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A further snipit from "this day newspaper Nigeria " was The president tweeted after the meeting, “It was a pleasure to play host to Exxon Mobil executives, Liam Mallon and Adesua Dozie at the State House earlier today. The meeting marks the continuation of this administration’s efforts to secure the collaboration of critical players in the oil sector towards ensuring stability, transparency, and fair competition in the sector. which does speak volumes to me. regards H.
Its hard to know where to start, firstly this is Nigeria, a ever growing economy and population, I have been in this share ever since seplat aquired elland back around 5 years ago. I would be very surprised if this deal dosent go through now (probably take a further 2 months before everything is signed) because this will set a trend to foreign investor groups paving the way for further deals. Dont forget also the capitol this will put into Nigeria's coffers allowing funding for the country which is badly needed, if you think about the pollical structure is changing, the government is sorely missing the cash from the gold mine which is oil/gas. I am hoping that this all goes through amicably, as Im sure there will be big international investors keeping a eye on things. as always GL everyone wo is invested regards H. may I also add some fantastic insight into figures and facts from seatank and others.
As in most business, common sense, a balanced outcome and an end date for final sign off.
Everyone is keen to get this over the line !!
Big day today. Will they or wont they agree? Fit for a Nollywood blockbuster!
Seems the regulator wants money to be set aside for various legal requirements. I wonder who will fit the bill? Who needs this deal the most?
THISDAY is reporting that the parties have two mutually exclusive options, a full audit or accept provisions required for decomm, communities and environment. As these are mature fields, most of this cost should fall on Exxon.
In Seplat’s last update, the discussions were described as being constructive, I assume this means the discussions have been beneficial for Seplat?
Exxon needs to demonstrate that it’s making progress to realign its portfolio and would be keen to get closure. Otherwise, it risks getting bogged down for many years to come and may still be no better off.
Giving an idea of final deal and timescale
Thx Alex
MPNU in the bag and $400-500m in net profits next year i.e. p/e 2.5x
With these amazing news today, I'm confident to underwrite that Seplat consummates MPNU in Q3 2024 - and I've updated my sheet accordingly. You can find an excerpt/dashboard of my sheet here, link: https://i.imgur.com/6Ph3iCP.png
New assets that are coming online in Q3 2024 that will create a tremendous Year-over-Year result:
- Sapele build-out: up to additional 35 MMscfd
- ANOH Gas: 70 MMscfd net from Seplat via incremental wells
- MPNU: +90k boep/d in early 2022 which I assume - with a substantial margin of safety - is down to 55k Q3-2024; and will regain to at least 70k boep/d in 2026. (IMHO, my assumption leaves substantial upside)
- AGPC first dividend of $30m in 2026 - reaching +$100m in 2030.
KPIs:
- To create additional margin of safety I assume that OPEX/barrel goes to $12 from current $9.6 and CAPEX to $12 from current $10.
- Effective tax rate is difficult, but I'm putting a flat 40%
I envision we make +$500m in 2025 and +$600m in 2026. Let's assume further delays or blackouts; $400m in 2025 and +$500m in 2026.
This is probably a +300p stock within 18 months, IMHO.
For those whom may have difficulties in opening the link from alexeliassons post .
Nigeria could sign off on Exxon oil asset sale to Seplat within weeks, NUPRC says
By Camillus Eboh and Isaac Anyaogu
May 2, 20241:58 PM GMT+1Updated an hour ago
ABUJA/LAGOS, May 2 (Reuters) - ExxonMobil's Nigerian petroleum assets sale to Nigeria's Seplat could be approved in less than two weeks, the country's oil regulator told Reuters on Thursday.
The $1.28 billion sale in Africa's largest oil exporter has awaited regulator approval since 2022.
Gbenga Komolafe, chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), told Reuters the parties involved would be invited to a meeting on Friday.
"Subject to the outcome of the meeting, consent...could be given in less than two weeks from the date of the meeting," he said.
