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"6mth / 1 yr targets for SEPL" .... 90p-180p trading range ... The windfall tax is taking oilies down and Seplat with it ... by the looks ..... although I can't see Seplat's bottom line being affected by a tax on UK oil production .... so my current target is £1 and I'll drip buy until it gets there ... and when it goes down further I'll buy in bigger loads.
Thereafter I've seen 135p from Seplat recently so I'll be clear by then, providing oil stays above $100 etc etc.
;)
Useful documents to be found here ...
https://www.seplatenergy.com/investors/research-and-analyst-coverage/
TempleOfDoom - Interesting, I've just bought into SEPL - concerned about Nigeria country specific risks, but too good a stock to ignore! I also hold POLY, CEY, CAML & SHEL + BP but I'm in two minds about Shell, on one hand it's gone up 30% in last few months, with Rishi's WFT announced - time to sell out and take profits?
OTOH - Shell's North Sea Gas project was approved today, and they've got a few UK projects ready to go into production, so that should blunt the effects of the WFT. Plus they have an economic moat - great brand, little competition on LSE. Where else are UK investors going to invest? So will probably buy the dip on SHEL - if it happens!
Out of interest, what are your 6mth / 1 yr targets for SEPL?
Oil up 3.5% Brent $117
Meanwhile, sold out of funds this morning with large BP & Shell holdings ... enjoyed a 4% rally on renewables with the windtax collapse a couple of days ago ... all eyes on Sunak this afternoon for the oil& gas sector in the UK.
Topped up another small buy this morning ..... 90p-180p trading range for Seplat?
That fixed gas revenue is for 2022 according to RNS releases .. after which Nigeria moves over to a demand/supply model ... with EU a major potential customer going forwards ...
while Q1 had $97.53 as the average realized oil price sold, and not too far off an average of spot prices for Q1.
I agree SeaTank that SEPL should generate a lot of dosh - but 2 points ..
1) about 40% of SEPLs output is gas and gas revenue is only a fraction of oil per kboepd
2) about 40% of the oil revenue is hedged for 2022 @ $55/bbl
seatank8300; spot on. Should be a pinned post, so all see. All you need to know about SEPL.
I've taken another look at broker forecasts for SEPL - they're much too low and not at all indicative of profitability at the current oil price. And SEPL itself doesn't offer any EBITDA or cash flow guidance, probably because Nigerian stock exchange regulations prevent them from doing so. But we can make an educated guess at where they stand at today's oil price.
Laster quarter's EBITDA was around $150m at an oil price of $102.
Oil is currently at $110.
When the Ampuke Escravos pipeline opens, realised yield should improve by up to 5%.
Oil production volumes should improve at least 5% in the second half too.
These three drivers should add at least another $40/quarter to EBITDA, which suggests at least $190m quarterly EBITDA by the end fo the year, which is $760m of annual EBITDA.
Then in the first half 2023 the ANOH facility commercialises, adding at least another $40m of annual EBITDA (probably a lot more at current oil prices), which takes SEPL's EBITDA to $800m annually.
That's just organic.
SEPL will be debt free by end of this year, assuming no acquisitions are made. Thus SEPL's enterprise value will be circa $900m vs EBITDA of $800m - which suggests a multiple of around 1x EV/EBITDA.
The stock has never traded this cheap in its history. A multiple of 2x has typically been as low as it goes. But when the oil price outlook is robust, that multiple expands, to 3x plus.
One can look at it either of two ways - 1. the company is deeply out of favour for whatever reason and is unlikely to re-rate much, but will pile up cash as time passes and that will have to be either distributed to shareholders or reinvested in growth and more cash generation, or 2. the stock will ultimately re-rate as the market wakes up to the prodigious cash generation.
Either way, it doesn't matter in my view. This is an asymetric risk-reward profile and patience will reap great rewards.
Unlike many similar cheap oil stocks out there (e.g. Gulf Keystone), SEPL is a genuine blue chip, with clear legal title, low cost operations, and most importantly a diversified portoflio of producing licence areas and processing facilities. Diamond in the rough.