REG - Seplat Energy PLC - 2021 Annual Report and Notice of AGM
22/04/2022 14:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220422:nRSV0937Ja&default-theme=true
RNS Number : 0937J Seplat Energy PLC 22 April 2022
22 April 2022
Seplat Energy Plc
2021 Annual Report and Notice of AGM
Seplat Energy Plc ("Seplat" or the "Company") confirms it has today published
its Annual Report and Accounts for the year ended 31 December 2021 together
with the notice of the Company's ninth Annual General Meeting ("AGM") and
forms of proxy. The Company will hold its AGM at 11:00am (WAT) on Wednesday
18 May 2022 at 16a Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.
In accordance with Listing Rule 14.3.6 copies of the Company's Annual Report
and Accounts for the year ended 31 December 2021, the Notice of AGM and proxy
forms have also been submitted to the FCA for publication through the document
viewing facility of the National Storage Mechanism and will shortly be
available for inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
In accordance with Disclosure Guidance and Transparency Rule ("DTR")
6.3.5R(3), copies are available on the Company's
website, https://www.seplatenergy.com/
The Company's audited financial statements and extracts of the management
report were included in the Company's Final Results announcement on 28
February 2022. That information, together with the Appendices to this
announcement, which contains the following additional information that has
been extracted from the 2021 Annual Report, constitutes the material required
for the purposes of compliance with DTR 6.3.5 only:
· the Directors' Responsibilities
Statement;
· a description of principal risks and
uncertainties that the Company faces; and
· related party transactions.
This announcement should be read in conjunction with and is not a substitute
for reading the full 2021 Annual Report. Page and note references in the
text below refer to page numbers and notes in the 2021 Annual Report and terms
defined in that document have the same meanings in these extracts.
Enquiries
Seplat Energy plc
Emeka Onwuka, CFO +234 (0) 1 277 0400
Edith Onwuchekwa, Company Secretary/General Counsel
Carl Franklin, Head of Investor Relations
Ayeesha Aliyu, Investor Relations
Chioma Nwachuku, Director - External Affairs and Sustainability
FTI Consulting
Ben Brewerton / Christopher Laing +44 (0) 203 727 1000
seplat@fticonsulting.com (mailto:seplat@fticonsulting.com)
Notes to editors
Seplat Energy Plc is Nigeria's leading indigenous energy company. It is listed
on the Premium Board of the Nigerian Exchange Limited (NGX: SEPLAT) and the
Main Market of the London Stock Exchange (LSE: SEPL).
Seplat Energy is pursuing a Nigeria-focused growth strategy through
participation in asset divestments by international oil companies, farm-in
opportunities, and future licensing rounds. The Company is a leading supplier
of gas to the domestic power generation market. For further information please
refer to the Company website, http://seplatenergy.com/
Appendices
Appendix A: Statement of Directors' responsibilities
The following Statement of Directors' responsibilities is extracted from the
2021 Annual Report and Accounts (page 136).
The Companies and Allied Matters Act, 2020, requires the Directors to prepare
financial statements for each financial year that gives a true and fair view
of the state of financial affairs of the Group at the end of the year and of
its profit or loss. The responsibilities include ensuring that the Group:
1. keeps proper accounting records that disclose, with reasonable accuracy,
the financial position of the Group and comply with the requirements of the
Companies and Allied Matters Act, 2020;
2. establishes adequate internal controls to safeguard its assets and to
prevent and detect fraud and other irregularities; and
3. prepares its financial statements using suitable accounting policies
supported by reasonable and prudent judgements and estimates and are
consistently applied.
The Directors accept responsibility for the annual financial statements, which
have been prepared using appropriate accounting policies supported by
reasonable and prudent judgements and estimates, in conformity with
International Financial Reporting Standards (IFRS), the requirements of the
Companies and Allied Matters Act, 2020 and Financial Reporting Council of
Nigeria Act, No. 6, 2011.
The Directors are of the opinion that the financial statements gives a true
and fair view of the state of the financial affairs of the Group and of its
financial performance and cash flows for the year. The Directors further
accept responsibility for the maintenance of accounting records that may be
relied upon in the preparation of financial statements, as well as adequate
systems of internal financial control.
Nothing has come to the attention of the Directors to indicate that the Group
will not remain a going concern for at least twelve months from the date of
this statement.
