REG - Savannah Energy Plc - Ops & Financial Update, Fundraising & Buyback

Savannah EnergyAnnouncement

22/10/2025 17:00

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RNS Number : 4478E  Savannah Energy Plc  22 October 2025

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22 October 2025

Savannah Energy PLC

("Savannah" or "the Company")

 

Operational and Financial Update, Proposed Fundraising, Warrant Purchase and
Cancellation

and Conditional Share Buyback Arrangement

Savannah Energy PLC, the British independent energy company focused around the
delivery of Projects that Matter is pleased to provide the following
operational and financial update for the nine months ("9M") to 30 September
2025. All figures are unaudited.

The Company is also pleased to announce a proposed fundraising, a conditional
share buyback arrangement and a warrant cancellation agreement, further
details on which are included below.

Andrew Knott, CEO of Savannah, said:

"2025 has been a year of strong progress against the nine focus areas we set
out at the beginning of the year. These include increasing our rate of cash
collections in Nigeria, with performance remaining on track; advancing the
refinancing of our principal Nigerian debt facilities, which we expect to
complete by year-end; and successfully completing the acquisition of 100% of
Sinopec International Petroleum Exploration and Production Company Nigeria
Limited in March.

We have also commenced the Stubb Creek expansion project, continued to advance
our arbitral processes, and begun site construction ahead of the planned
drilling of our Uquo development and exploration wells. In Niger, discussions
on the R3 East development are progressing, while in the power sector we have
refined our business model to align with future growth opportunities. Finally,
we continue to pursue further value-accretive acquisitions across both the oil
and gas and power sectors, with the Norfund transaction already announced and
several other opportunities under active discussion.

Additionally, earlier in the year, the Company reported a 21% 2P Reserves
upgrade on its Uquo gas field and a 29% upgrade on its Stubb Creek oil field
2P Reserves. Collectively, these developments demonstrate the strong
operational momentum within the Group and our continued focus on disciplined
execution across all parts of the business.

We are also pleased to welcome NIPCO Plc ("NIPCO" or the "New Investor"), a
diversified Nigerian energy conglomerate, as a potential new investor in the
Company, who we expect to own approximately 19.4% of the Company following
completion of their primary investment and certain secondary share
transactions. The proceeds of the New Investor's primary investment are
expected to enable, among other things, the advancement of certain business
development opportunities currently under consideration. Coupled with the
imminent completion of the primary investment I committed to in March 2025, a
series of secondary transactions, which are expected to occur today, are
anticipated to increase my shareholding in the Company to approximately 12.6%,
demonstrating my continued strong faith in the Company's future potential.(1)

In addition, we are pleased to announce that should we see a significant
improvement in cash collections- and/or receive meaningful proceeds from the
arbitral processes we are engaged in, it is the Board's present intention to
consider returning a portion of such funds to shareholders through a tender
offer or share buy-back, subject to prevailing capital requirements and
shareholder and regulatory approvals. In this vein, today we are also
announcing the signature of a conditional off-market share buyback agreement
for approximately 6.8% of the Company's enlarged share capital, to acquire
shares prior to 31 March 2026. We are also announcing the proposed
cancellation of warrants over approximately 101 million shares.

I would also like to take this opportunity to extend my thanks to all those
who contributed to our successes this year - my incredibly dedicated and
passionate colleagues, our host governments, communities, local authorities
and regulators, our shareholders and lenders, and our customers, suppliers
and partners. Thank you all."

Highlights

Funding

·      Intention to complete a fundraising by way of subscription of
161,061,510 new Ordinary Shares at 7 pence per new Ordinary Share to raise
approximately £11.3m before expenses;

·      Completion of the final tranche of the March 2025 fundraising of
138,977,614 new Ordinary Shares at 7 pence per new Ordinary Share expected
imminently, with the final approximate £9.7 million in subscription funds to
be received; and

·      Planned introduction of a new strategic shareholder, NIPCO, a
diversified Nigerian energy conglomerate, onto Company's register.

Conditional Share Buyback

·      Proposed share buyback agreement expected to be signed to acquire
up to 143,565,582 existing Ordinary Shares from certain shareholders at 7
pence per share during the period ending 31 March 2026 (conditional upon the
approval of Shareholders, expected to be sought shortly).

Warrant Cancellation

·      The Company intends to acquire and cancel warrants over
101,113,992 Ordinary Shares in the Company.

