SEPLAT Petroleum Development Company Plc (“Seplat” or the “Company”), a leading Nigerian independent oil and gas exploration and production company held its 2017 Annual General Meeting (AGM) at the Civic Center on Wednesday, June 6, 2018 in Lagos.
Seplat, which was impacted by disruptions to its export routes resulting in an extended force majeure at the Forcados terminal, however, announced a return to full year profitability in 2017.
According to the company “Profit before tax for the year stood at US$44 million and reflects the return to profitability in the third and fourth quarters where net quarterly profit before tax of US$24 million and US$46 million respectively offset the US$26 million loss before tax recorded at mid-year.”
Although global oil prices remained volatile in 2017, with Brent starting the year around the US$55/bbl level and trading down to a low of around US$45/bbl mid-year before, recovering steadily thereafter to exit 2017 at the US$67/bbl level, average daily productions rose considerably with the company’s average working interest production now standing at 36,923 boepd representing an overall increase of 43% year-on-year.
Speaking on his company’s performance, Seplat CEO Austin Avuru announced “I am pleased to report that Seplat made a return to full-year profitability in 2017, registered strong cash flow performance and significantly strengthened the balance sheet. In a year of contrast, we were plagued throughout most of the first half by force majeure at the Forcados terminal…Our proactive and decisive management coupled with the strong underlying fundamentals of the business have seen us emerge from an exceptionally challenging period a much fitter and stronger business that is well equipped to deliver long-term value for our shareholders.”
As usual, gas was a key revenue driver underlining Seplat’s gas domestication strategy and demonstrating the robustness of gas as a key source of growth and diversification, as well as delivering a much-needed reliable supply of gas to the Nigerian power sector.
Seplat’s gas business made a record contribution with revenues of US$124 million, which accounted for over 27% of Seplat’s total revenues. Early in 2017, the company completed and commissioned the Phase II expansion of its Oben gas processing hub, which added a further 225 MMscfd of processing capacity to take total capacity at the Oben plant to 465 MMscfd. Together with 60 MMscfd capacity at the Sapele plant Seplat now operates 525 MMscfd of gross gas processing capacity.
In his comments on the company’s return to profitability, ABC Orjiako, Chairman of the Board, emphasised the contribution of gas to overall growth and profitability “I am pleased to report that in 2017 we made good progress as we reviewed our vision, mission and strategy towards refocusing the Company on our key priorities: to de-risk future cash flows through diversification of oil export routes; invest in and scale up our domestic gas business; maintain a liquidity buffer while continuing to reduce debt; keep tight financial control with discretion in spending; and position Seplat with a stabilised platform for sustainable growth even in a harsh operating environment… Our strategy to diversify and grow our sources of income through the expansion of our gas business continues to gain momentum.”
Following repeated disruptions to the TransForcados export route, Seplat is now focused on providing multiple export routes to mitigate downtime and revenue loss. In 2017, the company successfully completed repairs and upgrades on two jetties at the Warri refinery that will enable sustained exports of 30,000 bopd (gross) up from 15,000 bopd.
By Q3 2018, the Amukpe-Escravos 160,000 bopd capacity pipeline is set to come on stream thus providing a third export option for liquids production at OMLs 4, 38 and 41 which presently accounts for around 90% of Seplat’s total liquids production mix.
Looking ahead, Seplat which was migrated to the Premium Board of the Nigerian Stock Exchange (NSE) on April 16, 2018 will focus on its early mover advantage in the domestic gas sector which will now be anchored around OML 53’s large-scale ANOH greenfield gas and condensate development. The company will also retain the flexibility and financial discipline that has seen it emerge from a difficult chapter in its history a fitter and stronger business.