REG - Savannah Energy Plc - Update on Ops & Financials, Fundraise & Suspension

Savannah EnergyAnnouncement

03/03/2025 17:15

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RNS Number : 1623Z  Savannah Energy Plc  03 March 2025

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3 March 2025

 

Savannah Energy PLC

("Savannah" or "the Company")

 

Operational and Financial Update

Proposed Fundraising

Lifting of Suspension and Restoration to Trading

 

Savannah Energy PLC, the British independent energy company focused around the
delivery of Projects that Matter, announces an intention to complete a
fundraising (the "Fundraising") by way of a subscription of new ordinary
shares of £0.001 each ("Ordinary Shares") to raise up to £30.6 million and
that the lifting of the suspension and restoration to trading on AIM of the
Company's existing Ordinary Shares will become effective at 7.30 a.m. on
Tuesday 4 March 2025. The Company also provides the following financial and
operational update.

Andrew Knott, CEO of Savannah Energy, said:

"Today we are announcing our intention to undertake a Fundraising by way of a
subscription of new Ordinary Shares. We are also providing a comprehensive
operational and financial update, including announcing that a new US$200m
hydrocarbon asset acquisition facility has been signed. All of which is
expected to lay a strong foundation for the delivery of our 2025 - 2030
organic and inorganic growth plans.

This is an exciting time for Savannah. Our core Nigerian business remains
extremely robust: as at end 2024 we had US$3.4bn of contracted future revenues
in our gas business with a weighted average contract life of 13 years and a
25-year reserve and resource life. This business has seen double-digit
compound annual Adjusted EBITDA(1) and cash collections growth over the course
of the past eight years.

There are nine key focus areas in our business over the course of the next 12
months: (1) delivering a further increase in our rate of cash collections in
Nigeria(2); (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"); (4) commencement of the Stubb Creek expansion
project; (5) the advancement of our Chad/Cameroon arbitration processes(3);
(6) the commencement of the safe and successful drilling of our Uquo
development and exploration wells; (7) the potential advancement of our R3
East development in Niger(4); (8) the refinement of our power sector business
model; and (9) the delivery of further transformational acquisitions.

Given our planned activity levels this year, our capital allocation policy
remains unchanged: we intend to allocate our excess capital to our highest
risk-adjusted return investment opportunities, assessing doing so against the
potential to make distributions to shareholders. We will continue to review
our approach to capital allocation as the business develops.

Lastly, I would like to express my gratitude to our shareholders and lenders
for their support, as well as to our incredibly passionate and dedicated
employees for the contributions they have made to our Company's successes
achieved to date. I look forward to updating our shareholders as we progress
on the delivery of our focus projects throughout the year. Thank you all."

 

Highlights

Funding

·      Intention to complete a Fundraising by way of a subscription of
new Ordinary Shares to raise, in aggregate, approximately £30.6 million
before expenses;

·      US$200 million acquisition debt facility signed with
energy-focused investment company Blacksea W.L.L ("Blacksea") providing access
to potential funding for future hydrocarbon asset acquisitions(5).; and

·      US$60 million reserve-based lending ("RBL") facility signed in
October 2024 with The Standard Bank of South Africa Limited and Stanbic IBTC
Bank Limited to fund the SIPEC Acquisition, as previously announced on 3
December 2024.

Operational

·      Average gross daily production of 23.1 Kboepd for FY 2024,
broadly in line with the prior year (FY 2023: 23.6 Kboepd), of which 88% was
gas (FY 2023: 91%)(6);

·      Commissioning of the US$45 million compression project at the
Uquo Central Processing Facility ("CPF") is now well underway and completion
of this project is expected to enable the Company to maintain gas production
levels over the medium and long-term;

·      Three gas contracts with customers agreed and extended in FY 2024
for a total of up to 105 MMscfpd (17.5 Kboepd);

