REG - Savannah Energy Plc - Exxon Transaction Completion & Supplemental Ad Doc
09/12/2022 18:45
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RNS Number : 2876J Savannah Energy Plc 09 December 2022
9 December 2022
Savannah Energy PLC
("Savannah" or "the Company")
Completion of ExxonMobil Transaction in Chad & Cameroon,
Publication of Supplemental Admission Document
and Board Changes
Savannah Energy PLC, the British independent energy company focused around
the delivery of Projects that Matter in Africa, is pleased to announce the
completion of its acquisition of ExxonMobil's entire upstream and midstream
asset portfolio in Chad and Cameroon, including operatorship of the upstream
assets (through the acquisition of the former operator, Esso Exploration and
Production Chad, Inc.) (the "ExxonMobil Transaction"). Savannah is also
pleased to announce the publication of a Supplemental Admission Document (the
"Document") in relation to the ExxonMobil Transaction. Selected extracts from
Part 1 of the Document Letter from the Non-Executive Chair of Savannah are
reproduced below. Shareholders are however encouraged to read the Document in
full.
This announcement follows Savannah's 13 December 2021 announcement of the
signing of a Share Purchase Agreement ("SPA") with ExxonMobil, which has an
economic effective date of 1 January 2021, and the publication of its 31
December 2021 Admission Document containing details on, inter alia, the
ExxonMobil Transaction. The ExxonMobil Transaction constituted a reverse
takeover transaction pursuant to AIM Rule 14 and, accordingly, was subject to,
inter alia, shareholder approval which was granted on 24 January 2022. The
ExxonMobil Transaction has now been completed.
Re-admission of the share capital of the group as enlarged by the ExxonMobil
Transaction is scheduled to take place at 8.00 a.m. on 13 December 2022.
Transaction Highlights
Following the completion of the ExxonMobil Transaction, Savannah now owns a
40% interest in the Doba Oil Project and an effective c. 40% indirect interest
in the Chad-Cameroon export transportation system:
· The Doba Oil Project comprises interests in seven producing
fields - Kome, Miandoum, Bolobo, Moundouli, Maikeri, Nya and Timbre - with a
combined gross 2P Reserve base of 142.3 MMbbls as at 1 October 2022 and
expected 2022 gross production of 28.0 Kbopd; and
· The Chad-Cameroon export transportation system comprises a 1,081
km pipeline and the Kome Kribi 1 floating storage and offloading facility,
offshore Cameroon (along with all associated facilities). The Chad/Cameroon
pipeline is 30" in diameter with a nameplate capacity of 250 Kbopd and an
estimated pipeline throughput in 2022 of 124 Kbopd, from more than 15 fields;
Strand Hanson Limited is acting as Financial & Nominated Adviser to the
Company in connection with the ExxonMobil Transaction.
The Document is available to download from the Company's website in accordance
with AIM Rule 20:
www.savannah-energy.com (http://www.savannah-energy.com/)
The Company's proposed acquisition of PETRONAS (E&P) Overseas Ventures
SDN. BHD.'s interests in the same assets in Chad and Cameroon is not a
condition of the ExxonMobil Transaction.
Andrew Knott, CEO of Savannah Energy, said:
"We are delighted to announce the completion of our US$407 million acquisition
of ExxonMobil's upstream and midstream businesses in Chad and Cameroon. I
would like to warmly welcome our new employees to the Savannah family and look
forward to building our in-country businesses with them as we embrace the
multiple growth opportunities available to us.
In Chad, our focus will immediately turn towards making the investments we
believe the Doba Oil Project needs to significantly increase production
volumes from current levels and the advancement of our up to US$500m/500 MW of
renewable power projects. We expect our investments in these projects to
provide significant increased tax revenues and electricity access for the
people of Chad. In Cameroon, we hope to see the COTCo and TOTCo businesses
grow further over the course of the coming years through additional
third-party customer throughput volumes. We are also actively considering
investments in other opportunities to pursue Projects that Matter in country.
