Savannah Energy Declares 26% Increase in Revenue to $290.4m

Kayode Tokede

Savannah Energy has announcedd $290.4million revenue in its result and accounts for the period ended December 31, 2022, a growth of about 26 per cent from $230.5million reported in 2021 financial year.

The British independent energy company that is focused around the delivery of Projects that Matter in Africa disclosed 20 per cent Increase in Nigeria amid operations continues shift to renewables.

The company announced $222.4million adjusted EBITDA  in 2022, an increase of 27 per cent from $175million in 2021 and EBITDA margin remained unchanged at 77per cent.

Savannah’s operating and administrative expenses stood at $66.2million and capital expenditure (capex) for 2022 at $23.6million, both significantly under previous guidance. Its cash balance in 2022 was $240million, up 56per cent from last year, compared to its current market cap of $420million.

The group’s total assets amounted to $1.76billion, compared to $1.35million in 2021.

The report further showed that the average daily gross production from Savannah’s Nigerian operations stood at 26.8 Kboepd, a 20per cent increase from 22.3 Kboepd in 2021.

Of that, 90 per cent was gas, including a 23 per cent increase in gas production from the Uquo gas field.

The CEO of Savannah Energy, Andrew Knott in a statement said, “2022 was another year of significant progress and growth for our company. Our Total Revenues1 grew by 26 per cent to $290million, our Adjusted EBITDA2 rose by 27per cent to $222million.

“To put these numbers into context, since the announcement of our decision to acquire our Nigerian business in 2017, it has delivered six consecutive years of Total Revenues1 growth at a compound annual growth rate of 21 per cent.

“This growth has seen us more than double the number of customers the business serves and increase the share of Nigeria’s thermal power generation capacity that it supplies from 10 per cent to 24 per cent.

“Our performance against key industry sustainability metrics relating to HSE performance, carbon intensity, senior management gender diversity and local employee ratios remain industry leading.”

Looking into the rest of 2023, he said, “I am confident in where we are as a business. Key projects we are focused on completing include:  the closing of our proposed acquisition of PETRONAS’ assets in South Sudan in Q3; at least one further hydrocarbon asset deal;  reaching our target of having up to 1GW+ of renewable energy projects in motion by end of year;  the flow testing of our R3 East development in Q4; and  the refinancing our Nigerian debt.”

During 2022 financial year, the company secured four new gas sales agreements with Central Horizon Gas, Trans Afam Power, Notore Chemical Industries, and Shell Petroleum Development for a total of 53 MMscfpd of supply contracted.

Additionally, a contract extension with First Independent Power Limited increased the quantity of gas supplied from 35 MMscfpd to up to 65 MMscfpd.

Savannah had in March last year announced its very first renewable energy project, the 250 MW Parc Eolien de la Tarka wind farm project in Niger. This is aimed at increasing the country’s on-grid electricity supply by up to 40 per cent with project sanction expected in 2024.

With the signing of two new renewable energy agreements post-period, Savannah currently has up to 525 MW of hydroelectric, solar photovoltaic and wind projects in motion in Cameroon and Niger.

As shown by these investments in renewables, Savannah is a strong believer in Africa’s transition to renewable energy. The company aims to become one of the largest renewable energy development companies in Africa over the next two years with a rapidly growing pipeline of solar, wind, and hydro power projects, aiming for 1 GW+ of projects in motion by end of 2023 and 2 GW+ by end of 2024. Savannah believes that the African renewable energy market represents a significant opportunity of 242 GW by 2030, requiring an investment of over US$40bn in 2026-2030, and that its experience in hydrocarbons is directly transferable to this space.

Generally, Savannah delivered strong and impressive operational and financial performance in 2022, with results outperforming the target it set for the year. Total revenues grew by over 25% to US$290.4m with a resulting rise in adjusted EBITDA of 27% to US$222.4m. This makes FY22 the sixth consecutive year of total revenue growth for Savannah’s Nigerian business, representing a CAGR of 21% since the business was acquired in 2017.

During this six-year period, the company doubled its customer base and increased the share of Nigeria’s thermal power generation capacity that it supplies from 10per cent to 24per cent.

Its Nigerian business continues to be reinforced by long-dated, take-or-pay contracts that have no linkage to commodity pricing and provide stable, predictable cashflows. At the end of 2022, Savannah had over US$3.8bn of future contracted revenues with contracts having average weighted remaining life of 15 years.