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Limit up +9% in Lagos yesterday, but tanked -5% in UK. Hmmm
We must be extremely close to all being revealed. I'm very very keen to see this Prospectus.
Looks like we're almost there, only days away!
"The $1.3 billion sale divestment of ExxonMobil asset to Seplat is also 98 per cent completed, and would be finalised in the coming days, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has said."
guardian.ng/news/1-3b-exxonmobil-seplat-divestment-98-completed/
Up another 10% today !!!
Up over 8% in Nigeria today.
Shares in Nigeria priced equivalent to GBP 228p.
https://markets.ft.com/data/equities/tearsheet/summary?s=SEPLAT:LAG
Very significant chart-wise to get past 148/149.
Highest price for years. We could practically treat this as "blue sky" Nice.
Mmm trek yes there’s something definitely brewing, the spread is all very right - a good sign, I’m guessing the deal will be announced just before the 2 year anniversary, on a different note, good read on how the authorities seem to be getting to grips with the illegal oil refineries that are rife. I hope going fwd this is a ongoing focus of the new goverments promise
Link attached https://punchng.com/nnpcl-destroys-34-illegal-refineries-in-one-week/
As always good luck and is the end nigh 😊regards H.
That’s more like it +£100k of buys in first hour. There’s something happening somewhere that we haven’t picked up yet imo!
Usual caveats
Trek
This is doing really well
Exxon?
Something is driving this from Nigeria imo.
£45k of trades on LSE just don’t cut it.
MM’s obviously have a RNS alert as price is up unnecessarily on volumes/trades.
Also comes on the back of consistent rise in sp.
I was expecting 140 before news and +200p after but looks like there are rumours out there and folk in Nigeria have been buying driving London up. After all the arbitrage is a bit silly atm!
Usual caveats
Trek
So is this it ? The spike upwards in Seplat's market capitalisation due to the acquisition we've all been waiting for, or a higher dividend being declared. We'll see.
Patting my own back tonight...
I've had one of those rare trading two days where the plan went well ! Sold all my stake in Seplat at 136 yesterday, bought Dec at 848, sold this morning gaining 8%, bought the original shares back and more in Seplat first thing this morning , along with more UKW and lowered my DEC average, now Seplat is up by over 4% on the day. A well needed bottle of wind with the Mrs tonight )) Cheers and GL all.
Agree Trek. If Roger has his way, MPNU will be a sizeable exporter of LNG to the world on long term contract. So much to look forward to, meanwhile we are paid to sit on hands while picking up an 8.6% divdiend yield paid quarterly!
Hi SeaTank
I see Nigeria as far more investor friendly than the UKCS! For those reasons that you point out and sold UK oilies a long time ago in favour of SEPL and SAVE. I sold Save, fortunately after a multibag before the last suspension and put it all in here!
The biggest risk imo is the bandits/local mafias but these are being onboarded with community employment, investment and local security.
On the global stage everyone wants to be Nigeria’s friend with its youthful demographic and high growth economy! Russia, China, The West and India. Nigeria seem happy to play all sides and none at all!
A good SP rise today now through 140 as predicted!
Could well see a gradual 100p rise from here and a 100% increase in the dividend if that divestment lands.
99%! lol!
Usual caveats
Trek
A low valuation multiple is much closer to the truth, with SEPL. Actually it is truth. These production figures can be sustained.
Finally, SEPL's midstream gas business is an infrastructure business, de-linked from the price of oil. This business has decades of reserves and delivers to commercial customers on long term contracts at a negotiated yet fixed price levels. This business, as it grows, provides a stable income stream, which deserves to be valued at a much higher multiple than an oil E&P. The future upside of MPNU is taking MPNU's shallow water gas reserves and exporting them under long term contract at fixed prices as LNG. This business could be worth a fortune, if it materialises.
I've been looking fairly closely at North Sea operators for a long time, as there are many flagwavers out there for these stocks. While I don't deny that there is value around, I don't see the risk-reward stacking up any better than SEPL. I'm often told by fans of North Sea oil that SEPL is interesting but the Nigeria risk is a problem for them. I find that interesting, as from where I'm sitting I see quite the opposite.
My points would be:
- North Sea oil suffers from ongoing political risk - the windfall taxes imposed on operators have been phenominal, and we are about to enter a Labour government who are vocal about their hate for the fossil fuel industry. I only see risk of further taxation ahead, removing a big part of the Free Cash Flow argument for these stocks.
- The North sea and its producers have short lifespans - they have little by way of reserve life, and without incentives to grow reserves. The tax and political system is against them, the ESG lobby is hammering them, and investors are not interested either. These businesses are managing decline; by nature they are a shrinking business. They can only be valued by DCF; multiples don't work. Truth is, they are limited life businesses.
