REG - Seplat Energy PLC - H1 2022 Results
28/07/2022 07:16
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220728:nRSb0028Ua&default-theme=true
RNS Number : 0028U Seplat Energy PLC 28 July 2022
Please see the Full Audited Results in attached PDF
http://www.rns-pdf.londonstockexchange.com/rns/0028U_1-2022-7-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0028U_1-2022-7-27.pdf)
Seplat Energy Plc
Unaudited results for the six months ended 30 June 2022
Lagos and London, 28 July 2022: Seplat Energy PLC ("Seplat Energy" or "the
Company"), a leading Nigerian independent energy company listed on both the
Nigerian Exchange and the London Stock Exchange, announces its unaudited
results for the six months ended 30 June 2022.
Financial highlights
· Revenues up 71% from 6M 2021 to $527.0 million, higher realised oil
prices of $107/bbl
· EBITDA up 92% to $342.7 million (adjusted for non-cash items)
· Strong cash generation of $330.1 million, capex of $70.7 million
· Strong balance sheet with $350.0 million cash at bank, net debt of
$418.6 million
· Lower production opex of $8.1/boe achieved
· Average realised gas pricing sustained at $2.76 despite pricing
pressure on domestic gas delivery obligation
· Q2 dividend of US$2.5 cents per share, taking 6M 2022 total to US$5.0
cents per share
Operational highlights
· Strong safety record extended to 28.4 million man-hours without
lost-time injury from Seplat Energy-operated assets
· Working interest production improved to 52.4 kboepd in Q2 (liquids
30.3 kbopd, gas 22.1 kboepd),
6M average of 49.9 kboepd (excludes volumes from Ubima, which was divested in
Q1)
· Amukpe-Escravos Pipeline commercial agreements signed, continuous
injection expected from first week of August
· Exit from Ubima completed for consideration of $55 million, with
initial payment of $6.4 received in July
· Agreement for 95% equity farm-in to the Abiala Marginal Field carved
out of OML 40
· Five wells drilled
· Full-year guidance narrowed to 50-54 kboepd (excludes Ubima)
Update on proposed acquisition of Mobil Producing Nigeria Unlimited (MPNU)
· Transformational acquisition announced in February 2022 will almost
triple production and boost reserves
· Seplat Energy reiterates that the Sales & Purchase Agreement
(SPA) signed on 25 February 2022 to acquire Exxon's shallow water operations
in Nigeria, MPNU, remains valid and the Company remains confident that the
proposed acquisition will be brought to a successful conclusion in accordance
with the law
Q2 corporate updates
· Ongoing strengthening of governance continues with transition from
founder Chairman to Independent Chairman, Basil Omiyi, appointed 18 May; three
new Board members announced during the period
· Samson Ezugworie joins Board in newly created role of Chief Operating
Officer
· 'Tree for Life' decarbonisation initiative launched in May with a
commitment to plant five million trees in five years across five states in
Nigeria
· Seplat West (OMLs 4,38 &41) recommended for ISO 55001 (Asset
Management), a first for African E&P
Roger Brown, Chief Executive Officer, said:
"Production increased strongly in the second quarter, achieving 52.4 kboepd
across our operations, and we expect to maintain higher volumes for the rest
of the year now that we plan to export liquids through the more secure
Amukpe-Escravos Pipeline. Having divested our interest in Ubima because of its
high production costs and export difficulties, we recently acquired a 95%
interest in the Abiala marginal field and plan to begin operations there next
year using existing infrastructure in OML 40. This is consistent with the
strategy for low-cost, low-risk upstream growth we announced last year."
"We remain confident that our transformational acquisition of MPNU will be
approved, adding significant reserves and production capacity that will
strongly reinforce Seplat Energy's position as Nigeria's leading indigenous
oil and gas producer."
"We have recently launched a roadmap for decarbonisation, with a clear path to
ending routine flaring by 2024. In addition, our 'Tree for Life' initiative
will plant five million saplings to sequester carbon across five states. All
of these initiatives demonstrate our strategic commitment to build a
sustainable company that delivers energy transition for the benefit of all
Nigerians."
