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Excellent find, all the sellers of the last couple of days may be rapidly re thinking that short term decision and scramble to re buy.
Sit tight, we appear to be in the final furlong !
MEM
NIGERIA'S OIL REGULATOR NUPRC HAS INVITED EXXON, SEPLAT TO FRIDAY MEETING TO PRESENT TWO OPTIONS FOR ASSET SALE APPROVAL - NUPRC/Reuters News
NIGERIA'S OIL REGULATOR SAYS EXXON'S OIL ASSET SALE TO SEPLAT COULD BE APPROVED "IN LESS THAN TWO WEEKS" - NUPRC
Looks like the deal is getting done. Also looks like a couple of percentages of the field will be handed over to NNPC. Nevertheless, we're looking at +150-200% production raise depending on what scenario that plays out, without any share dilution whatsoever. The last point is very important, IMO.
Congrats, gents!
Nearly 10 pence down today. Oil price down a bit but wouldn't knock off 9 to 10p.
Without any reason other than profit taking or a June sign off means a few months delay hence another buying opportunity and DRIP days 29th May and 14th June.
Https://punchng.com/shell-will-complete-2-4bn-nigeria-assets-sale-june-fg/
CEO of NUPRC has said, quite explicitly, that they target the divestment of Shell's assets to be completed by June.
I believe the same "due diligence dialogue", which is intended to tie up loose ends regarding "environmental and end-of-life liabilities" is also in process regarding ENI/Oando and MPNU/Seplat.
So we might be looking at a June sign-off date, which is not so far away.
I bought back my 20%. Lost a couple hundred quid. Can’t win ‘em all!
Anyways as an aside. This in an update from Deltic today re UKCS (I don’t hold).
It shows why Nigeria is so appealing fiscally and regulatory!
Meanwhile the UK will pay more for imported energy including transition fuels like gas from Russia and support that with coal and further US/Qatar HC imports as its ‘greener’ than using UKCS and in parallel generating an internal transition economy with uk jobs and paying uk taxes.
Oh I have zero political allegiances they are all imo useless!
“ The feedback from Deltic's Pensacola farm-out process has indicated that the continual tinkering with the Energy Profits Levy and resultant fiscal uncertainty created by the current government, along with recent rhetoric emanating from the Labour Party, have had a severely negative effect on the ability of UK Exploration and Production (E&P) companies to commit to long term investments in the North Sea. This has resulted in many operators diverting capital away from the UKCS or delaying investment decisions, especially with respect to new large-scale opportunities like Pensacola.
Against this hostile political environment, and despite the Company's best efforts, Deltic have not yet been able to secure a farm-out partner for Pensacola and although there are a number of live discussions with respect to a way forward on Pensacola, there is a risk that a farm-out may not be secured before the end of May 2024. We remain of the view that Pensacola represents an excellent value-driven opportunity for the right partner and would be willing to engage with any additional potential partners.”
Trek
I added some more today on the drop so pleased to see sense prevail as the day went on!
AI are reporting that the ENI sale of NAOC is about to get approval, so finally signs of life at last (albeit being led by the presidents nephew also helps!)
https://www.africaintelligence.com/
Closed flat on optically (very) weak results today, tells you all you need to know about the underlying strength of the ticker; probably one or two funds on their way onto the share register - or something bigger that doesn't need an introduction.
Have to say, I do like Mrs. Edith Onwuchekwa's signature.
Great recovery today once the market realised what was happening with the drop in revenue.
We seem to have staged a good recovery, mid price down 0.5p on IG.
Common sense prevailed re this mornings RNS. Steady ship, all good.
Just wait for the final sign of re MNPU.
Just a little more Patience
MEM
Hi Seatank, thanks for your input, excellent.
One thought re your FCF
Forecast Oil prices
What will the price of oil be in 10 years?
According to the latest long-term forecast, Oil price will hit $100 by the end of 2024 and then $110 by the middle of 2031. Oil will rise to $125 within the year of 2032, $140 in 2033, $150 in 2034 and $160 in 2035.
