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magazineSavannah raises funds as it targets Seven deal completion
Savannah Petroleum (SAVP:AIM) 27.1p
Gain to date: 1.9%
Original entry price: Buy at 26.6p, 6 September 2018
The decline in oil prices and news of a dilutive share placing (24 Jan) have taken some of the wind out of the sails of oil and gas producer Savannah Petroleum (SAVP:AIM). As a result, the healthy early gains we recorded following our positive call have largely been erased.
Delays in concluding the acquisition of a basket of assets from Seven Energy in Nigeria have also not helped the share price; this acquisition is now anticipated to complete before the end of the first quarter.
The company expects to receive $90m in cash when this deal goes through. For now it has raised around $23m through a placing at 28p per share. Investors can take some comfort from the fact the board itself had a healthy participation in the fundraising.
Regardless of the frustration at the hold-up in getting the Seven deal over the line, we continue to like the medium-term story, where the company should be able to generate significant cash flow from the Seven Energy portfolio which it can invest in developing its exploration and appraisal assets in both Nigeria and Niger.
SHARES SAYS:
Investors should (eventually) be rewarded for their patience.
Keep buying.
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