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More big wins appeared last week

Thanks Gwillerz79. It is truly bizarre that this stuff should even appear in the public domain, quite apart from newspapers, but this is Nigeria. One would think that with the State barely functional, in fact not actually functional at all, there would be other things to talk about!

The fact that a foreign executive's visa can be withdrawn overnight and he be sent packing back to the UK in quick haste is yet another reason for international companies to avoid the country. Nigeria is such a disaster zone!

I enjoyed this emotional outpouring in defence of Roger from the ladies at SEPL: https://www.seplatenergy.com/news-insights/news/statement-by-the-seplat-women-s-awesome-network/

At last, a proper defense of Roger has begun in the media and on twitter

Most of 2018 to 2019 Brent traded between $60 and $70. During that time SEPL traded between 100p and 130p.
Since then, we have AEP, ANOH, dividend, maybe MPNL, governance improvements - all support the valuation. So I don't really see why, if Brent returns to that range, SEPL should move to a sub-100p trading range, for an extended period of time anyway.

I'm a long term holder of SEPL anyway, as you know, but nevertheless happy with the last couple days price action despite plunging oil price. I sense we're close to a resolution re both Roger and MPNL - only time will tell; hopefully not too much longer on both fronts.

He lives and works locally, from Lagos. He's committed. He has a lot of stock and is paid well. From what I can see there is also a succesion plan, but I don't expect him to leave for a while yet. It would be a great shame if he does and I agree that he brings a level of confidence in SEPL just by being an "outsider" so to speak.

You are entitled to your opinion of course, but I am here to help other interested investors understand that your perspective isn't reflective of the reality. Roger may have said such things in the past but there was never a lot of meaning in that sort of talk. Nigeria has been a corrupt cesspit of incompetence for decades and there has been no indication that recent years were any different and there is no indication that future years will be any different. Nigeria is probably going to default in the next three to five years, in my view. Don't be delusional about prospects for Nigeria.

As for your repeated comments about SEPL's economics, you are mistaken regarding your analysis from several directions (cash flow, AEP evacuation, etc) and contributors here have already pointed that out to you.

It is not a rainbow. It is Nigeria - all corporates miss target delivery dates, but they get there in the end, it is par for the course in this country. Nothing has changed.

Hxulcolrdoh, you are speaking your internal thoughts and alluding to changes in your perception, but that is your own musing. I have no gripe with that, just pointing it out as someone who has followed this company and the jurisdiction for years - I've seen no change from my perspective.

Nigeria is a rough and tumble jurisdiction by nature but in any case the company has thrived. They are a local player and a blue chip in Nigeria, an important local institution and they set an example to the whole rest of the sector. They are throwing off cash and will continue to do so regardless of this MPNL deal. The noise of this market is just that.

BTW, the stock is now trading 0.4% below where it stood at announcement of full year results/special dividend in USD terms. That's an opportunity for anyone who hasn't loaded up enough.

Agree!

Hi Tom, as alluded to, it is a quid pro quo situation. Exxon settled certain legal liabilities last year and agreed to continue their presence in deep water; I believe this was on the (not public) informal agreement they can sell their shallow water assets to whom they choose. Their shallow water assets are not just assets, they are people and teams who have been Mobil for the past several decades. They are not willing to sell these people and teams to NNPC, for corruption and mismanagement to undermine and degenerate the business, then be accused of failure to exit responsibly. In short, they won't sell to NNPC, but want to exit. They won't invest more in deep water unless they can exit shallow water. So something has to give. That is why Buhari signed off on the deal months ago.

Exxon still pushing for sign-off:
https://www.reuters.com/business/energy/ceraweek-exxon-seeks-unblock-stalled-sale-challenging-nigeria-top-executive-2023-03-06/

Minimum expectations for this stock's fair value has risen so there are barely any sellers out there at this price level in my view. I was though surprised to see the local Nigerian line fall 10% today. It's a weird market though - I don't entirely trust the prints.

I've been following their hiring very closely - there is no holding back on new staff right now. Management own more than 30% of this company so they know that their future is assured - they wouldn't be hiring like this otherwise.

I think that's my point. It's happened already. You are waiting for another announcement. So it depends on your optics as to whether you recognise it. Institutions know it because the CEO will tell them so, in a one-on-one meeting - most likely already have. ANOH will be completed, the balance sheet is strong, the pipeline has derisked production: the 15 cents is here to stay. It's happened - past tense. The new dividend level is 15 cents. That's my view. So I think the pertinent question is this: what is SEPL's trading level now with a bankable annual dividend of 15 cents?

There are no more sellers. Stock is crawling up.

Folks don't understand that this is an inflexion point.

A higher trading range is ahead. Why? The special divi will become the baseline divi, in my view. I am speculating, but I reckon that management are probably sending that message to institutionals already. It makes no sense for SEPL not to raise the baseline dividend.

The previous trading range at a 10 cent dividend can't be justified if a 15 cent dividend is the new normal.

