Revenue13 May 2026 00:35
Historically SEPL has had, to my mind, quite kow hedging of their production....to memory it's about 25% of production on a rolling 3 month basis.
Whilst it's considerably lower than most, I think that is ordained by their belief that, with their low cost of production, they can still be profitable in a low oil price environment. And when previously the oil price has been elevated, they have elevated/issued special dividend to reflect such, return benefit to shareholders.
Presuming their usual stance, their hedging that expired March, will have been rehedged into an increased price bottom, which can only be of benefit.
Prior to the Iran situation, when oil was bobbing around $60 I felt it was too low, my view being nearer to $80 through 5 years, but the commentary was reducing demand (green transition) and over supply, hence the depressed price.
We have had a boon at SEPL with the elevated oil price, and the volume unhedged capturing such, and don't feel the last update fully reflected that uptick in cashflow, due to timings. The next will.
Personally, post an Iranian resolution, I feel $70 will be the bottom, certainly for a good while, as others have suggested here, stocks are replenished. That is considerably above the price environment SEPL has prospered in in the last 12 months, ergo, forgetting their progression on gas, bringing wells back on line, etc, their is considerably more to come here.
I had a concern about a year ago, that the hidden value here would be seen by a private equity style outfit, and a premium offer would be made, which didn't capture the potential. The MAU share transfer has removed that, as our new largest shareholder, is more likely to consolidate smaller operators, take up licences, and metamorphasise SEPL into just a Nigerian champion, but an African champion - not least because of his positive ear of govt.
The reason I'm writing this today, is, fortuitously, during the 8 years I've held, this has grown so much that it exceeds what investment advisors generally suggest, both on an individual stock basis, and a sector basis, and in excess of what personally I would be comfortable with. So I was looking to reduce towards more recommended levels.
But just as I do with a stock that I own, that might drop a lot, that I'm thinking of capping my losses on, when thinking of taking profits, I ask myself, If I had never owned this stock, never made a loss/gain, would I buy today. Go through the annual reports/RNS's and examine the fundamentals. Here you have:
A low cost producer, maintaining/increasing oil production, A gas producer/shipper whose production isn't yet acknowledged, or it's ability to increase such, increased routes to market through it's Terminal ownership, A major shareholder that has interest in the domestic energy supply network/provision, an increasing demand for exported gas.
Through turbulence, this has been the stock that keeps on giving. And it has much more to give, he
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