Malcy’s Blog: Oil price, Savannah, Union Jack, Borders & Southern. And finally…

WTI (June) $62.49 +87c, Brent (July) $65.41 +88c, Diff -$2.92 +1c.

USNG (June) $3.33 -3c, UKNG (June) 83.47p -1.1p, TTF (June) €35.385 +€0.29.

Oil price

Oil was up last week, the apparent agreement by Iran on uranium turned out to be just the messenger getting the details wrong and the capitulation was far from it…no acceptance of closing of all the facilities after all.

Savannah Energy

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce a Q1 2025 trading update. All figures are unaudited.

Andrew Knott, CEO of Savannah Energy, said:

“I am pleased to provide a Q1 2025 trading update, highlighting good progress in our core objectives for the year, including a 19% increase in Total Revenues¹, and a continued strong trend in cash collections with almost US$125 million received in the quarter. We are also reporting that, since completion of the SIPEC Acquisition, production at the Stubb Creek oil field (“Stubb Creek”) has increased by approximately 15% and 2P oil reserves have been upgraded by 29%. Our planned Uquo Field drilling campaign, set to commence in Q4, has the potential to add further reserves, resources and production capacity which would be capable of easy and quick monetisation.

2025 continues to be an exciting year for the business and we continue to work towards “ticking-off” the delivery of the nine focus area projects that we outlined at the beginning of the year, being: (1) securing a further increase in our rate of cash collections in Nigeria²; (2) completion of the refinancing of our principal Nigerian debt facilities; (3) completion of the planned acquisition of 100% of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (the “SIPEC Acquisition”) which was achieved during Q1 2025; (4) commencement of the Stubb Creek expansion project (which we updated on today); (5) the advancement of our Chad/Cameroon arbitration processes³; (6) the commencement of the safe and successful drilling of our planned Uquo development well and potential Uquo exploration well; (7) the potential advancement of our R3 East development in Niger⁴; (8) the refinement of our power sector business model; and (9) the delivery of further transformational acquisitions.

I would also highlight that we anticipate achieving a strong increase in cash collections in 2025 (even when set against our long-term 13% CAGR⁵), with significant production capacity growth expected in 2026 once our heavy Uquo field investment programme is completed.

I look forward to reporting further progress towards the achievement of many of our focus area projects when we announce our full year 2024 results in June.”

Having returned from suspension in March, SAVE has now been able to provide the market with a comprehensive update concentrating on its core Nigerian oil & gas assets. Since the SIPEC deal was completed the company report on the production at the Stubb Creek oil field and say that it has increased by approximately 15% and that 2P oil reserves have been upgraded by 29%.

They also say that the planned Uquo Field drilling campaign, set to commence in Q4, has the potential to add further reserves, resources and production capacity which would be capable of easy and quick monetisation. The updated figures are also impressive, total revenues are up 19% and perhaps more importantly cash collections for the quarter were $124.8m ($117.7) and will increase further in 2026 after the investment programme reaps its rewards.

The company are undoubtedly rejuvenated and have pledged to the ‘ticking-off’ process whereby they deliver on the nine focus area projects which are in the corporate psyche and in which will be reported on in the full year figures in June. 

The shares have not appreciated since the raise and I would have expected them to do so as the operational numbers are exceptional in particular leading to the total revenues and cash collections announced here and clearly with much more to come. These numbers make Savannah look incredibly cheap with upside to 30p easily achievable and maybe more in the longer term.