Operational

·      9M 2025 average gross daily production of 20.1 Kboepd (9M 2024:
23.0 Kboepd), of which 85% was gas (9M 2024: 88%)(2). Following completion of
the SIPEC Acquisition in March 2025, we commenced an 18-month expansion
programme that has already increased current Stubb Creek gross daily
production to 3.3 Kbopd, approximately 24% above the 2024 average;

·      Well site construction is currently ongoing for the Uquo NE
development well. This follows the earlier signing of a turnkey drilling
contract for a planned two-well drilling campaign on the Uquo Field, scheduled
to commence in January 2026, with first gas targeted by the end of that
quarter;

·      New compression system at the Uquo Central Processing Facility
("CPF") completed and fully commissioned. This project, which was delivered
safely and approximately 10% under the original US$45 million budget, is
expected to allow us to maximise the production from our existing and future
gas wells;

·      Gas contract extension agreed with the Central Horizon Gas
Company Limited ("CHGC") to end December 2026 for up to 10 MMscfpd;

·      Progressing our previously announced proposed acquisition of
indirect interests in three East African hydropower projects, including the
255 MW Bujagali power plant, with a 13-year operating and payment track
record, and two advanced-stage development projects, marking Savannah's
planned entry into five new countries - Uganda, Burundi, the Democratic
Republic of the Congo (the "DRC"), Malawi and Rwanda;

·      Continuing to progress our existing priority Power Division
projects, including the up to 250 MW Parc Eolien de la Tarka wind farm project
in Niger and the up to 95 MW Bini a Warak hybrid hydroelectric and solar
project in Cameroon;

·      Subject to a satisfactory agreement being reached with the
Government of Niger, our subsidiary is considering commencing a four-well
testing programme and/or a return to exploration activity in the R1234 PSC
contract area in 2026/27; and

·      Actively reviewing opportunities in both the thermal and
renewable power sector, with the expectation of announcing transaction(s)
currently under consideration over the course of the next 24 months in the
African power space.

Financial (unaudited)

·      9M 2025 Total Revenues(3) of US$185.2 million, up 9% (9M 2024:
US$169.3 million) and 9M 2025 cash collections of US$241.6 million, an
increase of 5% (9M 2025: US$229.3 million);

·      As at 30 September 2025, cash balances were US$101.8 million (31
December 2024: US$32.6 million) and net debt stood at US$629.9 million (31
December 2024: US$636.9 million). Gross debt as at 30 September 2025 was
US$731.7 million of which only US$41.4 million (6%) was recourse to PLC;

·      The Trade Receivables balance as at 30 September 2025 was
US$493.3 million, a 9% improvement on year-end 2024 (31 December 2024:
US$538.9 million);

·      Agreements signed with a consortium of five Nigerian banks in
respect of an increase in the Accugas debt facility from NGN340 billion
(approximately US$222 million) to up to approximately NGN772 billion
(approximately US$500 million) (the "Transitional Facility"). It is expected
that the Transitional Facility will be utilised to enable the remaining
outstanding balance of the Accugas US$ Facility to be repaid by end 2025; and

·      Term sheet agreed between Savannah's wholly owned subsidiary,
Savannah Energy EA, and a major African based financial institution for a new
US$37.4 million debt facility to provide funding for our planned acquisition
of a 50.1% interest in Klinchenberg BV ("Klinchenberg"), which holds indirect
interests in three East African hydropower projects.

Employee Benefit Trust

·      Intended sale of Ordinary Shares by the Company's employee
benefit trust ("EBT") and issue of new Ordinary Shares to the EBT.

Reasons for the Potential Funding and Use of Proceeds

The Company intends to conduct a fundraising of approximately £11.3 million
at a price of 7 pence per new Ordinary Share (the "Financing"), to be
subscribed in full by NIPCO, a diversified Nigerian energy conglomerate.
Accordingly, 161,061,510 new Ordinary Shares are expected to be issued
pursuant to the Financing.

In addition, the New Investor intends to acquire, for £7.9 million,
113,378,685 Ordinary Shares issued as part of the Company's March 2025
fundraising and expects to acquire a further £9.5 million, 135,674,944
Ordinary Shares through a series of secondary market trades, representing a
total investment of approximately £28.7 million in the Company and an
expected pro forma holding of around 19.4% of the Company's enlarged share
capital (as enlarged by the various proposed share issues referred to in this
announcement).

The Company's CEO Andrew Knott also intends to: (1) imminently acquire
25,598,929 new Ordinary Shares for £1.8m as part of the March 2025
fundraising; (2) acquire a further 32,202,738 existing Ordinary Shares for a
total consideration of £2.3m through a secondary market trade; and (3)
acquire 63,690,129 existing Ordinary Shares from the EBT for a total
consideration of £4.5m. Post these transactions Mr Knott is expected to have
a pro forma holding of around 12.6% in the Company's enlarged share capital.

