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Current Shares in issue circa 1.3 billion worked up to 2.0 billion below:
Equity Raise Scenario’s if we complete Petronas South Sudan acquisition at suspension price of @26.25p:
100 Million @ 26.25p = £26,250,000 (USD - $33,800,000)
200 Million @ 26.25p = £52,500,000 (USD - $67,600,000)
300 Million @ 26.25p = £78,750,000 (USD - $101,000,000)
400 Million @ 26.25p = £105,000,000 (USD - $135,000,000)
500 Million @ 26.25p = £131,250,000 (USD - $169,000,000)
600 Million @ 26.25p = £157,500,000 (USD - $202,000,000)
700 Million @ 26.25p = £183,750,000 (USD - $236,000,000)
Market Cap at suspension @ £343 million assuming we complete south sudan acquisition at lets just say we use a very conservative increase in market cap of £500m on open and re-listing, so effectively an increase in market cap by £150 million.
Based on the above equity raise potential price targets on open
1.3 bn shares + 100 m = 1.4bn - £500m / 1400 = 0.357p open price - 35.7p
1.3 bn shares + 200 m = 1.5bn - £500m / 1500 = 0.333p open price – 33.3p
1.3 bn shares + 300 m = 1.6bn - £500m / 1600 = 0.312p open price – 31.2p
1.3 bn shares + 400 m = 1.7bn - £500m / 1700 = 0.294p open price – 29.4p
1.3 bn shares + 500 m = 1.8bn - £500m / 1800 = 0.277p open price – 27.7p
1.3 bn shares + 600 m = 1.9bn - £500m / 1900 = 0.263p open price – 26.3p
1.3 bn shares + 700 m = 2.0bn - £500m / 2000 = 0.250p open price – 25p
Market Cap at suspension @ £343 million assuming we complete south sudan acquisition at lets just say we use a very conservative increase in market cap of £600m on open and re-listing, so effectively an increase in market cap by £250 million.
Based on the above equity raise potential price targets on open
1.3 bn shares + 100 m = 1.4bn - £600m / 1400 = 0.428p open price - 42.8p
1.3 bn shares + 200 m = 1.5bn - £600m / 1500 = 0.400p open price – 40p
1.3 bn shares + 300 m = 1.6bn - £600m / 1600 = 0.375p open price – 37.5p
1.3 bn shares + 400 m = 1.7bn - £600m / 1700 = 0.352p open price – 35.2p
1.3 bn shares + 500 m = 1.8bn - £600m / 1800 = 0.333p open price – 33.3p
1.3 bn shares + 600 m = 1.9bn - £600m / 1900 = 0.315p open price – 31.5p
1.3 bn shares + 700 m = 2.0bn - £600m / 2000 = 0.30p open price – 30p
Part 2
Market Cap at suspension @ £343 million assuming we complete south sudan acquisition at lets just say we use a very conservative increase in market cap of £700m on open and re-listing, so effectively an increase in market cap by £350 million.
Based on the above equity raise potential price targets on open
1.3 bn shares + 100 m = 1.4bn - £700m / 1400 = 0.500p open price - 50p
1.3 bn shares + 200 m = 1.5bn - £700m / 1500 = 0.466p open price – 46.6p
1.3 bn shares + 300 m = 1.6bn - £700m / 1600 = 0.437p open price – 43.7p
1.3 bn shares + 400 m = 1.7bn - £700m / 1700 = 0.411p open price – 41.1p
1.3 bn shares + 500 m = 1.8bn - £700m / 1800 = 0.388p open price – 38.8p
1.3 bn shares + 600 m = 1.9bn - £700m / 1900 = 0.368p open price – 36.8p
1.3 bn shares + 700 m = 2.0bn - £700m / 2000 = 0.35p open price – 35p
Please note the above does not take into account the complexities of the deal and the debt funding structure, this is purely based on issue of equity vs potential market cap gain if the transaction closes. Just simple equity vs share comparison. Obviously, it goes without saying the lower the equity dilution and the higher the market price will mean higher the share price on open and admission.
Why are you talking about equity raise so much? The company have previously stated this is not the intention.
Not having a dig, just wondering why this keeps coming up.
An equity raise would be a bit of a failure at the moment to my way of thinking. They have previously demonstrated they can get support from the sellers essentially, securing their divestment goals and clearly this is of benefit to SAVE. I would have thought that would be more likely, no?
Robberyrob - Apologies I am not trying to mislead in any shape or form I was just seeing what the extreme scenario would look like if they did a raise so i did numbers to the extreme up to 2 billion shares in issue, I am not saying that will happen and fully agree that the company did say no use of equity is likely................
However with that being said a modest equity raise can also not be ruled out as well they raised $65 million dollars for the last deal at suspended price of 19.35p so wouldn't be surprised if they raised a little through the use of equity this time round too. The comment around them mentioning that they will use cash at hand and debt was on the SPA announcement on 12th December, but at that point they probably thought they would have had access to our 8,000 bopd net share of doba revenues................
Also they might get the fundraise out the way alongside this deal so they don't need to use equity for the following deal, if the following deal is also close to being wrapped up this year as Andrew suggested delivering another significant m&a opportunity this year.
