The last couple of months have seen Seplat Petroleum Development Company trending in the news, and oftentimes in relation with some very controversial issues. Besides the ANOH gas project, Seplat has been roped into the Access Bank loan disputes with Cardinal Drillings, which even led to the shutdown of its corporate headquarters.

Seplat’s offices have been reopened in the last couple weeks, but there are still a lot of discussions around the Access Bank versus Seplat loan tussle. There have also been protests from some of the company’s staff over delayed confirmation and other employment-related matters, as well as a protest of the Ikweghwu community in Amukpe, Delta state demanding jobs and infrastructure development from the company.

So what is it about Seplat that continues to be of interest to individuals and corporations?

Seplat Petroleum Development Company was established in 2009 after a merger of Austin Avuru’s Platform Petroleum Limited and A.B.C Orjiako’s Shebah Petroleum Development Company. Avuru became the MD, while Orjiako was the Board Chairman. Both men had been friends from their years of working for others and later running their individual businesses; they reached the decision to merge their companies to take advantage of the opportunities in the nation’s upstream sector.

The benefits they sought played out soon after the merger, when they got a major investment from Muarel & Prom, a French oil company. This investment ceded a 45% interest in the company to the French oil company, and gave Seplat an opening to more lucrative opportunities. Seplat was appointed operator of three oil mining leases (OMLs), which include OML 4, OML 41 and OML 38.

With a strong reserve base and track record, Seplat had a consistent increase in its gross oil production and in April 2014, completed the dual listing on both the London Stock Exchange and the Nigerian Stock Exchange.

The $535 million raised in the initial public offering (IPO) ranked as the largest for a sub-Saharan Africa company since 2008 and the second-largest ever for a Nigerian company, further enabling the company to acquire additional blocks.

Revenue and profit have consistently been on the rise since Seplat commenced operations, and gross liquid production has grown more than sixfold over the decade.

At a time when many still regarded gas as a by-product of oil production, Seplat foresaw that gas would soon grow to become an alternate source of energy in Nigeria and started making investments in commercialising the gas reserves it had on its oil blocks. Seplat carried out aggressive investment in the installation of dedicated processing and drilling facilities for gas production wells. Today, the company supplies gas to three power plants that generate almost 40 per cent of power supply in Nigeria.

Seplat’s legal battles

Seplat had a series of protracted disputes and court cases over the years. One of such disputes was with Canadian oil company, Crestar Natural Resources Limited, over the acquisition of OML 25 from Shell. According to the details of the case, both companies jointly emerged the preferred bidders in the acquisition of the OML in 2014, but disagreed along the line over a $20.5 million deposit held in escrow. This case dragged till 2018 before it was resolved.

There was also another case in which Seplat alongside Chevron Nigeria Limited won against Brittania-U Nigeria Limited in 2016. This was a dispute over OMLs 53 and 55.

The most recent and publicised court case Seplat has had to grapple with is the case of Access Bank Vs. Seplat Petroleum Development Company which resulted in the sealing up of the building that houses the company’s head office. The details of the case revealed that Cardinal Drilling Services obtained a loan facility from Diamond Bank (now Access Bank) to purchase the CDS Rigs 101, 201, 202, and 203. The facility was secured by a fixed and floating Debenture over Cardinal’s assets.

With Cardinal Drilling unable to service the outstanding part of the facility (amounting to $85.8 million), the bank activated Clause 6 of the Deed of Debenture, which allows it to appoint a Receiver/Manager over Cardinal’s assets, and listed Seplat and its Chairman, Dr. A.B.C Orjiako, as co-defendants in the litigation.

Access Bank claimed that two of Cardinal Drilling Services rigs (CDS 101 and 201) were deployed into Seplat’s operations, while all the four rigs purchased with the loan were very critical to Seplat’s future drilling plans, making Seplat “a sister company to Cardinal, jointly promoted by Orjiako who is the alter ego of the two companies.”

The bank further claimed that Seplat was the ‘real debtor’ while Cardinal Drilling was merely a ‘vehicle smokescreen’, and thus sealed Seplat’s headquarters at Ikoyi. It was also granted a Mareva injunction to seize bank accounts and other assets owned by Seplat, while also appointing Kunle Ogunba, SAN, as the receiver-manager for the assets of the defendants.

The statement from Seplat however insists that Seplat neither borrowed nor guaranteed any loan for Cardinal Drilling, but only supported discussions between Cardinal Drilling and Access Bank towards the settlement of the debt owing to business relationship.

A statement signed by Seplat’s Company Secretary and General Counsel, Mrs. Edith Onwuchekwa, read: “We understand that Cardinal Drilling has outstanding loan obligations to Access Bank. However, Seplat is neither a shareholder in Cardinal Drilling nor has outstanding loan obligations or guarantees to Access Bank and did not at any time make any commitments or guarantees in respect of Cardinal Drilling’s loan obligations to Access Bank.”

