Seplat Energy reports N140.6bn gross profit in H1’23

Seplat Energy Plc has released its unaudited results for the six months ended June 30, 2023, recording a rise in revenue by 3.8 percent year-on-year (YoY) to N278.3billion, from N219.2billion in the same H1 period of 2022

The company also declared a second quarter (Q2) 2023 dividend of US 3 cents per share, in line with a higher core annual dividend of US 12 cents.

The energy company also grew its 2023 H1 gross profit to N140.6 billion from N114.1 billion year-on-year. The Company, in its announcement, described the operating performance for the period as solid, given a 2 per cent increase in production, helped by reduced losses on its Western Asset, which is benefitting from the availability of the Amukpe-Escravos Pipeline and increased output from OML40.

Seplat Energy extended the Share Sale and Purchase Agreement (SSPA) for the acquisition of ExxonMobil’s share capital of Mobil Producing Nigeria Unlimited (MPNU) to preserve the transaction, pending the resolution of certain legal proceedings and receipt of applicable regulatory approvals; and will continue to work with all parties to achieve a successful outcome.

The full-year production guidance was retained at 45-55 kboepd whilst Capex guidance range at $160 – $190 million (previously $160 m) to support the Group’s objectives for the year.

Following the Company’s previously announced Board succession plan (25 April 2023), it announced that Eleanor Adaralegbe, currently Vice-President Finance, has been appointed CFO-designate and will succeed Emeka Onwuka as CFO in 2024.

Financial highlights

Revenues went up 3.8 percent to $547 million (including over lift of $ 59.4 million), on improved production, offset by the lower oil price. It also recorded cash generation of $259.1 million, funding capex of $88.8 million and improved shareholder returns.

Balance sheet remains strong, $381million cash at bank, despite the impact of the devaluation of the Naira on USD cash balances, net debt now at $380million ($128 million MPNU cash deposit not included), and further $3.3 million received as part of the Ubima disposal, total proceeds up to $21.9 million. It recorded unit production opex of $9.6/boe.

Average oil price $79.54/bbl (6M 2022: $107.35/bbl); average gas price $2.87/Mscf (6M 2022: $2.76/Mscf). The second quarter (Q2) 2023 dividend declared of US 3 cents per share is in line with a higher core annual dividend of US 12 cents.

Read also: Multiple regulatory bodies, overlapping mandates limit manufacturers – MAN

Operational highlights

Working interest production increased by 1.8 percent to 50,805 boepd, in the middle of our 45-55 kboepd guidance. Amukpe-Escravos Pipeline (AEP) continued to provide alternative evacuation resulting in lower downtime overall.
The company completed five new wells, boosting liquids production at OML 40 and Island section of grouting operations on OB3 pipeline complete. ANOH gas plant mechanical completion and partner-operated key project milestones are expected by the end of 2023.
Seplat also achieved more than 4.2 million hours without Lost Time Injury (LTI) at Seplat-operated assets and a carbon intensity figure of 26.3 kg/boe. Sapele Power gas offtake is expected to commence in H2’23, this is expected to reduce emissions by approximately 40 percent.

Corporate updates

Seplat extended the Share Sale and Purchase Agreement (SSPA) for the acquisition of ExxonMobil’s share capital of Mobil Producing Nigeria Unlimited (MPNU) to preserve the transaction, pending the resolution of certain legal proceedings and receipt of applicable regulatory approvals. “We continue to work with all parties to achieve a successful outcome,” it said.

Full-year production guidance retained at 45-55 kboepd

Seplat maintained a Capex guidance range at $160 – $190 million (previously $160 million) to support the Group’s objectives for the year.

Following our previously announced Board succession plan (25 April 2023), we are pleased to announce that Eleanor Adaralegbe, currently VP of Finance, has been appointed CFO-designate and will succeed Emeka Onwuka as CFO in 2024.

Commenting on the results, Roger Brown, Chief Executive Officer, Seplat Energy said: “Seplat Energy’s continuing strong performance puts us on track for an excellent year that will support the increased quarterly dividends we announced in April, and our balance sheet remains strong despite the impact of the recent Naira devaluation. We are benefiting greatly from the use of the new Amukpe-Escravos Pipeline, which has supported our robust cash generation this year, and remain focused on improving operations, reducing costs where possible and further derisking the business. We continue to strengthen our Company in the knowledge that our efforts to improve governance and sustainability are widely supported by Nigerian and international investors.

“The distraction of frivolous legal actions is receding, and we are focused on developing our assets and launching our joint venture ANOH Gas Processing Plant, which will significantly boost our cash generation in the coming years. We expect that this will enable us to fund additional investment in Nigeria’s energy infrastructure and return higher dividends to shareholders.

“We remain confident that our proposed and transformational acquisition of MPNU will be approved, enabling us to scale into a significant energy supplier with diverse and productive assets that have the potential to generate substantial benefits for Nigeria. We wholly align and support the recent government efforts to make Nigeria a more attractive place to invest and continue to focus on delivering affordable and reliable energy for Nigeria’s young, entrepreneurial and rapidly growing population,” he said.