REG - Savannah Energy Plc - FY2023 Results, Notice of AGM, Posting of Report
07/06/2024 07:00
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RNS Number : 4979R Savannah Energy Plc 07 June 2024
7 June 2024
Savannah Energy PLC
("Savannah" or "the Company"")
FY 2023 Audited Annual Results
Notice of AGM and Posting of the 2023 Annual Report
Savannah Energy PLC, the British independent energy company focused around the
delivery of Projects that Matter, is pleased to announce its audited results
for the year ended 31 December 2023. The Notice of the Annual General Meeting
("AGM") and a copy of the 2023 Annual Report and Accounts are available to
download from the Company's website (www.savannah-energy.com
(http://www.savannah-energy.com) ). The Notice of the AGM has been posted to
those shareholders who have elected to receive postal copies.
Andrew Knott, CEO of Savannah Energy, said:
"2023 clearly demonstrated the robustness of our business model, corporate
capacity and corporate infrastructure. Our core business continued to perform
strongly, while we have progressed our projects in Niger during a period of
political change, progressed two separate hydrocarbon acquisitions which are
material to our business, continued to grow our renewable energy business,
managed the impact of the nationalisation of our Chad Assets to ensure that we
receive the value we are due and positioned ourselves strongly to announce
further new and exciting projects in 2024."
FY 2023 Highlights
· Average gross daily production was 23.6 Kboepd, broadly in line
with FY 2022 production on a like-for-like basis when adjusted for a planned
maintenance programme;
· Up to 696 MW of renewable energy projects in motion at year-end,
and targeting a portfolio of up to 1 GW+ of renewable energy projects in
motion by end 2024 and up to 2 GW+ by end 2026;
· Financial guidance achieved or exceeded;
o Total Revenues(1) of US$260.9 million (11% ahead of guidance of 'greater
than US$235 million');
o Operating expenses plus administrative expenses(2) of US$68.8 million (8%
below guidance of 'up to US$75.0 million'); and
o Capital expenditure of US$13 million (guidance of 'up to US$30 million');
· Strong safety record maintained with a zero Lost Time Injury rate;
· Continued increase in customer diversification in Nigeria with gas
sold to nine customers, and a number of new and extended sales agreements
signed, totalling up to 101 MMscfpd;
· Average realised sales price of US$4.51/Mscfe (+9% increase on the
prior year average realised price of US$4.14/Mscfe);
· Agreement signed with Amalgamated Oil Company Nigeria Limited to
purchase up to 20 MMscfpd of gas over the course of the next 10 years for
onward sale to our gas customers, providing a commercial route to market for
third-party stranded gas resources via our c. 260km pipeline network; and
· US$45m compression project in Nigeria advanced and remains on track
with front-end engineering design and the associated order of long lead items
completed in Q4 2023.
Post-year End Update
· Strong Nigerian gas sales momentum continued with a 12-month
contract extension signed in January 2024 with FIPL to supply up to 65 MMscfpd
to their FIPL Afam, Eleme and Trans Amadi power stations;
· Accugas refinancing process underway with new Naira facility signed
in early 2024, which is being progressively drawn down during the year and
utilised towards repayment of the existing Accugas US$ facility;
· Agreements signed in March 2024 to acquire 100% of Sinopec
International Petroleum Exploration and Production Company Nigeria Limited
("SIPEC"), whose principal asset is a 49% non-operated interest in the Stubb
Creek oil and gas field, Nigeria, consolidating our interest in the asset.
Plans in place to double production to approximately 4.7 Kbopd within 12
months following completion of the acquisition through the implementation of a
de-bottlenecking programme; and
· US$45m compression project in Nigeria on-budget and on-track for
completion in H2 2024, which will enable us to maintain and grow our gas
production levels.
Sustainability Highlights
· Publication of first disclosure reports in accordance with the Task
Force on Climate-Related Financial Disclosures ("TCFD") and the Sustainability
Accounting Standards Board ("SASB") standards during 2023, and publication of
first disclosure reports in accordance with the Global Reporting Initiative
("GRI") and our chosen United Nations Sustainable Development Goals ("UN
SDGs") post-year end in 2024;
· Low carbon intensity metric maintained in 2023 of 10.7 kg
CO(2)e/boe (2022: 9.7 kg CO(2)e/boe), 45% lower than the Supermajor average of
19.4 kg CO(2)e/boe(3);
· Total Contributions(4) in 2023 to host nations were US$52.0
million; and
· 24% increase in training hours per employee and a 24% increase in
total training hours in 2023 to 15,858 (2022: 12,754).
Financial guidance for 2024
We are providing the following guidance in relation to the Group for the year
ended 31 December 2024. This guidance does not include any contribution from
proposed acquisitions:
· Total Revenues(1) greater than US$245 million;
· Operating expenses and administrative expenses(2) of up to US$75
million; and
· Capital expenditure of up to US$50 million.
AGM
The AGM will be held at 10.30 a.m. (BST) on Friday, 28 June 2024 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".
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 (Nominated Adviser) +44 (0)
20 7409 3494
James Spinney
Ritchie Balmer
Rob Patrick
Cavendish Capital Markets Ltd (Joint Broker)
+44 (0) 20 7220 0500
Derrick Lee
Tim Redfern
Panmure Gordon (UK) Ltd (Joint Broker)
+44 (0) 20 7886 2500
Hugh Rich
James Sinclair-Ford
Camarco
+44 (0) 20 3757 4983
Billy Clegg
Owen Roberts
Violet Wilson
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR").
About Savannah Energy:
Savannah Energy PLC is a British independent energy company focused around the
delivery of Projects that Matter in Africa
Chair's statement
Well placed for an exciting year ahead
Dear fellow shareholders,
I am pleased to provide my inaugural report to shareholders, having been
appointed to the Board as a Non-Executive Director in April 2023, and having
succeeded Steve Jenkins as Chair following the 2023 AGM. I would like to take
this opportunity to thank Steve for his leadership of the Board from the
Company's inception in 2014 to June 2023. We are fortunate to be able to
continue to draw on Steve's experience and knowledge in his continuing role as
a Non-Executive Director. I would also like to thank Sylvie Rucar, who
resigned from the Board as a Non-Executive Director in July 2023, for her
contribution to the Company.
Savannah performed well in 2023 and has shown strength and resilience. I am
pleased with how the Company adapted and managed the challenges it faced in
2023, whilst continuing to focus on delivering our long-term strategy and
adhering to high standards of governance. The Company is well placed for an
exciting second half of 2024, with the anticipated completion of both the
South Sudan and SIPEC Acquisitions, the expected completion of the compression
project in Nigeria, the comprehensive flow testing programme planned for key
oil fields within our R3 East Development in Niger and the continuing
development of our Renewable Energy Division.
We have continued to enshrine a strong safety culture within Savannah with a
zero LTI and zero TRIR achieved in 2023. I am particularly proud to report
that in September 2023 our operations in Nigeria recorded a significant
milestone with one million working hours without an LTI, followed by two
million working hours without an LTI post-year end in May 2024.
The Board continues to place great emphasis on engagement with all our
stakeholder groups and more information on this is provided in our Section 172
Statement on page 42 of our Annual Report and Accounts 2023. Our updated
materiality assessment post-year end also ensures that we continue to engage
with our key stakeholder groups on a range of relevant sustainability topics.
We continue to use the 2018 Quoted Companies Alliance Corporate Governance
Code (the "QCA Code") as the basis of the Group's governance framework. The
Corporate Governance Report on page 112 of our Annual Report and Accounts 2023
explains how we applied the principles of the QCA Code in 2023. After
reflecting on the governance requirements of the Group and the breadth of the
Directors' skills, the Board decided to adopt a number of changes to the
structure of the Committees, including:
• Changing the membership composition of the Committees;
• Transferring the risk responsibilities from the Audit Committee
to the Health, Safety, Environment, Security and Risk Committee; and
• Reviewing and updating the terms of reference for certain
Committees.
The resulting alignment of the Board, its Committees and the executive team
means we are in a strong position to deliver the Group's strategy and
long-term value to both internal and external stakeholders.
In order to ensure that the continued development of the Board is in parallel
with the pace of the expansion and dynamism of the Company, during H2 2024 we
intend to undertake an evaluation of the Board, its Committees and each
Director. As evidenced by the new Director appointments over the last two
years, the Board continues to place significant value on having Directors with
diverse outlooks and varied experiences to achieve the balance of skills
required to run a company such as Savannah during this stage of its growth
cycle.
As we look to the future, our focus on growing a material, African-focused
energy business remains unchanged. As a Board we remain cognisant of our
responsibility to ensure the long-term success of this strategy in the
interests of, not only our shareholders, but also our wider stakeholders,
including our employees, our host governments and our local communities. I
believe that Savannah is exceptionally well-positioned to achieve these
ambitions.
Thank you to you all for your support for Savannah Energy in 2023 and the year
to date.
Joseph Pagop Noupoué
Chair of the Board
6 June, 2024
CEO's shareholder letter
Championing the African energy transition
Dear fellow shareholders
I would like to welcome you to our tenth Annual Report as a listed company.
This year's letter follows a similar format to those of recent years. The
first section discusses our Company's continued industry-leading financial,
operational and sustainability performance. The second discusses our key focus
areas for 2023 and 2024. The third discusses the "how" and the "why" we see
the African energy transition evolving and discusses the relevance of our
hydrocarbon AND renewables business model.
Before turning to the first section, I would like to draw your attention to
three key articles in this year's Annual Report. The first article on pages 10
to 19 describes "Why we do what we do", where we discuss our corporate purpose
and the associated core beliefs which serve to underpin our strategy and
business model. I really believe that this section is essential reading for
anyone seeking to understand our Company. The second on pages 27 to 31,
authored by Professor Stefan Dercon, CMG, Professor of Economic Policy at the
Blavatnik School of Government and the Department of Economics of the
University of Oxford, and the Director of the Centre for the Study of African
Economies at the University of Oxford, discusses "Private Investors and the
Gamble on Growth and Development", drawing on themes from his recent book,
"Gambling on Development; Why Some Countries Win and Others Lose". The third
article, on pages 32 to 37 from Johan Norberg, an author, lecturer,
documentary filmmaker and a Senior Fellow at the Cato Institute in Washington
D.C., focuses on the importance of capitalism and free markets for economic
growth in Africa, following the arguments developed in his recent book, "The
Capitalist Manifesto: Why the Global Free Market Will Save the World". We are
extremely grateful to both of our distinguished guest authors for their
contributions.
