Seplat Energy Share Discussion Threads

[keith95] 01/3/2021 07:38

I’ve stopped using SB firms after CMC changed their WTI Texas oil cash product to track the December contract in May rather than the next expiry month .... cost me a quid ior two ..... these firms are sharks in my opinion.

Not to be touched with a barge pole.

[andyforster1] 27/2/2021 13:54

Looking forward to results now the negative media coverage has been put to bed. Looking for minimal capex in 2021 as the Anoh project is already fully funded. Maintain/increase current production from existing assets once opex cuts are eased. Focus on free cash flow whilst we await the marginal field round awards and budget a growth package for 2022.

[rolo7] 24/2/2021 09:50

Looks interesting results out Monday a bit earlier than normal but oil price will transform seplat, target 100 for a start, so illiquid shame as would make a fste 250 candidate?!

[seatank8300] 21/2/2021 17:26

It seems the case across many markets - the spread betting companies must be really concerned about how heavily long everything and especially small caps their retail customer base is. We could quite well see a market correction in the not so distant future and an avalanche of forced selling triggered by the margin crunch.

[chopsy] 19/2/2021 21:18

Annoyingly IG are closing only.

[seatank8300] 19/2/2021 21:09

Well SAVE is a great trading stock, it's extremely volatile - it could be up or down 50% next week. I've enjoyed trading it myself ;)

[krall] 19/2/2021 20:49

Swanvesta - I think Zengas likes SAVE a lot more than SEPL... .. :-)

Own DD is key.

[seatank8300] 19/2/2021 15:59

This is a pretty good summary: hxxps://youtu.be/q39TfUphcwg

[seatank8300] 19/2/2021 15:46

SAVE may well succeed with the Niger assets - I hope they do. In Nigeria, their gas is paid for in Naira and to date (and for some years) there has been no practical method of repatriating Naira to USD offshore. The central bank will eventually free up the exchange rate of course, so this will not be an issue foreverm, but it continues to be today.
The Amukpe-Escravos pipeline will be operational later this year I believe, which will improve Seplat's pricing for oil exported along this route (something to do with the measurement system, reducing loss) as well as much reduce the risk of sabotage, as the pipeline is predominantly underground. The risk of sabotage is anyway political and ultimately the governement makes the necessary payments to protect the industry bar a few intermittent clashes - we're not talking Iraq or Syria here. Seplat has a good track record of dealing with these interuptions.
Seplat's gas connects into the core pipe network to the most industrialised areas of the country including Lagos - as far as I know Savannah's does not, but perhaps I stand to be corrected?
Seplat's debt is predominatenly in USD and financing costs are very low for the country - the banks are falling overthemselves to lend to Seplat.
NPDC has 55% of all oil blocks in the country, call it a rent - the operator is Seplat or whoever is the private entity or consortium that owns the remaining 45%.
Slow payment of NPDC receivables has been a sore point for the industry for some years, but they ultimately cough up and Seplat has improved its receivables days significantly in recent years. Again, it's an industry wide annoyance, not an existential threat.
The Cardinal related litigation is irrelevant noise it seems.
Seplat's reputation in the domestic market and support for major capex projects such as ANHO provide a lot of cover with regard to government and regulator relations.
I really hope SAVE succeeds in their Niger project as well as win some additional industrial clients for their gas in Nigeria so that they can delevearge their balance sheet.

[swanvesta] 19/2/2021 13:41

Relevant post from SAVE bb, with a few concerns:

ZENGAS
19 Feb '21 - 12:34 - 1897 of 1899
0 7 0
Re Seplat/Save

It's nothing to do with infrastructure in so called Nigerian backwaters. Maybe take a look at where so many power stations are located to recieve gas that goes out across the country and that gives a better idea, not to mention Lafarge and other industries. It's not just about selling gas to all and sundry, but having guarantees that we are paid. Either way there will be more than enough choice for growth.

Niger may be land locked but of no consequence now as i see it. No different than when neighbouring Chad didn't have any oil infrastructure, not landlocked but still had to build a very significant pipeline.

