31st May 2019 11:27
LONDON (Alliance News) - Nigeria and Niger focused oil and gas company Savannah Petroleum PLC on Friday reported a narrowed annual loss and said it intends to focus on its Niger operations for the remainder of 2019.
In 2018, the company's pretax loss narrowed to USD24.6 million from USD27.4 million in 2017. Savannah Petroleum's operating expenses increased by 3.7% to USD28.1 million from USD27.1 million the year before.
Savannah Petroleum saw a USD5.0 million fair value adjustment in 2018 compared to zero in 2017.
"I am very pleased with the progress we made as a company in 2018. During the year we executed a highly successful drilling campaign in Niger, that saw us deliver five discoveries from five wells, a 100% exploration success record. With this achievement, we have proven that the geology is low-risk, and therefore that similar success is expected to be repeatable elsewhere on our acreage," said Chief Executive Andrew Knott.
The company said its focus for the remainder of 2019 will be on its Niger operations, hoping to deliver first oil from its R3 East production system. Savannah Petroleum will look to recommence exploration drilling in the second half.
Knott continued: "In Nigeria, we shortly expect to complete the Seven Energy transaction, and our guidance remains that this will complete in the second quarter of 2019. We continue to see Nigeria as a high-potential jurisdiction for Savannah and believe we will be able to significantly grow our business and generate returns for our stakeholders through maximising the cash flow generation potential of the Seven Assets as well as through accessing new growth opportunities. I look forward to updating all Savannah stakeholders on the progress made across our portfolio during the remainder of 2019."
Following the completion of the Seven Energy deal, the company said it will "consider the commencement of shareholder returns" in 2019, through either a dividend or share buyback.
In 2017, Savannah agreed to acquire assets from Seven Energy in a deal which would see the London-listed firm take a 40% interest in the Uquo oil and gas field in Nigeria and a 63% interest in Seven Energy's subsidiary Universal Energy Resources Ltd, which has a 51% interest in the Stubb Creek oil and gas field in the south-east Niger delta.
Savannah also agreed to take a 20% stake in the Accugas Ltd midstream business, a 260-kilometre gas pipeline network and associated gas processing infrastructure, potentially alongside third-party investors.
After Savannah Petroleum's holding in Universal Energy Resources decreased, Seven Energy agreed to acquire Savannah Petroleum's remaining 37.5% minority interest for about USD3 million.
At the end of December, Savannah Petroleum had amended its Seven Energy transaction, under which African Infrastructure Investment Managers would have acquired 80% of Accugas and Savannah the remaining 20%.
Savannah Petroleum said it is making "good progress" on being granted ministerial consent for the transaction.
Shares in Savannah Petroleum were up 5.0% Friday at 19.19 pence each.
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