Member Info for Tyler19

New appointment of MD appears to be a wise move. Having someone who knows the MPNU assets to guide investments is excellent:

“It announced that the Executive Director and Development Manager at ExxonMobil Affiliates in Nigeria, Mr. Dotun Isiaka, has now been appointed as the Managing Director..”

https://www.arise.tv/seplat-energy-completes-acquisition-of-exxonmobils-mpnu-assets-in-800-million-deal/

Interesting article on production targets:

https://financialpost.com/pmn/business-pmn/seplat-to-revive-hundreds-of-exxons-old-idle-nigerian-oil-wells

MEM, I was just making the point that we already have 300 producing wells (from earlier updates) and Roger mentioned that an estimated 100 wells of the 400+ shut-ins wells can be bought online easily without employing a rig. 400 wells in total that don’t require drilling and can be producing.

600+ wells in the scope really is enormous.

Excellent investor presentation. Full of confidence, knew their facts and figures and understood market concerns. They made it very clear why this is a truly transformational acquisition. Well done team Seplat!

400 wells drilled! This probably includes the 300 already producing wells and another 100 ready to go but have not been bought on line. Of course some of these may be injection wells. I’m assuming 90 of these will production wells and 10 for other purposes. 90 wells ready to go is very impressive in itself and bodes well for ramping up production in the short term.

A typical well produces 500 to 2000 boepd, that’s equivalent to another 45 to 180 Kboepd! Of course, a small amount of investment will be required but will be minimal.

Roger mentioned that it was not a priority for Exxon to allocate capital to these facilities, probably due to their re-alignment of portfolios. This partially explains why they would not have applied for PIA, similar to other multinationals reducing investments in Nigeria, whilst local companies had done so as they all planned to increase production.

I don’t believe the market truly understands how transformational this really is. Particularly, how quickly proven reserves will increase once new production plans are in place and should transform the balance sheet. It's a very large cash cow and probably a ten bagger for those that bought more than two years back.

I’m still fully invested in this and look forward to 2025 with excitement. GLA!

It appears that investors are only focusing on the net profit, which is low but expectedly so, the company has utilized minimal tax offsets over a 4 year period. This type of scenario can be very misleading on valuation.

The enlarged group has NAV of 221p per share, significantly higher than todays share price. MPNU is a highly cash generative business and the assets have a long productive life ahead. To replace this business from scratch today it would probably cost well in excess of $10B and take 5+ years to develop.

Seplat have previously indicated that their focus for future development will be the MPNU assets. This is an excellent strategic move as MPNU has a much higher production availability (86%) versus Seplat’s (~50 – 60%).

In the coming days, I expect the NAV to act as a floor for the share price and not the ceiling.

In the presentation tomorrow I would like see more details of how they plan to extract value from MPNU.

GLA!

There’s a lot of information to absorb and some of which requires further explanation, which we’ll hopefully get on the 12th.

They key points are:

• No significant development and exploration projects between Jan 2021 and June 2024. MPNU has been in holding mode rather than maximizing profits, understandable if the assets are no longer part of your long term plans. This will change with Seplat.

• It was a pleasant surprise to see production maintained at very high levels without the above. Shows the quality of the fields.

• The production facilities have plenty of spare capacity and should be able to significantly ramp up production with a little capex, great operating leverage potential.

• There’s clearly a high effective rate of tax, which should significantly reduce once the capex begins.

• Historically, Seplat has managed to secure tax holidays for gas projects, which may be the case here too, and should help reduce the tax burden. The focus on gas for MPNU was identified in the first investor presentation. It would appear that this is part of seplat’s plan to extract value.

GLA!

I agree with you mcb77, the long term potential is huge. I’ve heard other CEOs describe the realignment by big multinationals as a “once in a lifetime opportunity “ for the smaller local companies. It’s not difficult to see why. Global energy demand is sky rocketing, energy transition is slowing and all the large scale energy facilities take decades to bring on line. Having an immediate step change in production at such a time makes this a great opportunity! Best of luck!

Mcb77 – I can see Seplat going above £4 over a 2 year time horizon and it depends on how quickly they can increase MPNU production. MPNU has 300 associated wells, which implies well spread very large offshore facilities. I believe this will give lots of low cost infield opportunities for drilling.

Swatton – The prospectus should detail what the consolidated group will look like financially and its impact on dividends. I believe Sea Tank posted his thoughts on dividends earlier, which look very reasonable. I anticipate the dividend increasing to around 25 cents for the year ahead, subject expenditure plans.

GLA!

