Savannah Energy completes $35.1m SIPEC acquisition, expands reserves to 197 MMboe

Savannah Energy Plc, a British independent energy company, has completed its acquisition of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (SIPEC), a year after its initial announcement.

SIPEC holds a 49 per cent non-operated interest in the Stubb Creek oil and gas field, which is operated and 51 per cent owned by Universal Energy Resources Limited, a Savannah affiliate.

The company, in a statement, stated that the acquisition boosts Savannah’s reserves and resources by approximately 30 per cent, increasing from 151 million barrels of oil equivalent (MMboe) to 197 MMboe.

It noted that it also adds 227 billion standard cubic feet (Bscf) of 2C gross gas resources at Stubb Creek Field, enhancing the company’s long-term feedstock gas supply for Accugas customers.

The $35.1 million transaction, according to Savannah Energy, was fully funded through a drawdown from a $60 million reserve-based lending (RBL) arranged by Standard Bank of South Africa Limited.

The consideration includes approximately $19.5 million in SIPEC’s available cash and a deferred payment of $2 million, payable in eight quarterly instalments.

Following the acquisition, Savannah Energy plans to commence an 18-month expansion programme aimed at increasing Stubb Creek Field’s gross production from an average of 2,700 barrels of oil per day in 2024 to approximately 4,700.

The Stubb Creek Field, located in Akwa Ibom State is a producing oil field with significant undeveloped non-associated gas resources.

As of last year, it had 11 million stock tank barrels (MMstb) of 2P gross oil reserves and 515 Bscf of 2C gross gas resources.

“Commercial oil production started at Stubb Creek Field in 2015, with cumulative production of 8.1 MMstb to 31 December 2024. Oil produced at Stubb Creek Field is processed through production facilities onsite and then exported to the Qua Iboe terminal via a 25 km pipeline. The Stubb Creek Field was converted to a 20-year petroleum mining lease in accordance with the Petroleum Industry Act 2021 and effective from 1 December 2023,” it stated.

The Chief Executive Officer of Savannah, Andrew Knott, stated that the company is delighted to announce the completion of the SIPEC acquisition, emphasizing that the achievement aligns with one of their core business priorities for 2025.

He added that their focus at the Stubb Creek Field will now shift to advancing the expansion project, which is expected to increase production by almost three quarters over the course of 2025 and 2026.

“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,” he stated.