TIDMSAVP
RNS Number : 2550C
Savannah Petroleum PLC
28 September 2018
28 September 2018
Savannah Petroleum PLC
("Savannah" or "the Company")
Niger Early Production Scheme and Exploration Update
Savannah Petroleum PLC, the British independent oil and gas
company focused around oil and gas activities in Niger and Nigeria,
is pleased to provide an update on its forward plans for its Niger
assets.
Highlights
-- Amdigh-1 well test to be performed in December 2018;
-- Confirmation of Early Production Scheme ("EPS") plans
anticipated to develop a recoverable resource base of 52 mmbbls,
with a first phase expected to see production of c.1kbd from Q1
2019 and a second phase development planned to see production ramp
up to c.5kbd during 2019;
-- Net capital expenditure to first oil expected to be less than
US$5m, with external financing requirement 60% lower vs. the
Company's conceptual development solution announced in November
2016;
-- Savannah's Competent Person, CGG Robertson, has reviewed the
EPS plans and associated cost structure and has assessed these to
be reasonable;
-- 120 mapped exploration targets identified on Savannah's
acreage for future drilling consideration;
-- Confirmation from the the Ministry of Energy and Petroleum of
Niger that the pre-feasibility study for a second export pipeline
from Niger to the Benin coast has been completed, with the
feasibility study planned to be completed by end 2018 with a view
to first oil exports in 2021.
Amdigh-1 Well Test Plans
Following the Company's discovery at the Amdigh-1 well,
announced on 6 June 2018, Savannah's Niger subsidiary ("Savannah
Niger") has elected to perform its first test on this well. It is
intended that an electric submersible pump ("ESP") will be
installed downhole using a workover rig during the month of
December 2018. The workover rig is expected to be hired from Great
Wall Drilling Company Niger SARL ("GWDC"). Savannah Niger expects
to rent the associated surface equipment required for the test.
Niger Early Production Scheme
As announced on 8 August 2018, Savannah Niger entered into a
legally binding Memorandum of Understanding with the Republic of
Niger (the "Niger MOU") in relation to the implementation of a
proposed EPS. It is envisaged that the EPS will be domestically
focused, utilising crude oil resources associated with the
Company's recent discoveries in the R3 portion of the R3/R4
Production Sharing Contract area in the Agadem Rift Basin ("ARB")
of South East Niger. Under the terms of the Niger MOU, Savannah is
required to submit a pre-feasibility study in relation to the EPS
to the Republic of Niger by 6 November 2018, work around which has
significantly progressed.
The EPS is currently anticipated to develop a recoverable
resource base of 52 mmbbls, and is expected to be centred around
the Amdigh oil field, over which the surface facilities are planned
to be located. The facilities are intended to be linked to a simple
gathering system to enable the proximal fields (e.g. Bushiya,
Kunama and Eridal, as well as other potential future discoveries)
to be tied into the EPS. The evacuation route for the EPS will see
the produced crude oil transported c.120km to the Jaouro Export
Station (the "JES") which connects the c.463km Agadem-Zinder crude
oil pipeline to the Société de Raffinage de Zinder ("SORAZ")
refinery. The crude oil sales point is assumed as being the SORAZ
refinery gate.
The EPS is anticipated to be developed in two phases ("Phase 1"
and "Phase 2"). Phase 1 is expected to see crude oil trucked from
Amdigh to the JES, and is anticipated to deliver plateau production
of c.1kbd from Q1 2019. Phase 2 foresees a pipeline being laid from
Amdigh to the JES (the "Amdigh-Jaouro Pipeline") during 2019. The
Amdigh-Jaouro Pipeline is expected to be ten inches in diameter
with throughput capacity of up to 10kbd. This second phase
development has been planned to see production ramp up to c.5kbd,
and later in the life of the field assumes the use of water
injection to increase recovery rates. Savannah is also evaluating
the possibility of increasing trucked production in Phase 1 above
1kbd, however no firm decision has been made in relation to this at
this stage.
Savannah currently estimates net capex to first oil to be less
than US$5m (for Phase 1 EPS), with total life of field operating
and transportation costs estimated at c.US$9.8/bbl and capex
(including abandonment) of c.US$3.5/bbl (note all numbers are
stated in 2018 real terms). The external financing requirement for
the field facilities is estimated US$1.1/bbl. These are
pre-feasibility level costs which are expected to be refined over
the coming months as the Company moves to project approval later
this year and represent a significant improvement in the cost
structure which Savannah has previously presented when publishing
the results of the November 2016 and July 2015 Conceptual
Development Studies ("CDS"). As with the prior CDS, Savannah's
Competent Person, CGG Robertson, has reviewed the Company's
proposed EPS plans and associated cost structure and has assessed
these to be reasonable at this stage. Savannah plans to provide a
further update on the EPS following submission of its
pre-feasibility study to the Republic of Niger.
