Despite the weak Q1'24 performance, largely driven by the impact of timing of lifting and a lower working interest production of gas from OMLs 4, 38 & 41, we remain optimistic about SEPLAT's ability to achieve production levels of 50.04 thousand barrels of oil equivalents per day (kboepd), above the midpoint of management's 44,000 to 52,000 boepd guidance set for FY'24. Our view is supported by:
- The increase in 2P reserves following an independent assessment by Ryder Scott Company;
- The commencement of production from the previously drilled E&A wells, Sibiri-1 ( contributed to Q1'24 output) and Sibiri-2 (expected later in the year);
- The expectation for Abiala marginal field to produce its first oil in Q3'24;
- The potential delivery of the 13 new wells (11 oil wells and 2 gas wells) across operated and non-operated assets in line with the 2024 drilling program (e.g. the Ovhor-21 well was completed in Q1'24);
- The resumption of preliminary operations of the Trans Niger Pipeline (TNP), which could drive higher output from Eastern assets;
- The expectations of the first gas from the ANOH Gas plant in Q3'24 and;
- The expansion of 3rd party gas sources to maximise the utilisation of the Oben and Sapele gas plants' processing hubs (81.0% completion as of Q1'24).
Overall, we arrive at a 12-month target price (TP) of N4,187.20 and a BUY rating on the counter. Our TP implies a potential upside of 41.4% relative to the current market price of N2,962.30.
