Seplat saw its Q1 revenue rose 16.8% to $152.4m with increased operational efficiency and cost reduction strategy

• Oil firm reported $28 million in Q1 PBT; declares $2.5 cent dividend

Charles Abuede

With the 2021 expected production guidance between the average of 48,000 to 55,000 barrels of oil equivalent per day (boepd), Seplat Petroleum Development Company Plc, a leading Nigerian independent energy company, in its unaudited results for the three months ended 31 March 2021, reported a 16.8 per cent rise in its revenue to $152.4 million with increased operational efficiencies and further, cost reduction strategies while it recorded $77.8 million in earnings before interest, taxes, depreciation and amortization (EBITDA), which is a measure of a company’s overall financial performance resulting from the maintenance of a strong cash position.

A breakdown of the energy company’s Q1 financial performance, it reported a profit before tax (PBT) of $28 million for the period, up from a loss position of $95.7 million in the same period of 2020. Furthermore, the company recorded net debt of $458.1 million while the cash at the bank stood at $236.3 million and total capital expenditure for the period was $32.6 million. Thanks to the successful issue of $650 million 7.75 per cent senior notes to redeem existing $350 million 9.25 per cent senior notes and repay $250 million drawn on $350 million RCF and the completion of the $100 million Westport RBL facility refinancing.

Highlighting the operational performance of the company, it was seen that the working-interest oil and production was within guidance at 48,239 boepd and an average daily volume of nearly 54,000 boepd which was achieved in the first 21 days of April. Furthermore, liquids production of 28,541 bopd was recorded in Q1 2021; gas production of 114 MMscfd (19,698 boepd); low unit cost of production of $8.70/boe; while the company’s safety record extended to more than 17 million hours without LTI on Seplat-operated assets. A point of success as witnessed by the leading energy firm was the Oben-50 gas well which is now producing. Thus, Oben-51 was drilled and completed with gas expected to flow in May 2021.

Roger Brown, the Chief Executive Officer of the Company, while commenting on the results, which were released to the NSE and LSE on Thursday, said: We have made a progressive start to the year, delivering oil and gas production volumes of 48,239 boepd, within our guidance range. With the Gbetiokun field at OML40 now back in production, we are currently achieving average daily volumes of nearly 54 kboepd so far in April and we will build on this as we add additional oil and gas wells this year.

“Our flagship ANOH gas project is proceeding as planned and was fully funded in February when our joint venture company, AGPC successfully raised $260 million of debt financing. In addition, the success of our $650 million Eurobond issuance in March demonstrates investor confidence in our prudent financial management and the exciting future ahead for the Company and its stakeholders.”

According to the Seplat CEO, “As we drive forward our strategy of being a low-cost energy provider delivering reliable, affordable and sustainable energy to the young, fast-growing population of Nigeria, energy transition – which delivers on Nigeria’s social development goals in tandem with the climate agenda – is essential.”

This is the backbone of Seplat’s strategy and we will be communicating how we plan to achieve this over the coming months. To that end, the Board took the decision to change our name to Seplat Energy PLC, which more adequately reflects our ambitions of providing a broader energy mix. We will present the name change to our shareholders for approval at the AGM on 20 May 2021.”

In another development, as the company continues to hedge against oil price volatility, it expects a higher proportion of revenues to come from long-term gas contracts at stable prices. Meanwhile, Seplat revealed that it seeks its shareholders’ approval at the AGM on 20 May 2021 to change name to Seplat Energy PLC to reflect evolving strategy while it plans to host Capital Markets Day on 29 July 2021.

Also on the company’s outlook, it stated that although, it expects some COVID-19 related delays to push completion of its ANOH project into early 2022 following a cost optimisation programme, the company now expect the project to cost no more than $650 million, substantially below the $700 million budget previously stated at Final Investment Decision.

In the meantime, the company board adopts a quarterly dividend policy and declares Q1 2021 dividend of $2.5 cents per share.