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Savannah Petroleum (SAVP)

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Friday 28 September, 2018

Savannah Petroleum

Half Year Results

RNS Number : 2546C
Savannah Petroleum PLC
28 September 2018
 

28 September 2018

Savannah Petroleum PLC

("Savannah" or "the Company")

 

2018 Half Year Results

 

Savannah Petroleum PLC, the British independent company focused around oil and gas activities in Niger and Nigeria, together with its subsidiaries (the "Group"), is today pleased to announce its unaudited interim results for the six-month period ended 30 June 2018.

 

First Half Summary

 

·      Successful delivery of drilling campaign in South East Niger, with two oil discoveries (Bushiya and Amdigh) made from two wells on the R3 East portion of the R3/R4 Production Sharing Contract ("PSC") during the period under review;

·      Consistently safe operations, with no lost time incidents and wells drilled within budgeted time;

·      One-year extension to the R1/R2 PSC received, providing the Company with greater flexibility to plan follow-on drilling activities, unconstrained by PSC timing issues;

·      Strengthening of the executive management team with the appointment of David Clarkson as Chief Operating Officer;

·      Strong progress on the acquisition of certain oil and gas assets in South East Nigeria from Seven Energy International Limited (the "Transaction"), with the successful completion of a US$125m equity placing to fund, inter alia, the Transaction and of an exchange offer to acquire Seven's 10.25% Senior Secured Notes;

·      Cash position as at 30 June of US$11.7m;

·      H1 cash operating costs (excluding Transaction costs) of US$7.3m, consistent with market expectations for pro-forma Enlarged Group cash operating costs (excluding Transaction costs) of c.US$17.5 - 20m for FY 2018.

 

Post Period Summary

 

·      Continued drilling success in South East Niger, with two further oil discoveries (Kunama and Eridal) delivered safely, with no lost time incidents, and within budgeted time;

·      Announcement of agreement with the Government of Niger to implement a domestic-focused Early Production Scheme ("EPS"), utilising crude oil resources associated with the Company's discoveries on R3 East;

·      Continued positive developments in relation to Agadem Rift Basin ("ARB") crude export solution, with the signature of an MOU between the Governments of the Republic of Niger and the Federal Republic of Nigeria envisaging the construction of an export pipeline from the ARB to a refinery in Northern Nigeria;

·      Updates to the Seven Energy Transaction announced, increasing the reserves and resources being acquired by 25.1 mmboe (+19%) and affording Savannah increased operational control across the gas value chain in South East Nigeria;

·      Commencement of work by Accugas on the Calabar Gas Distribution Project, expected to represent a material new revenue and cash flow stream for the Enlarged Group from H1 2020;

·      Cancellation of share premium account confirmed, creating distributable reserves in order to provide the Directors with maximum flexibility to, if appropriate, pay dividends to shareholders, buyback the Company's shares or make other distributions to shareholders;

·      Agreement of a term sheet with a leading Geneva-based oil trading firm for a new US$50m debt facility.

 

Outlook

 

·      Results of Zomo-1, the fifth well in the Company's ongoing Niger drilling campaign, expected to be announced shortly;

·      Four further well options available under the Company's rig contract with Great Wall Drilling Company Niger SARL, each of which can be exercised individually at Savannah's discretion;

·      Production test expected to be performed on Savannah's Amdigh-1 discovery well during Q4 2018;

·      Seven Energy Transaction expected to be completed during Q4 2018, with the Implementation Agreement anticipated to be signed by end October 2018.

 

 

 

Andrew Knott, CEO of Savannah Petroleum, said:

"I am very pleased with what Savannah has achieved during a very busy first half of 2018. The Company saw considerable drilling success in Niger, with two oil discoveries made during H1 and a further two discoveries post period end.  In recent months we have also announced a commitment, alongside the Government of Niger, to install an EPS on R3 East, which will see initial production from our discoveries sold into the domestic market.  We continue to see significant resource potential on our wider Niger acreage, and in addition to the upcoming Zomo-1 results we expect to update the market on our plans for further drilling in the coming months.

We continue to advance the Seven Energy Transaction, which is now expected to complete during the fourth quarter of 2018.  Earlier this month we announced two additional value accretive deals in relation to the broader Transaction, which will see Savannah increase its anticipated interests in two key assets, via an MOU with Frontier Oil at the Uquo field and the expected buy-out of minority shareholders at Stubb Creek.  These transactions are value accretive and afford Savannah increased operational control across the gas value chain.