Signed on behalf of the Directors by:
A.B.C
Orjiako
R.T. Brown
Chairman
Chief Executive Officer
FRC/2014/IODN/00000003161
FRC/2014/ ANAN/00000017939
28 February
2022
28 February 2022
Appendix B: Principal risks and uncertainties
The following principal risks and uncertainties table is extracted from the
2021 Annual Report and Accounts (pages 40 to 45).
The implementation of our strategy can be hindered by various risks and
uncertainties. The risks that the Board considers most significant are
described here.
Operational risks
Field operations and project deliverability Third-party infrastructure downtime HSSE risks
Description Description Description
Failure to manage operational activities in line with planned expectations can
An over-reliance on third-party operated transportation infrastructure can
Oil and gas activities carry significant levels of HSSE risks if not properly
lead to production misses, project delays and cost overruns, high production expose the Company to an extended period of production being shut in. managed. As activity levels continue to increase there is a strong focus on
costs and earlier than expected field decommissioning. preventing major environmental (including the emerging climate change - GHG
emissions risk), health or safety incidents.
Mitigation Mitigation Mitigation
Focus on risk management at planning phase and mitigation plans activated.
Work is ongoing to secure a second export line to complement Forcados.
Deployment of an HSSE Management System in line with best practices.
Compulsory 'peer-to-peer' review for high-value projects and better project Continue to explore export via barging as a back-up option in extreme cases. Monitoring and reporting of HSSE performance scorecards at management and
management techniques. FEED completed and outcome prepared for presentation to JV Partners to pave Board levels. Our HSSE systems and process are subjected to independent review
way for Contracting Strategy concurrence for Engineering, Procurement, and identified improvement initiatives are deployed. Continual focus on HSSE
Protracted land acquisition, preparation and rig startup have been Installation and Commissioning (EPIC) of Amukpe LTF Upgrade. training and initiatives on incidence prevention.
contributory factors which have received focused attention and significant
process improvements and improved communications with JV partner and approving Finalising the Amukpe to Escravos pipeline (AEP) project in a bid to provide a Emergency Response plan set for any eventuality and comprehensive Incident
regulators to mitigate delays. major alternative for crude evacuation in the core assets. The AEP project is Review panels to identify and channel lessons learnt to improvement
at 99.8% completion and crude deliverability test conducted. Two contingency activities. Focus on the delivery of projects earmarked to reduce and/or
Use of smart/ intelligent wells to improve recovery and improved rig tanks in Amukpe for partial storage during shut-in over shorter periods. eliminate gas flaring as spelt out under the company's "Gas Flares Out
performance monitoring and reporting to manage NPTs. Roadmap" and new energy transition plan..
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Net working interest production
Net working interest production
HSSE scorecards
Operating costs per boe
Days downtime
LTIF
EBIT
TRIR
Strategic pillars Strategic pillars Strategic pillars
1, 2, 3
2, 3
2, 3, 5
Assessment Assessment Assessment
Very high
Very high
High
Trend Trend Trend
Steady. We continue to redefine our project management approach for improved
Steady. Remarkably improved uptime of Forcados export system. However, risk
Steady. Though the risk is inherent, we will continue to deploy our HSSE risk
speed of delivery and efficiency, finalised the integration of the newly trend is Steady, even though there is no near term line of sight for an management in line with best practices and with strong emphasis on prevention.
acquired Eland assets into our business, consolidate performance across board, alternative evacuation line, in the sudden event of prolonged outage of the
maximise production, maintain a strong balance sheet, and strategically TFP. Alternative line (AEP) is now scheduled for Q2 2021 delivery.
position the Company for future growth.
Infectious diseases outbreak in Seplat (e.g. Covid-19) Sustaining E&A programme
Description Description
Risk of an index case manifesting in Seplat offices or field locations. This
Exploration and appraisal activities carry significant levels of subsurface
leads to an unsuccessful initial control of an index case (probably resulting risk. Sustained E&A drilling failure will impact the Company's ability to
in communal spread of the disease in the Seplat community as a result of late organically replace reserves and production.
detection of secondary contact cases which may have had close contacts with
index case or close contacts from other external primary sources). Risk also
covers supply chain disruptions emanating from the pandemic i.e. the extent to
which the disease will have an impact on all key projects of the Company
(including ANOH) as designed in the work programme (impacting the supply chain
and major contractors scheduled to deliver in a few months).
