Savannah Energy 2021 Half Year Results And Outlook For The Year

Savannah Energy PLC, the African-focused British independent energy company sustainably developing high quality, high potential energy projects in Nigeria and Niger, has announced its unaudited interim results for the six months ended 30 June 2021 and outlook for the FY 2021.

Andrew Knott, Cheif ExecutIve Officer of Savannah Energy, said:

“These results show just how far we have come this year, with US$116.5m of Total Revenues1, US$91.5m of Adjusted EBITDA2 and strong free cash flow. Our operational performance has been excellent which is important to all our stakeholders as we continue to play a vital role in driving economic growth and living standards in our countries of operation. This growth is set to continue as we progress discussions with ExxonMobil with respect to the proposed acquisition of its entire upstream and midstream assets in Chad and Cameroon and begin an anticipated new investment programme on our Niger assets, over which we are pleased to have agreed terms for an extension of up to 10 years.

I’d like to thank all of our shareholders and other stakeholders for their continued support as we look to capitalise on the opportunities available to us.”

H1 2021 Financial Highlights

• Total Revenues1 of US$116.5m (up 2% on H1 2020 Total Revenues of US$114.6m), in line with 2021 guidance of over US$205m for the full year;

• Average realised gas price of US$4.2/Mscf (H1 2020: US$3.9/Mscf) and an average realised liquids price of US$63.5/bbl (H1 2020: US$48.3/bbl);

• Cash collections from the Nigerian Assets in H1 2021 were US$101.6m compared to US$82.1m in H1 2020;

• Adjusted EBITDA2 of US$91.5m (H1 2020: US$89.2m);

• Adjusted EBITDA margin broadly unchanged at 79% (H1 2020: 78%);

• Operating expenses plus administrative expenses3 of US$22.5m (H1 2020: US$22.7m) being US$1.0/Mscfe (H1 2020: US$1.1/Mscfe);

• Profit before tax of US$7.7m (H1 2020: US$1.2m);

• Drilling of a gas well on the Uquo field commenced in September 2021 and the non-associated gas compression project at the Accugas gas processing plant is progressing, full year capital expenditure guidance of up to US$65m maintained;

• Net debt position as at 30 June 2021 of US$369.4m (Year-end 2020: US$408.7m) with Adjusted Leverage4 of 2.3x (Year-end 2020: 2.5x); and

• Cash at bank5 of US$135.7m as at 30 June 2021 (Year-end 2020: US$106.0m)

H1 2021 Operational Highlights

• Average gross daily production, of which 88.6% was gas, increased 6% during H1 2021 to 22.6 Kboepd (H1 2020: 21.3 Kboepd). This includes a 6% increase in production from the Uquo gas field compared to the same period last year, from 113.5 MMscfpd (18.9 Kboepd) to 120.2 MMscfpd (20.0 Kboepd);

• On 5 February 2021 Accugas signed a new gas sales agreement (“GSA”) with Mulak Energy Limited (“Mulak”) representing Savannah’s entry into Nigeria’s high-growth compressed natural gas (“CNG”) market;

• On 2 June 2021, Savannah announced that the Company is in exclusive discussions with ExxonMobil Corporation with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon; and

• On 7 June 2021, Savannah published its re-focused sustainability strategy as part of the 2020 Annual Report focusing on four key strategic pillars with the strategy anchored around the 13 most relevant UN Sustainable Development Goals where we believe Savannah can have the biggest economic, environmental, social and governance impact

Post Period Update

• Drilling of a new gas production well in the Uquo field, Uquo 11, commenced on 21 September 2021;

• On 29 September 2021, the Niger Ministry of Petroleum amalgamated Savannah’s four licence areas (covered by the previous R1/R2 PSC and the R3/R4 PSC) into a single PSC (R1/R2/R3/R4), valid for up to a further 10 years. This lays the foundation for an anticipated new investment programme in our R3 East development in 2022;

• On 12 August 2021 it was announced that, as a result of the Company’s growth in recent years and the planned significant further expansion, the decision was taken to restructure the finance function of the Company. As a result, Ms Isatou Semega-Janneh left, and ceased to be a Director of, the Company; and

• On 16 August 2021 His Excellency President Muhammadu Buhari signed the Petroleum Industry Act 2021 (the “PIA”) into law indicating the government of Nigeria’s commitment to enhancing the governance, administrative and fiscal regimes of the domestic industry. It is anticipated that the PIA will have a positive fiscal impact on Savannah

FY 2021 Guidance Reiterated

We reiterate our FY 2021 guidance as follows:

• Total Revenues1 greater than US$205.0m from upstream and midstream activities associated with the Company’s three active Nigerian gas sales agreements and liquids sales from the Company’s Stubb Creek and Uquo fields. Any revenues received from new additional gas sales agreements would, therefore, be incremental to this;

• Operating expenses plus administrative expenses3 of US$55.0m to US$65.0m;

• Depreciation, Depletion and Amortisation of US$19m fixed for infrastructure assets plus US$2.6/boe for oil and gas assets; and

• Capital expenditure of up to US$65.0m