IF this came to fruition the FCF would be utterly enormous.
The Gas which SEPL plan to extract and sell to a power hungry local civil population, plus export to overseas markets will become a large standalone profit centre.
Everyone should have some SEPL in a balanced portfolio.
Final thought, when the MNPU deal is signed off and our average daily production rises to 100,000 bpd, with more upside, we will become a Bid target, especially with 25 years of reserves.
Large oil and gas fields tend to get larger as work is completed, unlocking larger reserves.
Interesting times.
All within a background of increasing dividends
I can foresee a bid price of £3bn in 18 months time.
MEM
SeaTank8300. Thanks.
As usual always very grateful for your enlightening and researched contributions on this forum.
Good chance of a further recovery in the SP this afternoon, hoping for a closing price broadly neutral change.
Then waiting for news out of Lagos re Chevron/Mobile final sign off, we must be very close after the Oil Ministers comments
These results were good. Production was solid, at the higher end of guidance, with the resumed Trans Nigeria Pipeline allowing a restart of wells at OML53 auguring well for the rest of the year. Cost of production was slightly up from last year at $9.6/boe, so, fundamentally, the business remains extremely profitable.
In addition, several positive indicators:
Firstly re ANOH, the OB3 pipeline is still anticipated for completion by end Q2, which is the first time I haven’t seen slippage in this schedule, which suggests reasonable hope that ANOH can commence production by end Q3, or at the very worst by end of the year! To give some perspective, this was originally slated for operation in 2022 and has been delayed multiple times – to see operational start around the corner is a great thing.
Secondly, fiscal incentives have been raised, as well as changes to a law concerning contracting process, and the regulator has raised domestic gas prices, which all point to the positive regulatory/governance backdrop which is supportive of investment and expansion of this industry.
Thirdly, MPNU deal close is not far off.
As Access Capital points out, MPNU will approximately halve current ratings, i.e. double profit and cash flow. Their forecast aligns with mine, which is approximately $250m in free cash flow once ANOH is contributing, doubling once MPNU is consolidated = $500m Free Cash Flow. Market cap is $1,165m.
I expect financing cost of MPNU to be around 12% but the total cost after adjustments to be around $800m (conservative guess), much lower than the $1,200m price tag, so financing expense will be around $100m annually. Therefore genuine FCF of the consolidated group will be $350m in year one = 30% FCF Yield.
At that rate of cash generation, the MPNU loan will be paid back in about two years, during which time MPNU production will have increased circa +20-30% on fresh capex. That means two years after MPNU consolidation FCF will be $600m+. Consider that in the context of today’s market cap of $1,165m.
Here's bit of the broker report....
Financial performance for the quarter was skewed by a substantial underlift, FX effects, and a high deferred tax charge, much of which should rebalance in subsequent quarters
Seplat received US$95m in April for volumes lifted in March and cash balances are expected to normalise in the second quarter
The NMDPRA increased the domestic gas price by 11% to US$2.42/mcf and there were other positive institutional developments including fiscal incentives and greater autonomy over contracting which continue to speak to the supportive attitude of the government to the oil and gas industry in Nigeria
If you haven't seen, Capital Access have published a research piece on the results. I haven't had a chance to look at them in detail yet myself, but seems that all is in good order.
https://www.capitalaccessgroup.co.uk/research-portal#/portal/capital-access-group/research/23_2024042902355766129
https://www.capitalaccessgroup.co.uk/research-portal#/portal/capital-access-group/
"Seplat delivered an encouraging operating performance in 1Q24 including
production of 49.3kboed, towards the upper end of guidance (44-52kboed). All
current guidance was maintained but good progress on the ANOH export
infrastructure and an earlier than expected resumption of exports through
Zone 6 of the Trans Niger Pipeline improve confidence that guidance will be at
least met. Financial performance for the quarter was skewed by a substantial
underlift, FX effects, and a high deferred tax charge, much of which should
rebalance in subsequent quarters; the dividend was maintained at USc 3. We
have revised our forecasts to reflect guidance and despite the strong
performance of the share price, the rating remains attractive, with debt adjusted
cash flow of under 4x for FY24 and falling rapidly. Completion of the MPNU
acquisition would approximately halve current ratings, we estimate."
