Reason Why Seplat Share Price Gained 53% In 10 Days

Seplat Share Price

Seplat Petroleum Development Company has had a whirlwind 2016 with the share price tanking to an all time low of N153. At the time, it seemed as though the share price will break another major support and start trading below N100. However, things changed dramatically for the stock in the last 6-8 days. In this time the stock has gained a remarkable 56% with investors who took position looking at their portfolio and smiling.

It appears two major factors may have contributed to the sharp rise in the share price of Seplat. First is that oil price rebounded towards the end of last week over news that Russia and OPEC were looking at the possibility of cutting back on crude oil production. The news was refreshing to the oil markets with the price of crude rising to as high as $34.

Another possible reason is that the Nigerian stock market appears to have stopped the hemorrhage that was January. Rather than report straight losses, the index is now reporting a mix bag of losses and gains. As stocks climb out of one of the worst bearish holes in the last three years, the likes of Seplat are bound to feel the band wagon effect. The share price is also relatively undervalued and as expected will attract bargain hunters.

Lastly is Seplat themselves. The company reported that it had won the case against Britannia U following the verdict of the Supreme court. This was a case that had potential revenue implications for the company and it was essential that they won it. The CEO explained this much

“We are naturally very pleased with today’s ruling, not least because it means we are now free to deploy our proven operating expertise to realise the significant reserve, production and value potential these blocks hold.

To give an idea of scale, we estimate these blocks to hold recoverable volumes of around 200 million barrels of oil equivalent net to Seplat, a material volume by any standard and one which has now been unlocked for us.”

Seplat share price was flat on Thursday and it is unlikely that the rally will continue. Investors are probably now looking into the direction of its earnings which still remains a major concern for the company.

The post above and its ensuing comments, if any, is purely the opinion of the writer(s). It therefore should never be considered as an investment advise of any sort. If required, readers should please consult a competent professional financial adviser for any investment decision.


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