- Savannah announces $1.25 billion South Sudan deal
- Follows acquisition of assets from Exxon Mobil in Chad and Cameroon
- Shares set to be suspended into 2023
Fresh from completing the acquisition of assets from ExxonMobil (XOM:NYSE) in Chad and Cameroon, African oil and gas outfit Savannah Energy (SAVE:AIM) has unveiled a £1.25 billion deal to buy assets in South Sudan from Indonesian state operator Petronas.
Both transactions constituted reverse takeovers and therefore had to be approved by shareholders. Savannah’s shares were already set to be suspended until 13 December pending completion of the Exxon transaction, that period of suspension now looks set to be materially extended.
Savannah paid out $407 million for the Exxon assets. The company is also yet to complete on the purchase of Petronas’ stake in the Chad and Cameroon fields.
Investors will hope the process isn’t too protracted. It took two years to get a previous acquisition in Nigeria over the line - the deal to acquire Seven Energy finally completing at the back end of 2019. Savannah is planning to publish an admission document in the first half of 2023 for the Petronas deal and for now details are relatively scarce.
HOW SAVANNAH IS ‘BUILDING A WHOPPER’
The plan is to fund the purchase using a mixture of its own cash resources and debt, in a similar way to the Exxon deal was financed.
The Petronas assets include interests in 64 producing fields and the relevant subsidiary reported net profit of more than $130 million across the three years to 31 December 2021. The scale of the deal means you would expect Savannah to resume trading at a higher market capitalisation than the £340 million it was at before being suspended.
In reference to the deal Shore Capital analyst Craig Howie said: ‘This clearly relates to an extremely substantial package of producing, liquids-focused assets and offers an excellent geographic fit with the company’s existing sub-Saharan operations.’
Howie: ‘We published a note on Savannah on 11 July 2022, entitled ‘Building a whopper’ and it seems clearer than ever today that (chief executive) Andrew Knott and team intend to do just that.’
