• Natural Gas News

    Savannah Wraps up Nigerian Deal


The deal has been more than two years in the making.

by: Joseph Murphy

Posted in:

Natural Gas & LNG News, Africa, Premium, Corporate, Mergers & Acquisitions, Exploration & Production, News By Country, Nigeria

Savannah Wraps up Nigerian Deal

London-listed Savannah Petroleum has closed the takeover of gas upstream and midstream assets from indebted Nigerian independent Seven Energy – more than two years after the deal was first announced. Nigerian authorities approved the acquisition in August.

Under the deal first agreed in 2017, Savannah now has an 80% stake in Seven Uquo Gas, owner of a 40% interest in the Uquo gas field in southeastern Nigeria; a 100% share of Universal Energy Resources, which has a 51% stake in the nearby Stubb Creek field; and an 80% interest in Accugas, which operates a 200mn ft3/day gas processing plant at Uquo and a 260-km pipeline network. African Infrastructure Investment has also secured 20% interests in Seven Uquo Gas and Accugas as part of the transaction.

Savannah said the purchase had given it a material production base expected to generate “significant” free cash flow.

“The deal transforms Savannah into a full-cycle E&P company in West Africa and marks the start of a very exciting time for us,” CEO Andrew Knott said. “We have acquired a business with great people and a strong set of exploration, appraisal, development and production assets which are expected to be highly cash flow generative for the company.”

He told analyst Malcolm Graham-Wood in a television interview the same day that there is "very substantial" spare capacity in the pipeline system and a large gas resource nearby, so there is a very large opportunity to monetise additional molecules. The company is hoping to announce more sales contracts with new customers at little additional cost but with substantial revenues to come. It is looking at $150mn in free cash flow over the next five years, based on the daily contract quantities. The company's gas already accounts for a tenth of Nigeria's power output, he said, and the population and the economy are both growing.