Nigeria’s biggest indigenous oil production company, Seplat Petroleum Development Company Plc, said OPEC’s extended oil production cuts on Nigeria would lead to a decline in its 3rd quarter earnings.
The company’s CEO, Austin Avuru, disclosed this on Wednesday during an investor call. He said the company has handled the cuts so far and that its working interest production would take a little hit, even as the cuts are expected to have little impact on its overall full-year performance.
“We have managed the cut in such a way that it has had very little impact on our working interest production, and should have little impact on full-year results,” Avuru said.
The Backstory: Seplat Petroleum reported total revenue of N80.1 billion in H1 2020, a 34.2% decline when compared to N108.9 billion reported in H1 2019. Similarly, the company reported a loss after tax of N37.7 billion during the period under review, as against a profit after tax of N37.5 billion in H1 2019.
Based on the foregoing, therefore, it is obvious that the company’s financials as of half-year 2020, have already been impacted by the pandemic and trends in the oil market. As you may well know, the COVID-19 pandemic has negatively affected oil prices in 2020, resulting in a historic price drop earlier this year. This development prompted OPEC to reduce production output to its lowest level in nearly 30 years. In specific terms, production was cut to 9.6 million barrels a day and later adjusted to 7.7 million barrels, according to earlier reporting by Nairametrics.