2023 in review
The macro environment of 2023 was very different to that of 2022. Real GDP
growth in both Africa and the OECD fell year-on-year to 3.2%1 and 1.6%2 from
4.0%1 and 2.9%2 respectively. The macro energy complex was significantly
weaker too, with, for example, benchmark oil and liquified natural gas prices
falling by 18% and 38%3 respectively. Annual inflation rates in advanced
economies fell from an average of 7.3%1 in 2022 to 4.6%1 in 2023, starkly
contrasting with sub-Saharan Africa where inflation rose year-on-year to
16.2%1 versus 14.5%1 last year. The latter was caused largely by the former
countries' loose monetary policies4 and resulted in a broadly proportionate
depreciation in the value of non-indexed African currencies which depreciated
against the US Dollar by an average of 16%5.
The seven energy Supermajors reported US$129.3 billion of profit in 2023 (-29%
year-on-year)6, largely driven by the softening macroeconomic environment,
while their aggregate annual production volume fell by a modest 1.2%. The
major energy companies' business plans were also revised with CEO commentary
across the board focusing on the critical role energy and, in particular,
energy generated from hydrocarbons, plays in the global economy. This was
reflected in the Supermajors' near-term projected capital expenditures for
transition projects reducing relative to their projected capital expenditures
for fossil fuel projects, with a consequent increased role for hydrocarbons in
their pre-2030 business mixes than had been suggested in prior year CEO
commentaries.
Savannah's financial performance was significantly ahead of the guidance we
provided at the beginning of the year. We reported Total Revenues(a) of US$261
million (versus guidance of greater than US$235 million and US$290.4 million
last year), Operating and administrative expenses(f) of US$68.8 million
(versus guidance of less than US$75 million and US$66.2 million last year) and
Adjusted EBITDA of US$184.1 million (2022: US$223.6 million). Our Adjusted
EBITDA margin, therefore, remained industry leading at 71% compared to the
Supermajors' average margin of 20%6. The 10% year-on-year decline in Total
Revenues(a) was significantly driven by lower gas invoicing due to a planned
maintenance programme we conducted at our production facilities in Nigeria (a
regulatory requirement coinciding with the 10-year anniversary of the
commencement of operations).
At the Nigerian business unit level, we recorded Adjusted EBITDA(c) of
US$213.9 million (-13% year-on-year) and an Adjusted EBITDA(c) margin of 82%.
The US$29.8 million difference between the Group and our Nigerian business
Adjusted EBITDA(c) numbers largely reflects the central costs of running the
business, the investments we are making in our pre-revenue renewables business
and the build-up of corporate infrastructure necessary to support our
significant future organic and inorganic growth plans. A substantial portion
of these central costs in the year related to the establishment of the
infrastructure needed to support the operations in Chad and these costs would
ordinarily have been charged to these entities. However, following the
Nationalisation, the costs remained at the corporate level - we have taken
steps to reduce these costs in FY 2024, while continuing to maintain the
necessary infrastructure to support our growth plans.
In 2023, 90% of our revenue stream was derived from fixed price gas sales
agreements with no cyclical exposure to oil or international gas prices. Over
the last seven years our Nigerian business has achieved an annualised Total
Revenues(a) compound annual growth rate ("CAGR") of 15.7%. This Total
Revenues(a) growth compares favourably to the long-term trend CAGR of the
wider UK stock market constituents of 4.6%. Further, since the announcement of
our decision to acquire our Nigerian business in 2017, we have more than
doubled the number of customers. We are now contracted to supply gas to enable
approximately 20% of Nigeria's thermal power generation capacity (up from
approximately 10% at the time of acquisition)7, as well as to key
petrochemical and cement factories. We are clearly performing a critical
service to the Nigerian economy. Over the same period our operational
performance has been equally robust, with an estimated 99% uptime versus plan
at our Uquo CPF.
The build out of our pre-revenue Renewable Energy Division continued in 2023
as the 500 MW of projects we had intended to pursue in Chad were replaced by
up to 446 MW of new solar, hydro and wind projects in other African countries.
We intend to provide more details on the individual projects we are developing
within our Renewable Energy Division at a strategy presentation later in 2024.
At the time of writing, we have up to 696 MW of renewable projects in motion.
On a pro forma basis we increased training hours per employee by 24% on a
broadly flat headcount. We intend to continue to invest in our people and
infrastructure as we pursue our goal of potentially quadrupling the scale of
our business over the course of the coming years.
As always, we maintained our strong focus around safe operational delivery. In
2023 we recorded an exceptional Lost Time Injury Rate ("LTIR") of zero and a
Total Recordable Incident Rate ("TRIR") of zero per 200,000 working hours. Our
performance against key sustainability metrics remained equally
industry-leading. Our carbon emissions were 45% lower than the industry
average of 19.4 kg CO2e/boe at 10.7 kg CO2e/boe. Our senior management female
gender diversity was 33%, while our local employee ratios in our countries of
operation were maintained at 99% for Nigeria and 100% for Niger.
Key highlights
Niger
Following the change of government in Niger in July 2023, the country achieved
first oil exports through the 1,950 km Niger-Benin oil export pipeline in Q2
2024. At the time of writing, the pipeline is now reported to be fully
operational and transporting approximately 90 Kbopd from China National
Petroleum Corporation's Agadem licence area to the Port of Cotonou in Benin.
This increased production is expected to accelerate Niger's economic growth by
an estimated 27% and exports by 89% respectively in 2025 versus 2023 levels10.
From a Savannah perspective, commissioning of the pipeline provides a clear
route to international markets for crude oil produced from our R1234 contract
area. We expect to commence a comprehensive flow testing programme in late
2024 of the main oil fields included in our c. 35 MMstb R3 East field
development plan (the "FDP"). This flow testing programme is expected to
enable us to fine tune and optimise the FDP, ahead of expected first
commercial oil production in H2 2025/H1 2026. The NPV of the initial R3 East
development project has been assessed at US$150 million11.
We made significant progress on our up to 250 MW Parc Eolien de la Tarka wind
farm project, located in the Tahoua Region of southern Niger. We have now
completed the principal studies required to enter into a definitive concession
agreement with the Government of Niger. We submitted our Environmental Social
Impact Assessment ("ESIA") scoping report to the National Bureau of
Environmental Evaluation post-year end in Q1 2024. During H2 2024 we plan to
continue the ongoing ESIA fieldwork and complete the additional studies
required for the submission of the full ESIA report. We hope to achieve
project sanction in 2025 with first power delivery in 2027. We have also
signed agreements with two leading international Development Finance
Institutions to fund approximately two-thirds of the pre-construction
development costs of the project. The project is anticipated to supply up to
22% of Niger's electricity demand, based on the country's projected energy
demand in 2026 (which is expected to grow significantly between today and
2026).
In May 2023 we signed an agreement for the potential development of two solar
photovoltaic power plants in the areas around the cities of Zinder and Maradi,
also in southern Niger, with a combined installed power generation capacity of
up to 200 MW. These projects are now operating on a timeline with a
sanctioning decision expected in 2025, for first power in 2027. These projects
are expected to supply up to 12% of Niger's electricity demand based on 2026
energy demand projections.
Our wind and photovoltaic renewable projects in development in Niger would
therefore be capable of supplying up to 34% of Niger's electricity demand at
the commencement of project operations.
Nigeria
Post-year end we announced plans to increase our effective economic interest
in the Stubb Creek oil and gas field in Nigeria from 51% to 100%, through the
acquisition of our Nigerian subsidiary Universal Energy Resources's joint
venture partner SIPEC. This acquisition will increase Savannah's net 2P and 2C
Reserves and Resources base by 29% from 157.6 MMboe to 203.4 MMboe for a total
consideration of US$61.5 million, an effective cost of US$1.3/boe12.
In January 2024, our Nigerian midstream subsidiary, Accugas, signed an
agreement with a consortium of five Nigerian banks to provide a new NGN340
billion term facility (the "Transitional Facility"). This refinancing will
enable us to align the currency of Accugas' principal revenue streams with its
debt service obligations and is intended to provide much greater financial
flexibility for the business in future years.
Throughout 2023 we progressed the US$45 million compression project at our
Uquo CPF, which will enable us to further grow our gas production levels over
the course of the coming years. At the time of writing, the project remains on
track and on budget, and is expected to be completed and operational in H2
2024.
The investment we made in the Nigerian energy investment company Fenisko
(previously known as Lekoil Limited), performed well in 2023. In 2022,
Savannah invested approximately US$1 million in Fenikso and, under the terms
of the restructuring agreements subsequently negotiated between Savannah and
Fenikso, we received an entitlement to payments totalling up to US$16.3
million for the following nine year period. At the time of writing Savannah
has fully recovered our investment, with payment receipts totalling US$2.9
million to date.
Cameroon
In Cameroon progress has continued apace on Savannah's Bini a Warak hybrid
hydroelectric and solar project since the signing of the Memorandum of
Agreement with the Government of the Republic of Cameroon on 20 April 2023.
The project involves the construction of a hydroelectric dam on the Bini
River, located in the northern Adamawa Region of Cameroon, and is expected to
increase current on-grid electricity generation capacity in northern Cameroon
by over 50%.
During 2023, design optimisation studies were completed which identified
opportunities for improvement on the original project design, reducing its
environmental and social impact and lowering the cost per kilowatt hour. In
particular, the redesign incorporates photovoltaic solar into the project,
raising its installed power generation capacity from 75 MW to 95 MW.
Hydropower production will adapt to photovoltaic solar production levels,
enabling a combined stable level of energy generation throughout the day. The
redesign is also expected to reduce dam water levels, thereby lowering the
flooded surface area by around 50% and reducing the impact on local
communities.
The proposed redesign was presented to Cameroon's Ministry of Water and Energy
in December 2023 and was subsequently approved by the Minister of Water and
Energy, His Excellency Gaston Eloundou Essomba. A project sanction decision is
currently anticipated in early 2026, with first power targeted in the 2027 to
2028 window.
We also agreed to sell a 10% interest in COTCo to the national oil company of
Cameroon, Société Nationale Des Hydrocarbures, for consideration of US$44.9
million plus accrued dividends13, 14.
Chad
Our wholly owned subsidiary, Savannah Chad Inc ("SCI"), commenced arbitral
proceedings 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. Our
other wholly owned subsidiary, Savannah Midstream Investment Limited ("SMIL"),
commenced arbitral proceedings in relation to the nationalisation of its
investment in TOTCo, 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 COTCo, the Cameroon company which owns and operates the section of the
Chad-Cameroon pipeline located in Cameroon.
We expect the arbitral proceedings to be concluded in the second half of 2025.
SCI and SMIL are claiming in excess of US$840 million for the nationalisation
of their rights and assets in Chad, and SMIL has a claim valued at
approximately US$380 million for breaches of its rights in relation to COTCo.
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. We believe the assets have
suffered because of the nationalisation, with the Government of the Republic
of Chad's own figures suggesting that Doba field oil production has fallen by
25%15 . This contrasts substantially with the planned 20% increase in
production Savannah had anticipated over the same period and equates to an
estimated more than US$235 million annualised loss of potential tax revenue
for the Government of the Republic of Chad.