Obviously we would all prefer the deal to be done with cash and debt as per the RNS back in December. However, as you rightly say, assumed revenue from Doba was probably in the equation back then, so I’d guess the mix of funding will have changed significantly since day 1. And also let’s not forget that every day that goes by, the final payment will be reducing nicely, especially with the rising price of oil. Very crudely (pardon the pun) on a wild guess of $30 per barrel to SAVE and 50k per day the headline figure of $1.25bn would be reducing by $1.5m per day and has probably averaged more than that over the 19 months (if 1//1/22 was the economic interest date) due to >$100 oil during 2022. So if the $1.25bn did remain as the starting point, what is the balance payment due? Maybe ($1.25bn - ($1.5m per day x 575 days)) = $387.5m to pay. AM I MISSING SOMETHING HERE AS THAT SEEMS A RIDICULOUSLY LOW SETTLEMENT PAYMENT? Zengas IZ PF help please?
But for this note, I’ll carry on with $387.5m to pay and how would this be funded? Cash and or debt and or equity? Did the primary finance providers insist on AK providing a junior loan and could something like this happen again? We can assume cash is more limited now without Doba and I hope not to see issue of equity. So personally I’d like to see the balance 100% debt funded but am not sure if I’m hoping that pigs fly!!! But with the uncertainly linked to the security of the export pipeline through Sudan, I’d guess that the typical debt funders would be extremely nervous. And as Petronas want out and much as we want in, could the remaining debt be taken on by them and linked to SS production? Yes, I maybe dreaming and this would be absolutely perfect in theory to SAVE and ourselves and I’d hope that it could be a possibility. $387.5m to Petronas is small change and would be paid for with another 259 days of production based on the numbers above from 1/8/23.
Another thing which is perfect in theory would be a full completion RNS on Friday with explicit government sign-off. And who knows, it may already be signed and we’re just waiting for the ink to dry before somebody changes their mind and nationalises the SS oil LOL.
Finally let’s not forget that Accugas is making very healthy FCF every day
Accugas debt to be restructured to match the 15/16 years remaining of our contracted gas
Niger oil test and first oil getting very close now
Another >475MW of renewable business to be signed in 2023
At least 1 more hydrocarbon deal signed and maybe completed in 2023 (my guess is Cameroon)
And hopefully no more suspensions although I fear we will if SS should fai.
Court award for Doba & Totco in our favour and >$1bn awarded to SAVE taken from production at the point of sale in Cameroon - OUCH to the Niger administration.
One way or another it should be a VERY interesting 12 to 18 months and a sincere GLA.
Rockyride - let's hope we all get news that we deserve as soon as possible with government sign off as well. Taking economic effective date into account I would be very surprised if the closing price is not at the very least sub $700m, obviously it could be even lower. I am hoping that 19 months or so of economic effective date if still 01.01.2022 as reported by a few on here previously will enable us to avoid an equity raise. Hopefully a few additional months than the original anticipated closing date would have negated the chad doba oil field revenues that may have been factored into the deal.
South Sudan Press picking up the Puot Kang Chol sky news story - https://www.eyeradio.org/kang-oil-is-south-sudans-only-steppingstone-to-renewable-energy/
The FinnCap note of 4th January 2022 page 9 at the time of the Petronas & Exxon assets assumed the acquisition price of $3.40 P2 barrel for the 103.8 mmbo 2P reserves with another 82 mmbo 2C.
With 22,500 bopd production = $15,700 flowing bl.
--------------------------------------
Afentra 19-7-23 on the Azule offshore Angola acquistion. "The attractive acquisition cost implies approx. $3.7/bbl based on 2P reserves". This is their 3rd acquisition on the same assets and gives them 6,000 bopd + 32 mmbo 2P oil + 20 mmbo 2C all done at $3.90b max which also includes some licence interests over and above production which has a discovery. If oil goes way above in 2 cases $65 and $75/b there are bonus payments to be made for 2 of the acquistions but these are spread out over 3 and 10 years respectively.
Flowing cost per bl approx $20,400.
For South Sudan - SAVE say "UP TO" $1,250m (so doesn't sound definitive to me) where as in the Petronas Chad acquisition it was for a definitive fixed sum when announced, while Exxon Chad was an up to price which included a contingency.
So does the "UP TO" $1250m price tag include possible contingencies for higher oil prices/production profile case ?
We kmnow little other than AI reported the reserves were some 300 mmbls - was this all 2P. There's also likely to be considerable 2C.
Based on what Save were paying for Chad ie an assumed $3.40 this would mean the 300 mmbls 2P in S.Sudan costing $1 billion pro rata. They are landlocked like Chad having to export a considerable distance through another country before reaching the loading terminal.
Based on $3.70 for Afentras offshore Azule acquistion and $3.82 for all - that would imply $1.1 - $1.15 billion for the S.Sudan 300 mmbls 2P - these are offshore and measurably less risk for export.
If you use the Chad price of $15,700 and Angola $20,400 flowing bl price - the 55,000 expected production in South Sudan could be in the $860m - $1.1b range. So on the flowing metric and 2P price examples it doesn't come to the UP TO $1250m and i can't see why SAVE would overpay given the risk never mind the Chad price example and the lower risk offshore Angola price example.
Unless there is signifcantly more reserves, greater production or some other infrastructure in S.Sudan that gives income - therefore on 300 mmbo P2 and 55k production i woukd hope for a $1b price tag with any contingencies taking it to that 'up to' $1250m initially quoted figure.
Apply a discount figure and if it's 1/1/22 then that could be a substantial deduction from $1 billion.
AI on the 18/1/22
' Savannah is also looking with great interest at Petronas shares for sale in South Sudan. The British junior informed Petronas of this during the negotiations in Chad. The assets represent some 75,000 bpd for Petronas, with reserves of 300m barrels.'
Zengas - Sure is a very tasty deal if they can cross the finish line...................................................................