Savannah Energy has announced that it plans to reduce its four-year capital expenditures in Nigeria by 15 percent.
In a statement on Friday, the British company said it had amended its capital expenditure programme in Nigeria as originally set out in the Nigeria Competent Person’s Report published in December 2019.
It cut its planned capital spending in the country for the 2020-23 period from about $118m to $100m, saying, “This has resulted in a reduction in the overall indicative group capital expenditure plans of around 13 per cent from $137m to $119m over the same period.”
“Overall, we have reduced our cost estimate for our indicative 2020–23 capital expenditure programme by around 13 per cent, versus our previous indications and are guiding that we expect our underlying operating costs (which include maintenance expenditures) to track levels consistent with 2020 (in real terms) over the medium term.
“It should also be noted that our 2021 guidance excludes contributions from any new gas sales agreements or any contribution from the R3 East development project in Nigeria, which would be incremental to this,” said Andrew Knott, Chief Executive Officer of the company.
The principal work programme changes will see only one gas well drilled in the 2020–23 period on the Uquo field and the acceleration of the Uquo field compression project previously assumed to commence in 2026/27 to 2021/22.
Knott said, “As this FY 2020 trading update demonstrates, despite the challenging headwinds, 2020 was a milestone year for Savannah Energy.
“It was our first full year of operating the high margin assets we acquired in Nigeria and I am delighted to report that we have significantly exceeded all of the original financial guidance we presented to the market this year, as laid out in our corporate Key Performance Indicator statement published within our FY 2019 Annual Report.
“In 2020, we grew revenues, reduced our underlying cost base and continued to provide gas contributing to over 10 per cent of Nigeria’s daily national average power generation, highlighting the resilience of the business.”
