By Adedapo Adesanya
The Naira recorded a 0.2 per cent or N1 fall against the United States Dollar at the Peer-2-Peer (P2P) segment of the foreign exchange (forex) market on Tuesday, closing at N576/$1 in contrast to N575/$1 it traded at the last trading session.
The demand for cryptocurrencies is making investors pay more Naira to get a Dollar at the P2P forex market. The invasion of Ukraine by Russia has triggered the appetite for digital coins and holders in Nigeria are requesting more Naira to release theirs.
Yesterday, eight of the 10 tokens tracked by Business Post across several trading platforms appreciated in value, with Bitcoin (BTC) rising by 5.3 per cent to sell for N25,125,000.55, followed by Binance Coin (BNB), which recorded a 4.8 per cent appreciation to trade at N169,471.40.
Ethereum (ETH) saw its value rise by 4.7 per cent to N1,737,833.92, Cardano (ADA) made a 3.5 per cent growth to sell at N564.94, Dogecoin (DOGE) improved by 3.3 per cent to sell at N78.23, Dash (DASH) gained 2.9 per cent to trade at N56,945.24, Litecoin (LTC) recorded a 2.0 per cent appreciation to trade at N65,425.50, while Ripple (XRP) recorded a 1.9 per cent jump to quote at N491.45.
But Solana (SOL) retreated during the session by 0.4 per cent to trade at N57,487.40, the United States Dollar Tether moved downwards by 0.1 per cent to trade at N584.91.
Meanwhile, at the Investors and Exporters (I&E) segment of the FX market in Nigeria, the local currency traded flat against the greenback on Tuesday at N416.67/$1 amid a significant increase in the demand for forex at the window.
Data from the FMDQ Securities Exchange showed that the turnover for the session was $121.54 million, 51.3 per cent or $41.22 million lower than the $80.32 million reported at the previous session.
Equally, the value of the Naira to the Pound Sterling remained unchanged at the market yesterday at N558.23/£1 just as the Euro also closed flat against the domestic currency at N466.37/€1.
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Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.
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By Adedapo Adesanya
The price of crude oil skyrocketed by more than 7 per cent as the Organisation of Petroleum Exporting Countries and allies (OPEC+) agreed on Wednesday to stick to their plans of small output rise in April, defying calls for an increase in supply to the market even as prices rally to multi-year highs on Russia supply disruption fears.
As of the time of filing this report, Brent was up 7.7 per cent or $4.50 to $115.9 per barrel while the United States West Texas Intermediate (WTI) was up by 7.2 per cent or $4.42 to $113 per barrel.
The decision to stick to its current output level comes as Russia’s intensifying war with Ukraine entered its seventh day, with fighting raging across the country.
The producer alliance said it had agreed to adjust the upward monthly overall output by 400,000 barrels per day for the month of April.
Although the decision had been widely expected by analysts, the market still clung to its bullishness as OPEC alone accounts for around 40 per cent of the world’s oil supply.
The group is in the process of unwinding record supply cuts of roughly 10 million barrels per day which were put in place in April 2020 to help the energy market recover after the coronavirus pandemic effect on crude demand.
Ahead of the meeting, the International Energy Agency (IEA) said it would move forward with a 60-million-barrel global release to offset energy market disruptions caused by international sanctions against Russia over its war with Ukraine. The U.S. has said 30 million of that total will come from the U.S. Strategic Petroleum Reserve.
The release of oil from the U.S. and other IEA members reflects the magnitude of expected disruptions to global energy markets.
Sanctions imposed on Russia over its invasion of Ukraine have so far been carefully constructed to avoid directly hitting the country’s exports, although there are signs the measures are inadvertently prompting banks and traders to shun Russian crude.
However, some Western oil majors announced plans to pull the plug on their Russian operations.
Analysts note that top oil producers in the Gulf countries led by Saudi Arabia and the United Arab Emirates are unlikely to pursue policy positions on the Russia-Ukraine conflict that end up causing a major rift in the oil market management framework which is key to the stability of revenues over the long term.
On Wednesday, the US imposed new export curbs on specific refining technologies, intended to hurt Russia’s oil refining sector down the road.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited moderated by 0.26 per cent on Wednesday as investors quickly booked profit from the gains recorded at the market in the past trading sessions.
It was observed that traders sold off some shares, including Lafarge Africa, Access Bank and others during the session, allowing the bears to take over the stock market from the bulls and at the close of transactions, there were only 15 price gainers and 34 price losers.
The heaviest price loser was Niger Insurance as its value went down by 10.00 per cent to 27 kobo, International Breweries declined by 9.73 per cent to N5.10, RT Briscoe lost 9.09 per cent to settle at 70 kobo, NGX Group depreciated by 8.70 per cent to N23.10, while Cornerstone Insurance fell by 8.57 per cent to 64 kobo.
The highest price gainer for the day was Royal Exchange as its equity price rose by 10.00 per cent to N1.65, Seplat gained 9.33 per cent to sell for N1034.00, Multiverse grew by 9.09 per cent to 24 kobo, NEM Insurance improved by 8.38 per cent to N4.14, while FCMB rose by 8.13 per cent to N3.46.
According to data obtained by Business Post, the insurance sector appreciated during the session, the energy index closed flat, while the banking, consumer goods and industrial goods counters depreciated by 1.32 per cent, 1.28 per cent, 0.55 per cent.
The losses posted by these three key sectors weakened the All-Share Index (ASI) of the bourse by 121.94 points to 47,360.79 points from 47,482.73 points and deflated the market capitalisation by N66 billion to N25.525 trillion from N25.591 trillion.
