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Might add the OPEC meeting has been postponed from 24th to the 30th Nov due to Saudis not happy with other members production outputs figures
Thanks for this - I got a little concerned that I'd missed something related to the deal when I saw the sells. Thanks for all the posts you guys put up by the way, long term watcher on the board who never posts. I've been in since the start of 2022 and I topped up in the past few days to take this to my largest holding. Really hoping we get the news we've all been waiting for regarding the deal in the next few weeks!
This just adds ammo for OPEC to reduce production next week which will have an even greater effect for the oil price to surge imo
A lot of oil company shares being sold today, majors' SP down between 2 and 3% reflecting >3% drop in POO.
Maybe not, just noticed some large sales going through,hard to fathom why you would be selling now considering whats going on here
Or Xmas around the corner
Quite a few indicative sell trades today. 123.5 to buy 121.7 to sell on 1000 shares. Nothing large. No liquidity.
I don’t think it’s anything other than some folk moving money post xd.
Can’t see the news below being adverse 250m not a lot for sepl! Sign of in country intent if you ask me. Good pr!
Usual caveats
Trek
Very helpful info Sea Tank thanks.The increase in the divi should not be sneezed at as well,sounds almost too good to be true,but hey why not.
Hi damofarl, some of your assumptions are very debatable so let me explain where I can:
MPNU is shallow water and was not involved in the Exxon lawsuits regarding oil spills (please show evidence if otherwise) - the spills were related to deep water, which were anyway settled with NNPC a while back, so it is unlikely that MPNU has material legal liabilities, although we will only know for sure when the prospectus is published.
Decommissioning provisions must be set aside during operation, i.e. cash into escrow, during the life of field production. Any under-provision in this regard will be calculated in the final adjustments to the cost of MPNU.
There will not be a payment or gift of Working Interest to NNPC in exchange for Seplat's purchase of MPNU because this would not be within the law. There is no mechanism for this. If NNPC insist on first right of refusal, it will have to go through the courts, which is not what the government wants, on many levels.
The cost of MPNU will be relatively marginal once adjusted for cash flow since the deal strike date of 1 Jan 2021.
The cost of the acquisition debt facility is SOFR + a spread, i.e. in dollars and not linked to Nigerian overnight rates. Estimated range is 12-13% I believe, but will fall as SOFR falls. Anyway, with the much reduced cash price of MPNU, Seplat will probably pay for it entirely in cash. They have the cash, why use debt at all?
Putting that together, in my view the deal terms are very likely to be unchanged from here because there is no mechanism for change, but NNPC will receive commitments on investment capex to raise production.
Please put all this together - we are highly likely in line to take receipt of an almost free lunch. I guess around $400m in cash will be paid for an asset generating around $400m in free cash flow annually. The impact on the share price will be equal to what the market is willing to value $400m annual free cash flow at - in my view at least 3x, so >$1bn. The market cap is currently $900m. The market cap once the deal is completed should be at least $1.9bn.
Hope this helps.
i quite like the irrational indifference to sepl - it keeps this board refreshingly clear of spivs and conspi******s.
the deal will go through, with a revised increase but offset price to mobil, with a slightly larger % share to nnpu . i note a recent press release post, where a minister stated discussions (on the deal) included retribution/restoration for a legacy of oil spills/damage (from mobil production), and therin maybe the 'adjustment' favour mobil, which will be a clean up fund, promised/delivered by sepl with a concomitant agreement from govt that such a fund would absolve any more listing/future claims.
as for a fund raise, don't see it. a recent sepl update reconfirmed that the original lenders panel for the announced acquisition were still on board, albeit yes, one must expect at higher than original rates.
whatever way you look at it, whatever the adjustments/placations, for nigeria, the future is bright, the future is sepl.
and for us too.
The SP has an African "haircut" for sure, like many mining companies operating in that continent. Ironically it was another well run company in Africa, Caledonia Mining that I sold out of today to top up here, and did so only because I can see short-med term upside here with this deal which is not priced in.
The more I read about the NNPC and its management team, the more certain I am that Seplat and Mr. Brown is in a much better negotiating position than pundits are suggesting.
The last three years NNPC failed, repeatedly, to meet production goals; financing deals falling through, co-operation with international players such as Chinese fell through, made headlines in the international investment community as to break-up and meddle with valid deals from majors such as Exxon. Vocalized an IPO (thus cash injection) that has been postponed 3-4 times by now, and no end in sight. And on it goes.
Nah, I'd say the Nigerian government understands that not only does it _not_ hold legal grounds to block the Exxon sale, but also NNPC being the sole operator of these fields is probably not the best setup for their own long term interests. Honestly, I find it hard to even see a IPO being achievable if NNPC/Nigeria is in the middle of a arbitration process, lack of global investor trust, rug-pulled a major oilco etc.
https://thewillnews.com/exclusive-in-desperate-bid-to-remain-in-office-mele-kyari-fast-tracks-ipo-for-nnpc/
Sorry for the rant. Have a good one, all :)
To be honest there never been much interest in this share over at least 2 years yet this is imo is a well run company with reliable divis
I've just sold up elsewhere and topped up here today. Hard to believe the SP has not moved on all this news. The market seems to have an unbelievably indifferent attitude towards this share. Makes me wonder whether the deal, which now looks very likely to go through will be transformational to the SP or not.
Well how wrong can you be, i seriously thought we would be over 1.30p its possible that the thought of suspension could be the reason why investors are put off
If you can trust anyone on AIM my trust is with R Brown ever time. imo
I would also add that as the deal will be back dated, the amount of debt required will now be much lower. Although, may be at a higher cost. On balance, financing should be less painful.
Ahhh OK. I misread page 6 of the pdf. Funding by Equity of $300m to $400m in this pdf on their website.
Isn't that odd language to use IMO, funding by equity usually means one thing in my book, then next to it they talk about buying the equity of the acquisition using their cash. Anyway... Either way I'll be holding and reinvesting the DIVs, have a really low average now.
https://www.seplatenergy.com/media/wojc2c5e/seplat-acquisition-of-mpnu-presentation.pdf
It was announced when the deal was first announced. All funded through debt, existing cash balances and the benefit from effective date to completion. No need for equity to be raised
No dilution ! When did he say that ? Wow. I'll believe it when only when it happens. I've heard the same kind of thing over the years but admittedly from companies with seemingly less integrity.
One very very rarely sees a free lunch in equities but if there was ever one this is it. Free lunch.
Correct, there is no equity dilution and the headline deal figure will be much reduced by cash flow adjustments since the deal date of Jan 2021, so there will be limited debt increase too. That means the vast majority of the value creation is straight to equity, I.e. market cap goes UP.
R Brown said there would be no dilution
Hi trek/sea Thankyou both for the links and answers, voting was the combined but I know the answer now, looking through the original proposal it’s really good to read it through again, if the deal could still hold up the original terms or at least 80% this will be fantastic. Fingers crossed all will be revealed soon, yes it’s Nigeria but imo I’m hoping most of the nitty gritty has already been thrashed out. As always good luck all, regards H.