Member Info for SeplatWinner

You can see the thread to figure out who I replied to.

Are you going to give me a reply to my question(s) or is your take still a "lol"?

You have approx. 6000 posts between your three accounts complaining about issues in Iraq and their federal state Kurdistan. We understand, it will never be as clear-cut as you have it in your Anglo-Saxon country.

Your complaints aside, what's your actual take here? No restart of the pipeline, ever? Baghdad claiming the PSCs illegal?

Instead of mocking my take - would you mind telling me how it will work out, then?

We have confirmation from the Iraq Ministry of Oil that 1) negotiations with the IOCs are ongoing and 2) payment of outstanding arrears.

If you take your stand, that Baghdad consider all these companies and their licenses illegal - why are they even negotiationing and offering concessions? Surely you can't u-turn after that, and take the position that the licenses were illegal to start with.

If this hits arbitration court in Paris (which Iraq obliged under post Iraq war restructuring) Baghdad will find themselves in a very weak position not acting on these "illegal licenses" for over a decade, and especially not after the closure of the pipeline.

Games are over, everybody knows it, exports will restart after Erdogan visits Baghdad late next month.

(When did Erdogan ever not get what he wants?)

While I could to, some small degree, subscribe to the old conspiracy theory that it's all an act from Baghdad to once and for all terminate western IOCs and put Kurdistan in terminal poverty (and a new ISIS stronghold, because of it?) - I believe we've gone too far now for Baghdad to pull of that rug-pull.

- Apikur has been successful in aligning both parties of the congress in the US, rooting for US companies and their investments being intact in Kurdistan. We have US politicians, from both sides of the aisle, now putting these assets as a precedent for further Iraq talks.

- We know that recent PSCs Iraq signed with international companies doesn't differ much in terms of economics from KRG-based PSCs. Link: https://www.rudaw.net/sorani/business/140220245

- When Iraq signed the latest PSCs with Total, the minister finished the press conference with saying "all projects are unique, and we can make amendments to the contracts". It's clear for everyone that Iraq want's to up it's total oil production.

- If the KRG is unable to export oil the funding still remains for Baghdad

- Currently the pipeline costs Baghdad $30m per month - or $360m per year - in fees to Turkey

- KRG politicians have stated publicly that they don't have any issues with the oil going through SOMO

- Iraq is currently missing $1B in annual revenues on-top of looking uninventable to international companies wanting to invest

Sure, I understand that Baghdad might have philosophical problems with Kurdistan - but are they really going to argue the IOCs illegal and risking international arbitration for years and years? For what? 5% higher royalties?

The games are ending now. Turkey is pushing, the US is pushing, KRG is pushing.

It's happening fellas, everybody onboard?

I would really love if the MPNU acquisition went through right now, when Brent just hit $85:

2-2.5x of oil production overnight without any share dilution. Tremendous leverage on the bottom line EPS.

Since October 2023 - when Turkey lift the force majeure and green light restart of flow - Baghdad is being debited $30m USD per month. Approx. $180m USD as per today and $360m USD per year.

Baghdad could flip this losing hand to $1B gross revenue per month, with the start of exports. (friendly reminder that Kirkuk SOMO oil also went through the pipe).

Follow the incentives. Load up. Cheers

DNO, GKP and Shamarans pays approx. $15-16 per barrel for midstream transport, storage and loading. When I talked to management at Shamaran and DNO both confirmed that +90% of these costs lands on the side of Turkey. One can then conclude that Turkey gross income for a open pipe is +$1,500m per year, every year. Substantial.

I might get a rebuttal that the (Botas) pipeline fee is not $15-16 per/b - but that's not the entirety of the cost structure. Turkey makes a killing here and it's in that context we should understand their constant eagerness to restart the exports. Not to mention the "quality discount".

I invite everyone to read (or listen) to the last paragraphs of the DNO conference call for Q4. The CEO explicitly states that the current agreement of the pipeline has less then two years life left and if no solution to be found within that time span, new export routes will be forced open by two years.

Link: https://i.imgur.com/dw1TjXB.png

Load up gents, we're going up.

The Turks signaled that the pipes are repaired and that they are ready to receive exports for the first time in October 2023. Since then, they have vocalized this four (4) times from the highest echelon (i.e. ministry of foreign affairs) and it's on the agenda for the deliberations that start today in Baghdad.

The ICC judgement cost Turkey a net $1,500m for almost a decade of exports. This might sound like a large sum, but the ITP earned Turkey approx. $1,400-$1,600m per year. When you understand that the financial incentives are there, then you understand Turkey's eagerness to restart the pipeline exports.