Summary of performance
$ million ₦ billion
6M 2022 6M 2021 % Change 6M 2022 6M 2021
Revenue 527.0 308.8 70.7% 219.2 120.4
Gross profit 274.3 88.9 208.5% 114.1 34.7
EBITDA * 342.7 178.9 91.6% 142.6 75.0
Operating profit (loss) 245.3 109.4 124.2% 102.0 42.7
Profit (loss) before tax 209.9 62.1 238.0% 87.3 24.2
Cash generated from operations 330.1 125.6 162.8% 137.3 49.1
Working interest production (boepd) 49,924 **50,786 -1.7%
Average realised oil price ($/bbl.) $107.35 $64.69 65.9%
Average realised gas price ($/Mscf) $2.76 $2.86 -3.5%
* Adjusted for non-cash items **includes Ubima production
Responsibility for publication
This announcement has been authorised for publication on behalf of Seplat
Energy by Emeka Onwuka, Chief Financial Officer, Seplat Energy PLC.
Signed:
Emeka Onwuka
Chief Financial Officer
Investor call
At 09:00 BST / WAT on Thursday 28 July 2022, the Executive Management team
will host a conference call and webcast to present the Company's results.
The presentation can be accessed remotely via a live webcast link and
pre-registering details are below. After the meeting, the webcast recording
will be made available and access details of this recording are also set out
below.
A copy of the presentation will be made available on the day of results on the
Company's website at https://seplatenergy.com/ (https://seplatenergy.com/)
Event title: Seplat Energy Half year results
Event date 9.00am (BST/WAT) Thursday 28 July 2022
Webcast live link https://secure.emincote.com/client/seplat/seplat014
Conference call and pre-register link https://secure.emincote.com/client/seplat/seplat014/vip_connect
(https://secure.emincote.com/client/seplat/seplat014/vip_connect)
Archive link https://secure.emincote.com/client/seplat/seplat014
The Company requests that participants dial in 10 minutes ahead of the call. When dialling in, please follow the instructions that will be emailed to you following your registration.
Enquiries:
Seplat Energy Plc
Emeka Onwuka, Chief Financial Officer +234 1 277 0400
Carl Franklin, Head of Investor Relations
Ayeesha Aliyu, Investor Relations
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 / Luke Spells +44 207 986 4000
Investec Bank plc
Chris Sim / Charles Craven / Jarrett Silver +44 207 597 4000
Notes to editors
Seplat Energy PLC is Nigeria's leading indigenous energy company. It is listed
on 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, https://seplatenergy.com/
(https://seplatenergy.com/)
Operating review
Working interest production for the six months ended 30 June 2022
6M 2022 Q2 2022 6M 2021
Liquids ((1)) Gas Total Liquids Gas Total Liquids Gas Total
Seplat % bopd MMscfd boepd bopd MMscfd boepd bopd MMscfd boepd
OMLs 4, 38 & 41 45% 17,386 117.7 37,681 17,119 127.9 39,166 19,618 120 40,376
OML 40 45% 8,688 - 8,688 10,150 - 10,150 5,211 - 5,211
OML 53 40% 2,139 - 2,139 1,573 - 1,573 3,275 - 3,275
OPL 283 40% 1,416 - 1,416 1,496 - 1,496 1,159 - 1,159
Total 29,629 117.7 49,924 30,338 127.9 52,385 29,263 120 50,021
Liquid production volumes as measured at the LACT (Lease Automatic Custody
Transfer) unit for OMLs 4, 38 and 41; OML 40 and OPL 283 flow station.
Following the decision to exit from the Ubima asset in April 2022, volumes
from the marginal field have not been reported
Volumes stated are subject to reconciliation and may differ from sales volumes
within the period.
