A flash blog today, I am attending a family funeral. I hope to have further detailed comments after speaking to the companies.
Savannah Energy
Major announcements from SAVE on Friday and today, here is the detail.
Savannah announced on Friday the completion of its acquisition of ExxonMobil’s entire upstream and midstream asset portfolio in Chad and Cameroon, including operatorship of the upstream assets (through the acquisition of the former operator, Esso Exploration and Production Chad, Inc.) Savannah is also pleased to announce the publication of a Supplemental Admission Document in relation to the ExxonMobil Transaction. Selected extracts from Part 1 of the Document Letter from the Non-Executive Chair of Savannah are reproduced below. Shareholders are however encouraged to read the Document in full.
This announcement follows Savannah’s 13 December 2021 announcement of the signing of a Share Purchase Agreement with ExxonMobil, which has an economic effective date of 1 January 2021, and the publication of its 31 December 2021 Admission Document containing details on, inter alia, the ExxonMobil Transaction. The ExxonMobil Transaction constituted a reverse takeover transaction pursuant to AIM Rule 14 and, accordingly, was subject to, inter alia, shareholder approval which was granted on 24 January 2022. The ExxonMobil Transaction has now been completed.
Re-admission of the share capital of the group as enlarged by the ExxonMobil Transaction is scheduled to take place at 8.00 a.m. on 13 December 2022.
Transaction Highlights
Following the completion of the ExxonMobil Transaction, Savannah now owns a 40% interest in the Doba Oil Project and an effective c. 40% indirect interest in the Chad-Cameroon export transportation system:
· The Doba Oil Project comprises interests in seven producing fields – Kome, Miandoum, Bolobo, Moundouli, Maikeri, Nya and Timbre – with a combined gross 2P Reserve base of 142.3 MMbbls as at 1 October 2022 and expected 2022 gross production of 28.0 Kbopd; and
· The Chad-Cameroon export transportation system comprises a 1,081 km pipeline and the Kome Kribi 1 floating storage and offloading facility, offshore Cameroon (along with all associated facilities). The Chad/Cameroon pipeline is 30″ in diameter with a nameplate capacity of 250 Kbopd and an estimated pipeline throughput in 2022 of 124 Kbopd, from more than 15 fields;
The Company’s proposed acquisition of PETRONAS (E&P) Overseas Ventures SDN. BHD.’s interests in the same assets in Chad and Cameroon is not a condition of the ExxonMobil Transaction.
Andrew Knott, CEO of Savannah Energy, said:
“We are delighted to announce the completion of our US$407 million acquisition of ExxonMobil’s upstream and midstream businesses in Chad and Cameroon. I would like to warmly welcome our new employees to the Savannah family and look forward to building our in-country businesses with them as we embrace the multiple growth opportunities available to us.
In Chad, our focus will immediately turn towards making the investments we believe the Doba Oil Project needs to significantly increase production volumes from current levels and the advancement of our up to US$500m/500 MW of renewable power projects. We expect our investments in these projects to provide significant increased tax revenues and electricity access for the people of Chad. In Cameroon, we hope to see the COTCo and TOTCo businesses grow further over the course of the coming years through additional third-party customer throughput volumes. We are also actively considering investments in other opportunities to pursue Projects that Matter in country.
Outside of Chad and Cameroon, we expect that, in the coming months, we will further augment our corporate growth profile through the announcement of additional hydrocarbon asset acquisitions and the initiation of new utility-scale renewable energy projects (in addition to our existing up to 750MW project pipeline).
Lastly, I would like to the opportunity to express my gratitude to all those who contributed to the successful completion of this transaction and, in particular, our host country stakeholders, my incredibly dedicated and passionate colleagues and the ExxonMobil deal and in-country teams. Thank you all.”
Savannah has today announced that it has entered into a Share Purchase Agreement with PETRONAS International Corporation Limited to acquire PETRONAS’ entire oil and gas business in South Sudan through the acquisition of Petronas Carigali Nile Limited, for a total cash consideration of up to US$1.25 billion, subject to certain completion adjustments. The Transaction Consideration is expected to be financed through a combination of the enlarged Group’s available cash resources and debt. The Transaction is conditional upon the satisfaction of certain conditions precedent including, inter alia, approval of the Government of the Republic of South Sudan, the approval of Savannah’s shareholders and re-admission to trading on AIM taking effect.
Completion of the Transaction would result in the Company acquiring PCNL’s interests in three Joint Operating Companies which operate Block 3/7 (40% working interest), Block 1/2/4 (30% WI) and Block 5A (67.9% WI), in South Sudan. The PETRONAS Assets comprise of interests in 64 producing fields, with first production having commenced in 1999. In 2021, the PETRONAS Assets produced an average gross 153.2 Kbopd. Major partners in the JOCs include CNPC, Sinopec, ONGC and Nilepet, the national oil company of South Sudan.
The Transaction constitutes a reverse takeover transaction pursuant to AIM Rule 14 and, accordingly, per the above, will be subject to, inter alia, shareholder approval. Trading in the Company’s ordinary shares will be suspended from trading on AIM with effect from 7.30 a.m. this morning, and will remain so pending publication of an AIM Admission Document setting out, inter alia, details of the Transaction, or confirmation is provided that the Transaction has been terminated. The Company intends to publish an AIM Admission Document in H1 2023, which will contain a notice of general meeting at which shareholder approval shall be sought, and, following which publication, the Company would seek restoration to trading on AIM of its ordinary shares. Full details on the conditions to completion of the Transaction will be set out in the AIM Admission Document.
