Seplat Petroleum Development Company has returned to profitability, reporting a net profit of $22.3 million for the nine months ended September 30 2017, rising from a bruising 2016 that saw net losses fall to $36.6 million on the back of plunge in oil prices and militant activities.
“I am pleased to report a sharp improvement in Seplat’s operational and financial performance which has resulted in a welcome return to profitability during the third quarter. The improved cash flow is translating into a stronger balance sheet and, based on current levels of production and sales, we maintain full year production guidance of 35,000 to 38,000 boepd,” said Austin Avuru, Seplat’s chief executive officer.
In a note to investors released October 23 2017, the company said third quarter operating profit rose to $40.9 million compared to US$11.7 million operating loss recorded in the same period last year.
Net profits shot up to $22.3 million against a net loss of $36.6 million in third quarter 2016. Quarterly revenue grew to $146.7 million from $59.7 million recorded in the same quarter last year. The company boasting its 9 months operating profit to US$53.2 million as against $53.7 million operating loss in the same period last year while net loss narrowed to $5.3 million from $97.8 million net loss recorded in the first nine months of 2016.
Analysts said the results posted by the oil and gas giant beat their estimates.
“Compared with our estimates, while sales beat our US$130m forecast by 13%, PAT was ahead by around 7%. The earnings variation was driven by positive surprises on the top line and in net finance charges. On an annualised basis,” said a said Uwadiae Osadiaye, analyst with Lagos-based investment firm, FBNQuest Limited, in a note sent to BusinessDay. “Seplat’s 9 months sales and loss before tax are tracking behind consensus sales and PBT estimates of US$469m and US$63m respectively.”
Osadiaye said the result is significant because ‘this is the first quarter since the end of 2015 that Seplat has posted a profit.
Oil sales, driven primarily by improved production, were a big contributor to the improved performance, up 292 percent year-on-year to US$115m.
“Third quarter working interest oil production rose 146 percent to 26,351 barrels of oil per day compared to last year, in line with management’s full year guidance of 17/19kbpd and compares with c.9.5kbpd delivered in H1 2017,” said Osadiaye.
Seplat, along with many other indigenous oil producers, saw their profit margins shrink when a militant attack on the Forcados pipeline knocked off over 250,000 barrels per day of crude production constraining exports through the Forcados terminal.
Shell declared force majeure on Forcados shipments in February 2016 militants calling themselves the Niger Delta Avengers bombed the main crude supply line to the terminal, causing massive spills in the area.
ISAAC ANYAOGU