·      Procurement process of long lead equipment progressing in Nigeria
in preparation for a potential two-well drilling campaign on the Uquo Field in
H2 2025, with an additional gas development well expected to add up to 80
MMscfpd of supplemental production capacity and a potential exploration well
targeting an Unrisked Gross gas initially in place ("GIIP") of 154 Bscf (25.7
MMboe) of incremental gas resources;

·      Progress continues on the planned SIPEC Acquisition with
completion anticipated in the first half of March 2025. Following completion
of the SIPEC Acquisition, we intend to commence an up to 18-month expansion
programme which is anticipated to increase Stubb Creek Field gross production
from an average of 2.7 Kbopd in 2024 to approximately 4.7 Kbopd;

·      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;

·      Up to 696 MW of renewable energy projects currently in motion,
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 hydroelectric project in Cameroon; and

·      Savannah is actively reviewing opportunities in both the thermal
and renewable power sectors. The Company is in the process of refining our
power sector business model and associated targets to reflect this and expect
to provide updates on this process throughout the course of 2025.

Financial (unaudited)

·      FY 2024 Total Income(7) of US$393.6 million (FY 2023: US$289.8
million), comprising Total Revenues(8) of US$258.7 million (FY 2023: US$260.9
million) and Other operating income(9) of US$134.9 million (FY 2023: US$28.9
million);

·      FY 2024 record cash collections of US$248.5 million (FY2023:
US$206 million). As at 31 December 2024, cash balances were US$32.6 million
(31 December 2023: US$107.0 million) and net debt stood at US$634.0 million
(31 December 2023: US$473.7 million). Gross debt as at 31 December 2024 was
US$666.5 million of which US$625.5 million (94%) is non-recourse to PLC; and

·      FY 2024 Total Revenues(8) were ahead of the previously issued
financial guidance of 'greater than US$245 million', while FY 2024 financial
guidance is reiterated for Operating expenses plus administrative expenses(10)
at 'up to US$75 million'. We expect FY 2024 capital expenditure to come in
lower than planned (previously guided at 'up to US$50 million') due to the
phasing of spend.

Investor Presentation Webcast

An investor presentation webcast will be held at 2:00 p.m. (GMT) on Tuesday 4
March 2025, where CEO Andrew Knott will be presenting, as well as hosting a
Q&A session. If you are a shareholder or professional investor and wish to
register for the webcast and/or submit questions, please click this link and
complete the registration form
https://www.savannah-energy.com/investor-presentation-webcast/
(https://www.savannah-energy.com/investor-presentation-webcast/) .
Registration must be completed and questions submitted by 11.30 a.m. on
Tuesday 4 March 2025. Once registered, a link will be sent to you via email
shortly before the scheduled start time of the webcast.

Update on Proposed South Sudan Transaction and Restoration to Trading on AIM

Further to the Company's announcement on 20 December 2024, the Company has
continued to progress an alternative transaction in respect of the acquisition
of the ex-PETRONAS assets in South Sudan (the "Potential Transaction") and, as
such, the Company's shares have remained suspended from trading on AIM. The
Company has now terminated existing discussions relating to the Potential
Transaction and, therefore, the lifting of the suspension and restoration to
trading on AIM of the Company's existing Ordinary Shares is expected to become
effective at 7.30 a.m. on Tuesday 4 March 2025. However, the Company reserves
the right to pursue a new version of the Potential Transaction which would not
constitute a Reverse Takeover under the AIM Rules. The Company has held
preliminary discussions with potential counterparties relating to such a
potential variation.

Reasons for the Potential Fundraising and Use of Proceeds

The Company is intending to conduct a Fundraising to enable it to execute its
strategy of delivering Projects that Matter in Africa. The Board believes that
this Fundraising is being conducted at the appropriate time and that it will
enable strategic investment in the Company by long-term growth orientated
investors. The net proceeds will be used to assist with meeting the objectives
of the Company overall, with the current intention being to apply the proceeds
as follows:

 

·      Enable the potential acceleration of key business development
opportunities under consideration;

·      To repay and/or acquire up to approximately US$21 million of
subsidiary company debt; and

·      General corporate purposes.

