Savannah Energy Announces H1 2023 Results With 12% Increase In Nigerian Production

Posted on September 30, 2023

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce its unaudited half-year results for the six months ended 30 June 2023. 

The H1 2023 Unaudited Financial Results showed that the company’s total revenue grew 8% to US$138.7 million, compared to US$128.7 million in H1 2022. Adjusted EBITDA likewise increased by 8% to US108.2 million (H1 2022: US$100.3 million), and adjusted EBITDA margin remained strong and stable at 78%.

Savannah’s operating and administrative expenses stood at US$27.4 million, a slight increase from H1 2022’s US$24.5 million. The company recorded a profit after tax of US$46.8 million, a significant achievement when viewed against the loss after tax of US$20.5 million in H1 2022. It’s net debt position during the period amounted to US$443.4 million.

In terms of operations, its average gross daily production from Nigeria increased by 12% to 25.3 Kboepd, compared to 22.5 Kboepd during H1 2022. The period also saw a 15% increase in gas production from its Uquo Field to 138.5 MMscfpd, a substantial growth from the 120.3 MMscfpd in H1 2022.

During H1 2023, the company sold gas to eight principal customers, with a number of new and extended gas contracts agreed. These include including agreements with Amalgamated Oil Company Nigeria Limited, Shell Nigeria Gas Limited, and Shell Petroleum Development Company of Nigeria Limited.

Andrew Knott, CEO of Savannah Energy, said:

“I am pleased to report robust results for the first six months of 2023, which demonstrate our continuing ability to deliver strong operational performance. Average gross daily production increased by 12% to 25.3 Kboepd, while Total Revenues1 and Adjusted EBITDA2 both increased by 8% during the first half of the year.  

The expansion of our Renewable Energy division has continued apace, with several new projects added to our development portfolio in the first half of the year. We now have up to 676 MW of projects in motion across three countries as we quickly move towards the achievement of up to 1 GW+. At the same time, we continue to progress our proposed acquisition of PETRONAS International Corporation Limited’s energy business in South Sudan, with the intention to publish an AIM Admission Document in Q4 2023. 

We continue to deliver on our strategy and remain unequivocally an “AND” company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND renewable energy areas.” 

 

Operational Highlights 

  • Average gross daily production from Nigerian operations was 25.3 Kboepd, a 12% increase from 22.5 Kboepd during H1 2022. Robust customer demand led to a 15% increase in gas production from the Uquo Field to 138.5 MMscfpd (H1 2022: 120.3 MMscfpd);
  • Strong safety record, with our Nigerian operations recording one million working hours without a Lost Time Injury;
  • Gas sold to eight principal customers, with a number of new and extended gas contracts agreed, including:
    • An agreement with Amalgamated Oil Company Nigeria Limited (“AMOCON”), whereby Savannah’s Accugas subsidiary agreed to purchase up to 20 MMscfpd of gas from AMOCON over the course of the next ten years for onward sale to our gas customers (with deliveries having commenced in May); and
    • New gas sales agreement with Shell Nigeria Gas Limited (“SNG”) and a contract extension with Shell Petroleum Development Company of Nigeria Limited (“SPDC”);
  • This strong momentum continued post-period end with contract extensions signed with Central Horizon Gas Company Limited (“CHGC”), First Independent Power Limited (“FIPL”) and Notore Chemical Industries PLC (“Notore”) for a total of up to 85 MMscfpd;
  • Up to 676 MW of renewable energy projects now in motion, including agreements signed during the period for the up to 75 MW Bini a Warak Hydroelectric Project in Cameroon and for the development of two proposed solar photovoltaic power plants in Niger with combined capacity of up to 200 MW; and 
  • First disclosure report for Sustainability Accounting Standards Board (“SASB”) published today here.

Financial Highlights 

  • Total Revenues increased by 8% to US$138.7 million (H1 2022: US$128.7 million);
  • Adjusted EBITDA increased by 8% to US108.2 million (H1 2022: US$100.3 million);
  • Adjusted EBITDA margin strong and stable at 78% (H1 2022: 78%);
  • Operating expenses plus administrative expenses of US$27.4 million (H1 2022: US$24.5 million);
  • Profit after tax (including contribution from discontinued operations) of US$46.8 million (H1 2022 loss after tax: US$20.5 million); and
  • Net debt position at period end of US$443.4 million (FY22: US$404.9 million) with Leverage broadly stable at 1.9x (Year-end 2022: 1.8x).

