Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
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Some more details have emerged that I find highly interesting:
1) The Chief Executive of the NUPRC said this weekend that the current average production of MPNU is 159 378 bop/d and that the technical production potential is 244 268 bop/d. Seplat working interest will be 40% i.e. additional 64,000 bop/d capacity in H2 2024 and reaching 97,000 early 2026.
Research firm 'Capital Access' had MPNU Seplat working interest at 50,000 bop/d so this was a very positive revelation.
2) "The commission expects the divesting parties to indicate their preferred option and issue the applicable instrument within two weeks of the date of this workshop. I assure you that the commission is eager to close the divestments within the shortest timeline upon the receipt of any of the required instruments.”
I appreciate this language of urgency from the part of NURPC.
3) Most certainly will the majors that are divesting (Exxon, Equinor, Eni & Shell) try to offload all liabilities of the acquiring part. However, I doubt that's in the interest of the regulator; setting a precedent were a producer simply divests near end of life assets.
The language here is also aimed at the divesting part:
"...the divesting companies will be required to issue an undertaking to retain the liabilities until confirmation of the release by the commission of all or part of the retained liabilities."
4) These last statements (10Y Seplat anniversary Mr. Heineken & NURPC this weekend) have de-risked the case of Seplat enormously, in my opinion. Keep in mind, the major risk was always that 1) termination of the deal or 2) NNPC strong-arm into some of the fields %. Both these risks are of the table now.
5) The Lockbox: all net profit in MPNU from effective date January 1 2021 to 2023-05-24 was accumulated and earmarked to Seplat which in turn lower the acquisition price. In my calculations it shouldn't be below $700m.
2023-05-24 the RNS stated that Exxon and Seplat from this date "share" the profits - but no further details were disclosed. Let's say it's 50/50: the lockbox could be +$800m today.
$700m accumulated and $128m already in deposit. In a base-case Seplats final and remaining consideration for acquiring these massive assets could be in the range of ~$500m.
Forgot to add:
When I talked to Seplat management they told me that MPNU's opex/boe is $17. Somewhat higher than the onshore fields, but instead you have zero (0) oil-theft and the royalties are lower in shallow water.
When ANOH comes online the expect opex/boe go down for the group, as it's essentially new incremental wells feed straight into the plants. Highly efficient, high margin.
Thanks Alex, excellent commentary.
Looking at all the evidence, this points to a quite amazing deal in SEPL favour, especially going forward, say 18 months.
Some excellent posts on here as ever. Thanks for them.
Drawing together some of those details, at $80 bbl with $17 opex on 64k bbl, and presuming a 50/50 share for the last 12 months with Mobil, I get $1.7b already in the lockbox since Jan2021
"I get $1.7b already in the lockbox since Jan2021"
That's closer to the number I have, those saying $800m I think are quoting the "capital access" research firm who it looks like didn't account for depreciation, amortization and impairment; they had mpnu doing $387m in free cashflow on $4.5 billion in revenue in 2022 which makes no sense whatsoever.
My $700m in Free Cash Flow up to 2023-05-24 from 2021-01-01 certainly is conservative (as stated), and I consider everything above that as a cherry on top. :) Bless
Mmm just spotted the AGM is pencilled in for next Thursday, wouldn’t it be an ideal opportunity to announce good news !! Fingers crossed😊
More transcribes are being released from the NURPC workshop last friday, and I'm highlighting the parts about timeline below. Link is here: https://www.thisdaylive.com/index.php/2024/05/04/for-reinvestment-in-mobil-shell-agip-equinor-oil-blocks-nuprc-gives-two-week-ultimatum
Two weeks to decide about Option 1 & 2 (this has been explained in this board earlier, so I'm not repeating that).
But, followed up with some other comments that might be disconcerting for some:
“Even when we want to finish that in the middle, we don’t plan to keep you waiting in limbo. We expect that by June 30, we should have finished everything.
“And we expect some more time to make our recommendations, to dialogue with you, make our recommendations, submit that to the minister, the minister approves and communicates his consent to you.
“So, we hope that no matter what, by August 31, everything should have been done and you have your consent. So, that’s the proposition we have for you today,” she stated.
Now, I wouldn't rule out an earlier execution because we have Mr. Heineken on the record saying he recently was in New York, meeting Exxon, and agreed upon the details. (Seplat 10 year anniversary). I also would like to believe that some of NURPC demands has been communicated to Exxon, Equinor, Eni and Shell prior to last Friday i.e. the process might be further ahead than we believe.
Two days ago the CEO of Oando, who's buying ENI assets, said the following:
“working through the obligations under the Share Purchase Agreement” and is “on track” to close the deal this quarter."
Buying 20% of 4 OMLs which NNPC already owns 60% of i.e. a setup almost 1:1 to ours.
To sum it up, I'm extremely confident the deal will go through. August 31 is later than I had hoped for, but I've been holding since Feb. 2022 so I might hold another 3 months. :)