Oil price, Savannah, Genel, iog, IGas,
WTI $18.84 +$3.78, Brent $25.27 +$2.73, Diff -$6.43 -$1.05 +8c, NG $1.95 +8c
That was indeed the month that was, to tenuously keep my thread moving. Although we wont know until Monday, after the June Brent contract has rolled over, whatever the final numbers it will have been proven to be one of the most amazing months in my 488 in the sector. The fiasco of the May WTI expiry will live with many for a long time as warnings from people like me about ETFs came home to roost.
Opec+ production cuts officially come into place today and whilst some nations such as Kuwait have already committed it may take some time for the excess on the high seas to be absorbed by the market, but be absorbed they will, its just a matter of time. Also today marks the start of the Chinese May 1-5 holiday, much more interesting this year as having put the virus behind them they can enjoy the travel, holidays and shopping with the lowered virus response level behind them. With no inbound quarantine rules and the Forgotten City being reopened again will it be an orgy of hedonism ahead?
Savannah Energy (AIM:SAVE)
A financial and operational update from SAVE this morning and they announce that FY cash collections from their Nigeria assets were $168.8m and from the beginning of their ownership to date in 2020 $96m. They are already seeing significant deleveraging with $40m of the restructured debt paid down by 31/3/20. AIIM acquired a 20% interest in SUGL and Accugas in return for $54m in cash giving an implied combined valuation of $270m of those assets, most impressive.
Average daily gross production increased by 25% during SAVEs ownership to 19.6 koepd (15.7) which includes a 34% increase in Uquo gas production from 77 MMscfd to 103.8 MMscfd with a peak daily rate of 164 MMscfd. They have also announced a new GSA, the first in five years, with FIPL for their Afam power plant, in addition successful transfers of operatorship of both the Uquo Central Processing Facility and the FUN Manifold crude gathering station, from Frontier Oil Limited to Savannah.
As previously announced and based on the CPR prepared by CGG and published on 11 December 2019, net asset-level free cash flow generation, on a maintenance adjusted take-or-pay basis, by the Nigerian Assets, assessed to be an average of c.$130m p.a. 2020–2023.
In Niger the company issue an updated CPR for those assets by CGG, they give 35 MMstb of gross 2C resources for R3 East discoveries with an additional 90 MMstb of gross unrisked prospective, in best case, with tie-in distance of R3 East facilities. In the CGG report, a subset of 11 prospects and leads from the extensive exploration portfolio comprising 146 prospects and leads are given unrisked prospective best case of 360 MMstb.
Savannah plans to deliver the development of the R3 East and continue to progress with the installation of the EPS within 12 months, market conditions and finance permitting. The R4 area previously relinquished will now be combined with units R1/R2 PSC area the thus retaining the full acreage position previously covered by the R1/R2 PSC and the R3/R4 PSC.
Andrew Knott, CEO is clearly pleased, In Nigeria, we are responsible for the provision of gas supplies to providers of over 10% of the countrys current power generation capacity, a responsibility we take very seriously . In this time of global uncertainty, it has been widely reported in the local press that many companies have struggled to supply gas-for-power in recent months, which has led to significant power outages in country. In stark contrast Savannah … has increased our gas production levels by 34% since completing the acquisition of the Nigerian Assets. We continue to expect to increase production levels further during the course of this year as we add new customers, such as FIPL who we announced earlier this year. Overall this is exceptional progress by Savannah and give significant optimism for the future.
Genel Energy (LON:GENL)
A Bina Bawi update from Genel this morning in which they say that they have received extensive documentation in Mid April from the KRG following the commercial understanding reached in September 2019. Obviously it needs further negotiation but keeps separately the Jurassic oil development and the deeper Triassic natural gas development with the oil being on the standard terms of the KRI. In the meantime the KRG will not exercise notice of intention to terminate the Bina Bawi PSC.
iog announces today that the OGA has approved the Core Project Phase 1 FDP, a major milestone for the company and partner CalEnergy. The next steps are full contract awards for Phase 1 workstreams -underway since FID- including platform fabricators, pipe-lay, subsea work and well management. Interestingly none of these are affected by the ongoing industry and macroeconomic turbulence.
The construction activities for two platforms are expected to deliver Southwark and Blythe in 1H 2021 followed by the offshore pipe-lay Read More – Source