2023 Guidance 

  • Total Revenues guidance reiterated at ‘greater than US$235 million’;
  • Group Operating expenses plus administrative expenses guidance reiterated at ‘up to US$75 million’; and
  • Total capital expenditures guidance reduced from ‘up to US$60 million’ to ‘up to US$30 million’, reflecting the rephasing of certain planned capital projects in Niger and Nigeria.

South Sudan Acquisition Update 

Further to the Company’s announcement on 27 July 2023, the Company continues to advance the various workstreams required to complete the acquisition of PETRONAS International Corporation Limited’s energy business in South Sudan (the “PETRONAS Acquisition”) and now intends to publish an AIM Admission Document in respect of the PETRONAS Acquisition on or before 15 December 2023, following such point the Company will seek restoration to trading on AIM of its ordinary shares.

Niger Update 

Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South East Niger. As previously announced, the intention was to carry out a well test programme on our principal discoveries in Q4 2023. However, following recent political events, this timeline will be subject to further revision due to restrictions imposed by the Economic Community of West African States on Niger, which has resulted in the closure of the border between Benin and Niger. This has created logistical challenges for companies operating in Niger and, specifically for Savannah, in relation to the importation of the necessary equipment to complete our planned well test programme. A further update in relation to timing will be provided in Q4 2023. 

Savannah continues to progress the up to 250 MW Parc Eolien de la Tarka wind farm project, with all key required studies either complete or at an advanced stage. Savannah also announced the signing of an agreement for the development of two proposed solar photovoltaic power plants, each up to 100 MW in scale, during the period and work is at an initial stage on these projects.

 

Divestment of Interest in COTCo 

On 20 April 2023, Savannah announced that its wholly owned subsidiary, Savannah Midstream Investment Limited (“SMIL”), had signed a Share Purchase Agreement with the national oil company of Cameroon, Société Nationale Des Hydrocarbures (“SNH”) for the sale of 10% of the issued share capital in Cameroon Oil Transportation Company (“COTCo”). The cash consideration for the shares was US$44.9 million and SMIL also retained the right to the dividend attaching to the shares up to the payment date of the consideration. Formal completion of the sale shall occur upon satisfaction of certain conditions precedent related to amendments to the bylaws of COTCo. Please refer to Note 20 of the interim financial statements for further information on the accounting treatment of the transaction.

 

Board Update 

Following the Annual General Meeting held on 30 June 2023, Steve Jenkins retired as Chair but remains on the Board as an independent Non-Executive Director. Joseph Pagop Noupoué was appointed Non-Executive Chair, having joined the Board as a Non-Executive Director in April 2023. Sylvie Rucar retired as a Non-Executive Director from the Board post-period end due to personal reasons.

Fenikso Limited (“Fenikso”) 

As previously detailed, in 2022 Savannah invested approximately US$1 million (“the Initial Investment”) in Fenikso (previously known as Lekoil Limited) and, under the terms of the restructuring agreements negotiated between Savannah and Fenikso entered into in December 2022, the Company will receive payments of up to US$16.3 million over the course of the next nine years. Post-period end, Savannah has fully recovered the Initial Investment with the receipt from Fenikso of payments totalling US$1.3 million to date.

 

Chad Assets Update  

As previously disclosed in the Group’s 2022 Annual Report, the Republic of Chad nationalised the Group’s interests in Chad owned by its subsidiaries, Savannah Chad Inc (“SCI”) and Savannah Midstream Investment Limited (“SMIL”), (the “Chad Assets”) by way of a law passed on 31 March 2023 (the Nationalisation”). This confirmed an announcement of the President of Chad of 23 March 2023.

The actions of the Republic of Chad are in breach of the upstream conventions to which SCI and the Republic of Chad are, amongst others, party, together with a breach of the convention between Tchad Oil Transportation Company (“TOTCo”) and the Republic of Chad. Further details are provided in Notes 2, 22 and 23 of the financial statements. Disputes under the upstream conventions and the TOTCo convention are subject to the jurisdiction of ICC arbitral tribunals, seated in Paris. SCI and SMIL have commenced ICC arbitral proceedings against the Republic of Chad to seek full recompense for the loss that they have and will suffer as a result of the nationalisation of the Chad Assets.

Following the period end, a dispute has also arisen among the shareholders of COTCo. SMIL has initiated appropriate court and ICC arbitral proceedings to protect its interests as a shareholder in COTCo. 

 

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