Highlights

·      Q1 2025 Total Revenues¹ of US$73.3 million, up 19% (Q1 2024: US$61.4 million), which includes a contribution of approximately US$3.6 million from Stubb Creek following completion of the SIPEC Acquisition;

·      Q1 2025 cash collections of US$124.8 million, an increase of 6% (Q1 2024: US$117.7 million). As at 31 March 2025, cash balances were US$110.4 million (31 December 2024: US$32.6 million) and net debt stood at US$597.8 million (31 December 2024: US$636.9 million). This included debt associated with the SIPEC Acquisition and, for comparison purposes, if this was excluded, the net debt would have further reduced to US$570 million;

·      Q1 2025 gross production at Stubb Creek was 2.8 Kbopd (Q1 2024: 2.5 Kbopd) and, following completion of the SIPEC Acquisition during the quarter, we have commenced an up to 18-month expansion programme anticipated to increase gross production to approximately 4.7 Kbopd. During April 2025 we have already seen an increase of 15% in Stubb Creek gross production to an average of 3.1 Kbopd compared to the average 2024 level;

·      Increases of 197% and 29% in Stubb Creek Gross 1P and 2P oil Reserves, respectively, due to an improved ultimate field recovery factor, as determined through the implementation of enhanced field monitoring protocols and advanced reservoir modelling. This follows a similar 27% increase in Uquo Field Gross 2P Reserves announced in November 2021;

·      Average gross daily production of 23.6 Kboepd for Q1 2025, broadly in line with the prior year period (Q1 2024: 24.1 Kboepd);

·      Completion of an equity issuance raising, in aggregate, gross proceeds of approximately £30.6 million and the signing of a US$200 million acquisition debt facility providing access to potential funding for future hydrocarbon asset acquisitions;

·      Procurement process of long lead equipment progressing in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field commencing in Q4 2025. Equipment orders have been placed for a development well which is expected to add up to 80 MMscfpd of production capacity.  An additional exploration well remains under consideration targeting an Unrisked Gross gas initially in place (“GIIP”) of 154 Bscf (25.7 MMboe) of incremental gas resources; and

·      Continuing to seek to progress the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger, subject to satisfactory stakeholder agreements being entered into.

Operational update

Hydrocarbons Division

Nigeria Existing Business

Average gross daily production was 23.6 Kboepd for Q1 2025, broadly in line with the prior year period (Q1 2024: 24.1 Kboepd).

On 10 March 2025, we announced the completion of the SIPEC Acquisition. Since its completion, we have commenced work on the planned production expansion with an increase of 15% in production already achieved.  It is anticipated that this up to 18-month programme will lead to Stubb Creek gross production increasing to approximately 4.7 Kbopd. The transaction consideration was funded through a drawdown under a new US$60 million Reserve-Based Lending (“RBL”) debt facility. The RBL is fully available to utilise and the current drawn amount is US$40 million. 

The US$45 million compression project at the Uquo Central Processing Facility is almost complete, with one compressor online and the second to be commissioned before the end of next month. This project, which will be delivered under budget, will allow us to maximise the production from our existing and future gas wells.

We are progressing the procurement process of long lead equipment in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field commencing in Q4 2025. Well site and flowline surveys have been completed for the Uquo NE development well (“Uquo NE”). This well is forecast to provide gas volumes of up to 80 MMscfpd. An additional exploration well in the Uquo Field (“Uquo South”) is also currently under consideration, which may be drilled back-to-back with the Uquo NE well. Uquo South is a well targeting an Unrisked Gross GIIP of 154 Bscf of incremental Prospective gas Resources on the Uquo licence area.

Niger

We are continuing to seek to progress the 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger. The Niger-Benin oil export pipeline, now fully operational, provides a potential route to international markets for crude oil produced from the R1234 contract area of our subsidiary, Savannah Energy Niger SA, with 90 Kbopd reportedly being transported from the China National Petroleum Corporation-operated Agadem PSC area.

Subject to satisfactory stakeholder agreements being entered into, Savannah Energy Niger SA may commence a four-well testing programme on the Amdigh-1, Eridal-1, Bushiya-1 and Kunama-1 discovery wells by the end of 2025, with all of the required long lead item equipment already in Niger. We are at the pre-contract award stage of the programme and our initial internal estimate of the total cost of the well test programme is approximately US$14.5 million (this will be subject to change as programme progresses and contracts are awarded). Assuming a successful well test programme, we would look to accelerate plans to commence commercial oil production from the R3 East Area and intend to incorporate the data acquired into our field development plan.