Further, as a result of the actions of the Government of the Republic of Chad,
Savannah is no longer actively pursuing the up to 500 MW of renewable power
generation projects in Chad. These projects were the subject of a Memorandum
of Understanding signed on 26 May 2022 by the Government of the Republic of
Chad and Savannah in the presence of the Ambassador of the United Kingdom to
the Republic of Chad. The projects had attracted significant interest from
Development Finance Institutions wishing to partner with us and we believe
would have increased electricity access rates in the country by over 200%. As
discussed above, our Renewable Energy Division has successfully replaced these
planned projects with new projects we are pursuing in other African countries.
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.
South Sudan
We continue to progress the planned acquisition of PETRONAS assets in South
Sudan. In 2023 the assets produced 149 Kbopd (gross) of crude oil16. Savannah
has already undertaken significant preparation work associated with the
completion of this acquisition, which is now targeted for Q3 2024.
Key focus areas for the coming years
Over the course of the coming years, I expect there to be several key focus
areas for the business. These include:
• Significant expansion of our Renewable Energy Division. We expect
to have up to 1 GW+ of renewable energy projects in motion by end 2024 and up
to 2 GW+ by end 2026. Our confidence in these targets is driven by the
pipeline of projects we are working on and expect to be in a position to
announce in H2 2024 and the robust growth dynamics underpinning the African
power market on both the supply and demand sides of the equation (i.e. low
existing electricity access rates and high population growth rates).Over time,
I believe that our renewable energy business will evolve to be a high growth
business characterised by contractually long-dated, geographically diversified
cashflows;
• Further hydrocarbon acquisitions. The major energy companies are
estimated to have in excess of US$169 billion17 of upstream oil and gas assets
in Africa and most have significant upstream asset divestment programmes.
Savannah is strongly positioned to continue to participate in these divestment
programmes, given our operating capabilities, regional reputation and access
to capital. Post-deal we would expect to act as strong asset stewards
delivering better underlying operational performance and improvements in unit
carbon intensity (within the limitations of the underlying assets) compared to
the previous asset owners;
• The refinancing of our US$342 million Accugas debt facility. Our
intention remains to redenominate the current US Dollar-denominated facility
to a multi-tranche Naira-denominated facility, extending the average maturity
to beyond 2030 and reducing the facility cost in Dollar equivalent terms;
• Progressing the R3 East Development project. As noted previously,
we intend to commence a flow testing programme on the key R3 East area fields
in Q4 2024 with first commercial oil production anticipated during H2 2025/H1
2026;
• Increasing oil production at Stubb Creek. Following completion of
the SIPEC Acquisition, we plan to implement a de-bottlenecking programme at
the Stubb Creek processing facilities. It is anticipated that within 12 months
of the completion of the acquisition, this will lead to the more than doubling
of Stubb Creek gross oil production to approximately 4.7 Kbopd; and
• Resolution of the Chad disputes. As discussed above, SCI and SMIL
have claims valued in excess of US$1 billion in aggregate in the Chad disputes
with the legal arbitrational processes scheduled to conclude by end 2025.
As can be seen from the above list, we remain unequivocally an "AND" company.
We are seeking to deliver strong performance, both for the short AND
long-term, across multiple fronts. We are pursuing growth opportunities in
both the hydrocarbon AND renewable energy areas. This approach permeates our
entire business and how we have built, and will continue to build, our
corporate infrastructure.
It is also important to emphasise that our investment decisions are first and
foremost driven by expected risk-adjusted returns criteria and all projects
and transactions that we pursue are subject to rigorous analysis and due
diligence in this regard.
How we see the African Energy Transition
As in previous years' shareholder letters, I have chosen to discuss how we see
the African Energy Transition. Before turning to discuss this, I feel it is
important to emphasise that this is only one of several important contributing
beliefs driving what Savannah does as a company. On pages 10 to 19 of the
Annual Report and Accounts 2023 we have outlined in detail "Why we do what we
do". In that section we discuss our corporate purpose and associated core
beliefs which serve to underpin our hydrocarbons AND renewables strategy and
business model. In simple terms, the section explains why energy poverty in
Africa is the principal problem our Company is seeking to help solve and why
we believe this problem is one of the most urgent and important problems
facing the world today. I would urge any reader interested in really
understanding our Company to read this section, especially if they are from a
rich world background and perhaps less intuitively understand the realities of
the everyday challenges facing the 600 million people who are defined by the
World Bank as living in extreme poverty (i.e. have incomes of less than
US$2.15/day)18.
Energy is critical to enabling and sustaining people's quality of life. People
without access to energy are dramatically poorer than those with access to
energy. For example, Niger is ranked 189 out of 193 on the UN Human
Development Index19 ("UN HDI") with a GDP per capita of US$1,18720 and power
consumption per capita of 410 kWh21. The United States of America on the other
hand is ranked 20 out of 193 on the UN HDI with GDP per capita of US$63,670
and power consumption per capita of 76,989 kWh, 5,266% and 18,689% higher
respectively. A similar pattern emerges when we look at the relationship
between power consumption and other key quality of life barometers such as
life expectancy and lifetime health outcomes.
Over 75% of today's global energy mix is provided by hydrocarbons with 53%22
of this provided by oil and gas. The scale of investment required to sustain
the "status quo" global quality of life is immense. Global non-financial
capital expenditures for the energy sector amount to 42% of all global
capex23. The world clearly, therefore, requires oil and gas today, and is
prepared to pay vast amounts of money to enable this. The extent to which the
world requires oil and gas in the future will depend on the absolute and
relative rate of renewable energy and carbon mitigation technological
improvements, and the absolute and relative rate of adoption of these
improvements. In this regard, the quote by John Kerry (The former US Climate
Change Envoy), which I have cited in my last three shareholder letters,
remains pertinent - "I am told by scientists that 50% of the reductions we
have to make by 2050 or 2045 are going to come from technologies we don't have
yet."
While the pace of technological evolution and adoption may be argued to be
generally faster today than in earlier periods, I believe that it is important
to recognise that the global energy transition is likely to take a relatively
long time. Previous energy transitions have taken fifty plus years, and the
modern renewable transition only began around 2015. Further, full displacement
of the previous energy sources has not occurred in previous transitions (i.e.
coal still provides approximately 26% of the global energy mix).
In this regard, when we look at the forecast future energy mix, there is
currently a big difference between the trend case (i.e. what forecasters are
suggesting will actually happen) versus the net zero 2050 case. Essentially
the world appears to be on track to have around 52-54%24 of its energy mix in
2050 to be provided by oil and gas, which, given likely energy demand growth
over the course of the next 26 years, suggests that actual oil and gas demand
is currently not on trend to fall significantly over the period.
The foregoing contrasts dramatically with the many net zero forecasts which
generally see the total share of fossil fuel supply falling to just over 20%
of the global energy mix by 205025.
Further, it is likely that lower income countries, where the ability to pay
for renewable energy infrastructure is lowest and the need for low-priced
energy to deliver life changing economic growth is highest, will see
hydrocarbons form a much greater part of their energy mix in 2050 than in the
developed world. This point is demonstrated well by the adjacent map. On
average, only 57% of Africa's entire population has access to on-grid
electricity (falling to 51% if South Africa, Egypt and Algeria are excluded),
with the electricity access rate in our countries of active operations
estimated at 65% for Cameroon, 19% for Niger and 60% for Nigeria. For much of
Africa, the primary issue is around people being given access to reliable and
affordable power, period.
From a Savannah perspective, our primary focus is on participating in Projects
that Matter in Africa. We expect to continue to acquire hydrocarbon businesses
and to re-invest the cash flows we generate in both hydrocarbon AND renewable
energy projects. We firmly believe that Africa needs both if it is to be given
the opportunity to grow and lift ever more of her citizens out of energy
poverty.
Closing thoughts
I would hope that having read through this letter my reasons for being
optimistic around the future of our business are clear. We are a purposeful
organisation, doing societally essential work. The opportunities associated
with the African energy transition (the build-out of our renewable energy
business hydrocarbon acquisitions from Big oil sellers) represent a once in a
generation opportunity, which we at Savannah are strongly positioned to take
advantage of. We have made significant investments in our people,
infrastructure, and capabilities, and have well-developed regional and
financial stakeholder relationships and credibility. We have a strong track
record of "getting things done". I believe that Savannah will achieve great
things over the course of the coming years and look forward to continuing this
journey with you, my fellow shareholders.
2023 clearly demonstrated the robustness of our business model, corporate
capacity and corporate infrastructure. Our core business continued to perform
strongly, while we have progressed our projects in Niger during a period of
political change, managed the impact of the nationalisation of our Chad Assets
to ensure that we receive the value we are due, progressed two separate
hydrocarbon acquisitions which are material to our business, continued to grow
our renewable energy business and positioned ourselves strongly to announce
and progress further new and exciting projects in 2024. We have invested
heavily to create a growth and performance orientated pan-African company with
a diversified asset base. In 2023 we clearly saw the benefits of this.
Lastly, I would like to express my gratitude to all those who contributed to
our successes in 2023 - my incredibly dedicated and passionate colleagues, our
host governments, communities, local authorities and regulators, our
shareholders and lenders, and our customers, suppliers and partners. Thank you
all.
Andrew Knott
Chief Executive Officer
6 June 2024
Financial review
Positioning the business for growth
Performance against market guidance 2023
Full Year 2023 Full Year 2023
Actuals Guidance
US$ million US$ million
Total Revenues(a) 260.9 >235
Operating expenses plus administrative expenses(f) 68.8 <75
Capital expenditure 13.0 Up to 30
Year in summary
Our Nigerian business continued to perform strongly in 2023 and the Group
overall outperformed the guidance we set for the year. We continue to position
the business for growth in both the hydrocarbons and renewables business
whilst maintaining a focus on efficiencies.
Total Revenues(a) were US$260.9 million (2022: US$290.4 million) with a
resulting Adjusted EBITDA(c) of US$184.1 million (2022: US$223.6 million). The
reduction is a result of lower gas invoicing during the year largely due to
the planned maintenance programme which took place in the second half of 2023
(including a planned 10-year anniversary regulatory inspection which required
full shutdown of the Uquo CPF). Savannah continues to supply gas to enable in
excess of 20% of Nigeria's thermal power generation capacity (up from 10% at
the time of our decision to acquire the Nigerian business in 2017) and is also
an important supplier to both the fertiliser and cement sectors.
Our Nigerian business is underpinned by long-dated, take-or-pay contracts
which have no linkage to commodity pricing and provide long-term, predictable
cash flows. At the end of 2023 we had over US$3.5 billion of future contracted
revenues with an average weighted remaining contract life of almost 14 years.