Mitigation Mitigation
The Company's leadership through the COVIMOG (monitoring and response team)
Strict compliance with reservoir management guidelines. Building internal
continued to sustain the Company business and observed all recommended capacity with skilled sub-surface expertise. Drill a minimum of two
preventive measures advised by both the Presidential Task Force (PTF) and exploration wells, as well as continuous M&A work to secure available
State Governments. Over 90% of employees were fully vaccinated via a opportunities at the right price.
concerted Industry (OPTS) support, while PCR tests remained mandatory for
everyone carrying out activities in the various areas of the company's
operation and Travel Advisory updates were shared with staff. Provision
continued to remain in place for targeted tests of personnel in all locations
as required. Follow up treatment of positive cases continued to be managed and
funded by the Company. Also, as facilitated by the Lagos State Government, the
Covid-19 booster dose vaccines are now readily available in Government Health
centres, and the Company plans to keep on liaising with appropriate bodies in
the industry to facilitate this process. Manage press/publicity and
communication to avoid miscommunication/ wrong press.
KPI/Performance metric KPI/Performance metric
HSSE scorecards
Reserve replacement
LTIF
TRIR
Strategic pillars Strategic pillars
2,5
1, 2, 3
Assessment Assessment
High
Very high
Trend Trend
Steady. Our risk landscape remained largely stable with respect to existing
Steady. High grading our exploration portfolio through a thorough prospect
exposures since our last update in 2020. The Company did well to manage the screening exercise. In the near term, plan is to commence exploration drilling
lingering impact of Covid-19 (infectious disease outbreak), via a strategic campaign in the West.
management vehicle called COVIMOG.
External risks
Niger Delta stability and security Stakeholder management relationships Geopolitical risk
Description Description Description
Seplat Energy's core operations are located in the Niger Delta region of
Failure to manage stakeholders can result in business disruptions and
Nigeria has at times in its history faced political uncertainties and threats
Nigeria and that comes with significant risks. Historically, the Niger Delta interference. The Company prioritises the effective management of such as terrorism aimed at de-stabilising and undermining the orderly and
has always been a high-risk environment with security incidents such as relationships with all stakeholders including host communities, JV partners, effective rule of central government.
kidnappings, vandalism and criminal attacks on Oil and Gas installations. government, regulatory bodies and shareholders.
Mitigation Mitigation Mitigation
The Company, working with other industry players in the region, continues to
Ensure consistent delivery of CSR initiatives (as well as full compliance with
Scenarios and response options plan set. Crisis management team in place for
put pressure on government to find a lasting solution to Niger Delta the terms of the GMoU) across all operational areas. Sustain local content high alert political periods. Continue to partner/network with security
restiveness and the current security measures put in place by the facility development with priority to community contractors. Tailored CSR programmes, stakeholders and share intelligence regarding security. Business continuity
operator, together with the government's strategy of dialogue with capacity building and infrastructure developments with the host communities. plans actioned in light of current geo-political situation.
stakeholders in the region, seems to be working. Organisational focus and clear strategy to deliver shareholder value pursued
by the Board and management. Corporate governance, transparency and
proactiveness in dealings with regulators and JV partners.
KPI/Performance metric KPI/Performance metric KPI/Performance metric
LTIR
Net working interest production
Occurrences of civil
TRIR
LTIR
Security incidents
TRIR unrest and terrorism.
Operating cash flow
Host community incidences
Strategic pillars Strategic pillars Strategic pillars
2, 3, 5
2, 5
2, 3, 5
Assessment Assessment Assessment
Very high
High
High
Trend Trend Trend
Steady. Efforts by the government and industry pressure groups, aimed at
Steady. We continue to enjoy good working relations with our stakeholders.
Steady.
enhancing security in the region seems to be paying off as the business
recorded zero occurrence in militancy activities, similar to the previous
year. We will continue our monitoring and vigilance.
Financial risks
Oil price volatility Changes to tax status and legislation Availability of capital
Description Description Description
Oil prices have exhibited a history of volatility and can fluctuate sharply in
If the tax regime/legislation under which the Company operates its assets were
The oil and gas industry is highly capital intensive. Significant amounts of
line with external factors. to change, profitability may be impacted. capital are required to continue development activities and fund M&A. Non
funding of cash calls by JV partners impacts activities and liquidity.
Mitigation Mitigation Mitigation
Hedging continues to be our price risk management tool. Price sensitisation on
Perform evaluation of business plan and performance metrics exclusive of tax
Emphasis on compliance with requirements of the JV operating agreement for
project economics and cost discipline for capital projects sanctioning. benefits. Project economics were determined on maximum tax basis to mitigate effective/strict JV partner concurrence. Board review and approval of
Aggressive focus on cost reduction. the impact of the now expired pioneer tax status. Impact assessment of financial strategy and debt portfolio management with strong banking
potential tax legislature monitored at the Board level. relationships.