Production
Working interest production for 6M 2022 averaged 49,924 boepd, (6M 2021:
50,021 boepd, excluding Ubima), with an oil / gas mix of 59% and 41%,
respectively. Within this, liquids production was up 1.3% year-on-year, to
29,629 bopd. Second-quarter total production averaged 52,385 boepd, up 10.0%
from the previous quarter (Q1 2022). The higher overall production in Q2 was
from higher oil and gas volumes, up 4.3% and 19.1%, respectively, because of
an improvement in overall uptime.
Compared to the first half of 2021, lower volumes from OMLs 4, 38 and 41 were
primarily due to outages in the Trans Forcados System that resulted in a
third-party downtime of 16%, exacerbated by scheduled and unscheduled
maintenance activities leading to a total downtime of 23%. However, the impact
of future FOT (Forcados Oil Terminal) outages on production from OMLs 4, 38
and 41 is expected to be alleviated by our use of the Amukpe-Escravos Pipeline
from August 2022, which will deliver liquids to the alternative Escravos
terminal through more secure underground pipeline.
Despite evacuation constraints, significantly higher volumes of 8,688 bopd
were achieved from OML 40 (6M 2021: 5,211 bopd) and following the deployment
of additional vessels, 10,150 bopd production was achieved in the second
quarter of 2022.
At our smaller OML 53 operation, which contributed less than 11% of liquids in
2021, production was affected by major disruption to export operations in
Eastern Nigeria, although we continue to export 2,000 bopd to the nearby
Waltersmith Refinery.
Six-month gas volumes were down 1.9% year-on-year to 117.7 MMscfd, impacted by
lower gas supply in Q1 2022 when price renegotiation with customers and issues
with a hot oil burner at the Oben Gas Plant affected production. However,
following successful conclusion of these price discussions and installation of
a new burner, gas production improved significantly to 127.9 MMscfd in Q2
2022.
Overall, the Group's oil and gas production for the period totalled 9.0 MMboe
compared to 9.1 MMboe in the same period in 2021 (excluding Ubima).
Drilling activities
The Group's ongoing drilling programme has a minimum of ten wells planned for
2022 to arrest decline and grow production across the assets. We completed
three oil wells (Amukpe-05, Opuama-12 and Gbetiokun-13 well, which was spudded
late 2021) and concluded drilling on the Sibiri exploration well. The Owu-02
(appraisal well), Opuama-13 and Oben-52 oil wells were spudded in the second
quarter with drilling progressing according to plan.
As reported in the 3M 2022 results, the Sibiri exploration well has been
drilled to TD, with initial indications it has encountered eight oil-bearing
reservoirs with 353 ft of gross hydrocarbon pay, net pay of 229 ft.
We continue to work with our partners to secure regulatory approval to
carryout extended well testing (EWT) to confirm producibility, among other
parameters critical to full field development.
We have successfully moved all four rigs acquired from Cardinal Drilling to
Seplat Energy well locations. Following a post-rig move survey of all rig
equipment, two rig inspection vendors were selected to carry out the Rig
Inspection and Certification work. The Company expects that the recommended
repairs will be concluded, and the rigs commissioned by the end of 2023.
Upstream business performance
Seplat Energy's liquids (oil and condensate) operations produced 5.3 MMbbls on
a working interest basis in 6M 2022
(6M 2021: 5.4 MMbbls). Production in the period was affected by evacuation
constraints, Ubima exit, and other deferments tied to maintenance activities.
Production downtime for the Group in the period was 23%.
Seplat West, which holds the working interest and operates our major assets
(OML 4, 38 & 41), has been recommended for ISO 55001 Asset Management
Systems certification, reflecting our commitment to operational excellence
across the Group. We believe this is the first African oil and gas operation
to achieve such certification.
Pipeline vandalism in Eastern Nigeria, on the route that evacuates oil from
OML 53, has led to a full production shut-in of around 1,000 bopd (gross) at
Jisike since February. However, the Company continues to evacuate produced
volumes of around 2,000 bopd from Ohaji to the Waltersmith Refinery. Overall,
OML 53 contributes less than 11% of total liquids based on 2021 volumes. We
have engaged with our JV partner (NAPIMS) to operationalise an alternative
evacuation option of trucking/barging for Jisike and Ohaji South fields.