We continue to invest in our key infrastructure; for example, the US$45.0
million Uquo gas compression project is well progressed which will enable us
to increase gas production volumes in the years ahead. The total incurred
expenditure as at the end of 2023 was US$23.5 million and the project remains
on-budget and on-track for completion in the second half of 2024.
In early 2024, Accugas signed an agreement with a consortium of five Nigerian
banks to provide a new NGN340 billion term facility (the "Transitional
Facility"). The Transitional Facility is being progressively drawn down in
2024 and utilised towards repayment of the existing Accugas US$ Facility. This
is the first step in the previously announced refinancing plan which will
align the currency of Accugas' principal revenue cash collections with its
debt service obligations, significantly reducing the Group's foreign exchange
exposure.
In 2023, we saw significant volatility in the Nigeria currency markets with an
unprecedented level of Naira devaluation, the value of the Naira at year end
being approximately 50% lower than at the start of the year. This trend has
continued into 2024. This devaluation resulted in a foreign exchange loss for
the year of US$104.7 million (2022: US$28.9 million). Our customers pay for
gas predominantly in Naira however under the terms of the GSA with our
principal customer, the exchange losses realised can be invoiced via a true-up
mechanism.
Our total cash receipts for the year were impacted by a delayed payment from a
customer which was received in early January 2024 (expected in December 2023).
Had this payment of US$97.8 million been received as expected, then this would
clearly have resulted in a higher cash balance and lower leverage at year end.
As previously disclosed, the Government of the Republic of Chad passed a law
on 31 March 2023 confirming the Nationalisation of the Group's Chad Assets.
Following this Nationalisation, all of the Group's operations for the Chad
Assets have been recognised as discontinued operations in line with IFRS 5 for
the current year. The net profit and total comprehensive profit from
discontinued operations amounted to US$89.0 million, which is shown as a
single line in the consolidated statement of comprehensive income. We have
commenced ICC arbitral proceedings against the Government of the Republic of
Chad to seek full recompense for the loss that we have and will suffer as a
result of the Nationalisation of the Chad Assets (further details are in Notes
2, 14 and 15 of the financial statements).
As required under accounting standards, the 2022 consolidated statement of
comprehensive income has been restated to exclude the impact of discontinued
operations. The consolidated statement of financial position and the
consolidated statement of cash flows are not required to be restated (further
details are set out in note 2 to the financial statements).
Key performance metrics summary
Full Year Full Year
2023 2022
Gross production, Kboepd 23.6 26.8
Total Revenues(a), US$ million 260.9 290.4
Revenue, US$ million 224.2 212.5
Average oil and gas sales price, US$/Mscfe 4.51 4.14
Operating expenses plus administrative expenses(f), US$ million 68.8 66.2
Operating expenses plus administrative expenses(f), US$/Mscfe 1.4 1.2
Closing cash balances, US$ million 107.0 240.9
Adjusted EBITDA(c) 184.1 223.6
Net debt(g), US$ million 473.7 404.9
Leverage(h) 2.6x 1.8x
Consolidated statement of comprehensive income
Revenue
Revenue during 2023 was US$224.2 million (2022: US$212.5 million), an increase
of 5% driven largely by increased gas prices. Gas revenue was approximately
90% of the total at US$202.7 million (2022: US$181.1 million) with US$20.5
million (2022: US$29.8 million) being derived from oil and condensate sales.
US$0.9 million (2022: US$1.6 million) was for processing of third-party crude
oil.
Gas is sold under a mixture of short and long-term gas sales agreements, all
of which have individually agreed prices defined in US Dollars, with certain
long-term contracts adjusted annually for consumer price indexation. The
majority of our gas sales contracts are supported by investment grade(e)
guarantees, including a World Bank Partial Risk Guarantee for the Calabar
power station gas sales contract.
The weighted average sales price for the year was up 9% to US$4.51/Mscfe
(2022: US$4.14/Mscfe).
Impact of take-or-pay accounting rules under IFRS 15: Total Revenues(a)
Revenue recognition for our gas sales agreements is impacted by the
take-or-pay accounting rules under IFRS 15. Under take-or-pay contracts,
customers agree to buy a minimum amount of gas from us each year. This gas is
either delivered to them, or the volume not taken (which is described as
make-up gas) is effectively prepaid for by the customer for potential delivery
in future periods. During 2023, our customers took less gas than they had
contracted to buy, so there was a difference between invoiced oil and gas
sales of US$260.9 million (Total Revenues(a)) and Revenue as reported in our
consolidated statement of comprehensive income of US$224.2 million.
Revenue in our Consolidated statement of comprehensive income of US$224.2
million only reflects the value of oil and gas actually delivered, with the
difference of US$36.7 million reported as an increase in Contract liabilities
("deferred revenue") in the consolidated statement of financial position, net
of any make-up gas that is consumed, plus other invoiced amounts.
A key point to highlight is the cash neutrality of the take-or-pay accounting
treatment; had our customers requested the make-up gas to be delivered to them
in the accounting year, then all the invoiced sales would have been recognised
as Revenue in the consolidated statement of comprehensive income and our cash
generation would have been the same in either case (as this reflects receipts
from customers regardless of whether they related to delivered gas or make-up
gas).
We report Total Revenues(a) as management believes that this is a more
meaningful method of describing the cash generation capacity of the business.
To provide further clarity on the take-or-pay accounting rules, please refer
to the theoretical simplified worked example which is shown on page 57 of the
2020 Annual Report and Accounts, which can be accessed on our website.
Operating expenses plus administrative expenses(f)
Operating expenses plus administrative expenses(f) for the year were US$68.8
million (2022: US$66.2 million) which compared favourably with guidance of up
to US$75 million and the 4% increase is also well below the 9% increase seen
in average sales prices in the year.
Depreciation, depletion and amortisation ("DD&A") amounted to US$38.4
million (2022: US$39.0 million) made up of US$14.7 million (2022: US$16.2
million) for infrastructure assets, which are depreciated on a straight-line
basis over their estimated useful life and US$20.1 million (2022: US$20.6
million) for upstream assets, which are depreciated on a unit of production
basis, plus US$3.6 million (2022: US$2.2 million) for other assets and
right-of-use assets.
Other operating income
Other operating income of US$28.9 million (2022: US$7.8 million) relates to
amounts invoiced under the true-up mechanism in certain GSA's which allow for
recovery of realised foreign exchange losses.
Adjusted EBITDA
Adjusted EBITDA(c) was US$184.1 million (2022: US$223.6 million), the result
being impacted by the 10% reduction in Total Revenues(a) for the year
following a planned maintenance programme conducted at our production
facilities in Nigeria (a regulatory requirement coinciding with the 10-year
anniversary of the commencement of operations).
Finance costs
Finance costs for the year amounted to US$102.7 million (2022: US$78.9
million), of which US$83.2 million (2022: US$62.3 million) related to bank and
loan note interest expense. The average interest rate on debt for the Group
was 14.1% (2022: 12.0%), due to higher average US LIBOR rates in 2023.
Foreign exchange losses
Foreign exchange losses amounted to US$104.7 million (2022: US$28.9 million).
US$67.8 million (2021: US$12.4 million) are unrealised losses on Naira
monetary assets and liabilities (mainly cash balances) which occurred
following the devaluation seen in Naira during the year. The official
Naira/US$ exchange rate weakened over the course of 2023 from approximately
Naira 450/US$ at the start of the year to approximately Naira 900/US$ at year
end.
Realised foreign exchange losses amounted to US$36.9 million (2022: US$16.6
million). The majority of these losses can be recovered through the true-up
mechanism as described above.
Consolidated statement of financial position
Receivables and payables
Trade and other receivables amounted to US$370.9 million (2022: US$239.3
million) which primarily consists of amounts due from gas customers in
Nigeria. As noted earlier there was a material payment of US$97.8 million
which was delayed from 2023 into early 2024 - had this been received as
expected at the end of 2023, then the receivables balance would have been
approximately US$274.9 million.
Trade and other payables amounted to US$108.0 million (2022: US$122.1 million)
which will be settled in the normal course of business.
Debt
The net debt(g) at year end was US$473.7 million (2022: US$404.9 million), an
increase of 17% year-on-year. During 2023, US$84.2 million of debt was repaid
however the devaluation of Naira denominated cash balances led to an increase
in net debt(g).
Work continued during the year on the proposed refinancing of the Accugas US$
Facility. The intention remains for this to be refinanced into a Naira
denominated borrowing structure to match the currency in which revenues are
received in Nigeria. The Transitional Facility was signed early in 2024 and is
being progressively drawn down with funds then converted to US$ to repay the
Accugas US$ Facility. This process is well underway. Pending completion of the
Transitional Facility, at balance sheet date the Group continued to hold Naira
denominated cash balances in order to be used to service US$ denominated debt.
Details of the debt facilities available to the Group are in Note 12 of the
financial statements. It is worth noting the treatment of the debt facility
entered into to finance the acquisition of the Chad and Cameroon Assets.
Despite the Nationalisation there remains an outstanding balance of US$119.3
million at the year end. Of this amount only US$34.0 million is recourse to
the Company with the remainder being fully non-recourse.
We remain comfortable with the Leverage(h) position of the Group which is at a
conservative level given the long-dated (14-year) gas sales contracts in place
and the high-quality, long-life asset base.
Leverage(h)
2023 2022
US$ million US$ million
Adjusted EBITDA(c) 184.1 223.6
Net debt(g) 473.7 404.9
Leverage (times) 2.6 1.8
Consolidated statement of cash flows
The Cash Flow Statement includes the results from discontinued operations.
As noted above, during 2023 cash balances decreased to US$106.9 million (2022:
US$240.8 million). The decrease has been accentuated by the delayed customer
payment and had this US$97.8 million been received as anticipated in December
2023 (rather than January 2024) the cash balance would have been $204.1
million. Cash balances reduced in the year despite the strong operational
performance due to a combination of debt repayments of US$84.2 million (2022:
US$44.0 million) and the unrealised foreign exchange loss resulting from Naira
devaluation of US$81.8 million (2022: US$16.9 million).
Capital expenditures for the year of US$13.0 million (2022: US$23.6 million)
relate largely to the compression project at the Uquo CPF and during the year,
US$44.9 million was received from SNH in relation to a 10% interest in
COTCo1,2.
Going concern
The Group places significant importance in managing its liquidity position and
ensuring that all parts of the business have appropriate funding as needed to
meet their obligations. The Directors have reviewed the Group's forecasted
cash flows as well as the funding requirements of the Group for the period to
31 October 2025. This forecast was prepared on a "bottom-up" basis, at each
major asset and corporate level, and it reflects the Group's best estimate of
costs and revenues for the period. The capital expenditure and operating costs
used in this forecast are based on the Group's approved corporate budget which
includes operating budgets for each of the operating subsidiaries and an
estimate of the corporate general and administrative costs for the period.
