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RNS Number : 7222V Seplat Energy PLC 11 April 2023
Seplat Energy Plc
Publication of 2022 Annual Report, Notice of AGM and Amendment of Dividend
Payment Date
Lagos and London - 11(th) April 2023: Seplat Energy Plc ("Seplat" or the
"Company") confirms it has today published its Annual Report & Accounts
and Sustainability Report for the year ended 31 December 2022, its first
Climate Risk and Resilience Report together with the notice of the Company's
tenth Annual General Meeting ("AGM") and forms of proxy. The Company will
hold its AGM virtually via https://www.seplatenergy.com/agm-2023/
(https://www.seplatenergy.com/agm-2023/) at 11:00am (WAT) on Wednesday, 10 May
2023.
In accordance with Listing Rule 14.3.6 copies of the Company's Annual Report
and Accounts for the year ended 31 December 2022, 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 (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 2023. That information, together with the Appendices to this
announcement, which contains the following additional information that has
been extracted from the 2022 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 2022 Annual Report. Page and note references in the
text below refer to page numbers and notes in the 2022 Annual Report and terms
defined in that document have the same meanings in these extracts.
Amendment of dividend payment date
The Company announced on 28 February 2023, in conjunction with its FY 2022
Financial Results, a special and final dividend of US7.5cents. The payment
date for this dividend has been amended from 10 May 2023 to 16 May 2023. This
change is to allow the Registrars facilitate the dividend payments considering
the bank holidays within the period.
Enquiries:
Seplat Energy Plc
Emeka Onwuka, Chief Financial Officer +234 1 277 0400
Eleanor Adaralegbe, Vice President, Finance
Edith Onwuchekwa, Director Legal/Company Secretary cfranklin@seplatenergy.com (mailto:cfranklin@seplatenergy.com)
Carl Franklin, Head of Investor Relations
Ayeesha Aliyu, Investor Relations aaliyu@seplatenergy.com (mailto:aaliyu@seplatenergy.com)
Chioma Nwachuku, Director External Affairs & Sustainability
FTI Consulting
Ben Brewerton / Christopher Laing +44 203 727 1000
seplatenergy@fticonsulting.com
Citigroup Global Markets Limited
Tom Reid / Peter Catterall +44 207 986 4000
Investec Bank plc
Chris Sim / Charles Craven / Jarrett Silver +44 207 597 4000
About Seplat Energy
Seplat Energy PLC (Seplat) is Nigeria's leading indigenous energy company.
Listed on the Nigerian Exchange Limited (NGX: SEPLAT) and the Main Market of
the London Stock Exchange (LSE: SEPL), we are pursuing a Nigeria-focused
growth strategy in oil and gas, as well as developing a Power & New Energy
business to lead Nigeria's energy transition.
Seplat's energy portfolio consists of seven oil and gas blocks in the prolific
Niger Delta region of Nigeria, which we operate with partners including the
Nigerian Government and other oil producers. We also have a revenue interest
in OML 55. We operate a 465MMscfd gas processing plant at Oben, in OML4, and
are building the 300MMscfd ANOH Gas Processing Plant in OML53 and a new
85MMscfd gas processing plant at Sapele in OML41, to augment our position as a
leading supplier of gas to the domestic power generation market.
For further information please refer to our website, http://seplatenergy.com/
(http://seplatenergy.com/)
Appendices
Appendix A: Statement of Directors' responsibilities
The following Statement of Directors' responsibilities is extracted from the
2022 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:
B. Omiyi
R.T.
Brown
Chairman
Chief Executive Officer
FRC/2016/IODN/00000014093
FRC/2014/
PRO/DIR/003/00000017939
28 February
2023
28 February 2023
Appendix B: Principal risks and uncertainties
The following principal risks and uncertainties table is extracted from the
2022 Annual Report and Accounts (pages 38 to 43).
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 which must be
lead to production misses, project delays and cost overruns, high production expose the Company to extended period of production being shut-in. properly managed. As activity levels continue to increase there is a strong
costs and earlier than expected field decommissioning. focus on 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.
Amukpe to Escravos pipeline (AEP) project was completed and commissioned in
Deployment of an HSSE Management System in line with best practices.
Compulsory 'peer-to-peer' review for high-value projects and better project the third quarter 2022 to complement the Trans Forcados Pipeline. Continue to Monitoring and reporting of HSSE performance scorecards at management and
management techniques. explore export via barging as a back-up option in extreme cases. Board levels.
