Seplat Energy has reported a profit of N33.9 billion for the nine months that ended September 2022.
Amidst the continuous rise in inflation, the financial report of the company shows that the amount is 144% higher than the profit reported during the same period of the previous year. The impressive record, however, is on the heels of activities of the previous quarters (Q1 and Q2) of the year 2022. The Q3 report depicts a N1.6 billion loss and a revenue dip to N39.5 billion, from N62 billion.
The company explained that the third-quarter production was severely affected by evacuation issues in all assets, and this led to deferred liquid volumes of 3.4 MMbbls. Consequently, total liquids production in the third quarter averaged 12,475 bopd, down 58% from the previous quarter (Q2 2022).
It stated, “For OMLs 4,38, & 41, the situation would have been more acute if we had not been successful in operationalizing the Aumukpe Escravos Pipeline (AEP). A total of 1.2 MMbls or 18,600 bopd (gross) was passed via the AEP in Q3 2022. Initial technical and operational hitches were experienced on the AEP but we expect an improvement in the performance of the pipeline from the fourth quarter as we overcome these initial challenges. Third-party deferment on OML 4, 38, and 41, due to evacuation constraints from AEP, was 4.8%.”
Revenue from contracts with customers rose from N183 billion to N259 billion in the 9 months, a 41% jump in the first three quarters of the year. However, revenue for Q3 fell to N39 billion from N62 billion.
Recall that Nigeria’s oil export volumes fell to less than one million barrels per day in August due to significant oil theft and pipeline vandalism. In September, Nigeria National Petroleum Company Ltd (NNPC) reported that Nigeria was losing up to 470,000 bopd.
Also, Nigerian operators have experienced unprecedented levels of crude oil theft through illegal connections to pipelines across the Niger Delta. This situation has resulted in onshore production shut-ins and terminal operators declaring force majeure arising from lower deliveries.
Meanwhile, the company saw an increase in the cost of sales to N140 billion from N125 billion for the nine months ended 30th September 2022, showing a 12.5% rise, while the gross profit stood at N119 billion for the period compared to N58 billion in the previous year.
Also, general and administrative expenses jumped from N21 billion to N33 billion while other income dipped from N33 billion to N22 billion during the period.
What the company is saying
Mr. Roger Brown, Chief Executive Officer, Seplat Energy Plc, said while commenting on the report, “Despite an unusually challenging quarter for the Nigerian oil and gas industry, with key export routes being unavailable because of force majeure, we have demonstrated that we have a resilient business. The Amukpe-Escravos Pipeline has been operational since August and we have had our first oil export this month. The Trans Forcados Pipeline has now resumed operations and we continue to increase our use of alternative export routes, giving us confidence that the final quarter of the year will show some improvement in volumes.”
“We are working closely with all the relevant stakeholders on our transformational acquisition of MPNU and remain confident that the proposed acquisition will be brought to a successful conclusion in accordance with the law. The acquisition will add significant reserves and production capacity that will strongly reinforce Seplat Energy’s position as Nigeria’s leading indigenous oil and gas producer.”
The key highlight of its result in dollar terms
- Revenues are up 34.4% to $618.6 million ($678.9 million including underlift), driven by higher realized oil prices of $108.25/bbl.
- EBITDA up 27% to $337.9 million (adjusted for non-cash items)
- Strong cash generation of $368.1 million, CAPEX of $110.3 million
- A strong balance sheet with $304.8 million cash at the bank, net debt of $452.2 million
- Production opex of $9.3/boe
- Average realized gas pricing sustained at $2.80/Mscf despite pricing pressure on domestic gas delivery obligation
- Received $13.4 million out of a total of $55 million in accordance with the Ubima divestment agreement
Q3 dividend of US2.5 cents per share, taking 9M 2022 total to US7.5 cents per share ($44.1 million paid in the period)