Outside of Chad and Cameroon, we expect that, in the coming months, we will
further augment our corporate growth profile through the announcement of
additional hydrocarbon asset acquisitions and the initiation of new
utility-scale renewable energy projects (in addition to our existing up to
750MW project pipeline).
Lastly, I would like to the opportunity to express my gratitude to all those
who contributed to the successful completion of this transaction and, in
particular, our host country stakeholders, my incredibly dedicated and
passionate colleagues and the ExxonMobil deal and in-country teams. Thank you
all."
Re-Admission and Total Voting Rights
The Company's issued share capital currently comprises 1,306,098,819 ordinary
shares. Application has been made to the London Stock Exchange plc for
re-admission of the Company's 1,306,098,819 ordinary shares to trading on AIM,
which is expected to take place at 8.00 a.m. on 13 December 2022.
As the Company does not hold any shares in treasury, this figure of
1,306,098,819 Ordinary Shares may continue to be used by shareholders in the
Company as the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change in their
interest in, the share capital of the Company under the FCA's Disclosure
Guidance and Transparency Rules.
Board Appointments
Further to the Company's announcement of 7 June 2022, the Company is pleased
to announce that the proposed appointments of Sarah Clark and Dr Djamila
Ferdjani as Non-Executive Directors of the Board will become effective on
completion of the ExxonMobil Transaction. The appointment of Sylvie Rucar has
been delayed due to personal reasons and is now anticipated to become
effective during early 2023.
Sarah Clark
Sarah was an elite level athlete for 18 years and is a former British,
European and Commonwealth champion in the sport of judo, who competed at three
Olympic Games for Great Britain. She is currently CEO of Edinburgh, Judo one
of the UK's largest, most successful and fastest growing judo clubs catering
for beginners to Olympic medallists. Sarah currently serves as a Non-Executive
Director of JudoScotland (the governing body for judo in Scotland).
Sarah has worked extensively in mentor, role model and leadership positions
with organisations such as the Dame Kelly Holmes Trust, the Youth Sport Trust
and the Winning Scotland Foundation. In these roles, her focus has been to
deliver personal and group development programmes to young people from
disadvantaged backgrounds and communities. She has also worked extensively
with individuals and companies delivering programmes around the positive
learnings businesses can take from the elite level sport world.
Dr Djamila Ferdjani
Dr Ferdjani is a medical doctor, entrepreneur and social activist. She founded
the Pro-Santé Polyclinic in Niger, of which she was President and CEO.
Djamila formerly served as a technical consultant to the Islamic Development
Bank and as a Professor of Health Prevention and Promotion at the African
Development University.
She is a founding Board member of Afrikajom (the leading Pan African human
rights focused think tank) and is the founder and President of MedCom NGO (a
Niger focused medical and educational NGO). She is a former a member of the
executive committee of the Orange Niger Foundation. She regularly speaks at
African focused Human Rights events, including those organised by the World
Bank, Oxfam, Plan International, the G5 Sahel, The Open Society Initiative for
West Africa, the National Democratic Institute and TEDx. Dr Ferdjani has been
named by the United Nations Population Fund as one of the 100 women leaders in
Niger and by Facebook as one of 19 African LeadHERs breaking boundaries in the
fields of media, entertainment, education and business.
Information required pursuant to paragraph (g) of Schedule Two of the AIM
Rules for Companies on Sarah Clark and Dr Djamila Ferdjani is set out below.
Sarah Louise Clark, aged 44
Current Directorships/Partnerships Past Directorships/Partnerships (last 5 years)
Peebles Sport Ltd JudoScotland
Dr Djamila Ferdjani, aged 60
Current Directorships/Partnerships Past Directorships/Partnerships (last 5 years)
NGO Medcom None
Other than the information contained within this announcement, there is no
further information required to be disclosed pursuant to paragraph (g) of
Schedule Two of the AIM Rules for Companies.
