Savannah Energy Plc - 2025 Half-Year Results & Trading Update

Notes to the condensed consolidated interim financial statements

1.   General information

Savannah Energy PLC ("Savannah" or "the Company") was incorporated in England and Wales on 3 July 2014. The condensed consolidated financial statements of Savannah and its subsidiaries (together the "Group") for the six months ended 30 June 2025 were approved and authorised for issuance by the board of directors on
22 October 2025.

The Group's principal activities are the exploration, development and production of natural gas and crude oil and development of other energy related projects in Africa.

The Company is domiciled in England for tax purposes and its shares were listed on the Alternative Investment Market ("AIM") of the London Stock Exchange on 1 August 2014.  The Company's registered address is 40 Bank Street, London, E14 5NR.

2.   Accounting policies

Basis of Preparation

The condensed consolidated interim financial statements included within this Interim Report have been prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts, and in accordance with the London Stock Exchange AIM Rules for Companies. The provisions of IAS 34: Interim Financial Reporting have not been applied.

The condensed consolidated interim financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the Group's 2024 Annual Report and Accounts, for the year ended 31 December 2024 ("the Group's 2024 Annual Report"). The financial information for the six months ended 30 June 2025 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Savannah for the year ended 31 December 2024 were prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2024 Annual Report contained a disclaimer of opinion, and as such contained a statement under 498(2) or 498(3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2024 will be filed with the Registrar of UK Companies.

All the Company's subsidiaries' functional currency is US Dollars ("US$"), and the consolidated financial statements are presented in US Dollars and all values are rounded to the nearest thousand (US$'000), except when otherwise stated.

The financial information presented herein has been prepared in accordance with the accounting policies used in preparing the Group's 2024 Annual Report. There are no other new or amended standards or interpretations adopted from 1 January 2025 that have a significant impact on the interim financial information.

As disclosed in the Group's 2024 Annual Report, the Republic of Chad nationalised the Group's interests in its Chad subsidiaries Savannah Chad Inc ("SCI") and Savannah Midstream Investment Limited ("SMIL"), (the "Chad Assets") by way of a law passed on 31 March 2023 (the "Nationalisation"). As a result of the Nationalisation, the Group was unable to fully access all the underlying financial information, nor have access to the relevant Chad-based employees of the affected entities SCI and SMIL in order to prepare the financial information: (i) for audit purposes to be consolidated into the Group's financial statements for the year ended 31 December 2024; and (ii) for the unaudited condensed consolidated interim financial statements for the six months ended 30 June 2025.

Therefore, as at 31 March 2023 the activities of the Chad Assets were considered as a discontinued operation, in accordance with IFRS 5: Non-current Assets for Sale and Discontinued Operations; and the net statement of financial position associated with the Chad Assets was fully impaired such that no balances remained in the consolidated statement of position at subsequent reporting dates. For both the six months ended 30 June 2025 and 30 June 2024, no transactions were recorded with this discontinued operation and Note 20 sets out the position of any potential contingent liabilities associated with the Chad Assets.

With respect to the Group's valuation of its financial investment in Cameroon Oil Transportation Company (COTCo), no further adjustment has been made as at 30 June 2025 - more details of this financial investment are set out in the Group's 2024 Annual Report.     

Going concern

The Directors have considered the factors relevant to support a statement of going concern; in assessing the going concern assumption the Directors have reviewed the Group's forecasted cash flows as well as the funding requirements of the Group from the date of the approval of these financial statements to 31 October 2026. As in previous periods, this forecast was prepared on a "bottom-up" basis, at each major asset and corporate level, and it reflects the Group's best estimate of costs and revenues for the going concern period. The capital expenditure and operating costs used in this forecast are based on the Group's corporate budget which includes operating budgets for each of the operating subsidiaries and an estimate of the corporate general and administrative costs for the going concern period.

The base case model assumes that Cash Collections from the Group's gas customers in Nigeria are received on a regular basis along with an unwind of historic receivables in line with both key long-term supply contracts with committed volumes and short-term supply contracts and only assumes that current customers are supplied. Forecast cash inflows generated from liquids production at the Stubb Creek and Uquo fields are based on in-house production forecasts in line with the Competent Person Report.