We strengthened our executive management team with the appointment of David Clarkson to Chief Operating Officer, and have also put in place the ability to return capital to shareholders, if appropriate.  I would like to thank all of our stakeholders for their ongoing support, and we look forward to providing further updates on our Niger and Nigeria businesses in the coming weeks and months at what is an exciting time for our Company."

Unless otherwise defined, capitalised terms are as per the Company's Admission Document dated 22 December 2017.

 

For further information contact:

 

 

Savannah Petroleum  

+44 (0) 20 3817 9844

Andrew Knott, CEO

 

Isatou Semega-Janneh, CFO

 

Jessica Ross, VP Corporate Affairs

 

 

 

Strand Hanson (Nominated Adviser)

+44 (0) 20 7409 3494

Rory Murphy     

 

James Spinney

 

Ritchie Balmer

 

 

 

Mirabaud (Joint Broker)

+44 (0) 20 7878 3362

Peter Krens

 

Ed Haig-Thomas

 

 

 

Hannam & Partners (Joint Broker)

+44 (0) 20 7907 8500

Neil Passmore

Alejandro Demichelis

 

Hamish Clegg

 

 

 

Celicourt Communications      

+44 (0) 20 7520 9266

Mark Antelme

 

Jimmy Lea

 

 

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

 

Notes to Editors:

 

About Savannah Petroleum

 

Savannah Petroleum PLC is an AIM listed oil and gas company with exploration and production assets in Niger and Nigeria. Savannah's flagship assets include the R1/R2 and R3/R4 PSCs, which cover c.50% of the highly prospective Agadem Rift Basin ("ARB") of South East Niger, acquired in 2014/15. The Company is also in the process of acquiring interests in the cash flow generative Uquo and Stubb Creek oil and gas fields and a 20% interest in the Accugas midstream business in South East Nigeria from Seven Energy.

 

Further information on Savannah Petroleum PLC can be found on the Company's website: http://www.savannah-petroleum.com/en/index.php

 

 

 

SAVANNAH PETROLEUM PLC

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

6 months ended

Year

ended

 

 

 30 June

2018

 30 June

2017

 31 December 2017

 

 

US$'000

US$'000

US$'000

 

Note

Unaudited

Unaudited

Audited

 

#

 

 

 

 

 

Operating expenses                                                    

 

3

(19,250)

(5,944)

(27,091)

Operating loss

 

(19,250)

(5,944)

(27,091)

 

 

 

 

 

Finance income

 

345

174

283

Finance costs

 

(895)

(35)

(561)

Fair value adjustment (warrants)

8

2,223

-

-

Loss before tax

 

(17,577)

(5,805)

(27,369)

Income tax

 

(5)

(7)

(13)

Net loss and total comprehensive loss

 

(17,582)

(5,812)

(27,382)

 

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

 

Owners of the parent

 

(17,554)

(5,810)

(27,350)

Non-controlling interests

 

(28)

(2)

(32)

 

 

(17,582)

(5,812)

(27,382)

 

 

 

 

 

Loss per share

 

 

 

 

Basic and diluted (US$)

4

(0.03)

(0.02)

(0.10)

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2018

 

 

 

 

 

 

 

 

 

 

 

 

30 June

30 June

31 December

 

 

2018

2017

2017

 

 

US$'000

US$'000

US$'000

 

Note

Unaudited

Unaudited

Audited

Assets

 

 

 

 

Non-Current Assets

 

 

 

 

Property, plant and equipment

 

5,343

2,537

2,933

Exploration and evaluation assets

5

125,876

108,068

111,733

Long term loan receivables

6

88,956

-

-

Total non-current assets

 

220,175

110,605

114,666

Current Assets

 

 

 

 

Other receivables and prepayments 

 

29,185

857

3,999

Cash and cash equivalents

 

11,719

8,409

14,904

Total current assets

 

40,904

9,266

18,903

 

 

 

 

 

Total Assets

 

261,079

119,871

133,569

 

 

 

 

 

Equity and Liabilities

 

 

 

 

Capital and reserves

 

 

 

 

Share capital

7

1,240

483

520

Share premium

7

-

146,892

157,188

Other reserve

7

(4,989)

-

-

Capital contribution

7

458

458

458

Share based payment reserve

7

5,198

3,727

4,551

Accumulated surplus/(deficit)