In reaching its decision to proceed with the Financing, the Board considered
the proposed introduction of NIPCO to be beneficial to shareholders as a
whole, bringing onto the Company's share register a diversified Nigerian
energy conglomerate with deep industry expertise. The Board believes that the
New Investor's intended investment will strengthen the Company's balance
sheet, broaden its shareholder base, and support the next phase of the
Company's growth. Accordingly, the Board considers the Financing to be in the
best interests of the Company and its shareholders. The net proceeds of the
equity issuance are expected to be used, inter alia, to enable the
acceleration of certain potential near-term business development opportunities
and for general corporate purposes.

The Financing was discussed on a wall-crossed basis with shareholders
representing approximately 50% of the Company's enlarged share capital, each
of whom has provided written confirmation of their support for the Financing.

 

Excess Cash

The Board is also mindful that an improvement in receivables cash collections
and/or a favourable outcome in ongoing arbitral proceedings could, in due
course, result in the business holding excess cash balances. In such
circumstances, it is the Board's present intention that, subject to the
Company's capital requirements, shareholder authorities, available reserves
and applicable regulatory approvals, a portion of those funds could be used to
implement a share buy-back and/or tender offer for the Company's Ordinary
Shares. No assurance can be given that any such distribution or capital
management initiative will occur, and the timing and quantum of any return of
capital would remain at the sole discretion of the Board. Further, pursuant to
authority granted to the Company at the Company's AGM held in June this year,
the Company may conduct market share buybacks of up to 241,592,266 Ordinary
Shares, subject to certain parameters with regard to the buyback price, and
the Company reserves the right to use such authority on an opportunistic
basis.

Buyback Agreement

The Company expects to enter into an off-market share buyback agreement with
certain existing Shareholders (the "Buyback Agreement"), the terms of which
would allow the Company to buy back (or nominate third parties to purchase) up
to 143,565,582 existing Ordinary Shares (the "Buyback Shares") at 7 pence per
share in one or more tranches at any time prior to 31 March 2026 (subject to
the Company having sufficient distributable profits at the time of any such
buyback). The Buyback Agreement provides for the Company (or third parties)
having acquired 50% of the Buyback Shares by 30 January 2026, and the balance
of the Buyback Shares by 31 March 2026, subject, in the case of any buybacks
by the Company, to the Company having sufficient distributable profits. The
Buyback Agreement would terminate on 31 March 2026 and any Buyback Shares not
purchased by the Company or third parties on or prior to that date would be
released from the arrangement. The Buyback Agreement will require the approval
of Shareholders by way of an ordinary resolution.

The Company intends to convene a general meeting of Shareholders in due course
to seek approval for the Buyback Agreement and to renew and to potentially
expand its general buyback authority. There is no certainty that the Company
will ultimately buyback the Ordinary Shares subject to the Buyback Agreement.

No assurance can be given that any such distribution or capital management
initiative will occur, and the timing and quantum of any return of capital
would remain at the sole discretion of the Board.

Operational Update

Hydrocarbons Division

Average gross daily production was 20.1 Kboepd for 9M 2025 (9M 2024: 23.0
Kboepd), of which 85% was gas (9M 2024: 88%)(2);

On 10 March 2025, we announced the completion of the SIPEC Acquisition.
Following completion, we commenced a planned production expansion programme
that has already increased current Stubb Creek gross daily production to 3.3
Kbopd, approximately 24% above the 2024 average. The full programme, expected
to take up to 18 months, is anticipated to raise gross production to as much
as 4.7 Kbopd. In parallel, we are evaluating an alternative, lower capex
option that could deliver a faster production ramp up, with plateau production
sustained for a longer period at a slightly lower rate than under the original
expansion programme.

The compression project at the Uquo CPF is now completed and fully
commissioned. This project, which was delivered approximately 10% under the
original US$45 million budget, is expected to allow us to maximise the
production from our existing and future gas wells.

The Company's Accugas subsidiary was pleased to agree a contract extension
(effective 20 June 2025) with CHGC to end December 2026 to supply up to 10
MMscfpd of gas. This represents the fourth such extension to the original
contract signed with CHGC in February 2022. CHGC is a major gas distribution
company situated in the South-South region of Nigeria, operating a 17 km gas
pipeline infrastructure network providing natural gas to industrial and
commercial users in the Trans Amadi Industrial Area of Port Harcourt as well
as the greater Port Harcourt Area, Nigeria.

