Savannah Energy’s subsidiary commences gas sales in Nigeria
(SAVE ) announced that its Accugas subsidiary has now commenced gas sales to First Independent Power Limited’s (“FIPL”) power plant, FIPL Afam, in Nigeria.
In 2020, Savannah, an African-focused British independent energy company which is focused on developing energy projects in Nigeria and Niger, signed a gas sales agreement with FIPL Afam marking, which, at the time, marked its first new gas sales agreement in five years.
FIPL is an affiliate company of Sahara Group, an international energy and infrastructure conglomerate which holds operations in over 42 countries. Sahara Power Group, which is the largest privately-owned, vertically integrated power firm in Sub-Saharan Africa, plans to expand its power generation capacity in Africa to more than 5,000 megawatt by 2023.
After successfully constructing a short pipeline to establish connection, and recommissioning of the third-party pipeline linking FIPL Afam to Accugas’ network, Accugas has commenced gas deliveries to FIPL Afam of up to a maximum daily nominated quantity of 35 MMscfpd.
In total, the FIPL Afam plant has a power generation capacity of 180MW while the average daily nomination for this week is 25 million standard cubic feet of gas per day (MMscfpd).
Andrew Knott, CEO of Savannah Energy, said: “First gas sales to FIPL Afam represents a great milestone for Accugas and Savannah, and the achievement of a key performance goal for 2021. This marks our entry into the high growth Port Harcourt Industrial area. We look forward to developing our relationship further with FIPL over the coming months and are excited to continue our role as the gas supplier of choice to the Nigeria power sector.”
Kola Adesina, Group Managing Director, Sahara Power Group added: “In order to bring energy to life, we at Sahara, through our diversified power assets, continue to seek partnerships that enhance our customer experience and quality of life by ensuring the health of the electricity value chain. We believe with Savannah, we have a partnership that works.”
In September, Savannah Energy said its performance to date and in the six months to 30 June 2021 reflected the strong cash generative quality of its gas producing assets in Nigeria.
In its half-year results, the African-focused British independent energy firm reported total revenues at $116.5m, up 2% on 1H20 and an Adjusted EBITDA of $91.5m up 3% on 1H20.
The increase in revenues was largely a result of higher realised prices, the Group explained.
Operating profit was $54m, a 13% increase on 1H20, to reflect the rising revenues with the ongoing control of operating expenses and administrative expenses, which remained flat.
The Company’s profit before tax was $7.7m, up from US$1.2m in 1H20 while the loss after tax was $1.4m compared to a profit of $1.8m in 1H20. The Company highlighted that the increased tax charge year-on-year was primarily a result of profits generated in Nigeria.
In particular, the Group’s gas revenue stream, which represents 92% of 1H21 revenue (1H 20: 91%), is insulated from fluctuations in oil price as the gas contracts are all priced independently of oil prices with escalation clauses related to US consumer price inflation.
“These results show just how far we have come this year, with US$116.5m of Total Revenues, $91.5m of Adjusted EBITDA and strong free cash flow,” commented CEO, Andrew Knott.
Knott said the firm’s operational performance has been “excellent” as Savannah continues to play “a vital role in driving economic growth and living standards in our countries of operation.”
Post-period, Savannah started drilling the gas well, Uquo 11, on the Uquo field. The Group also started ordering compression equipment for the Accugas gas processing plant in 1H.
During 1H21, the Company agreed in principle with the Ministry of Petroleum to amalgamate the four licence areas into a single PSC rather than the previous proposal of two PSCs.
Knott said growth is also “set to continue” as Savannah progresses the proposed acquisition of its entire upstream and midstream assets in Chad and Cameroon alongside ExxonMobil.
Savannah has reiterated its FY21 guidance of total Revenues greater than US$205.0m from upstream and midstream activities associated with the Company’s three active Nigerian gas sales agreements and liquids sales from the Company’s Stubb Creek and Uquo fields.
In addition, the Group said progress continues to be made in rolling out its new sustainability performance and reporting framework with a view to reporting on this from 2022 onwards.
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