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.
Sapele - typo, of course not a NGC issue. A very good development project.
Dont recall seeing this one before, must have missed it. Looks very strong. No 1 pick for 2024 (as it was for 2023 and 2022 ...)
https://www.seplatenergy.com/media/wwtesqce/investor-presentation-8-november-2023.pdf
When do we here more from NGC on this issues ?
Anoh - OB3 pipeline; river crossing grouting & tunneling continues. Completion of pipeline installation rescheduled to end 2023.
Spur line; poor weather, deterioration of security situation in recent quarter. Completion targeting end 2023
Sapele - Project 75% complete.
Plant upgrade will increase capacity by 85 MMscfd and will enable delivery of export-standard gas
LPG processing module will open new markets for LPG products
Three out of four compressors on the Sapele Accelerated Gas project have now been commissioned
Plant commissioning in 2024
.......based on past 12 months and assuming they continue to pay the same divi + specials that is
A growth share (hopefully) with circa 9% net divi after tax. What's not to like?
Added 5k here - the dividends alone meet my hurdle rate lol
Great news! Increased dividend stream coming up for SEPL!
I was looking at the trade spread which was less than 0.5p. I thought that’s odd. Then I saw the RNS!
Just added 2k shares. Nigeria is a high growth market and this will be extra revs for sepl!
Usual caveats
Trek
Lagos and London, 3rd January 2024: Seplat Energy Plc is pleased to announce that the ANOH gas plant installation works reached mechanical completion on 29th December 2023, in line with the revised timetable.
They sure are taking their time getting this over the line
Sapele (85mmcfd) is similar size to ANOH (80mmcfd). Capital Access report stated that ANOH should offer US$50m of gross annual profit.
But Saple is an upgrade from 60 MMscfd and to export quality gas (lng), so won't add like ANOH but I believe there's a shortage of LNG in Nigeria so maybe get a decent price.
Also from the Capital Access report:
"On that basis we forecast total production to grow from 44.1kboed in 2022 to 66.4kboe in 2026 for CAGR of 10.8%. Of the absolute growth we model, around 10% comes from higher gas production as a result of the Sapele gas plant
upgrade and Flares Out programme, around 30% comes from higher uptime in liquids production, largely due to the AEP, and the balance comes from the start-up of raw gas supply to the AGPC plant from OML 53 (Figure 24)."
I have looked and wondered about the new gas facility at sapele, I seem to recall there was a $250 million investment, this was to be commissioned in December completed by January 24, I have looked on seplats rns feed etc and can’t find any reference to this. This is quite a step forward I think it was to supply a great deal more lpg to the market, can anyone find the revenue streams this may generate, because I can’t, might be my grey matter playing up again ! Thanks regards H.
Welcome back Temple lets hope we get a positive result before or when the next results come out next month
I got 52p in 2020 .. a couple of times ... May and August/September .... Bought a small number today ... day traded a bit the past 6 months but mostly out - looking for bigger gains elsewhere ... and a drop here .... this share has indeed held up well.
Such is life.
GLA and happy new year.
Happy
tom111,
the london stock exchange closes at 12:30 on friday 22 december and will re-open at 08:00 on wednesday 27 december.
as the old saying goes in the construction game : friday is known as p.o.e.t's day:
****ed off early tomorrows saturday.
have good xmas everyone and look forward to reading your comments next year.
Hi everyone, I just want to thank seatank,trek,temple and countless others that provide information, insight and debate for seplat. I have been here for a while and first noticed this share when seplat bought out eland oil. I have a small holding probably compared to others but very happy with my holding producing steady gains and of corse a healthy divi. It hasn’t been an easy share to watch, sometimes despairingly nail biting ! But I soon realised this has great potential. Anyhow may I wish you all a great Christmas and a prosperous new year. Regards H.
Obviously false info on Google
Market closed tomorrow for holidays
Since the low in 2020 there is a clear trendline with higher highs and higher lows, with drawdowns of up to -35% until mid 2022 but since then much less at -21%, and these drawdowns have nearly always been followed by higher highs. The chart trend is a good one and does not suggest it will fall again much below 110p unless there is a material oil price correction. It reflects the de-risking of the business from an evacuation point of view (the AEP) and more recently expectations for MPNU. SEPL still trades at around the same level as it was in 2019 when Brent oil was much lower, albeit similar in real terms, and yet it is a much de-risked business with AEP plus ANOH and MPNU around the corner. Figure that.
Okay thanks, if I recall correctly it usually bounces between 80 and 130 and I think off the top of my head 60s in2020.
Thanks for the posts and the document.
The bulk of my holdings have an average of 97.8p. I bought some higher than this in 2019 but made a significant commitment at lower levels (mostly in 2020) to bring the average down, and I have held since then reaping the dividends and waiting for this to valued properly by the market. In my view we are nowhere near fair value. Even if the share price flatlines for the next two years, I expect the dividend to move up and beyond $0.20/share, so the carry more than compensates for the wait for capital gain. This is a very misunderstood stock. If you are looking for others, I would point you in the direction of PLUS and JET2!