The long term prospects are excellent here. The company is in a prime position to grow both organically and inorganically. Combine that with a large anticipated dividend increase ahead, it offers a good combination of growth and income. It will probably offer best value when its increased post acquisition production meets higher oil prices in a year or two. GLA!

The deal is backdated to Jan 2021. My conservative estimate is between $300 - $400M still to pay. However, if there is a slower rate of production decline and higher realized oil prices then there are scenario's where we pay nothing or get money back. However, these are remote possibilities. Typically, you expect a rate of decline of around 10% per year.

At the beginning of the year, Roger Brown was hopeful of completing the acquisition by the end of the year. For many of us the next big potential catalyst is the prospectus which will contain details of the acquired assets, financial performance and financing, if any. It typically takes 10 to 12 weeks to complete once the prospectus has been released, which will quickly be followed by a shareholder vote to approve the acquisition.

I don’t believe the completion of the acquisition will occur by the end of the year, more likely sometime in February.

However, I anticipate the prospectus to be released very soon, probably within the next two weeks, which should give the share price a boost, along with the traditional year-end rally in stocks.

GLA!

I think you may be right, the share price is already up substantially in Nigeria, up more than 7% earlier today, now ~3%.

The dividend has increased earlier than I was anticipating. I guess it shows management confidence in the lockbox, I was expecting $300M - $400M, it may be towards the lower end.

Another set of solid results. So much so that I’m still in accumulation mode. There are lots of positives in the update, all realizable in the near term. In addition to what’s been mentioned already:

• Drilling is on track for 2024, probably the most important item as of today.

• Two new fields are now onstream.

• All MPNU acquisition work streams are at an advanced stage and should ensure completion very soon.

• Seplat are assessing various new midstream gas, power, and renewable investment opportunities. These should provide longevity to Seplat’s operations by becoming more carbon neutral and control of full turnkey operation.

• ANOH spur line is complete, whilst OB3 is delayed by 3 months. Considering the delay is due to a third party, it’s no reflection on Seplat. The nature of the industry is such that you need to rely on third parties and deal with challenges that the physical world throws at you. Not totally unexpected.

• The Fitch report in their assumptions states: “Dividends of about USD100 million in 2024 and USD200 million in 2025-2027”. That’s doubling of the dividend very soon. Wow!

GLA!

Harbour eyes U.S. listing with next acquisition

Harbour launches sale of North Sea field stakes

Alex, this should tie-in very well with the company trading update next week on the 29th.

Really pleased for all the shareholders here, GLA!

SeaTank, the reported poor outlook for oil is predominantly based on a slowdown in China and slowing global growth. After the start of the Ukraine war, the US has turned a blind eye to the various sanctions it has imposed on countries such as Iran, whose production is now ironically, 750 Kbopd higher than a year ago, similar stories elsewhere. We’re now entering a looser monetary policy environment, which will become stimulative in the next 3 to 4 months. Higher GDP, higher oil demand!

On the supply side, most of the supply growth has come from Shale in the US, which many industry insiders now believe has reached a peak. Elsewhere, oil fields a maturing rapidly, including middle east.

Media reports of where the markets are heading can be anywhere between 6 months and 2 years behind, by which time the train has often left the station.

There is low liquidity in Seplat for major institutional buyers and hence historically, a low correlation with the price of oil. Ultimately, share prices are driven by profits and in the case of production companies that’s driven by the price oil, some clever hedging and long term sales contracts.

I was expecting a slowdown in the oil markets over the next 6 to 9 months. However, with the unfortunate events in the middle east, I now believe that the next oil bull run may start early, possibly within 3 to 4 months. This is based on:

• Continued loosening of monetary policy around the world.

• Large China stimulus package.

• Slowing energy transition.

• Increasing geopolitical risks.

• Possible post US election lift in consumer confidence.

• Falling dollar and associated emerging markets pick up.

• Record shorts on oil, which have started to close.

Our acquisition of MPNU may prove very timely and cost effective. If the final payment is small or minimal, there may be a large increase in dividend ahead. GLA!

Excellent video! Roger is brutally honest and direct. He’s repeated some important facts:

• Nigeria has the best assets in the world, below ground.

• Sees PIA as being highly beneficial for local operating companies.

• Sees sudden and large increases in production from local companies from ongoing divestments.

If these things materialize, I wonder where Seplat share price will be in 5 years and what the dividend yield may be relative to today's share price?

Any rate cut without a significant risk of a recession will encourage sector rotation into low valued stocks and HBR should benefit with its very high dividend yield. We just need our local powers to be a little less of a hindrance and allow investor confidence to grow. It’s about time.

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!