Savannah Energy Announces H1 2024 Results with 3% Increase in Nigerian Production

Savannah Energy Announces H1 2024 Results with 3% Increase in Nigerian Production

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce its unaudited half-year results for the six months ended 30 June 2024. 

The H1 2024 Unaudited Results showed a strong financial performance, with the company’s total income increasing by 40% to US$233.4 million, compared to US$167.6 million in H1 2023. This comprises total revenues of US$123.5 million and other operating income of US$109.9 million. 

Its operating profit also stood at US$152.3 million, 130% higher than H1 2023 (US$66.2 million), with adjusted EBITDA of US$91.6 million, compared to US$108.2 million in H1 2023. This excludes other operating income which when included shows a 47% increase year-on-year to US$201.5 million, compared to US$137.1 million in H1 2023. 

The report also shows that the company’s operating expenses plus administrative expenses came up to US$75 million, and capital expenditure of up to US$50 million. 

In terms of operations, its average gross daily production in Nigeria for the period stood at 24.4 Kboepd, representing an increase of 3% compared to FY 2023 (23.6 Kboepd). 

The report also shows that company’s renewable energy projects in motion at period-end rose to 696 MW. A strong believer in Africa's transition to renewable energy, Savannah which aims to become one of the largest renewable energy development companies in Africa over the next two years with a rapidly growing pipeline of solar, wind, and hydro power projects is 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. 

Andrew Knott, CEO of Savannah Energy, said:

“I am pleased to report our results for the first six months of 2024, as well as the wider progress we are making developing our business. Key highlights in H1 included the delivery of US$233m of Total Income1 and the announcement of our planned acquisition of SINOPEC’s upstream assets in Nigeria. Alongside this, we are pleased to report strong progress in the development of our renewable energy business, particularly relating to our planned projects in Niger and Cameroon. Looking forward we expect to make a series of announcements around our entry into further renewable energy projects prior to year-end. We remain unequivocally an “AND” company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND renewable energy sectors.”

Financial Review

The table below provides an overview of our results for H1 2024 with a comparison for H1 2023:  

* The prior year comparative has been restated to conform with the presentation of “other operating income” in the 2023 annual report 

Operational Review

Nigeria 

During 2024 YTD, Savannah’s subsidiary, Accugas Limited agreed and extended three gas contracts for a total of up to 105 MMscfpd. These include the extension of the agreement with First Independent Power Limited (“FIPL”) in January 2024 for an additional 12-month period, whereby Accugas is supplying FIPL’s FIPL Afam, Eleme and Trans Amadi power stations with up to 65 MMscfpd of gas; a new 24-month agreement signed in July 2024 with Ibom Power Company Limited, owner of the Ibom power station, to supply up to 30 MMscfpd of gas, following the expiration of the previous 10-year agreement; extension of the agreement with Central Horizon Gas Company Limited (“CHGC”) was signed in August 2024 for an additional 12-month period, whereby Accugas is supplying CHGC with up to 10 MMscfpd of gas. 

The company also continues to make progress on the US$45 million compression project at the Uquo Central Processing Facility (“CPF”), and project remains on budget and on track to be completed during 2024. The company is also currently working on a proposed further development programme for the Uquo field which is expected to see additional wells drilled in 2025 and 2026.  

SIPEC Acquisition

In March 2024, Savannah announced the proposed acquisition (via two separate transactions) of 100% of SIPEC for a total consideration of US$61.5 million.  SIPEC’s principal asset is the 49% non-operated interest in Stubb Creek. A subsidiary of Savannah, Universal Energy Resources Limited, is the 51% owner and operator. The company expects this to be completed in Q4 2024. The transaction consideration is expected to be funded through a new senior debt facility arranged by Standard Bank of South Africa Limited and the existing cash resources of the Company. 

As at year end 2023, SIPEC had an estimated 8.1 MMstb of 2P oil reserves and 227 Bscf of 2C Contingent gas resources. Savannah’s Reserve and Resource base is expected to increase by approximately 46 MMboe following completion of the SIPEC Acquisition. SIPEC oil production is estimated at an average of 1.4 Kbopd for 2024. Following completion of the SIPEC Acquisition, Savannah plans to implement a de-bottlenecking programme at the Stubb Creek processing facilities. It is anticipated that within 12 months of completion of the acquisition, this will lead to Stubb Creek gross production increasing by 135% to approximately 4.7 Kbopd. Importantly, the SIPEC Acquisition also secures significant additional feedstock gas available for sale to its Accugas subsidiary, underpinning Savannah’s long-term ambition to be the gas supplier of choice in Nigeria.