Ubima marginal field exit
A settlement agreement was reached in Q1 2022 with the JV Partner All Grace
Energy Ltd. (AGEL) to divest our subsidiary Wester Ord Oil and Gas Nigeria
Ltd.'s (WON) rights in the Ubima Marginal Field for a consideration of $55
million. In accordance with agreement, AGEL began payments to WON in July,
with a payment of $6.4 million.
Ubima is in a high operating cost environment with major evacuation challenges
and substantial capital expenditure would have been required to create more
secure evacuation routes for production from the field. The decision to exit
will enable the Company to invest in other parts of its business that generate
higher returns. Following the execution of settlement agreements and transfer
of rights in the asset to AGEL, WON derecognised both asset and liabilities in
H1 2022 (Ubima's current reserves of approximately 2 MMbbls). Ubima's
production has been removed from the average daily production stated in these
results.
Farm-in to Abiala marginal field
Following the 2020 Marginal Field Bid Round in Nigeria, Naphta Global E&P
Ltd. (Naphta) was awarded 100% equity in the Abiala marginal field carved out
of OML 40 by the NUPRC. The marginal field contains 2C gross oil resources of
around 23 MMbbls and 2U gross resources of around 54 MMbbls.
Elcrest (45% owned by Seplat Energy) has entered into an agreement with Naphta
for a 95% equity farm-in into the Abiala marginal field, while Naphta will
have a 5% carried interest. Elcrest will also assume the role of Operator and
Technical & Financial Partner in the Elcrest/Naphta Joint Venture. The
Heads of Agreement was executed with a signature bonus of $12 million paid to
NUPRC. The transaction represents a consolidation of the Company's strategic
position on the OML 40 block and provides an early monetisation opportunity
using existing OML 40 facilities, subject to agreement with NPDC (Nigerian
Petroleum Development Company), which operates the OML 40 Asset.
In developing the field, Elcrest is targeting first oil by end of Q2 2023 and
plans to focus on low-cost development with early monetisation opportunities
that leverage existing contractual positions to accelerate the field's
development. Seplat Energy will also explore how to optimise its tax position
to the extent possible under the new PIA.
Amukpe-Escravos pipeline
Following mechanical completion of the pipeline, Seplat Energy has signed all
the necessary offtake and crude handling agreements. Dewatering of the AEP
line has commenced and the continuous injection of crude is expected by the
first week of August. This therefore allows us to commence lifting from the
Chevron terminal during this quarter. The mostly underground pipeline will
provide greater revenue assurance through reduction in losses and downtime.
Midstream Gas business performance
Working interest gas volumes for the period were 117.7 MMscfd (6M 2021: 120
MMscfd). The Gas business contributed 41% of the Group's volumes on a boepd
basis and 10.9% of Group revenues. Price renegotiation with customers was
concluded in the period and following the DGDO gas pricing revision in August
2021, the average gas price achieved was $2.76/Mscf. During the period we
signed short-term gas sales agreements (GSAs) with three new customers, two of
which commenced offtake at a combined rate of 66 MMscfd in January and March.
The third customer will commence offtake of 20 MMscfd in Q4 when conditions
precedent to commence are expected to have been satisfied.
In the second quarter, gas sales volumes were impacted by network pressure
affecting offtake by our customers downstream, by the shutdown of the Oben gas
plant for repairs of critical equipment and by the well testing campaign
carried out.
ANOH Gas Processing Plant
Seplat Energy continues to make progress on the ANOH plant and has achieved
87% overall project completion at the gas plant site. The government partner,
the Nigerian Gas Company (NGC), is delivering the pipelines that will take the
gas from ANOH to Oben, namely the 23km spur line and the Obiafu-Obrikom-Oben
(OB3) pipeline.