As part of its analysis in making the going concern assumption, the Directors have considered the range of risks facing the business on an ongoing basis, as set out in the Risk management section of this Annual Report. In addition, the other principal assumptions made in relation to our base case going concern assessment relate to the regular payments of gas invoices by customers, the forecast commodity price environment and continued access to FX markets (specifically in relation to the financing of US Dollar denominated costs and the refinancing of the remaining balance of the Accugas US$ Facility). Notwithstanding the risks across the Group, both the base case forecasts and sensitised scenarios confirm that the Directors believe that the Group and each subsidiary company has sufficient liquidity to continue as a going concern for at least a 12-month period from the date of the approval of this report.

Looking at a selection of the principal risks:

Payment of invoices from a concentrated customer base

The Group continues to have a relatively concentrated customer base which results in an inherent reliance risk on a small number of customers. As previously outlined, the Group continues to focus on diversifying the customer base to reduce this concentration. The risk associated with Nigerian-based gas customers is mitigated through the external credit support covering the off take contracts at Accugas where we have a Partial Risk Guarantee in place via the World Bank to provide credit support for Accugas' principal customer for up to approximately US$112 million of invoices and for other customers, letters of credit are normally required.

The Group continues to seek to diversify its revenue stream and following the acquisition of the additional interest in the Stubb Creek, this continues to further enhance the US Dollar cash revenue generating capacity of the Group.

Commodity price/foreign exchange environment

The Group operates in the energy sector and is therefore exposed to fluctuations in commodity prices. Brent oil prices traded at an average of US$82.0/bbl in 2023, US$81.0/bbl in 2024 and US$69.7/bbl between January 2025 and September 2025. Due to the market volatility experienced in 2025 year to date, Management has adopted an oil price of US$65.0/bbl for the going concern period. The Group's gas sales contracts are at fixed prices without any correlation to crude, with long-term supply contracts subject to inflation price adjustments.

Commodities remain volatile and can fluctuate based on a wide range of factors. Following the increase in the Group's interest in the Stubb Creek field a rolling, options-based hedging programme has commenced to provide protection against oil price fluctuations.

Following the proactive actions of the Nigerian Government, Nigerian Naira ("NGN") devalued significantly at the start of 2024, from an exchange rate against the US$ of NGN859 to approximately NGN1,544 at year end (with an average of NGN1,478 during the year). The Naira is now more aligned to a market driven rate and overall, this has had a positive impact on the Group's cash flows. The Group continues to invoice its customers in US Dollars and, while they have the option to pay in either US Dollars or NGN, any NGN payments are at prevailing market rates ensuring US Dollar equivalent receipts remain consistent. NGN denominated costs are more favourable on a US Dollar equivalent basis, providing cash flow benefits to the Group throughout the going concern period.

Debt financing

Accugas has in place a Naira denominated loan facility with a consortium of Nigerian lenders (the "Transitional Facility"), which has been utilised to partially refinance the Accugas US$ Facility. The Transitional Facility was increased in September 2025 to up to NGN773 billion, and this increased facility will allow Accugas to convert and repay the remainder of the Accugas US$ Facility prior to its maturity date at the end of 2025.

The limit of the increased Transitional Facility was calculated based on an exchange rate of greater than 30% above the current market rates. Accugas is confident therefore that the Transitional Facility will be sufficient to fully repay the Accugas US$ Facility, However, repayment of the Accugas US$ Facility and utilisation of the Transitional Facility continue to require access to appropriately priced US Dollars. If the expanded Transitional Facility is not sufficient to fully repay the Accugas US$ Facility, an amount would remain outstanding which is required to be repaid by the final maturity date of the Accugas US$ Facility (31 December 2025). The base case model shows that sufficient cash flows are available to service any remaining balance under the Accugas US$ Facility. The Group also has other maturing debt facilities during H2 2025 and the base case model shows that sufficient cash flows are available to service these maturing obligations. In Nigeria, the Group continues to access US Dollars as required to pay its non-Naira denominated expenditures. The Directors remain confident that this will continue and that the Group will be able to access US Dollars and other currencies as required to maintain its operational funding needs.

The maturity date of the term loan facility entered into to fund the acquisition of the Chad and Cameroon Assets has been amended on several occasions following the Nationalisation. Most recently, in October 2025 it has been amended to provide Savannah with the option, at its sole discretion, to extend the final maturity date until January 2027 which is beyond the going concern review period.

