Q1 2025 Trading Update
19/05/2025 07:00
RNS Number : 1537J
Savannah Energy Plc
19 May 2025
19 May 2025
Savannah Energy PLC
("Savannah" or "the Company")
Q1 2025 Trading Update
Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce a Q1 2025 trading update. All figures are unaudited.
Andrew Knott, CEO of Savannah Energy, said:
"I am pleased to provide a Q1 2025 trading update, highlighting good progress in our core objectives for the year, including a 19% increase in Total Revenues1, and a continued strong trend in cash collections with almost US$125 million received in the quarter. We are also reporting that, since completion of the SIPEC Acquisition, production at the Stubb Creek oil field ("Stubb Creek") has increased by approximately 15% and 2P oil reserves have been upgraded by 29%. Our planned Uquo Field drilling campaign, set to commence in Q4, has the potential to add further reserves, resources and production capacity which would be capable of easy and quick monetisation.
2025 continues to be an exciting year for the business and we continue to work towards "ticking-off" the delivery of the nine focus area projects that we outlined at the beginning of the year, being: (1) securing a further increase in our rate of cash collections in Nigeria2; (2) completion of the refinancing of our principal Nigerian debt facilities; (3) completion of the planned acquisition of 100% of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (the "SIPEC Acquisition") which was achieved during Q1 2025; (4) commencement of the Stubb Creek expansion project (which we updated on today); (5) the advancement of our Chad/Cameroon arbitration processes3; (6) the commencement of the safe and successful drilling of our planned Uquo development well and potential Uquo exploration well; (7) the potential advancement of our R3 East development in Niger4; (8) the refinement of our power sector business model; and (9) the delivery of further transformational acquisitions.
I would also highlight that we anticipate achieving a strong increase in cash collections in 2025 (even when set against our long-term 13% CAGR5), with significant production capacity growth expected in 2026 once our heavy Uquo field investment programme is completed.
I look forward to reporting further progress towards the achievement of many of our focus area projects when we announce our full year 2024 results in June."
Highlights
· Q1 2025 Total Revenues1 of US$73.3 million, up 19% (Q1 2024: US$61.4 million), which includes a contribution of approximately US$3.6 million from Stubb Creek following completion of the SIPEC Acquisition;
· Q1 2025 cash collections of US$124.8 million, an increase of 6% (Q1 2024: US$117.7 million). As at 31 March 2025, cash balances were US$110.4 million (31 December 2024: US$32.6 million) and net debt stood at US$597.8 million (31 December 2024: US$636.9 million). This included debt associated with the SIPEC Acquisition and, for comparison purposes, if this was excluded, the net debt would have further reduced to US$570 million;
· Q1 2025 gross production at Stubb Creek was 2.8 Kbopd (Q1 2024: 2.5 Kbopd) and, following completion of the SIPEC Acquisition during the quarter, we have commenced an up to 18-month expansion programme anticipated to increase gross production to approximately 4.7 Kbopd. During April 2025 we have already seen an increase of 15% in Stubb Creek gross production to an average of 3.1 Kbopd compared to the average 2024 level;
· Increases of 197% and 29% in Stubb Creek Gross 1P and 2P oil Reserves, respectively, due to an improved ultimate field recovery factor, as determined through the implementation of enhanced field monitoring protocols and advanced reservoir modelling. This follows a similar 27% increase in Uquo Field Gross 2P Reserves announced in November 2021;
· Average gross daily production of 23.6 Kboepd for Q1 2025, broadly in line with the prior year period (Q1 2024: 24.1 Kboepd);
· Completion of an equity issuance raising, in aggregate, gross proceeds of approximately £30.6 million and the signing of a US$200 million acquisition debt facility providing access to potential funding for future hydrocarbon asset acquisitions;
· Procurement process of long lead equipment progressing in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field commencing in Q4 2025. Equipment orders have been placed for a development well which is expected to add up to 80 MMscfpd of production capacity. An additional exploration well remains under consideration targeting an Unrisked Gross gas initially in place ("GIIP") of 154 Bscf (25.7 MMboe) of incremental gas resources; and
· Continuing to seek to progress the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger, subject to satisfactory stakeholder agreements being entered into.
Operational update
Hydrocarbons Division
Nigeria Existing Business
Average gross daily production was 23.6 Kboepd for Q1 2025, broadly in line with the prior year period (Q1 2024: 24.1 Kboepd).
On 10 March 2025, we announced the completion of the SIPEC Acquisition. Since its completion, we have commenced work on the planned production expansion with an increase of 15% in production already achieved. It is anticipated that this up to 18-month programme will lead to Stubb Creek gross production increasing to approximately 4.7 Kbopd. The transaction consideration was funded through a drawdown under a new US$60 million Reserve-Based Lending ("RBL") debt facility. The RBL is fully available to utilise and the current drawn amount is US$40 million.
The US$45 million compression project at the Uquo Central Processing Facility is almost complete, with one compressor online and the second to be commissioned before the end of next month. This project, which will be delivered under budget, will allow us to maximise the production from our existing and future gas wells.
We are progressing the procurement process of long lead equipment in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field commencing in Q4 2025. Well site and flowline surveys have been completed for the Uquo NE development well ("Uquo NE"). This well is forecast to provide gas volumes of up to 80 MMscfpd. An additional exploration well in the Uquo Field ("Uquo South") is also currently under consideration, which may be drilled back-to-back with the Uquo NE well. Uquo South is a well targeting an Unrisked Gross GIIP of 154 Bscf of incremental Prospective gas Resources on the Uquo licence area.
Niger
We are continuing to seek to progress the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger. The Niger-Benin oil export pipeline, now fully operational, provides a potential route to international markets for crude oil produced from the R1234 contract area of our subsidiary, Savannah Energy Niger SA, with 90 Kbopd reportedly being transported from the China National Petroleum Corporation-operated Agadem PSC area.
Subject to satisfactory stakeholder agreements being entered into, Savannah Energy Niger SA may commence a four-well testing programme on the Amdigh-1, Eridal-1, Bushiya-1 and Kunama-1 discovery wells by the end of 2025, with all of the required long lead item equipment already in Niger. We are at the pre-contract award stage of the programme and our initial internal estimate of the total cost of the well test programme is approximately US$14.5 million (this will be subject to change as programme progresses and contracts are awarded). Assuming a successful well test programme, we would look to accelerate plans to commence commercial oil production from the R3 East Area and intend to incorporate the data acquired into our field development plan.
Updated Competent Persons Reports
The Company has appointed McDaniel & Associates Consultants Ltd. ("McDaniel"), to prepare updated Competent Person's Reports ("CPRs") for the oil and gas assets of the Group. These reports are anticipated to be finalised and published alongside the Company's FY 2024 annual report and accounts. McDaniel have completed their assessment for Stubb Creek and a summary of the Gross 1P, 2P, 3P Reserves (prepared in accordance with the 2018 Petroleum Resource Management System), is set out in the table below, along with a comparison vs. the numbers presented in the Company's March 2024 Nigeria CPR, as adjusted for production since its publication. The reduced range between the 1P and 3P Reserves demonstrates the lower uncertainty in the Reserves estimates and is a reflection of the maturity of an asset that has now been on production for over 10 years.
| Stubb Creek | |||
| CPR, March 2024* | McDaniel, March 2025 | Change (%) | |
| Oil (MMstb) | |||
| 1P Reserves | 3.3 | 9.8 | +197% |
| 2P Reserves | 10.7 | 13.8 | +29% |
| 3P Reserves | 20.4 | 18.1 | -11% |