Savannah Energy Shows Resilience with Strong H1 2024 Performance

Savannah Energy Plc, the British independent energy company, whose  midstream subsidiary, Accugas Limited, is playing a major role in Nigeria’s  thermal power generation capacity, has just released its unaudited results for the half year, showing strong financial performance, writes  Goddy Egene

Savannah Energy Plc, the British independent energy company focused around the delivery of projects that matter, continues its growth trajectory in Africa as it posted another healthy financial and operational performance for the half year  (H1) ended June 30,  2024.
According to the  unaudited  H1 report,  average daily production in Nigeria rose three per cent to 24.4 Kboepd, where its midstream subsidiary, Accugas Limited, supplies gas enabling  20 per cent of the country’s thermal power generation capacity. The company also highlighted progress around its ambitions for its renewable energy division across Africa.

In the H1 2024 unaudited report, Savannah Energy posted a commendable total Income increase of 40 per cent to US$233.4 million, compared to its H1 2023 total income of US$167.6 million.
A breakdown of the total income shows that  it is  made up of total revenues of US$123.5 million and other operating income of US$109.9 million associated with the billing of foreign exchange losses incurred by Accugas Limited, as it converted the Naira cash it received into United States dollars[Savannah continues to benefit from over US$3.4 billion of contracted future gas revenues in Accugas, with price escalation clauses tied to US consumer price inflation.

The report further shows that Savannah’s operating profit in H1 2024 stood at an impressive US$152.3 million, which is  130 per cent higher than US66.2 million posted in  H1 2023.  Its adjusted EBITDA, which excludes Other operating income, decreased marginally to US$91.6 million, compared to US$108.2 million in H1 2023. But if Other operating income is included, it shows a 47 per cent year-on-year increase to US$201.5 million.

The report illustrates Savannah’s prudence with cost management as its costs remained stable at US$1.1/Mscfe on a unit of production basis, the same as in H1 2023, largely due to the steps the company has taken to reduce central costs over the period.
It also provides updates on its oil and gas operations, with its Nigerian business continuing to record a strong and consistent performance. In addition to posting a three  per cent  increase in average gross daily production in Nigeria to 24.4 Kboepd, compared to FY 2023 (23.6 Kboepd), Savannah’s subsidiary, Accugas, consolidated its market leadership during the period, agreeing and extending three gas contracts for a total of up to 105 MMscfpd.
Commenting on the report, Chief Executive Officer of Savannah, Andrew Knott, said:“I am pleased to report our results for the first six months of 2024, as well as the wider progress we are making developing our business. Key highlights in H1 included the delivery of US$233 million of total income and the announcement of our planned acquisition of SINOPEC’s upstream assets in Nigeria. Alongside this, we are pleased to report strong progress in the development of our renewable energy business, particularly relating to our planned projects in Niger and Cameroon. Looking forward we expect to make a series of announcements around our entry into further renewable energy projects prior to year-end. We remain unequivocally an “and” company, seeking to deliver strong performance both for the short and long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon and renewable energy sectors.”
In January this year, Accugas extended its agreement with First Independent Power Limited for an additional 12-month period, enabling Accugas to continue supplying the FIPL Afam, Eleme and Trans Amadi power stations with up to 65 MMscfpd of gas.
In July, Accugas also signed a new 24-month agreement with Ibom Power Company Limited, owner of the Ibom power station, to supply up to 30 MMscfpd of gas, following the expiration of the previous 10-year agreement. A month later, it extended its agreement with Central Horizon Gas Company Limited for an additional 12-month period, whereby Accugas will supply CHGC with up to 10 MMscfpd of gas.
Savannah scored big last March when it announced that it has signed separate Share Purchase Agreements(SPAs) with Sinopec International Petroleum Exploration and Production Corporation and Jagal Ventures Limited to acquire 100 per cent  of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (SIPEC). SIPEC’s principal asset is a 49 per cent non-operated interest in the Stubb Creek oil and gas field, located in Akwa Ibom State, Nigeria. An affiliate of Savannah, Universal Energy Resources Limited, is the 51 per cent owner and operator.
Savannah anticipates that, within 12 months following completion of the acquisition, Stubb Creek gross production should increase by approximately 2.7 Kbopd to approximately 4.7 Kbopd through implementation of a de-bottlenecking programme.
The company is also set to complete work on its US$45 million gas compression project at its Uquo gas Central Processing Facility that will allow Accugas to continue to provide reliable gas supplies to customers for years to come. The system comprises two parallel trains with a capacity of 160 MMscfpd each and is designed to increase the gas export pressure. The company is also currently working on a proposed further development programme for the Uquo field which is expected to see additional wells drilled in 2025 and 2026.
According to the company, it has always shown clear ambitions for renewable energy in Africa. Its H1 2024 report shows that the company’s renewable energy projects  in motion at period-end has risen to 696 MW. A strong believer in Africa’s transition to renewable energy, Savannah aims to become one of the largest renewable energy development companies in Africa over the next two years with a rapidly growing pipeline of hydro, wind and solar power projects, targeting a portfolio of up to 1 GW+ of renewable energy projects in motion by end 2024 and up to 2 GW+ by end 2026.
In addition to this, the company hopes to announce its entry into further projects in the next few months and has also signed agreements with the IFC and the US International Development Finance Corporation to fund two-thirds of pre-construction development costs on its up to 250MW Parc Eolien de la Tarka wind farm project in Niger.
Savannah also stated in the report that it remains committed to the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger, as part of its determination to continue to deliver on projects that matter in the country and other markets where it operates on the continent. The Niger-Benin oil export pipeline which is now fully operational continues to provide a clear route to international markets for crude oil produced from its R1234 contract area. The company continues to progress its planned four well testing programme and is in the process of mobilising the required long lead item equipment into country.
Savannah noted that it continued to make significant impact in Cameroon with the Bini a Warak Hybrid Hydroelectric and Solar Project well on schedule, following the approval of the optimisation and proposed redesign of the project given by the country’s Water and Energy minister.
The company added that  in South Sudan,  it remains in active discussions regarding a potential transaction in the East African country, with a further update expected by  early November.