George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
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That's why the signing is dragging out,too many envious/jealous/greedy types wanting the 'fat' envelope before they let the prize fall to Seplat.
I produced a quick sketch on how the MPNU acquisition will impact the P&L.
https://i.imgur.com/VKYjIRQ.png
This is not an all-encompassing sheet (obviously), but it's fair to say the end-result will be absolutely massive.
Seplat has fulfilled its obligations in this acquisition so it's not in Exxonmobils legal right to withdraw (reputational damage and substantial breaking-fee). Notwithstanding, Exxonmobil agreed to a formal extension mid 2023 and I really don't see them changing their minds two years in - as it's literally peanuts for that major.
Cash at bank $450m (2022: $404m), Revenue $1,061.3 million up 12%, Production averaged 47,758 boepd, up 8%, special dividend of US 2.4p, in addition to Q4 23 declared dividend of 2.4p, confident will acquire transformational Exxon Mobil's (MPNU)
Broker notes 'a number of catalysts noted that offer upside between 32% & 90%+ (excluding the very likely transformational MPNU deal or conversion to PIA terms that offers further upside from it's forward valuation) a current divi around 7%. We calculate NAV at 169p at a 15% discount rate rising to 244p at a 10% discount rate'
https://twitter.com/surprised_trade/status/1773337210860798270
That
Mobil will pull the sale of assets now there’s a sensible government in power 😝
Even in Nigerian time this is wrong
Thoughts
Still holding though !!
NNPC was in Houston (US) last week and, among other things, presented Nigeras new three point plan for the O&G sector.
Here's the meeting with, among others, Exxonmobil:
https://twitter.com/nnpclimited/status/1770546141777580042
We now have more details regarding the new three point plan for the O&G sector: point 1.(a) should be substantial for Seplat if the MPNU acquisition gets approved, as it explicitly targes shallow offshore;
https://strenandblan.com/2024/03/15/sbp-energy-market-update-highlights-and-analysis-on-the-executive-orders-signed-by-president-tinubu-to-revamp-the-oil-and-gas-sector/
NNPC aims to be listed within 3 years: https://www.thisdaylive.com/index.php/2024/03/21/nnpc-says-processes-for-public-ownership-of-its-shares-to-begin-soon
For a deal that's 99% done, the last percentage is taking forever .
Or is this just a "Nigerian Percentage" ?
SW, it’s falling on thin volumes and most likely investors are looking to book profits before the end of the tax year. Any falls make it a compelling buy with a forward dividend yield of ~10%. Further falls? Yes, please!!!
Most global O&G stocks are currently going vertical, and we're approaching $90 brent. Any insights to why Seplat goes down everyday? Any local news that I've missed?
Yeah damofarl, some years ago I was chatting to an African who was working for one of my customers and he explained the concept of "African time" to me!
Ha ha Biscmark; you, me, and everyone here!
I've been here a long time. And long learnt to understand 'Nigeria Time'!
I generally open this board just after 7AM each weekday to look to see if there's an RNS confirming the deal has been done. One day surely I'll be rewarded with a pleasant surprise!
I would really love if the MPNU acquisition went through right now, when Brent just hit $85:
2-2.5x of oil production overnight without any share dilution. Tremendous leverage on the bottom line EPS.
My basic DCF shows a fair value of around 215p, using conservative assumptions, and exclude any value from MPNU.
The inputs are:
Cost of equity of 14%
FCF after dividends paid and interest costs of US$80m in 2024
Dividend paid post withholding tax of US$80m in 2024
Terminal value is derived from FCF after dividend and interest costs of US$130m in 2025, discounted by 10% for withholding tax, + PV value of dividends post withholding tax
Growth rate of dividends and FCF of 2%
Basically the present value of the current dividend stream is near the same value of the PV of FCF. You could say that by discounting the FCF by withholding tax, I have assumed that this FCF is passed to shareholders.
I would argue that the already high, consistent and progressive dividend should be a catalyst for the share trading closer to fair value, essentially because there is a line of sight to it. In my view the share price is realistically going to edge up towards 200p.
MPNU will create additional value beyond this. We don't know what that will be yet - we need the deal to be signed off and Prospectus issued, but we know almost for certain it is happening. That's additional upside.