 

232,644

(37,777)

(59,317)

Equity attributable to owners of the Group

 

234,551

113,783

103,400

Non-controlling interests

 

(425)

(367)

(397)

Total Equity

 

234,126

113,416

103,003

 

 

 

 

 

Current Liabilities

 

 

 

 

Trade and other payables

 

12,056

6,455

17,888

Borrowings

 

12,131

-

12,678

Financial liability (Warrants)

8

2,766

-

-

Total current liabilities

 

26,953

6,455

30,566

Total Equity and Liabilities

 

261,079

119,871

133,569

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018

 

 

 

 

 

 

6 months

ended

6 months ended

Year

ended

 

 30 June

2018

 30 June

2017

 31 December 2017

 

US$'000

US$'000

US$'000

 

Unaudited

Unaudited

Audited

Cash flows from operating activities:

 

 

 

  Loss for the period before tax

(17,577)

(5,805)

(27,369)

  Depreciation and amortisation

174

108

274

  Share option charge

647

789

1,613

  Unrealised finance costs

72

34

559

  Fair value adjustments (warrants)

(2,223)

-

-

 

 

 

 

Operating cash flows before movements in working     capital

(18,907)

(4,874)

(24,923)

 

 

 

 

  (Increase) / decrease in other receivables and              

  prepayments

(18,808)

193

(2,560)

  (Decrease) / increase in trade and other payables

(12,000)

435

12,604

Income tax paid

(5)

(7)

(798)

 

 

 

 

Net cash used in operating activities

(49,720)

(4,253)

(15,677)

Cash flows from investing activities:

 

 

 

  Payments for property, plant and equipment

(2,226)

(1,691)

(2,253)

  Exploration and evaluation costs paid

(8,332)

(13,698)

(17,313)

Acquisition of long term loan receivable (SSN's)

(40,911)

-

-

 

 

 

 

Net cash used in investing activities

(51,469)

(15,389)

(19,566)

Cash flows from financing activities:

 

 

 

  Finance income/(charges)

21

(34)

(221)

  Proceeds from issues of shares, net of issue

  costs

98,937

5,024

14,966

Drawdown of borrowings

876

-

12,341

Repayment of borrowings

(1,830)

-

-

Net cash provided by financing activities

98,004

4,990

27,086

Net decrease in cash and cash equivalents

(3,185)

(14,652)

(8,157)

Cash and cash equivalents at beginning of period

14,904

23,061

23,061

Cash and cash equivalents at end of period

11,719

8,409

14,904

         

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

AS AT 30 JUNE 2018

 

 

 

Share

 

Share

 

Capital

 

Other

Share

 based

(Accumulated deficit)/

 

Non- controlling

 

 

capital

premium

contribution

reserve

payment reserve

Retained

earnings

Total

interest

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2016 (Audited)

483

146,892

458

-

2,938

(31,967)

118,804

(365)

118,439

Equity settled share based payments

-

-

-

-

789

-

789

-

789

Loss for the period and total comprehensive loss

-

-

-

-

-

(5,810)

(5,810)

(2)

(5,812)

Balance at 30 June 2017 (Unaudited)

483

146,892

458

-

3,727

(37,777)

113,783

(367)

113,416

Issue of ordinary shares to shareholders, net of issue costs

37

10,296

-

-

-

-

10,333

-

10,333

Equity settled share based payment

-

-

-

-

824

-

824

-

824

Loss for the period and total comprehensive loss

-

-

-

-

-

(21,540)

(21,540)

(30)

(21,570)

Balance at 31 December 2017 (Audited)

520

157,188

458

-

4,551

(59,317)

103,400

(397)

103,003

Issue of ordinary shares to shareholders, net of issue costs

720

152,385

-

-

-

(58)

153,047

-

153,047

Equity settled share based payment

-

-

-

-

647

-

647

-

647

Warrants issue

-

-

-

(4,989)

-

-

(4,989)

-

(4,989)

Share premium cancellation

-

(309,573)

-

-

-

309,573

-

-

-

Loss for the period and total comprehensive loss

-

-

-

-

-

(17,554)

(17,554)

(28)

(17,582)

Balance at 30 June 2018 (Unaudited)

1,240

-

458

(4,989)

5,198

232,644

234,551

234,126

                     

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Savannah was incorporated in the United Kingdom on 3 July 2014. Savannah's principal activity is the management of its investment in Savannah Petroleum 1 Limited ("SP1"). SP1 was incorporated in Scotland on 3 July 2013. SP1's principal activity is the management of its investment in Savannah Petroleum 2 Limited ("SP2"), and the provision of services to other companies within the Group. SP2 has a 95% interest in Savannah Petroleum Niger R1/R2 S.A. ("Savannah Niger") whose principal activity is the exploration of hydrocarbons in the Republic of Niger.