Updated Competent Persons Reports

The Company has appointed McDaniel & Associates Consultants Ltd. (“McDaniel”), to prepare updated Competent Person’s Reports (“CPRs”) for the oil and gas assets of the Group. These reports are anticipated to be finalised and published alongside the Company’s FY 2024 annual report and accounts. McDaniel have completed their assessment for Stubb Creek and a summary of the Gross 1P, 2P, 3P Reserves (prepared in accordance with the 2018 Petroleum Resource Management System), is set out in the table below, along with a comparison vs. the numbers presented in the Company’s March 2024 Nigeria CPR, as adjusted for production since its publication. The reduced range between the 1P and 3P Reserves demonstrates the lower uncertainty in the Reserves estimates and is a reflection of the maturity of an asset that has now been on production for over 10 years.

*Prepared by CGG Services (UK) Ltd

Power Division

As previously announced, Savannah is in the process of refining our Power Division business model, the remit of which has now been expanded to include potential thermal as well as potential renewable energy projects. We continue to progress our existing portfolio of up to 696 MW of wind, solar and hydroelectric projects, with our principal focus projects being on the up to 250 MW Parc Eolien de la Tarka project in Niger and the up to 95 MW Bini a Warak hybrid hydroelectric and solar project in Cameroon. It should be noted that it is not expected that all of the projects currently being progressed in the portfolio funnel will reach financial close. However, our project funnel should be viewed as dynamic, and we would expect to replace projects which do not progress to financial close with other new projects in an organic manner over time.

Financial update (unaudited)

Q1 Performance Highlights

Q1 2025 Total Revenues¹ were US$73.3 million, an increase of 19% over the prior year period (Q1 2024: US$61.4 million). Other operating income⁶ was Nil in Q1 2025 (Q1 2024: US$76.6 million) due to the absence of any requirement to invoice realised foreign exchange losses in the period.

Q1 2025 cash collections were US$124.8 million, an increase of 6% over the comparable prior year period (Q1 2024: US$117.7 million). As at 31 March 2025, cash balances were US$110.4 million (31 December 2024: US$32.6 million) and net debt stood at US$597.8 million (31 December 2024: US$636.9 million). This included debt associated with the SIPEC Acquisition and, for comparison purposes, if this was excluded, the net debt would have further reduced to US$570 million. The Trade Receivables balance as at 31 March 2025 was US$503.0 million (31 December 2024: US$538.9 million) which relates primarily to amounts due under various gas sales agreements in Nigeria. Delivering an increase in our rate of cash collections in Nigeria remains a key focus area for the business in 2025.

2025-2026 Outlook

Given the significant ongoing operation work, including completion of compression, site and logistical preparations for upcoming material drilling activity and other ongoing well activities, together with anticipated levels of customer demand, we expect production to average around 20 Kboepd for the remainder of the year⁷. From Q2 2026, following the drilling and tie-back of Uquo NE, we expect to materially increase our gas delivery capacity to up to 200 MMscfpd (approximately 33.3 Kboepd) in addition to increased oil production from Stubb Creek, which is expected to reach 4.7 Kbopd during H2 2026.

Debt Facilities

In March 2025 a subsidiary of the Company signed a US$200 million debt facility, which is available to support potential future acquisitions of oil and gas assets and is currently undrawn.

In January 2024, a NGN 340 billion term facility was signed by Accugas with a consortium of five Nigerian banks (the “Transitional Facility”). This facility is fully utilised with the resulting funds converted to US$, which, along with cash held, was used to partially prepay the existing Accugas US$ Facility. There is a remaining principal balance under the US$ Facility as at 31 March 2025 of approximately US$213.1 million. We are in the final stages of agreeing an increase in the Transitional Facility to enable the remaining outstanding US$ balance to be converted into Naira, with the current expectation this will allow the remainder of the Accugas US$ Facility to be fully repaid during Q2/Q3 2025. This process, when complete, will align Accugas’ debt facility with the currency in which gas revenues are received.