Chariot
Chariot Limited, the Africa focused transitional energy group (“Chariot”), is pleased to announce that along with its partner the Office National des Hydrocarbures et des Mines (“ONHYM”), it has agreed key principles for long term gas sales from the Anchois Gas Project (“Anchois”) with the Office National de l’Electricité et de l’Eau Potable (“ONEE”) (together the “Parties”). Anchois is located within the Lixus Offshore licence (“Lixus”), offshore Morocco in which Chariot holds a 75% interest and operatorship, alongside ONHYM which holds a 25% interest.
Key principles include:
· Sales of up to 0.6 BCM per year (c. 60 mmscf per day) on a take or pay basis for a minimum of 10 years with gas to be delivered via the Maghreb-Europe Gas Pipeline.
· Secures direct, domestic supply for Morocco’s existing and potential longer term gas power plant infrastructure.
· Framework and timetable in place to conclude the gas sales agreement (“GSA”).
With the preliminary key principles now agreed, the Parties will continue discussions regarding Anchois with a view of concluding the binding gas sales agreement. Whilst there is no guarantee that these principles will be turned into a fully termed GSA, the parties are progressing with the next stage of documentation. The Company will provide further updates as required.
Mrs Amina Benkhadra, General Director Office National des Hydrocarbures et des Mines: commented:
“Agreeing these key principles is indicative of our commitment to the development of the Anchois gas field. We are pleased to be working in partnership with Chariot on this asset which has the potential to deliver a range of benefits to the country.”
Mr Abderrahim El Hafidi, General Director, Office National de l’Electricité et de l’Eau Potable commented:
“The Anchois gas project will be an important source of domestic natural gas that will initially feed directly into ONEE’s power plants via the Maghreb-Europe Gas Pipeline. We are interested to conclude this sales agreement and for Anchois to continue to progress towards production.”
Adonis Pouroulis, CEO of Chariot Limited added:
“This is a notable step forward for us in our journey towards gas production and underpins the project development plan and financing. I would like to thank ONEE and ONYHM for their ongoing support, and we look forward to continuing to work together to bring this important natural gas supply onstream and into the Moroccan market as quickly as possible.”
Sound Energy
Sound has provided a project financing update in relation to the Company’s Tendrara Production Concession, onshore Morocco.
Partner and possible Farm-Out Update
The Company announced on 9 August 2022 that it had initiated a formal farm-out process to identify a partner for the Tendrara Production Concession and the surrounding Grand Tendrara and Anoual exploration permits. The objective of the area-wide approach is to seek a co-investing partner in each licence to both fund the expected balance of Phase 2 development costs to first gas of approximately US$60 million net to the Company’s working interest in the Tendrara Production Concession and also to progress an exploration and appraisal drilling programme in the Grand Tendrara and Anoual exploration permit areas (the “Process”).
Following strong levels of interest in the Process from a wide range of credible and well-funded parties, the Company has now received quantified non-binding indications of interest in the Process from several parties and, following review, the Company intends to engage in more detail with the relevant parties. Further announcements will be made, as appropriate, in due course.
Phase 2 Development – EPC Contractor
In parallel with the farm-out process in progress, the Company has been developing relationships with various vendors to conduct Engineering, Procurement, Construction (“EPC”) and potentially Operations and Maintenance activities for the Phase 2 development of the Tendrara Production Concession. Advanced negotiations are ongoing, with suitable Consortia to undertake such work identified.
Phase 2 Development – Lead Finance Arranger Mandate Update
The Company announced on 23 June 2022 that it had entered into an Arrangement and Mandate letter (“Mandate”) with Attijariwafa bank (the “Arranger”), a Moroccan multinational bank and one of the leading banks in Morocco, under which the Company mandated the Arranger in relation to the arrangement of project debt financing for the development of Sound Energy’s Tendrara Production Concession (the “Agreement”).
Pursuant to the Agreement, the Arranger was mandated, and provided with exclusivity by the Company for a period of eight months, to arrange a long-term project senior debt facility with a term of no more than 12 years of up to 2.250 billion Moroccan dirhams (approximately US$210 million using current exchange rates) for the partial financing of the currently estimated approximately US$330 million total Phase 2 development cost (including development wells post-first gas) of the Tendrara Production Concession (the “Financing”). Under the terms of the Mandate, as amended, the parties agreed to seek to negotiate binding terms for the Financing by 15 December 2022.
Good progress continues to be made with the Arranger who has recently commenced technical due diligence. To provide sufficient time for this technical diligence process to complete, the parties have entered into a further amendment to the Mandate in order to extend the date by which they will seek to negotiate binding terms for the Financing to 15 March 2023. The exclusivity provided to the Arranger under the Mandate to arrange the Financing has also been extended to 1 June 2023.
Commenting, Graham Lyon (Executive Chairman) said:
“The receipt of credible interest from a number of industry participants in joining the Tendrara Production Concession development and surrounding exploration acreage is encouraging and the Company will now spend time to fully evaluate each and the structure of any potential future transaction. Identifying the Consortium for the Phase 2 development Engineering work is also key as is the structure by which the Company engages all parties.
“Understandably Attijariwafa bank require more time for their external experts to get familiar with the project as this would be the first Moroccan bank led gas development financing. We look forward to providing further positive updates as the various project milestones are delivered.”
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion.