SeaTank8300 : You open your previous comment (10:59) with "Sorry for the long posts".
There's definitely no need to apologise, your in depth and realistic opinions are more than welcome and I'm sure this is echoed by the majority of members on this BB
What is your average if you don't mind me asking?
Sorry for the long posts. I needed to run through this report in detail as I have an epic position in SEPL, so it was just as much for me as you.
The peer group multiple comparison is interesting, pointing out that on an EV/boe basis Seplat has by far the lowest valuation against peers operating in similar jurisdictions. Considering the low-risk nature of Seplat's onshore reserves (putting security risks aside, which in my mind are relatively minimal these days), this low multiple stands out. Also, the sheer longevity of their reserve base is special (27 years of production).
The dividend/yield forecasts are much too low. The report makes plenty of caveats that the dividend could rise, but frankly this is 100% fact assuming oil prices remain >$70. The dividend is clearly going to be $0.15 minimum for the full year as there is no argument for it not being in line with last year’s. Then there is ANOH’s cash generation – this will drive dividends higher for 2024.
MPNU, the elephant in the room. Firstly, they point out that MPNU’s free cash generation has been around US$800m, thus substantially reducing the cash cost. Secondly, depletion forecasts are much worse than I expected, so FCF is estimated at US$159m at $75 oil in 2024. This is disappointing…and highlights how cost inefficient MPNU operations are too, but also highlights the heavy tax burden that MPNU is suffering (85% tax rate) given the entity is no longer investing and therefore no longer reaping tax incentives. MPNU’s cost base is clearly bloated. I have two points to make: 1. SEPL will invest to raise production back to original levels, 2. Investment to raise production = lower cash tax rate, and 3. there will be significant cost synergies to extract. I would expect SEPL to drive FCF above US$300m annually, at the very least, within a year or two. That’s my view. The acquisition will cost SEPL US$500m (+ US$300m potentially in overperformance) for US$300m+ free cash flow. Wow.
Finally, the comments on the PIA (Petroleum Industry Act) are noteworthy as Wood Mackenzie gives a figure of 50% uplift to NAV potentially from what I believe are tax incentives to maintain and grow production, particularly favouring smaller production blocks. This is new to me and suggests further hidden value.
I would like to make some comments in response to certain points made in the report. Regarding ANOH: "Given the lack of broker coverage, we do not believe the market fully understands the value of the ANOH project to Seplat. On our estimates, at plateau, ANOH should add over US$50m to Upstream gross profit and generate operating cash flow of over US$70m. In addition, we forecast a dividend to Seplat from the AGPC JV of US$12m in 2025 rising to over US$80m by the end of the decade. Overall, we estimate ANOH will add up to cUS$100m pa in additional operating cash flow to the group from 2026 rising to cUS$150m towards the end of the decade." - this is an interesting paragraph as I don't believe SEPL has ever given an estimate of the value of upstream operations of OML 53 that feeds into ANOH. According to the figures given, the upstream part will generate US$70m in annual cash flow at plateau (from 2025), which is a considerable sum. Then there is the midstream AGPC JV (what I have often previously referred to as ANOH) which will begin paying dividends in 2025, which the report estimates as rising from US$26m in 2026 to US$83m in 2030. i.e. combined, the cash flows are very considerable from 2025, around US$100m.
I want to highlight that there are two key assumptions here which are very conservative and likely to present upside surprise: 1. 30% downtime, and 2. a US$60 Brent oil price assumption for the liquids from the plant. More likely in my view, both assumptions will be beaten, and annual cash generation will be materially greater than the assumption of US$100m from ANOH. I think US$120-130m is more likely. And in my view a lot of this will flow through to the dividend, as has previously been suggested by management (hence I think the dividend will ultimately double from this alone).
I also want to point out the 11.75% interest on borrowings for ANOH. For those worried about the cost of debt in Nigeria, this is a timely reminder that dollar-earning projects such as this achieve much lower financing costs than local NGN-earning projects for the domestic economy. It might also prompt questions about what the correct discount rate is for the DCF. I would argue that 15% is too conservative for the group given its diversified and low risk onshore operations and underground pipelines for evacuation. Seplat’s bonds also trade too cheap at 11.5% yield. When ANOH comes online, I should hope we see discount rates for both fall by 200bps at least, which will take the fair value of the equity to around 200p.
Https://www.seplatenergy.com/media/q1cgd5dp/seplat-energy-valuation-catalysts.pdf
Just posting this link again, in case anyone missed it. SEPL pay Access Capital for investment research and have obviously provided most if not all of the insight they report.
As this is “paid for” marketing communication, obviously they strike a positive tone, but it is also clear that assumptions are conservative, outlining what SEPL management are confident in delivering without disappointment, and prefers not to overly trumpet the potential value accretion of MPNU which has not yet been given regulatory approval.