 

The Company is aware that Andrew Knott, Director and CEO, and Blacksea intend
to participate in the Fundraising, alongside several other participants, with
a staged share admission process to be followed based on timing of funds
received by the Company from certain of the subscribers. The Company is also
aware that there will likely be an imminent substantial series of secondary
trades in the Company's shares, which certain directors intend to purchase
shares in (the "Secondary Sale Process"). The issue price of the new Ordinary
Shares comprising the proposed Fundraising will be equal to the price per
Ordinary Share determined in the Secondary Sale Process. Additionally, certain
directors intend to exercise share options previously awarded to them under
various share option plans. Further details will be provided in the Company's
next announcement.

New Debt Financing

Savannah Energy Oil & Gas Limited (the "Borrower"), a subsidiary of the
Company established to acquire interests in upstream oil and gas assets, has
signed a US$200 million debt facility with energy-focused investment company
Blacksea (the "Facility")(5).

The Facility is available to the Borrower to support potential future
acquisitions of oil and gas assets and has a tenor of up to five years with
quarterly repayments commencing in February 2028.  The Facility is secured on
the assets of the Borrower together with any new assets acquired using funds
drawn under the Facility. It is a condition of utilisation of the Facility
that Savannah and the lender and/or an affiliate of the lender enter into an
offtake contract in respect of the production associated with the assets being
acquired. The loan bears interest at SOFR(11) + 7%.

Valuation Update

The Company has appointed McDaniel & Associates to prepare updated
competent person's reports 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, which are expected to be released in early
June 2025.

In the meantime, the Company has updated its internal management estimates of
the potential PV10 value (on an unrisked basis) at an asset-level basis for
its Nigeria and Niger assets. This is summarised in the following table:

 

 

 Asset                           Last CPR Asset Value Estimate (PV10)  Last CPR Asset Value Estimate Date  Current Management Asset Value Estimate(12) (PV10)  Current Management Asset Value Estimate Date
 Accugas*                        US$636 million                        March 2024                          US$743 million                                      1 Jan 2025
 Uquo gas*                       US$329 million                        March 2024                          US$287 million                                      1 Jan 2025
 Stubb Creek - Universal Energy  US$110 million                        March 2024                          US$91 million                                       1 Jan 2025
 Stubb Creek - SIPEC             N/A                                   N/A                                 US$194 million                                      1 Jan 2025
 R3 East - Niger                 US$150 million                        December 2021                       US$210 million                                      1 Jan 2025
 TOTAL                           US$1,225 million                                                          US$1,526 million                                    1 Jan 2025

*Asset values based on Savannah's 80% share of Accugas and Uquo gas.

Principal differences to the Accugas, Uquo and Stubb Creek valuation cases
relate to the differing value estimation dates, alongside certain changes to
operational work programme assumptions and cost structure. The R3 East
development plan has been comprehensively re-worked since the last published
Niger CPR of December 2021, with a plateau production rate of around 10 Kbopd
now assumed (previously 5 Kbopd)(13).

Operational update

Hydrocarbons Division

Nigeria Existing Business

Average gross daily production was 23.1 Kboepd for FY 2024, broadly in line
with the prior year (FY 2023: 23.6 Kboepd), of which 88% was gas (FY 2023:
91%)(5);

Commissioning of the US$45 million compression project at the Uquo CPF is now
well underway and completion of this project will enable us to maintain our
gas production levels over the medium and long-term.

We are currently progressing the procurement process of long lead equipment in
Nigeria in preparation for a potential two-well drilling campaign on the Uquo
Field in H2 2025. The Uquo NE well ("Uquo NE"), is forecast to provide gas
volumes of 60-80 MMscfpd to supplement the production capacity of our current
Uquo well stock. 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.