Seplat Petroleum also filed an application dated 12 December 2020 seeking to discharge or lift the same interim order, and be granted access to the offices and the frozen accounts. Despite posting a bond of $20 million as security, its application was turned down.

A month after, a Lagos Court of Appeal ordered the suspension of the interim order issued by a Federal High Court sealing the corporate offices of Seplat Petroleum Development Company holding that the balance of convenience favoured the petroleum company. The court held that the petroleum company couldn’t deliver this service unless the order was suspended. It however ordered the company to issue a bond of $20 million in the name of the Court’s Chief Registrar.

The Management

Seplat has been fairly fortunate with its management and has its impressive financials and strategic decisions over the years to show for this. The duo who started the company as Managing Director and Board Chairman were both seasoned executives in the oil sector and so had a lot of know-how and know-who to bring to the marriage.

Avuru retired from his position as Managing Director in 2020 and was succeeded by Roger Thompson. Orjiako has remained the board Chairman even after 11 years, with several equally competent members on the board.

Oil companies and the Social Responsibility dragnet

One sure cause of dispute between oil exploring companies and their host communities has been the issue of corporate social responsibility – an avenue of giving to the community and boosting the social welfare of the people who bear the brunt of the company’s profit-making activities.

A recent analysis by Nairametrics showed that between 2010 and 2019, Seplat spent no less than $66.69 million on Corporate Social Responsibility (CSR). The report dug deeper on the Seplat Petroleum Development Company – 2019 Sustainability Report,” made available on the Nigeria Stock Exchange platform.

According to the report, Seplat had invested in 55 community development projects in 2019 alone, with 31 projects completed and 24 projects ongoing. Also in the same year, the company awarded 201 university scholarships and spent over N11.9 million as prize money to winning schools and students in the PEARL QUIZ competition.

Other areas touched include the healthcare sector where 3,500 pregnant women and over 15,690 patients with eye diseases have received free treatment courtesy of the oil company. Hundreds of youths have also been trained and empowered to engage in commerce.

However, it would seem that some of these projects do not extend to all their host communities because of the recent protest by some members of the Ikweghwu community over what they termed “oppression and intimidation from the management” despite exploring oil from their community for eight years.

The press statement signed by Dr. Chioma Nwachuku, Seplat’s GM, External Affairs & Communications said that the company was not aware of any existing agreement, but was in talks with the community for a peaceful settlement.

It is not clear whether the company has any defined policy or understanding that cuts across all its host communities in terms of infrastructural development, job allocation and social welfare, or if it reaches a different understanding from one community to the other. As an oil company, it is almost normal that host communities would come up with demands intermittently, sometimes to avoid being exploited by the company, and at other times, to exploit the company. A definite policy in this regard will no doubt save Seplat the unwanted disruptions that protests cause to its activities.

MainOne Cable Company Nigeria Limited recently celebrated 10 years in the business of bridging the digital divide in West Africa.

As the provider of the first privately owned, open access 7,000-kilometer undersea high capacity cable submarine connection in West Africa, MainOne continues to attract the interest of individuals, corporate bodies and government institutions across the continent.

READ: MainOne named Microsoft Azure ExpressRoute Connectivity Provider for Nigeria

However, MainOne was among six telecom operators recently mandated by the Nigerian Communications Commission (NCC) to submit their yearly financial statements, within 7 months after the end of their financial year.

The company, though celebrated, is not without its challenges, which its financial statements would make clearer. However as we await the submission of the statement, Nairametrics looks into MainOne in this week’s Company Profile to understand what makes it tick.

READ: Facebook is building $1 billion high speed internet across Africa

How it started

Funke Opeke returned to Nigeria in 2008, where she was faced with ridiculously poor internet connectivity, so she decided to do something about it.

She started Mainstreet Technologies, the developers of MainOne Cable in the same year, to serve as a service and network solutions provider, not only in Nigeria but in West Africa.

What is now recognized as one of Africa’s biggest cable companies started with all of Opeke’s savings as start-up capital. She encountered stiff challenges related to raising more capital to take care of the foundational works, feasibility studies, business plans, and technical plans. However, the company was able to pull through.

READ: MainOne commences construction of cable landing station in Abidjan

On April 28, 2008, Main Street Technologies awarded a turnkey supply contract for the MainOne Cable System to Tyco Telecommunications. After completing and commissioning the project, MainOne went live on July 22, 2010.

The company has since grown in leaps and bounds from its little beginnings. Its connections extend from Portugal to West Africa, with Cable Landings Stations along the route in Accra (Ghana) and later to other countries in Africa like Dakar (Senegal), Abidjan (Côte d’Ivoire), and Lagos (Nigeria).

READ: Rack Centre to create West Africa’s largest data centre in $100m expansion

The Phase1 cable system spans 6,900 kilometres. Additional connectivity extending to Angola and South Africa occurred in the Phase2 of the project.