Mid 2023 Iraq made a request via the New York ICC court to settle the aforementioned payment by Turkey. It was 4-5 months after this request Turkey signalled "all clear" - and there hasn't been a single rebuttal from the Iraqi side on this issue since. If there was outstanding payments from the Turkey side, meanwhile Turkey four (4) times argues for a restart - we would hear complaints from the Iraqi side (rest assured).

Turkey will push for exports.

The US will push for exports.

KRG will push for exports (it's their livelihood, more than 50% of the economy)

Two weeks ago Iraqi foreign minister told us that they have agreed to a oil cost recovery of $20 (implicitly saying the PSCs are intact).

It's happening, give it 2-3 more months.

Turkey made (makes) approx. $1,400m - $1,600m per year operating the ITP. It's very clear that they have heavy incentives to get get it restarted. It's a huge source of income for Turkey and I'm confident they will make concessions on other topics, just to get it reopened.

Turkey has stated publicly four (4) times since October 2023 that they are ready for a ITP reopening.

The $20.6 offered is just for cost recovery it's not the total revenue earned.

What are some sensible projections for FCF in 2024 and 2025?

According to the latest RNS we're looking at $40-50m FCF for 2024. DNO (a country peer) told the markets a couple of weeks back that they've almost finalized an agreement with KRG that they can invest in further production (out of pocket) and receive a higher working interest of that production. Sort of a payback of arrears. Nothing signed just yet.

+9% Congrats, gents!

Not only is the Nigerian Naira improving, but we also see strong improvements in the regulatory framework of the country. Surely shouldn't be long until the MPNU deal is sealed.

News on the Bloomberg terminal:

"Nigeria Announces Measures to Bolster Oil and Gas Investment"

"President Bola Tinubu on Wednesday signed executive orders introducing tax credits for some onshore and shallow-water locations and streamlining contract approvals, the government said in a statement."

Industry experts are out criticizing the slow and difficult process of making divestments and exits in Nigera. Doesn't put Nigeria in a good light, but it works as pressure to seal the Seplat/MPNU deal IMHO.

Link: https://businessday.ng/energy/oilandgas/article/delayed-iocs-divestments-in-nigeria-worries-investors/

NNPC themselves commented this subject last Friday, and the language is far more neutral and willing than it was 1-2 years ago. Also speaks in Seplat/MPNU favour IMHO.

Link: https://porscheclassy.com/were-not-hindering-divestment-by-foreign-oil-companies-nnpcl/

Furthermore, I looked closer at the language used in all quarterly results announcement since the acquisition. Last week it was the first time ever they stated "highly confident". It was repeated several times. As you can see below, the language was quite weak throughout 2022 and they got even more confident Q2-2023 and onwards.

Feb 2024: "We remain highly confident that President Tinubu’s administration will approve our acquisition this year"

Q3 2023: "Increasing confidence that President Tinubu’s administration will approve our acquisition"

Q2 2023: "We continue to work with all parties to achieve a successful outcome and have been encouraged by recent developments"

Q1 2023: "We remain confident that the proposed acquisition will be brought to a successful conclusion and continue to engage with all relevant parties"

Q4 2022: "We are continuing to pursue the Presidential approval received on the 8 August 2022 for the MPNU acquisition and we remain focused on concluding the transaction"

Q3 2022: "“We are working closely with all the relevant stakeholders on our transformational acquisition of MPNU"

One thing that I took notice of in the conference call was the tremendous high confidence and overall good mood with the CFO & Brown. Night and day compared to last year, when the H1 results were declared. Probably shines through that things are going all right.

Can't really stress hard enough how massive the share potential is, when all these growth opportunities in this slide plays out: https://i.imgur.com/XG5oiHk.png

+$600-800m FCF/Year

For the first time ever I'm actually worried we're gonna be taken out at a silly 40-50% premium this year, just before profits really start to explode.

"Strong Results - More to Come!"

https://i.imgur.com/SU5grtD.png

Amazing results:

- Revenue growth +11.5% YoY (up from 3.8% in H1 i.e. it's accelerating)

- EBITDA growth +7.4% YoY (up from minus -32% in H1 i.e. huge improvement)

- Free Cash Flow _after_ all the massive investments being done is +$260m i.e. 20% of market cap

- Strongest language yet on MPNU acqusition

- Reserves at ATH +9% YoY

- Dividend $15c i.e. 9% dividend yield on yesterdays close