Hi all, here are my thoughts on where WPL is and the strategic...

Hi all, here are my thoughts on where WPL is and the strategic issues facing WPL

Issues in WPLs control

1. New CEO

2. Quarterly report

3. Purchase of Senegal stake from FAR

4. Sell down of Senegal stake

5. Sell down of Pluto

Issues outside WPLs control

6. Credit rating
7. OPEC+ production
8. Senegal unrest

other
9. Maintenance

1. the new CEO is announced soon. Hopefully it's the current Santos CEO he seems
well respective

2. The quarterly report will, unfortunately, not knock it out of the park as the delay in gas pricing. Below shows that Brent in the last quarter of 2020 was about the same as the 3rd quarter 2020. However there was the brief spot rally in Jan and Feb


3. The FAR share holder meeting is scheduled for the 16th of April (this Friday). All going well there won't be anymore surprise nonbinding bids at the 11th hour. If FAR shareholders do vote in favour, which I think the major holders will vote in favour, then WPL will have the majority stake in the largest oil discovery of 2014. $45 million for FARs share is a very good deal. If they vote against I think we'll have to wait to June for FAR to formally default and then it's free!

4. After securing FARs stake I expect WPL to undertake a strategic review of the costs and magically find that there are efficiencies that can be achieved, bring down the Breakeven point and significantly boosting the sell down price.

WPL paid $300m upfront for Crain's 40% which is $7.5 million per % and $45 million for FARs 14% which is $3.2 million per %. Not sure what the break even production is but any material decrease will increase the sell down price. Also any appreciation in the oil price would also be helpful.

5. I haven't seen anything in the media about this lately so, hopefully no news is good news. How long does everyone expect this to take? Is it possible that a deal could be announced this financial year?

6. Sell downs and the higher oil price will no doubt see our credit worthiness improve. The only is that S&P have gone a bit woke on the oil and gas industry

7. The truce in OPEC+ seems to be holding and the announcement to increase supply as we head into the Northern hemisphere summer should hold US frackers at bay for the short term

8. I was a bit surprised by how quickly the unrest flared in Senegal. It has/had a reputation for stability hopefully the president doesn't seek to change the constitution for a third term

9. Maintenance, this is going to reduce output. But cant find an estimate of how much the impact will

Conclusion
WPL faces some head winds and uncertainties but some of these should be resolved in the next month and others over the next. All in all pretty happy with my investment decision, happy to hold/accumulate from here