Savannah Energy (SAVP) says it has completed the complex takeover of Seven Energy and now controls extensive upstream and midstream gas assets in Nigeria.
Seven ran into major issues in 2017 from a combination of security issues, unpaid invoices from government gas buyers and an inability to change Nigerian Naira into US dollars, leaving it unable to keep paying its debts. Those debtors, including Savannah, signed off on the deal rather than shareholders.
The company said the completion made it a “leading oil and gas producer” in London. The midstream business includes 80 per cent of the Accugas gas processing facility with a capacity of 200m standard cubic feet per day (mmscfd), with around 50mmscfd in spare capacity currently.
Savannah will bring in cash as a result of the deal, as it is selling 20 per cent of both Accugas and the holding company that has 40 per cent of the Uquo gas field for $54m (£42m).
For the deal to be completed, Seven had to be put into administration, and Savannah announced a London court had signed off on this earlier in the week.
The structure of the deal led to complaints from Seven shareholders, who voted against the tie-up in a protest move at a meeting in July. Due to the deal structure this did not block the combination, and while the majority of those voting said no to the deal, about 60 per cent of shares present abstained from going either way.
Additional detail will come on the Seven portfolio after Savannah publishes a supplemental listing document.
Broker Numis said “great credit” must go to Savannah management for getting the deal done. Chief executive Andrew Knott had missed several self-imposed deadlines for the tie-up while waiting for the Nigerian government to sign off on the combination. Numis forecast free cash flow of $110m to $125m a year in the medium term.
