Nigeria's Seven Energy Seeks to Soothe Creditors
London-listed Savannah Petroleum said November 15 it has agreed to exclusivity (lock up agreement) in a proposed, complex acquisition of certain Nigerian assets from Nigerian gas producer Seven Energy.
Seven Energy acknowledged it was involved in a “comprehensive capital restructuring” adding that the Savannah proposal was “beneficial both for the [Seven] group and its creditors.”
Savannah said the transaction will involve its acquisition from Seven of: a 40% stake in the Uquo oil/gas field; a 62.5% stake in Universal Energy Resources (UERL) which holds 51% interest in the Stubb Creek oil/gas field; an interest in the Accugas midstream business that owns a 260km gas pipeline network and associated gas processing infrastructure, possibly alongside certain third-party investors.
The lock-up envisages consideration of $87.5m cash and $52.5m in newly-issued Savannah shares being paid to the holders of Seven's current 10.25% bondholders who would also have other rights. The transaction could take five months to complete, indicated Savannah, and was not guaranteed.
Seven indicated November 15 that its 9M2017 gas sales by Accugas, all supplied by the Uquo field, had been 78mn ft3/d, delivering gas to the Calabar and Ibom power plants and Unicem cement works, a level broadly in line with year-ago sales. The Calabar gas offtake is supported by a World Bank partial risk guarantee which guarantees payments to Accugas for gas supply.
Seven Energy said in June 2017 it was in talks with Savannah over farming into the latter’s exploration acreage in Niger, to the north of Nigeria. The latest statement makes no mention of this, even though Savannah’s 1H results on September 20 indicated it was still current and that it had booked a drillrig for a three-well campaign in Niger.
Mark Smedley