Conversion of Uquo Marginal Field and Stubb Creek Marginal Field to New
20-Year Petroleum Mining Leases

The Uquo Marginal Field and the Stubb Creek Marginal Field have been converted
to new 20-year Petroleum Mining Leases, both effective 1 December 2023, in
accordance with the Republic of Nigeria's Petroleum Industry Act 2021.

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 in 2025, with certain of the
required long lead item equipment having already arrived in country. 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.

Power Division

In 2025 we expect to further refine our Power Division business model, the
remit of which has now been expanded to include thermal as well as renewable
energy projects. We continue to progress our existing portfolio of up to 696
MW 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.

As a highly indicative rule of thumb, Savannah believes that African renewable
energy projects generate un-risked NPV10s of up to US$0.5 million per MW
(wind) / up to US$1.8 million per MW (hydro) / up to US$0.3 million per MW
(solar) of nominal capacity at the time of commencement of operation. It
should also be noted that it is not expected that all of the projects
currently being progressed in the portfolio funnel will reach financial
close. However, our project funnel should be viewed as dynamic, and we would
expect to replace projects which do not progress to financial close with other
new projects in an organic manner over time.

FY 2024 Unaudited Financial Review

The Group has performed in line with expectations.

Highlights

FY 2024 Total Income(6) was US$393.6 million (FY 2023: US$289.8 million),
comprising Total Revenues(7) of US$258.7 million (FY 2023: US$260.9 million)
and Other operating income of US$134.9 million(9) (FY 2023: US$28.9 million).

FY 2024 cash collections were a record US$248.5 million (FY 2023: US$206.0
million). As at 31 December 2024, cash balances were US$32.6 million (31
December 2023: US$107.0 million) and net debt stood at US$634.0 million (31
December 2023: US$473.7 million). It should be noted that only 6% of
outstanding debt as at 31 December 2024 is recourse to Savannah, with the
balance sitting within subsidiary companies on a non-recourse basis. The Trade
Receivables balance at year-end 2024 was US$538.9 million (31 December 2023:
US$389.9 million) and this relates primarily to amounts due under various gas
sales agreements in Nigeria.

Debt Facilities

In January 2024, a new NGN 340 billion four year-term facility was signed by
Accugas with a consortium of five Nigerian banks (the "Transitional
Facility"). As at 31 December 2024, NGN 332 billion of this facility had been
drawn down, with the resulting funds being converted to US$, which, along with
cash held, was used to partially prepay the existing Accugas US$ Facility,
leaving a balance as at 31 December 2024 of approximately US$212.3 million.

As contemplated in the Transitional Facility agreement, we have requested an
increase in the facility to enable the remaining outstanding US$ balance to be
converted into Naira, allowing the remainder of the Accugas US$ Facility to be
fully repaid within H1 2025. This process, when complete, will align Accugas'
debt facility with the currency in which gas revenues are received.

Arbitration Update

As previously disclosed in Savannah's 2023 Annual Report, our wholly owned
subsidiary, Savannah Chad Inc ("SCI"), commenced arbitral proceedings in 2023
against the Government of the Republic of Chad and its instrumentalities 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 Tchad Oil
Transportation Company, 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 Cameroon Oil Transportation Company ("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 no
later than 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$140million and costs) for the
nationalisation of their rights and assets in Chad(14). SMIL has a claim
valued at approximately US$380 million (plus interest which is currently
estimated at in excess of US$40 million and costs) for breaches of its rights
in relation to COTCo(15). Whilst the Government of the Republic of Chad has
acknowledged SCI's and SMIL's right to compensation, no compensation has been
paid or announced 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, the Group intends to vigorously pursue its 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(16). SCI is defending the claims vigorously.  We
currently expect these arbitral proceedings to be concluded no later than Q3
2026.