In addition to the base case which assesses the Group's going concern for its
existing business, the Group has also separately assessed the impact on the
Group's going concern assumption with respect to its proposed acquisitions of
the South Sudan Assets and SIPEC which are expected to complete in the second
half of 2024.
The Directors recognise the range of risks facing the business on an ongoing
basis, as set out in the risk section on page 100 of this Annual Report.
Notwithstanding the risks across the Group, both the base case forecasts and
sensitised scenarios confirm that the Directors believe that the Group and
each subsidiary company has sufficient liquidity to continue as a going
concern for the period to 31 October 2025.
Please refer to Note 2 of the consolidated financial statements for further
details on the going concern review.
2024 financial guidance and outlook
In 2024, we are providing the following guidance in relation to the Group.
This guidance does not include any contribution from proposed acquisitions:
• Total Revenues(a) greater than US$245 million;
• Operating expenses and administrative expenses(f) of up to
US$75 million; and
• Capital expenditure of up to US$50 million.
Nick Beattie
Chief Financial Officer
6 June 2024
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023 2022
Note US$'000 US$'000
Continuing operations
Revenue 3a 224,175 212,498
Cost of sales 4 (77,818) (73,156)
Gross profit 146,357 139,342
Other operating income 3b 28,877 7,767
Administrative and other operating expenses (42,129) (39,527)
Gain on disposal - 7,372
Transaction and other related expenses (13,248) (14,487)
Expected credit loss and other related adjustments 16,703 (39,495)
Operating profit 136,560 60,972
Share of profit from associates 4,400 160
Finance income 3,216 1,068
Finance costs 5 (102,655) (78,870)
Fair value through the profit or loss and other adjustments (5,706) (8,134)
Foreign exchange loss 6 (104,713) (28,925)
Loss before tax (68,898) (53,729)
Current tax expense (5,822) (9,487)
Deferred tax credit (1,311) 4,801
Total tax expense (7,133) (4,686)
Loss after tax (76,031) (58,415)
Discontinued operations
Profit/(loss) after tax from discontinued operations 89,040 (5,659)
Total profit/(loss) 13,009 (64,074)
Other comprehensive income
Items not reclassified to profit or loss:
Actuarial (loss)/gain relating to post-employment benefits (128) 100
Tax relating to items not reclassified to profit or loss 48 (33)
Other comprehensive (loss)/profit (80) 67
Total comprehensive income from continuing and discontinued operations 12,929 (64,007)
Total profit/(loss) after tax attributable to:
Owners of the Company 14,855 (61,334)
Non-controlling interests (1,846) (2,740)
13,009 (64,074)
Total comprehensive income attributable to:
Owners of the Company 14,786 (61,281)
Non-controlling interests (3,257) (2,726)
12,929 (64,007)
Loss per share from continuing operations
Basic (US$) 7 (0.06) (0.04)
Diluted (US$) 7 (0.06) (0.04)
Earnings/(loss) per share from continuing and discontinued operations
Basic (US$) 7 0.01 (0.05)
Diluted (US$) 7 0.01 (0.05)
Consolidated statement of financial position
as at 31 December 2023
2023 2022
Note US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 8 476,144 623,118
Intangible assets 174,707 183,013
Investment in associates - 188,350
Financial investment 139,459 -
Deferred tax assets 227,318 234,666
Right-of-use assets 2,648 3,658
Restricted cash 29 28
Other non-current receivables 9,879 7,032
Total non-current assets 1,030,184 1,239,865
Current assets
Inventory 7,143 40,374
Trade and other receivables 9 370,857 239,346
Cash at bank 10 106,941 240,888
Total current assets 484,941 520,608
Total assets 1,515,125 1,760,473
Equity and liabilities
Capital and reserves
Share capital 1,836 1,828
Share premium 126,824 124,819
Treasury shares (136) (136)
Other reserves 531 531
Share-based payment reserve 14,717 9,974
Retained earnings 110,726 95,940
Equity attributable to owners of the Company 254,498 232,956
Non-controlling interests 9,259 11,116
Total equity 263,757 244,070
Non-current liabilities
Other payables 11 2,030 7,712
Borrowings 12 213,469 102,392
Lease liabilities 1,998 3,453
Deferred tax liabilities - 27,605
Provisions 49,256 94,845
Contract liabilities 346,490 314,018
Total non-current liabilities 613,243 550,025
Current liabilities
Trade and other payables 11 108,000 279,448
Borrowings 12 367,199 543,397
Interest payable 136,090 105,600
Tax liabilities 6,384 18,513
Lease liabilities 2,798 1,626
Contract liabilities 17,654 17,792
Total current liabilities 638,125 966,376
Total liabilities 1,251,368 1,516,402
Total equity and liabilities 1,515,125 1,760,473
Consolidated statement of cash flows
for the year ended 31 December 2023
2023 2022
Note US$'000 US$'000
Cash flows from operating activities:
Net cash generated from operating activities 13 33,223 75,693
Cash flows from investing activities:
Interest received 1,716 881
Payments for property, plant and equipment (10,267) (18,191)
Exploration and evaluation payments (2,683) (5,375)
Loans and advances - receipts 2,195 -
Acquisition deposits - (19,648)
Proceeds from disposal 44,900 -
Loans and advances - payments (5,012) (1,067)
Lessor receipts 538 286
Cash from/(to) debt service accounts 77,934 (29,836)
Cash acquired on acquisition of a subsidiary - 95,596
Net cash from investing activities 109,321 22,646
Cash flows from financing activities:
Finance costs (36,509) (38,528)
Proceeds from issues of equity shares, net of issue costs 2,011 61,141
Sale of treasury shares - 73
Borrowing proceeds 2,850 12,810
Borrowing repayments (84,213) (57,008)
Lease payments (939) (1,474)
Net cash used in financing activities (116,800) (22,986)
Net increase in cash and cash equivalents 25,744 75,353
Effect of exchange rate changes on cash and cash equivalents (81,757) (16,945)
Cash and cash equivalents at beginning of year 104,147 45,739
Cash and cash equivalents at end of year 10 48,134 104,147
Amounts held for debt service at end of year 10 58,807 136,741
Cash at bank at end of year as per Statement of Financial Position 10 106,941 240,888
Consolidated statement of changes in equity
for the year ended 31 December 2023
Share Share Shares Other Share-based Retained Equity Non - Total
capital premium to be Treasury reserves payment earnings attributable controlling equity
issued shares reserve to the interest
owners of
the
Company
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1,409 61,204 63,956 (58) 458 8,706 157,221 292,896 13,842 306,738
1 January 2022
Loss after tax - - - - - - (61,334) (61,334) (2,740) (64,074)
Other comprehensive income - - - - - - 53 53 14 67
Total comprehensive income - - - - - - (61,280) (61,280) (2,727) (64,007)
Transactions with shareholders:
Shares issued 419 63,615 (63,956) (78) - - - - - -
Sale of treasury of shares - - - - 73 - - 73 - 73
Equity-settled share-based payments - - - - - 1,268 - 1,268 - 1,268
Balance at 31 December 2022 1,828 124,819 - (136) 531 9,974 95,940 232,956 11,116 244,072
Profit/(loss) - - - - - - 14,855 14,855 (1,846) 13,009
after tax
Other comprehensive loss - - - - - - (69) (69) (11) (80)
Total comprehensive income - - - - - - 14,786 14,786 (1,857) 12,929
Transactions with shareholders:
Shares issued 8 2,005 - - - - - 2,013 - 2,013
Equity-settled share-based payments - - - - - 4,743 - 4,743 - 4,743
Balance at 31 December 2023 1,836 126,824 - (136) 531 14,717 110,726 254,498 9,259 263,757
Notes to the financial statements
for the year ended 31 December 2023
1. Corporate information
Savannah was incorporated in the United Kingdom on 3 July 2014. Savannah's
principal activity is the exploration, development and production of natural
gas and crude oil and development of other energy-related projects in Africa.
The Company is domiciled in England for tax purposes and is a public company,
and its shares were admitted on the Alternative Investment Market (AIM) of the
London Stock Exchange on 1 August 2014.The Company's registered address is 40
Bank Street, London E14 5NR.
2. Basis of preparation
The Financial Statements of the Group and the Company have been prepared in
accordance with UK-adopted IAS. These Financial Statements incorporate the
results for the year ended 31 December 2023 and have been prepared under the
historical cost convention except for financial instruments measured at fair
value through profit or loss, employee benefits and derivative financial
instruments which have been measured at fair value.
The accounting policies applied are consistent with those adopted and
disclosed in the Group's audited consolidated financial statements for the
year ended 31 December 2022. There have been a number of amendments to
accounting standards and new interpretations issued by the International
Accounting Standards Board which were applicable from 1 January 2023, and have
certain impacts on the accounting policies, methods of computation or
presentation applied by the Group. Further details on new International
Financial Reporting Standards adopted will be disclosed in the Annual Report.
As a result of the Nationalisation, the Company has not been able to fully
access underlying financial information, nor have access to the relevant
Chad-based employees of the affected entities to prepare financial information
for audit purposes to be consolidated into the Group's financial statements
for the years ended 31 December 2023 and 2022. The Group's auditor has
therefore been unable to conduct a complete audit on these entities for the
years ended 31 December 2023 and 2022. Therefore, the activities of the Chad
Assets have been considered as a discontinued operation, in accordance with
IFRS 5: Non-current Assets for Sale and Discontinued Operations, from 31 March
2023. This is without prejudice to Group's claims for compensation in respect
of the Nationalisation.
Despite the limitation noted above, the financial information that has been
disclosed for the Chad Assets in the current and prior year was primarily
sourced from bank statements and any financial records and supporting
documents that were available before the date of Nationalisation. The
Directors considered the best way to record and present transactions during
the year and agreed that the most reliable basis to record any transactions
was on a cash accounting basis supported by bank statements, unless
supportable by invoices.
Included within Discontinued operations is an impairment of the net balance
sheet position as at the date of Nationalisation, on the basis that the
Republic of Chad nationalised all the interests and rights pertaining to the
Chad Assets. Also, included within the Chad Assets is the Group's interest in
TOTCo which was held as an equity accounted for investment. This investment
has also been fully impaired.
During the second half of the year, in an attempt to take control of and
deprive SMIL of its equity ownership, governance and operational rights in
COTCo, the Republic of Chad, SHT Overseas Petroleum (Cameroon) Limited (SHT),
COTCo and certain other shareholders of COTCo have undertaken a number of
actions in breach of the Articles of Association of COTCo, the services
agreement between COTCo and SMIL (Services Agreement) and Cameroonian law.
Disputes under the Articles of Association of COTCo and the Services Agreement
are subject to the jurisdiction of ICC arbitral tribunals, seated in Paris.
