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Amazingly insightful and detailed response Zengas, Thank you. I guess another concern of mine is how problematic to the sp this (what seems like) never ending big seller has been. Great that it sounds like they’ve almost finished. IIs own the bulk of shares. They simply won’t have patience for too much longer if the sp doesn’t move. Investors will demand their money is moved. Then we have more big sellers. AK really needs to get this going ASAP before this happens.
Haz etc thanks for comments.
When we acquired Accugas our average FCF for the 3 years was estimated around $130m/yr.
I see the risk as late payments holding our development up, but not so much of a risk as never getting paid.
I see risk reducing when generation output increases, closing the gap to 24 hr supply, metering and increase in customer connections thus a greater source of revenue in addition to full tarriff reflective cost which again boosts revenues and gradually elimates shortfalls in the entire chain. It's economic sense and oil isnt always going to drive the Nigerian economy as it once did.
It should work because the govt needs to move away from oil based economy, reduce and meet emissions targets, replace high diesel/petrol costs (that people fork out for which should ultimately be cheaper) to electric power instead, health issue costs in real terms and the loss of $25b+ annually in GDP, the need for significant job creation and a population that is rising by about the size of Scotland every year in need of power and all the benefits that brings. The alternative is addmitting failure and instability in the years ahead??
How can SAVE deal with late payments and the $120m/yr average expected ?
Acquiring more higher end, non government industrial customers which AK said this/next year size of prize was worth over $40m+ yr in additional FCF and thereby replace some of that delayed FCF or live with some late payment issues longer until sector balances out .
One would think that would ultimately keep our original $120m/yr FCF on track and cover all committments as originally planned in allowing for any problem customers. They can't all be problematic because they need power, non government constrained on payment and if they are already forking out perhaps more than twice as much for diesel, you would think this would ultimately give these businesses a major boost in energy cost savings from day one.
On the Nigerian oil front - i see more opportunities for marginal fields and Stubb Creek has yet to double production once debottlenecked. Majors have oprerated there for years so i don't see the likes of Save being stopped from getting too big. Country needs all the investment it can get post Covid so hopefully we make the most of it under the present government.
Payment issues don't unduly worry me and are low down my scale for risk. If we have a decent spread of Nigerian assets there's no reason why Save can't create significant value.
Country generally stable and while always possible for terrorist acts like anywhere i think electricity is key and a priority for development in helping the county to prosper and keep dissafection to a minimum.
I'm comfortable with the way Zengas seeds the identification of plenty of the issues within his ongoingly positive postings here and propose he sticks with that style.
Maybe sometimes issue identification is done plenty more subtly versus his positive points identification granted .. or a positive presented towards addressing a negative is, by default, acknowledging the negative.. or his posts sometimes very directly open the lid on potential negatives too .. as perhaps eg'd by his recent cable article posting here.
Also, even he, as good as he is, has to figure out some of the issues as he goes here and this Nigeria endeavour is still a very new, politically subtle and complex one, extra especially in the way we're tied into a very tricky and complicatedly evolving overall national grid picture via our key Calabar client.
Finally, I very much agree most of us bought in here for a Niger play and the Nigeria play was a huge and complicated medium / long term play deviation from that which we were kinda defaulted along into. And that, one more time, shows the randomness of the game we play.
It felt like a banker (and essentially without rto would have been with the 5/5 successes). Put 85k in, (a huge bet for me) - take a 20k profit after 2 or 3 successes. RTO was disaster for short termers like me.
Zengas you are brilliant poster on here. Any regular on this board should be indebted to your detailed posts and insights, so thank you. I bought £85k at an average of 37p. I since cannot afford to average down - it was a short term bet on the drills pre seven rto, in the hope of paying for my new kitchen! Your posts are full of positivity. But what I’d love to know is what in the short term you think will increase sp. And if you have genuine faith in this. I love your Positivity but have you any concerns? Will sellers of this stock always outweigh buyers. Will Nigeria allow a british company to get too big? There’s clearly issues with sp, it being circa 7.5p. Keen to hear your thoughts?