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Solid results in my view

I was initially sorry to see net debt looking sticky and come in above $400m, but that was because $140m of cash went towards the Exxon acquisition and I believe the annual bond coupon was paid in Q2. At the current oil price, omitting these cash draws, free cash flow should be around $200m in the second half, which will bring net debt down to around $200m at the end of the year. Adjusting for the deposit to Exxon, which will be returned if the acquisition is rejected, SEPL will be almost debt free by year end.

So it is perhaps not a surprise that locals are starting to talk about a dividend increase: https://moneycentral.com.ng/companies/article/record-profit-could-convince-seplat-to-hike-dividend/

It's my view, at the very least, the dividend will double by 2023. ANOH, coming on stream in 1H 2023, will itself almost entirely finance such a doubling of the dividend. Plus we have revenue enhancement from the AEP coming on stream from next week.

A couple of other things to note. SEPL operations are notably better quality than its local peer group, which was reflected by ISO certification - this is why Exxon will only divest to SEPL:
"Seplat West, which holds the working interest and operates our major assets (OML 4, 38 & 41), has been recommended
for ISO 55001 Asset Management Systems certification, reflecting our commitment to operational excellence across the
Group. We believe this is the first African oil and gas operation to achieve such certification. "

About drilling activity, it has been slow going at Sibiri, which has great potential - the wait continues here.

But the farm-in of the Abiala marginal field sounds like a closer and low cost win for SEPL with production possibly from 2024.

In all, these results remind us of the resilience and diversity of SEPL's business in Nigeria with multiple catalysts in the near term.

And, most importantly from my perspective, the dividend is almost certainly going to grow imminently.

Agree doesn't make sense. Just not a sexy stock.
Inflation isn't much of a risk for them either.

Thanks damofarl, I think we are on the same page. I agree with you that there's unlikely to be fireworks tomorrow, just a solid set of numbers. Nigeria is a "go-slow" place - the only way to avoid dissappointment is to expect a delay. So I wouldn't be surprised if the major project completions are pushed out again. They'll get there in the end; just in their own sweet time. Same is the case with the dividend - as you point out the core shareholders aren't in a rush, and with the spate of IOCs exiting, there is some argument for deleveraging as much as possible and holding power dry for opportunities. Not to mention the Exxon deal.

That said, I really do hope to see some production growth, at the very least. Let's see.

But even if results are dull, cash generation will be quite epic. Time is on our side with this one, if we ourselves have the patience to let it play out.

Improved production figures and drilling results for OML40 - should be news on this front soon. This was the Eland acquisition, which has under-delivered to date but should eventually come good. SEPL paid a fortune for Eland...

Trek, I don't disagree, although the oil price is in the hands of a complex system of forces, so nobody really knows. I first invested in SEPL years ago at around 120p when the oil price was around $70 as I thought the valuation was cheap and I liked the dividend. Fast forward, yes delivery of growth has been slower than wished but they've paid the dividend and it's a very solid diversified business, so I've slept well at night (but for a month or so last year). Oil price is at $100 and the balance sheet is almost debt free, yet we're still at 120p. So my conviction is only that much higher today.

Trek, in my view we need the dividend to be raised, doubled at least, to get this show on the road. Investors aren't placing much value in reinvested cash flows into Nigeria. It would be very easy for them to double the dividend - regardless of having some debt on the balance sheet. They're taking their time.

1.3m shares traded today - someone sizeable is accumulating despite the solid share price recovery

This financing agreement came sooner than expected at a lower cost than expected, so good news. Now I would like to see the resource update. In any case, Altyn is making progress without diluting shareholders, so far so good.

Actually annual EBITDA should be around $600m at 100 oil, against a $860 market cap, so not quite equal in quantum, but not far from it. By end of the year SEPL will be debt free, which would place the stock on a historical EV/EBITDA multiple of 1.4x assuming Brent stays at $100. Forward looking EV/EBITDA at $100 oil once AHOH and the AE pipeline are operational will be around 1.3x.

I've said this before, I'll say it again, at $100 oil this company is generating its market cap in EBITDA, which shows the market valuation has utterly disconnected from the valuation. On top of that, the Ampuke Escravos pipeline will shortly enhance revenues by a further few percent, and the ANOH plant operational next year will deliver another several tens of millions of EBITDA ($40m?), not to mention production increases at the former Eland blocks acquired in 2019. The Exxon deal is a side-show. SEPL will be generating close to 50% of its market cap in free cash flow at $100 oil without the acquisition, in my view. That cash flow has to go somewhere; either to renewable energy projects (some) or paid out to shareholders (most). Big paydays are around the corner. That the share price has been inching up again lately despite sector weakness reflects at least some of these truths.