NUPRC would give the companies two mutually exclusive options that, if accepted, would permit approval of the deal, he said.
He did not spell out what these options were but said the law requires money to be set aside for decommissioning, host community development and environmental remediation.
"As a commission, we don't want our nation to carry unwarranted financial burdens arising from the operations of the assets over time by the divesting entities."
A spokesperson for Seplat declined to comment. An Exxon spokesperson did not immediately comment.
Observers say approving the deal would bring much needed investment into Nigeria's petroleum sector. While it is pending, there is little incentive to put money into the assets, which means production will gradually decline.
Former Nigerian president Muhammadu Buhari initially consented to the transaction, but withdrew that consent days later after the oil regulator refused to sign off on it.
President Bola Tinubu, who took office last year, has made attracting investment a key priority.
My apologies, here's the link: https://www.reuters.com/markets/deals/nigeria-could-sign-off-exxon-oil-asset-sale-seplat-within-weeks-nuprc-2024-05-02/
Can you post a link to the article please?
Read the news again, "the options" seems to be in regard to guarantees about decommissioning i.e. our best case is playing out. Shell was also notified about similar, last week.
"He did not spell out what these options were but said the law requires money to be set aside for decommissioning, host community development and environmental remediation."
Excellent find, all the sellers of the last couple of days may be rapidly re thinking that short term decision and scramble to re buy.
Sit tight, we appear to be in the final furlong !
MEM
NIGERIA'S OIL REGULATOR NUPRC HAS INVITED EXXON, SEPLAT TO FRIDAY MEETING TO PRESENT TWO OPTIONS FOR ASSET SALE APPROVAL - NUPRC/Reuters News
NIGERIA'S OIL REGULATOR SAYS EXXON'S OIL ASSET SALE TO SEPLAT COULD BE APPROVED "IN LESS THAN TWO WEEKS" - NUPRC
Looks like the deal is getting done. Also looks like a couple of percentages of the field will be handed over to NNPC. Nevertheless, we're looking at +150-200% production raise depending on what scenario that plays out, without any share dilution whatsoever. The last point is very important, IMO.
Congrats, gents!
Nearly 10 pence down today. Oil price down a bit but wouldn't knock off 9 to 10p.
Without any reason other than profit taking or a June sign off means a few months delay hence another buying opportunity and DRIP days 29th May and 14th June.
Https://punchng.com/shell-will-complete-2-4bn-nigeria-assets-sale-june-fg/
CEO of NUPRC has said, quite explicitly, that they target the divestment of Shell's assets to be completed by June.
I believe the same "due diligence dialogue", which is intended to tie up loose ends regarding "environmental and end-of-life liabilities" is also in process regarding ENI/Oando and MPNU/Seplat.
So we might be looking at a June sign-off date, which is not so far away.
I bought back my 20%. Lost a couple hundred quid. Can’t win ‘em all!
Anyways as an aside. This in an update from Deltic today re UKCS (I don’t hold).
It shows why Nigeria is so appealing fiscally and regulatory!
Meanwhile the UK will pay more for imported energy including transition fuels like gas from Russia and support that with coal and further US/Qatar HC imports as its ‘greener’ than using UKCS and in parallel generating an internal transition economy with uk jobs and paying uk taxes.
Oh I have zero political allegiances they are all imo useless!
“ The feedback from Deltic's Pensacola farm-out process has indicated that the continual tinkering with the Energy Profits Levy and resultant fiscal uncertainty created by the current government, along with recent rhetoric emanating from the Labour Party, have had a severely negative effect on the ability of UK Exploration and Production (E&P) companies to commit to long term investments in the North Sea. This has resulted in many operators diverting capital away from the UKCS or delaying investment decisions, especially with respect to new large-scale opportunities like Pensacola.
