Energy
Savannah Acquires 49% Interest In Stubb Creek Field, Nigeria
Savannah Energy PLC has announced that it has signed separate Share Purchase Agreements (“SPAs”) with Sinopec International Petroleum Exploration and Production Corporation (“SIPC”) and Jagal Ventures Limited (“Jagal”) to acquire 100% of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (“SIPEC”) (the “SIPEC Acquisition”).
The company also announced that it published an updated Competent Persons Report (“CPR”), compiled by CGG Services (UK) Ltd, covering its assets in Nigeria.
Offering details on these, the company’s Communications Manager in Nigeria, Okwudili Onyia in a statement, revealed that “SIPEC’s principal asset is a 49% non-operated interest in the Stubb Creek oil and gas field (“Stubb Creek”), located in Akwa Ibom State, Nigeria. An affiliate of Savannah, Universal Energy Resources Limited, is the 51% owner and operator.”
The SIPC SPA would see Savannah Energy SC Limited (a wholly owned subsidiary of Savannah) acquire a 75% equity interest in SIPEC for cash consideration of US$52 million, payable on completion and subject to customary adjustments for a transaction of this nature from 1 September 2023.
In addition, the Jagal SPA would see Savannah Energy SC Limited acquire a 25% equity interest in SIPEC for cash consideration of US$7.5 million (without adjustment), payable on completion, plus US$2 million in deferred cash consideration payable in eight equal quarterly instalments post-completion.
The transaction consideration is expected to be funded through a new bank debt facility arranged by The Standard Bank of South Africa Limited and the existing cash resources of the Company. Completion under each of the SPAs is subject to the parties’ satisfaction of customary conditions precedent, including certain regulatory approvals, as well as a mechanism ensuring that completion under both SPAs occurs simultaneously.
As at year end 2023, SIPEC had an estimated 8.1 MMstb of 2P oil reserves and 227 Bscf of 2C Contingent gas resources. SIPEC oil production is estimated at an average for 2024 of 1.4 Kbopd. Savannah’s Reserve and Resource base will increase by approximately 46 MMboe following completion of the SIPEC Acquisition.
It is anticipated that, within 12 months following completion of the SIPEC Acquisition, Stubb Creek gross production should increase by approximately 2.7 Kbopd to approximately 4.7 Kbopd through implementation of a de-bottlenecking programme.
The SIPEC Acquisition will secure significant additional feedstock gas available for sale to Savannah’s 80% owned Nigerian gas processing and distribution subsidiary, Accugas Limited (“Accugas”). At present, Accugas has eight principal gas customers, including large thermal power stations, such as Calabar Generation Company Limited, as well as key industrial players, such as Lafarge Africa PLC and the Central Horizon Gas Company Limited. With a weighted average remaining contract life of 14 years, Savannah’s natural gas supplies are a critical enabler of the Nigerian economy and currently support approximately 20% of Nigeria’s thermal power generation.
Since Savannah announced its intention to acquire Accugas in late 2017: (i) volumes of gas transported; (ii) the number of significant customers served; and (iii) the Company’s contribution to thermal power generation in Nigeria have each more than doubled.
The following information in relation to the SIPEC Acquisition is included in accordance with the disclosure requirements of Schedule Four to the AIM Rules for Companies:
For the financial year ended 31 December 2022, SIPEC audited accounts show income after tax of US$27.8 million (excluding exceptional income of US$42.3 million) and total assets of US$136.5 million.
CEO, Savannah Energy, said, Andrew Knott, “Savannah remains committed to growing our core business in Nigeria through a combination of both value accretive acquisitions and organic projects.
“This is reflected in this morning’s announcement of the SIPEC Acquisition. The base case acquisition has been priced in line with our expected returns criteria, with the identified upside cases (the oil de-bottlenecking and new gas sales to Accugas projects) hoped to add significant value to the Stubb Creek field over time.”
In the wake of a prolonged power crisis impacting Northern Nigeria, Minister of Power Adebayo Adelabu visited the Zawaciki 1MWp mini-grid project in Kano, underscoring the potential of decentralized renewable energy solutions to alleviate regional power shortages.
The project, operated by Bagaja Renewables, provides daytime electricity to the Gida Dubu community, offering a vital source of power as the region faces widespread blackouts.
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Sadiq Zakari, Managing Director of Bagaja Renewables, welcomed the Minister to the facility and highlighted the critical timing of the visit.
“Bagaja Renewables had the distinct honor of welcoming the Honorable Minister of Power to the Zawaciki 1MWp interconnected mini-grid,” Zakari said.