I hadn't noticed until this morning, that the Nigerian listing of Seplat rose 10% last week, to an all time high of NGN 1,430. Interesting...

The former chairman and major shareholder and representitive of SEPL remains very much "on-side" with local institutions, enjoying a photo op here with the CEO of the newly formed NNPCL, who is challenging Exxon's asset sale in court. It's not over until the fat lady sings IMHO...
https://guardian.ng/news/high-low-expectations-as-buhari-unveils-new-nnpc/

As expected, super results and an acceleration in outlet growth. Super cash generation too.

Q2 EBITDA should come in close to or perhaps even above $200m

Unlike SAVE, the bulk of SEPL's cash generation is from oil revenue, which can be expatriated; whereas as gas revenue can not be, as per current FX controls in Nigeria) - just saying.

Lagos and London - 11 July 2022: Seplat Energy PLC recently became aware that, on 5 July 2022, the Nigerian National Petroleum Company Limited ("NNPC") commenced an action at the State High Court of the Federal Capital Territory in Abuja, Nigeria ("State High Court") in relation to the acquisition of the entire shares of Mobil Producing Nigeria Unlimited ("MPNU"). MPNU, its shareholders (Mobil Development Nigeria, Inc. and Mobil Exploration Nigeria, Inc.), and the Nigerian Upstream Petroleum Regulatory Commission are named as defendants in the suit. NNPC has requested the State High Court to declare that a dispute has occurred between itself and MPNU in relation to the interpretation of pre- emption rights under their Joint Operating Agreement ("JOA") and order NNPC and MPNU to arbitration as required by the JOA.

On 6 July 2022, the State High Court made an ex-parte order of interim injunction restraining the Defendants from completing any divestment in MPNU, including the Share Sale and Purchase Agreement signed with Seplat Energy Offshore Limited (the "SPA").

Neither Seplat Energy PLC nor Seplat Energy Offshore Limited is a party in the suit.

I'm somewhat biased but see this as a positive step in that NNPC is having to challenge this by the book, through the courts, and if their case doesn't stand up, then they won't have recourse.

The downside, if that is the outcome, is an irritated SOE partner going forwards; but overall would be a positive outcome for SEPL.

My fear is NETW's about to see competitive price pressure in their home market - I don't have any evidence of it, but short sellers will have done their research so I'm worried; they're so sticky with this stock, it must be something fueling them. Known unknown or unknown unknown? Or maybe everything's just dandy and we're simply witnessing a bear market...

Thanks for your input StoneFold. Personally, I'm not very concerned, marginally more so than I was before, considering the corp gov risks at any such small mining op in Kaz. Progress has been slow at Altyn but the numbers are improving and I don't see a strong argument for the Assubayevs to screw minority shareholders at this juncture.

Spike, keep it civil. You seem to be upset about the share price and are throwing big suggestions around about fraud and theft that you can't really back up. As I said before, it doesn't make a lot of sense that the Assaubayev family would blow up this LSE listing and reputation over such small fry, especially after so many years of not doing so. The financial situation of the family is unknown but they were in the past worth hunreds of millions if not billions of dollars and as far as I know still have interests in the mining sector outside of AltynGold. It's absolutely likely that these prepayments involve a related party, I agree on that point, but at this stage it can't be assumed that the money is stolen - more likely, in my view, that the contracts will be fulfilled for mining services or whatever was intended. I'm just looking at all this and saying it doesn't make much sense to jump to the worst conclusion.

I came across this interview: https://bne.eu/interview-kazakh-gold-miner-altyngold-on-a-roll-228415/?source=russia
Why woud he bother if about to defraud the company?

If you don't like the smell of all this, by all means sell your stock. But making big unsubstatiated claims in a public forum isn't kosher.

Look at the facts, defrauding the company to gain a few percent they dont already own just doesn't seem a likely outcome at this stage. You've offered no strong story for it either. Sorry to rain on your negativity parade.

Actually if anything the big fraud was several years ago when a huge payment and dilution happened acquiring Teren Sai. But today? Not likely at all.

If the intention is to steal the very small part of the asset they dont already own from shareholders, they've had years and years to do this already and haven't. Why now? And why waste money on such a tidy annual report? And why waste money on Renaissance Capital research coverage if that was the intention? Indeed why waste money on a decent audit firm in London and listing on the main market? And why would people with such quantum of wealth bother with such a half baked and limited value fraud? Wouldn't they first accelerate the company, funded with plenty of foreign credit/equity, then steal it when there's something valuable they dont own to steal? They already own almost the entire company - they're stealing from themselves. Nah, I don't agree this is fraud at all and your assertion is far fetched - it is not obvious at all that theft is what this is.

But I do appreciate your reading of the annual report and highlighting what you found - and I do agree it does smack of **** governance and controls. But it's Kazakhstan.