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9M’23: Seplat declares US3 cents interim dividend despite 42.5% dip in pre-tax profit

Seplat Energy says ANOH Gas Plant reaches Mechanical Completion

Seplat Energy Plc has announced an interim dividend of US3 cents (United States Three Cents) per Ordinary Share (subject to appropriate WHT) to be paid to Seplat shareholders whose names appear in the Register of Members as at the close of business on November 10, 2023.

The Register of shareholders will be closed on November 13, 2023 to enable Seplat’s registrar, Datamax Registrars Limited, prepare for the payment of the interim dividend.

Seplat Energy recently released its unaudited results for the nine months ended September 30, 2023. Its nine months 2023 production averaged 48,152 boepd, up 11percent on nine months 2022, with liquids production up 17percent. Operations benefited from improved uptime at Forcados Oil Terminal and availability of the Amukpe-Escravos pipeline, supporting strong revenue, modestly offset by higher costs. Robust cash generation, further strengthening our balance sheet.

Revenue went up 31percent to $810.4 million (including an overlift of $127.8 million) from $618.6million in 9months 2022 (including an under-lift of $60.3 million). Adjusted revenue was flat year-on-year (YoY) as improved production mitigated lower oil price realisations. Profit before tax (PBT) decreased to N106.5billion from N185.2billion in same nine months of period of 2022, representing a decline of 42.5percent.

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The dividend will be paid in Naira and US Dollars only. The default currency for the dividend will depend as follows: Shareholders holding their shares on the Nigerian Exchange Limited without a valid Nigerian Certificate for Capital Importation (CCI) will be paid their dividend in Naira as the default currency; shareholders holding their shares on the Nigerian Exchange Limited with a valid CCI will be paid their dividend in US dollars as the default currency.

However, those shareholders may instead elect to receive their entire dividend payment in Naira (partial elections are not permissible). Evidence of the CCI must be provided to Datamax Registrars Limited; and shareholders holding their shares through depository interests on the London Stock Exchange will be paid their dividend in US dollars as the default currency.

The exchange rate for the Naira amounts payable will be determined by reference to the relevant exchange rates applicable to the US dollar on November 9 and will be communicated by the Company on November 10.

On or around November 24, the interim dividend will be paid electronically to shareholders whose names appear on the Register of Members as of November 10 and who have completed the e-dividend registration and mandated the Registrar to pay their interim dividend directly into their Bank accounts.

The results showed average realised oil price of $82.76/bbl (9M 2022: $108.25/bbl); average gas price improved to $2.87/Mscf (9M 2022: $2.80/Mscf). Unit production opex of $9.7/boe, (9M 2022: $9.3/boe). Cash generation of $365.1 million, flat YoY, funding capex of $125.4 million. Balance sheet strengthened in the quarter, $391.0 million cash at bank (9M 2022: $305 million), $128 million MPNU cash deposit not included.

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Net debt at end September fell to $347.6 million (9M 2022: $452.2 million), a further $11 million of RBL borrowings were repaid in 3Q 2023 ($22 million YTD). Net Debt to TTM EBITDA improved to 0.9x. The Q3 2023 dividend declared of US3 cents per share is in line with higher core annual dividend of US 12 cents.

Roger Brown, Chief Executive Officer, said: “Seplat Energy’s operational performance was strong in the third quarter, particularly September which mitigated some of the outages experienced on third party infrastructure and supported production growth of 11percent on the same period in 2022.

“Our balance sheet remains strong and thanks to higher commodity pricing and our proactive approach to cash management, we have generated more than $170million in free cash flow year to date. Our focus for the rest of 2023 is on safe and reliable operations, revenue assurance and cost management, all of which will deliver further strengthening of our cash position. This keeps us on track for an excellent year that will support the increased quarterly dividends we announced in April and allow us to continue our commitment to reward shareholders,” Brown noted.

“Following the serious incident on the Depthwize Majestic rig, which resulted in the tragic loss of life, we have provided significant support to Depthwize, its owner, in its recovery operation. Our own investigations are ongoing, but I can assure all stakeholders of our unwavering commitment to safety on all of our operations.

“Ongoing third-party delays to ANOH’s export infrastructure remain a source of frustration, but we are confident that the quality of the project will support dividend growth for Seplat in the coming years as we diversify the business and deliver on our strategy to provide more affordable energy for Nigeria.

He said: “We remain confident that we can conclude our transformational acquisition of MPNU. We wholly align with and support President Tinubu’s efforts to make Nigeria a more attractive place to invest, and we will play our part by delivering affordable and reliable energy that will support our nation’s growth.”

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“Group production performance has improved in 2023, thanks to well performance on OML40 and reduced losses on our Western Asset. We have no significant planned turnaround activity in 4Q23, as such we can narrow our production guidance to a range of 46,000-50,000 boepd, within our original guidance range. Our guidance does not include any contribution from MPNU or ANOH.

“Our capital expenditure guidance for 2023 is narrowed to a range of $160-180 million. Reduced well count modestly lowers total expenditure on drilling, while we also anticipate making some project milestone payments in the final quarter of the year. The focus on recovery of our drilling program continues. We are actively looking to contract a new swamp rig, that will increase rigs on our Western Asset to four.

“We expect to generate positive free cash flow in the final quarter of 2023, further supporting our ability to fund the MPNU transaction and underpinning managements desire to continue to reward shareholders. The company maintains a policy of a core dividend of 3c per share payable quarterly (12c per share annually), and an additional special dividend. The special dividend will be considered by the board as part of the full year 2023 result,” the company said.