 

 

Basis of Preparation

 

The condensed consolidated financial statements have been prepared using the same accounting policies that applied to the Group's latest annual audited financial statements. The provisions of IAS 34 'Interim Financial Reporting' have not been applied.

The condensed consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2017 Annual Report. The financial information for the six months ended 30 June 2018 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Savannah Petroleum PLC are prepared in accordance with IFRSs as adopted by the European Union. The Independent Auditors' Report on that Annual Report and financial statements for 2017 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The Group's statutory financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies.

All amounts have been prepared in US dollars, this being the Group's functional currency and its presentational currency.

 

Going concern

 

The Directors have reviewed the budgets and forecasts as well as the funding requirements of the business for the next 12 months. Having conducted this review, the Directors have a reasonable and strong expectation that the Group has adequate resources to continue operating for the foreseeable future. The planned acquisition of certain assets from Seven Energy is expected to see the Company acquire interests in two free cash flow generative oil and gas fields and receive incremental cash funds on close associated with the US$20m proceeds from the SSN equity issuance. This transaction is currently anticipated to complete in the fourth quarter of 2018, following the satisfaction of relevant conditions precedent which include, inter alia, the Implementation Agreement being entered into, the Accugas Transaction and the Accugas Waiver becoming effective, the Frontier Agreements being entered into and becoming effective, Ministerial Consent and NSEC Consent.

Upon completion of the transaction the Group is therefore expected to benefit from a significant positive liquidity/working capital inflow. Were the transaction to be materially delayed from the currently anticipated fourth quarter completion schedule, which the Directors recognise as a potential risk, the Group would likely be required to access incremental debt facilities. The Directors have a reasonable and strong expectation that the Group would be able to achieve this. On this basis the Directors continue to adopt the going concern basis in preparing the half-yearly results.

Accounting policies (continued)

Intangible exploration and evaluation assets

 

Intangible assets relate to exploration, evaluation and development expenditure and are accounted for under the 'successful efforts' method of accounting per IFRS 6 'Exploration for an Evaluation of Mineral Resources'. The successful efforts method means that only costs which relate directly to the discovery and development of specific oil and gas reserves are capitalised. Exploration and evaluation costs are valued at cost less accumulated impairment losses and capitalised within intangible assets. Development expenditure on producing assets is accounted for in accordance with IAS 16, 'Property, plant and equipment'. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the income statement.

Financial assets

 

During the period to 30 June 2018, the Group completed the exchange offer in respect of the 10.25% SSN's issued by Seven Energy Finance Ltd, representing 96.04% of the outstanding 10.25% SSN's.

 

The acquisition of the SSN's were recognised at a fair value of US$89m and recorded as Long-term loan receivables, it is expected to form part of the purchase consideration for Seven Energy upon completion of the transaction.

 

Management assessed whether the acquisition of the SSN's, which will later form part of the purchase consideration could attribute to Savannah, control over Seven Energy. Management concluded that the acquisition did not grant Savannah 'control' (as defined in IFRS 10) over Seven Energy, as the Group does not have access to the variable return from the SSN's nor does it have the ability to direct the relevant activities of Seven Energy.

 

Warrants

Savannah granted to each participant in the two-tranche equity placing (the first and second tranches having taken place in December 2017 and February 2018 respectively) one warrant to subscribe for ordinary shares for every two placing shares subscribed. The shares are denominated in Sterling, however the reporting currency of the Group is the US Dollar. The 'fixed for fixed' test therefore does not pass and the warrants are treated as a financial liability through profit and loss.

The warrants are exercisable twelve months post second tranche equity placing, at an exercise price of £0.35.

 

Segmental analysis

 

In the opinion of the directors, the Group is primarily organised into a single operating segment. This is consistent with the Group's internal reporting to the chief operating decision maker. Separate segmental disclosures have therefore not been included.