Well site construction is currently ongoing for the Uquo NE development well.
This follows the earlier signing of a turnkey drilling contract in preparation
for a planned two-well drilling campaign on the Uquo Field. Drilling for this
well is scheduled to begin in January 2026, with first gas targeted by the end
of that quarter and forecast to deliver gas volumes of up to 80 MMscfpd. An
additional exploration well in the Uquo Field ("Uquo South") is expected to be
drilled back-to-back with the Uquo NE well. Uquo South is a well targeting an
Unrisked Gross GIIP of 131 Bscf of incremental Prospective gas Resources on
the Uquo licence area.

The Company notes the supportive public statements made by various officials
of the Government of Nigeria during 2025 regarding the Nigerian electricity
sector, stating that His Excellency President Bola Tinubu has approved a
US$2.6 billion financing package to assist companies operating within the
power industry settle outstanding verified invoices to power generation
companies ("Gencos") and subsequently to gas supply companies. This has
created renewed positive momentum in the discussions Accugas Ltd, an 80%
Savannah owned subsidiary, is having with its offtakers that are Gencos around
the repayment of the Company's outstanding receivables balance in an
accelerated manner.

 

We continue to actively engage with the Government of Niger around our forward
work programme plans in country. Subject to a satisfactory agreement being
reached with the Government, our subsidiary is considering commencing a
four-well testing programme and/or a return to exploration activity in the
R1234 PSC contract area in 2026/27. The R3 East development plan, itself, has
been significantly re-worked since the last published Niger Competent Persons'
Report ("CPR") of December 2021, with a plateau production rate of around 10
Kbopd now assumed (previously 5 Kbopd). The Company has updated its internal
management estimates of the potential PV10 value (on an unrisked basis) at an
asset level basis for R3 East to US$184.4 million (vs the last CPR asset value
estimate of US$150 million). Assuming a successful well test programme is
conducted, 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.

 

Outlook

Given the significant ongoing operation work, including completion of site and
logistical preparations for the upcoming material drilling activity and other
ongoing well activities at the Uquo Field, together with anticipated levels of
customer demand, we expect production to average around 19-20 Kboepd for FY
2025(3). From Q2 2026, following the drilling and tie-back of the Uquo NE
development well ("Uquo NE"), we expect to materially increase our gas
delivery in addition to increased oil production from Stubb Creek.

 

Power Division

In 2025, we have repositioned our power sector business model to pursue
operating asset opportunities in both the thermal and renewable energy spaces
alongside interests in large scale renewable energy development projects.

Proposed Acquisition of Three East African Hydropower Projects

On 19 September 2025, we announced the proposed acquisition of interests in
three East African hydropower projects with the signing by our wholly owned
subsidiary, Savannah Energy EA Limited, of a Share Purchase Agreement ("SPA")
with Norfund, the Norwegian investment fund for developing countries, to
acquire its current 50.1% interest in Klinchenberg for a total consideration
of up to US$65.4 million (the "Klinchenberg Transaction"). Klinchenberg is a
joint venture company currently owned by Norfund (50.1%) and British
International Investment ("BII") (49.9%), the UK's development finance
institution. Klinchenberg has interests in a portfolio of hydropower assets,
as set out below:(4)

·      an indirect 13.6% interest in the operating 255 MW Bujagali
run-of-river hydropower plant ("Bujagali") in Uganda;

·      an indirect 12.3% interest in the 361 MW Mpatamanga hydropower
development project ("Mpatamanga") in Malawi; and

·      an indirect 9.8% interest in the 206 MW Ruzizi III hydropower
development project ("Ruzizi III") spanning Burundi, the Democratic Republic
of the Congo (the "DRC") and Rwanda.

The consideration includes a US$6.8 million deferred cash element, payable
three years post-completion of the Klinchenberg Transaction, and contingent
payments in respect of Mpatamanga and Ruzizi III payable upon financial close
of these projects. The Klinchenberg Transaction is subject to customary
adjustments upon completion and is expected to complete no earlier than Q1
2026. The SPA has an economic effective date of 31 December 2024. The
consideration is expected to be funded by through a new US$37.4 million debt
facility provided by a major African based financial institution, and the cash
resources of the Company.

In 2024, Klinchenberg distributed a gross dividend of US$17.4 million to its
shareholders, of which US$8.7 million was attributable to Norfund.

The Bujagali tariff is governed by a 30-year, capacity-based power purchase
agreement running to 2042, providing stable, dollar-denominated cash flows.
Revenues are anchored in availability payments rather than dispatch volumes,
insulating returns from hydrological variability and demand risk.

