (335) (8,954)
Non-cash adjustments
Payment in kind adjustment/accretion of interest 1,380 262 1,642
Unpaid invoices - (291) (291)
Net debt fees 1,752 - 1,752
Borrowing fair value adjustments (3,042) - (3,042)
Foreign translation (1,011) 79 (932)
Balance at 30 June 2021 (unaudited) 505,122 7,776 512,898
--------------------------------------------------- ------------ ------------------- ---------
Borrowings Lease liabilities Total
US$'000 US$'000 US$'000
--------------------------------------------------- ------------ ------------------- ----------
At 1 January 2020 (audited) 532,052 5,570 537,622
--------------------------------------------------- ------------ ------------------- ----------
Cash flows
Repayment (22,107) (76) (22,183)
Proceeds 3,835 - 3,835
--------------------------------------------------- ------------ ------------------- ----------
(18,272) (76) (18,348)
Non-cash adjustments
Payment in kind adjustment/accretion of interest 1,791 337 2,128
Net debt fees (4,618) - (4,618)
Borrowing fair value adjustments 3,674 - 3,674
Foreign translation (819) (404) (1,223)
Balance at 30 June 2020 (unaudited) 513,808 5,427 519,235
--------------------------------------------------- ------------ ------------------- ----------
20. Contingent liabilities
One of the Group's Nigerian subsidiaries ("the Subsidiary") had
previously received approval from the Nigerian Investment Promotion
Commission ("NIPC") that granted it exemption from certain
corporate taxes for a period of five years from February 2014
("Pioneer Relief"). Subsequently, NIPC reduced the exemption period
to three years with the remaining two years subject to a further
extension request, which the Subsidiary submitted, but has not yet
been formally advised of the outcome. During a recent tax audit by
the Nigerian tax authorities ("FIRS"), the validity of the
extension request has been queried although no tax assessment has
yet been raised.
The Group is of the view that it has fully complied with all
requirements necessary to obtain the extension and therefore expect
it to be approved in due course. However, if FIRS are ultimately
successful, an additional US$61.0 million of gas profits would be
subject to corporate taxes of approximately US$3.9 million together
with a deferred tax charge of approximately US$15.5 million
reflecting the utilisation of capital allowances.
21. Capital commitments
At 30 June 2021, capital commitments amounted to US$13.0 million
(30 June 2020: US$1.9 million).
22. Events after the reporting date
There are no events after the reporting date other than those
described within this announcement.
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END
IR DDGDCUSDDGBC
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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