 

3.   Operating loss

 

Operating loss has been arrived at after charging:

 

30 June

30 June

  31 December

 

2018

2017

2017

 

Unaudited

Unaudited

            Audited

 

US$'000

US$'000

US$'000

 

 

 

 

Depreciation of property, plant and equipment

174

108

274

Staff costs

5,035

3,293

5,097

Operating lease rental

133

61

189

 

 

 

 

 

During the period an amount of US$12,000,000 (HY 2017: US$1,400,000, FY 2017: US$18,500,000) related to costs associated with the proposed acquisition of the Seven Assets from Seven and Seven Energy Creditor Group, and was included within operating loss.

 

4.    Loss per share

 

Basic loss per share amounts are calculated by dividing the loss for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.

 

Diluted loss per share amounts are calculated by dividing the loss for the periods attributable to ordinary holders by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. The effect of share options and warrants are anti-dilutive and are therefore excluded from the calculation of diluted loss per share.

 

Details of share capital movements are given in note 7.

 

 

30 June

30 June

31 December

 

2018

2017

2017

 

Unaudited

Unaudited

Audited

 

US$'000

US$'000

US$'000

 

 

 

 

Net loss attributable to owners of the parent

17,554

5,810

27,350

 

 

 

 

 

Number of shares

Number of shares

Number of shares

 

 

 

 

Basic and diluted weighted average number of shares

657,332,395

274,621,447

274,922,400

 

 

 

 

 

US$

US$

US$

 

 

 

 

Basic and diluted loss per share

0.03

0.02

0.10

 

 

 

 

 

 

5.    Exploration and evaluation assets

 

Exploration and evaluation assets consist of acquisition costs relating to the acquisition of exploration licenses and other costs associated directly with the discovery and development of specific oil and gas reserves in the R1/R2 and R3/R4 license areas.

 

30 June

30 June

  31 December

 

2018

2017

2017

 

Unaudited

Unaudited

            Audited

 

US$'000

US$'000

US$'000

 

 

 

 

Exploration and evaluation assets

125,876

108,068

111,733

 

 

 

 

 

The amounts for exploration and evaluation assets represent active exploration projects. These will ultimately be written off to the statement of comprehensive income as exploration costs if commercial reserves are not established, but are carried forward in the statement of financial position whilst the determination process is ongoing. There are no indications of impairment having regard to the indicators in IFRS 6.

Exploration and evaluation costs of US$14,143,000 incurred in the six-month period to 30 June 2018 are mainly related to drilling campaign costs in the R3/R4 license area. As at 30 June 2018, the Group had realised oil discoveries in both wells drilled to this date (Bushiya and Amdigh). The third well, Kunama, spudded shortly before 30 June 2018.

In May 2018, the Group received a one-year extension to its R1/R2 Production Sharing Contract ("PSC") with the Government of Niger. The extension is the first phase of Savannah's Exclusive Exploration Authorisation under the PSC.

 

6.    Long term loan receivable

 

 

30 June

30 June

31 December

 

2018

2017

2017

 

Unaudited

Unaudited

Audited

 

US$'000

US$'000

US$'000

 

 

 

 

10.25% Senior Secured Notes

 

 

 

-   Cash consideration

40,910

-

-

-   Equity consideration

48,046

-

-

 

 

 

 

 

88,956

-

-

 

 

 

 

 

On 7 February 2018 the Group completed the exchange offer on the 10.25% Senior Secured Notes (SSN's) and Savannah had received valid exchange instructions in respect of US$305,623,123 in principal amount of outstanding 10.25% SSN's, representing 96.04 per cent of the outstanding 10.25% SSN's.

The SSN's acquired were recognised at their fair value of $88,956,000, having been obtained at a material discount to their principal amount. The SSN's are expected to form part of the purchase consideration for Seven Energy upon Deal Completion.