SMIL has commenced arbitral and other legal proceedings in relation to the
Chad Assets and COTCo to seek full compensation for the loss that it has and
may suffer.
As a result of these events, the Company has not been able to fully access all
the underlying financial information or have access to the relevant COTCo
employees to prepare the financial information for audit purposes to be
consolidated into the Group's financial statements for the year ended 31
December 2023. The Group's auditor has therefore been unable to conduct a
complete audit on COTCo for the ended 31 December 2023.
Going concern
The Directors have reviewed the Group's forecasted cash flows as well as the
funding requirements of the Group for the period to 31 October 2025. This
forecast was prepared on a "bottom-up" basis, at each major asset and
corporate level, and it reflects the Group's best estimate of costs and
revenues for the period. The capital expenditure and operating costs used in
this forecast are based on the Group's approved corporate budget which
includes operating budgets for each of the operating subsidiaries and an
estimate of the corporate general and administrative costs for the period.
The Group has now executed a four-year, Naira denominated loan facility with a
consortium of Nigerian lenders (the Transitional Facility), which will be
utilised to refinance the Accugas US$ Facility. The Transitional Facility is
intended to then be progressively paid down through a combination of
long-dated domestic bond issuances and other bilateral facilities (as was
detailed in the Group's Admission Document, published December 2021).
As part of its analysis in making the going concern assumption, the Directors
have considered the range of risks facing the business on an ongoing basis, as
set out in the risk section of this Annual Report. In addition, the other
principal assumptions made in relation to our base case going concern
assessment relate to the regular payments of gas invoices by customers, the
forecast commodity price environment and continued access to FX markets
(specifically in relation to financing of US Dollar denominated costs and the
refinancing of the Accugas US$ Facility).
Notwithstanding the risks across the Group, both the base case forecasts and
sensitised scenarios confirm that the Directors believe that the Group and
each subsidiary company has sufficient liquidity to continue as a going
concern for the period to 31 October 2025.
3. Revenue
(a) Revenue from contracts with customers
2023 2022
Year ended 31 December - continuing operations US$'000 US$'000
Gas sales 202,744 181,125
Oil, condensate and processing sales 21,431 31,373
Total revenue from contracts with customers 224,175 212,498
Gas sales represents gas deliveries made to the Group's customers under gas
sale agreements. The Group sells oil and condensate at prevailing market
prices.
(b) Other operating income
Other operating income of US$28.9 million (2022: US$7.8 million) relates to
the invoicing of foreign exchange losses incurred on certain customer trade
receivables that are settled in a currency other than the invoiced currency
and are permitted to be invoiced to the relevant customer.
4. Cost of sales
2023 2022
Year ended 31 December - continuing operations US$'000 US$'000
Depletion and depreciation - oil and gas, and infrastructure assets 34,819 36,794
Facility operation and maintenance costs 37,909 28,938
Royalties 5,090 7,424
77,818 73,156
5. Finance costs
2023 2022
Year ended 31 December - continuing operations US$'000 US$'000
Interest on bank borrowings and loan notes 83,266 62,313
Amortisation of balances measured at amortised cost 9,725 7,227
Unwinding of decommissioning discount 5,263 5,585
Interest expense on lease liabilities 259 367
Bank charges 157 231
Other finance costs 3,985 3,147
102,655 78,870
6. Foreign exchange loss
2023 2022
Year ended 31 December - continuing operations US$'000 US$'000
Realised loss 36,803 16,551
Unrealised loss 67,910 12,374
104,713 28,925
Realised foreign translation loss mainly relates to the translation of Naira
denominated transactions into US Dollars. Unrealised loss relates to the
revaluation of monetary items held in currencies other than US Dollars. During
the year ended 31 December 2023, the Nigerian Naira devalued against the US
Dollar which largely resulted in an unrealised loss on monetary balances held
in Naira.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the
year attributable to owners of the Company by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit or loss for
year attributable to owners of the Company by the weighted average number of
ordinary shares outstanding during the year, plus the weighted average number
of shares that would be issued on the conversion of dilutive potential
ordinary shares into ordinary shares. In the current year, there is a loss
attributable to the owners of the Company - from continuing operations, such
that the diluted weighted average number of shares reduces the loss per share.
Therefore, the basic weighted average number of shares was used to calculate
the diluted loss per share.
The weighted average number of shares outstanding excludes treasury shares of
99,858,893 (2022: 99,858,893).
2023 2022
Year ended 31 December US$'000 US$'000
Loss after tax from continuing operations
Loss attributable to owners of the Company (74,185) (55,675)
2023 2022
Year ended 31 December Number of shares Number of shares
Basic weighted average number of shares 1,216,577,609 1,202,714,329
Add: employee share options and warrants 60,420,729 60,012,622
Diluted weighted average number of shares 1,276,998,338 1,262,726,951
2023 2022
US$ US$
Loss per share from continuing operations
Basic (0.06) (0.04)
Diluted (0.06) (0.04)
23,853,457 options granted under share option schemes are not included in the
calculation of diluted earnings per share because they are anti-dilutive for
the year ended 31 December 2023 (2022: 23,853,457). These options could
potentially dilute basic earnings per share in the future.
8. Property, plant and equipment
Oil and gas Infrastructure Other
assets assets assets Total
US$'000 US$'000 US$'000 US$'000
Cost
Balance at 1 January 2022 197,768 446,128 4,924 648,820
Additions 896 1,068 478 2,442
Transfer to Intangible assets - - (390) (390)
Recognised on acquisition of subsidiary 121,672 - - 121,672
Decommissioning remeasurement adjustment (5,162) (24,856) - (30,018)
Balance at 31 December 2022 315,174 422,340 5,012 742,526
Additions 296 9,525 456 10,277
Disposals - - (250) (250)
Decommissioning remeasurement adjustment (287) (1,699) - (1,986)
Transferred to discontinued operations (121,558) - - (121,558)
Balance at 31 December 2023 193,625 430,166 5,218 629,009
Accumulated depreciation
Balance at 1 January 2022 (37,069) (40,891) (2,659) (80,619)
Transfer to Intangible assets - - 231 231
Depletion and depreciation charge (22,176) (16,227) (617) (39,020)
Balance at 31 December 2022 (59,245) (57,118) (3,045) (119,408)
Depletion and depreciation charge (20,097) (14,722) (504) (35,323)
Disposals - - 250 250
Transferred to discontinued operations 1,616 - - 1,616
Balance at 31 December 2023 (77,726) (71,840) (3,299) (152,865)
Net book value
Balance as at 1 January 2022 160,699 405,237 2,265 568,201
Balance as at 31 December 2022 255,929 365,222 1,967 623,118
Balance as at 31 December 2023 115,851 358,374 1,919 476,144
9. Trade and other receivables
2023 2022
As at 31 December US$'000 US$'000
Trade receivables 389,911 244,288
Receivables from a joint arrangement 5,388 8,673
Other financial assets 5,829 11,518
401,128 264,479
Expected credit loss (53,487) (68,840)
347,641 195,639
VAT receivables 1,100 1,385
Loans and advances 2,093 2,194
Prepayments and other receivables 20,023 40,128
370,857 239,346
10. Cash at bank
2023 2022
As at 31 December US$'000 US$'000
Cash and cash equivalents 48,134 104,147
Amounts held for debt service 58,807 136,741
106,941 240,888
Cash and cash equivalents includes US$0.3 million (2022: US$1.2 million) of
cash collateral on the Orabank revolving facility. The cash collateral was at
a value of XOF210.0 million (2022: XOF750.9 million). Amounts held for debt
service represents Naira denominated cash balances which are held by the Group
for 2020-2023 debt service which has been separately disclosed from Cash and
cash equivalents.
11. Trade and other payables
2023 2022
As at 31 December US$'000 US$'000
Trade and other payables
Trade payables 26,461 159,068
Accruals 29,273 50,045
VAT and WHT payable 16,601 16,229
Royalty and levies 6,815 5,542
Employee benefits 35 71
Contingent consideration - 14,680
Financial liability (FVTPL) 19,328 19,739
Other payables 9,487 14,074
Trade and other payables 108,000 279,448
Other payables - non-current
Employee benefits 2,030 7,712
Other payables - non-current 2,030 7,712
110,030 287,160
12. Borrowings
2023 2022
As at 31 December US$'000 US$'000
Revolving credit facility 11,376 11,223
Bank loans 345,849 367,249
Senior Secured Notes 86,626 91,383
Other loans 136,817 175,934
580,668 645,789
13. Cash flow reconciliations
A reconciliation of loss before tax to net cash generated from operating
activities is as follows:
2023 2022
Year ended 31 December US$'000 US$'000
Loss before tax from continuing operations (68,898) (53,732)
Profit before tax from discontinued operations 56,826 786
Adjustments for:
Depreciation 3,545 2,242
Depletion 34,819 38,403
Finance income (1,501) (948)
Finance costs 102,655 78,970
Discontinued operations finance costs 14,937 -
Fair value through the profit or loss and other adjustments 5,706 8,134
Share of profit from associates (4,400) (65)
Gain on disposal - (7,372)
Unrealised foreign exchange loss 67,910 12,374
Share-based payments 4,743 1,268
Expected credit loss and other related adjustments (16,703) 39,495
Contingent consideration writeoff (9,242) -
Chad Assets net impairment (19,864) -
Operating cash flows before movements in working capital 170,533 119,555
Increase in inventory (1,948) (6,143)
Increase in trade and other receivables (141,337) (110,845)
(Decrease)/increase in trade and other payables (11,061) 20,534
Increase in contract liabilities 23,510 87,656
Income tax paid (6,474) (35,064)
Net cash generated from operating activities 33,223 75,693
14. Contingent liabilities
As set in Note 2, the impact of the Nationalisation of the Chad Assets has
resulted in the Group not being able to determine liabilities within its
subsidiary, SCI, as to both type and quantum. The Directors have sought legal
advice which has confirmed that the scope of Law No. 003/PT/2023 promulgated
by the President of Chad on 31 March 2023 ("Nationalisation Law") is not
specific in relation to SCI's liabilities in Chad. The consequences of the
Nationalisation Law for SCI will be established by an arbitration which SCI
has commenced against the Republic of Chad. Based upon the legal advice
received and the Group's inability to sufficiently identify and quantify,
through any reasonable means, the liabilities associated with SCI or the Chad
Assets, the Directors believe that these should be considered as contingent
liabilities in line with the requirements of IAS 37: Provisions, Contingent
Liabilities and Contingent Assets. As previously reported, for the year ended
31 December 2022, the Group consolidated the Chad Assets from the date of
completion of their acquisition on 9 December 2022 to 31 December 2022 in
accordance with Note 2 of the Financial Statements, as set out in the Group's
2022 Annual Report.
There are conditions remaining to the completion of the sale of the 10%
interest in COTCo to SNH and if the sale is completed it could result in a tax
liability. Given the uncertainty surrounding the completion, the impact of the
above arbitrations and the shareholder dispute (set out in Note 2), it is not
possible to properly assess if any tax liability will arise.
