Chief executive officer of Seplat Petroleum Development Company plc, Austin Avuru, says the company’s operations have continued to perform in line with expectation with the phasing of its 2019 work programme such that the production uplift will be felt throughout the second half of the year.
He said this would be realised as the company steps up drilling activities which focuses on capturing the numerous high margin and short-cycle cash return opportunities within its current portfolio.
The Seplat boss made this statement while commenting on the recently released interim management statement and consolidated interim financial results for the three months ended 31 March 2019.
The results showed positive impact of the 2018 debt refinancing and subsequent deleveraging, which resulted in a 38 per cent year-on-year reduction in finance costs to $16 million (2018: $26m). Net profit stood at $33 million after adjusting for a tax credit of $13 million.
He said: “The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with government’s first tranche of equity investment received. We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria.”
A breakdown of how the performance indices showed:
• Production uptime in Q1 stood at 85%; Reconciliation losses are yet to be finalised but are expected to remain at levels consistent with prior periods; Full year 2019 production guidance maintained at 49,000 to 55,000boepd on a working interest basis, comprising 24,000 to 27,000bopd liquids and 146 to 164MMscfd (25,000 to 28,000boepd) gas production.
– Sequencing of the 2019 work programme means the corresponding production uplift will be realised progressively throughout H2; 2019 capex guidance maintained at US$200 million (excluding investment in the ANOH joint venture).
• Revenue of US$160 million and gross profit of US$81 million represents a 51% gross profit margin (unchanged year-on-year); Revenue reflects the lower oil production and oil price realisation of US$61.7/bbl (2018: US$65.78/bbl). Average realised gas price of US$3.24/Mscf in the period (2018: US$2.79/Mscf) – Operating profit of US$33 million (2018: US$84 million) reflects adjustments for a US$16 million overlift position and US$12 million charge in relation to the Company’s oil price hedges, comprising US$5 million cost of hedges and US$7 million fair value loss (reversing the US$9 million fair value gain booked at the end of 2018).
– Net cash generated from operations up 73% year-on-year at US$80 million (2018: US$46 million) versus capex incurred of US$16 million (2018: US$3 million). Further receipt in the period of US$17 million from liftings at OML 55 .
• Repaid US$100 million on the four-year RCF bringing balance drawn to zero while retaining significant headroom in the capital structure to fund growth initiatives. US$4.5 million RCF fees written off in finance costs.
– Gross debt of US$350 million at 31 March 2019 solely comprised of the Company’s bond issuance due 2023. Cash at bank stood at US$644 million (which includes US$100 million temporarily held on behalf of Nigerian Gas Company (“NGC”) as the government’s initial equity investment into ANOH Gas Processing Company (“AGPC”)); Normalised cash at bank therefore stood at US$544 million with an effective resultant net cash position of US$194 million.
• Final Investment Decision (FID) for the large scale ANOH gas and condensate project was announced in March and initial equity investment of US$100 million from government received; Project to comprise a Phase One 300 MMscfd midstream gas processing development with first gas targeted for Q1 2021.
– Gas revenue from the existing business up 5% year-on-year at US$42 million (2018: US$40 million) Project Updates – Amukpe to Escravos pipeline anticipated to be operational in Q2 2019 with ramp up to initial permitted capacity of 40,000 bopd expected during Q3 2019.
Olusola Bello
