Savannah Energy, the African-focused British independent energy company developing high quality, high potential energy projects in Nigeria and Niger, today announced its unaudited interim results for the six months ended 30 June 2020.

Andrew Knott, CEO of Savannah Energy, said:
“I believe that our first half results clearly demonstrate the transformation Savannah has undergone to become a cash generative business, benefitting from a long-dated, gas-biased revenue stream with no meaningful oil price exposure. I am pleased that we are able to reiterate our core FY 2020 Total Revenues (US$200m+) and cost guidance (US$68.0 – US$72.0m) today, while also reporting cash collections in the period to end of August of US$133.1m. Over 94% of our forward revenue guidance is derived from three gas sales agreements with a weighted average contracted life of 15 years.

As a company we are extremely cognisant of the challenging macro-economic backdrop and the critical role our projects play in our countries of operation. While we believe our business is strongly positioned at this time, we fully understand the importance of working in partnership with our project stakeholders to ensure “win-win” outcomes as we continue to develop our business. In this regard we continue to see strong growth potential in both of our core business units, with gas sales to new customers expected in Nigeria and new oil sales from the R3 East project in Niger following the installation of an Early Production System (“EPS”) which is expected to commence by the end of FY 2021.”

H1 2020 Operational Highlights

Nigeria

• Average gross daily production, of which 88.8% was gas, increased 17.7% during H1 2020 to 21.3 Kboepd (H1 2019: 18.1 Kboepd). This includes a 22.4% increase in production from the Uquo gas field compared to the same period last year, from 92.7 MMscfpd (15.4 Kboepd) to 113.5 MMscfpd (18.9 Kboepd);
• Achievement of an all-time Nigerian Assets gas production record of 177 MMscfpd on 30 May 2020;
• Accugas’ customers achieved an all-time record peak contribution of 11.5% of Nigeria’s electricity generation or 486MW on 23 May 2020, with the contributed electricity being exclusively generated from Accugas sales gas;
• On 31 January 2020, Accugas entered into the first new gas sales agreement for the business in over five years with First Independent Power Limited (“FIPL”), an affiliate company of the Sahara Group, for the provision of gas to the FIPL Afam power plant. Accugas is in the process of working with FIPL to validate the third-party infrastructure required to enable the commencement of gas sales under this contract; and
• In June 2020, Accugas signed a term sheet with a significant new industrial gas sales customer, a subsidiary of a well-respected international company, for an initial quantity of up to 5 MMscfpd of gas for an initial five-year period.

Niger

• Updated Competent Person’s Report for the Niger assets compiled by CGG Services (UK) Ltd was published on 1 May 2020, certifying 35MMstb of Gross 2C Resources for the R3 East discoveries with an additional 90MMstb of Gross Unrisked Prospective Resources (Best case) within tie-in distance of the planned R3 East facilities, and a 2C case economic break-even oil price estimated at US$26.0/bbl;
• Agreement reached with the Niger Ministry of Petroleum to combine the R4 area with the R1/R2 PSC Area into a new R1/R2/R4 PSC, extending the licences for a further 10 years and retaining the full acreage position previously covered by the R1/R2 PSC and the R3/R4 PSC, and that the R3 PSC area will continue as a stand-alone PSC area. Ratification of these changes is subject to Council of Minister approval and payment of the associated fee;
• Plans for delivering the R3 East development continue to progress with the intention to commence installation of an EPS by the end of FY 2021, market conditions and financing permitting; and
• Significant further potential on the Savannah PSC areas remains, with 146 further potential exploration targets having been identified for future drilling consideration.

Post Period Summary/2020 YTD Trading Update

• Average gross daily Nigeria production in the year-to-date period ended 31 August 2020 of 20.4 Kboepd (2019: 17.6 Kboepd), of which 88.2% was gas, including a 19.3% increase in production from the Uquo gas field compared to the same period last year, from 90.5 MMscfpd (15.1 Kboepd) to 108.0 MMscfpd (18.0 Kboepd);
• Group cash balance of US$84.7m1 and net debt of US$426.8m as at 31 August 2020;
• In August 2020 the Company announced that a total of 10,998,844 Savannah ordinary shares (1.1% of total issued shares) were purchased by directors of the Company, thereby demonstrating their confidence in the significant future potential of the business; and
• Savannah published its first sustainability review as part of the 2019 Annual Report and commented on plans to undertake a review of its approach to Environmental, Social and Governance (“ESG”) reporting during 2020 with a view to developing and implementing a new ESG performance reporting framework for the group.

Guidance for FY 2020

Savannah reiterate their FY 2020 Total Revenues, Gross Production, Group Administrative and Operating Costs and Capital Expenditure guidance:

• Total Revenues of greater than US$200.0m;
• Gross Production of 21.0 Kboepd to 23.0 Kboepd;
• Group Administrative and Operating Costs3 of US$68.0m to US$72.0m;
• Capital expenditure of up to US$45.0m;

Savannah reduces their FY 2020 Group Depreciation, Depletion and Amortisation guidance to US$35.0m – US$37.0m (from US$43.0m – US$45.0m), reflecting an increase in the estimated useful life of the company's infrastructure assets.

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