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So .. 400+ AT trades every 7 minutes ......
I'm still of the view a little hedgie is playing the shareprice as shown by the last 30 minutes of trading today.
I bailed a bunch yesterday between 93-94p .. so happy to buy back at 88p or below over the next few days ...
GLA
No benefit from recently wild gas prices, as gas contracts are fixed or pegged locally, but when AHOL is up and running, export of gas condensates will be at international prices, I believe. The higher oil price will be helping things along for sure. I still suspect the selling pressure is coming from the NGN FX situation - irritating but transient.
"with our gas" You mean Seplat's gas obviously .... not sure ... my guess is that it's local supply so probably not directly linked to US commodity prices, unless exported - but one could work it out from results I suppose.
I saw an article on line that pointed out that while energy prices themselves have ballooned recently the S&P Energy Index has stayed relatively flat ....
..... as have a number of Oil & Gas stocks in the UK market after the July rally and subsequent pullback, so flatlining would not seem to be isolated to just Seplat just now.
So either the big fish controlling share prices in the energy sector regard the current highs in energy prices as a blip to be ignored or, they are keeping prices down to fill their boots.
Who knows, while the UT close friday ay 89.8p is a positive step to get back to £1.00 +.
GLA
Very difficult to buy on HL today. Does anybody know what the situation is with our gas? Do we get market prices?
Saw a big trade in Nigeria this afternoon …. Right side of the spread so grabbed a few more today.
GLA.
.. or bull trap ..... difficult one.
There was the big buy back from 92p .....
Up and away.
"No it's not HFT causing the issue, they prefer liquid instruments."
HFT algos can be recognized by small AT trades eating away at the offer and the bid.
You are welcome.
No it's not HFT causing the issue, they prefer liquid instruments. It's because the Naira has taken another plunge over the last few weeks on the grey or unofficial market. When there's pressure on the unofficial rate portfolio investors will get around exchange controls to exit Naira by purchasing Seplat local stock in Naira and then switching it to the London line through their custodian (i.e. no FX transaction), then selling the London line to redeem into GBP. I've mentioned it before - Seplat is one of the few such channels available to use in this way. It's being piggybacked as a conduit for money wanting to escape the country. It's annoying and results in technical not fundamental selling pressure, but that's also why it's an opportunity for the long term investor. When such repatriation pressure disipates the stock bounces back. It's not fundamentals driven at all so you shouldn't worry about it - take the opportunity to stock up on a solid 8% dividend stock in my view. If you're wondering how Seplat can pay dividends to offshore investors with exchange controls, it is because their oil business is ringfenced from capital controls. Conversely, that is a challenge for Savannah Energy in my view, as they are mostly a gas business, which is not ringfenced from capital controls, as far as I understand. It's an important nuance to take into account. Anyway, it's all good, Seplat is doing great at $70 oil and kicking off plenty of cash, which will shine through even more as the hedges roll off into the end of the year.
Do you not watch level 2?
Only 13 trades today. A High frequency Trader. Seriously ?
SP in in doldrums here like the other oil companies and probably sentiment due to articles like this.
https://www.worldoil.com/news/2021/9/9/nigeria-struggles-to-find-buyers-for-october-oil-exports
Another case of battening down and reinvesting the divs whist waiting it out.
Think it’s high frequency trader sea. Regards H.
Sorry what's HFT?
….but as much of a bargain as 80p.
There is a HFT crawling around here ….. so the shareprice is being manipulated, with the objective of a HFT to take your money.
The question is whether the HFT is spoofing or being run by someone that knows something you don’t know, but wish you did.
I stand by this - yet oil's now at $70+
Hedges expiring and now throwing off cash.
BARGAIN.
If the oil price holds up to today’s level it should keep on rising still!
2022 is a long way away for me .... and have done well out of this share.
Good to see 80p break
??
Nigerian assets have always traded cheaply but were further and viciously discounted again when SARS-Cov-II hit. You are referencing the value of the company against recent lows, which were blatantly extreme and not justifiable on the basis of either the oil price volatility or the cost of equity in Nigeria. Note also that Seplat is a blue chip and by far the largest indigenous player in the market as well as the cornerstone of gas production in the country for power generation - they are also a dollar earner. I expect 2020 will be forgotten in due course and a more normal valuation will be attributed again, and perhaps one that gives them some credit for the consolidation story too.
You may be right about Nigerian withholding tax on offshore dividends - although I would say that $0.10 seems likely to be adjusted upwards, at least from 2022 when the ANOH project comes on stream.
"Which results in:
Annual dividend of at least $0.10 ($60m) = 9.5% yield
Price to earnings ratio = 3.4x"
10% is taken off for Nigerian taxes from the dividend so I make the current yield 8.26% and while excellent not as attractive as it was ....
So I've started selling more recently in 5,000 shares versus £5,000 lots before that ... and I'm done selling at 79.44 today .... 25K free shares in the account and slightly over the same number in £'s as profit ... so with any luck, the dividends will pay my annual petrol costs and half the gas bill going forwards - what with trading since December 2020 my sell average price works out at 86p and good enough for me.
The down side to this share the past 6 months was hedging oil Q4 of 2020 and Q1 of 2021 at $35 a barrel which will reduce revenues somewhat (see earlier results) - and I assume one of the reasons the last CEO went back in August - struck me as panic.
I like this business - but there are risks and as such I will go in heavy when really cheap - but happy to hold a comfortable amount now.
GLA
This is a quick & dirty but conservative outline of Seplat’s financial position, as I see it, for your benefit!
Core business 50 kboepd @ $45/bbl = $820m of annual revenues
Pre tax profit margin of 24% = $197m pre tax profit
= $157m net profit
Meanwhile, the ANOH 50:50 joint venture project, which is fully funded and on target to produce first gas in Q4 2021:
Once operational, Seplat’s working interest of 10 kbbld of condensate ($164m revenues @ $45/bbl) + 97k litres/day LPG @ $0.35/litre ($12m revenues) (too conservative!) = total additional revenues $186m
15% net profit margin = $28m net profit
Note Seplat’s share of equity already invested = $210m, so net profit from ANOH is likely to be way more than this to justify it's cost of equity.
Thus Seplat is, at minimum, a $185m/year net profit business at a very conservative $45 oil price, assuming no profitability uplift from operational commencement of their Escravos pipeline or additional volumes from new well development or from future value-enhancing acquisitions.
Now put this in the context of:
Market cap $630
Cash position of $213m
Debt position of $692m
Receivables/loan repayments due from Westport of $400m (2022 to 2024)
In other words, post near-term receivables and cash resources, Seplat’s net debt position is circa $100m (i.e. negligible for a business generating almost twice that in net profit)
Which results in:
Annual dividend of at least $0.10 ($60m) = 9.5% yield
Price to earnings ratio = 3.4x
You’re right, this valuation doesn’t make any sense, even for Nigeria’s leading O&G blue chip company!
This business has a 100% return in the short term IMHO as this sort mispricing just won’t hold.
(disclaimer/disclosure: this is not a recommendation to buy and I own a tonne of stock in the above company!)