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Seplat’s Q3 revenue dips to $388million on lower oil prices

Seplat to seek dual listing on NSE, LSE

Seplat Petroleum Development Company Plc, a leading Nigerian independent energy the company listed on both the Nigerian Stock Exchange and London Stock Exchange has announced an interim dividend at a rate of $0.05 (Five Cents) per Ordinary Share (subject to appropriate withholding tax). The company has released to the investing public its unaudited results for the nine months ended September 30, 2020.

Seplat’s share price was flat at N420 per share as at 1 pm Nigerian time on Friday, October 30, 2020.

The interim the dividend is to be paid to SEPLAT’s shareholders whose names appear in the Register of Members as at the close of business on November 13, 2020.

On or around December 7, 2020, the interim dividend will be paid electronically to shareholders whose names appear on the Register of Members as of November 13, 2020, and who have completed the e-dividend registration and mandated the Registrar to pay their interim dividend directly into their Bank accounts.

To enable SEPLAT’s Registrar, Datamax Registrars Limited, prepare for the payment of the interim dividend, the Register of shareholders will be closed on November 14, 2020, according to a statement at the Nigerian Stock Exchange (NSE). The qualification date is Close of Business on November 13, 2020. Note that on the London Stock Exchange: The Associated Record Date will be November 13, 2020, and the ex-dividend date will be November 12, 2020.

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Operational highlights

Seplat said its working-interest production is within guidance at 50,653 bpd, despite market volatility. Further operational highlights show: liquids production of 33,327 bopd, gas production of 100 MMscfd; Eland OML40/Ubima assets produced 9,151 bopd, 27.5percent of Group oil volumes, integration progressing well; TFP reconciliation losses reduced to 8.6percent; Amukpe-Escravos Pipeline now expected operational in H2 2021; the low unit cost of production at US$8.73/boe, with cost-cutting initiatives ongoing, particularly at OML40/Ubima; and ANOH the project remains on track for Q4 2021 first gas, completion of financing imminent.

The Q3 financial highlights

Seplat reported strong cash balance of $213 million after $100 million Revolving Loan Facility (RCF) repayment, $29 million 2019 final dividend, and $109 million capital expenditure (capex); Net debt remained steady at $480 million with most maturities after 2021; revenue was $388 million due to lower oil prices, down year-on-year by 21.6percent from $494.9million in 9M’2019. Gross profit decreased to $90.6million in Q3’20 from $264.7million in Q3’19, down 65.8percent. Loss before tax printed at $130.1million from the pretax profit of $184.8million in Q3’2019, down by 170.4percent.

The financial highlights also showed IAS 36 COVID-19 impact assessment and IFRS 9 non-cash impairment provision of $180 million; provision reverses operating profit of $100 million to operating loss of $79 million; and Nigerian Petroleum Development Company (NPDC) receivables further reduced to $152 million.

Outlook for 2020

Full-year production guidance narrowed to 48-52 kboepd, subject to market conditions; Oil hedging: 1.5MMbbl at $30/bbl and 0.5MMbbl at $35/bbl in Q4 2020; and Full-year CAPEX expected to be around $120 million ($109 million already invested)

Roger Brown, Chief Executive Officer, Seplat said: “Seplat’s third-quarter performance has again demonstrated the resilience of our business in challenging times and in addition to voluntarily reducing our debt leverage by $100 million, we are maintaining our commitment to shareholders by declaring an interim dividend of $0.05 per share, as we have in previous years. The business continues to operate effectively despite the restraints of the COVID-19 pandemic and the recent unrest in Nigeria.

“After the a tragic incident on OML40 in July, we have in consultation with our government partner NPDC and the regulatory authorities in Nigeria conducted three separate and comprehensive investigations that have led to the implementation of new and strengthened safety procedures at the joint venture. Our thoughts and prayers remain with the affected families and friends,” he added.

“We continue to hedge our oil business against further price volatility and are pursuing further cost-cutting initiatives to ensure that we will remain profitable even at lower prices experienced earlier in the year.

We have strengthened our oversight with the appointment of two independent directors, Arunma Oteh and Xavier Rolet, who brings considerable local and international business and governance expertise to the Board. I have taken over the leadership of Seplat at a challenging time for our industry, but am confident that our actions to increase operational efficiencies, further reduce costs and continue our expansion into midstream gas processing to reduce carbon emissions by displacing inefficient and expensive diesel-generated electricity, will ensure that Seplat remains at the forefront of Nigeria’s exciting energy transition and provide sustainable energy for a young and rapidly growing population,” Brown stated.

“Following our performance over the first nine months of the year we are narrowing guidance to 48,000-52,000 boepd for the full year. We continue to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices. We also continue to focus on cost savings to maintain profitability at the lower oil prices we have realised so far this year.

“We have significant cash resources available and will continue to manage our finances prudently in 2020, expecting now to invest $120 million of capital expenditure across the full year (of which $109 million has already been invested).

“We remain confident that our cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth. The timely completion of the ANOH project in late 2021 remains a major priority and we expect that the debt financing will achieve financial close in the coming weeks”, the company stated.