Niger initial small 20k bopd refinery but a major export pipeline started via Benin and there is still an option to connect to the Chad pipeline. Railway option into N/Nigeria or additional pipeline. Hasn't been an issue for me and the Chinese being there with it's amount of reserves makes it compelling in terms of monetisation.

Seplat rating from Fitch. hxxps://ng.investing.com/news/commodities-news/fitch-affirms-seplat-at-b-outlook-positive-307622 This covers almost everything.

Seplats most of their oil production is in the high risk Niger delta. "The company's primary export route, was shut down for 305 days in 2016 and more than 182 days in 2017, adversely affecting operations". You only have to google Niger Delta oil threats and see it's always in the background and last month a threat of full scale attacks across the delta. hxxps://www.energyvoice.com/oilandgas/africa/289576/niger-delta-militants-nddc/ So if anything was to knock out their oil for any length of time with a significant amount of debt so close to maturity it's a risk to weigh up. (The new Escravos p/line will help on completion and also reduce oil theft).

7E operated the same oil based business as Seplat and was in part responsible for it's failure i beleive and Save did not buy into those.

I've viewed Seplat as higher risk based solely on having only one country of operation and where its main infrastructure is. But there again, ones mans risk is anothers opportunity/investment case.

Sepalt supplying 30% of Nigerian power on a 50-50 basis with it's partner NNPC so imo they could focus less on guarantees given NNPCs involvement so might invoke more risk.

Reports in AEI 18/12/20 of setbacks with the Eland acquisition. All top execs went. "OML 40 in trouble. The Elcrest joint venture, formed by Eland and Starcrest, has since 2015 held 45% of OML 40, which is operated by NPDC (55%), a production subsidiary of the state-owned Nigerian National Petroleum Corp (NNPC). An explosion occurred at the site in early November, cutting output by several thousand barrels per day. Contacted, Seplat said the blast had had a "very limited impact" on production, without going into details. This wasn't the first mishap at the site: an earlier explosion in June 2020 cost the lives of seven people and halted production for several weeks." (Much longer artictle).

Then Dec/Jan and the Cardinal Drilling Co issue and the bank so none immune from litigation.

As a company Seplats got great assets but for me to make a sizeable personal investment i find it exposed by being in just one country and predominantly in the highest risk area of it. I feel the Nigerian stock exchange listing can weigh on it depending on the countrys circumstances and what impact Nigerian investors might have on it. In terms of their gas growth it should though offer a huge diversification.

Saves infraststructure well away from problematic areas in the S/E but that's not to say it's ever risk free. Having a 2nd country of operation and seeking a likely 3rd country for diversification with significant production potential greatly spreads risk profile.

As for a Save div - Theres some $12m minimum dollars in oil revenue last year at the lows. Save Gas contracts are in 'dollars' and those paid in Naira converted to dollars and any shortfall on exchange rate made up so not entirely correct that funds can't be repatriated though there is a CB dollar shortage. In terms of any div, $3m was recently pencilled in by one broker and Company also recently said under consideration for this year so comments on a div not being payable is not correct.

Save might lag Seplat in terms of production but i made a post last year where i felt they'd be in similar production terms as Kosmos or Tullow without anything near their massive debt loads. I think this is what has given Save a high diversified blue chip investor base with the recent addition of Vitol among them. Each company has its own merits/risk so down to the individuals perception of risk imo.

[swanvesta] 19/2/2021 10:59

Thanks for your reply. I stuck my toe in yesterday as it does look like a phenomenal cash generator - just have a couple of Qs regarding the direction of travel recently. Mostly that seems to be due to oil prices last year, but also constant delays with pipelines and problems with the Eland assets. OML40 seems rather accident prone, with the 7 deaths last July and then an explosion in November.

Also, can you explain how the $400m+ loan from Westport is to be repaid? I understand we get the whole of Elcrest's net cashflow from OML40 until the debt is repaid, but how does that fit with the repayment holiday? Is it that the extra cashflow will count as repayment in the meantime, and then in 2022 cash top-ups may/will become due? And what do we know about Elcrest in terms of their ability to pay? Google doesn't seem to come up with much.

