Oil price, Savannah, Angus. And finally…

WTI (July) $63.37 +52c, Brent (Aug) $65.34 +48c, Diff -$1.97 -4c.

USNG (July) $3.68 -4c, UKNG (July) 85.68p +1.72p, TTF (July) €36.32 -€0.03.

Oil price

Oil is flat today but will end up on the week barring accidents, there is little for me to add to my previous comments this week except that it seems that China and the USA are closer after an hour long call between the two Presidents last night. 

Savannah Energy

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce its unaudited results for the year ended 31 December 2024. The Notice of the Annual General Meeting (“AGM”) is available to download from the Company’s website (www.savannah-energy.com) and has been posted to those shareholders who have elected to receive postal copies.

Andrew Knott, CEO of Savannah Energy, said:

“I am pleased to announce our FY 2024 results today, in line with our trading statement released in January 2025, and to announce a 21% increase in 2P Reserves at our flagship Uquo field in Nigeria, bringing the total Reserves increase on the field since acquisition to 81%. This follows our announcement of a 29% increase in 2P Reserves on the Stubb Creek field in May 2025. 

2025 continues to be an exciting year for the business and we continue to work towards “ticking-off” the delivery of the nine focus area projects that we outlined at the beginning of the year, being: (1) securing a further increase in our rate of cash collections in Nigeria¹; (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”) which was achieved during Q1 2025; (4) commencement of the Stubb Creek expansion project; (5) the advancement of our Chad/Cameroon arbitration processes²; (6) the commencement of the safe and successful drilling of our planned Uquo development well and potential Uquo exploration well; (7) the potential advancement of our R3 East development in Niger³; (8) the refinement of our power sector business model; and (9) the delivery of further transformational acquisitions. I would also highlight that we anticipate achieving a strong increase in cash collections in 2025 (even when set against our long-term 13% CAGR⁴), with significant production capacity growth expected in 2026 once our heavy Uquo field investment programme is completed.”

These results have beaten the whisper and it seems that the nine focus area projects are well underway for delivering management targets. In particular the 21% increase in 2P Reserves at the ‘ flagship Uquo field in Nigeria’, making the total reserves increase on the field since acquisition to 81% which just shows how well the installation of  the compressors is going, one already in and the second one imminent. 

This is an incredible performance when you look at the scale of it and especially when you take into account the 29% increase in 2P Reserves on the Stubb Creek field announced last month, expect significant increases in production from now onwards with the 18-month expansion programme now underway.

Final documentation for a significant upsizing of the Accugas Transitional Facility from NGN340 bn to NHG773bn has been agreed and to be in place by the end of this month, which will allow full repayment of the Accugas US$ Facility and align Accugas’ debt with the currency in which gas revenues are received, something that will also be a significant and material positive factor for Savannah.

Following the update on 19th May most of the other points have been made, a strong drilling campaign is keenly expected, clearly at Uquo where a two well programme is underway and an extra potential exploration well being considered. 

Finally, work continues at the R3 East oil development in Niger where 35 MMstb is being looked for and which would exit through the Niger-Benin pipeline ‘subject to satisfactory stakeholder agreements’ being entered into.

Again as trailed before, Savannah are progressing a bunch of renewable projects in wind, solar and hydroelectric power, in the up to 95 MW Bini a Warak hybrid hydroelectric and solar project in Cameroon and the flagship up to 250 MW Park Eolien de la Tarka wind farm project in Niger.

Progress across the board here for Savannah who are market leaders in what are fast growing markets, I expect to see returns of the organic kind and never out of the question, inorganic growth…

FY 2024 Highlights

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

·      FY 2024 Total Income⁶ of US$393.8 million (FY 2023: US$289.8 million), comprising Total Revenues⁷ of US$258.9 million (FY 2023: US$260.9 million) and Other operating income⁸ of US$134.9 million (FY 2023: US$28.9 million);

·      FY 2024 record cash collections of US$248.5 million (+21% on FY 2023 cash collections of 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$636.9 million (31 December 2023: US$473.7 million). Gross debt as at 31 December 2024 was US$669.5 million, of which US$630.6 million (94%) was non-recourse to PLC;

·      FY 2024 Adjusted EBITDA⁹ of US$181.2 million broadly in line with prior year (FY 2023 of US$184.1 million) and Adjusted EBITDA⁹ margin maintained at 70% (FY 2023: 71%);

·      Total Group assets of US$1.6 billion as at 31 December 2024 (2023: US$1.5 billion);

·      Financial guidance for the year achieved or exceeded:

o  Total Revenues⁷ of US$258.9 million (6% ahead of guidance of ‘greater than US$245 million’);

o  Operating expenses plus administrative expenses¹⁰ of US$71.0 million (5% below guidance of ‘up to US$75.0 million’); and

o  Capital expenditure of US$23.1 million lower than guidance of ‘up to US$50 million’ due to the phasing of spend;

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

·      Average realised sales price of US$4.68/Mscfe (+4% increase on the prior year average realised price of US$4.51/Mscfe);

·      NGN340 billion term facility signed by Accugas in January 2024 with a consortium of five Nigerian banks (the “Transitional Facility”). As at 31 December 2024, NGN 332 billion of the Transitional Facility had been drawn down, with the resulting funds 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;

·      US$60 million debt facility signed in October 2024 with The Standard Bank of South Africa Limited and Stanbic IBTC Bank Limited to fund the SIPEC Acquisition¹¹; and

·      Uquo Marginal Field and the Stubb Creek Marginal Field were 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.

