The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Rumours that Wcat PSA has been signed and sp up 70%. If true maybe ours will follow shortly, fingers crossed.
RR it would be nice but not sure achievable, with AK being a finance man would have thought he would have had this over the line by now.
LST - maybe wishful thinking on my part but I’m hoping AK has been waiting a bit for Naira stability before pushing the button on our debt refinance deal. Additionally I wonder if it could possibly be linked somehow as a tracker deal similar to some UK mortgages? Ie if and when Naira trades better we track the movements for our interest payments. One way or another it’s way beyond time for us to see this deal closed.
Cheers TIL, read an article last week that the refinery was doing its final testing and will be in production in a matter of weeks. This in time will also have a positive impact of in country fuel prices and stability of the Naira.
TIL - great research matey, please keep your newsflow coming?
Doing some further research I believe our partnership with AKWA IBOM Power company will turn into a material event. Here are a few articles why :
New oil refinery coming online in AKWA ibom for 200,000 bopd next year will probably need stable power and will be souced from IBOM power station
https://www.legit.ng/business-economy/energy/1568228-after-dangote-refinery-project-begins-consignment-arrives-china/
The plant produces current installed capacity of 191 MW and is owned by the Akwa Ibom State of Nigeria. But can produce up to 732 MW. The new deal shows that the aggregate maximum capacity of the gas turbine generator unit was capable of producing up to 732 megawatts.
https://www.vanguardngr.com/2022/05/akwa-ibom-firm-seal-deal-for-732mw-ibom-power-plant-expansion/
New substation investment in region to transfer power from plant to national grid -
https://guardian.ng/news/fg-kick-starts-construction-of-n6-8bn-substation-in-a-ibom/
Power distribution licence approved to local neighbouring states from ibom power
https://businessday.ng/news/article/nerc-approves-electricity-distribution-company-for-akwa-ibom/
Akwa Ibom gives Fed Govt nod to offtake power from Ibom Power Plant
https://thenationonlineng.net/akwa-ibom-gives-fed-govt-nod-to-offtake-power-from-ibom-power-plant/#google_vignette
Seems like there is material potential in our partnership with Ibom Power company
There seems to be plenty of optimism in the Nigeria Gas sector and some recent comments from NNPC and total energy committing $6bn
https://championnews.com.ng/well-use-gas-to-revolutionise-nigerias-power-industrial-sectors-kyari/
https://www.ogv.energy/news-item/total-energies-plans-6bn-investment-in-nigerian-oil-and-gas-assets
I can see plenty of opportunity to have Amocon style agreements to use third party gas through our network. The beauty of our pipeline is that we have 10 TCF of undeveloped gas resource in and around our pipeline.
"The Accugas facilities and pipelines have significant spare capacity and are strategically located in South East Nigeria, an area where there is both substantial undeveloped gas resources (c. 10 Tscf undeveloped gas estimated to be located within tie-in radius of Accugas pipelines) and significant expected demand for gas from power stations and industrial off-takers in the Calabar, Port Harcourt, Aba and Uyo areas."
Rocky - the company and IR could be doing a lot more in keeping the shareholders appraised no matter how big or small the operational updates are and regardless of whether we are in a suspension period or not, there isn’t really any excuses there
TIL - thanks for all your research and keeping some decent content on here. shame SAVE can’t give us a bit more info and they haven’t even put anything on Twitter for 6 weeks. With all that you’ve found going on in Nigeria, the least they could have done is put a few positive Tweets on. They seem more interested in letting us know about Graduate sponsored degrees than O&G. Hopefully we’ll get an update by YE but I’m certainly not banking on it.
Lets help ibom power with efficiency and optimal performance hopeful leading to a higher uptake in gas from us.
https://www.linkedin.com/feed/update/urn:li:activity:7142930068057595904?updateEntityUrn=urn%3Ali%3Afs_feedUpdate%3A%28V2%2Curn%3Ali%3Aactivity%3A7142930068057595904%29
Seems like we will have a greater influence in the running and making Ibom power plant efficient. Let's hope we can increase our take / pay gas from 20 MMscfd which is due to expire this month.
https://www.linkedin.com/posts/kuthompson_kuthompson-ariseagenda-umoeno-activity-7142765274172231680-_MMB?utm_source=share&utm_medium=member_desktop
On a separate note looks like the CPF construction is running at full steam ahead we have hired a new construction co-ordinator
https://www.linkedin.com/posts/adebanjoadebowale_im-happy-to-share-that-im-starting-a-new-activity-7142414769243820033-Bflu?utm_source=share&utm_medium=member_desktop
One thing that does intrigue me and can work in our favour is if we help power stations become more efficient like the Ibom power limited company link I posted below.
Seems to me that we are acting like techincal partners helping the power station become efficient and de-bottling the station to be able to handle stable transmission as part of this I am sure we can sell more gas to the Ibom power limited. It seems like we can act as technical partners and advisors for our customers and in return for more gas uptake, sounds like a win win model. We get more stable gas sales and potential increase in volumes.
Wouldn’t surprise me if we are doing that with a lot of our power station customers or plan to adopt this strategy.
Longshort - agreed it is frustrating to be suspended. But even without another acquisition there is a credible path to circa 50,000 boepd based on accugas alone in the next 6 -12 months if they pick up a few more gas contracts which I am sure they must be keen to get a few more.
Accugas has and is the crown Jewel of our portfolio and its organic growth and projected growth more than underpins the company regardless of acquisition outcomes and Nigeria being probably the most stable country to own an oil and gas asset.