Equity issue

In March 2025, the Company undertook an equity issuance to raise in total approximately US$41 million. Approximately US$21 million of the new money raised was used to acquire certain debt which was maturing in 2025. There is a second tranche of new shares expected to be issued in October 2025 once the Company's shares have resumed trading.

Sensitivity analysis

The Group has undertaken sensitivity analysis on the respective cash flow forecasts and considered the material risk areas for the business which could impact upon the going concern assumption. These risks included: (i) timely payment of receipts from gas customers; (ii) commodity pricing; and (iii) reduction of customer collections. In this respect, a number of sensitivities were prepared, as follows:

(i)         gas customer receipts - extended the collection receipt time;

(ii)         commodity price - reduced the forecast average oil price to US$60/bbl;

(iii)        exclude certain customer collections; and

(iv)        a combination of all the above sensitivities.

Mitigating actions were considered which could be taken by the Group to prevent a shortfall arising under any scenario and these could include:

(i)         deferring or reducing costs - given its high equity ownership levels and operatorship of key assets, the Group has significant levels of control over capital and operating spend and can directly manage costs where necessary with only minimal committed capital spend;

(ii)         enforcing its rights to claim payment under the credit support arrangements in place; and

(iii)        raising of additional debt or equity if required - the leverage on the Nigerian assets is low and given the long-term gas sales contracts and long-life nature of the assets, the Group believes further funding could be accessed if the need arose.

Under sensitivity analysis, the operating cash flows and funding available to the Group remain sufficient at all times during the forecast period to meet obligations as required whilst still maintaining headroom.

The Directors are confident in the Group's forecast and have a reasonable expectation that the Group will continue in operational existence for the going concern assessment period and believe it is appropriate to continue to adopt the going concern basis in preparing these interim condensed financial statements.

3.   Segmental reporting

For the purposes of resource allocation and assessment of segment performance, the operations of the Group are divided into four segments: three geographical locations and an Unallocated segment. The current geographical segments are Nigeria, Cameroon and Niger. All these geographical segments' principal activities are exploration, development and extraction of oil and gas. The Unallocated segment's principal activities are the governance and financing of the Group, as well as undertaking business development opportunities. Items not included within Operating profit/(loss) are reviewed at a Group level and therefore there is no segmental analysis for this information.

The following is an analysis of the Group's continuing operations results by reportable segment for the six months ended 30 June 2025:

1.     Refer to Note 5 for items included within Cost of Sales.

2.     Includes Property, plant and equipment and Exploration and evaluation assets.

The following is an analysis of the Group's results by reportable segment for the six months ended 30 June 2024:

1.     Refer to Note 5 for items included within Cost of Sales.

2.     Includes Third party investments, Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.

4.   Revenue

(a)  Revenue from contracts with customers

Set out below is the disaggregation of the Group's revenue from contracts with customers:

Gas sales represent gas deliveries made to the Group's customers under gas sale agreements. The Group sells oil and condensate at prevailing market prices.

(b) Other operating income

Other operating income consists of US$5.6 million (2024: US$109.9 million) relating to the invoicing of foreign exchange losses incurred on certain customer trade receivables that are settled in a currency other than the invoiced currency and are permitted to be invoiced to the relevant customer, and income from grants amounting to US$0.2 million (2024: US$nil) with respect to renewable development projects.

5.   Cost of sales

6.   Operating profit

Operating profit has been arrived at after charging:

1.     Transaction and other related expenses primarily relate to the Group's legal and other costs in relation to the Chad and Cameroon arbitration processes, and acquisition related expenses relating to the acquisition of assets in Nigeria and the proposed acquisition of assets in South Sudan (in 2024).

7.   Finance costs

1.     Includes amounts due to unwinding of a discount on a long-term payable, contract liabilities (Note 16) and amortisation of debt fees.

2.     Hedging related costs relate to oil hedge premiums paid and net mark-to-market (MTM) movements.

8.   Foreign exchange loss

Realised foreign translation loss mainly relates to the translation of Naira denominated transactions into US Dollars.

9.   Taxation

The tax expense/(credit) for the Group is:

Income tax expense is recognised based on the actual results for the period and principally arises on Nigerian profits.

The Nigeria Tax Act 2025 ("the Act") was enacted after the balance sheet date and is effective 1 January 2026. 