In 2015, the company started operations of MDXi, said to be Nigeria’s largest Tier III Data Center, and extended a submarine cable from Lagos to Cameroon.

READ: Facebook, MainOne romance to birth high speed internet for Ogun and Edo

Operations and unprecedented glitch

MainOne is in the business of providing telecommunication services and offers wholesale broadband services through a system of cable networks and fiber optic infrastructures.

With its services acclaimed to come at fair charges, MainOne Cable has in its clientele, telecommunication operators and providers, governments, large enterprises, and schools across 10 West African countries.

The company claims that its decision to provide its services at rates that are less than the current international bandwidth prices in the region is to encourage local content development via skills transfer of critical networking technologies and job creation, with the location of the network operational center (NOC) in Nigeria.

READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

Main Street Technologies is also backed by influential investors such as the Africa Finance Corporation, the Pan-African Infrastructure Development Fund (PAIDF), and a couple of Nigerian banks.

In 2018, the company recorded a 74-minute glitch during a network upgrade that caused some Google global traffic to be misrouted through China. This temporary disruption attracted immediate reactions from critics, but the company assured that stringent processes had been put in place to prevent a repeat of such outage in the future. To its credit, there has been no other record of such.

READ: Nigerian passport holders have access to just 2.1% of the world’s GDP – Forbes

Financials

In an interview with Nairametrics in 2017, Opeke stated that the company was yet to attain profitability, but was making strategic investments that would pay off in the future. However, with the last publicly available statement being that of 2014, there is no way to ascertain what level of progress has been made in the last 6 years.

The 2014 financial statement was audited by KPMG Professional Services at the time when Babatunde Dada was still CFO. The report showed progressive growth in the company’s fortunes from 2011 to 2014. However, all of the company’s expenses went up, despite the various cost optimization programs implemented.

READ: N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners

Profit before tax grew from N146.8 million in 2013 to N189.6 million in 2014, while total revenue grew from N1.1 billion in 2013 to N1.7 billion in 2014.

In 2020, the COVID-19 pandemic and other incidents also took their toll on the company’s finances. During the company’s 10 years celebration recently, Opeke pointed out that the cost of the company’s services had become slightly expensive due to power challenges and the currency volatility in the country.

However, she said that the company was working towards deploying smarter policies to further realise its vision. She also noted that the company was in the process of winding down its foreign debt obligations and increasing exposure to Naira loans, to shield itself from the impact of the fluctuating exchange rates, since its customers paid for services in naira.

READ: Tizeti, MainOne extend partnership to expand highspeed WiFi services in Africa 

Management  

A decade after its establishment, Opeke still runs MainOne Cable as the Chief Executive Officer, while Anil Verma serves as the Chief Technical Officer.

Others are:

Solanke Abimbola, Chief Finance Officer; Tinuola Ipadeola, Head of Corporate Services and Development; Gbenga Adegbiji, Chief Operations Officer MDXi; Abayomi Adebanjo, General Counsel; and Olawale Fayose, Company Secretary.

READ: 28 million merchants to be granted crypto usage on PayPal

Heading the Board of Directors is Fola Adeola as Chairman, while Dapo Oshinusi, Taiwo Okeowo, Bennedikter Molokwu, Innocent Ike, Souleymane Keita, Banji Fehintola, Sipho Makhubela, George Olaka, Sandeep Fakun, and Praveen Beeharry, are all Directors.

With this calibre of talents and seasoned professionals on its management team, the mystery shrouding its financials becomes worrisome.

READ: SAHCO acquires eco-friendly electric tractors for its ramp operations

Recognitions

The over $400 million infrastructural investments in West Africa have made noticeable impacts across the economy and earned MainOne a number of recognitions and awards.

In 2019, MainOne was awarded the Datacloud Africa Award for Excellence in Data Center (Africa) and Africa Cloud Service Provider of the Year, Nigeria Business Leadership Award for Connectivity and Data Centre Service Provider of the Year, and BoICT Award for Best Tier III Data Centre in Nigeria – MDXi.

READ: Huawei ranks No.1 in 2019 Data Center Interconnect Market Share outside of North America

Others are NTITA Telecoms Wholesale Provider of the Year (2017), Lagos Chamber of Commerce and Industry Award for Excellence in Broadband Infrastructure (2016), Frost & Sullivan Best Practices winner for the Nigerian Data Center Customer Value Leaderships Award (2014), Ghana Telecoms Awards: Telecom Wholesale Carrier of the Year (2013), and Nigerian Telecoms Awards: Broadband Company of the Year (2011), African Telecom Hall of fame – Best Telecoms project of the year (2010), amongst others.

READ: Elon Musk surpasses Bill Gates’ wealth, now worth $128 billion

Bottom line

Besides acting in line with the new NCC policy, the Management of MainOne will have to do something about making the financial reports available to the public. Not only will this satisfy stakeholders’ curiosity, but it will also keep interested and potential investors abreast with the progress made so far and help them determine where assistance is required.