Member Info for SeaTank8300

Recent drilling has shown scope for reserve replacement and free cash flow is on the rise

Operational delivery is still strong but the share lacks investor interest and momentum - long term value is present though

Loungers need to declare a maiden dividend and reliable dividend policy, if necessary by moderating site rollout - that is the next step to actualising shareholder value in my view

VIX is back to lows again, which might be why the share price is consolidating.

Next news flow catalyst probably Q2 trading update in early July.

USD 6 cents of dividends per share are paid to shareholders tomorrow. The next USD 3 cents go Ex on Thursday. Happy days.

I've been banking dividends from this share since 2019 (the year of my first purchase), so almost five years, around USD 63 cents per share (gross) in total (56.7 cents net). They really do add up.

I expect the dividend to rise at least 10 cents to 25 cents for 2025 even WITHOUT the MPNU acquisition, thanks to ANOH and other initiatives.

Regarding my first purchase of SEPL which was around the 100p park, I should have received the equivalent of that first investment with dividends (net) by around mid-late 2027.

I bought the bulk of my position around the 100p mark in mid 2021. It should take to around mid 2028 (four more years) to see my entire investment returned in dividends.

That is the beautiful thing about a consistent, high yielding, and growing dividend stream.

When MPNU is signed off, I expect additional 15 cents or thereabouts on top of the 25 cents from 2025. So at the current share price, it would take 6 years for dividends (net) to accumulate sufficiently to cover the current share price.

After that, one has an essentially free SEPL share (and continuing dividend stream).

This surely stacks up well alongside politically exposed, reserve life challenged, North Sea Oil. In my view SEPL deserves a position in everyone's (diversified) portfolio.

Yawn

No, but I suggest you take some time to understand the landscape before you invest. Some of us here have been invested in SEPL for years. That wouldn't be the case if there was a risk of confiscation, weak property rights, or arbitrary taxation. Nigeria is probably one of the lowest risk jurisdictions in the world for E&P from a political perspective.

Don't panic, the move down today has been on sales of £6,000 :))

This stock is very illiquid. Small buys or sells can have high impact in the short term.

BTW, the next dividend ex-date is in 7 days :)

I share your frustration but don't lose sight of the fact that all signs tell us this deal will be signed-off, so it is just a matter of time, also that this merger is truly transformational and Rome wasn't built in a day, and that SEPL is native/indigenous to Nigeria which makes a huge difference in how they are able to navigate the local challenges.

I should also repeat the point I made a while back, that the LNG for export potential of MPNU is very large indeed, which would be the longer term growth story, putting aside the prodigious cash generation and dividend potential in the medium term.

If MPNU is consolidated at end 2024, I'm guessing (very much finger in the air) that the further payment to Exxon will be around $400m, so net debt will circa $800, therefore at today's share price SEPL's EV will be approximately $2.1bn. Free cash flow of the combined entity should be at least $500m, I hope, something we won't know until the prospectus is published. What I find interesting, given there are few attractive large capex projects on the horizon, is the prodigious cash generation and how it will be used. It all likelihood, given what we know, a portion of this cash generation will be directed to dividend to shareholders, whilst the bulk will used to accelerate amortisation of debt.

For instance, if 20% is channelled to dividends, i.e. $100m, that equates to additional 12p dividend in the pocket or 7% additional yield at today's share price. The remaining annual FCF of $400m would be sufficient to erase SEPL's debt entirely within just two years.

Move forward two years to end 2026: SEPL has a debt free balance sheet and >$400m of annual FCF net of dividends, to do what with? If it were to be entirely paid out to shareholders, it would equate to a further 48p in the pocket, or another 28% yield at today's share price.

That would be on top of the 13% yield beforehand (the current yield + assumed extra $100m), so a 41% yield combined at today's share price.

Therein lies the upside, IF or WHEN the MPNU deal is signed-off.

Thanks for highlighting. Good to see the level on the rise since.

I think most of us here "know" that this share is going to £30 at the very minimum. For christsake the USD market cap is still below the peak of end November 2022. Indeed we have a 20% rise from here to reach the all time USD market cap peak of end July 2018. The market can be so incredibly and stubbornly dumb on occasions, and this is one of those.

Https://www.cftc.gov/MarketReports/financialfcmdata/index.htm

Latest data for March released from CFTC. Cunningham Commodities "customer assets in seg" did not increase month on month unfortunately. But VIX is also down, so margin levels may also be lower.

Https://punchng.com/shell-will-complete-2-4bn-nigeria-assets-sale-june-fg/

CEO of NUPRC has said, quite explicitly, that they target the divestment of Shell's assets to be completed by June.

I believe the same "due diligence dialogue", which is intended to tie up loose ends regarding "environmental and end-of-life liabilities" is also in process regarding ENI/Oando and MPNU/Seplat.

So we might be looking at a June sign-off date, which is not so far away.