[seatank8300] 19/2/2021 10:44

Seplat is already producing oil which generates millions of dollars legally allowed to be paid out to shareholders, while their gas business generates Naira (priced in dollars) that funds their doemstic growth capex for the future. ANOH will produce a mix of gas and condensate (which will generate dollars). Seplat sells its gas into the major part of the main grid where most industrial users are, whereas I believe SAVE's gas infrasturcture supplies a relatively smaller market where there isn't a great deal of industrial activity currently. It's not to say SAVE doesnt have an interesting story, but Seplat is an altogether different animal in my view. Seplat has a strong balance sheet, profitable producing fields, pays out large dividends already, and is likely to further consolidate the domestic industry. On my calculations at the current oil price it's trading on <3.0x PE, which is insane value for the cornerstone of Nigeria's domestic energy industry.

[swanvesta] 19/2/2021 10:19

Hmm, not sure you can call the south east 'backwaters', especially with the Ibom deep sea port to be built there? And you talk about gas but SAVE also have a lot of oil to be developed in Niger. And aren't SEPLAT also moving into gas big-time with the ANOH project? I get the impression gas has a more certain future in Nigeria, if not over the world in general.

[seatank8300] 18/2/2021 23:28

I posted an explanation on the LSE discussion board about the share pricing differential.

The difference between SAVE and Seplat is:
1. SAVE's infrastructure is located in the backwaters of the country with relatively little industrial activity
2. SAVE primariy sells gas, whose price is set in dollars but paid in Naira, and Naira can not currently be repatriated offshore, so there is no chance of a dividend until the central bank changes it's policy (it's been years already); whereas Seplat produces oil which is priced in dollars and paid in dollars, and therefore profits can be repatriated at the company's will to pay us shareholders dividends, which they do.

That's the difference; but I still like SAVE, it's very cheap and in the long run it should work out well. Seplat though is a totally different and superior beast - it's a major infrastructure asset, an indigenous consolidator in the sector, very profitable, with a strong balance sheet and paying a big dividend that is likely to rise considerably over the coming 12 months. Easy choice between the two in my view.

[spooky] 18/2/2021 12:26

Can anyone explain the above market trades over the last couple of days?

[krall] 16/2/2021 12:17

Yes, very easy to get hooked.

SEPL´s quaterly webcasts on the website are also high class with good Q&A sessions.

hxxps://seplatpetroleum.com/investors/results-centre/

[chopsy] 16/2/2021 09:11

Thanks for that interesting interview. Compelling, isn't it?

[krall] 16/2/2021 08:38

This Webinterview is a few months old, CEO Roger Brown gives a very good summary of the company and the market in Nigeria.

[swanvesta] 15/2/2021 22:37

SAVE have world bank guarantees on the bulk of their revenues. Also located in the richer industrial part of the country? Where they're building the new deep water port.

[krall] 15/2/2021 18:17

Also in both, in favor of SEPL. Both very well set up for taking advantage of the huge domestic NG growth in Nigeria. And by no means competitors, SEPL main route is towards northwest/west, SAVE has for now their pipeline system in south/southeast. Market is more than big enough for both for years to come.

SEPL oil bizz is very strong, and there´s some nice, very sizeable exploration prospects to start of with in OML 40, hopefully we see a well there in 2021.
I think Nigeria´s oiltargets are more exiteing than frontier work in landlocked Niger.

On the negative Sepl has some bad hedges, not big contracts but low for Q1 2021.

If you run the numbers, im not completly updated, you will see that SEPL has the lower reserv and flowing barrel valuation.

Ive held positions in Nigerian oilers like Mart, MP Nigeria, HOIL earlier with mpst of the times good success, but be prepared to expeince hickups, in Nigeria they will come in one from or another. Key thing is to stay with wellfinanced companies.

[chopsy] 15/2/2021 16:48

I am in both, but in the ratio 50:1, in favour of SAVE. I'd like to get a bit more here, maybe buy on dips. The uptrend does seem to be well established, and it is a sectoral thing, but I know very little so far here. They supply 30% of gas for power in Nigeria, so a much larger share of the pie so far than SAVE. If the ANOH project is a success, we may well see 200p this year. But SAVE clearly has multi bagger potential.