To date, the stock is trading as if this 5 cent is one-off. That's a mistake. The market is so beaten down with this stock, even a statement as strong as Tuesday's full year results has not been absorbed or acted upon. Even some of the posters on this board sold into the intraday high on Tuesday that barely reflected the 5 cents!

The market is also illiquid and thin, it will take time for institutions to get with the new programme.

But in my view a higher trading range regime is in process. If you're not in you're miss it.

The buybacks are very small in size, a fraction of daily volume. The buys are offering some very gentle support but not directional. The share definitely has a lack of active institutional following in my view. I am pretty certain that the complex business model (value creation through development + operating) combined with optically high debt load combined with optically expensive valuation multiples frighten most institutional managers away. The relatively low free float and poor share liquidity doesn't help. That all said, it was a problem for them up until around 2018/2019 when they caught their stride in terms of room expansion then rise in free float with management share sale then entry to FTSE250 and then passive inflows. The Covid debacle crushed all of that, but three years on we have growth in delivery of rooms again and rising room rates and returning profitability - the sails should catch the wind again and hopefully back into the FTSE250, passive inflows, and the share price returns to something closer to the EPRA/share value again. I can't see this trading at below £16 come end of this year unless something ugly has hit such as a resurge in energy costs or softening demand in London. That's my view for what it's worth.

First of all, don't try to value this company using PE. It is a developer of hotel real estate assets, i.e. creates value not just by operating hotels but by transforming land and property. Their published EPRA is the best method of understanding what value is being created. This is a yearly revalued NAV, essentially, based on DCF. At their last trading update, management indicated that the uplift in EPRA at annual results will be material, at least £25+.

The share price has instead fallen, to near £10. And this is despite energy prices falling rapidly (as PPHE is not hedged re energy), and hotel rate inflation rising majorly, boosting everyone's margins. The market is missing a trick here. I expect PPHE to be trading back above £16 in no time, frankly.

Hxulcolrdoh, the optics are difficult re the P&L which is to do with the ballooning deferred tax asset because "effective" tax rate under IFRS is not the same as cash taxes paid, as there are a lot of deductables that defer taxes increasingly into the future if, I believe, while investment continues. More pertinently look at cash generation. The second half still generated good cash flow even after capex and dividends paid - can't argue with that! Q3 was a horrible quarter yet the second half was still productive. The cash generation of this business will increasingly flow to shareholders in dividends, in my view. ANOH alone should generate enough cash to double our dividend, which is apart from the special divi we've seen today. Reading the presentation, the "risked timeline" for ANOH to commence production is by end of the year. Well it will be a lovely surprise if it does!

About the jurisdictional risks, they are lower than the North Sea -fact!- because the tax and licence regime has been stable throughout, NNPC receivables haven't been an issue for years, and the government is desperate to encourage more investment so won't bombshell the sector. Regarding the security and evacuation issues, the AEP is a game-changer in this regard. That is a project we've waited years for, and has now been delivered. The pipeline is deep underground and can't be hacked and pilfered by theives from what I hear. Volumes shipped should be far more consistant going forwards, regardless what happens with the Trans Forcados Pipeline.

Great update from the company, a gratifying raise of the dividend, and plenty to look forward to during the remainder of 2023!

The special dividend could be the game changer here, as what is special at end of year might very well or probably become regular from Q1 23 results, i.e. a quarterly dividend of 3.5 cents+. That is what I hope and expect. I've been saying this has been due for a long time. That alone would move SEPL into a higher trading range, potentially around the 150p level. All the other projects in train are exciting and will add value in due course, but the dividend is real cash to us today and will drive the fair value of the stock as per DDM. MPNU is obviously transformative but it's also binary. The dividend with SEPL is regular as the seasons and manifests shareholder value today. Great news for all of us. The share price hasn't moved which is absurd - a chance for anyone who hasn't stocked up to get some more.

There's a lot of interesting and dare I say positive news in here to unpack...however the headline special divi of 5 cents is defintely a share mover in my view and will shift us into a higher trading range - thank god for that. I've been waiting for this dividend raise about three years.

Apart from the dividend, Roger's statement sounded more optimistic than usual and there are several carrots in there. Yes AHOH has been delayed again, predictably, to Q4, which is the one piece of bad news - in my view Q4 might well turn into Q2 2024. This is Nigeria after all. But there is good news too. Interesting talk of spinning out midstream - hopefully more information on this is forthcoming, I'd like to understand how that might be helpful to the share price. Cash generation and cash at the bank rose more than I expected - I haven't looked at what's behind this yet, but this is good. Talk of completing the MPNU acquisition before Buhari's term ends in May was v interesting. The resource at Sibiri looks increasingly economic and shoud be the next leg of growth (but we need more information). And probably most immediately financially relevant: the AEP is allowing close to target evacuation of oil despite all the security issues, which I hope means months like last September and October are a thing of the past, which is very good news.