I am buying as this represents a great Buying opportunity ahead of MPNU news, which must be very soon.
Large spread of 8p will narrow as the day moves on
So if the figures today were "underlifted" then the next quarter will look awesome instead, right ?
The cash position is down due to this "being paid later" which takes the position lower than the Exxon Deal requirements.
So are we looking at another 3 months waiting to get cash back up or they will just use debt facilities.
IMO no worries either way, a lower SP is good for DRIPs and possible trading to get averages lower.
Down 6% on the day, which still takes us above the recent support of early 149.
... and there is clearly a buyer in the background as they will offer above bid (they were all day friday on dummy sells and happy to take any number of shares) and for those selling today it appears the same. typically as stated below on a drop of 5 per cent plus this would go NT, not today, they will take any number of shares on a dummy sell, that is typically a sign of background buyers eager to secure .
I understand some folks confusion looking at the rns and the initial figures, however, as stated below and explained very well SEPL just gets paid laterand importantly production at current oil prices is at the upper end of guidance, MPNU awaits etc...every reason to add to holdings not sell imo ;-)
From Brave AI…
“ Overlift oil and gas refers to a situation where the amount of oil or gas produced and lifted (removed from the well or field) exceeds the amount that is entitled to a particular party or entity, such as a joint venture partner or a government agency. This can occur due to various reasons, including:
Efficient lifting arrangements: In some cases, it may be more practical for a party to lift a full tanker or a certain quantity of oil or gas, rather than a proportionate share of the total production.
Imbalances in production: When the production of oil or gas is not evenly distributed among the parties involved, overlift can occur.
In the context of oil and gas production, overlift can have financial implications, such as:
Creating a receivable for the party that is entitled to a larger share of the production
Requiring the party that is entitled to a larger share of the production to pay for the excess production
Affecting the revenue and profitability of the parties involved
For example, in a joint venture, overlift can occur when one party lifts more oil or gas than its entitlement, resulting in a receivable for the other party. Similarly, in a government’s share of profit hydrocarbons, overlift can occur when the government’s share of production exceeds its entitlement, resulting in a receivable for the joint venture parties.”
Main thing was guidance is towards upper end. We just get paid later!
‘ Production averaged 49,258 boepd, down 4.8% on prior period (3M 2023: 51,720 boepd), but 5.7% above Q4 2023 production, and towards the upper end of 2024 guidance (44,000 boepd - 52,000 boepd)“
All said I took 20% off this morning after they had had a good run. I intend to buy them back just hoping for cheaper.
Should have done Friday really as results day often disappoints but I thought just maybe after all the media news we would have had something more concrete on the divestment.
Anyways I was offered a price for 50k. It’s previously been NT to sell this time of day. So there is likely a background buyer still which should put a floor under the SP.
Usual caveats
Trek
The last week has seen a climb up, probably on people expecting a resolution to the Exxon deal. I'm expecting the price to settle back in at around 150p. Anything lower and that's a little silly as nothing has changed from what we already know. Personally I was not expecting a resolution announcement today, Seplat would announce that as soon as it happened, they certainly would wait around for results day.
Markets can be irrational at times....provides opportunity though :-)
Not the uodate I was hoping to see this morning. Looks like the SP will tell us what it thinks of that
It's because of Underlift/Overlift accounting - adjusted for this the revenues was almost unchanged:
"after adjusting for underlift and overlift oil volumes, 3M 2024 adjusted revenues of $236.3 million, against $255.6 million in 3M 2023"
Why is revenue down so much when oil price / production has broadly been maintained ?
What am I missing here..