Global Rating Agency, S&P has improved the rating of Nigerian Oil and Gas Company, Seplat to B on the back of expectations of impressive 2018 full year result.
‘’We expect indigenous Nigerian oil producer Seplat Petroleum Development Company will report strong results in 2018 supported by healthy oil prices and relatively low capital expenditure (CapEx) and dividends, In our view, this resulted in a reported net cash position as of end-2018’’ S&P
‘’We are therefore raising our issuer and issue credit ratings on Seplat and its $350 million notes due 2023 to ‘B’ from ‘B-,’’ The rating agency stated.
The upgrade reflects the improvements Seplat made in 2018, both operationally and financially, which S&P viewed as ongoing, as the Oil and Gas Company continues to de-risk and improve its business, with the Amukpe-Escravos Pipeline Project expected to be commissioned, and a final investment decision (FID) made on the Assa North and Ohaji South (ANOH) Gas Processing Plant.
According to S&P, “This somewhat reduces Seplat’s inherent weakness as a small oil and gas producer in the troubled Niger Delta region’’
The upcoming elections in Nigeria were identified as a likely factor that could delay potential transactions to toward the end of 2019 if anything happens at all this year.
S&P noted that it could lower the rating if militant actions and/or operational issues arose such that production was disrupted over the longer term although it does not consider the risk imminent.
‘’We think such a scenario will become less likely over time given the Escravos-Amukpe pipeline, increases in Seplat’s gas production, and potentially increased diversification following future acquisitions’’ S&PGR noted, adding that rating pressure could arise if the company undertook a large debt-financed acquisition resulting in a much less favourable capital structure.
On Tuesday, 28 January, Seplat slid to its lowest in more than a year at N520 per share, a performance CSL analyst, Gbolahun Ologurno attributed to ‘’general weak sentiment in the market’’
‘’There is no bad news that will likely affect its operations hence its financial performance such as militant activities on Trans Forcados pipeline’’ Ologunro explained.
Businessday analysis of the unaudited Seplat financials for nine months to September 2018 show impressive performance of the Oil and Gas Company.
Revenue surged 103.91 percent to hit N173.71 billion compared to N85.19 billion recorded in the corresponding period of 2017.
Seplat in 2018 nine months, overturned a loss before tax of N760 million incurred in nine-month 2017 to record a remarkable profit before tax of N65.05 billion.
Despite paying more than four thousand folds in tax, as the figure rose from N860 million to N37.09 billion in the nine months under review, Seplat recorded a Profit After Tax up to 1,626.42 percent reversing losses of N1.6 billion in 2017 to close the books for the period with N279.68 billion as gains.
Consequently, in 2018 nine months, earnings per share (basic) skyrocketed to N47.98, a major improvement over the negative earnings per share of N2.88 in the corresponding period of 2017.
In the run-up to the announcement of their Full Year Audited Financial Statement, Seplat Petroleum on the 14th of January notified the Exchange on the postponement of their closed period.
‘’Following the scheduling of a meeting of the Board of Directors of the company for 28th February 2019, the closed period is consequently extended to twenty-four hours (24 hrs.) after the audited financial statement has been released to the public.’’
SEGUN ADAMS
