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I agree! Revenue up! Cashflow up! Leverage ratio down! What is there not to like. Exercise of options is old news and well priced in. GLA!

Plus the gap between the current share price and the takeover assumed price of 360p should close before then.

It may be down to end of driving season but gas prices are trending up.

What I like the most here is that the MPNU deal is being financed using debt, where the amount of debt required is now significantly lower than when the deal was announced. There is no equity dilution and cost of debt can be offset against tax. Plus interest rates are pointing south. This should all help with valuation metrics.

In earlier company presentations, Roger Brown mentioned that he expects MPNU depletion rates to be around 10%, even better if he’s right, and that he was hopeful of providing firm update on the acquisition by the Q3 results. Fingers crossed for an RNS soon and like others here I’m also using any price weakness to top up here. GLA!

The H1 update shows a number of catalysts approaching their conclusion, MPNU acquisition, ANOH gas plant, Abiala tie-back and Sapele upgrades, all within the next 6 months plus the new production from Sibiri. This bodes well for the share price over the next 6 months.

Seplat is likely to see a substantial increase in production at a time in the economic cycle when the oil price should be lower but isn’t. Major economies are looking to cut interest rates to stimulate growth in the coming months and consequentially demand for oil, which traditionally is very bullish for the oil price. This has not been factored into any of the valuation forecasts I’ve seen on this chat. This is all ignoring the under investment in the oil industry and geopolitics which could further exacerbate the situation. Interesting times ahead! If all goes to plan, Seplat may be looking at a position in the FTSE 100 soon. GLA!

Alex, Sea Tank,

I’m with you both, it should be 40%. In Seplat’s update on 23rd May, it stated:

“There has been no material change in terms of the announcements dated 25 February 2022 and 24 May 2023. The headline consideration, effective date and the contingent payment structure remain unchanged”.

Purely based on this and needs of Nigeria as a country I don’t believe they will change the percentage. After all, some of the investments required for increasing production will come from Seplat’s investor pool. It would unwise on their part to reduce this pool.

Clearly, NNPC and Exxon have publicly differed and hence the court proceedings. I suspect adjustments have been agreed and made to satisfy the two parties only, be it for political reasons, legal or accounting purposes but only affect NNPC and Exxon and not Seplat.

Lagos and London, 14 June 2024: Seplat Energy notes the announcement on the 30 May 2024 by the Nigerian National Petroleum Company Limited ("NNPCL") regarding the Settlement Agreement between NNPCL, ExxonMobil Corporation, Delaware and Mobil Producing Nigeria Unlimited ("MPNU") and has since been notified of the termination of the court proceedings brought by NNPCL against MPNU and its affiliates over the proposed divestment of MPNU's shares to Seplat Energy Offshore Limited ("SEOL").

Seplat Energy commends the open cooperation and progress achieved by all stakeholders, and will diligently engage all key stakeholders, including the Government, in progressing towards a swift completion of the acquisition of MPNU.

Looks like we're almost there. There's an interesting quote in the press releases:

"The parties will jointly discontinue arbitration proceedings upon completion of the transaction. MPNU shareholders and NNPC will align their positions to finalize their respective transactions with Seplat".

Could it mean we still get 40%. Fingers crossed! And as usual, GLA!

It would be interesting to see if NNPC sell their 10% to Seplat or Seplat buys 30% at a lower price. Both options should work well with Seplat. It shouldn’t be long before an RNS, probably within a week or so.

Looks like the purchase will be for 30% rather than 40%. Await new price, assume it will be pro rated down?

https://africaoilgasreport.com/2024/05/farm-in-farm-out/nnpc-to-hold-70-of-the-jv-as-the-exxonmobil-seplat-transaction-comes-to-a-close/

This is fantastic news, excellent management, excellent assets, excellent growth ahead, and last but not least, a well done to the Nigerian government and regulator. One sure way to change negative perceptions.

Also, best wishes to the stockholders, I've thoroughly enjoyed reading many of the excellent and helpful posts here. Thank you!

A video of the AGM is available online if anyone is interested. Link below:

https://www.youtube.com/watch?v=9R6dxdqQhpo

I would love to know the full detail of discussions between the various parties and the existing contracts that are in place. Unfortunately, small private investors are rarely in such a privileged position. We’re often left with reading in between the lines.

There are some judgement calls we can make:

1. There was no mention NNPC’s first right of call to make a bid for the assets, which may imply that NNPC have agreed not to pursue that route, if an agreement can be reached? This would be very positive for us.