[robsy2] 15/2/2021 15:52

This looks interesting as does SAVE . I am weighing up my options, neither,one or the other or a bit of both? any advice welcome.
Best

[chopsy] 12/2/2021 16:37

Sideways April 20 to December, new uptrend established since then. I'll try to buy on dips.

[krall] 06/2/2021 19:35

Latest news on the ANOH project -

hxxps://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=3868017&;lang=en-GB&companycode=ng-sepl&v=redesign

The last part of financing is now closed. Over subscribed and provided by a consortium of seven banks. The Anoh project is big, ths single largest domestic project targeting a lot of reserves, big production numbers for drygas, condensate and LNG.
To bring gas to the big domestic markets in Lagos/Abudja they need to link it up with a new huge pipeline the “OB3” that will transport the gas from AHOH to Seplats Oben gas infrastructure and from there to end users. The OB3 pipeline is critical and needs to in use AND it is a project Seplat is not involved in and have no control over. There has of course(...) been delays it has been 90% complete for some years now, the old contractors failed to make the Niger river crossing complete 4 or 5 times. Last year they where set aside and changed to a Chinese pipeline company and it is supposed to be commissioned any day now.

Point is – I don’t think Seplat and partners would have closed this last part of financing unless they are as sure as they can be that the pipeline will be ready to deliver gas when ANOH is scheduled for start up in Q4.

The news release has some interesting info – “Following a cost optimisation programme, the AGPC construction cost is now expected to be no more than US$650m, inclusive of financing costs and taxes, significantly lower than the original projected cost of US$700m”, a testament to Seplats project team and how many times have we seen a project in Nigeria coming in below budget.

-“Seplat is a leading provider of natural gas to Nigeria's power sector, supplying around 30% of gas used for electricity generation.”, that´s before the ANOH comes on stream.

I really think SEPLAT is at the right place at the right time, they are way ahead of almost all serious competitors working with Domestic gas in Nigeria. They made the gamble some 10 years ago buying blocks from Shell when gas was selling for less than 1$, business was big time negative, now it has changed it´s has very healty economics.

Okechukwu Mba, Managing Director of ANOH Gas Processing Company said:
"Successfully closing the US$260 million debt facility means that the ANOH project is now fully funded. Once operational, AGPC will be a significant supplier of gas to Nigeria's power sector, supporting local employment and the cleaner generation of power for Nigerian homes and businesses. We conservatively estimate that the gas from AGPC will be enough to generate electricity for more than 5 million people".

Roger Brown, Chief Executive Officer of Seplat, said:
"Completing the funding of ANOH is an important milestone for AGPC. The ANOH development is one of the government's Seven Critical Gas Development Projects and our involvement provides a clear path towards strengthening Seplat's position as Nigeria's leading indigenous diversified energy producer. It will help us drive, alongside our government partners, Nigeria's transition to cleaner, less expensive power generation. We are extremely proud to partner with the Nigerian Gas Company in this strategically important project, which will create jobs and prosperity in the Nigerian economy.
Seplat will continue to diversify its business and invest in gas to help Nigeria develop its own natural resources, which in turn will drive more sustainable social and economic growth for a young, rapidly growing population."

[krall] 06/2/2021 15:52

Looking at the basic numbers -
Mcap $630
Cash position of $213m/Debt $692m
EV - $1109 m
Annual dividend of $0.10 , 9.5% yield. (Kept at same level in 2020)
1P2P reserves 509 mm for a reserve valuation of 2,2 USD/barrel
Production 2020 , 50000 boepd for a flowing barrel valuation of 22 USD/barrel.
Operatons costs – 8,9 USD/barrel

Receivables/loan repayments due from Westport of $400m (2022 to 2024) from the Eland acquisition.

Yes Nigeria has it´s challenges above ground, but Seplat looks really attractive right now.

One must keep in mind Sepl has been stress tested more then once – pipeline interruptions with the Forcados pipeline being down for more than a year, theft, delayed payment from partners, SARS, Covid and more. They have sorted out the issues and now it looks really good with oilprices at a healthy level and some key trigger to be finalized during 2021.