Savannah Energy, a British independent energy company, has completed the acquisition of Sinopec International Petroleum Exploration and Production Company Nigeria (SIPEC).
This acquisition, initially disclosed on 19 March 2024, increases Savannah’s reserves and resources base by approximately 30% from 151 million barrels of oil equivalent (mboe) to 197mboe.
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SIPEC owns a 49% non-operated stake in the Stubb Creek oil and gas field (Stubb Creek Field), with the remaining 51% operated by Universal Energy Resources, a Savannah affiliate.
The SIPEC Acquisition is highly accretive to Savannah’s group net asset value, with SIPEC’s management estimated value at $194m on a pre-debt basis.
The transaction is set to unlock material production upside, with Savannah planning to initiate an up to 18-month expansion programme that is expected to boost the Stubb Creek Field’s gross production from an average of 2,700 barrels of oil per day (bopd) in 2024 to around 4,700bopd.
The Stubb Creek Field, situated in Akwa Ibom State, Nigeria, is a producing oilfield with substantial undeveloped, non-associated contingent (2C) gas resources.
As of the end of 2024, the field had an estimated 11 million stock tank barrels of probable (2P) gross oil reserves and 515 billion standard cubic feet (bscf) of 2C gross gas resources.
The field has been operational since 2015, with cumulative production reaching 8.1 million stock tank barrels.
The acquisition adds 227 billion cubic feet of 2C gross gas resources at the Stubb Creek Field, providing Savannah with additional long-term feedstock gas for sale to its Accugas customers.
The transaction consideration was fully funded through a drawdown under a $60m (£46.42m) Reserve-Based Lending debt facility arranged by the Standard Bank of South Africa.
At the time of completion, the cumulative consideration paid amounted to approximately $35.1m, inclusive of around $19.5m of cash available to SIPEC.
An additional $2m in deferred cash consideration is payable in eight quarterly instalments post-completion.
Savannah Energy chief executive officer Andrew Knott said: “We are delighted to announce the completion of the SIPEC acquisition – the achievement of one of our core business priorities for 2025. Our focus at the Stubb Creek Field will now turn to progressing the expansion project, which we expect to increase production by almost three quarters over the course of 2025/26.
“I look forward to updating shareholders on this in the coming months, as well as on the progress we make towards achieving the other core business priorities we outlined to shareholders earlier this month. I would like to thank the Government of Nigeria for the support that they have shown our company in approving the SIPEC acquisition and I extend a warm welcome to the SIPEC employees joining Savannah today.”
In August 2024, Savannah Energy terminated its planned purchase of Petronas’ oil and gas business in south Sudan.