2. All parties will act in their self-interest. Going by the various press releases all would like a speedy closure. The government has shown its hand to the oil majors and Herminator, as you’ve rightfully mentioned, the ball is in their court, they have a starting point which they can further negotiate with respect to legal elements, time frames for any payment and even negotiate liabilities.

3. As more than one major oil company is involved, they may propose to collectively set up a fund to address the issues rather than individually suffer reputational damage and get caught up in legal wranglings.

4. The oil majors will be mindful of setting any negative precedence for liabilities, both locally and internationally.

5. In the current environment, the oil majors will want to guard their reputation with respect to environment and exploitation of local communities. This limits their options and makes a high level solution more probable.

6. The government is focusing on ensuring companies that acquire the assets have appropriate capabilities. This is a major plus for Seplat as the leading local company, this should provide greater opportunities for further acquisitions.

7. As the government and the regulator are actively involved, there is increased potential for kickbacks for the oil majors for their remaining assets. An additional catalyst and negotiating tool.

Most of this will favor an early high level resolution, not necessarily within two weeks but soon. GLA and hopefully start of another long bull run.

Some further clarifications

https://www.reuters.com/world/africa/oil-majors-offered-faster-nigerian-exit-if-they-pay-cleanup-2024-05-03/

Big day today. Will they or wont they agree? Fit for a Nollywood blockbuster!

Seems the regulator wants money to be set aside for various legal requirements. I wonder who will fit the bill? Who needs this deal the most?

THISDAY is reporting that the parties have two mutually exclusive options, a full audit or accept provisions required for decomm, communities and environment. As these are mature fields, most of this cost should fall on Exxon.

In Seplat’s last update, the discussions were described as being constructive, I assume this means the discussions have been beneficial for Seplat?

Exxon needs to demonstrate that it’s making progress to realign its portfolio and would be keen to get closure. Otherwise, it risks getting bogged down for many years to come and may still be no better off.

SeaTank, thank you for the clarification, wrong choice of a word on my part. Should have read "some" and not "most". I guess, what's important is that the company has managed its naira risks very well, however small. Look forward to the update tomorrow and hopefully have a different conversation tomorrow.

MEM, Seplat's Naira income closely matches its Naira expenditure, so small risk on that front. The main risk to the company is that it sells most of its products within Nigeria and therefore, there is a receivables and credit linkage risk. A falling currency can result in the downgrade of a country’s credit rating which can then affect the credit rating of a company that receives income from the country, be it in dollars. This actually happened in February 2023! Luckily, it has reversed since then.

The Nigerian Naira has become the world’s best performing currency in recent weeks and may explain the recent price spike. Another tick in the box. Anticipate further analyst upgrades on the back of this and rising oil price.

https://abokifx.com/news/nigeria-s-naira-rebounds-sharply-after-bumper-interest-rate-rises-ft?type=market

Not expecting any significant news on MPNU on Monday but any update would be a bonus. GLA!

The environment in Nigeria now appears to be conducive for growth. Reading the annual report, it appears that the company is at least thinking, if not planning, further acquisitions and bidding for new offshore licenses. Below are extracts from pages 28 and 29:

“To address the shift of international oil companies (IOCs) from onshore and shallow water investments to deepwater, an important initiative was announced in December 2022. This initiative involves an upcoming bid round for seven new offshore blocks, covering a significant area in water depths ranging from 1,150 to 3,100 meters. It aims to attract experienced local and international offshore exploration and production investors, promote energy security, generate substantial revenue, and foster partnerships within a fair and well-defined legal and regulatory framework”.

“Seplat’s reputation as a reliable partner makes it a preferred choice for incumbent asset owners seeking to engage in various Nigerian oil and gas transactions. Their strategic positioning positions them well to capitalise on future opportunities, including asset divestments from the IOCs, participation in upcoming licensing rounds, and farm-in prospects”.

SeaTank,

I agree with you, it’s undervalued on many fronts, even if we ignore the MPNU acquisition. There’s so much potential ahead for the company. Roger Brown has a number of times made the following statement:

“I think this year will be truly transformational for us, as we bring the ANOH gas project onstream and, I hope, complete the MPNU transaction and develop the four blocks that are in much need of investment to realise their full potential in both liquids and developing a very significant gas resource”.

Roger’s past performance shows he has credibility.