Under this legislation, Nigerian entities with a turnover in excess of 50 billion Naira will be liable to pay a minimum effective corporate tax rate of 15% based on profits before tax, as reported in their audited financial statements, subject to certain adjustments. This will result in a supplementary tax payable should the aggregate corporate income taxes payable or paid by the company be less than 15% of the profits before tax. It is expected that further details will be issued by the Nigerian Revenue Service via Regulations.  It should be noted that the Act permits such Regulations to prescribe a higher turnover threshold for this minimum effective tax rate to apply. Due to the complexities of implementation and pending the Regulations, the Group is in the process of assessing the impact of this change on its Nigerian subsidiaries.

10.  Earnings per share

Basic earnings per share amounts are calculated by dividing the profit or loss for the period attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the profit or loss for the periods attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares.

As there is a profit attributable to the owners of the Company for the six months ended 30 June 2025 and 30 June 2024, the diluted weighted average number of shares has been calculated. In the comparative period, the basic average number of shares was used to calculate the diluted loss per share given there is a loss attributable to the owners of the Company, meaning the diluted weighted average number of shares reduces the loss per share. Therefore, the basic weighted average number of shares was used to calculate the diluted loss per share.

The weighted average number of shares outstanding excludes treasury shares of 68,964,585 (30 June 2024: 68,964,585).

^1.                The earnings per share calculation only takes into account profit/(loss) attributed to owners of the Company.

23,450,849 options granted under employee share option schemes and 101,113,992 warrants issued are not included in the calculation of diluted earnings per share because they are anti-dilutive for the six months ended 30 June 2025 (30 June 2024: 23,853,457 and 101,113,992 warrants). These options could potentially dilute basic earnings per share in the future. The basic weighted average number of shares used in 2024 has been recalculated and has decreased the previously reported EPS.

11.  Property, plant and equipment

Upstream assets principally comprise the well and field development costs relating to the Uquo and Stubb Creek oil and gas fields in Nigeria. Oil and gas assets recognised through acquisition of Savannah Energy Stubb Creek Limited relates to 49% interest in the Stubb Creek Field. In line with the acquisition, the previously held oil gas assets were revalued in line with step-up acquisition reporting standard under IFRS 3. See Note 19 Business Combination for further details.

Infrastructure assets principally comprise the Nigerian midstream assets associated with the Group's network of gas transportation pipelines, oil and gas processing facilities and gas receiving facilities. Other assets include vehicles, office equipment and building improvements.  Decommissioning remeasurement adjustments reflect updated cost estimates for the period/year. 

Each year, management performs a review of each CGU to identify potential impairment triggers. During the six months ended 30 June 2025 and the year ended 31 December 2024, no such triggers were identified. 

12.  Trade and other receivables

The following has been recognised in the condensed statement of comprehensive income relating to expected credit losses for the period:

13.  Cash at bank

Amounts held for debt service represents Naira denominated cash balances which are held for debt service, and this has been separately disclosed from Cash and cash equivalents.

14.  Trade and other payables

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

15. Borrowings

16. Contract liabilities

Contract liabilities represent the value of gas supply commitment to the Group's customers for gas not taken but invoiced under the terms of the contracts. The amount has been analysed between current and non-current, based on the customers' expected future usage gas delivery profile. This expected usage is updated periodically with the customers.

The unwinding of the discount on contract liabilities relates to the fair value adjustments made under IFRS 3: Business Combinations following the acquisition of the Nigerian assets and entities in 2019. The fair value adjustment was calculated as the discounted, expected cost of the future deliveries of gas volumes under the terms of customer take-or-pay contracts. This discounted amount unwinds relative to an apportioned amount of the contract liabilities volumes at the date of acquisition that have subsequently been utilised.

17. Cash flow reconciliations

The changes in the Group's liabilities arising from financing activities can be classified as follows:

18. Capital commitments

At 30 June 2025, capital commitments amounted to US$9.5 million (30 June 2024: US$0.5 million).

19. Business combination

On 19 March 2024, the Company announced that a wholly subsidiary had signed Share Purchase Agreements to acquire SIPEC, the Group's joint venture partner in the Stubb Creek Field. On 10 March 2025 the SIPEC Acquisition completed and the entity was renamed as Savannah Energy Stubb Creek Limited ("SESCL").  The entity owns a 49% non-operated interest and completion of the SIPEC Acquisition now gives the Group a combined effective ownership of 100% in the Stubb Creek Field. The Group is proceeding with its plans to increase oil production.

