Savannah Energy PLC has posted $91.7million in revenues for the six months ended 30 June 2020 together with a trading update up to 31 August 2020 and outlook for the full year (FY) 2020.
The interim result showed total cash collections from the Nigerian Assets in the year-to-date period ended 31 August 2020 were $133.1million (year-to-date period ended 31 August 2019: $103.8million) while a Group cash balance of $84.7million and net debt of $426.8million were recorded as at 31 August 2020.
Speaking about the results, the Chief Executive Officer of Savannah Energy, Andrew Knott, 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 ($200million+) and cost guidance ($68.0 – $72.0million) today, while also reporting cash collections in the period to end of August of US$133.1million. Over 94 per cent of our forward revenue guidance is derived from three gas sales agreements with a weighted average contracted life of 15 years”.
Within the period, a number of milestones were recorded in its Nigeria operations. Average gross daily production increased 17.7 per cent to 21.3 thousand barrels of oil equivalent (Kboepd) while in H1 2019: 18.1 Kboepd). This includes a 22.4 per cent increase in production from the Uquo gas field compared to the same period last year, from 92.7 million standard cubic feet per day (MMscfd about 15.4 Kboepd to 113.5 MMscfd (18.9 Kboepd). In H1 2020, Accugas increased gas supply to the Nigeria power sector by 35 per cent as against performance in quarter four (Q4) of 2019. This compares to wider industry performance which saw the gas shortage to supply the Nigerian power grid increasing by 33 per cent versus Q4 2019.
The company achieved an all-time Nigerian Assets gas production record of 177 MMscfd on 30 May 2020. While Accugas’ customers achieved an all-time record peak contribution of 11.5 per cent of Nigeria’s electricity generation, about 486 megawatts (MW) 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, 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.
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 MMscfd of gas for an initial five-year period.
“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 which is expected to commence by the end of FY 2021”, Knott said.