For further information, please refer to the Company's
website www.savannah-energy.com (http://www.savannah-energy.com/) or
contact:
Savannah Energy +44 (0) 20 3817 9844
Andrew Knott, CEO
Nick Beattie, CFO
Sally Marshak, Head of IR & Communications
Strand Hanson (Nominated Adviser) +44 (0) 20 7409 3494
James Spinney
Ritchie Balmer
Rob Patrick
finnCap Ltd (Joint +44 (0) 20 7220 0500
Broker)
Christopher Raggett
Tim Redfern
Panmure Gordon (UK) Ltd (Joint +44 (0) 20 7886 2500
Broker)
John Prior
Hugh Rich
James Sinclair-Ford
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, as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended, 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 quoted British independent energy company
focused around the delivery of Projects that Matter in Africa and is active in
Cameroon, Chad, Niger and Nigeria.
Further information on Savannah Energy PLC can be found on the Company's
website: www.savannah-energy.com (http://www.savannah-energy.com/) .
Selected extracts from Part 1: Letter from the Non-Executive Chair of Savannah
from the Document
1 Introduction
On 13 December 2021, the Company announced that it had entered into an
agreement to acquire ExxonMobil's interests in the Doba Oil Project and the
Chad-Cameroon ETS, which constituted a reverse takeover transaction pursuant
to Rule 14 of the AIM Rules. The proposed transaction was approved by
Shareholders on 24 January 2022.
The Company is pleased to confirm that completion of the Exxon Acquisition
took place on 9 December 2022. Consequently, the Company's Existing Share
Capital will be cancelled from trading on AIM at 4.30 p.m. on 12 December 2022
and Re-Admission of the Company's Existing Share Capital will take place at
8.00 a.m. on 13 December 2022.
The consideration payable by the Company in respect of the Exxon Acquisition
is being funded by a combination of the proceeds of the drawdown on the Exxon
Prepayment Facility and existing cash resources.
The key terms of the Exxon Acquisition are summarised in Part 2 of the
Document.
You should read the whole of the Document and the December 2021 Admission
Document, and not just rely on the information contained in the Document.
2 Update on the Exxon Acquisition
Following the publication of the December 2021 Admission Document, the Company
appointed a new senior management team in Chad. This team has been working
with ExxonMobil's transition team and EEPCI to prepare for the transfer of the
operated Chad/Cameroon Assets to Savannah Chad.
The Company has also focused on preparing to deliver the business support
services currently provided by ExxonMobil affiliates to TOTCo and COTCo via
the ExxonMobil Services Agreement.
Savannah's business support functions have engaged with local teams on
critical business processes in both Chad and Cameroon.
The ExxonMobil and Savannah IT teams have taken the necessary actions in
preparation for transitioning key business systems, applications, and IT
infrastructure from ExxonMobil to Savannah whilst maintaining continuity of
business operations, which will take effect on or shortly following
Completion.
During 2022, production rates at the Doba Oil Project have not deviated
materially from those disclosed in the Chad/Cameroon CPR dated 17 December
2021.
3 Details of the Exxon Prepayment Facility
Savannah Energy Finance (as borrower), the Exxon Lender (as lender) and EACMI
(as marketing agent) entered into an up the US$170 million Prepayment Facility
Agreement to fund Completion of the Exxon Acquisition in accordance with the
Exxon SPA.
The key terms of the Exxon Prepayment Facility are set out in paragraph 3.1 of
Part 5 of the Document.
4 Status of PETRONAS Acquisition
Completion of the PETRONAS Acquisition is not a condition of the Exxon
Acquisition.
5 Company History and Events Arising since the publication of the
December 2021 Admission Document
Savannah is a leading, Africa-focused, British, independent energy company
quoted on AIM. The Company is the holding company of the Existing Group and
currently operates from offices in the UK (London), Nigeria (Abuja, Lagos, and
Uyo) and Niger (Niamey).
