Seplat Petroleum Development Company Plc (SEPLAT), leading Nigerian independent Oil and Gas Company, listed on both the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE), has announced its unaudited results for the nine months, ended 30 September 2019, released to the NSE and LSE.
The company declared a $29m interim dividend to shareholders and highlighted that its recent £382m cash acquisition of Eland Oil and Gas Plc will create more value opportunities for shareholders, going forward.
Working interest production averaged 47,163 boepd for the period (2018: 50,303 boepd) and reflects slippage to the intended production drilling programme as a result of rig mobilisation delays and availability. Four drilling rigs are now operating across Seplat’s portfolio, to drive liquids working interest production to an expected exit rate of 30,000 bopd. Production uptime stood at 91%, while average reconciliation losses for the first nine months stood at 13%. This factor for the third quarter, only stands at 1%, while the factor for the first six-month period is still under review, and expected to be consistent with prior periods when finalised
Full year average working interest production guidance has consequently been revised downwards to 45,000 boepd (from 49,000 boepd to 55,000 boepd), comprising 23,000 to 25,000 bopd liquids and 128 to 133 MMscfd gas.
Revenue of US$495 million (2018: US$568 million) reflects lower production and sales year-on-year together with lower price realisations of US$64.22/bbl and US$2.8/Mscf (2018: US$71.14/bbl and US$3.06/Mscf); gas tolling revenue of US$67 million also recognised in relation to the processing of NPDC’s gas at the Seplat sole risk funded Oben gas plant 375 MMscfd expansion between June 2015 and end of 2018
Gross profit of US$265 million (2018: US$306 million) represents a 54% gross profit margin; operating profit of US$211 million (2018: US$264 million) with US$36 million recognised within other income (including a US$31 million oil underlift position and US$3 million income generated by third party useage of the Group’s Warri pipeline) and a US$5 million net fair value gain offset by a US$40 million impairment of NPDC receivables
Cash generated from operations stood at US$306 million (2018: US$386 million) versus capex incurred of US$64 million (2018: US$29 million). Full year 2019 capex spend expected to be around US$120 million; gross debt of US$350 million at 30 September consists solely of the 2023 senior notes with undrawn headroom of US$225 million available through the 2022 RCF. Cash at bank at 30 September was US$455 million resulting in a net cash position of US$105 million.
Commenting on the result, the Chief executive Officer, SEPLAT, Austin Avuru, said: “2019 so far has seen us make significant progress towards furthering our ambitious growth strategy. Our core business remains highly cash generative and with four rigs now operational in the field we expect to quickly regain momentum. This is reflected in our decision to declare an interim dividend of US$29 million.”
“We have set the next major growth phase of our gas business in motion having taken FID for the large scale ANOH gas and condensate development to position us as Nigeria’s largest supplier of processed gas to the domestic market. In another major step, and in line with our overall growth strategy, we have made a strong statement of intent by becoming the first Nigerian company to undertake a public market acquisition of a London Stock Exchange listed company, and in doing so highlighted our ambitions to be a consolidator within our space.
“The recommended acquisition of Eland for £382 million is a logical continuation of our business model and represents a rare opportunity to secure a well-run asset base that lies firmly within our core geographical area of focus and expertise. Following completion, the enlarged asset base will enhance our inventory of production, development, appraisal and exploration opportunities and enable us to ensure capital continues to be deployed to the most value creative opportunities for shareholders.”
Final investment decision (FID) taken for the large scale ANOH gas and condensate development in March 2019 and followed by capital markets days in London and Lagos in June and July. Project to comprise of a first phase 300 MMscfd midstream gas processing development with first gas targeted for Q1 2021; key regulatory, commercial and engineering workstreams remain on schedule
Equity investment of US$150 million from government received by ANOH Gas Processing Company (“AGPC”) with US$150 million equity funding from Seplat also made into AGPC. Final equity injection of US$120 million expected in Q4 and funding discussions have progressed with prospective bank lenders and relevant advisors, in anticipation of debt funding being in place in H1 2020 in advance of the time that such funds are needed to meet project costs.