Niger

Savannah remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger. The Niger-Benin oil export pipeline, now fully operational, provides a clear route to international markets for crude oil produced from our R1234 contract area. The company continues to progress its planned four well testing programme and are in the process of mobilising the required long lead item equipment into country. 

Located in the Tahoua Region of southern Niger, Savannah’s Parc Eolien de la Tarka wind farm project is anticipated to be the country’s first wind farm and the largest in West Africa, with a total power generation capacity of up to 250 MW. Savannah has signed agreements with two leading international Development Finance Institutions (the International Finance Corporation, the private sector arm of the World Bank, and the US International Development Finance Corporation, the U.S. government's development finance institution) to fund approximately two-thirds of the pre-construction development costs of the project.

The project made significant progress in H1 2024 with all key studies now either complete or at an advanced stage. It submitted its Environmental and Social Impact Assessment (“ESIA”) scoping report to the Government of Niger and has continued to progress the ongoing ESIA field work additional studies required for the submission of the full ESIA report, expected in 2025. As part of the ESIA studies, Savannah is currently performing a land survey of the wind farm area. The company has partnered with the Department of Geography of the Abdou Moumouni University of Niamey, where it has enabled a cartography and software training programme for a cohort of its students, before deploying them under supervision on the Tarka site. This has provided local students with a material and exciting learning experience, while involving them in a transformational energy project for their country.

In August 2024, it hosted a site visit for Niger’s Minister of Energy where it provided the Minister, Governor of Tahoua, local officials and community representatives with a presentation on the project and a tour of the wind farm site, detailing it plans for the project and outlining its transformative potential for Niger and its people. The Minister confirmed that the Parc Eolien de la Tarka wind farm project is on the Ministry of Energy’s list of priority projects.

Parc Eolien de la Tarka is expected to produce up to 800 GWh of electricity per year, representing approximately 22% of Niger’s annual electricity demand, based on the country’s projected energy demand in 2026. The construction phase is expected to create over 500 jobs, while the project has the potential to reduce the cost of electricity for Nigeriens and avoid an estimated 450,000 tonnes of CO2 emissions annually.

Savannah also continue to progress the two photovoltaic solar power plants expected to be located within 20 km of the cities of Maradi and Zinder. In H1 2024, it presented the preliminary commercial and technical proposals to the Government of Niger. A sanctioning decision on these projects is expected in 2025, with first power in 2027.

Cameroon

Substantial progress has been made on the Bini a Warak Hybrid Hydroelectric and Solar Project in Cameroon, following the approval of the optimisation and proposed redesign of the project given by the Minister of Water and Energy. The redesigned project, involving the construction of a hydroelectric dam on the Bini River in the northern Adamawa region of Cameroon, now incorporates photovoltaic solar, raising its installed power generation capacity from up to 75 MW to up to 95 MW. Savannah continues to progress the project towards an anticipated project sanction in 2026, with first power targeted in the 2028 to 2029 window.

South Sudan 

Savannah remains in active discussions regarding a potential transaction in South Sudan. A further update is expected to be made in early November.

Chad Arbitration Update

As previously disclosed in Savannah’s 2023 Annual Report, Savannah Chad Inc (“SCI”), has 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. Its other wholly owned subsidiary, Savannah Midstream Investment Limited (“SMIL”), has commenced arbitral proceedings in relation to the nationalisation of its investment in Tchad Oil Transportation Company, 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 Cameroon Oil Transportation Company (“COTCo”), the Cameroon company which owns and operates the section of the Chad-Cameroon pipeline located in Cameroon.

Savannah expects 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.

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.

Sustainability

Savannah published its Task Force on Climate-Related Financial Disclosures 2023 disclosure report and its maiden disclosure report in accordance with its chosen 13 United Nations Sustainable Development Goals in June 2024. It continues to progress its 2024 sustainability performance measurement and reporting in line with its sustainability strategy.

For further information, please refer to the Company's website www.savannah-energy.com or contact:

 

Okwudili Onyia, Communications Manager +234 2770650

About Savannah Energy:

Savannah Energy PLC is an AIM quoted British independent energy company focused around the delivery of Projects that Matter in Africa, active in Cameroon, Chad, Niger and Nigeria.

Further information on Savannah Energy PLC can be found on the Company's website: www.savannah-energy.com.