At the market yesterday, Transcorp was the busiest stock as it sold 29.2 million units for N32.6 million, United Capital transacted 28.3 million units worth N374.2 million, Access Bank exchanged 17.7 million units for N181.5 million, Zenith Bank traded 17.5 million units valued at N470.7 million, while FCMB transacted 17.4 million units worth N57.6 million.
In all, investors transacted 280.0 million stocks worth N4.2 billion in 5,620 deals at the midweek session in contrast to the 370.5 million stocks worth N7.9 billion transacted in 6,045 deals a day earlier, indicating a decline in the trading volume, value and number of deals by 24.45 per cent, 46.99 per cent and 7.03 per cent respectively.
Seplat Energy Plc on February 25 announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU), a subsidiary of ExxonMobil.
In its recent insight, Wood Mackenzie, a trusted intelligence provider that empowers decision-makers with unique insights on the world’s natural resources said in the energy transition era, both ExxonMobil and Seplat will be pleased with the deal, adding that the deal offers huge upside for oil as well as gas.
Also, Wood Mackenzie, the leading research and consultancy business for the global energy, power and renewable, resurface, chemicals, metals and mining industry, said because this deal is a corporate acquisition, the Nigerian National Petroleum Company (NNPC) Limited has no rights to pre-empt a deal under the Joint Operating Agreement (JOA), which governs the JV, rather than ministerial consent would be the only hurdle remaining, “although nothing can be taken for granted”.
MPNU has a 40 per cent operated interest in a Joint Venture with NNPC (60 per cent). The JV includes OMLs 67, 68, 70, 104, the Qua Iboe oil export terminal. MPNU also has a 51percent interest in the Bonny River NGL Recovery project.
Seplat has agreed to pay $1,283 million, plus contingent consideration of up to $300 million. The effective date is 1 January 2021 and completion is expected in H2 2022, pending ministerial approval. Seplat’s debt financing of $825 million is fully committed by a syndicate of Nigerian and African banks, and energy and commodity traders.
Implications: If it completes, the deal will be transformational for Seplat Energy. It is already the leading indigenous company in Nigeria, but this will triple its working interest production to over 140,000 boe/d. In total, Seplat will operate 15percent of Nigerian oil production.
Crucially, the deal diversifies its operations into shallow water, which is largely devoid of the thefts afflicting its onshore operations. Although this is Seplat’s first offshore acquisition, it will acquire all of MPNU’s Nigerian staff, thus allaying any concerns about its operational capabilities.
Our equity-based valuation of MPNU – excluding the Qua Iboe terminal – is $870 million (discounted 10 per cent, January 2021, $50/bbl long-term).
However, at $70/bbl, we value the company at $1.678 billion. In the energy transition era, ExxonMobil will be pleased with this deal. But so will Seplat, as the deal offers huge upside for oil as well as gas.
The portfolio includes a massive 1.3 billion boe of contingent resources, 75 per cent of which is gas. Less than half of its 70 fields have been developed. Although the JV has been in production since the early 1970s, its maturity relates more to the extensive infrastructure than the reservoirs themselves. Yes, many fields are in decline, but they have also been under-invested for over 20 years.
Seplat has built a business turning around the Majors’ unwanted assets, a process it started in 2010. With the acquisition, its portfolio becomes very oil dominated. ExxonMobil refused to be drawn into the high-risk domestic gas market and had no exposure to NLNG. As a result, the acreage has the highest concentration of gas flaring in the country. Seplat, a listed company, will need to tackle this immediately.
Longer-term it will look to develop access into the domestic market in line with government policy, while there is also scope for LNG too. An FLNG project at Yoho on OML 104 was already under discussion before the deal.
That could now accelerate, while long-term supply to NLNG is another option.
There is also a possible upside from the Petroleum Industry Act (PIA) fiscal terms. Our analysis shows the JV portfolio would more than double in value if Seplat converts. However, this is far from certain, since it would have to relinquish up to 60percent of its acreage and much of the resource it has just acquired. A thorough review of its now extensive portfolio to identify the most advantaged barrels will be an urgent priority. The deadline for converting to the new fiscal terms is February 2023.
The deal is not without risks either. Seplat will have to find billions of dollars in the longer term to transform its portfolio and some rationalisation could follow. NNPC will of course be Seplat’s JV partner, and its ability to fund its 60 per cent equity longer term as it transitions to a limited liability company will be just as critical to the success of the deal.
ExxonMobil has been planning to sell its JV business for years, and its exit is overdue. The shallow water JV assets have long been non-core and are some of the highest-cost barrels in its global portfolio.
Although emissions were not a key driver for selling, the deal will help with its recently announced net-zero targets for scope 1 and 2 emissions.
The portfolio has an intensity of 48 kgCO2e/boe, more than double its global average.
It can now focus on renegotiating workable fiscal terms for its Nigerian deepwater assets like Erha and Usan. However, if that does not end successfully, a country exit could be on the cards, given its deepwater options in Guyana and Brazil.
No NNPC pre-emption
Because this is a corporate acquisition, NNPC has no right to pre-empt a deal under the Joint Operating Agreement (JOA), which governs the JV. This means that ministerial consent would be the only hurdle remaining, although nothing can be taken for granted.
Shell’s ongoing divestment of its subsidiary SPDC, similarly rules out pre-emption. If NNPC wants to acquire that portfolio, then it will have to out-bid the competition. If successful in raising up to $5 billion with Afrexim Bank it would have the firepower to do just that, and massively strengthen its position in the onshore delta.
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