 

Business Development

Nigeria Proposed SIPEC Acquisition

In March 2024, we announced the proposed acquisition (via two separate
transactions) of 100% of Sinopec International Petroleum Exploration and
Production Company Nigeria Limited ("SIPEC") for a total consideration of
US$61.5 million. SIPEC's principal asset is the 49% non-operated interest in
Stubb Creek. A subsidiary of Savannah, Universal Energy Resources Limited, is
the 51% owner and operator. All regulatory consents for the SIPEC Acquisition
have been obtained, including consent from the Honourable Minister of State,
Petroleum Resources, which is conditional upon payment of ministerial consent
and processing fees and other usual conditions for a transaction of this
nature. Completion is anticipated in the first half of March 2025.

The SIPEC Acquisition will be funded from the US$60 million RBL Facility
provided by The Standard Bank of South Africa Limited and Stanbic IBTC Bank
Limited. The availability under the RBL Facility is US$60 million.

As at year end 2023, SIPEC had an estimated 8.1 MMstb of 2P oil reserves and
227 Bscf of 2C Contingent gas resources. Following completion of the SIPEC
Acquisition, Savannah's reserve and resource base is, therefore, expected to
increase by approximately 46 MMboe from 158 MMboe to 204 MMboe (on a pro-forma
basis as at 1 January 2024).

Following completion of the SIPEC Acquisition, we plan an up to 18-month
expansion programme to increase the processing capacity of the Stubb Creek
facilities. It is anticipated that this will lead to Stubb Creek gross
production increasing from an average of 2.7 Kbopd in 2024 to approximately
4.7 Kbopd. Importantly, the SIPEC Acquisition also secures significant
additional feedstock gas available for sale to our Accugas subsidiary.

AIIM Assets

Savannah has held discussions with its private equity partner Africa
Infrastructure Investment Partners ("AIIM") in relation to Savannah
potentially acquiring AIIM's 20% interest in the Accugas and SEUGL businesses.
This discussion is based on the formula originally negotiated with them at the
time of the initial acquisition and detailed in the respective shareholder
agreements. The parties have agreed to make a decision in relation to any such
transaction in March 2025. It is currently both Savannah and AIIM's view that
a transaction is unlikely to be agreed based on the formula(17). AIIM would,
therefore, continue to be an active partner in the Accugas and SEUGL
businesses going forward.

Future M&A Activity

The Company continues to view M&A as a core source of potential future
value creation for the business. Savannah takes a long-term approach to
business development, which we believe is critical given the industry and
jurisdictions in which we operate. M&A deals, particularly for energy
assets, can frequently take more than four years from initial discussion to a
successful conclusion, with only a small percentage of initial conversations
resulting in a completed deal. Strategically, the Board and management team of
Savannah, therefore, believe that it is critical to maintain a funnelled
approach to business development, pursuing a large portfolio of potential deal
opportunities in parallel, which are progressed through the deal maturation
cycle and systematically evaluated based upon the deal's structure and risk
adjusted returns, as well as the fit with the Company's execution capacity.

The African energy sector offers attractive M&A market dynamics, with, for
example, large divestment programmes planned by major and national oil
companies in the hydrocarbons sector and by private equity firms in the power
sector. Active portfolio management through M&A and divestment
transactions shift assets to those owners best positioned to maximise their
value at that stage of the asset life cycle. Savannah is a potential partner
of choice in these deals, given our strong regional relationships, operational
experience, access to financing, and more efficient operational costs and
corporate structure.

Throughout 2023 and 2024, Savannah's shares remained suspended from trading on
AIM in accordance with AIM Rule 14, as we pursued an acquisition that would
have constituted a reverse takeover. We believe that such transactions can act
as critical enablers of value accretive growth for ambitious high growth
companies such as Savannah and should, therefore, be actively encouraged by
the regulatory regime. However, the risk of potentially lengthy share
suspension periods can act as a disincentive for companies to pursue such
transactions. In our view consideration should, therefore, be given to
potential amendments to the rules governing reverse takeovers, particularly in
respect of suspension requirements, with a view to enhancing the AIM
market's attractiveness as a growth-focused exchange, while maintaining a
suitable level of investor protection. This position is consistent with the UK
Government's well publicised pro-business growth agenda. Savannah intends to
work with our advisers and other stakeholders to encourage the relevant
decision makers to consider potential changes accordingly.

