Why Savannah Energy Oil Deal in Chad Fails to Advance

Savannah Energy Plc is unable to progress her publicised acquisition of ExxonMobil and PETRONAS’ assets in Chad but has failed to disclose this development to the market.

According to Savannah, the non-disclosure of the material information the company has been kept for past months is deliberate and fraudulent.

Savannah Energy had indicated interest in the acquisition at a time other oil and gas companies were also gunning for the deal but the deliberate non-disclosure of material information shattered the deal.

According to a statement, the Government of Chad, through the state-owned oil company, Societé des Hydrocarbures du Tchad (SHT), notified PETRONAS on January 18th, 2022 of her decision to exercise her right of first refusal and to carry out the operation in place of Savannah Energy.

“Consequently, SHT is in the process of acquiring control of substantial shareholding in ExxonMobil and PETRONAS. SHT is currently in discussion with PETRONAS concerning the adaptations to be made to the transfer agreement to reflect the substitution of SHT for Savannah Energy, as buyer. SHT is also in the process of taking the necessary steps to raise the financing for the operation.

“While this has been going on, Savannah Energy has remained silent, a clearly unethical act that is wilfully downplaying the potential impact the collapse of the deal might have on investors who have made significant decisions based on the announcement made by Savannah Energy in December, 2021.”

Under article 12 of the association agreement, the members of the consortium have a right of first refusal for 30 days in the event of transfer by another member of its participation in the consortium, in order to carry out the concerned operation (which leads to the transfer of the stake concerned) in place of the initially planned buyer, under the same conditions as those agreed between the parties

Recall that the British firm and London Stock Exchange listed company announced the execution of share purchase agreements (SPAs) worth $626m with ExxonMobil and PETRONAS to acquire their oil & gas assets in Cameroon and Chad in December, 2021.

As a result of both acquisitions, Savannah Energy was to acquire a combined 75% controlling interest in the Doba Oil Project and 70% indirect controlling interest in the Chad-Cameroon oil export transportation system. The remaining interests are owned by the national oil companies of Chad and Cameroon.