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Seplat to step up production growth

Seplat

Seplat Petroleum Development Company Plc has given assurance to its stakeholders that it will grow production, drive increased shareholder yield and capital appreciation.

The Company, which reiterated its commitment to stronger growth in the oil and gas sector as it held its sixth annual general meeting in Lagos, posted  N73 billion profit for the period ended, December 31st, 2018.

It also announced N228 billion revenue in its full year 2018.  This is an increase of 65 per cent from the N137billion the company made in the 2017.

Its N73 billion profit before differed tax, represented a 480 per cent increase from N13 billion which it made over the same period in 2017.

Gross profit for the period grew by 84% to N120billion from N65billion reported in December 2017. Operating profit stood at N95billion, representing a growth of 177% over N34billion recorded in the corresponding period of December 2017.

Seplat’s net profit after however dipped by 45% from N81billion recorded as at December 2017 to N45 billion in December 2018.

In his address to shareholders, the Chairman, A.B.C. Orjiako, said the company’s 2018 operational and financial performance reflected the significantly higher year-on-year levels of production uptime  at its core oil producing assets combined with a firmer, albeit still volatile, oil price and increased contribution from the company’s gas business.

“As you are aware, our results from the previous two years were characterised by  the extended period of force majeure at the Forcados terminal from February 2016 to June 2017.

“As we enter 2019, our reliable production base, low unit cost of production and discretion over capital commitments will allow the business to remain highly free cash flow generative and profitable. In the absence of any major interruption or force majeure event, this will enable Seplat to honour its dividend policy and provide an attractive yield to our shareholders in addition to the potential for capital appreciation.”

According to Orjiako, the company will selectively invest in low-risk oil production drilling opportunities within the existing portfolio and the continued expansion of the gas business, with 2019 set to be the year that activity intensifies at the large-scale Assa-North and Ohaji-South (ANOH) gas and condensate development.

“Seplat remains an ambitious growth-orientated company that is in a position of strength to capture inorganic opportunities where we can leverage our competitive advantages to seek out carefully considered, price disciplined and value accretive acquisitions.

Also speaking at the AGM, the Chief Executive Officer of Seplat Petroleum, Austin Avuru, said: “Seplat has delivered an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years. At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks.

“As Seplat continues to enhance production and revenue diversification with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large-scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business. Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of US$350m,” he added.

Avuru noted that Seplat’s board had recommended a final dividend of US$0.05 per share to all its shareholders. “In 2018, Seplat reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise,” Avuru said.

He also announced that Seplat board had taken the Final Investment Decision for the ANOH and Amukpe-to-Escravos alternate export pipeline which would be completed and fully commissioned in Q2 2019. These projects are part of the future expansion initiatives of Seplat in Nigeria’s oil and gas industry.

 

Olusola Bello