Savannah Energy PLC announced that its Accugas subsidiary has entered into a revised gas sales agreement (GSA) on favourable terms with Lafarge Africa PLC, part of the LafargeHolcim Group, for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The revised GSA with Lafarge Africa PLC is extended for a further five years to January 2037. It also increases the effective gas price Accugas receives from US$5/Mscf to US$7.50/Mscf until 2027 together with an upfront payment of $20 million to Accugas. The daily contracted quantity of gas is reduced from 38.7 MMscfpd to 24.2 MMscfpd. The reduction will enable Accugas to release approximately 12 MMscfpd of currently reserved gas processing capacity at its central processing facility (“CPF”), enabling Accugas to enter into additional long-term GSAs with other customers, increasing the business’ future revenues and cash flow potential.

The revised structure also allows Lafarge to utilize its accumulated make-up gas balance of approximately $58 million on an accelerated basis. Lafarge’s commitments under the revised agreement continue to be guaranteed by an international investment grade bank guarantee. Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscfpd to 131.8 MMscfpd; and the revised GSA is accretive to short and medium term cashflow and to Total Revenues over the term of the contract and is, therefore, Net Asset Value enhancing.

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Source: PetroleumAfrica