Savannah Energy has pushed back closing on its South Sudan acquisition yet again, although Shore Capital has set out some grounds for positivity.
The operator said it remained suspended from trading on London’s AIM. It has pushed back the cancellation date to April 2 this year.
However, Savannah said it is still making progress on the various parts of the deal. These include “in-country approvals”, which are required to complete the deal for Petronas’ assets.
Shore Capital analyst Craig Howie said it can be “realistically expected” that Savannah publish its AIM admission document within this time.
Savannah announced the deal in December 2022. It agreed to pay $1.25 billion to Petronas for the Malaysian company’s assets in South Sudan. At that point, it aimed to publish its admission document within the first half of 2023.
Shore’s Howie said “we continue to sense that Savannah is pressing on to ensure that this can occur as soon as possible – noting AIM’s granting of the further extension announced today”.
Once the documents are published, he said, it will be easier to assess the South Sudan. In the meantime, Howie said, “we continue to forecast material organic revenues and cash flow”.
Petronas has a 40% stake in Block 3/7, 30% in Block 1/2/4 and 67.9% in Block 5A. In 2019-21, the Petronas unit reported an average post-tax profit of $130.6 million.
The deal has an effective date of January 1, 2022. Thus, while the delays are inconvenient, cash flow from the assets will go to paying down the final price paid by Savannah.
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