5.1 Nigeria
In Nigeria, the Company has a significant controlling interest in a
large-scale integrated gas production and distribution business which is
currently supplying gas to facilitate over 24 per cent. of Nigeria's thermal
power generation. The Company acquired the Nigerian Assets in November 2019
(refer to the April 2020 Supplemental Admission Document for further
information). The Nigerian Assets comprise interests in two large-scale oil
and gas fields, the Uquo non-associated gas field and the Stubb Creek oil and
gas field, with net 2P Reserves and net 2C Resources, as estimated by CGG in
the 2021 Nigeria CPR, of 79.3 MMboe and 60.0 MMboe, respectively, and the
Accugas Midstream Business, all of which are located in South-East Nigeria.
Average gross daily production from the Nigerian assets in the year-to-date
period ended 31 October 2022 was 27.0 Kboepd, a 23 per cent. increase from the
average gross daily production of 21.9 Kboepd in the same period in 2021. Of
the total average gross daily production of 27.0 Kboepd in the year-to-date
period, 90 per cent. was gas, including a 27 per cent. increase in production
from the Uquo Gas Project compared to the same period last year, from 115.6
MMscfpd (19.3 Kboepd) to 146.4 MMscfpd (24.4 Kboepd).
The Company's cash collections from its Nigerian Assets for the ten months
ended 31 October 2022 amounted to US$156.8 million, an increase of five per
cent. on equivalent period in 2021 of US$149.2 million.
A new gas production well, Uquo-11, commenced production in April 2022 and
produced at an average rate of 80 MMscfpd up to 31 October 2022.
During 2022, the Company signed, via its subsidiary, Accugas Limited, new gas
sales agreements ("GSAs") in Nigeria with: (i) Central Horizon Gas Company
Limited ("CHGC"), a major gas distribution company situated in the South-South
region of Nigeria; (ii) TransAfam Power Ltd, a licensed power generation
company in Nigeria; and (iii) Notore Chemical Industries PLC, a Nigeria-based
integrated agro-allied, chemicals and infrastructure company located in the
Onne Oil and Gas Free Zone area of Rivers state in southern Nigeria. In
addition, a contract extension was signed with First Independent Power Limited
("FIPL") to supply gas to its Eleme and Trans Amadi power plants, bringing the
total number of power plants supplied under the contract to three, including
the FIPL Afam power plant.
In addition, Accugas Limited commenced gas deliveries to three new customers
in Nigeria, FIPL's Trans Amadi power plant, TransAfam's power plants in Rivers
State, and CHGC. Accugas Limited now has operational GSAs with power plants
comprising 24 per cent. of Nigeria's thermal generation capacity.
5.2 Refinancing of the Accugas Term Facility
The Company is progressing towards refinancing the Accugas Term Facility,
which currently has a maturity date of 31 December 2025, into a multi-tranche,
Naira denominated borrowing structure. It is currently anticipated that the
first phase of the refinancing will complete during the first half of 2023,
although there can be no guarantee this will occur. Once completed, this
refinancing would align the currencies of the Existing Group's principal
revenue streams with its debt service obligations and would reduce the
Existing Group's foreign exchange exposure.
5.3 Niger
The Company's current focus in Niger is the planned R3 East early production
scheme to be located at the Amdigh field and initially commencing in 2023,
subject to market conditions and financing.
The Board believes that significant further potential exists on its licence
area in Niger with an exploration portfolio containing a total of 146
potential exploration targets with a total Unrisked Best Estimate of
approximately 6.7 Bnbbls Oil Initially In Place. The Board believes that this
has the potential to deliver meaningful cashflows to the Group in the future.
The key terms of the R1234 PSC remain as described in paragraph 12 of Part 14
of the December 2021 Admission Document, save that in the first four years of
the PSC, Savanah is now obliged to drill five (as opposed to two) exploration
wells to a minimum depth of 2,000 metres, with at least one exploration well
on R1, R2 or R4, as well as acquiring 250km(2) of 3D seismic.
