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After completing it entrant in Nigeria’s exploration field which is in dire need of investments, Savannah Petroleum plc has announced it’s 2020 intents to undergo major projects in its gas field development plan at Uquo creek fields in South-East Nigeria.
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According to Savannah Petroleum, the upstream firms plan to drill and complete a gas production well, re-complete an oil well as a gas producer and work over one of the current gas production wells at an estimated cost of $34.5million.
“The well operations are expected to commence in H1 2020 and in addition $7million is intended to be invested by Accugas for continued facility upgrades,” Savannah Petroleum said in a statement seen by BuinsessDay.
Savannah Petroleum noted that an asset integrity investment programme was also undertaken at the Nigerian Assets in 2019, focusing on the Uquo and Accugas facilities, in order to ensure that high-level operational delivery can continue while investment programme is expected to continue into 2020.
“We continue to view these assets as a strong platform from which we will deliver further growth. In this regard, we continue to make good progress in relation to the supply of gas to potential new customers, and are investing in additional well stock to ensure anticipated future production levels are capable of being met,” Savannah’s CEO Andrew Knott said.
Savannah Petroleum said gas from the Uquo field is sold via Accugas to three principal customers through Gas Sales Agreements (GSAs), with maintenance adjusted gross take-or-pay volumes under the GSAs set at 141 mmscfd (23.5 kboepd) in 2019 while Oil and condensate from the two fields are sold under an offtake deal with Mobil Producing Nigeria (MPN) and is exported via the Qua Iboe terminal.
The British independent oil and gas company focused around activities in Niger Republic and Nigeriasaid a Competent Person’s Report for the Uquo and Stubb Creek fields as well as the Accugas midstream business estimates gross and net proved and probable reserves of 99.6 million barrels of oil equivalent and 71.0 million barrels, respectively.
The best gross and net resource estimate stands at 98.0 million barrels of oil equivalent and 58.6 million barrels, respectively.
The report states a net present value of the Nigerian assets at $1.2 billion, with $957 million net to Savannah Petroleum.
In the first half of 2020, Savannah Petroleum expects gas production to rise largely as a result of the addition of the Alaoji power plant, which will be a new partner for Accugas.
Savannah Petroleum said cash collections at the Nigerian Assets in 2019 are expected to be around $190million, with cash generated from these assets already been directed to funding operating cost, maintenance costs and debt service while capital expenditure for 2020 is predicted at $41.5 million.
Also, production costs over the 2016-2019 periods have decreased by a total of 18percent.
At year-end 2019, the Company expects a reduction in total leverage at the Nigerian Assets of $40million with cash within Savannah’s Nigerian Asset holding subsidiaries of $15million.
