RTO doubt11 Jul 2022 17:01
chances of the RTO completing?
if San Leon were viewed simply as an Irish/ British company then i might be a tad concerned but the RTO, into which our Nigerian partners have also put much blood and sweat over the last year, will change all that. we become a majority Nigerian owned vehicle with highly influential Nigerians involved. Jite Okoloko is hugely respected in his home country and rightly so. Harvard educated and a former Ernst and Young Entrepreneur of the year, he now becomes an important figure in the Nigerian economy. the Nigerian government is desperate to get the onshore marginal licences operating efficiently again, so they can at least reach the Opec quota. it goes without saying that hydrocarbons are the most valuable parts of the Nigerian economy. we also know from the Admission Doc that Mutiu Sunmonu will stay on as Chairman. as a former head of Shell Nigeria, he is of course a big figure in the regional market with connections both political and financial. personally i think this thing has now got way too much momentum to falter. and that would be embarrassing for President Buhari, who has put much personal and political skin into seeing investment come into the marginal licences (and all the better if that includes a foreign element). last year Buhari signed the Petroleum Industry Act into law. this is what PwC say about it on their website: 'The Act seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry. Despite being a major source of revenue, the oil sector lags other sectors in terms of GDP contribution. If implemented diligently, the PIA will help facilitate Nigeria’s economic development by attracting and creating investment opportunities for local and international investors.'
and as for the money we were told ages ago that Afreximbank had issued a term sheet and that this was agreed. then recently we were told that the loan documentation was being prepared, with $750m as the facility. i count a minimum of 3 sets of lawyers involved in the drafting and approving this and that could easily be 5. you don’t do that if the deal looks shaky. it clearly isn’t. all the approvals and licences may be outwith San Leon's control but there will be significant political clout behind us and many vested interests willing this over the line.
i'm not surprised one bit the SP came off today, as investors and traders go for the exit, after this extended period of suspension, but long term value holders have not waited this long for the great news yesterday to pack up now. and i believe we will see new funds moving in to pick up bargains from those leaving. much has changed, not least the price of oil, and i gather the barges they are likely to be using typically each hold 10000 barrels. moreover it is simply absurd to suggest that the previous SP already reflected some upside potential it barely covered cash and secured debt. even at 10.5% of this world class license, we were bar
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