5.4 Renewable Energy
Savannah's Renewable Energy division was established in 2021 and during H1
2022 signed two non-binding agreements for the development of a total of up to
750MW large-scale greenfield solar and wind projects with the governments of
Chad and Niger. The agreement signed in Chad covers two projects. The first
comprises an up to 300 MW photovoltaic solar farm and battery energy storage
system located in Komé, Southern Chad (the "Centrale Solaire de Komé"). This
project is being developed to provide clean, reliable power generation for the
Doba Oil Project and the surrounding towns of Moundou and Doba. The second
involves the development of solar and wind projects of up to 100 MW each to
supply power to the country's capital city, N'Djamena (the "Centrales
d'Energie Renouvelable de N'Djamena"). The Centrale Solaire de Komé project
would represent the largest solar plant in sub-Saharan Africa (excluding South
Africa) and potentially the largest battery storage project on the continent.
The Centrales d'Energie Renouvelable de N'Djamena would more than double the
existing installed generation capacity supplying the capital city and increase
the total installed on-grid power generation capacity in Chad by up to an
estimated 63 per cent.
In Niger, an agreement was signed by Savannah with the Ministry of Petroleum,
Energy and Renewable Energies of the Republic of Niger for the construction
and operation of the country's first wind farm, with a proposed installed
power generation capacity of up to 250 MW on an independent power producer
basis in the Tahoua Region of Southern Niger. This is targeted to increase the
country's on-grid electricity supply by up to 40 per cent. Sanctioning of this
project is targeted for 2023 with first wind power expected to commence in
2025. These projects represent potentially substantial foreign direct
investments that would make significant contributions to the economic
development of the regions where they will be situated.
6 Summary Financial Information of the Exxon Target Companies
6.1 Exxon Target Companies
The summary financial information presented below is an extract of the
historical financial information of Exxon Target Companies as set out in Part
3 of the Document. The summary financial information for the six months ended
30 June 2022 and the year ended 31 December 2021 has been derived from Exxon
Target Companies' Financial Information.
Figure 1, Summary Financial Information of the Exxon Target Companies
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME SELECTED LINE ITEMS
Six months ended Year ended 30 June 31 December
2022 2021
US$'000 US$'000
Revenue 95,686 192,705
Operating loss (14,816) (6,570)
Loss before tax (16,970) (13,143)
Loss after tax (13,032) (113,651)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION SELECTED LINE ITEMS
Total assets 820,568 782,740
Total liabilities 598,783 547,923
Net assets 221,785 234,817
CONSOLIDATED CASH FLOW STATEMENT SELECTED LINE ITEMS
Cash (used in)/generated from operating activities (121,647) 104,105
Cash provided by investing activities 40,680 25,534
Cash generated from/(used in) financing activities 75,356 (129,667)
Net cash outflow (5,611) (28)
6.2 Summary Financial Information of the Existing Group
The summary financial information presented below is an extract without
material adjustment from the audited consolidated financial statements for the
Existing Group for the year ended 31 December 2021 and the unaudited interim
financial information for the six months ended 30 June 2022.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME SELECTED LINE ITEMS
Six months ended Year ended
30 June 31 December
2022 2021
US$'000 US$'000
Revenue 85,847 185,799
Operating profit 27,854 87,713
(Loss) before tax (11,314) (7,745)
(Loss)/profit after tax (20,545) 17,103
CONSOLIDATED STATEMENT OF FINANCIAL POSITION SELECTED LINE ITEMS
Total assets 1,341,760 1,348,587
Total liabilities 1,047,308 1,041,849
Net assets 294,452 306,738
CONSOLIDATED CASH FLOW STATEMENT SELECTED LINE ITEMS
Cash generated from operating activities 41,884 128,115
Cash used in investing activities (61,526) (123,237)
Cash from/(used in) financing activities 18,194 (25,159)
Net cash (outflow)/inflow (1,448) (20,281)
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