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Seplat Energy July 30th 2024. – Solid half, better to come

Seplat delivered a solid performance in the first half of the year with production at 48.4kboed.

The 2024 programme of 13 wells is on track for completion by YE24 including key start-ups at Sibiri, which came onstream late in 1Q24 and is producing ahead of expectations

ANOH remains on track for first gas in 3Q24. Start-up of the ANOH project and continuation of the underlying performance in the rest of the portfolio should see a stronger operational performance.

Seplat’s share price has been strong which we believe is likely to reflect the underlying improvement in operations,

imminent start-up at ANOH, and the completion of the MPNU transaction.

MPNU is the entire operated offshore shallow water business of ExxonMobil in Nigeria

Adds established high-quality, operated assets delivering strong cashflow from existing US$-based production

Upside potential from extensive portfolio of low-cost and low-risk production optimisation opportunities

▪ Significant undeveloped gas resource base to underpin energy transition and drive domestic and export revenues when developed

▪ Portfolio diversification through entry to shallow water, with dedicated export routes offering enhanced security

▪ Reinforces balanced approach to gas and oil in portfolio

▪ Disciplined investment, conservative assumptions and attractive metrics that enhance dividend potential

Creates one of the largest independent energy companies. No requirement to access equity capital from the market via a capital raise, Dividend policy remains unchanged

Realistic prospect for commercialisation of billion barrel equivalent resource

https://www.seplatenergy.com/media/wojc2c5e/seplat-acquisition-of-mpnu-presentation.pdf

Here's most of the Bloomberg article -

The findings provide a glimpse of how the most rarefied corner of finance has cooled on the investment prospects of a green transition. Managers in the $5 trillion hedge fund industry say the reason is obvious: Despite the promises, clean energy and green technology stocks have lagged far behind the broader market. Deep-pocketed institutions are concluding that many climate investments won’t pay off as quickly, or as lucratively, as they’d hoped. Managers in the $5 trillion hedge fund industry say the reason is obvious: Despite the promises, clean energy and green technology stocks have lagged far behind the broader market. Deep-pocketed institutions are concluding that many climate investments won’t pay off as quickly, or as lucratively, as they’d hoped. 500+ hedge funds invest in the energy sector, but their positions show caution around green stocks and confidence in fossil fuels. Higher interest rates upended capital-intensive projects like offshore wind farms.

Most of the hedge fund managers Bloomberg interviewed pointed to an increasingly hostile geopolitical environment, with obstacles such as tariff wars leaving them unwilling to invest in classic green bets such as EVs or solar power. In fact, with much of the supply chain for green technology now depending on China, the risk of a full-blown trade war targeting its products has become a direct threat to the financial appeal of clean energy.

The tariff war targeting China will feed inflation in Europe and the US, undermining the appeal of everything from solar cells to EVs. Most hedge fund managers Bloomberg interviewed said Chsolar is among green sectors that have been “more or less terrible” for the past three years. “Solar is probably structurally screwed''. Slowing sales growth has turned hedge fund managers increasingly bearish on EVs. The number of hedge funds with long bets on thermal coal, oil and gas companies exceeded those with net short positions at the end of September. Crude oil oulook, “the short-term risk is for higher prices because inventories are low,” with prospects of an increasingly entrenched conflict in the Middle East potentially adding to that price pressure.

Hedge funds with long bets for wind outnumbered those with short bets for close to 60% but down from 73%. Grid infrastructure is seen as a rare opportunity to get exposure to the energy transition without being wrong-footed by the tariff wars and over-supply concerns that have pitted China against the US and Europe.

“It’s very difficult for a hedge fund to price in a geopolitical risk for a length of time,” said George Boubouras, head of research at K2 Asset Management in Melbourne. And that means there’s a “long winter ahead” for the green transition trade.

Bloomberg - Wall Street has taken a close look at key sectors in the green economy and decided to bet against them.

Despite vast green stimulus packages in the US, Europe and China, more hedge funds are on average net short batteries, solar, electric vehicles and hydrogen than are long those sectors; and more funds are net long fossil fuels...

