By Audrey Lotechukwu
MON 01 MARCH, 2021-theGBJournal- Seplat Petroleum Development Company Plc (Seplat), leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and the London Stock Exchange, today announced its audited results for the financial year ended 31 December 2020.
Key highlights include:
-Total revenue in 2020 was $530.5 million, down 24.0% from the $697.7 million achieved in 2019.
– Crude oil revenue was $417.9 million (2019: $495.1 million) a 15.6% reduction compared to 2019, largely reflecting lower realised oil prices of $39.95/bbl for the period (2019: $64.4/bbl) offset by added production primarily from the Eland assets.
– Gross profit decreased 68.5% to $124.6 million (2019: $395.7 million) due to lower oil prices and higher non-production costs primarily consisting of royalties and DD&A, which were $228.8 million compared to $187.7 million in the prior year.
-Direct operating costs, which include crude-handling fees, rig-related costs and operations and maintenance costs amounted to $151.8 million in 2020, 44.2% higher than $105.3 million in 2019.
-A non-cash provision of $114.4 million across non-financial assets in the period.
-An impairment provision of $144.3 million booked in the period which includes a nonfinancial asset charge of $114.4 million (IAS 36 as detailed above) and financial asset charges of $29.9 million (IFRS 9).
– The Group’s tax charge for 2020 was $5.1 million, compared to $29.1 million for 2019. The tax charge is made up of a deferred tax credit of $8.5 million and a current tax charge of $13.6 million. The deferred tax credit is mainly driven by the unutilised capital allowances and unutilised tax losses for the period. The estimated effective tax rate used for the year ended 31 December 2020 was 6% (2019: 10%). The reduction in the effective tax rate was principally due to the recognition of tax losses available for utilisation against future profit.
– Final dividend of $0.05 per share recommended ($0.10/share for full year)
-EBITDA of $266 million, operating profit of $121 million (before non-cash impairments and unrealised fair value losses)
-Strong cash position of $259 million after $100 million RCF repayment, $58 million dividends paid in the year, and
-$150 million capex; net debt at $440 million with most maturities after 2021
– Working-interest production within guidance at 51,183 boepd, despite demand fall and OPEC+ quotas
-Liquids production of 33,714 bopd, gas production of 101 MMscfd
“2020 was a challenging year for the Company but Seplat has once again shown its resilience and ability to overcome challenges and deliver production in line with guidance, operating with minimal incidences of COVID-19 cases,’’ said Roger Brown, Chief Executive Officer.
‘’From the $330 million of cash generated from operations, we have increased our capital investment, invested in ANOH and voluntarily paid down $100 million of debt, further deleveraging the balance sheet. Despite seeing the lowest oil prices in our 10-year history, we have continued to honour our commitment to shareholders of a regular income stream on their investment, by maintaining a total dividend of $0.10 per share for the year.”
“Gas is the lower-carbon feedstock for affordable electricity for Nigeria’s young and rapidly-growing population. Seplat is leading Nigeria’s transition away from spending scarce foreign currency on imported, expensive, high-emission diesel-generated electricity and we believe this will provide the necessary baseload for a functioning electricity grid that will allow renewable energy to take its place, as we see in the developed world, which in large parts is still fuelled by coal. The energy transition in Nigeria must balance both the environmental and the social agenda.”
“Our flagship ANOH project, with the Nigerian Gas Company, is now fully funded and we have made excellent progress in difficult times, with major gas processing units expected to arrive in Nigeria in Q3 2021, installation to commence before the end of the year, mechanical completion and pre-commissioning in Q1 2022 and first gas flowing to customers before the end of H1 2022, at a lower expected cost of up to $650 million.”
“We remain committed to providing shared value for all of our stakeholders. During the year, with our Government partners, we provided medical beds and other palliatives to our communities and have started construction on a 200-bed infectious diseases hospital. Seplat continues to focus on employment opportunities for communities, education, healthcare and knowledge transfer and local capacity development.”
For 2021, the company expects to produce an average of 48,000 – 55,000 boepd, taking into account the impact of OPEC+ quotas.
‘’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 have significant cash resources and will continue to manage our finances prudently in 2021, expecting to invest $150 million of capital expenditure across the full year. We remain confident that our ongoing cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth.’’
Following its successful funding, the completion of the ANOH project remains a major priority, but Seplat also expect some COVID-19 related delays to push completion into early 2022.
‘’Following a cost optimisation programme we now expect the project to cost no more than $650 million, substantially below the $700 million budget previously stated at Final Investment Decision (FID).’’
Seplat is pursuing a Nigeria-focused growth strategy and is well positioned to participate in future asset divestments by international oil companies, farm-in opportunities, and future licensing rounds. The Company is also a leading supplier of gas to the domestic power generation market.