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Savannah Energy announces FY 2022 audited annual results

08 Jun 2023

Savannah Energy, the British independent energy company focused around the delivery of Projects that Matter, has announced its audited results for the year ended 31 December 2022. A copy of the 2022 Annual Report and Accounts will be available to download from the Company’s website later today.

Andrew Knott, CEO of Savannah Energy, said:

'2022 was another year of significant progress and growth for our company. Our Total Revenues(1) grew by 26% to US$290m, our Adjusted EBITDA(2) rose by 27% to US$222m. To put these numbers into context, since the announcement of our decision to acquire our Nigerian business in 2017, it has delivered six consecutive years of Total Revenues1 growth at a compound annual growth rate of 21%. This growth has seen us more than double the number of customers the business serves and increase the share of Nigeria’s thermal power generation capacity that it supplies from 10% to 24%. Our performance against key industry sustainability metrics relating to HSE performance, carbon intensity, senior management gender diversity and local employee ratios remain industry leading.

Looking forward to the rest of 2023, I am confident in where we are as a business. Key projects we are focused on completing include: (1) the closing of our proposed acquisition of PETRONAS’ assets in South Sudan in Q3; (2) at least one further hydrocarbon asset deal; (3) reaching our target of having up to 1GW+ of renewable energy projects in motion by end of year; (4) the flow testing of our R3 East development in Q4; and (5) the refinancing our Nigerian debt.

I would urge shareholders to spend time reading through my CEO Letter to Shareholders and the “Why we do what we do” section of the Annual Report which discuss our corporate purpose and associated core beliefs which serve to underpin our hydrocarbons AND renewables strategy and business model. They are essential reading for anyone trying to understand what Savannah is, where we are going and why.

I would like to express my gratitude to all of those who contributed to our success in 2022 – my incredibly dedicated and passionate colleagues, our host governments, communities, local authorities and regulators, our shareholders and lenders, and our customers, suppliers and partners. Thank you all.'

Key FY 2022 Financial Highlights

FY 2022 Total Revenues1 of US$290.4m (+26% on FY 2021 Total Revenues1 of US$230.5m). This is ahead of the Company’s previously issued FY 2022 guidance of ‘Total Revenues1 of greater than US$215.0m’;
Adjusted EBITDA2 of US$222.4m (+27% on FY 2021 Adjusted EBITDA2 of US$175.0m);
Adjusted EBITDA2 margin remained broadly unchanged at 77%;
Average realised sales price for 2022 of US$4.14/Mscfe (-6% on the 2021 average realised price of US$4.42/Mscfe and driven by the broader mix of gas customers);
Operating expenses plus administrative expenses3 of US$66.2m (FY 2022 guidance of up to US$75.0m);
Depreciation, Depletion and Amortisation4 of US$39.0m (FY 2022 guidance of US$41.9m based on the actual produced volumes);
Capital Expenditure for the year of US$23.6m (FY 2022 guidance of up to US$35.0m);
Group cash balance5 of US$240.9m as at 31 December 2022 (+56% versus FY 2021 year-end Group cash balance5 of US$154.3m);
Group net debt6 of US$404.9m as at 31 December 2022 (+9% versus FY 2021 year-end Group net debt6 of US$370.0m);
Leverage7 was 1.8x (2021 leverage7 of 2.1x) and an interest cover ratio8 of 3.4x (FY 2021 ratio of 2.8x); and
Total Group assets amounted to US$1,760m at year-end (2021: US$1,349m).

