…Financial and Operational Update Year to Date
…Successful Drilling and Completion of Uquo-11 Gas Production Well Below Budget
Savannah Energy PLC an African-focused British independent energy company sustainably developing high quality, high potential energy projects in Nigeria and Niger, is pleased to announce the publication of an updated Competent Person’s Report (“CPR”) covering the Company’s assets in Nigeria, whereby Gross 2P Reserves increased 27%, together with a financial and operational update for the year to date.
The CPR was compiled by CGG Services (UK) Ltd (“CGG”), a well-known independent third-party reserves auditor.
Andrew Knott, CEO of Savannah Energy, said: “I am extremely pleased to announce the publication of our updated CPR covering the Company’s asset in Nigeria, showing a 27% organic increase in Group 2P reserves. This progression shown in the heart of our business has been replicated in our financials as we maintain a positive year of growth with total revenues up 7% against the same period last year as we reiterate guidance for 2021. Operationally we have successfully drilled and completed the Uquo-11 gas production well, below budget and at a significantly lower cost than previous Uquo wells drilled by our subsidiary company. We look forward to continuing our positive progress through the rest of the year and we expect to update shareholders as to progress made in relation to the Proposed Acquisition (as defined below) when appropriate. We remain confident in our Company’s outlook.”
Key Highlights
Updated Competent Persons Report for Nigeria
Certification by CGG of 108.6 MMboe 2P Reserves (2019 CPR[1]: 85.5MMboe) with additional 99.7 MMboe 2C Contingent Resources (2019 CPR1: 98.0MMboe);
Significant 27% increase to Gross Uquo 2P Reserves driven by the new Pre-Stack Depth Migration (“PSDM”) re-processing/re-interpretation of the Uquo 3D seismic survey and better than prognosis from the newly drilled Uquo-11 well; and
·Nigerian Assets [2] gross NPV10 of US$1.2bn assessed by CGG (NPV10 net to Savannah of US$954m).
Financial Highlights
Total Revenues [3] up 7% y-o-y to US$192.5m for the 10 months ended 31 October 2021 (year-to-date period ended 31 October 2020: US$180.2m);
Group cash balance of US$130.8m [4] and net debt of US$382.7m as at 31 October 2021 (as at 31 October 2020: US$80.7m and US$433.3m respectively);
· Total cash collections from the Nigerian Assets up 6% to US$149.2m for the 10 months ended 31 October 2021(year-to-date period ended 31 October 2020: US$141.1m);
We reiterate our FY 2021 guidance for the following:
Total Revenues3 of greater than US$205.0m from upstream and midstream activities associated with the Company’s three active Nigerian gas sales agreements and liquids sales from the Company’s Stubb Creek and Uquo fields;
Group Administrative and Operating Costs5 of US$55.0m – US$65.0m;
Group capital expenditure of up to US$65.0m; and
We are revising our Group Depreciation, Depletion and Amortisation guidance from US$19m fixed for infrastructure assets plus US$2.6/boe, to US$20m fixed for infrastructure assets plus US$2.3/boe primarily as a result of the reserves increase at the Uquo field.
Operational Highlights
Successful drilling and completion of the Uquo-11 gas production well, below budget;
Average gross daily Nigeria production in the year-to-date period ended 31 October 2021 was 21.9 Kboepd, a 16% increase from the average gross daily production of 19.0 Kboepd in the same period last year;
Of the total average gross daily production of 21.9 Kboepd in the year-to-date period, 88% was gas, including a 16% increase in production from the Uquo gas field compared to the same period last year, from 99.5 MMscfpd (16.6 Kboepd) to 115.6 MMscfpd (19.3 Kboepd);
Front End Engineering Design (“FEED”) progressing for the Uquo compression project; and
On 2 June 2021, Savannah announced that the Company is in exclusive discussions with ExxonMobil Corporation with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon (the “Proposed Acquisition”). The Proposed Acquisition continues to progress, and the Company expects to provide a further update in the coming weeks.
Operational Update
Average gross daily Nigeria production in the year-to-date period ended 31 October 2021 was 21.9 Kboepd, a 16% increase on the average gross daily production of 19.0 Kboepd in same period last year.
Of the total average gross daily production of 21.9 Kboepd in the year-to-date period ended 31 October 2021, 88% was gas, including a 16% increase in production from the Uquo gas field compared to the same period last year, from 99.5 MMscfpd (16.6 Kboepd) to 115.6 MMscfpd (19.3 Kboepd). Gas production levels are driven by customer nomination levels.
Accugas commenced first gas sales to FIPL, an affiliate company of the Sahara Group, in November 2021 for the provision of gas to the FIPL Afam power plant.
The Uquo-11 gas producer well has been drilled and was completed in the D1.0 and D1.3/D1.4 reservoirs on 16 November 2021. The well total net pay thickness came 71ft above prognosis, with a total thickness of 355ft for the main reservoirs’ targets (i.e. C9.0, D1.0 and D1.3/D1.4 reservoirs).
The Company also started ordering compression equipment for the Accugas gas processing plant during the first half of 2021. Factory Acceptance Tests for the two compressor packages have been successfully carried out, the Front End Engineering Design is in progress and we expect the Long Lead Items to be ordered before the year end. Both the drilling and compression projects will ensure our continued ability to deliver gas at current and anticipated future increased contracted volumes to satisfy customer demand.
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