RE: Further Details7 May 2024 11:31
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.
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