Union Jack Oil

Union Jack has announced its audited results for the year ended 31 December 2024.

Copies of the Company’s Annual Report will be posted to shareholders on or before 26 May 2025 and will be available on the Company’s website: www.unionjackoil.com. The Company’s AGM will be held in the George White Suite at The Bristol Hotel, Prince Street, Bristol BS1 4QF on Friday 27 June 2025 at 11.00 a.m.

Operational Highlights

•    Wressle Competent Person’s Report (“CPR”) upgrades 2P Reserves by 263%

•    West Newton Carbon Intensity Study given AA rating by GaffneyCline Associates

•    Successful Andrews 1-17 and Andrews 2-17 oil and gas discovery wells in Oklahoma, USA, now in commercial production

•    The Taylor 1-16 well in Oklahoma awaiting completion of the Hunton and Cromwell formations

•    Commencement of the UK onshore Keddington Oilfield upgrade

•   Acquisition of a 45% interest in the Rogers Secondary Recovery Project in Oklahoma, with post balance sheet positive results seen in pressure build up

•   Further acquisition of revenue generating Mineral Royalty packages in the Bakken Shale, Permian Basin and Eagle Ford Shale, USA, delivering pleasing returns in excess of 25% on original investment

•   Post Balance Sheet date, successful Moccasin 1-13 oil discovery in Oklahoma, now in production from the 1st Wilcox formation with two further oil-bearing formations to be completed

Financial Highlights

•    Gross profit of £1,968,101 (2023: £3,298,844)

•    Net profit of £649,213 (2023: £859,089)

•    Basic earnings per share 0.61 pence (2023: 0.79 pence)

•    Oil and gas revenues £3,929,722 (2023: £5,065,679)

•    The Company continues to be debt free

David Bramhill, Executive Chairman, commented:

“The Board’s confidence has once again been supported by the Company’s profitable 2024 financial results, confirming its resilience, both financially and operationally.

“In the UK, Union Jack will remain focused on the development of its flagship project, Wressle, where the Operator and Joint Venture partners have high-value appraisal and development programmes planned for the future, in particular the unlocking of the material proven reserves of oil and gas that remain in place within the Penistone Flags formation. The Board is confident that within the Wressle development there remains significant upside which will support the Company with revenues for at least another decade.

“I also look forward to progress at West Newton. Encouragingly, the results from this key project, to date, signal a potentially highly valuable onshore project with resources comparable to those usually reported offshore. A significant onshore domestic gas resource, as indicated at West Newton, has the potential to become an important transition fuel in helping the UK achieve its 2050 Net Zero emissions target.

“At time of writing, Keddington is expected to be, following site upgrades, close to being operational and poised to deliver the Company additional revenues.

“Union Jack’s initial success in the USA over the past 12 months, highlights the ease of entry and ability to execute our business in that country, justifying the Board’s decision to seek further growth opportunities internationally to bolster the Company’s robust production and appraisal assets in the United Kingdom.

“Our appetite for additional growth opportunities has been whetted by our recent positive experiences in the USA and discussions are at an advanced stage with Reach in respect of expanding our activities over the coming months and beyond.

“I believe the Board’s optimism in our further expansion in the USA, executed alongside a proactive drilling and development campaign, will deliver material rewards in due course.

“I am confident that the increase in drilling, appraisal and development activity being evaluated in the pursuit of growth from our balanced UK and USA portfolios has the potential for notable value creation for shareholders. We believe our heightened activity and the expected additional news-flow generated, combined with effective investor engagement on both sides of the Atlantic, will continue to attract the ongoing support of our existing shareholders and the attention of new investors, broadening the appeal of the Company to a wider audience.