Barry Norris, chief investment officer of UK hedge fund Argonaut Capital Partners LLP says fossil fuels remain necessary as a reliable source of energy. “The energy transition is failing, and will fail,” Norris said

https://x.com/surprised_trade/status/1848398221389005296

Well done everyone ..

https://x.com/surprised_trade/status/1848345916803002839

Production at top end of guidance, Free Cash Flow generation continues, cash increased to $133m, divi 10%, no debt and broker has 140p target

https://x.com/surprised_trade/status/1844676385299747185

Oil shoots higher as Biden is said to be discussing an Israeli strike on Iranian oil facilities: Bloomberg

https://x.com/surprised_trade/status/1841850351252603365

Final Q3 15,549 avg bopd, +19,6% vs guidance. 17,6k Oct 1, great start for Q4. 17k bopd YTD 🤑💰🤑💰🤑💰

https://x.com/surprised_trade/status/1841731564863893718

Very high flow rate at new Bittern well

The B6 well on the Bittern field is now in production at a stable gross rate of ~8 mboe/d. Net to Serica, this represents ~5.2 mboe/d. This is well above our expectations of ~3 mboe/d (net).

• This result showcases the quality of the subsurface team at Serica, something emphasised by the CEO at the HY results, as the well was drilled horizontally in a thin 245 m long reservoir section just above the oil-water contact

. • Overall production is now above 50 mboe/d. Given a slow ramp-up following the summer shutdown, production needs to remain at this level for FY24 production to average ~41 mboe/d (which is the company’s guidance).

• We forecast that the Gannet GE-05 well will add a further ~2 mbbl/d once on stream in November.

• The key newsflow for Serica is the upcoming UK budget to be published on 31 October that will provide visibility on the UK fiscal regime. We believe that the share price trades at a discount to the worst case scenario. If UK fiscal terms are too punitive, Serica’s future investment in the UK will be very limited. Under such a scenario, Serica estimates that the UK business could generate >U$500-600 mm of cumulative free cash flow by YE27. This represents almost the current market cap of the company.

• We re-iterate our target price of £2.90 per share All eyes on the October budget Assuming 38% for the EPL (total of 78% tax on profit), no sunset date for the EPL and no allowed depreciation for EPL purposes (ie £1 of spending triggers only 40% of tax shield vs 78% tax) would lead to a core NAV (based on the company’s 2P reserves only) of ~£1.80 per share. This represents ~30% upside to the current share price. Assuming “normal” depreciation (78% tax shield vs 78% tax) takes our Core NAV to £2.50 per share and unlocks further investment opportunities, including Buchan, with an overall ReNAV of ~£2.90 per shares.

Valuation

Our Core NAV and ReNAV for Serica are respectively £2.55 per share and £2.92 per share.

You spotted it too Alex, great news

Nigeria is set to approve Exxon Mobil Corp.’s sale of its oil and gas assets to domestic energy supplier Seplat Energy Plc, President Bola Tinubu said.

The “divestment will receive ministerial approval in a matter of days,” Tinubu said in a speech on Tuesday marking Independence Day in the West African nation. The move will “increase oil and gas production, positively impacting our economy,” he said

https://x.com/surprised_trade/status/1841017801382723746

'With many operators facing the real prospect of a cliff-edge for investment, production and jobs, a consequence of flawed government policies in the weeks and months ahead, the real-world concerns of offshore workers articulated powerfully by those on the Bruce platform cannot be ignored in the corridors of power

message is clear: the UK will need oil and gas in our future energy mix — the only question is, where we will get it from? Do we produce more of it from homegrown places such as Bruce — with all the employment, economic, and security advantages that brings — or do we increase dependency on imported supplies with their higher emissions in an increasingly volatile world?

These are questions the government hasn’t yet answered clearly or credibly. They deserve a fuller response, because industry and independent reports suggests that fiscal plans for the offshore sector could see tens of thousands of job losses by 2030. Imagine the employment equivalent of a Grangemouth refinery closing nearly every week from 2025 to 2030. No one should leave that unchallenged.