“This visit comes at a critical time, as Northern Nigeria endures a prolonged blackout, underscoring the urgent need for alternative power solutions.
The Zawaciki mini-grid has been instrumental during this crisis, providing at least 9 hours of daytime electricity to the Gida Dubu community, demonstrating the potential of renewable energy in addressing the region’s energy needs.”
Minister Adelabu praised the Zawaciki project as a model for interconnected mini-grids nationwide, noting its role as a sustainable solution for communities grappling with unreliable power supply.
“The Honorable Minister expressed admiration for the Zawaciki project, recognizing it as a viable proof of concept for interconnected mini-grids across Nigeria,” Zakari stated.
“He emphasized the importance of such initiatives and called on state governors and other key stakeholders to support efforts to decentralize and strengthen the nation’s power infrastructure.
By backing projects like Zawaciki, stakeholders can play an instrumental role in reducing reliance on the national grid and ensuring a more stable power supply for local communities.”
Zakari underscored the transformative potential of private-sector renewable energy projects in Nigeria’s power landscape.
He said, “As we have witnessed here at Zawaciki, private-sector-driven renewable energy solutions can transform Nigeria’s energy landscape. With the right policies and support, we can empower communities and enhance energy resilience, even in times of national power instability.”
In addition to the Zawaciki project, Bagaja Renewables is developing several renewable energy initiatives across Northern Nigeria. Among these are:
Barhim Estate, Katsina: A residential power initiative aimed at expanding energy access for households in the region.
Kura-Karfi Commercial Cluster, Kano: Focused on delivering clean and reliable power to commercial areas, this project aims to support local businesses and stimulate economic growth.
Kafin Hausa, Jigawa: With site fencing completed, Bagaja Renewables is preparing to begin technical design and engineering work for a mini-grid in Kafin Hausa, slated to start construction soon.
Zakari said, “These projects represent Bagaja Renewables’ unwavering commitment to building a resilient, decentralized, and renewable-powered energy future across Northern Nigeria.
“Bagaja Renewables is dedicated to collaborating with the government and stakeholders to scale up renewable energy solutions that will support communities, industries, and essential services.
“We believe that decentralized power generation is the future for Nigeria, and we are eager to contribute to a sustainable, reliable, and inclusive energy system for all.” he added
Power has been restored across Plateau, Bauchi, Gombe, and Benue States, bringing relief to residents who endured a 10-day blackout.
The Jos Electricity Distribution Company confirmed that electricity was reinstated around 7:20 p.m. on Wednesday, prompting celebrations in Jos, the Plateau State capital, and other affected areas.
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The prolonged outage was caused by the tripping of a major 330kV transmission line between Benue and Enugu states, leaving several northern states without power.
The blackout severely impacted daily life and economic activities, with residents expressing frustration over the disruption to businesses, healthcare services, and personal livelihoods.
In response, President Bola Tinubu took swift action, summoning Minister of Power Adebayo Adelabu and National Security Adviser Nuhu Ribadu to address the crisis.
Presidential Adviser Bayo Onanuga disclosed on Monday that President Tinubu directed the Ministry of Power and relevant agencies to expedite restoration efforts.
“President Tinubu is deeply concerned about the reports of vandalism and deliberate destruction of essential power infrastructure,” Onanuga said in a statement.
“The President has tasked TCN engineers with bringing immediate relief to the affected states and implementing a long-term solution to prevent future outages.”
The Federal Government of Nigeria Power Company (FGN Power Company) has announced significant progress in the pilot phase of the Presidential Power Initiative (PPI), which is set to revolutionize the nation’s electricity transmission landscape.
The initiative, in partnership with Siemens, aims to enhance the country’s power infrastructure through the deployment of advanced technology and equipment.
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Kenny Anuwe, the Managing Director and CEO of FGN Power Company, revealed that the installation and commissioning of eight power transformers across key locations are now complete.
The transformers have been successfully deployed in Ajah, Maryland, Apo, Okene, Ihovbor, Amukpe, Potiskum, and Birnin Kebbi, resulting in a notable increase in the transmission wheeling capacity by 569.6 megawatts (MW).
In addition to the transformers, three mobile substations are operational in Ajah, Jebba, and Kawnar Dangora, further boosting the transmission capacity by an additional 151.2 MW.
Anuwe emphasized that these enhancements are pivotal in addressing the energy needs of the country and supporting economic growth.
Looking ahead, Anuwe stated that the transmission network will be augmented by an impressive 720.8 MW, with plans to commission the remaining equipment to deliver at least another 500 MW by the end of 2024.
This strategic initiative is expected to significantly improve power distribution and reliability, marking a transformative step towards a more robust energy sector in Nigeria.
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