“The Company retains a strong Balance Sheet and a clear focus on the development of its assets both in the UK and the opportunity-charged USA. This includes a balanced portfolio of Mineral Royalties, along with the production assets that are now assembled, that are expected to contribute meaningful revenue and growth opportunities going forward.

“I take this opportunity to thank our shareholders for their continued support, as well as my co-directors and advisers, both in the UK and USA, all of whom continue to contribute towards the development and growth of the Company.

“The future of Union Jack remains bright.”

Year end results carry no surprises and today UJO are emphasising its long term strategy which, especially given the additional and successful journey into the USA makes for good long term reading.

Starting with the UK it could be forgotten that UJO have a solid, even exciting base at home and with solid production from Wressle they have built an asset that the recent CPR showed 2P reserves up by 263%. With considerable upside from the Penistone Flags, UJO consider the whole field capable of at least 10 years more revenue. With Keddington following site upgrades close to being operational and poised to deliver the Company additional revenues the UK onshore portfolio is in good nick. 

But it maybe the recent successes in the USA that have grabbed the market’s attention as with a number of successful wells in Oklahoma bring swift and high returns that will reward shareholders. Straightforward purchases and easy entry have enabled success and the company is already ‘seeking further growth opportunities internationally to bolster the Company’s robust production and appraisal assets in the United Kingdom.

Union Jack is delivering a good quality long term onshore portfolio in the UK whilst admittedly much more swiftly adding a meaningful portfolio in the USA, they describe it as ‘will deliver material rewards in due course’. 

This strategy means that Union Jack looks in a good place, the shares are seriously undervalued and shareholders have much to look forward to.

Borders & Southern

Borders & Southern has announced its audited results for the year ended 31 December 2024. Full copies of the Company’s Annual Report and Accounts, including the Company Overview, Chairman’s Statement, Remuneration Committee Report, Directors’ Report, Auditor’s Report and full Financial Statements, will be available on the Company’s website and posted to Shareholders along with the notice of the AGM shortly.

Summary

·    Raised  a further $4.7 million (£3.7 million) before expenses through capital raises in 2024 and early 2025

·    Cash balance on 31 December 2024: $2.1 million (2023: $1.9 million)

·    Administrative expense for the year: $1.2 million (2023: $1.1 million)

·    Operating loss of $1.2 million (2023: $1.1 million)

Chairman’s and CEO’s review

After my first full year as Borders and Southern CEO, it is my pleasure to address shareholders and bring everyone up to date with what has happened in the past twelve months and what we hope to achieve in the months and years to come.

I was lucky enough to inherit a very robust project with highly commercial economics, a great board and a top technical team. Together we have executed three strategic moves that leave us in what we believe is a much stronger position going forward.

Firstly, we have further refined our phased early production offering which we believe will better appeal to potential international partners  as it requires relatively low capex and offers accelerated payback.

Secondly, we took the key step to appoint an International Investment Bank with worldwide networks to assist the Company in a farm-out to finance the next phase of the development of the Darwin discovery. We believe that this appointment, together with significant changes in industry appetite for projects, will greatly assist us in achieving our goal of bringing in a partner (or partners) on favourable terms. It is worth noting that the new advisor has sufficient confidence in the strength of the investment case that they have agreed to work on a success case basis as opposed to the more usual retainer fees.

And thirdly, we have made the vital move to put the Company onto a firmer financial footing. During 2024 the company also took several steps to further reduce overhead costs, which included moving offices. The Company has always benchmarked its overhead costs against its peers we remain in the lowest cost quartile. These reductions further reinforce this. We also completed two capital raises to strengthen the balance sheet (one post year end) and concomitantly, our negotiating position for the farm-out. In total we have raised about £3.7m (pre costs) which, together with our existing resources, gives us well over two years runway. Cash in the bank gives us the time and firepower to make the right deal or deals for shareholders, rather than be forced to accept the first one.