The way forward: a fair fiscal regime for the sector that incentivises investment and jobs, and domestic production from new and existing fields that will help to deliver the oil and gas we still need

In the real world, this would represent a much better way of delivering on the government’s stated aims, including growth, rather than effectively offshoring jobs and importing virtue.'

https://www.thetimes.com/article/c4224a69-6379-4f00-b041-3446b23da808?shareToken=bd8f747ccb466a5f928df4c0c18082a9

MORE LABOUR CRONYISM :

The Miliband files:

Brother David making good money from Net Zero projects on back of Red Ed’s zealot like plans

https://unherd.com/2024/09/the-miliband-files/

https://x.com/TiceRichard/status/1840619469392990219

'ALL the capacity for these cables has been bought up to 2030 already. '

For anyone thinking the Grid could be decarbonised by 2030 (Ed 'no plan' Miliband particularly) the UK has not bought into that capacity for those cables as yet! So impossible to get anywhere near his ridiculous claims, at some point very soon he will have to accept that no more drilling in North Sea and/or punitive taxes will make him look even more foolish (some feat) as Britains lights WILL go out and imports will rise accordingly.

'Can we deliver that scale of infrastructure much more quickly than it’s been done historically? The UK has a planning regime that can take up to seven years. So you add on a couple years for construction and you quite quickly get to, on average 10 to 12 years to build a piece of electrical equipment to support the decarbonization agenda.

The second challenge would be around the supply chain. We are hugely dependent on manufacturers delivering huge pieces of equipment. The best example I can give you is high-voltage direct-current cables, which are basically the electrical cables that connect countries or transport large quantities of energy. ALL the capacity for these cables has been bought up to 2030 already.

Then thirdly is where you’re going to get your resources. Just to bring it to life, in the UK we need seven times as many overhead linesmen by 2030 than we have in the UK today. '

AI demand for energy in data centres - the racks that they used five years ago, which take about 30 kilowatts of energy and exactly the same rack in size today is up to 300 kilowatts. So it’s a tenfold increase in exactly the same space.

So we need to understand as an industry how much energy these data centers are actually going to use.'

https://www.bloomberg.com/news/features/2024-09-27/national-grid-ceo-john-pettigrew-on-ai-s-power-needs-and-wiring-net-zero

15,797 bopd average Q3 so far, 21,5% more than guidance

https://x.com/Mrsrojbani/status/1839092232919335066

15,620 bop average Q3 so far, 20% more than guidance

https://x.com/surprised_trade/status/1838957971801333980

Gary Smith, head of GMB union, has had enough. In a packed event in Liverpoo lon Tuesday, Smith tore into the new government’s energy plans. The target to make our electricity carbon neutral by 2030 is totally unachievable, he argued, and its reckless pursuit is simply accelerating deindustrialisation and mass lay-offs. There aren’t enough cable-makers to make the wires, for one thing, or enough engineers to install and maintain them, and people aren’t going to turn off their kettles at peak times for a fiver. As for renewables, he was scathing, portraying a sector that lobbies for bill-payers to fund it, makes its kit cheaply overseas using slave labour, imports it all into Britain, loads intermittency costs on to the grid, and keeps all the jobs and profits abroad.

The government did not see fit to put up anyone to debate Smith directly. Why not? The truth is that Starmer’s “patient”, “calm” and “determined” political establishment cannot acknowledge that its policy, endorsed by so many virtuous experts, must make room for facts and competing interests, like those of industrial workers, drivers, households, businesses or anyone queasy at the idea of relying on Chinese production for most of our new energy infrastructure. Instead, we had to watch Ed Miliband prancing around selling his green fantasy....

https://www.thetimes.com/comment/columnists/article/starmers-grown-ups-are-living-in-fantasyland-hdk3bztc8

“It’s completely naive, at best.” Sharon Graham says she doesn't know how Ed Miliband can say he'll 'stop North Sea licenses' without a plan in place to replace lost jobs and that type of energy.

https://x.com/LBC/status/1837862790150697193

No problem Captain_value , thanks 👍