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Seplat grows pre-tax profit by 13.4% to $270m

...proposes $0.05 final dividend per share to shareholders

Seplat Petroleum Development Company Plc has released its audited results for the financial year ended December 31, 2019. The leading Nigerian independent oil and gas company listed on both the Nigerian and London Stock Exchanges posted 13.4 percent growth in profit before deferred taxes to $270million.

It recorded revenue of $698 million with total capital expenditure of $125 million, $114 million on oil and gas assets. Cash flow from operations stood at $338 million; cash at bank $333 million and final dividend maintained at $0.05 per share.

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The company operational performance shows low unit cost of production at $6.20/boe; working interest production of 46,498 boepd in line with 2019 revised guidance of 45,000 – 48,000 boepd; liquids production of 23,935 bopd; gas production was 131 MMscfd; and Final Investment Decision (FID) taken for 300MMscfd ANOH gas processing facility. Its first gas now expected fourth-quarter (Q4) 2021.

Austin Avuru, Chief Executive Officer, said: “As we enter a challenging phase for the global economy, Seplat will benefit from being a resilient company built on the solid foundations of prudent financial management and the careful mitigation of risk.”

He said “We have previously been tested by crisis. We successfully navigated the twin challenges of the 2014/2015 oil price shock, which was immediately followed by the 16-month Trans Forcados shut-in, which drastically reduced our liquids production. Thanks to our flexibility in managing cash flows we emerged a stronger and better-funded company, ready to take advantage of new opportunities.  Compared to those difficult periods, today’s Seplat has more cash on its balance sheet and is even more robust and diversified thanks to our continuing investments in gas, with its long-term contracts and independence from oil price volatility. We are a low-cost producer and will continue to manage our finances prudently.

“With the recent addition of Eland and the availability of new pipelines, our oil business is broadening and derisking its production fields and routes to market to assure even greater security of revenues in the future. In the coming year we will focus our investment only on the highest-returning projects, whilst carefully balancing our future needs with prevailing market realities.
“The challenges before us may be significant, but we are confident that the resilience and discipline of our business will help us consolidate our position as Nigeria’s leading independent oil and gas producer,” Avuru stated.

Seplat believes that the emergence of the COVID-19 pandemic in the first quarter of 2020, as well as pressure on oil prices in March, placed a premium on solid financial management that focuses upon low-cost production, robust cash management, a strong balance sheet and focused investment in high-return projects for sustainable future growth.

The business is hedged against low oil prices and a significant proportion of our revenues now come from gas, which offers further protection from oil price volatility. The Company has low production costs and can remain profitable even at lower oil prices. It has significant cash resources available and will manage its finances prudently in 2020, expecting now to invest just $100 million of capital expenditure ($50 million spent in Q1 2020), with a target of three new wells across our portfolio.

Seplat said it will also continue to focus on its investments in gas and the completion of the ANOH project remains a major priority.  At present we are targeting 2020 production of between 47-57 kboepd, including Eland production of 6-10 kbopd, subject to continuous evacuation being possible.

“Seplat has been tested in previous adverse conditions and we are confident that the stronger and more diverse business we operate today will be even more resilient against these unprecedented market events. The integration of Eland Oil & Gas PLC will position the Group strongly when the market recovers and we are pleased to report that on 17 March 2020, OML 40 produced a record 17 kbopd as recorded by its LACT. We remain optimistic about our long-term growth and success,” the company stated.

 

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