Net capital expenditure to reach financial close for the Mpatamanga and Ruzizi
III projects, after accounting for the acquired interests, is expected to be
less than US$2 million. To date, approximately US$6.5 million has already been
invested, net to the acquired interests. The project companies are targeting
financial close on both projects in 2026. Going forward Savannah expects to
account for the transaction as an investment in an associate, through the
equity method of accounting.

 

Existing Projects

We continue to progress our existing portfolio of wind, solar and
hydroelectric projects, with our principal focus projects being on the up to
250 MW Parc Eolien de la Tarka project in Niger and the up to 95 MW Bini a
Warak hybrid hydroelectric and solar project in Cameroon.

Our Parc Eolien de la Tarka project has made significant progress in the year
to date, with the Minister of Energy confirming that the project is on the
Government's list of priority projects. We are continuing to progress the
additional Environmental and Social Impact Assessment ("ESIA") field work
studies required for the full ESIA, which we expect to complete and submit to
the relevant authorities in early 2026. The Company is continuing to seek to
negotiate outline terms in relation to the project's proposed power purchase
agreement and continues to work on the project in close collaboration with the
International Finance Corporation (World Bank) and the US International
Development Finance Corporation.

Negotiations with the Government of Cameroon are at an advanced stage
regarding a Joint Development Agreement for the up to 95 MW Bini a Warak
hybrid hydroelectric and solar project. This is expected to replace the
Memorandum of Agreement signed in April 2023 and secure the terms under which
Savannah will collaborate with the Government of Cameroon to develop the
project further. Prior to financial close, we currently expect to reduce our
ownership interest in the Bini a Warak project by around 50%, so as to
introduce additional equity partners.

Future M&A Activity

The Company continues to view mergers and acquisitions activity as a core
driver of potential future value creation and is actively pursuing
opportunities across both the hydrocarbon and renewable energy sectors.

Savannah has recently entered into an exclusivity period in respect of the
proposed acquisition of majority interests in a portfolio of renewable
projects located in Sub-Saharan Africa, with an aggregate gross capacity in
excess of 100 MW and a strong payment history. The proposed acquisition would
also include the associated operational teams and a portfolio of renewable
development projects in the same country with a targeted gross capacity of
approximately 40 MW. The transaction, which remains subject to the execution
of long-form documentation and other customary conditions, is envisaged to
involve a potential gross consideration in the US$90 million to US$110 million
range and would be expected to be funded through a combination of debt and
cash resources.

This proposed acquisition represents the most advanced transaction currently
being progressed by Savannah. However, shareholders are advised that there can
be no certainty that the transaction will proceed on the above summarised
terms or be completed at all. The Company maintains an active business
development pipeline comprising a number of potential transactions at various
stages of evaluation, although no other opportunities have, at this stage,
reached such a level to necessitate disclosure under applicable regulations.
The Business development pipeline is sufficiently large that we are however
confident of announcing further transaction(s) over the course of the next 24
months in the African oil and gas and power space.

Financial Update (unaudited)

9M 2025 Performance Highlights

9M 2025 Total Revenues(3) were US$185.2 million, an increase of 9% over the
prior year period (9M 2024: US$169.3 million) and 9M 2025 cash collections
were US$241.6 million, an increase of 5% over the comparable prior year period
(9M 2024: US$229.3 million).

As at 30 September 2025, cash balances were US$101.8 million (31 December
2024: US$32.6 million) and net debt stood at US$629.9 million (31 December
2024: US$636.9 million). This included debt associated with the SIPEC
Acquisition and, for comparison purposes, if this were excluded, net debt
would have further reduced to US$587.3 million. It should be noted that only
6% of outstanding debt as at 30 September 2025 was recourse to Savannah, with
the balance sitting within subsidiary companies on a non-recourse basis.

The Trade Receivables balance as at 30 September 2025 was US$493.3 million, a
9% improvement on year-end 2024 (31 December 2024: US$538.9 million). This
relates primarily to amounts due under various gas sales agreements in
Nigeria. Delivering an increase in our rate of cash collections in Nigeria
remains a key focus area for the business in 2025. The Company is hopeful that
the Trade Receivables balance will reduce further in Q4 2025.

