REG - Savannah Energy Plc - FY 2021 Trading Update

Savannah EnergyAnnouncement

24/01/2022 07:05

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RNS Number : 3048Z  Savannah Energy Plc  24 January 2022

 

24 January 2022

Savannah Energy PLC

("Savannah" or "the Company")

 

FY 2021 Trading Update

 

Savannah Energy PLC, the British independent energy company focused around the
delivery of Projects that Matter in Africa, is pleased to announce a trading
update for the full year 2021.

 

 

Andrew Knott, CEO of Savannah Energy, said:

 

"I am extremely pleased to be able to announce a strong set of initial results
for 2021. We have exceeded our guidance set out at the beginning of 2021, with
our Nigerian assets continuing to perform well throughout the period. In
addition, our financial performance in the year was very strong and
operationally we were able to announce new gas sales contracts in Nigeria, as
well as commencing first gas sales under the FIPL Afam contract. Since the
announcement of our acquisition of the Nigerian assets we have clearly
demonstrated significant underlying asset value creation: for example, 2017 -
2021 Total Revenues(1) have increased by 65% and Cash Collections by 92%.

 

Looking forward we will continue to seek to execute our "Projects that Matter"
strategy as we continue to review opportunities in the renewable energy space
and further upstream and midstream asset acquisitions, deliver further
operational and financial progress in Nigeria and Niger and close out our
planned acquisitions in Chad and Cameroon. We look forward to updating our
stakeholders as to the progress we make."

 

 

FY 2021 Unaudited Financial Highlights

·      FY 2021 Total Revenues(1) of US$230.5m (up 7% on FY 2020 on a
like-for-like basis after adjusting 2020 Total Revenues of US$235.9m for an
advance payment of US$20m from Lafarge Africa which was received on entering a
revised Gas Sales Agreement).  This is ahead of the Company's previously
issued FY 2021 guidance of 'Total Revenues of greater than US$205.0m';

·    Group cash balance of US$154.3m(2) ( )(up 46% versus FY 2020
year-end cash balance of US$106.0m) and net debt of US$370.0m(3)(  )(down 9%
versus FY 2020 year-end net debt of US$408.7m) as at 31 December 2021;

·      Total cash collections from the Company's Nigerian assets rose
11% year-on-year to US$208.2m (FY2020 cash collections of US$187.4m); and

·      The Company is updating its guidance on the remaining items to
report for FY 2021:

o  Operating expenses plus administrative expenses(4)   are at or below
the lower end of the guidance range of US$55.0m - US$65.0m, driven by the
ongoing control of the cost base;

o  Group Depreciation, Depletion and Amortisation of US$20m fixed for
infrastructure assets plus US$2.3/boe (amended from US$19m fixed for
infrastructure assets plus US$2.6/boe), an overall reduction due to the 27%
reserves' increase in Nigeria as announced in the publication of the updated
Nigeria Competent Persons Report on 23 November 2021; and

o  FY 2021 Capital Expenditure for the year is significantly below the
guidance of up to US$65.0m, following the successful drilling of the Uquo 11
gas development well and ongoing compression works which are now scheduled to
complete in 2022.

 

 

 

FY 2021 Nigeria Operational Highlights

·      FY 2021 average gross daily production was 22.3 Kboepd, a 14%
increase from the average gross daily production of 19.5 Kboepd in FY 2020.

·    Of the FY 2021 total average gross daily production of 22.3 Kboepd,
88.1% was gas, including a 15% increase in production from the Uquo gas field
compared to 2020, from 103 MMscfpd (17.1 Kboepd) to 118 MMscfpd (19.7 Kboepd).

Nigeria Average Gross Daily Production

 

                             Uquo Gas (MMscfpd)  Uquo Condensate (Kbopd)  Stubb Creek Oil (Kbopd)  Total (Kboepd)
 1 January-31 December 2021  118                 0.1                      2.5                      22.3
 % of total production       88.1%               0.5%                     11.4%                    100%
 1 January-31 December 2020  103                 0.1                      2.3                      19.5
 % of total production       87.7%               0.6%                     11.7%                    100%
 % Increase                  15%                 -3%                      11%                      14%

N.B. - Percentages in this table are calculated from exact numbers, the
figures above are rounded.

Note that Nigeria production levels are largely driven by customer nomination
levels, while cash collections are largely driven by contractual maintenance
adjusted take-or-pay provisions.

Niger

The amalgamation of the R1/R2 and R3/R4 Production Sharing Contract ("PSC")
areas into the new R1234 PSC has been approved.  The first stage of the R3
East development project is to potentially commence in 2022

New Renewable Energy Division

Opportunities exist throughout Africa in the renewable energy sphere and
Savannah has recently established a new Renewable Energy division to pursue
such projects. Savannah believes that its proven hydrocarbon asset operational
management skills are directly transferrable to the renewable energy space,
which in Africa represents a potentially vast target market of over 310GW by
2030. Savannah expects to update on this potentially significant investment
opportunity in due course.

ESG Reporting Update

Savannah continues to progress plans to harmonise and enhance its approach to
sustainability reporting across the enlarged Group. We look forward to
providing further updates later this year.

 

 

 

 

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 in comparison to
Revenue recognised in the Consolidated Statement of Comprehensive Income

2.   Within cash balance of US$154.3m, US$106.9m is set aside for debt
service, of which US$75.5m is for interest, and US$1.6m relates to monies held
in escrow accounts for stamp duty relating to loan security packages

3.   Net debt (defined as 'Total long and short term debt exclusive of lease
liabilities less Cash at bank and other escrow monies) includes a Senior
Secured Note with a call option, which is subject to final review. Any change
in this option value will impact the reported net debt.

4.   Operating expenses plus administrative expenses are defined as total
cost of sales, administrative and other operating expenses excluding
transaction costs, royalty and depletion, depreciation and amortisation

 

 

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, Interim 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

 Hugo Rich

 James Sinclair-Ford

 Camarco                                                                           +44 (0) 20 3757 4983
 Billy Clegg

 Owen Roberts

 Violet Wilson

 

The information contained within this announcement is considered to be inside
information prior to its release, as defined in Article 7 of the Market Abuse
Regulation No. 596/2014, and is disclosed in accordance with the Company's
obligations under Article 17 of those Regulations.

 

About Savannah Energy:

 

Savannah Energy PLC is an AIM listed British independent energy company
focused around the delivery of Projects that Matter in Africa. 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. The Company has announced
that it is in the process of potentially acquiring a portfolio of upstream and
midstream assets in Chad and Cameroon.

 

Further information on Savannah Energy PLC can be found on the Company's
website: www.savannah-energy.com (http://www.savannah-energy.com/) .

 

 

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