United Kingdom based, Savannah Petroleum Plc announced a total comprehensive loss for 2017 of $27 million which is a 170 per cent increase from $10million in 2016 which was primarily due to the exceptional transaction costs associated with the Seven Energy as operating expenses increased by 222 percent to $27.1 million from $8.4 million in 2016.
“The increase in overall general and administrative expenses during the year was as a result of exceptional business development costs of $18.5 million in relation to the Seven Energy transaction,” the company said.
Over the course of the year, exploration and evaluation assets grew by 15 percent from $97 million at year end 2016 to $112 million at year end 2017.
The Group had cash equivalents at 31 December 2017 of $15 million compared to $23 million in 2016. Cash of $12.6 million in 2017 compared to $40 million in 2016 was raised through the issue of equity shares in December 2017 which comprised the first tranche of the $125 million placing.
Savannah CEO Andrew Knott said “the acquisition of assets from Seven Energy creates a full cycle exploration and production company, capable of paying a dividend from the cash flows generated by its upstream assets.
“The deal also enables us to enhance our operational capabilities and provide the business with a strong platform to deliver further value accretive organic and inorganic growth in the future,” Knott said.
Also in 2017, the group’s non-current assets were at $115million at 31 December 2017 which was a 17 percent increase compared to $98 million in 2016.
The increase in non-current assets is attributable to additional exploration expenditure relating to seismic acquisition and drilling program expenditure incurred during the year.
Current assets decreased by 34 per cent to $19 million at 31 December 2017 compared to $29 million in 2016. Including cash reserves of $15 million in 2017 compare to $23 million in 2017 which was a 34 percent decrease.
The decrease in current assets is as a result of significant cash outflow to support the Seven Energy transaction.
Also, Current liabilities rise by 244 percent to $31million in 2017 compared to $9 million in 2016. The increase in current liabilities is primarily due to additional payables associated with the Seven Energy transaction. The Group did not have any non-current liabilities in 2017 and 2016.
No dividend has been recommended by the Directors for 2017 and 2016, although the Group has announced its intention to commence payment of an annual dividend assuming the successful completion of the Seven Energy transaction. This is initially expected to be $12.5 million, assuming appropriate business performance during 2018, and payable in 2019.
During the year 2017, Savannah placed $125 million to fund, inter alia, the expected acquisition of certain assets from Seven Energy. As a result of the transaction, Savannah is expected to hold working interests in two large, producing onshore oil and gas fields in Nigeria as well as a 20 per cent interest in the Accugas midstream business.
Over the course of the year, exploration and evaluation assets grew to $112 million at year end-2017 from $97 million at the end of 2016. Much of this increase related to the successful completion of the R3 East 3D seismic survey.
The oil group also incurred expenditure associated with the signature of its rig contract with Great Wall Drilling Company Niger SARL, and procurement of the necessary long-lead tangible equipment in anticipation of its planned drilling program. A logistics base and pipe yard was constructed on Agadem for use in the campaign, with most of the drilling equipment mobilised on site.
Furthermore, the firm recorded $15 million year-end cash position which excludes proceeds from the second tranche of the placing, down from $23 million in 2016. No dividend was recommended for 2017, in line with the previous year, although the group announced its intention to commence payment of an annual dividend assuming the successful completion of the Seven Energy transaction. This is initially expected to be $12.5 million, assuming appropriate business performance during 2018, and payable in 2019.
In December last year, the Company announced a $125 million equity raise, of which $12.9 million (gross) was received by the Company prior to year-end. The remainder of the placing was successfully completed post-period end. The use of proceeds of this placing is to fund on-going Niger operations, the Seven Energy transaction and on-going corporate purposes.
SevenEnergy, an indigenous Nigerian company, was established in 2004, with headquarters in Lagos and London and a wholly-owned midstream company, Accugas.
Seven Energy is an integrated gas company in South-East, Nigeria with upstream oil and gas interests in the region and a flagship midstream gas processing and pipeline infrastructure for distribution of its products in gas and crude oil.
The company’s upstream portfolio consists of a diversified portfolio of onshore oil and gas interests with substantial reserves and resources base in south east and North West Niger Delta and three highly prospective assets in the Anambra Basin.
DIPO OLADEHINDE