Debt Facilities

In January 2024, a NGN 340 billion (approximately US$222 million) term
facility was signed by Accugas with a consortium of five Nigerian banks (the
"Transitional Facility"). This facility was fully utilised earlier this year
with the resulting funds converted to US$, which, along with cash held, was
used to partially prepay the existing Accugas US$ Facility. As at 30 September
2025, there was a remaining principal balance under the US$ Facility of
approximately US$193 million. We have signed agreements with the consortium of
five Nigerian banks to increase the Transitional Facility to up to
approximately NGN772 billion (approximately US$500 million), enabling the
remaining outstanding US$ balance to be converted into Naira, with the
expectation this will allow the remainder of the Accugas US$ Facility to be
fully repaid by end 2025. This process, when complete, is expected to align
Accugas' debt facility with the currency in which gas revenues are received.

Our wholly owned subsidiary, Savannah Energy EA, has signed a term sheet with
a major African based financial institution for a new US$37.4 million debt
facility to provide funding for the planned acquisition of a 50.1% interest in
Klinchenberg, as previously announced on 19 September 2025.

Arbitration Update

Our wholly owned subsidiary, Savannah Chad Inc ("SCI"), commenced arbitral
proceedings in 2023 against the Government of the Republic of Chad in response
to the March 2023 nationalisation of SCI's rights in the Doba fields in Chad,
and other breaches of SCI's rights. Another wholly owned subsidiary, Savannah
Midstream Investment Limited ("SMIL"), commenced arbitral proceedings in 2023
in relation to the nationalisation of its investment in TOTCo, the Chadian
company which owns and operates the section of the Chad-Cameroon pipeline
located in Chad. SMIL has also commenced arbitral and other legal proceedings
for breaches of SMIL's rights in relation to COTCo, the Cameroon company which
owns and operates the section of the Chad-Cameroon pipeline located in
Cameroon. We currently expect these arbitral proceedings to be concluded in
the first half of 2026.

SCI and SMIL are claiming in excess of US$775 million (plus interest which is
currently estimated at in excess of US$170 million and costs) for the
nationalisation of their rights and assets in Chad.(5) SMIL has a claim valued
at approximately US$330 million (plus interest which is currently estimated at
in excess of US$60 million plus costs) for breaches of its rights in relation
to COTCo.(6) Whilst the Government of the Republic of Chad has acknowledged
SCI's and SMIL's right to compensation, no compensation has been paid by the
Government of the Republic of Chad to date. Savannah remains ready and willing
to discuss with the Government of the Republic of Chad an amicable solution to
the disputes. However, in the absence of such discussions, SCI and SMIL intend
to vigorously pursue their rights in the arbitrations.

SCI is involved in further arbitral proceedings in which designates of
Société des Hydrocarbures du Tchad allege breaches by SCI of the Doba fields
joint operating agreement.(7) SCI is defending the claims vigorously. We
currently expect these arbitral proceedings to be concluded in Q3 2026.

EBT Issuance and Transactions

Sale of Ordinary Shares

It is intended that a company owned and controlled by the Company's CEO,
Andrew Knott, (the "Purchaser") will purchase 63,690,129 existing Ordinary
Shares currently held by the EBT (which is independent of the Company) at 7
pence per share (the "EBT Share Sale"). The aggregate consideration due by the
Purchaser to the EBT will be approximately £4.5 million (the
"Consideration"), to be settled by the transfer to the EBT of warrants to
subscribe for up to 101,113,992 new Ordinary Shares at 19.2 pence per share
and expiring in June 2029 (being the warrants granted by the Company in
December 2021 to a company owned and controlled by Mr Knott) (the "Warrants")
(such Warrants currently valued by the Company at approximately £1.3 million
using a methodology consistent with the approach adopted by external advisers
when valuing the Warrants for annual accounts (the "Warrants Value")). The
balance of the consideration due by the Purchaser to the EBT will be deferred
and be payable in cash over a six year period (with a commercial rate of
applied on monies due until the date of payment). Mr Knott has provided a
personal guarantee to the EBT in relation to the deferred consideration.

 

Purchase and Cancellation of the Warrants

Following completion of the EBT Share Sale, but legally separate and distinct
to the EBT Share Sale, it is intended that the Company will purchase the
Warrants from the EBT for cash consideration equal to the Warrants Value (the
"Warrants Purchase").  Following completion of this intended purchase, the
Warrants would be cancelled (the "Cancellation"), thereby removing an
instrument which, if exercised, would result in future dilution. This intended
cancellation of the Warrants was discussed with the New Investor in connection
with making its proposed equity investment in the Company referred to above.

The economic effect of the proposed EBT Share Sale and in turn the Warrant
Purchase and Cancellation is a reduction in the Company's enlarged fully
diluted share capital by approximately 4.5%. Given the importance of his
position within the Company, the Board is highly supportive of Mr Knott
acquiring a greater ownership interest in the business and acknowledges the
substantial personal financial commitment he is making in the years ahead. The
Board also considers that the Cancellation of the dilutive warrants previously
granted to Mr Knott is in the best interests of shareholders as a whole.