I'm not taking an profit until we are close to 200p, but only then because I will need to manage my overall size because I still see value at 200p.
The investment climate in O&G in Nigeria is only improving and has years to run. In stark contrast to North Sea oil. I've said it before, the political, tax, and ESG risks to North Sea oil are significant; Nigeria is LOWER RISK in these areas. As a local champion, SEPL has a long term growth opportunity. From a reserve perspective, SEPL's portfolio is low in complexity, low in operational risk, high in lifetime/years. With MPNU, the big opportunity will be export of gas. This long misunderstood stock is at last communicating its growth vision, and investors are waking up to the myriad of drivers.
I did find yesterday's move quite odd, as the news was very esoteric and almost all of us have no information on what these executive policy orders will mean and timeframe, but am pleased that someone does have a strong view and thought it worthy enough news to buy the stock hard.
A special divi and standard quarterly div of approx 4.5p per share very is likely to be attractive to many with an ex divi date of 25/04/24 and the following divi expected just 4 weeks later (23/05/24) with potential transformational news due anytime in the next few weeks/months anyone trying short term trades will need fabulous luck or knowledge.
Without positive news I see SEPL back in the 130's again in a week or so. I may sell something elsewhere to top up if/when it happens. As always the dilemma is what to sell, the appreciating winners or the depreciating losers? Ultimately I think the Exxon deal will go through and this will hit £2+ very soon after.
Bi Bismark,
I have CMCL on my watchlist. Good mgmt team just had a bit of bad luck imo. I would have bought had 630 in my sights but as usual didn’t buy and went elsewhere! Not many know of Cmcl, quiet bb. Good work! But I did well elsewhere!
Similarly I have unloaded at Duke ahead of results and since they have delivered two positive divestment RNS’s, yet sp not moved. Mmmm! Fingers on the button post a placing hoping for 25-26p, Let’s see. lol!
And that’s the trouble here. Just coz SEPL is on a run of glory atm and long may it continue. It can drip back. So it’s always on the back of my mind.
Still I have taken out profit here just like Temple (he’s in Duke). I added shed loads under 100p and have recycled and sliced since.
Got plenty left for me though and I am expecting an out of the blue divestment RNS here followed up by many more regarding the 2nd half ops with the usual NT to buy any decent amounts.
Hence, if anyone has done their DD here and has factored in the growth irrespective of the divestment I would recommend buying ahead of news and the soon double divi and then just holding!
Not advice but there aint many better opportunities out there and just coz some investors have taken profits that ain’t bad. I have spread some risk but may buy back depending on events.
Usual caveats
Trek
Fair enough Trek, but surprised you didn't buy them back earlier in the week. I got 7250 at £137.5 on Monday.
You've got a point about results though. CMCL dropped from £8 to £6 on a profit warning on Monday but are now back up to £7.85
Another of mine, GSL dropped about 8% this week after announcing they WOULD hit targets, but have since recovered.
Maybe I'll give that a go...
Na Bismarck, I sliced 16k shares just before the results; a move that has served me well in the past as results are oftentimes followed by a pullback. But this time I got caught! Jinx was inevitable!
Still onwards now to 200p and thankfully it was just a slice and I don't mind paying more to put them back in as this is sooo under the radar so no panic! Doh!
Trek
These shares have been trading in the 130's for weeks then suddenly they're up through 150 today on no news. Surely that means a leak or rumours, I guess we may find out which very soon....
Pleasing close,news has to be close,Nigeria still needs Exxon for deep water investments going forward, so surely enough pressure can be exerted on the vested interests of the state oil company to sign off the Seplat acquisition.
+9% Congrats, gents!
Not only is the Nigerian Naira improving, but we also see strong improvements in the regulatory framework of the country. Surely shouldn't be long until the MPNU deal is sealed.
Tax breaks a great incentive for investment and production....
Broker note with'' a number of catalysts noted that offer upside between 32% & 90%+ (excluding the very likely transformational MPNU deal from it's forward valuation) and a current divi around 7%
We calculate NAV at 169p at a 15% discount rate rising to 244p at a 10% discount rate, offering 32%-91% upside (excluding MPNU or conversion to PIA terms that offer further upside)''
https://twitter.com/surprised_trade/status/1757355886517891140