When was the SEP Initial Public Offering (IPO) and at what share price was it successfully achieved?
SEP went public on 1 February 2012 at a share price of Rp. 610
The SEP ticker symbol is ESSA as traded on the Indonesia Stock Exchange (IDX)
SEP currently has 1,100,000,000 shares outstanding
LPG, also known as Liquefied Petroleum Gas, consists of Propane (C3H8)and Butane (C4H10) hydrocarbons. In areas where piped gas is unavailable, LPG is main source of energy for heating and/or cooking. LPG can be stored and transported as a liquid via shipping tankers, tank trucks and portable canisters. In Indonesia, the bulk of LPG is used for cooking.
Condensate is mixture of hydrocarbon liquids that can be extracted from natural gas, and can also be known as Light Naphtha In the case of SEP, Condensate is primarily made up (mix) of Pentane (C5H12), Hexane (C6H14)and Heptane (C7H16) hydrocarbons. Condensate can be used as a raw material towards further downstream processing of fuels and petrochemicals.
SEP sells LPG in bulk to PT Pertamina (Persero) that are transported through 8-15 ton tank trucks
Condensate is not sold but returned to Pertamina EP in lieu of a Handing Fee
SEP’s LPG selling price is linked to Propane and Butane prices of CP Aramco, the global reference price for LPG. The price is adjusted as per the Propane and Butane composition.
There is a strong correlation between LPG and Crude Oil prices. However, in extreme circumstances, a delinking between LPG and Crude Oil price is evident as Suppy & Demand forces become a major factor in setting the LPG Price.
SEP’s 50% capacity increase has been achieved through more efficient technology rather than increased natural gas feedstock. The new technology application increases the extraction efficiency from 60% previously to 95% post-expansion. As such, SEP is confident that all its feedstock requirements until 2022 can be met.
We continue to explore opportunities whereby SEP can play a larger role in contributing to domestic LPG supply. These opportunities may arise at our present location or at other locations in Indonesia.
Shale gas has dynamically changed the supply and demand dynamics of oil & gas around the world. The advent of Shale Gas is causing a long-term adjustment of global energy prices including LPG. However, due to the hydrocarbon composition of Shale Gas we do not expect there to be significant change to the LPG supply chain.
LPG demand in 2014 was 6.2 million MT, of which 2.5 million MT was supplied domestically and 3.7 million MT was imported. Demand is expected to increase to 6.97 million MT in 2015 with imported LPG supplying 4.2 million MT. It is important to note that imported LPG has additional costs of transportation and a 5% import duty, making it significantly more expensive to buy than domestically produced LPG.
The Company doesn’t provide earnings guidance.
SEP will continue to prioritize funds for its project investments and capital expenditure. Should any surplus remain thereafter, the Company would look at issuing a dividend. Due to the large funding requirement of the Company’s expansion and investment into PT Panca Amara Utama, SEP has not issued a dividend for the past 3 years.
SEP’s revenue and major expenses are denominated in USD. Rupiah denominated expenses make up less than 10% of total expenses