Member Info for Tyler19

Hopefully this RNS will provide clarity to investors:

M.P. Evans, a producer of sustainable palm oil, notes today's announcement by the President of Indonesia, Prabowo Subianto, regarding proposed changes to the export of crude palm oil and other commodities. At this stage, the detailed implementing regulations have not yet been published, and the Group is monitoring developments closely with its local management team, advisers and industry partners.

The Group's operations are fully compliant with Indonesian laws and regulations, and it has longstanding relationships with local stakeholders and government authorities. All the Group's output is sold locally in Indonesia, and a significant part of Indonesian production is consumed domestically. Any changes to export mechanisms will not have a direct impact on the Group. There may be some indirect impact as prices available for the Group's output adjust to take account of new arrangements.

The Board remains confident in the long-term fundamentals of the Indonesian palm oil sector and in the resilience and efficiency of the Group's operations. The Board will provide further updates should it be necessary to do so.

It does increase the risk to profits in sterling from currency volatility in the rupiah but it's common practice for companies to safeguard against these risks using currency hedges. From my own experience, currency hedges do increase volatility in profits but tend to average out over the long term. MPE is a very well run company and should be able navigate this skilfully. I'm not worried and have added to my holdings today.

The share price reaction seems a little over done. It appears to be a case of sell first ask questions later. The Indonesian government is worried about palm oil/commodity producers under invoicing and thus paying lower taxes. It's also worried about the value of their currency. In both cases, it should only have a minimal impact on MPE. MPE has very transparent operations and most of its production, if not all, is in Indonesia. The company will use currency hedges to safeguard against foreign exchange as required to protect its profits. I've taken this opportunity to top up and have my fingers crossed for clam to return soon. GLA!

PJ, I do believe we’re heading in the right direction for an end to hostilities in the Gulf. Although, the path may be chaotic, no surprise there! It’s not an ideal environment for making investment decisions. My main concern is that the company still has a significant amount of debt and any delay in receiving payments from clients will not help.

On a longer term outlook, like yourself, I don’t believe anything has changed. The company is still well placed to benefit from greater focus on oil and gas (energy security) and globally aging infrastructure. Will look to add strategically as the situation evolves.

That’s a fair assessment PJ70. Also, force majeure being declared by one of their clients will likely impact receivables for the current year. The company mentioned it’s looking to geographically diversify, which suggest that the Gulf end clients are not yet ready to reprioritize planned work.

Good to see sanity returning on global stage. Although, I may be speaking too soon!

If we are entering a de-escalation phase then it’s very positive for GMS. The biggest cost of offshore maintenance is often associated with the production shutdown. As oil inventories in the gulf are already full and some production facilities have shutdown, it’s likely that some operators will take this opportunity to carry out essential repairs as soon as possible. GMS should see a significant uptick in demand in the near future.

The downside risk is that GMS may make some adjustments for disruptions caused over the last few weeks. However, as markets are forward looking I’m hoping that we’ll now see a sustained share price recovery. GLA!

Thank you LL. You’re absolutely right about the uncertainty and the potential for oil prices to fall rapidly. This may happen even if the war escalates but causes a global recession, markets correct and we get a serious credit event.

My base case is that Trump follows form and claims victory in the near term, pulls back forces. Leaves chaos in Iran, possibly a civil war. This will increase instability in the region but not sufficiently to affect offshore operations. This is likely to benefit GMS with its low valuation, stable workload and potentially higher day rates due to the increased risk.

GMS is well placed to benefit from the fallout over the medium term too, as countries rethink energy independence, possibly expanding oil production at the same time as renewables.

On the oil price front, Trump has promised his support base lower oil prices, not to deliver would be politically detrimental to him, particularly at a time of high tariffs and a weakening job market.

Good luck!

Operating companies are always ultra conservative when it comes to safety, I’m surprised that evacuation orders weren’t issued earlier. Under these circumstances you would expect staff levels to be reduced to production critical only.

I’ve not seen any reports of offshore platforms being targeted, so far. Doing so would almost certainly cause an environmental catastrophe which would affect the whole region, including Iran, and would almost certainly cause its neighbors to react militarily. At that stage, the international community would also get heavily involved to stop further escalation as the risks of a global recession would go up exponentially.

It’s possible that the operating company may be reacting a threat than an actual plan.

I suspect normal operations will return within a couple of weeks or even days. However, we do live in the most interesting of times where the unexpected happens more often than it should.

I continue hold as I expect things to look better in a few weeks. Suspect we’re going through a crescendo of fear and imagining the worst of scenarios.

GLA!

Considering the very large number of offshore facilities in the region, the likelihood of a GMS vessel being hit is fairly low. Also, their vessels should be fully insured.

I hope sanity returns to the ME soon. I suspect the intensity of the conflict will ease in the coming days/weeks, be it for no other reason than exhaustion of supplies. However, I fear that low level tensions will remain for much longer and will increase the risk premium for the region, potentially increasing the day rates for GMS.