These three initiatives have put us in a much stronger position. We are already seeing the benefits with renewed interest from multiple parties in the data room. It is worth pointing out that Darwin is an appraisal project. Hundreds of millions of dollars have already been spent in the high risk exploration phase. Whilst the appraisal and development phases require significant capital, the exploration risk has been much reduced and will be eliminated once we have tested a well as part of the appraisal program. We know we have a world class project which is attracting interest from tier one industry potential partners. We are really excited by Darwin and the prospects nearby as well as the size and scale of the remainder of the portfolio which can be seen in detail in our latest presentation on the website. We look forward to reporting progress to the market in due course.

In June 2024 we welcomed Dr. Sean Guest to the board as a non-executive director. Sean is currently the President and Chief Executive of Valeura Energy and has a long and successful track record in the oil and gas industry. His experience and expertise will be of great help, particularly as we go through this farm-out and development phase.

I would like to thank all existing and new shareholders for your support. I very much look forward to the year ahead and providing further updates on our progress.

Borders and Southern is looking to be an interesting play under the new management of Harry Baker. Since going to see him and his excellent team when the shares were friendless and Darwin was still only a City in Australia things have picked up materially.

The figures are neither here nor there, pre Baker but since then the company has made another raise and are funded into 2027 and with interest in the Falklands on the up people are looking at Darwin with a new pair of eyes. 

Indeed with the money funding the G&A very nicely the company can indeed afford to take the best offer, not the first offer in the Darwin farm-out which is underway. The shares have performed very well already and this can partly be put down to the imminent news expected from Sea Lion as Navitas have apparently stated that FID will happen this summer. 

The very size of Darwin has apparently convinced a number of very significant companies inti the data room, despite slightly uncertain commodity prices there are few of this size around, should this come off then there is mega material upside in the current share price.

Angus Energy 

Following recent market speculation, Angus Energy  announces it has entered into a non-binding agreement to purchase a group of producing assets located in the Gulf of America (“Potential Transaction”). 

Given the nature of the Potential Transaction, this would constitute a reverse takeover under Rule 14 of the AIM Rules for Companies and accordingly, the Company’s shares have been suspended from trading. 

Rationale for the Proposed Transaction 

Completion of this transformational transaction would represent a major strategic development for Angus Energy, with a significant increase in reserves, production and positive cash flow. The transaction diversifies Angus away from the challenging UK energy sector into assets in a highly supportive oil and gas jurisdiction, with stable and reliable production and low decline.

As part of the acquisition and reverse takeover process, approval of the Company’s shareholders in a General Meeting will be required under the AIM Rules. As such, a further announcement with full details of the transaction will be issued at the appropriate time once binding contracts are entered into and an admission document published and sent to shareholders with a notice of general meeting. The Company is working towards finalising the asset purchase agreement and further details and timing will be communicated in due course.

At this stage, the Potential Transaction is non-binding and subject to completing due diligence, funding and other material considerations and there is no certainty that it will be completed, and the timing thereof cannot be determined.

In accordance with Rule 14 of the AIM Rules for Companies, the Company’s shares have been suspended from trading on AIM with effect from today. The Company’s ordinary shares will remain suspended until such time as either an admission document is published, or an announcement is released confirming that the transaction is not proceeding.

Shareholders should be aware that there is a risk that admission of the Company’s securities could be cancelled if they have been suspended from trading for six months.

Finance Update

Further to the announcement of 7 May 2025, Angus Energy confirms that while resculpting discussions are ongoing, Trafigura has granted the Company an extension of the first principal repayment until 26 May 2025.

There’s nothing that I can add at this stage, we know nothing about the deal which has presumably had to have been released as it had been leaked but I hope to catch up with Angus management soon, it could be exactly what the doctor ordered…

And finally…

The Eagles triumphed over the Noisy Neighbours in the FA Cup final and Max hung on to win in Imola.