A leading energy player in Nigeria and Niger
Our current operations are in Nigeria and Niger, where we are sustainably developing high-quality, high-growth projects in both countries. In Nigeria, Savannah owns and operates a large-scale integrated gas production and distribution business which provides gas contributing to over 10% of Nigeria’s daily national average power generation and is significantly cash flow generative. In Niger, we have licence interests covering approximately 50% of the country’s main petroleum basin, the Agadem Rift Basin, in the south east of the country1. To date we have made five exploration discoveries from five attempts in Niger. For Nigeria and Niger, we have 2P and 2C reserves and resources of 157 MMBoe with a life of 31 years.
Supplying gas contributing to over 10% of Nigeria’s daily national average power generation
In November 2019, Savannah completed the acquisition of interests in two large-scale onshore oil and gas fields located in South East Nigeria – Uquo and Stubb Creek – and a controlling interest in Accugas, South East Nigeria’s leading gas processing and transportation business. These assets have been independently assessed to deliver average expected base case net asset free cash flows of approximately US$130 million p.a. for the period 2020-20232, primarily from fixed price gas contracts with no oil price linkage.
As at year end 2020, Uquo and Stubb Creek were estimated to contain net 2P reserves and 2C resources of 65.0 MMboe and 58.6 MMboe respectively, with associated 2020 production of 19.5 Kboepd. Gas produced from Uquo is processed and transported through Accugas’ infrastructure, which includes a 200 MMscfpd processing facility and an approximately 260km pipeline network connecting Uquo to its end-user gas customers, including the Calabar and Ibom power stations and the Lafarge Africa Mfamosing cement plant Currently, our gas contributes to over 10% of Nigeria’s daily national average power generation. Accugas currently has considerable spare infrastructure capacity, which creates a significant growth opportunity for our South East Nigerian gas business through the addition of further new customers and upstream gas resources.
Approximately 50% of Niger’s oil-prolific Agadem Rift Basin under licence1
Savannah’s licence interests in Niger cover approximately 50% of the highly prospective 13,655km1 Agadem Rift Basin in South East Niger.1
The Agadem Rift Basin is technically low risk (with an estimated 81% of historic exploration wells having proven successful), technically low cost (with an estimated finding cost of less than US$2/bbl) and benefits from significant existing and planned modern third party-owned “open access” oil infrastructure (with associated estimated construction costs of US$12 billion3 ). To date, Savannah has delivered a highly successful exploration campaign in Niger with five discoveries from five wells. Going forward, our focus in Niger is: (1) upon commercialising these discoveries through the installation of an Early Production Scheme which is expected to see initial potential Phase 1 production of up to 1.5 Kbopd delivered to the Zinder refinery in Niger, with potential Phase 2 production anticipated to increase this to around 5.0 Kbopd; and (2) the recommencement of exploration activities, with our company having a large bank of 146 potential exploration targets to consider for future drilling activity.
Reserves and Resources
A Competent Person’s Report for the Nigeria Assets was compiled by CGG Services (UK) Ltd in December 2019. This certified 2P reserves and 2C resources (subject to an adjustment for produced volumes), with gross and net 2P reserves of 99.6 MMboe and 71.0 MMboe respectively, and gross and net 2C resources of 98.0 MMboe and 58.6 MMboe respectively.
As at end of FY 2020 Nigerian 2P reserves and 2C resources were at 65MMboe and 59MMboe respectively, with a life of 26.5 years.
An updated Competent Person’s Report for the Niger assets was compiled by CGG Services (UK) Ltd in April 2020. This certified 35 MMstb of gross 2C resources for the R3 East discoveries drilled by Savannah in 2018, with an additional 90 MMstb of gross unrisked prospective resources (best case) within tie-in distance to the planned R3 East facilities. Savannah has identified an additional 146 potential exploration targets to consider drilling in the future. CGG has stated that estimated average play geological chance of success for the Alternances exploration prospects and leads, such as those drilled to date by Savannah in the R3 East area, is high, at more than 75%.
1. The Company has agreed with the Niger Ministry of Petroleum that the R4 licence area will be combined with the R1/R2 PSC Area into a new R1/R2/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.
2. Average 2020-2023 expected net asset-level free cash flow generation, on a maintenance adjusted take-or-pay basis as assessed by the Company’s Competent Person, CGG Services (UK) Ltd.
3. Estimated capital cost of the China National Petroleum Corporation-operated Agadem PSC area announced upstream and midstream development projects.