 

Proposed Subscription for New Ordinary Shares by the EBT

Ensuring that the Group is able to appropriately incentivise its employees is
considered by the Board to be crucial to the future success of the business.
It is therefore proposed to issue 210,000,000 new Ordinary Shares to the EBT
at nominal value (£0.001) (the "EBT Share Issuance"), with such shares being
held by the EBT for the benefit of the Group's employees, for example in
satisfaction of the exercise of employee options over Ordinary Shares.  The
EBT's subscription obligation will be funded from the EBT's cash reserves that
will derive from the Warrants Purchase.

Receipt of Shareholder Support

The EBT Share Sale, Warrants Purchase and EBT Share Issuance (together, the
"EBT Transactions") were discussed on a wall-crossed basis with a number of
the Company's shareholders ahead of this announcement. Shareholders
representing approximately 50% of the Company's enlarged issued share capital
have provided written confirmation of their support for the EBT Transactions.
In addition, the Company and the trustees of the EBT have each obtained
independent professional advice in relation to the EBT Transactions.

The Company believes the proposed EBT transactions deliver several key
strategic benefits, being: (1) the cancellation of the Warrants and issuance
of new shares into the EBT are expected to provide improved transparency
regarding the potential future equity dilution faced by shareholders,
particularly in light of the Company's acquisition-led growth strategy and
associated headcount expansion; (2) the EBT Transactions are intended to
further align the interests of management and employees with those of
shareholders through increased equity participation; (3) they reflect a
specific request from the New Investor that Mr. Knott increase his
shareholding in the Company; and (4) they enhance the Company's flexibility to
incorporate equity components into future remuneration arrangements -
something that was previously constrained by the limited number of unallocated
shares available within the EBT.

Lastly, when considered together with the other proposed share-related
transactions announced today - namely, the Financing, the Buyback Agreement,
the Warrant Purchase and Cancellation, and the EBT Issuance - the illustrative
net change to the Company's fully diluted share capital is expected to be
approximately 6.7%, assuming completion of all such transactions and the
corresponding adjustments to the fully diluted share capital. There can be no
assurance that all of these transactions will complete as envisaged, or at
all.

CEO Service Agreement Renewal

Mr. Knott has agreed with the Board to renew his service agreement on revised
terms. The renewed agreement includes a minimum term of two years, securing
Mr. Knott's continued leadership during this period as a key member of the
senior management team. All other material terms of his existing service
agreement remain unchanged.

The Board, having consulted with and received written support from
shareholders representing approximately 50% of the Company's enlarged issued
share capital, believes that the renewal of Mr. Knott's service agreement is
in the best interests of the Company and its shareholders, providing
leadership continuity as Savannah advances its growth strategy.

UK Public Markets Landscape

The UK equity market continues to face a number of structural challenges.
Industry data indicates that UK equity funds have experienced sustained net
outflows for several consecutive years, with cumulative redemptions in the
tens of billions of pounds over this period. Over the past two decades, UK
pension funds have also materially reduced their allocation to UK-listed
equities, from levels of around 50% in 2000 to single-digit percentages
today.(8) As a result, UK-listed companies currently trade at valuation
multiples that are materially lower than many of their international peers.(9)

The UK Government and financial regulators have acknowledged these trends and
have stated their intention to implement reforms designed to strengthen the
attractiveness of the UK's capital markets and to encourage greater investment
in domestic equities.

Savannah Energy plc has actively engaged with the London Stock Exchange in
connection with its consultation paper "Shaping the Future of AIM",
contributing to this reform dialogue. Savannah's particular focus has been on
the operation of AIM Rule 14 relating to share suspensions, under which
companies may be required to suspend trading for extended periods when
undertaking large-scale transactions deemed to be reverse takeovers. The
Company believes that such transactions can represent important opportunities
for value-accretive growth; however, the potential for prolonged suspension
periods can deter companies - particularly those operating in jurisdictions
where governmental approvals are protracted - from pursuing such
opportunities.

While the Board remains supportive of the Shaping the Future of AIM initiative
and is hopeful that it will deliver reforms enhancing AIM's suitability for
high-growth companies, it also recognises the ongoing market challenges noted
above, including those relating to cost of capital. Further the Board is
concerned that, given the Company's strategy and ambitions, were AIM Rule 14
not to be significantly amended, there is a risk that the Company's shares
could be subject to another prolonged period of share suspension in relation
to a future reverse takeover. The Company continues to evaluate a range of
potential corporate transactions which, if pursued, could be classified as
reverse takeovers under the AIM Rules. Accordingly, the Board considers that
further reform of AIM Rule 14 would be beneficial in supporting the Company's
growth strategy.