Protracted land acquisition, preparation and rig startup have been FEED completed and outcome prepared for presentation to JV Partners to pave Our HSSE systems and process are subjected to independent review and
contributory factors which have received focused attention and significant way for Contracting Strategy concurrence for Engineering, Procurement, identified improvement initiatives are deployed.
process improvements and improved communications with JV partner and approving Installation and Commissioning (EPIC) of Amukpe LTF Upgrade.
regulators to mitigate delays. Use of smart/intelligent wells to improve Continual focus on HSSE training and initiatives on incidence prevention.
recovery and improved rig performance monitoring and reporting to manage
non-productive times. Emergency Response plan set for any eventuality and comprehensive Incident
Review panels to identify and channel lessons learnt to improvement
activities. Focus on the delivery on projects earmarked to reduce and or
eliminate gas flaring as spelt out under the Company's "gas flares out
roadmap" and new energy transition plan.
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Net working interest production
Net working interest production
HSE scorecards
Operating costs per boe
Days downtime
LTIR
EBIT
TRIR
Strategic pillars Strategic pillars Strategic pillars
3/4/5
3/4/5
1/2/3/4/5
Assessment Assessment Assessment
High
Very high
High
Trend Trend Trend
Decreasing. We continue to redefine our project management approach for
Steady. The Forcados export system recorded significant downtime towards the
Steady. Though the risk is inherent, we will continue to deploy our HSSE risk
improved speed of delivery and efficiency; close of the year - however, the AEP coming onstream in July 2022 provided management in line with best practices and with strong emphasis on prevention.
adequate evacuation support for the business and helped enhance bottom-line
Acquired the ISO 55001 Asset Management System Certification for Asset liquidity. Risk trend is kept at steady with the AEP availability in the event
Integrity, consolidate performance across the board, maximise production, of an outage of the TFP.
maintain a strong balance sheet, and strategically position the Company for
future growth.
Climate-related risks Infectious diseases outbreak in Seplat (e.g. Covid-19) Sustaining Exploration and Appraisal (E&A) programme
The Task Force on Climate-related Financial Disclosures (TCFD) divided Description Description
climate-related risks into two major categories:
Risk of an index case manifesting in Seplat offices or field locations. This
Exploration and appraisal activities carry significant levels of sub-surface
leads to an unsuccessful initial control of index case (probably resulting in risk. Sustained E&A drilling failure will impact the Company's ability to
(1) risks related to the transition to a lower-carbon economy and 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
(2) risks related to the physical impacts of climate change. 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 Mitigation
The Company's leadership through the COVIMOG (monitoring and response team)
Strict compliance with reservoir management guidelines. Building internal
The Company has identified a number of projects to reduce or eliminate gas continued to sustain the company business and observed all recommended capacity with skilled sub-surface expertise. Drill a minimum of two
flaring, as 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 concerted opportunities at the right price.
outlined in our Flares Out roadmap; projects include (i) delivery of the LPG Industry (OPTS) support, while PCR test remained mandatory for everyone
projects at Sapele and Oben, (ii) Installation of booster compressors, and carrying out activities in the various areas of the Company's operation and
(iii) the Sapele integrated gas plant project. Travel Advisory updates were shared with staff. Provision continued to remain
in place for targeted tests of personnel in all locations as required. Follow
Other mitigation include (1.) seek alternative options for cleaner energy, up treatment of positive cases continued to be managed and funded by the
(2.) Participate in all industry discussions and initiatives aimed at the company. Also, as facilitated by the Lagos State Government, the Covid-19
introduction and deployment of Carbon emissions trading schemes in a booster dose vaccines are now readily available in Government Health Centres,
developing carbon-trading oil and gas economy. 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 KPI/Performance metric
HSSE scorecards
HSE scorecards
Reserve replacement
LTIR
LTIR
TRIR
TRIR
Strategic pillars Strategic pillars Strategic pillars
1/2/3/4/5/6
1/3/4/5
4
Assessment Assessment Assessment
Very high
Medium
Very high
Trend Trend Trend
Steady. The risk trend is being kept at steady following the company's focus
Decreasing. The Company remained in a controlled situation to manage the
Steady. High grading our exploration portfolio through a thorough prospect
and commitment to deliver key projects towards reducing and or eliminating gas Covid-19 pandemic throughout the year via the oversight coordination of the screening exercise. In the near term, plan is to commence exploration drilling
flaring as spelt out under the "gas flares our road map. Additionally, the strategic management vehicle called COVIMOG. campaign in the West.
company has developed climate change and sustainability/ESG policies, as well
as developed an inaugural TCFD report (Climate risk and Resilience).
