Nigeria’s largest listed Oil & Gas firm by market value Seplat Petroleum Development Company Plc has announced delays in its long term oil and gas projects till 2020.
In its consolidated financial results for the period ended 30 June 2019, Seplat announced it has diverted attention from its long term projects to short term projects which lead to a downward revision of its 2019 CAPEX to $150 million.
“Three planned exploration / appraisal wells targeting longer term oil and gas production together with the Oben and Sapele LPG projects have been deferred into 2020 with the current focus on shorter term oil and gas production gains,” Seplat said.
While also giving an update on Oben processing hub in western Niger Delta, Seplat announced it’s reached an agreement with Nigerian Petroleum Development Company (NPDC’s) Operating Committee to back into their right to 55percent of the gas plant expansion of 375MMscfd.
Seplat noted that payment of $168 million was agreed between the parties, with $67 million being booked in H1 2019 as gas tolling revenues while the final balance of $101 million will be paid and reflected in the Q3 results once the transfer of NPDC’s 55percent interest has been concluded.
“Work is on-going at the Sapele Gas Plant upgrade and which is expected to be completed in H2 2020,”Seplat said.
Out of a total $120 million, Seplat and Nigerian Gas Company Limited (NGC) will each contribute a further S$60 million equity investment over the remainder of 2019 and Q1 2020 with $280 million of debt funding to be finalized for ANOH processing hub in Eastern Niger Delta.
Seplat admitted that the Group is exposed to credit risk from its sale of crude oil to Mecuri as the off-take agreement with Mercuria runs for five years until 31 July 2020 with a 30 day payment term.
“The Group is exposed to further credit risk from outstanding cash calls from Nigerian Petroleum Development Company (NPDC) and National Petroleum Investment Management Services (NAPIMS),” Seplat said.
Seplat’s revenue from contracts with customers in the period rose by 3.98 percent on a year-on-year basis to N108.97 billion, thanks to N20.53 billion realised from gas tolling and recognised for the first time which resulted to increased net income margin of 42.61 percent, the highest in 6 years.
Gas tolling is revenue received from the NPDC for processing its share of the gas extracted from OML 4, 38 and 41 from 2015 to 2018, according to Seplat.
A 98 percent decline in Seplat’s tax expense to N437 million boosted its after-tax profit, making it grow 152.6 percent to N37.5 billion in the first half of 2019 as against N14.8 billion in the same period last year.
Consequently, the firm’s profit margin, a profitability metric that measures how much profit a company generates from every naira of sales, increased to 34.41 percent from 14.16 percent. This implies the company generated N34 as profit from every N100 realised from sales in the first half of 2019.
Meanwhile, Seplat announced its target to become Nigeria’s largest supplier of processed gas by 2021. Austin Avuru, chief executive officer Seplat disclosed this during an investors’ conference call monitored by BusinessDay.
Avuru attributed a decline in production figures to the management decision to arrest decline production volume after nondrilling in 2015 and early part of 2016, stabilize production assuring that there will be significant growth in subsequent quarters.