15. Events after the reporting period
On 31 January 2024, Accugas Limited executed a four-year, Naira denominated
loan facility with a consortium of Nigerian lenders (the Transitional
Facility). The Transitional Facility is being utilised to repay the Accugas
US$ Facility. More details are set out at Note 2.
With respect to the arbitrations described in Note 2 and 14, on 15 January
2024 SCI and SMIL filed their Statement of Claim in the consolidated
arbitration. On 29 May 2024, the Republic of Chad filed its Defence and
Counterclaim in the arbitration. The arbitral hearing on the merits of these
cases is scheduled to be held in June 2025 with a decision expected in Q4
2025.
On 19 March 2024, the Company announced that it had signed a Share Purchase
Agreement to acquire SIPEC, the joint venture partner in the Stubb Creek
field; more details are provided in the Strategic Report: Strategy in action
Stubb Creek of this Annual Report and Accounts. As there a number of
conditions precedent before legal completion no current assessment has been
made with respect to any IFRS 3: Business Combinations disclosures.
Definitions
(a) Total Revenues are defined as the total amount of invoiced sales during the
period. This number is seen by management as appropriately reflecting the
underlying cash generation capacity of the business as opposed to Revenue
recognised in the Consolidated statement of comprehensive income. A detailed
explanation of the impact of IFRS 15 revenue recognition rules on our
Consolidated statement of comprehensive income is provided in our 2020 Annual
Report in the Financial Review section on page 56. Note that Total Revenues is
not an audited number.
(b) Remaining life of contract revenues estimated on a maintenance adjusted
take-or-pay basis including contributions from two of our customers: Calabar
Generation Company Limited (owner of the Calabar power station), and the
Lafarge Africa PLC (owner of the Lafarge Mfamosing cement plant). Note this is
not an audited number.
(c) 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.
(d) Total contributions to Nigeria and Niger defined as payments to governments,
employee salaries and payments to local suppliers and contractors. Where total
contributions refer to the period 2014-2023 they include contributions to
Nigeria during the period pre-acquisition of the Nigerian assets by Savannah.
(e) Investment grade indicates credit support from an entity which holds an
investment grade rating from either Standard & Poor's, Moody's or Fitch
Ratings.
(f) Operating expenses plus administrative expenses are defined as total cost of
sales excluding third party gas purchases, administrative and other operating
expenses excluding royalty and depletion, depreciation and amortisation.
(g) Net debt is defined as Borrowings less Cash at bank and Restricted cash.
(h) Leverage is defined as Net debt divided by Adjusted EBITDA.
Footnotes
Section title and/or pages Footnotes
Pages 1 - 2 1. Total Revenues are defined as the total amount of invoiced sales
during the period. This number is seen by management as appropriately
reflecting the underlying cash generation capacity of the business as opposed
to Revenue recognised in the Consolidated statement of comprehensive income. A
detailed explanation of the impact of IFRS 15 revenue recognition rules on our
Consolidated statement of comprehensive income is provided in our 2020 Annual
Report in the Financial Review section on page 56. Note that Total Revenues is
not an audited number.
2. Operating expenses plus administrative expenses are defined as total
cost of sales excluding third party gas purchases, administrative and other
operating expenses excluding royalty and depletion, depreciation and
amortisation.
3. Carbon intensity figures based on the latest available published data
reported by TotalEnergies and Eni.
4. Total contributions to Nigeria and Niger defined as payments to
governments, employee salaries and payments to local suppliers and
contractors. Where total contributions refer to the period 2014-2023 they
include contributions to Nigeria during the period pre-acquisition of the
Nigerian assets by Savannah..
CEO's shareholder letter
Pages 5 - 9
1. Source: IMF April 2024.
2. Source: OECD November 2023.
3. Source: EIA, International Energy Outlook.
4 . Source: IMF, Regional Economic Outlook: Sub-Saharan Africa, Light on
the Horizon? October 2023 and Bloomberg, August 2023, Nigeria's Economic
Policies Too Loose to Support Naira, IMF Says.
5. Source: ISS African Futures: 'Exchange rate pressures take a toll on
sub-Saharan Africa'.
6. Source: S&P Capital IQ.
7. Savannah estimate based on the generation capacity of the power
stations supplied by Accugas.
8. In 2017 Savannah entered exclusive discussions to acquire the Nigerian
assets, this graph includes the period when Savannah had influence over
running the assets before completion of the acquisition.
9. Carbon intensity figures based on the latest available published data
reported by TotalEnergies and Eni.
10. Estimated on a normalised basis adjusted for the impact of the ECOWAS
sanctions imposed between July 2023 and February 2024.
11. Competent Persons Report, R1234 Licence Area, Agadem Basin Niger,
December 2021, CGG Services (UK) Ltd. Net Present Value discounted at 10%.
12. Cost of US$1.3/boe based on the effective date consideration payable to
Sinopec and Jagal and Reserves and Resources estimate as at 1 September 2023.
13. Savannah's wholly owned subsidiary, Savannah Midstream Investment
Limited ("SMIL"), has 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 COTCo. Completion of the transfer
of the shares from SMIL to SNH will result in SMIL's shareholding in COTCo
reducing from 41.06% to 31.06%. Completion shall occur upon satisfaction of
certain conditions precedent related to amendments to the Articles of
Association of COTCo.
14. During the second half of 2023, in an attempt to take control of and
deprive SMIL of its equity ownership, governance and operational rights in
COTCo, the Republic of Chad, SHT Overseas Petroleum (Cameroon) Limited
("SHT"), COTCo and certain other shareholders of COTCo have undertaken a
number of actions in breach of the Articles of Association of COTCo, the
Services Agreement between COTCo and SMIL and Cameroonian law. SMIL has
commenced arbitral and other legal proceedings against COTCo, the Republic of
Chad, SHT Overseas Petroleum (Cameroon) Limited and the other shareholders of
COTCo to seek full compensation for the loss that it has and may suffer as a
result of actions in breach of SMIL's rights under the Articles of Association
of COTCo and the Services Agreement.
15. Production drop from the time of nationalisation to May 2024 as stated
by Tchad Petroleum Company SA.
16. Source: EIA.
17. Rystad estimates US$169bn of upstream asset value in Africa for Exxon,
BP, Shell, Chevron, Total, Eni, Equinor and Repsol.
18. Source: World Bank.
19. Source: Human Development Report 2023/2024.
20. Source: IMF 2022.
21. Source: Our World in Data.
22. Source: IEA, World Energy Outlook.
23. Source: S&P Global Market Intelligence, S&P Global Ratings.
24. Source: IEA, Net zero by 2050.
25. Source: EIA, International Energy Outlook.
Financial review
Pages 10 - 13
1. Savannah's wholly owned subsidiary, Savannah Midstream Investment
Limited ("SMIL"), has 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 COTCo. Completion of the transfer
of the shares from SMIL to SNH will result in SMIL's shareholding in COTCo
reducing from 41.06% to 31.06%. Completion shall occur upon satisfaction of
certain conditions precedent related to amendments to the Articles of
Association of COTCo.
2. During the second half of 2023, in an attempt to take control of and
deprive SMIL of its equity ownership, governance and operational rights in
COTCo, the Republic of Chad, SHT Overseas Petroleum (Cameroon) Limited
("SHT"), COTCo and certain other shareholders of COTCo have undertaken a
number of actions in breach of the Articles of Association of COTCo, the
Services Agreement between COTCo and SMIL and Cameroonian law. SMIL has
commenced arbitral and other legal proceedings against COTCo, the Republic of
Chad, SHT Overseas Petroleum (Cameroon) Limited and the other shareholders of
COTCo to seek full compensation for the loss that it has and may suffer as a
result of actions in breach of SMIL's rights under the Articles of Association
of COTCo and the Services Agreement.
