Savannah Petroleum PLC has announced plans to raise about $40mln through the issuing of new shares to fund its next step in developing oil assets in Niger.The company plans to issue the shares at 38 pence each with current and new shareholders to conduct seismic studies of an area shielded by the R3 production sharing agreement (PSC) in the Agadem Rift Basin, south-east of Niger.

Savannah obtained its first blocks in July 2013, when the China National Petroleum Company (CNPC) compulsorily handed over a 50% interest in the blocks.In July 2015, the company also secured the R3/R4 contract area, with additional 29 new leads increasing the company’s acreage position to about 50% of the Agadem Rift Basin.Savannah plans to continue the work with a multi-well 3D seismic-backed exploration drilling campaign in Q1 of 2017.

“Savannah is focused on generating stakeholder value and only intends to conduct a transaction on terms it believes will enable the R1/R2 PSC Area and R3/R4 PSC Area to be explored and appraised in a value-accretive manner. We have something which is big and demonstrably low cost. We’re now in a position where we can go after the considerable upside in the permit area. The company resource base has grown, the value of that has increased and we’re now funded to pursue it. It means the wells we drill should be less risky because there’s more chance of finding oil,” Andrew Knott, the company’s Chief Executive, told Proactive Investors.

Savannah expects its share placing to provide the capital to achieve the next milestone in exploiting its profitable assets.The blocks in the area comprise of proven but undeveloped oil reserves which CNPC initially identified to be about 832 Mmbbls.However, Savannah later increased the prospective oil resource base for R1/R2 to 1.2bn barrels through a new independent assessment conducted by consultant CGG Robertson.

Anita Fatunji