The SIPEC Acquisition has been accounted for using the acquisition method and the Group has applied the requirements for a business combination achieved in stages by remeasuring its previously held interest in the joint operation through Universal Energy Resources Limited ("UERL"). The interim consolidated financial statements include the results of SESCL from the acquisition date and the six-month results for UERL.

Set out below are the provisional fair values of the separable assets and liabilities of the combined acquired entities (SESCL and UERL) together with the fair value of the purchase consideration*.

Consideration satisfied by:

* As at the date of the approval of these financial statements the purchase price allocation process and the determination of the fair values of the assets and liabilities of the acquired entity were yet to conclude. Net assets may therefore be subsequently adjusted, with a corresponding adjustment to gain on bargain purchase. This exercise will be completed prior to 10 March 2026 (one year after the completion of the SIPEC Acquisition).

The Group recognised a gain on the previously held interest from remeasurement in UERL to its fair value on the acquisition date.

The acquisition date fair value of the trade receivables amounts to US$1.2 million. The gross amount due under the contract is US$2.2 million of which US$0.9 million is expected to be uncollectible.

Transaction costs related to the SIPEC Acquisition of US$11.0 million have been expensed and are reported within Transaction and other related expenses in the Condensed consolidated statement of comprehensive income, and are reflected in Cash flows from operating activities in the Condensed consolidated statements of cash flows.

20.  Contingent liabilities

As explained the 2024 Annual Report, the impact of the Nationalisation of the Chad Assets has resulted in the Group not being able to determine liabilities within its subsidiary, SCI, as to both type and quantum. The Directors have sought legal advice which has confirmed that the scope of Law No. 003/PT/2023 promulgated by the President of Chad on 31 March 2023 (Nationalisation Law) is not specific in relation to SCI's liabilities in Chad. The consequences of the Nationalisation Law for SCI will be established by an arbitration which SCI commenced during 2024 against the Republic of Chad and remains going as at the date of this report. Based upon the legal advice received and the Group's inability to sufficiently identify and quantify, through any reasonable means, the liabilities associated with SCI or the Chad Assets, the Directors believe that these should be considered as contingent liabilities in line with the requirements of IAS 37: Provisions, Contingent Liabilities and Contingent Assets.

As reported in the Group's 2024 Annual Report there are conditions remaining to the completion of the sale of the 10% interest in COTCo to Société Nationale Des Hydrocarbures (SNH) and if the sale is completed it could result in a tax liability. Given the uncertainty surrounding the completion, the impact of the above arbitrations and the shareholder dispute it is not possible to properly assess if any tax liability will arise.  

21.  Events after the reporting date

On 19 September 2025, the Company announced that it is expected to sign a share and purchase agreement to acquire a 50.1% interest in Klinchenberg BV, a joint venture company which has a number of indirect interests in a portfolio of hydropower plants in Uganda, Malawi, Burundi, Democratic Republic of the Congo and Rwanda. The consideration for this transaction is expected to be up to US$65.4 million and expected to close during 2026.

Footnotes

^1. On a pro forma basis as at end 2024.

^2. Based on the March 2025 Competent Persons Report prepared by McDaniel & Associates Consultants Ltd.

^3. Note that gas production levels are largely driven by customer nomination levels, while cash collections are largely driven by contractual maintenance adjusted take-or-pay provisions of 117 MMscfpd in aggregate.

^4. Total Revenues are defined as the total amount of invoiced sales during the period. This number is seen by management as more accurately reflecting the underlying cash generation capacity of the business as opposed to Revenue recognised in the Condensed Consolidated Statement of Comprehensive Income.

^5. Adjusted EBITDA is calculated as profit or loss before finance costs, investment revenue, foreign exchange gains or losses, expected credit loss and other related adjustments, fair value adjustments, gain on acquisition, share based payments, taxes, transaction and other related expenses, depreciation, depletion and amortisation and adjusted to include deferred revenue and other invoiced amounts. Management believes that the alternative performance measure of Adjusted EBITDA more accurately reflects the cash-generating capacity of the business.

^6. Leverage is defined as net debt/Adjusted EBITDA⁵, with Adjusted EBITDA⁵ being prepared on a rolling 12-month basis and incorporating a pro-forma 12-month EBITDA in respect of SIPEC.