These results were good. Production was solid, at the higher end of guidance, with the resumed Trans Nigeria Pipeline allowing a restart of wells at OML53 auguring well for the rest of the year. Cost of production was slightly up from last year at $9.6/boe, so, fundamentally, the business remains extremely profitable.

In addition, several positive indicators:

Firstly re ANOH, the OB3 pipeline is still anticipated for completion by end Q2, which is the first time I haven’t seen slippage in this schedule, which suggests reasonable hope that ANOH can commence production by end Q3, or at the very worst by end of the year! To give some perspective, this was originally slated for operation in 2022 and has been delayed multiple times – to see operational start around the corner is a great thing.

Secondly, fiscal incentives have been raised, as well as changes to a law concerning contracting process, and the regulator has raised domestic gas prices, which all point to the positive regulatory/governance backdrop which is supportive of investment and expansion of this industry.

Thirdly, MPNU deal close is not far off.

As Access Capital points out, MPNU will approximately halve current ratings, i.e. double profit and cash flow. Their forecast aligns with mine, which is approximately $250m in free cash flow once ANOH is contributing, doubling once MPNU is consolidated = $500m Free Cash Flow. Market cap is $1,165m.

I expect financing cost of MPNU to be around 12% but the total cost after adjustments to be around $800m (conservative guess), much lower than the $1,200m price tag, so financing expense will be around $100m annually. Therefore genuine FCF of the consolidated group will be $350m in year one = 30% FCF Yield.

At that rate of cash generation, the MPNU loan will be paid back in about two years, during which time MPNU production will have increased circa +20-30% on fresh capex. That means two years after MPNU consolidation FCF will be $600m+. Consider that in the context of today’s market cap of $1,165m.

If you haven't seen, Capital Access have published a research piece on the results. I haven't had a chance to look at them in detail yet myself, but seems that all is in good order.

https://www.capitalaccessgroup.co.uk/research-portal#/portal/capital-access-group/research/23_2024042902355766129

https://www.capitalaccessgroup.co.uk/research-portal#/portal/capital-access-group/

"Seplat delivered an encouraging operating performance in 1Q24 including

production of 49.3kboed, towards the upper end of guidance (44-52kboed). All

current guidance was maintained but good progress on the ANOH export

infrastructure and an earlier than expected resumption of exports through

Zone 6 of the Trans Niger Pipeline improve confidence that guidance will be at

least met. Financial performance for the quarter was skewed by a substantial

underlift, FX effects, and a high deferred tax charge, much of which should

rebalance in subsequent quarters; the dividend was maintained at USc 3. We

have revised our forecasts to reflect guidance and despite the strong

performance of the share price, the rating remains attractive, with debt adjusted

cash flow of under 4x for FY24 and falling rapidly. Completion of the MPNU

acquisition would approximately halve current ratings, we estimate."

Please, no. The vast majority, around 80% or is it 90%, of SEPL's revenues are from oil sales which are exported. The remainder is gas which is USD priced, paid in NGN. The naira moves are not very important to SEPL, in either direction. Please don't make statements unless you are quite certain of the mechanics. The point of this board is to share useful and well-researched information, not confuse folks.

OML40: https://www.seplatenergy.com/our-company/our-operations/upstream/oml-40/

Seplat has invested in a professional IR executive, James Thomson, who has already improved communication in terms of written statements with more granular explanation, more video interviews, better format of quarterly results call, and more active direct communication with shareholders and potential shareholders. It takes time to build a following after years of underinvestment in IR.

Most importantly, a clear intention to drive the dividend has been communicated, which comes on the back of several years of dividend consistency - this is very important in raising interest in the stock.

An NYSE listing would not add any value at all, IMO.

More importantly, every step up in the dividend attracts attention and underpins step ups in the share price.

MPNU will be transformational and raise the share price and daily traded liquidity - increased traded liquidity will allow institutions to enter the name, which is key. In short, when daily traded liquidity moves towards $1m/day, there will be a natural upwards re-rate as institutions come in.

In my view, we have a pretty clear roadmap here, and it's all very positive

In my view, Monday will not herald much of note, other than solid operating performance, although perhaps the board raises the quarterly dividend, which I hope they do. They can move to paying the 15 cents over four quarters, which will be 3.75 cents/quarter, and then raise the dividend significantly from there in Q1 2025, as they have indicated they will do, when either ANOH is operational or MPNU is consummated. Everything we have been told to date suggests, in translation, that the dividend should increase by at least 20 cents (my estimate) when ANOH and MPNU are put to bed. That will make 35 cents of annual dividend. That is 25 pence of dividends annually in the pocket, with plenty of free cash generation left over for expansion projects in gas and recovering production of MPNU.

Happy days Trek, MR Market is finally realising that this is a very attractive income play with step-ups (plural) in income in the near-term, plus various growth avenues once MPNU closes. Frankly, when MPNU is sealed all bets are off regarding where this business could go. We've been invested in this name since 2019/2020 I believe and it's been a long wait but so good to see the stars aligning at last.