As part of its normal course of business, the Board has also initiated a
review of the appropriateness of Savannah's current AIM quotation and the
potential alternative options available to the Company, including the
possibility of seeking admission to another recognised stock exchange. This
review remains at an early and exploratory stage. There can be no certainty
that it will lead to any changes to the Company's current market arrangements.
The Company intends to engage with its investor base on this matter during the
course of Q4 2025.

 

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, CFO

Sally Marshak, Head of IR & Communications

 

Strand Hanson Limited (Nominated Adviser)
            +44 (0) 20 7409 3494

James Spinney

Ritchie Balmer

Rob
Patrick
 

 

Cavendish Capital Markets Ltd (Joint Broker)
            +44 (0) 20 7220 0500

Derrick Lee

Tim Redfern

 

Panmure Liberum Limited (Joint
Broker)
+44 (0) 20 3100 2000

Scott Mathieson

James Sinclair-Ford

 

Camarco
                 +44 (0) 20 3757 4983

Billy Clegg

Owen Roberts

Violet Wilson

 

 

About Savannah:

Savannah Energy PLC is a British independent energy company focused around the
delivery of Projects that Matter in Africa.

 

 

Forward-looking statements

This announcement contains statements that constitute forward-looking
statements, beliefs or opinions, including statements relating to business,
financial condition and results of operations of Savannah.  All statements
regarding the future involve known and unknown risks and uncertainties and
various factors could cause actual future results, performance or events to
differ materially from those described or implied in these statements.
Further, certain forward-looking statements are based upon assumptions of
future events which may not prove to be accurate, and Savannah does not accept
any responsibility for the accuracy of the opinions expressed in this
announcement or the underlying assumptions.  The forward-looking statements
in this announcement speak only as at the date of this announcement and
Savannah and its affiliates expressly disclaim any obligation or undertaking
to review or release any updates or revisions to these forward-looking
statements to reflect any change in Savannah's expectations with regard
thereto or any change in events, conditions or circumstances on which any
statement is based after the date of this announcement or to update or to keep
current any other information contained in this announcement or to provide any
additional information in relation to such forward-looking statements, unless
required to do so by applicable law.

 

Footnotes

(1.) Shares to be held between Lothian Capital Partners 2 Limited and Lothian
Capital Partners 6 Limited, both being companies wholly owned by Andrew Knott

(2.) Note that gas production levels are largely driven by customer nomination
levels, while cash collections are largely driven by contractual maintenance
adjusted take-or-pay provisions of 117 MMscfpd in aggregate.

( )

(3.) Total Revenues are defined as the total amount of invoiced sales during
the period. This number is seen by management as more accurately reflecting
the underlying cash generation capacity of the business as opposed to Revenue
recognised in the Condensed Consolidated Statement of Comprehensive Income.

( )

(4.) All interests presented on an expected net to Savannah basis. Prior to
completion of the Klinchenberg Transaction, it is expected that Klinchenberg
will be restructured, such that Norfund will hold 100% of Klinchenberg and
BII's indirect interests in Bujagali, Mpatamanga and Ruzizi will be moved to a
new vehicle. At completion of the Klinchenberg Transaction, Savannah is,
therefore, expected to acquire 100% of Klinchenberg.

( )

(5.) The Republic of Chad has filed certain counterclaims in these
proceedings, claiming in aggregate approximately US$699.1 million (without
interest and costs). SCI and SMIL believe these counterclaims are baseless and
without merit.

 

(6.) The Republic of Chad, SHT Overseas Petroleum (Cameroon) Limited (SHT),
COTCo and certain other shareholders of COTCo have filed counterclaims in
these proceedings, claiming in aggregate approximately US$58.7 million
(without interest and costs). SMIL believes these claims are baseless and
without merit.

 

(7.) The designates of Société des Hydrocarbures du Tchad have advanced
various claims and seek an aggregate of between US$110.9 to US$136.9 million
(without interest and costs). SCI believes the claims are baseless and without
merit.

 

(8.) Sources: "UK equity funds face 44-month outflow despite FTSE 100 high",
The Financial Analyst, 2025 and monthly funds flow data from Calastone FFI
Reports February 2021-October 2025.

 

(9.) Source: "Comparing the Asset Allocation of Global Pension Systems" by
William Wright and James Thornhill, New Financial, September 2024.

 

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