Key FY 2022 Operational Highlights

FY 2022 average gross daily production from the Nigerian operations was 26.8 Kboepd, a 20% increase from the average gross daily production of 22.3 Kboepd in FY 2021;
Of the FY 2022 total average Nigerian gross daily production of 26.8 Kboepd, 90% was gas, including a 23% increase in gas production from the Uquo gas field, from 118 MMscfpd (19.7 Kboepd) in FY 2021 to 145 MMscfpd (24.2 Kboepd) in FY 2022;
Four new gas sales agreements (“GSAs”) announced during the year:
- GSA announced with Central Horizon Gas Company Limited on 21 February 2022 to supply up to 5 MMscfpd of gas;
- GSA announced with Trans Afam Power Limited on 6 June 2022 to supply up to 35 MMscfpd of gas;
- GSA announced with Notore Chemical Industries PLC on 16 August 2022 to supply up to 10 MMscfpd of gas; and
- Interim GSA signed with Shell Petroleum Development Company on 26 October 2022 to supply up to 3 MMscfpd.
Contract extension announced on 22 April 2022 for the GSA with First Independent Power Limited, increasing the quantity of gas supplied from up to 35 MMscfpd to up to 65 MMscfpd and extending supply to cover three of its power plants, FIPL Afam, Eleme and Trans Amadi;
In March 2022, Savannah announced its inaugural renewable energy project, the up to 250 MW Parc Eolien de la Tarka wind farm project in Niger. This is targeted to increase the country’s on-grid electricity supply by up to 40% with project sanction expected in 2024.

Post-year End Operational Update

Following the signing of two new renewable energy agreements post-year end, Savannah currently has up to 525 MW of hydroelectric, solar photovoltaic and wind projects in motion in Cameroon and Niger:

On 20 April 2023, Savannah announced the signing of an agreement for the development of the 75 MW Bini a Warak Hydroelectric Project located in the northern Adamawa Region of Cameroon. Project sanction is expected in 2024 and first power targeted in the 2027 to 2028 window.
On 11 May 2023, Savannah announced the signing of an agreement with the Government of Niger for the development of two proposed solar photovoltaic power plants, with the combined installed power generation capacity of up to 200 MW. The project is expected to receive project sanction in 2024, with first power targeted in the 2025 to 2026 window.

Following Savannah’s acquisition of a 41.06% indirect equity interest in the Cameroon Oil Transportation Company (“COTCo”) from ExxonMobil on 9 December 2022, post-year end on 20 April 2023 Savannah’s wholly owned subsidiary, Savannah Midstream Investment Limited (“SMIL”), signed a share purchase agreement with the national oil company of Cameroon, Société Nationale Des Hydrocarbures (“SNH”), relating to the sale by SMIL and purchase by SNH of 10% of the issued share capital in COTCo.
For the five months to end May 2023, COTCo transported an average of 136.9 Kbopd of crude oil with a total of 21 liftings conducted on behalf of its customers. Each lifting saw the safe and successful transfer of approximately 1 MMbbls of crude oil from the FSO to ocean going vessels by COTCo on behalf of its customers.

Sustainability Highlights

0.34 Lost Time Injury Rate (2021: zero) and a 0.68 Total Recordable Incident Rate in 2022 (2020: 0.34);
Low carbon intensity metric maintained of 9.7 kg CO2e/boe (2021: 11.2 kg CO2e/boe), 48% lower than the industry average of 18.7 kg CO2e/boe;
Senior management female gender diversity of 32% (2021: 35%);
Total Contributions9 to host nations Nigeria and Niger increased by 3% to US$56.9m (2021: US$55.1m);
Investment in social impact projects in Nigeria and Niger increased by 23% to US$304,000 in 2022 (2021: US$246,000);
The number of transport related incidents remained exceptionally low with one in 2022 covering over 1.3 million transport kilometres travelled (2021: two incidents);
Road Traffic Accident Rate metric reported for the first time which was 0.14;
Establishment of a multimillion-dollar, world class training scheme across the business for 2022-2023, resulting in a 74% increase in training hours per employee and a 109% increase in total working hours of training in 2022, respectively;
Zero hydrocarbon spills recorded (defined as not greater than one barrel reaching the environment) (2021: zero);
Freshwater usage reduced to approximately 11,314m3 of freshwater from boreholes and mains supply (2021: 11,645m3, restated figures); and
Minimised our negative impacts on biodiversity by establishing Biodiversity Action Plans at our four operational sites.