FY 2023: Savannah Energy records increase in customer diversification in Nigeria

…Sustains zero lost time injury rate

Savannah Energy PLC, the British independent energy company gas announced an increase in customer diversification in Nigeria in its audited results for the year ended 31 December 2023.

The results show that its average gross daily production was 23.6 Kboepd, broadly in line with FY 2022 production on a like-for-like basis when adjusted for a planned maintenance programme.

The results show that Savannah Energy achieved or exceeded its previously issued financial guidance for the year. Its total revenues as at December 31 2023 stood at US$260.9 million, 11 percent ahead of previously issued guidance of greater than US$235 million.

Likewise, its operating and administrative expenses for the year came to US$68.8 million, 8 percent below previous guidance of up to US$75.0 million, with its capital expenditure at US$13 million, well below the previously issued guidance of up to US$30 million.

The company also maintained its strong safety record in 2023, with a zero Lost Time Injury rate.

The report further showed a continued increase in customer diversification in Nigeria with gas sold to nine customers, and a number of new and extended sales agreements signed, totalling up to 101 MMscfpd, with an average realised sales price of US$4.51/Mscfe, representing an over 9% increase on the previous year’s average realised price of US$4.14/Mscfe.

During FY23, the company signed an agreement with Amalgamated Oil Company Nigeria Limited to purchase up to 20 MMscfpd of gas over the course of the next 10 years for onward sale to its gas customers, providing a commercial route to market for third-party stranded gas resources via its c. 260km pipeline network.

Also its US$45m compression project in Nigeria remains on track, with front-end engineering design and the associated order of long lead items completed in Q4 2023, with completion target of H2 2024, which will enable the company to maintain and grow its gas production levels.

Savannah’s strong Nigerian gas sales momentum continued in 2024 with a 12-month contract extension signed in January 2024 with FIPL to supply up to 65 MMscfpd to their FIPL Afam, Eleme and Trans Amadi power stations. Also its subsidiary, Accugas’ refinancing process is well underway with a new Naira facility signed in early 2024, which is being progressively drawn down during the year and utilised towards repayment of the existing Accugas US$ facility.

It signed agreements in March 2024 to acquire 100 percent of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (‘SIPEC’), whose principal asset is a 49 percent non-operated interest in the Stubb Creek oil and gas field, Nigeria, consolidating its interest in the asset. Plans are also in place to double production to approximately 4.7 Kbopd within 12 months following completion of the acquisition through the implementation of a de-bottlenecking programme.

A strong believer in Africa’s transition to renewable energy, Savannah also undertook up to 696 MW of renewable energy projects in motion at year-end, and 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, “2023 clearly demonstrated the robustness of our business model, corporate capacity and corporate infrastructure. Our core business continued to perform strongly, while we have progressed our projects in Niger during a period of political change, progressed two separate hydrocarbon acquisitions which are material to our business, continued to grow our renewable energy business, managed the impact of the nationalisation of our Chad Assets to ensure that we receive the value we are due and positioned ourselves strongly to announce further new and exciting projects in 2024.”

FY 2023 highlights

Average gross daily production was 23.6 Kboepd, broadly in line with FY 2022 production on a like-for-like basis when adjusted for a planned maintenance programme;

Up to 696 MW of renewable energy projects in motion at year-end, and 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;

Financial guidance achieved or exceeded

Total Revenues1 of US$260.9 million (11 percent ahead of guidance of ‘greater than US$235 million’);

Operating expenses plus administrative expenses of US$68.8 million (8 percent below guidance of ‘up to US$75.0 million’); and

Capital expenditure of US$13 million (guidance of ‘up to US$30 million’);

Strong safety record maintained with a zero Lost Time Injury rate;

Continued increase in customer diversification in Nigeria with gas sold to nine customers, and a number of new and extended sales agreements signed, totalling up to 101 MMscfpd;

Average realised sales price of US$4.51/Mscfe (+9 percent increase on the prior year average realised price of US$4.14/Mscfe);

Agreement signed with Amalgamated Oil Company Nigeria Limited to purchase up to 20 MMscfpd of gas over the course of the next 10 years for onward sale to our gas customers, providing a commercial route to market for third-party stranded gas resources via our c. 260km pipeline network; and

US$45m compression project in Nigeria advanced and remains on track with front-end engineering design and the associated order of long lead items completed in Q4 2023.

Strong Nigerian gas sales momentum continued with a 12-month contract extension signed in January 2024 with FIPL to supply up to 65 MMscfpd to their FIPL Afam, Eleme and Trans Amadi power stations;

Accugas refinancing process underway with new Naira facility signed in early 2024, which is being progressively drawn down during the year and utilised towards repayment of the existing Accugas US$ facility;

Agreements signed in March 2024 to acquire 100 percent of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (“SIPEC”), whose principal asset is a 49 percent non-operated interest in the Stubb Creek oil and gas field, Nigeria, consolidating our interest in the asset. Plans in place to double production to approximately 4.7 Kbopd within 12 months following completion of the acquisition through the implementation of a de-bottlenecking programme; and

US$45m compression project in Nigeria on-budget and on-track for completion in H2 2024, which will enable us to maintain and grow our gas production levels.

Sustainability highlights

Publication of first disclosure reports in accordance with the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”) standards during 2023, and publication of first disclosure reports in accordance with the Global Reporting Initiative (“GRI”) and our chosen United Nations Sustainable Development Goals (“UN SDGs”) post-year end in 2024;

Low carbon intensity metric maintained in 2023 of 10.7 kg CO2e/boe (2022: 9.7 kg CO2e/boe), 45 percent lower than the Supermajor average of 19.4 kg CO2e/boe3;

Total Contributions in 2023 to host nations were US$52.0 million; and

24 percent increase in training hours per employee and a 24 percent increase in total training hours in 2023 to 15,858 (2022: 12,754).

Financial guidance for 2024

We are providing the following guidance in relation to the Group for the year ended 31 December 2024. This guidance does not include any contribution from proposed acquisitions:

Total Revenues greater than US$245 million;

Operating expenses and administrative expenses2 of up to US$75 million; and

Capital expenditure of up to US$50 million.