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Analysts Review Chevron-NNPCL JV Drilling, Ghana's Rating Downgrade and Losses in Global Tech Industry

Dec 05, 2022   •   by   •   Source: Proshare   •   eye-icon 135 views

Being an Analyst Note issued by Proshare Research on December 5th 2022


Chevron NNPCL JV to Increase Domestic Oil Production on New Financing

A sign of confidence might be returning to the Nigerian oil and gas industry. Chevron Nigeria Limited (CNL) and Nigerian National Petroleum Company Limited (NNPCL), operators of a joint venture, have secured a US$1.4bn financing for the NNPCL-CNL joint venture infill drilling programme in the offshore and onshore Escravos area from 2022 to 2026. The new investment of CNL raises optimism that other IOCs may be encouraged to reinvest in Nigeria's oil and gas. According to the GM of Policy, Government and Public Affairs of CNL, Esimaje Brikinn, the project, which covers the drilling of 37 wells, would help to monetize the country's reserves. It would increase the domestic gas supply in alignment with the operators' lower carbon ambitions. Although the programme reflects a change in the initial sentiment of the major oil company towards investment in Nigeria, analysts fear the history of the NNPC in lagging in its JV obligations could undermine the prosperity of the drilling. Moreso, the shadows of legacy issues in the industry may also cap the gains from the project. Howbeit, the transition of the NNPCL may be a game changer for its new JV projects.


Rating Agencies Downgrade Ghana's Foreign and Local Bonds

Following Ghana's debt restructuring proposal released in November, Moody's rating has downgraded the country's long-term issuer ratings to Ca from Caa2 or further junk status. The downgrade by the rating reflects the expectation that private creditors will likely incur substantial losses with the restructuring plan. The proposed restructuring states that investors will lose 30% of their principal and forgo some interest in foreign and local bonds. The Ca rating is the second-lowest score at Moody's. However, Moody's changed the outlook rating to a stable with the assumption that the debt restructuring would lead to funding from IMF that would prevent default. Other rating agencies followed suit, Fitch rated it two notches above default at CC, and S&P Global Ratings assigned CCC+, seven levels into junk. The downgrade will further raise the bonds' yields and affect future issuances' subscriptions.  


Global Tech Industry Loses US$7.4trn in One year

The global tech industry has lost US$7.4trn in one year after peaking during the COVID-19 pandemic. According to CNBC, in 2021, the Nasdaq Composite had just peaked, doubling since the early days of the pandemic. Hiring was booming, and tech employees have been prized with the high value of their stock options. Investors have lost roughly US$7.4trn with interest rate hikes choking access to capital and soaring inflation. Companies are in cash preservation mode, leading to thousands of job cuts a month and a surge of layoffs in November, amounting to 51,215 tech layoffs from 203 companies. 


Analysts believe that Africa has not been isolated from the global tech reality. Reduced funding, high global inflation, and the ongoing Russia-Ukraine war influencing economic response have reduced start-ups' funding. It is likely to get worse towards the end of the year between now and when things start improving, start-ups without solid bases are at riskAccording to Africatech investments into Nigerian start-ups fell 25year-on-year from US$1.45bn as of October 31, 2021, to US$1.16bn in the corresponding period of 2022.


Elon Musk, Twitter Owner, Reaffirms Support for Dogecoin

The cryptocurrency market has been trading in the red zone couple of weeks back, with some top performers occasionally selling in the green zone. Among them is the world's first-ever meme coin, Dogecoin, which did not only surge but also beat Bitcoin and Ethereum gains after tech billionaire Elon Musk reaffirmed its support for the crypto asset. Dogecoin is one of the top-performing crypto assets in the industry despite the bear market. Following the statement Elon Musk made on Twitter space on Saturday when he was asked if the social media platform would allow crypto payments, he replied with 'Dogecoin to the moon, meaning that there is a huge possibility that Dogecoin would surge. This response earned cheers, especially from DOGE holders, and Dogecoin saw a price jump 0f almost 4.8%, trading at $0.1044. Dogecoin has gained a 2.5% increase in the last 24hrs with a market cap of $14.3bn. Analysts believe Dogecoin could see another significant increase in price if Elon Musk, popularly known as Crypto Evangelist, acquire Doge.


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