I would not be surprised if the operating companies/governments start adding additional security measures to offshore platforms, further increasing demand for GMS services.

Personally, I expect a dividend of 2 to 4% for 2025 and steadily increasing thereafter, subject to capex requirements but above 4% going forward. Which is a very good dividend yield when interest rates are falling.

Also, with long term growth, it's for better for GMS to buy boats than to lease them. Leasing only makes sense for peak shaving short term demand. The fact that they're looking to buy more boats only reinforces the long term growth narrative.

I agree with you PJ70.

Also, the day rates will inevitably go up, if they haven't started going up already. A combination of higher day rates and a larger fleet size will bode well for the bottom line. These things rarely go up in a straight line but I believe a number of factors are coming together at the same time and we should start seeing upward step changes soon. I think it's wrong to look at GMS as an income stock, it's a growth stock for the next 10+ years.

If we look through the rear view mirror, we see a company operating in a challenging environment, with oversupply of boats after years of overinvestment, some clients struggled to pay their bills, lack of low cost finance and some tax issues. The share price spent many years in the doldrums, whilst the company addressed these challenges. It’s very easy to see why some investors are cautious about the company expanding its capacity.

However, looking ahead, the company is now operating in a more favorable environment. It operates predominantly in the middle east, providing essential services to offshore oil and gas producers. The region has aging offshore facilities, often older than 40 to 50 years and in need of refurbishment and upgrades, which cannot be delayed for much longer. This is exactly where GMS provides its services and I suspect we have good 10 years ahead of such investment, if not more, whilst the oil prices are low. When oil prices recover, there will be additional construction related work for GMS.

This is all be happening at the same time as offshore wind capacity is increased, which will require GMS services for new installations and ongoing maintenance work. In this light, why would you not increase your fleet size?

There’s a very bullish write-up in this weeks Investors Chronicle. GMS is rated as a buy, with just under 4% dividend expected for 2025 and significantly increasing in 2026 and 2027. There’s relative tightness in the end market. That’s great news. GLA!

Hunting is certainly a possibility and it’s good to see that they are bullish. GMS tends to benefit when there’s increased subsea activity, as associated platforms are often modified and upgraded at the same time.

ADNOC have been actively buying SSVs via a number of acquisitions, in 2025 they bought Zakher Marine International (ZMI). They may be interested in GMS.

With more of these boats being used for offshore wind, ADNOC may want to ensure/control supply of these vessels in their region.

Also, trading at 75% of book value. That’s cheap! At a time when most of their assets are relatively new. The flurry of contract awards suggests the end market is busy or getting busier. If nothing else, I think it’s a potential take over target as few new ships are being built.

Contracts are often awarded towards the end of the year as budgets for the year ahead are confirmed. Would not be surprised if we get another contract award before the new year. This will be great for earnings momentum and not to mention the potential for a larger dividend in 2026. Good luck!

Just to add to the discussion, the 6 month production target is probably related to switching of the production profile from a near term peak (a priority for MPNU) to a longer term plateau (priority for Seplat). This is a normal part of any company looking at adding value to its assets over the long term with larger cumulative production, which will get discounted in the NPV models and will be higher than the short term peak NPV. This is actually a real positive, particularly if, the 6 month production is at around 120 kboepd. Normally, you would expect short term production to drop as flows and wells are re-prioritized. The fact that we will be able to maintain the short term production whilst adjusting the profile, once again, demonstrates the quality of the assets. GLA!

The share price is now at a 44% discount to book value. This is starting to look like a strong takeover candidate. Probably by a local company in the middle east.

Damofarl,

The company is entering a phase with a crescendo of development. This will comprise lots of simultaneous and partly overlapping projects of various sizes, much bigger than what it has done before. There is a lot interplay within these facilities, which will impact how the developments are progressed and it is this that I would like the company to guide analysts on. This is not the sort of information that analysts will be used to dealing with and will require greater company guidance, which like yourself, I believe Seplat will do. Quarterly updates will avoid unnecessary speculations.

Well informed and regular analyst coverage will increase investor base, increasing multiple expansion, liquidity and lower cost of capital, benefitting both the company and its shareholders.

“….my only thought is should I buy more.” – This is a condition that many of us long term holders suffer but each time, we’re glad that we did buy more! Good luck!

There are a lot of potential catalysts here, the secret going forward will be for the company to explain its growth plans on a quarter by quarter basis at the their regular meetings with Analysts. At the moment, there may be too much technical information for investors to absorb and translate into an actual growth profile.

Looking at the prospectus in detail, I can easily see production going above 200 kboepd for MPNU alone and say another 60 kboepd for the old Seplat facilities. That’s a target production of 260 kboepd!

Roger Brown has repeatedly mentioned the huge gas potential here. In 2023 MPNU injected ~800 MMscfd of gas back into the reservoir. A significant % of this could be exported and as a high level estimate could add ~$100M to the bottom line. This is substantial when you compare this to the MPNU 2023 profits of ~$70M. This is just the gas part alone, which many people see as a side show!! GAL!