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Realised oil price
Effective tax rate
JV receivables
Operating cash flow
Tax status
Capex
New M&A activities
Strategic pillars Strategic pillars Strategic pillars
2
2, 3
2, 3, 4
Assessment Assessment Assessment
High
High
Very high
Trend Trend Trend
Decreasing. In the year 2021, we kept focus of our price risk management
Steady. PIB was passed into law as an Act (PIA) in August, 2021. Impact on
Decreasing. JV partners continue to remain current in paying cash calls.
policy to protect the Company's cash flow stream from downside scenarios. We Seplat is assessed as moderate.
will also continue to take hedge positions and apply cost reduction
strategies.
Financial risks continued
Cost control risk Liquidity Foreign exchange risk
Description Description Description
Cost reduction remains central to the Company's current operating strategy.
Liquidity risk is the risk that the Company will not be able to meet its
The Company is exposed to exchange rate risk to the extent that balances and
High operating cost and ineffective capital cost control negatively impacts financial obligations as they fall due. transactions are denominated in a currency other than the US Dollar.
operating cash flows and profitability.
Mitigation Mitigation Mitigation
Comprehensive budgeting process approved by the joint venture partner and the
Manage liquidity risk by ensuring that sufficient funds are available to meet
The Company has options to manage its foreign exchange exposure including
Board. Clear cost management targets. Grading of portfolio opportunities and commitments as they fall due. Uses both long-term and short-term cash flow financial hedge instruments such as forward exchange contracts.
project ranking for capital allocation. Focus on reducing drilling costs at projections to monitor funding requirements for activities and to ensure there
well design phase. Cost monitoring and periodic reporting. Focus on effective are sufficient cash resources to meet operational needs. Cash flow projections
contracting strategies for cost reduction. take into consideration the Company's debts and covenant compliance. Surplus
cash held is transferred to the treasury department which invests in
interest-bearing current accounts, time deposits and money market deposits.
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Operating cost per boe
Operating cash flow
Operating cash flow
EBIT
Capex
Capex
Capex
Well costs
Strategic pillars Strategic pillars Strategic pillars
2, 3, 5
1, 2, 3
2, 3
Assessment Assessment Assessment
High
Medium
Low
Trend Trend Trend
Steady. Cost discipline remains key focus of the business.
Decreasing. Improved uptime of TFP; improved JV cash call payment; oil price
Decreasing. Historically, the Company holds the majority of its cash and cash
rally; and strategic debt refinancing have all greatly improved liquidity equivalent in US dollar. Gas contracts are indexed in US dollar.
risk.
Strategic risks
Portfolio concentration risk Merger & Acquisition (M&A) risk Bribery and corruption risk
Description Description Description
High dependency on a concentrated portfolio of producing blocks and limited
Growth through M&A activities is part of the Seplat's strategy to pursue a
Bribery and corruption presents a risk throughout the global oil and gas
number of wells can leave the Company more susceptible to declining long-term focused acquisition and farm-in. M&A deals and transactions come with industry and represents an ongoing risk to any oil and gas company.
growth and reserves depletion. significant risk including structural, commercial and integration risks. There
is also the risk of nonachievement of acquisition targets due to highly
competitive landscape.
Mitigation Mitigation Mitigation
Focus on portfolio expansion strategy from the Board level to diversify
New business development unit is always looking for the right opportunities
Extensive training on anti-bribery and corruption. Embedding corporate
current portfolio. Integrated long-term planning on crude oil, gas and other for Seplat. Decision review board (DRB) process is in place to ensure deals governance principles with key focus on areas of the business which may be
renewables business. are properly vetted and adequate due diligence done on new opportunities. The more susceptible to corruption such as the contracting and procurement
DRB ensures the commercial, structural, KYC and integration risks are fully process. Processes exist to guide dealings with public officials.
considered and addressed with mitigation plan approved and in place prior to
deal closing.
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Successful execution of new acquisition and farm-in opportunities
Successful execution of new acquisition and farm-in opportunities
Whistleblowing reports
Number of disciplinary cases
Strategic pillars Strategic pillars Strategic pillars
2, 3
1, 3, 4
5
Assessment Assessment Assessment
High
Very high
Very high
Trend Trend Trend
Steady. The Company is in transform phase.
