The latest report from Seplat Energy Plc, the largest indigenous energy company by market value has unveiled how the firm bounces back from a loss position in the first nine months of 2020 to a profit of N13.86 billion in 2021.
Nigeria’s biggest quoted oil and gas company had a tempestuous 2021, with the global oil market at the mercy of the twin bugbears of the pandemic outbreak and a crash that dragged prices of crude to unprecedented lows in April.
The company, listed on both Nigerian Exchange Limited and the London Stock Exchange, seems to be on a rebound as its earnings before interest, taxes, depreciation and amortisation rose to N105.7bn in the first nine months of 2021, depicting a 29.6 percent growth compared to the corresponding period last year.
Acquisition of Cardinal Drilling rigs
Seplat Energy has agreed to acquire four drilling rigs from the receiver/manager appointed by Access Bank over the assets of Cardinal Drilling Services Limited.
The acquisition of these rigs, when deployed, should help to optimise drilling costs for Seplat Energy, avoid significant disruption to its business and end period of uncertainty caused by the ongoing debt recovery action by Access Bank against Cardinal Drilling Services Ltd, a related party of Seplat Energy
Net result
In the first nine months of 2021, Seplat Energy’s profit before tax was $97.4 million compared to a $130.1 million loss before tax in the corresponding period last year.
The Company’s tax expense for the period was $62.3 million, compared to a tax credit of $33.8 million for the same period in 2020.
The tax expense is made up of a deferred tax expense of $39.9 million and a current tax charge of $22.4 million.
The above development led to Seplat Energy’s net profit of $35.0 million compared to a net loss of $96.3 million in first nine months of 2020.
The resultant basic EPS was $0.11 in 9M 2021, compared to $0.10 basic loss per share in 9M 2020.
Drilling programme
Seplat has completed the Oben-50 and Oben-51 gas wells, which are now producing at a combined gross rate of c. 60 Million standard cubic feet per day (MMscfd) of gas and 4,000 bpd of condensates. The Umuseti-07 well was successfully completed in August and is producing c.2,000 bopd gross while work is ongoing at the three-well Gbetiokun drilling programme.
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The Gbetiokun-06 well commenced production in August with additional production of c. 4,000 bopd, taking Gbetiokun to a peak gross production of approximately 12,000 bopd.
“The third well Gbetiokun-08 will be spudded in October and gross production from the three wells upon completion is expected to be around 10,500 bopd,” the company noted.
Production performance
Total working-interest oil production volume for the period was 7.6 Million barrels, a lower performance compared to 9.1 million barrels recorded in nine months 2020.
According to Seplat Energy, the lower volume resulted from the disruption caused by the suspension of exports at the Forcados terminal.
The Company experienced Trans Forcados Pipeline (TFP) reconciliation losses of 11.3percent for the nine-month period, but “we expect the effects of losses and downtime to fall when the delayed Amukpe-Escravos underground pipeline comes onstream.”
Cash flows from operating activities
Net cash flows from operating activities, after movements in working capital, were $144.5 million, lower than $187.4 million in 9M 2020 partly due to an increase in restricted cash at the end of the period related to a $20 million bank guarantee filed by Seplat Energy in line with an order from the Court of Appeal in January 2021.
Seplat Energy also received $160 million from its JV partner Nigerian Petroleum Development Company (NPDC) towards the settlement of its Naira and USD cash calls.
“We have continued engagements with NPDC to ensure their cash call obligations are met as due,” Seplat Energy said.
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