Updated Competent Persons Reports

As previously announced on 19 May 2025, the Company appointed McDaniel & Associates Consultants Ltd. (“McDaniel”) to prepare updated Competent Persons Reports (“CPRs”) for the oil and gas assets of the Group. McDaniel have completed their assessment (prepared in accordance with the 2018 Petroleum Resource Management System) of the Reserves and Resources for the Stubb Creek and Uquo fields. The results from this CPR are set out in the tables below, along with comparisons vs. the Reserves and 2P + 2C Resources presented in the Company’s March 2024 Nigeria CPR as adjusted for production since publication.

Summary Comparison of Nigeria Gross Reserves

*Prepared by CGG Services (UK) Ltd 

* Prepared by CGG Services (UK) Ltd 

*Prepared by CGG Services (UK) Ltd

Summary of Nigeria Gross Reserves and Contingent Resources (McDaniel, 2025)

Reserves below are as at 31 March 2025.

2024 Sustainability Highlights

·      Publication today of our 2024 Sustainability Review and 2024 disclosure reports in accordance with the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”) standards;

·      Strong safety record maintained during 2024 with a zero Lost Time Injury rate and Total Recordable Incident rate;

·      2024 scope 1 carbon intensity ratio fell 47% to 5.7 kg CO₂e/boe (2023: 10.7 kg CO₂e/boe), driven primarily by an absence of pipeline maintenance and by initiatives to reduce emissions at source (such as flare reduction) at the Uquo Central Processing Facility;

·      Total Contributions¹² to our host nations increased 22% year-on-year to US$63.4 million (2023: US$52.0 million); and

·      Training hours per employee increased 32% year-on-year to 75 hours per employee with the increase largely due to a three-fold increase in health, safety and environment training hours.

Post-year End Update

·      On 4 March 2025, we announced the completion of an equity issuance raising, in aggregate, gross proceeds of approximately £30.6 million and the signing of a US$200 million acquisition debt facility providing access to potential funding for future hydrocarbon asset acquisitions (currently undrawn);

·      On 10 March 2025, we announced the completion of the SIPEC Acquisition and have commenced work on an up to 18-month expansion programme, anticipated to increase gross production to approximately 4.7 Kbopd;

·      The US$45 million compression project at the Uquo Central Processing Facility is almost complete, with one compressor online and the second to be commissioned before the end of this month. This project, which will be delivered under budget, will allow us to maximise the production from our existing and future gas wells;

·      The procurement process of long lead equipment is progressing in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field commencing in Q4 2025. Well site and flowline surveys have been completed for the Uquo NE development well (“Uquo NE”). This well is forecast to provide gas volumes of up to 80 MMscfpd. 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 targeting an Unrisked Gross gas initially in place of 131 Bscf of incremental gas resources on the Uquo licence area as audited by McDaniel;

·      We are 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.

·      We continue to progress our existing portfolio of up to 696 MW of wind, solar and hydroelectric projects, with our principal focus being on 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;

·      We are in the process of refining our Power Division business model, the remit of which has now been expanded to include potential thermal as well as potential renewable energy projects;

·      Cash collections YTD to 30 April 2025 were US$135.3 million (4 months to 30 April 2024: US$132.2 million). Delivering an increase in our rate of cash collections in Nigeria remains a key focus area in 2025. As at 30 April 2025 cash balances were US$77.2 million and net debt stood at US$601.6 million; and

·      Final documentation has been agreed with the lenders in respect of an increase in the Transitional Facility from NGN340 billion to up to NGN773 billion. It is expected that the agreements will be signed this month, and this upsized facility will be utilised to enable the remaining outstanding balance of the Accugas US$ Facility to be repaid. It is currently expected that this will be completed in H2 2025 and, once completed, this will align Accugas’ primary debt facility with the currency in which gas revenues are received.

2024 Audited Annual Report & Accounts and AGM

The FY 2024 audit remains ongoing – the process is significantly advanced and, once concluded, Savannah will publish its 2024 audited annual report and accounts. The Company is currently running rigorous and thorough audit tender processes for both the Group and its Nigerian subsidiaries.  The current expectation is that a ‘Big 4’ firm will be appointed for the Nigerian subsidiaries working alongside an experienced mid-tier firm in the UK for the Company and Group.  BDO LLP, the current auditor, has notified the Company of their intention to resign as auditor shortly after completion of the 2024 audit. 

The AGM will be held at 9.00 a.m. (BST) on Monday, 30 June 2025 at 40 Bank Street, London, E14 5NR. Details on how to submit your proxy vote are set out in the section of the Notice of AGM headed “Voting Arrangements – Action to be taken”. A separate General Meeting will be called to approve, inter alia, the 2024 Audited Annual Report.

Angus Energy

Further to the announcement of 27 May 2025, Angus Energy confirms that positive discussions with Trafigura regarding the resculpting of the original payment schedule and the potential transaction are ongoing. The Company will inform the market once an agreement has been reached.

Not much that one can pull from here, discussions continue and Angus are clearly hoping to ‘resculpt’ the payment schedule with Trafigura.

And finally…

A summers weekend in sport and none so epitomises the occasion more than the Epsom Derby which is tomorrow and The Oaks which is today.

Cricket continues with the T20 series against the WIndies, tonight at 18:30 at Chester-le-Street just sounds cold and Bristol at 14:30 might be chilly.

And the rugby Prem is at the denouement with semi finals, tonight between Bath and Bristol 19:45 and tomorrow the Tigers v Sale at 15:30.

And if you believe the BBC it is Sir David Beckham…………