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 O&G installations. government, regulatory bodies and shareholders.
Mitigation Mitigation Mitigation
The Company, working with other industry players in the region, continue 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
operators, consolidated with 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
1/2/3/4/5
1/2/3/4/5
1/2/3/4/5
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. During the year 2022, the Company recorded no incidents resultant from
enhancing security in the region seems to be paying off as the business geo-political activities such as terrorism and secessionist agitations. As a
recorded zero occurrence in militancy activities, similar to the previous year mitigation strategy, the Company continued to monitor Niger Delta
2021. We will continue our monitoring and vigilance. geo-political developments and issued regular reports to management, as well
as partnered with security stakeholders in the sharing of intelligence
regarding security.
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. We conduct price
Perform evaluation of business plan and performance metrics exclusive of tax
Emphasis on compliance with requirements of the JV operating agreement for
sensitisation on project economics and enforce cost discipline for capital benefits. Project economics were determined on maximum tax basis to mitigate effective/strict JV partner concurrence. Board review and approval of
projects sanctioning. 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
3/4
3
3/4/5/6
Assessment Assessment Assessment
High
Medium
Very high
Trend Trend Trend
Steady. In the year 2022, we kept focus of our price risk management policy to
Decreasing. The company is participating in all ongoing engagement with
Decreasing. JV partners continue to remain current in paying cash calls.
protect the Company's cash flow stream from downside scenarios. We will also stakeholders including community leadership for a better understanding of the
continue to take hedge positions and apply cost reduction strategies. PIA mechanism.
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
3/4/5
3
3
Assessment Assessment Assessment
High
Medium
Low
Trend Trend Trend
Steady. Cost discipline remains key focus of the business.
Steady. The combination of the AEP and the Trans-Forcados Pipeline assisted
Decreasing. Historically, the Company holds the majority of its cash and cash
Seplat's liquidity position significantly in the year. equivalent in US dollar. Gas contracts are indexed in US dollar.
We manage liquidity risk by ensuring that sufficient funds are available to
meet commitments as they fall due, using both long-term and short-term cash
flow projections to monitor funding requirements for activities.
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
3/4/5/6
3/4/5/6
3
Assessment Assessment Assessment
High
Very high
Very high
Trend Trend Trend
Decreasing. The company strategic direction is targeted at accessing oil and Steady. Excom process in place to vet opportunities and deals. Risk trend
Decreasing. Our geographical location continues to be susceptible to
gas reserves and resources to support growth in Pillar2 (midstream) and Pillar steady following ongoing strategy to acquire more strategic assets. M&A corruption. However, the risk trend is kept at decreasing following lower
3 (new energy) landscape remains competitive. cases of whistle blowing recorded during the year.
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
3
3
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 2022 Annual Report and Accounts (page 216 and 251)
38. Related party relationships and transactions
The Group is controlled by Seplat Energy Plc (the parent Company). The parent
Company is owned 6.43% either directly or by entities controlled by A.B.C
Orjiako (SPDCL (BVI)) and members of his family. The remaining shares in the
parent Company are widely held. The goods and services provided by the related
parties are disclosed below.
i. Shareholders of the parent company
Shebah Petroleum Development Company Limited SPDCL (BVI): A.B.C. Orjiako 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 $916.5 thousand, ₦409.8 million (2021: $1.1 million, ₦0.45 billion).
Payables amounted to nil in the current period.
Amaze Limited: A.B.C. Orjiako is a director and shareholder of Amaze Ltd. The
company provided consulting services to Seplat. Services provided to the Group
during the period amounted to $1,457 thousand, ₦651.3 million.
ii. Entities controlled by key management personnel
(Contracts<$1million in 2022)
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 nil during the period (2021: $222
thousand, ₦88.9 million. Receivables amounted to nil (2021: $6, ₦2,649).
Stage leasing (Ndosumili Ventures Limited): A subsidiary of Platform Petroleum
Limited. The company provides transportation services to Seplat. This amounted
to nil (2021: $278 thousand, ₦111.3 million). Payables amounted to nil
(2021: $3.2 thousand, ₦1.3 million).
iii. Entities controlled by Directors of the Company
Ubosi Eleh and Company (controlled by Director Ernest Ebi): The company
provided a leasehold property to Seplat. The amount during the period amounted
to $53.7 thousand, ₦24 million.
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