Steady. DRB process in place to vet opportunities and deals. Risk trend steady
Decreasing. Our geographical location continues to be susceptible to
following ongoing integration of Eland Oil and Gas Plc, as well as ongoing corruption. However, risk trend changed from steady to decreasing following
strategy to acquire more strategic assets. M&A landscape remains lower cases of whistle blowing during the year.
competitive.
Fraudulent activity risk Information security risk
Description Description
Fraudulent activity presents a risk throughout the global energy industry and
Potential cyber-attacks and information technology security breaches could
represents an ongoing risk to any energy company. result in loss or compromise of sensitive proprietary information,
communication and IT business continuity disruption across operations.
Mitigation Mitigation
Extensive whistleblowing campaign. Continuous monitoring and improvement of
We monitor and regularly upgrade the Company's information technology and
the system of internal controls by all lines of defence with strong internal security systems. The Company has a clearly defined employee user policy and
audit activity. Automation of processes where possible to reduce manual control of access rights. Our information security framework and
intervention. infrastructure have been externally reviewed in line with requirements of ISO
27001. IT business continuity plan is in place for quick deployment.
KPI/Performance metric KPI/Performance metric
Number of reported cases
Information security identification and containment reports
Strategic pillars Strategic pillars
5
1, 5
Assessment Assessment
Very high
High
Trend Trend
Steady. Risk is kept at very high and the Company continues to maintain a zero
Steady. While cyber security continues to hold international attention, there
tolerance policy. has not been a material IT breach on our operations. However, the triggering
of the work from home policy has resulted in a rising trend of the risk,
giving the greater number of employees working externally.
Appendix C: Related Party Transactions
The following Related party relationships and transactions are extracted from
the 2021 Annual Report and Accounts (page 221-222)
38. Related party relationships and transactions
The parent Company (Seplat Energy Plc) is owned 6.43% either directly or by
entities controlled by A.B.C Orjiako (SPDCL(BVI)) and members of his family
and 8.20% either directly or by entities controlled by Austin Avuru
(Professional Support Limited and Platform Petroleum Limited). The remaining
shares in the parent Company are widely held.
The goods and services provided by the related parties are disclosed below.
The outstanding balances payable to/receivable from related parties are
unsecured and are payable/receivable in cash.
i. Shareholders of the parent company
Shebah Petroleum Development Company Limited SPDCL ('BVI'): The Chairman of
Seplat is a director and shareholder of SPDCL (BVI). The company provided
consulting services to Seplat. Services provided to the Group during the
period amounted to $1.1 million, ₦0.45 billion (2020: $900 thousand, ₦342
million). Payables amounted to $101.8 thousand, ₦41.9 million in the current
period.
ii. Entities controlled by key management personnel
(Contracts>$1million in 2021)
Cardinal Drilling Services Limited (formerly Caroil Drilling Nigeria Limited):
The Company is owned by common shareholders with the parent Company. The
company provides drilling rigs and drilling services to Seplat. Transactions
with this related party amounted to nil (2020: $5.7 million, ₦2.1 billion).
Payables amounted to nil in the current period (Payables in 2020: $591
thousand, ₦225 million).
iii. Entities controlled by key management personnel
(Contracts<$1million in 2021)
Abbeycourt Trading Company Limited: The Chairman of Seplat is a director and
shareholder. The Company provides diesel supplies to Seplat in respect of
Seplat's rig operations. This amounted to $222 thousand, ₦88.9 million
during the period (2020: $296 thousand, ₦106 million). Receivables amounted
to $6, ₦2,649 (2020: $15,273, ₦5.8 million).
Stage leasing (Ndosumili Ventures Limited): A subsidiary of Platform Petroleum
Limited. The company provides transportation services to Seplat. This amounted
to $278 thousand, ₦111.3 million (2020: $714 thousand, ₦257 million).
Payables amounted to $3.2 thousand, ₦1.3 million in the current period
(2020: $23.6 thousand, ₦8.9 million).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END ACSSEAFEEEESEILRecent news on Seplat Energy
See all newsREG - Seplat Energy PLC - Share awards and Long Term Incentive Plan
AnnouncementREG - Seplat Energy PLC - Currency Exchange Rate: Q1 2025 Interim Dividend
AnnouncementREG - Seplat Energy PLC - 2025 Capital Markets Day
AnnouncementREG - Seplat Energy PLC - Results of the Twelfth Annual General Meeting
AnnouncementREG - Seplat Energy PLC - Currency Exchange Rate for 2024 Dividends
Announcement