- North Sea oil production is deep water and, most, being late life resevoirs, are complex in geology and extraction - these are real operational risks. We have have seen North Sea producers wiped out overnight because a resevoir has dissappointed catastrophically during the twilight of their life.
Whereas.... Nigeria, and Seplat in particular, in my view, have a much more attractive risk profile:
- The government of Nigeria is deeply incentivised to support growth in production, as oil represents the vast majority of fiscal revenue, and that won't change, not in our lifetimes. Tax incentives are designed to encourage reinvestment of cash generation into growing production; the tax system is therefore in support of industry growth and industry profit. The political risks are minmal.
- The security issue around oil is one about corruption and state complicity in this - this unhappy balance may improve one day, but it will not destory the industry, as key players are reliant on the industry's survival to steal from it. Currently, efforts are underway to incentivise those militias that steal to instead protect. We will see. SEPL, for its part, has a track record in localising employment opportunities in the vicinity of its operations to bring communities and mafias onside. They have a track record of success, going back years and years. Moreover, their AEP (pipeline) is secure transit infrastructure underground, much reducing any risk of pipe damage and downtime.
- SEPL's onshore assets have 25 years+ of life, multiples of North Sea, and without the complexity. MPNU's shallow water assets are shorter in reserve life but not complex either. These assets offer growth in production, not managed decline. A low valuation multiple is much closer
SEPLAT NL rose a further 7.3% today, now equivalent to 176p using the black market FX rate.
Https://twitter.com/SeplatEnergy/status/1749788261273252015?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
We're working with the National Oil Company & the government & we're optimistic about a speedy resolution of the MPNU deal. We estimate that our turnover revenues will probably go 2 to 3 times what they are today in terms of production. #transformingLives #SeplatEnergy
GBP equivalent 164p using black market FX rate
Agree, Trek, this is going through 140. Hell, it should already by above 140, on the basis of the other catalysts alone.
While the deal is certainly going to be signed off, we lack clarity on the terms, both with NPCC as well as Exxon. We need this formally signed off, then release of the Prospectus. The Prospectus will confirm what the cost of acquisition is, net of all the adjustments, what MPNU’s cash flow and profitability has been, and reveal all the optionalities, including I hope the development of gas export infrastructure in order that SEPL can export directly to Europe.
What a great interview. Had I not already I would be piling in here! It’s pretty clear to me that an RNS isn’t far off and NNPC behaviours have been called to account and their golden ticket has expired!
SP will go through 140 on speculation soon imo!
Usual caveats
Trek
I found video of the interview with oil minister which article quotes thanks. He mumbles a bit at beginning I think, but talks about Seplat from about 7mins:
https://youtu.be/kn44awmKwXM?si=xmEojGJhPb2mjHo2
Anyway, IMO it's quite clear that he says:
"If NNPC had ANY reason to invoke the right of first refusal...."
rather than
"NNPC had EVERY reason."
So the article misquotes him. He doesn't say he's agreed with NNPC claim of first refusal, he's just saying that if NNPC had the right of first refusal, then they left it too late and it's Seplat's deal now.
Now that is a pretty helpful find! Probably explains little lift in SP!
So lokpo is pretty clear then, just the two bod’s to sign off. But what’s in it for nnpc? Or have they been told to let sepl have Exxon and they get a better deal elsewhere?
Gonna be interesting few weeks but looks favourable for sepl!
Usual caveats
Trek
“But I can also tell you that the Seplat-Mobil transaction, which was truncated in the last administration has been 99 per cent resolved. I brought the parties together. We have had a series of meetings. We have agreed on the terms.“It’s just for the NNPC board to sit and approve the terms of the settlement and Seplat board sits and approves the terms of the settlement. It was a big disincentive to the IOCs to make further investments. And so, I brought them together, we have resolved, we have disagreed to agree. So, that matter is resolved.
“Under my watch, I will do whatever I can to see how that kind of situation does not arise again. NNPC had every reason to invoke the right of first refusal. But I have also told them to indicate it on time, so you don’t allow parties to negotiate up to the final point before you say you are interested.“We have to do things differently. And this government is willing to do things differently so that we can get the results that we deserve as a country,” he stated.
https://www.thisdaylive.com/index.php/2024/01/19/lokpobiri-fg-ready-to-immediately-approve-shells-2-8bn-deal-with-oil-consortium
GBP equivalent of 156p, using the black market exchange rate.
Good news around the corner?
I wonder if they are expecting to complete in the next 3 years?...