 

 

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

 

Tennyson Securities (Financial
Adviser)
+44 (0) 20 7186 9033

Peter
Krens
 

 

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

 

 

Dr Christophe Ribeiro, Savannah's VP Technical, has approved the technical
disclosure in this regulatory announcement in his capacity as a qualified
person under the AIM Rules. Dr Ribeiro is a qualified petroleum engineer with
over 20 years' experience in the oil and gas industry. He holds an MSc in
Geophysics from the Institut de Physique du Globe de Paris and an MSc in
Petroleum Engineering and a PhD in Reservoir Geophysics from Heriot-Watt
University. Dr Ribeiro is a member of the European Association of
Geoscientists and Engineers (EAGE) and Society of Petroleum Engineers (SPE).

 

About Savannah:

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

 

About Blacksea W.L.L

Blacksea W.L.L ("Blacksea") was established as an investment and trading
vehicle of two leading global commodity trading groups in 2014 (Vitol Bahrain
and Maddox DMCC). Blacksea was bought out by Maddox DMCC in 2019 and was then
the subject of a management buy-out in 2024. Today, Blacksea is a
well-capitalised investment company seeking to provide long-term capital to
high growth companies in the upstream oil and gas sector with whom long-term
commodities trading relationships can be developed.

 

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.) Adjusted EBITDA is calculated as profit or loss (excluding Other
operating income), before finance costs, investment revenue, foreign exchange
gains or loss, expected credit loss and other related adjustments, fair value
adjustments, gain on acquisition, share-based payments, 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.

 

(2.) Internal management estimates assume an increase in the rate of cash
collections in relation to historical receivables, an average oil price of
US$65.88 per barrel for 2025 and US$67.52 for 2026, completion of the SIPEC
Acquisition and the receipt of legacy payments in Nigeria.

 

(3.) As previously disclosed in Savannah's 2023 Annual Report, our wholly
owned subsidiary, Savannah Chad Inc ("SCI"), commenced arbitral proceedings in
2023 against the Government of the Republic of Chad and its instrumentalities
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
Tchad Oil Transportation Company, 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 Cameroon Oil Transportation Company ("COTCo"), the Cameroon
company which owns and operates the section of the Chad-Cameroon pipeline
located in Cameroon. We expect these arbitral proceedings to be concluded no
later than the first half of 2026.

 

(4.) Subject to satisfactory stakeholder agreements being entered into.

 

(5.) This facility is subject to the completion of the proposed Fundraising.

 

(6.) 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.

 

(7.) Total Income is calculated as Total Revenues(2) plus Other operating
income.

 

(8.) 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.

 

(9.) Other operating income primarily relates to the re-billing of foreign
exchange losses incurred through the conversion of Naira paid invoices into US
dollars.

 

(10.) Group operating expenses plus administrative expenses are defined as
total cost of sales, administrative and other operating expenses, excluding
gas purchases, royalties, depletion, depreciation and amortisation and
transaction costs.

 

(11.) Secured Overnight Financing Rate.

 

(12.) Please note that these are internal management estimates only which have
not been audited. Whilst they have been prepared using reasonable care, they
remain subject to change at any time.

( )

(13.) Management estimate as at 1 January 2025 based on R3 East development
with peak production of 10 Kbopd vs. 5 Kbopd in CGG CPR (2021).

 

(14.) The Republic of Chad has filed certain counterclaims in these
proceedings, claiming in aggregate approximately US$666.6 million (without
interest and costs). SCI and SMIL believe these counterclaims are baseless
and without merit.

 

(15.) 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.

 

(16.) The designates of Société des Hydrocarbures du Tchad are claiming
approximately US$160.5 million (without interest and costs). SCI believes the
claims are baseless and without merit.

 

(17.) The formula is significantly driven by Savannah's share price. AIIM's
position is driven by its view of Savannah's share price.

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