Glossary
2P Reserves the sum of proved plus probable reserves;
2C Resources the best estimate of Contingent Resources;
3D seismic geophysical data that depicts the subsurface strata in three dimensions. 3D
seismic typically provides a more detailed and accurate interpretation of the
subsurface strata than 2D seismic;
Accugas Accugas Ltd, a gas marketing, processing and distribution company incorporated
under the laws of Nigeria, an 80% owned subsidiary of the Company;
Accugas Midstream Business the business currently operated by Accugas Limited, comprising a 200 MMscfpd
gas processing facility and approximately 260 km gas pipeline network and
associated gas processing infrastructure;
Accugas US$ Facility Accugas' bank loan facility amounting to US$342.4 million;
AIM the Alternative Investment Market of the London Stock Exchange;
AIIM African Infrastructure Investment Managers;
AMOCON Amalgamated Oil Company Nigeria Limited, which produces gas from its OML 156
sole risk petroleum lease area;
Barrels or bbl a unit of volume measurement used for petroleum and its products (for a
typical crude oil 7.3 barrels = 1 tonne: 6.29 barrels = 1 cubic metre);
Bcm billion cubic metres;
Bn billion;
Board the Board of Directors of Savannah Energy PLC;
Bscf billion standard cubic feet;
Bscfpd billion standard cubic feet per day;
best estimate the middle value in a range of estimates considered to be the most likely. If
based on a statistical distribution, can be the mean, median or mode depending
on usage;
block an area defined for exploration licensing;
boe barrels of oil equivalent. One barrel of oil is approximately the energy
equivalent of 6 Mscf of natural gas;
CETS COTCo export transportation system;
Cameroon Assets means the assets acquired from ExxonMobil being a 41.06% shareholding interest
in Cameroon Oil Transportation Company which owns and operates the Cameroon
portion of the Chad-Cameroon pipeline and FSO;
Chad Assets means the assets acquired from ExxonMobil being a 40% participating interest
in the Doba Oil Field Development Area in Chad, and a 40.19% shareholding
interest in Tchad Oil Transportation Company which owns and operates the Chad
portion of the Chad-Cameroon pipeline. These assets were nationalised by the
Republic of Chad on 31 March 2023;
Chad and Cameroon Assets The Chad Assets and the Cameroon Assets;
Chad-Cameroon pipeline is the 1,081 km, 30 inch oil pipeline connecting the Doba Oil Project to the
Kome Kribi 1 FSO offshore Cameroon, with a nameplate capacity of 250 Kbopd (as
defined in the Supplementary Admission Document dated 9 December 2023);
CGCL Calabar Generation Company Limited (owner of the Calabar power station);
CHGC Central Horizon Gas Company Limited;
Company Savannah Energy PLC;
Committee(s) The four sub-committees of the Board. Audit Committee; Remuneration Committee;
Health, Safety, Environment, Security and Risk Committee; Compliance
Committee;
condensate light hydrocarbon compounds that condense into liquid at surface temperatures
and pressures. They are generally produced with natural gas and are a mixture
of pentane and higher hydrocarbons;
Contingent those quantities of petroleum estimated, as of a given date, to be potentially
Resources recoverable from known accumulations by application of development projects,
but which are not currently considered to be commercially recoverable due to
one or more contingencies;
COTCo Cameroon Oil Transportation Company;
CPF Central Processing Facility;
CPR Competent Persons Report - a CPR was compiled for the Niger and Nigeria Assets
by CGG Services (UK) Ltd;
Cretaceous geological strata formed during the period 140 million to 65 million years
before the present;
crude oil hydrocarbons that at atmospheric temperature and pressure are in a liquid
state, including crude mineral oil, asphalt and ozokerites, and liquid
hydrocarbons that are obtained by separation, processing or extraction;
debottleneck process of identifying specific areas and/or equipment in oil and gas
facilities that limit the flow of product and optimising them so that overall
capacity in the plant can be increased;
EBITDA Earnings before interest, tax, depletion, depreciation and amortisation;
ECOWAS Economic Community of West African States
E&P exploration and production;
EITI Extractive Industries Transparency Initiative. (Savannah is a member);
EMEA Europe, Middle East, and Africa;
EPF Early Prduction Facility;
ESIA Environmental and Social Impact Assessment;
ESG environmental, social, and governance;
ETS Export Transportation System;
exploration well a well drilled to find hydrocarbons in an unproved area or to extend
significantly a known oil or natural gas reservoir;
field an area consisting of either a single reservoir or multiple reservoirs, all
grouped on or related to the same individual geological structural feature
and/or stratigraphic condition;
FIPL First Independent Power Limited (owner of the FIPL Afam, Eleme and Trans Amadi
power plants);
FSO floating storage and offloading facility;
FUN Manifold the facilities for storing, handling and exporting crude oil from the Uquo,
Stubb Creek and Qua Iboe Fields to the Qua Iboe terminal;
geophysical measurement of the earth's physical properties to explore and delineate
hydrocarbons by means of electrical, seismic, gravity and magnetic methods;
GDP Gross Domestic Product;
GDPR General Data Protection Regulation;
GHG Greenhouse Gases;
gross resources the total estimated petroleum that is potentially recoverable from a field or
prospect;
Group Savannah Energy PLC and its subsidiaries;
GSA gas sales agreement;
1 Gt gigatonne (1 gigatonne = 1 billion tonnes);
GW gigawatt;
HRH His/Her Royal Highness;
HSE health, safety and environment;
HSE&S health, safety, environment and security;
HSES&R health, safety, environment, security and risk;
hydrocarbon a compound containing only the elements hydrogen and carbon. May exist as a
solid, a liquid or a gas. The term is mainly used in a catch-all sense for
oil, gas and condensate;
investment grade a rating that indicates that a municipal or corporate bond has a relatively
low risk of default;
international $ International dollars are a hypothetical currency that is used to make
meaningful comparisons of monetary indicators of living standards.
Figures expressed in international dollars are adjusted for inflation within
countries over time, and for differences in the cost of living between
countries.
The goal of such adjustments is to provide a unit whose purchasing power is
held fixed over time and across countries, such that one international dollar
can buy the same quantity and quality of goods and services no matter where or
when it is spent.
ICC International Chamber of Commerce;
IDA The World Bank's International Development Association;
IPC Ibom Power Company Limited (owner of the Ibom power station);
Kboepd thousands of barrels of oil equivalent per day;
Kbopd thousands of barrels of oil per day;
km kilometre;
km2 square kilometres;
kt kilotonne;
kV kilovolt;
kWh kilowatt hour;
Lafarge Lafarge Africa PLC (owner of the Lafarge Mfamosing cement plant);
lead an identified opportunity with sufficient support from geological analogues
and the like to encourage further data acquisition and/or study on the basis
that hydrocarbon accumulations may be found in the future;
licence an exclusive right to search for or to develop and produce hydrocarbons within
a specific area and/or a pipeline licence, as the context requires. Usually
granted by the State authorities and may be time limited;
LTIP Long-Term Incentive Programme;
LTIR Lost Time Injury Rate;
M thousand;
Matters reserved for the Board This document sets out the powers reserved for the Board and not delegated to
the Company's executive Directors;
Market Abuse Regulations The Market Abuse Regulations means the retained version of the Market Abuse
Regulation (EU) No 596/2014 on market abuse which applies in the UK following
the end of the Brexit transition period;
MJ megajoules;
MMboe millions of barrels of oil equivalent;
MMbopd millions of barrels of oil per day;
MMscf million standard cubic feet;
MMscfpd millions of standard cubic feet per day;
MMstb millions of standard stock tank barrels of oil;
MT million tonnes;
Mtoe million tonne of oil equivalent
Mscf thousand standard cubic feet;
Mscfe thousand standard cubic feet of gas equivalent;
MW megawatt;
Notore Notore Chemical Industries PLC;
Nationalisation on 23 March 2023 and the subsequent promulgation in law on 31 March 2023, the
Republic of Chad nationalised the interests of any kind of SCI located in Chad
or arising from the conventions between SCI and the Republic of Chad in
respect of the exploration, exploitation and transportation of hydrocarbons in
Chad and the interests of any kind of SMIL, including the shares and rights
held by SMIL in any branch office in Chad and any company having its principal
place of business in Chad;
natural gas hydrocarbon that at a standard temperature of sixty degrees Fahrenheit (60ºF)
and a standard pressure of one atmosphere are in a gaseous state, including
wet mineral gas and dry mineral gas, casing head gas, residual gas remaining
after separation treatment, processing, or extraction of liquid hydrocarbons;
Nigelec Société Nigerienne d'Electricité - the Nigerien electric power generation
and transmission utility;
Nigeria Federal Republic of Nigeria;
Nigerian assets the interest in the Uquo Gas Project owned by SEUGL, the interest in the Stubb
Creek Field owned by Universal Energy Resources and the interest in the
Accugas Midstream Business owned by Accugas Limited;
NGO non-governmental organisation;
NPK reflects the three elements found in NPK fertilisers, Nitrogen, Phosphorous
and Potassium;
oil equivalent international standard for comparing the thermal energy of different fuels;
OML Oil Mining Licence, a licence granted to produce oil and gas in Nigeria;
operator the entity that has legal authority to drill wells and undertake production of
hydrocarbons found. The operator is often part of a consortium and acts on
behalf of this consortium;
petroleum a generic name for hydrocarbons, including crude oil, natural gas liquids,
natural gas and their products;
PIA Petroleum Industry Act, enacted in 2021 to provide for the legal, governance,
regulatory and fiscal framework for the Nigerian Petroleum Industry;
play a project associated with a prospective trend of potential prospects, but
which requires more data acquisition and/or evaluation in order to define
specific leads or prospects;
prospect a project associated with a potential accumulation of oil or natural gas that
is sufficiently well defined to represent a viable drilling target;
prospective those quantities of petroleum estimated, as of a given date, to be potentially
resources recoverable from undiscovered accumulations by application of future
development projects;
PSC Production Sharing Contract;
PV10 Net Present Value of expected future cashflows discounted at 10% per annum
QCA code Quoted Companies Alliance corporate governance code;
Quad BTU quadrillion British thermal units;
R3 East Development or R3 East Early Production Scheme comprises the development of Savannah main discoveries (i.e. Amdigh, Eridal,
Bushiya and Kunama);
reserves those quantities of petroleum anticipated to be commercially recoverable by
application of development projects to known accumulations from a given date
forward under defined conditions;
reservoir a subsurface body of rock having sufficient porosity and permeability to store
and transmit fluids. A reservoir is a critical component of a complete
petroleum system;
resources deposits of naturally occurring hydrocarbons which, if recoverable, include
those volumes of hydrocarbons either yet to be found (prospective) or if found
the development of which depends upon a number of factors (technical, legal
and/or commercial) being resolved (contingent);
RTAR Road Traffic Accident Rate - (number of accidents/kilometres driven) *
200,000;
SASB Sustainability Accounting Standards Board;
Savannah Savannah Energy PLC and its subsidiaries;
SCI Savannah Chad Inc.;
seal a relatively impermeable rock, commonly shale, anhydrite or salt, that forms a
barrier or cap above and around reservoir rock such that fluids cannot migrate
beyond the reservoir. A seal is a critical component of a complete petroleum
system;
seismic survey a method by which an image of the earth's subsurface is created through the
generation of shockwaves and analysis of their reflection from rock strata.
Such surveys can be done in two or three-dimensional form;
SIPEC Sinopec International Petroleum Exploration and Production Company Nigeria
Limited;
SIPEC Acquisition The agreement, announced post-year end on 19 March 2024, to acquire 100% of
the outstanding share capital of SIPEC. SIPEC's principal asset is a 49%
non-operated interest in the Stubb Creek Field where our affiliate, Universal
Energy Resources Limited, is the 51% owner and operator;
SMIL Savannah Midstream Investment Limited
SNG Shell Nigeria Gas Limited;
South Sudan Acquisition the proposed acquisition of PETRONAS International Corporation Limited's
entire oil and gas business in South Sudan;
South Sudan Assets the assets that Savannah proposes to acquire from PETRONAS International
Corporation Ltd,as announced on 12 December 2022. These assets comprise
interests in three Joint Operating Companies which operate Block 3/7 (40%
working interest ("WI")), Block 1/2/4 (30% WI) and Block 5A (67.9% WI), in
South Sudan.
SPDC Shell Petroleum Development Company of Nigeria Limited;
stratigraphic a mode of trapping hydrocarbons which is not dependent on structural
entrapment;
Stubb Creek or Stubb Creek Field the Stubb Creek marginal oil and gas field located in the OML 14 block,
onshore Nigeria;
Stubb Creek EPF early production facilities located at the Stubb Creek Field;
TCFD Task Force on Climate-Related Financial Disclosures;
Transitional Facility An agreement signed by Accugas with a consortium of five Nigerian banks to
provide a new NGN340 billion Naira denominated four-year term facility which
will be utilised to repay the Accugas US$ Facility;
TRIR Total Recordable Incident Rate;
Tscf trillion standard cubic feet;
Tertiary geological strata formed during the period from 65 to 1.8 million years ago;
TOTCo Tchad Oil Transportation Company;
UN SDG Sustainable Development Goals, a series of 17 goals fixed by the United
Nations and adopted by 193 countries in 2015;
Uquo CPF the 200 MMscfpd gas processing facilities, owned by Accugas Ltd, and located
at the Uquo Field;
Uquo Field the Uquo marginal field located in the OML 13 block, onshore Nigeria;
Uquo Gas Project the gas project at the Uquo Field;
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. END FR GZGGVGVKGDZZRecent news on Savannah Energy
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