Against this hostile political environment, and despite the Company's best efforts, Deltic have not yet been able to secure a farm-out partner for Pensacola and although there are a number of live discussions with respect to a way forward on Pensacola, there is a risk that a farm-out may not be secured before the end of May 2024. We remain of the view that Pensacola represents an excellent value-driven opportunity for the right partner and would be willing to engage with any additional potential partners.”
Trek
I added some more today on the drop so pleased to see sense prevail as the day went on!
AI are reporting that the ENI sale of NAOC is about to get approval, so finally signs of life at last (albeit being led by the presidents nephew also helps!)
https://www.africaintelligence.com/
Closed flat on optically (very) weak results today, tells you all you need to know about the underlying strength of the ticker; probably one or two funds on their way onto the share register - or something bigger that doesn't need an introduction.
Have to say, I do like Mrs. Edith Onwuchekwa's signature.
Great recovery today once the market realised what was happening with the drop in revenue.
We seem to have staged a good recovery, mid price down 0.5p on IG.
Common sense prevailed re this mornings RNS. Steady ship, all good.
Just wait for the final sign of re MNPU.
Just a little more Patience
MEM
Hi Seatank, thanks for your input, excellent.
One thought re your FCF
Forecast Oil prices
What will the price of oil be in 10 years?
According to the latest long-term forecast, Oil price will hit $100 by the end of 2024 and then $110 by the middle of 2031. Oil will rise to $125 within the year of 2032, $140 in 2033, $150 in 2034 and $160 in 2035.
IF this came to fruition the FCF would be utterly enormous.
The Gas which SEPL plan to extract and sell to a power hungry local civil population, plus export to overseas markets will become a large standalone profit centre.
Everyone should have some SEPL in a balanced portfolio.
Final thought, when the MNPU deal is signed off and our average daily production rises to 100,000 bpd, with more upside, we will become a Bid target, especially with 25 years of reserves.
Large oil and gas fields tend to get larger as work is completed, unlocking larger reserves.
Interesting times.
All within a background of increasing dividends
I can foresee a bid price of £3bn in 18 months time.
MEM
SeaTank8300. Thanks.
As usual always very grateful for your enlightening and researched contributions on this forum.
Good chance of a further recovery in the SP this afternoon, hoping for a closing price broadly neutral change.
Then waiting for news out of Lagos re Chevron/Mobile final sign off, we must be very close after the Oil Ministers comments
These results were good. Production was solid, at the higher end of guidance, with the resumed Trans Nigeria Pipeline allowing a restart of wells at OML53 auguring well for the rest of the year. Cost of production was slightly up from last year at $9.6/boe, so, fundamentally, the business remains extremely profitable.
In addition, several positive indicators:
Firstly re ANOH, the OB3 pipeline is still anticipated for completion by end Q2, which is the first time I haven’t seen slippage in this schedule, which suggests reasonable hope that ANOH can commence production by end Q3, or at the very worst by end of the year! To give some perspective, this was originally slated for operation in 2022 and has been delayed multiple times – to see operational start around the corner is a great thing.
Secondly, fiscal incentives have been raised, as well as changes to a law concerning contracting process, and the regulator has raised domestic gas prices, which all point to the positive regulatory/governance backdrop which is supportive of investment and expansion of this industry.
Thirdly, MPNU deal close is not far off.
As Access Capital points out, MPNU will approximately halve current ratings, i.e. double profit and cash flow. Their forecast aligns with mine, which is approximately $250m in free cash flow once ANOH is contributing, doubling once MPNU is consolidated = $500m Free Cash Flow. Market cap is $1,165m.
I expect financing cost of MPNU to be around 12% but the total cost after adjustments to be around $800m (conservative guess), much lower than the $1,200m price tag, so financing expense will be around $100m annually. Therefore genuine FCF of the consolidated group will be $350m in year one = 30% FCF Yield.
At that rate of cash generation, the MPNU loan will be paid back in about two years, during which time MPNU production will have increased circa +20-30% on fresh capex. That means two years after MPNU consolidation FCF will be $600m+. Consider that in the context of today’s market cap of $1,165m.