Hence I was and still i am a bit surprised that they haven’t been able to secure another asset in country yet or perhaps they might in the not distant future.
Nigeria has signficant number of development assets which are capital starved. I am sure they are quite a few that could give 5 - 10 k Bopd per asset they should be more aggressive with these too and not just assets that majors are selling.
Yes granted we all want the big deals as that is overnight transformation and all I want for Christmas is deals for savannah whether SS or another.
If raising debt for SS is proving to be difficult and there are other assets going in relatively attractive jurisdictions we should go for those considering our ability to finance deals is hedge on the jurisdiction as we always opt for ring fenced financing perhaps it’s time we went to our lenders with an alternative deal which isn’t SS.
Sadly TIL, we as a company are not in a position yet where perceived asset value is reflected in share price due to the risk jurisrtitions we work and that will contine until we creat cash.
Based on the below growth rate of new gas contracts in motion and potential more gas contracts with hopeful debt restructure will have a material impact on the accugas business significant increase in revenues with debt restructure to match contract life can easily shift the Risked NAV estimate well beyond 45p/share.
I did a spreadsheet table this afternoon looking at the gas contracts we have shame I can't post the table on here for all. Our H1 2023 run rate was H1 2023 with an average of 25.3 Kboepd. Here is some of my highlights:
1) Notore Chemical Industries PLC - 10 MMscfd (1,772 BOEPD) Contract July to September 23 have averaged more than twice this at 26.3 MMscfpd (4,661 BOEPD) 12 Months Extension in H1 2023 + 16.3 MMscfd (+2,889 BOEPD)
2) Shell Petroleum Development Company of Nigeria Limited - 6 MMscfd (1,063 BOEPD) Added +3 MMscfd (+532 BOEPD) August 2023
3) Amocon - 20 MMscfpd (3,545 BOEPD) -Delivery Commenced April 2023 at 18 MMscfpd (3,190 BOEPD)
4) Ibom Power Company Limited (owner of the Ibom power station) - Contract till December 2023 (Extension Discussion Ongoing Potential opportunity to increase supply materially here I reckon as we are working with the local government to make this power station efficient and stable so as part of our assistance we could perhaps increase the current 20 MMscfpd (3,545 BOEPD) Take / Pay materially would be nice to double it to 40 MMscfpd (7,090 BOEPD)
https://thesouthernexaminer.com/why-eno-is-seeking-partnership-to-enhance-nigerias-epileptic-power-sector-p11079-202.htm
"Then we also have the Savannah Energy that supplies gas, they are willing to assist by coming up with solutions."
I would expect our H2 2023 average to be a lot closer to 30,000 boepd (H1 2023 (25,300 BOPED + Notore increase (+2,889 BOEPD)+ Shell increase (+532 BOEPD) + Amocon (3,190 BOEPD) = 31,911 BOEPD or circa 180 MMscfpd
I believe there is still additional scope sell more processed gas up to 200 MMscfpd (35,448) or 240 MMscfpd (42,538 BOEPD) as per Rocky IR update, and that's without the CPF facility to come in H1 2023 next year so in theory we can add anywhere between 20 MMscfpd (3,545 BOEPD) - 60 MMscfpd (10,634 BOEPD)
Would love to get daily production stable and in the range of 35,000 - 40,000 BOEPD, prior to CPF facility. Let's hope the company is hunting for additional gas customers aggressively perhaps we might get it through number 4 above Ibom Power Company Limited (owner of the Ibom power station) contract up fro renewal December 2023
Thanks tc - did you draft the article for Zac?
In case anyone missed it.
SAVE was mentioned yesterday on Zak's website.
https://www.share-talk.com/traders-cafe-with-zak-mir-the-week-in-small-caps-sunday-17th-december-2023/
TIL: I think we are all with you on that.
Anyways I am hoping the board are able to provide an operational update and perhaps close out the ever illusive accugas debt re-structure before the end of 2023.
RR i agree the conditions surrounding the debt for SS deal have changed significantly, SS war , significantly higher interest rates, if fundraise through shares at say 25p every £100m would be 400m extra shares (i for one do not want significant further dilution). I would like to see final payment being no more than £5-600m and Petronas being part of the debt structure with certain covenants in place.
Thanks for confirming rocky, I wasn't aware that debt providers had pulled away since.
TiL - your last sentence is incorrect. Whilst the Chad issue did not put off interested debt providers but the Sudan war that broke out on 15/4/23 certainly did. Some of the interested debt providers withdrew their interest due to worries over the export pipeline. The debt workstream is far from completed and still needs a significant amount of work.
The Africa Energy quote I was referring to below was an article from April 2023 - "African Energy understands the expropriation of Savannah’s upstream assets in Chad should not affect the deal, as financing for the South Sudan deal is ring-fenced."
It's clear the chad nationalisation as not affected our ability to raise finance for Petronas deal, that quote was April 2023 and we are in December so one would imagine with economic interest date the debt needed would be even lower thus making in more easier to access financing.
Clearly the challenges for this deal lies elsewhere and not related to companies ability to access capital.
As for financing is concerned for this deal. My understand is that the financing for Petronas deal is ring fenced meaning the chad revenues and fx loss has not affected our ability to finance the Petronas deal and this was highlighted in the Africa energy article earlier this year
So with African energy being quite a credible news source it’s safe to say funding this acquisition is not what’s holding this deal up.