Pre-Feasibility EPS Estimated Costs vs. Previous Conceptual
Development Studies
November November EPS vs. July 2015 EPS vs.
2018 EPS 2016 CDS CDS 2 CDS 1 CDS 1
External Financing
Requirement US$/bbl 1.1 2.7 (60%) 5.5 (80%)
--------- ---------- ---------- -------- ---------- --------
Life of Field
Capex US$/bbl 3.5 5.6 (38%) 8.0 (56%)
--------- ---------- ---------- -------- ---------- --------
Life of Field
Opex & Transportation US$/bbl 9.8 13.2 (25%) 23.1 (57%)
--------- ---------- ---------- -------- ---------- --------
Note: External financing requirement is defined as amount of
capital expenditure incurred prior to the project becoming
self-financing.
Savannah expects the external financing requirement associated
with the EPS to be financeable from a combination of the Enlarged
Group's anticipated liquidity resources and/or a partnership with a
third-party infrastructure finance fund.
Niger Exploration Update
To date, over 4,000 man days of technical work have been
completed by the Company's technical team on its Niger Production
Sharing Contracts ("PSCs"). This work has involved the
interpretation of significant seismic, Full Tensor Gradiometry and
magnetic datasets, as well as rock physics and reservoir geology
analyses, well analyses, basin modelling, core descriptions and
biostratigraphy, fault seal modelling and the identification and
evaluation of additional play types in the basin.
Savannah's database now comprises c.30,000km 2D seismic,
c.12,000km(2) 3D seismic, c.250 well data suites, c.36,950km FTG
data and various proprietary and third-party studies and reports.
The Company's Competent Person, CGG Robertson ("CGG") has assessed
the Company's gross best estimate risked recoverable prospective
resources at 2,821 mmbbls, utilising its proprietary "yet to find"
methodology.
The ARB now has 6 proven play types, with confirmed discoveries
having been made in the Sokor Alternances, Upper Sokor, Madama,
Upper Yogou, Lower Yogou and Donga Formations. The core play,
however, remains the Eocene age Sokor Alternances play type in
which 102 discoveries have been made, contributing to an aggregate
well success rate in the basin of more than 85%.
The Eocene age Sokor Alternances play comprises reservoir-seal
pairs deposited in a fluvio-lacustrine environment. Subsequent
rifting has created numerous fault-controlled structural highs,
which have proved extremely successful at trapping hydrocarbons.
Good quality reservoir sands have been encountered by all the wells
drilled to Sokor Alternances targets in the ARB.
Across Savannah's Niger PSCs, 120 potential drilling targets
have now been identified. The majority of these are primarily
targeting the Sokor Alternances, with additional prospectivity in
the Upper Sokor and the Yogou, however Savannah has also identified
four Yogou-only targets on the Dinga Ridge part of the R2 portion
of the R1/R2 PSC Area.
The Upper Sokor and Yogou plays are under-explored in the ARB
and provide significant up-side to the traditional Sokor
Alternances play. The Cretaceous age Yogou play lies beneath the
Sokor Alternances and has only been penetrated by a small fraction
of the exploration wells drilled to date in the ARB. The Upper
Yogou contains multiple reservoir-seal couplets, and these benefit
from their proximity to the mature marine source rocks that reside
within the Yogou Formation itself. The Eocene-age Upper Sokor
Formation has not previously been deliberately targeted in the ARB
as a primary objective, hence most of the wells drilled to date are
not optimally located to test this play. The Upper Sokor is
characterised by good quality reservoir and seal pairs similar to
those found in the Sokor Alternances and was also deposited in a
fluvio-lacustrine environment.
Total number Sokor Alternances Upper Sokor Yogou leads
of Savannah leads & prospects leads & prospect & prospects
drilling targets
R1 53 48 22 39
------------------ ------------------- ------------------ -------------
R2 4 0 0 4
------------------ ------------------- ------------------ -------------
R3 31 22 22 13
------------------ ------------------- ------------------ -------------
R4 32 20 0 18
------------------ ------------------- ------------------ -------------
Note: Plays are stacked in many cases and so the total number of
drilling targets in each PSC area is not a simple sum of each
play.
Savannah's forward drilling plans in the near-term are expected
to see Savannah continue to focus on the Sokor Alternances as a
primary target, with secondary targets of interest at this time
being the Upper Sokor and the Yogou. R3 East is expected to remain
an area of focus, particularly as the Company looks to put in place
productive capacity for its planned EPS, as well as the R3 Central
area.
Testing of the discoveries is of great importance to the success
of the immediate EPS (Early Production System) and to the broader
understanding of the development characteristics of the R3 area.