 

 

7.    Share capital

 

 

30 June

30 June

31 December

 

2018

2017

2017

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

 

 

Fully paid ordinary shares in issue (number)

794,489,081

274,621,447

301,793,177

Called up ordinary shares in issue (number)

22,480,346

-

290,270

 

 

 

 

Par value per share in GBP

0.001

0.001

0.001

 

 

 

 

 

 

 

Number of Shares

 

Share Capital

 

Share Premium

 

Total

 

 

 

US$'000

 

US$'000

 

US$'000

At 30 June 2017 (Unaudited)

274,621,447

 

483

 

146,892

 

147,375

Shares issued

27,462,000

 

37

 

10,296

 

10,333

At 31 December 2017 (Audited)

302,083,447

 

 520

 

157,188

 

157,708

Shares issued

514,885,980

 

720

 

152,385

 

153,105

Share premium cancellation

-

 

-

 

(309,573)

 

(309,573)

At 30 June 2018 (Unaudited)

816,969,427

 

1,240

 

-

 

1,240

 

 

 

Other capital reserves

 

 

Capital contribution

 

 

Other reserve

 

Share based payment reserve

 

Total

 

US$'000

 

US$'000

 

US$'000

 

US$'000

At 30 June 2017 (Unaudited)

458

 

-

 

3,727

 

4,185

Share based payments expense during the year

-

 

-

 

824

 

824

At 31 December 2017 (Audited)

458

 

-

 

4,551

 

5,009

Share based payments expense during the period

-

 

-

 

647

 

647

Warrants issued at fair value

-

 

(4,989)

 

-

 

(4,989)

At 30 June 2018 (Unaudited)

458

 

(4,989)

 

5,198

 

667

 

Nature and purpose of reserves

Capital contribution reserve

On 1 August 2014 a capital contribution of US$458,000 was made by shareholders of the Group as part of the loan note conversion.

 

Share based payment reserve

The share based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

Other reserve

The other reserve figure represents the reclassification of the fair value of warrants granted from equity to a financial liability, at initial grant date. See note 8 for further information.

8.    Warrant liability

 

The Company issued warrants along with the share issued during the placings in December 2017 and February 2018, being one warrant for every two ordinary shares placed. The warrants are exercisable at a price equal to the placing price of the Company's shares on the date of grant. There is no vesting period. If the warrants remain unexercised after a period of one year from the date of the second grant, the warrants expire.

 

 

30 June

30 June

31 December

 

2018

2017

2017

 

Unaudited

Unaudited

Audited

 

US$'000

US$'000

US$'000

 

 

 

 

Warrants

 

 

 

-   Fair value recognition at issue date

4,989

-

-

-   Fair value through profit and loss

(2,223)

-

-

 

 

 

 

As at period end

2,766

-

-

 

 

 

 

 

 

Details of the warrants outstanding during the period are as follows:

 

 

 

Outstanding at the beginning of period

13,090,817

35p

-

-

-

-

Issued during the period

119,500,000

35p

-

-

13,731,000

35p

Forfeited during the period

-

-

-

-

(640,183)

35p

Exercised during the period

-

-

-

-

-

-

Expired during the period

-

-

-

-

-

-

 

 

 

 

 

 

 

Outstanding at the end of the period

132,590,817

35p

-

-

13,090,817

35p

 

The warrants outstanding at 30 June 2018 had a weighted average exercise price of 35p, and a weighted average remaining contractual life of 7 months. In 2018, warrants were issued on 9 February 2018. The aggregate of the estimated fair values of the warrants issued on those dates is US$2.5 million. In 2017, warrants were issued on 22 December 2017. The aggregate of the estimated fair values of the warrants issued on those dates is US$0.3 million. The inputs into the Black-Scholes model are as follows:

 

 

 

30 June 2018

30 June 2017

  31 December 2017

Weighted average share price USD cents

38.50

-

38.50

Weighted average exercise price USD cents

46.22

-

46.22

Expected volatility

38.02% 

38.02% 

Expected life

7 months

-

13 months

Risk-free rate

0.61%

-

0.61%

 

 

 

 

 

Expected volatility was determined by calculating the historical volatility of the group's share price and the currency fluctuation between the USD and GBP over the previous 3 years. The expected life used in the model has been adjusted, based on contractual terms.

 

The fair value of the warrants at 31 December 2017 was US$0.3m. This was not recognised in the 2017 Annual Report due to its immaterial value.

 

 

9.    Capital commitments

 

At 30 June 2018, capital commitments related to drilling amounted to US$8.8m (HY 2017: US$0, FY 2017: US$0).

 

 

 

Introduction

We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 June 2018 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated Statement of Changes in Equity. We have read the other information contained in the half yearly financial report which comprises only the Notes to the Condensed Consolidated Interim Financial Statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As disclosed in Note 2 the annual financial statements of Savannah Petroleum PLC are prepared in accordance with IFRSs as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 2.

Our responsibility

Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 2.

 

Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants

Glasgow

27 September 2018

 

 


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