During the flowing portion of the well test, Savannah will
establish the likely production rates that can be achieved by each
well. Oil and gas samples will also be collected, which will enable
better definition of the operating parameters for the production
and export facilities. During the shut-in period, interpretive
analysis of the pressure data will provide an insight into the
near-well subsurface reservoir characteristics that help predict
longer-term well performance.
Export Project Update
Following the signature of an MOU between the Governments of the
Republic of Niger and the Federal Republic of Nigeria on 24 July
2018 in relation to the export of crude oil from the ARB to Nigeria
(the "Export Project"), Savannah is pleased to confirm that the
Company has been appointed to the Project's Technical Committee
(the "Committee"). Savannah's presence on the Committee is expected
to enable the Company to contribute to the delivery of the Export
Project, which complements Savannah's plans regarding
implementation of an EPS.
Separately, the Ministry of Energy and Petroleum of Niger has
confirmed to Savannah that the pre-feasibility study for a second
export pipeline from Niger to the Benin coast has been completed,
and the feasibility study is expected to be completed by end 2018,
with a view to first oil exports in 2021. Under the terms of the
R1/R2 and R3/R4 PSCs, as well as the Petroleum Code of Niger and
its Implementing Decree, Savannah will be entitled to access this
third-party infrastructure.
Andrew Knott, CEO of Savannah Petroleum, said:
"The development of our Niger business over the course of 2018
has been rapid. We have made four oil discoveries from four
exploration wells, establishing a 100% success rate on our acreage,
and have established clear pathways for their monetisation through
both domestic and export sales. We also continue to benefit from a
prospects and leads inventory which comprises some 120 targets over
our acreage, providing us with material and repeatable low
technical risk/low cost upside potential as we continue our
exploration activities. Further, the Niger business also benefits
from a strong gearing to the rising oil price. I look forward to
providing future updates as we further advance the business."
Unless otherwise defined, capitalised terms are as per the
Company's Admission Document dated 22 December 2017.
For further information contact:
Savannah Petroleum +44 (0) 20 3817 9844
Andrew Knott, CEO
Isatou Semega-Janneh, CFO
Jessica Ross, VP Corporate Affairs
Strand Hanson (Nominated Adviser) +44 (0) 20 7409 3494
Rory Murphy
James Spinney
Ritchie Balmer
Mirabaud (Joint Broker) +44 (0) 20 7878 3362
Peter Krens
Ed Haig-Thomas
Hannam & Partners (Joint Broker) +44 (0) 20 7907 8500
Neil Passmore
Alejandro Demichelis
Hamish Clegg
Celicourt Communications +44 (0) 20 7520 9266
Mark Antelme
Jimmy Lea
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No.596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Notes to Editors:
About Savannah Petroleum
Savannah Petroleum PLC is an AIM listed oil and gas company with
exploration and production assets in Niger and Nigeria. Savannah's
flagship assets include the R1/R2 and R3/R4 PSCs, which cover c.50%
of the highly prospective Agadem Rift Basin ("ARB") of South East
Niger, acquired in 2014/15. The Company is also in the process of
acquiring interests in the cash flow generative Uquo and Stubb
Creek oil and gas fields and a 20% interest in the Accugas
midstream business in South East Nigeria from Seven Energy.
Further information on Savannah Petroleum PLC can be found on
the Company's website:
http://www.savannah-petroleum.com/en/index.php
About the Agadem Rift Basin
The Agadem Rift Basin is located in South East Niger and covers
an area of approximately 30,000 km(2) in size located in South East
Niger. In the modern era, China National Petroleum Corporation
("CNPC") has made 97 discoveries from the last 127 exploration
wells with the principal discovered geological play being a
relatively shallow Eocene Sokor Alternances tilted fault light oil
block play. The basin has been in production since 2011 following a
first phase of development of the Agadem PSC area (which is
adjacent to Savannah permit areas) by a CNPC-led joint venture.
Despite the high success rate seen in the ARB to date, Savannah
believes the basin to have been relatively lightly explored, both
in terms of overall activity levels and stratigraphic horizons
which have been targeted. Further exploration activity in the basin
is aided by the very large geological dataset managed by the
Niger's Ministry of Energy & Petroleum which comprises c.12,000
km(2) of modern 3D seismic, c.30,000 km of 2D seismic and over 250
well data suites.
About Savannah's ARB Project
Savannah's Niger project consists of two PSC areas (R1/R2 and
R3/R4) which together cover an area of 13,655 km(2) . Across these
permit areas, Savannah has mapped 126 un-drilled exploration
prospects and leads.
Following an extensive period of geological data acquisition and
evaluation, Savannah commenced a 3 firm well and 6 optional well
drilling program with the spud of the Bushiya-1 well in March 2018.
The initial focus of this program has been the R3 East area, with
all four wells drilled to date by the Company (Bushiya-1, Amdigh-1,
Kunama-1 and Eridal-1) having resulted in oil discoveries.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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