Drilling on the 1.85km River Niger crossing has encountered some technical
issues on a small section of the crossing, and this is needed to complete the
OB3 pipeline project. The partner, NGC, is confident of resolving this and
Seplat is engaging constantly as resolution options are considered.
In addition, on the separate spur line project, the Company has been informed
that the milling and coating of the outstanding line pipes for the spur line
project, which is being undertaken in China, is nearing completion. Shipping
out of China is expected in Q3 2022.
The latest schedule provided by NGC shows completion of both OB3 and Spur Line
in Q1 2023, and therefore the Company maintains its timeline of first gas in
H1 2023.
NERC initiative to assure gas supply and revenue collection
To secure the sustainability of gas supply to the Generation Companies
(Gencos), the Nigerian Electricity Regulatory Commission (NERC) has
established a pathway to reactivate partial securitisation of Gas Contracts
for the Nigerian Electricity Supply Industry.
The commission facilitated contractual agreements between the generation,
transmission, and distribution companies to guarantee a daily average of 5,000
MW of electricity to consumers. The order, which became effective on 1 July
2022, proposes a payment waterfall to address the current issue of the
non-collection of full revenue for gas sales for Domestic Gas Delivery
Obligation (DGDO Customers). In addition, the order gives the gas suppliers
and gas transporters priority over the Gencos in terms of payments. This is a
positive development that will guarantee offtake, improve revenue collection
and reduce trade receivables, which currently stands at $27 million for the
Company's existing DGDO GSAs.
ESG developments
Seplat Energy is committed to environmental protection and is in step with
global objectives to reduce carbon greenhouse gas emissions. Through
investments in decarbonisation projects, the Company has developed a road map
with defined operational targets towards eliminating flares from Seplat Energy
operations over the next two years. We hope to reduce routine flaring by 40%
by the end of 2022 (exit rate compared to a start-of-year baseline) primarily
through the installation of gas compressors at Sapele. Flare reduction
initiatives are also ongoing at the Oben and Amukpe stations and in June 2022,
daily flares at Oben and Amukpe were reduced by 8.2% and 23.5%, respectively.
Aside from ending routine flares, we are investing in other ways to
decarbonise our operations, such as replacing diesel with LPG (Liquefied
Petroleum Gas) and onsite solar energy generation.
To offset the residual carbon emissions, the Seplat Energy 'Tree for Life'
initiative was launched in May and is a commitment to plant five million trees
in five years across Nigeria, starting with the five states of Edo, Delta, Imo
and two Northern states.
HSE performance
Safe and responsible operations are critical to the delivery of Seplat
Energy's strategy. The Company has now achieved more than 28.4 million
man-hours without LTI on its operated assets.
Staff and contractors worked a total of 4.2 million man-hours with no
fatalities or lost-time injuries. There was one major injury incident in the
period, which was managed according to the Company's governing processes.
Improvements have been implemented and learnings shared to enable continuous
improvement and improve mitigating actions.
There were 24 HSE incidents in total, compared to 21 incidents in the first
six months of 2021, including five reportable oil spills and four gas leaks,
all of which were remediated with limited environmental impact.
The Group established appropriate processes and safeguards for its people and
operations against Covid-19. A spike in positive cases was observed in the
second quarter, prompting the Company to re-enforce all Covid-19 control
protocols at our field operations and offices. These measures will be kept in
place for as long as necessary.
Board changes
On 22 April 2022, the Company announced the appointment of three new
Directors, effective 18 May 2022: Mrs. Bashirat Odunewu (Independent
Non-Executive Director); Mr. Kazeem Raimi (Non-Executive Director); and Mr.
Ernest Ebi (Non-Executive Director).
Following the decision of the founding Chairman ABC Orjiako to step down from
the Board at the 2022 AGM, Basil Omiyi was appointed Independent Non-Executive
Chairman on 18 May 2022. Charles Okeahalam was appointed Senior Independent
Non-Executive Director.
On 30 June 2022, the Company announced the appointment of Mr. Samson (Sam)
Chibogwu Ezugworie as the new Chief Operating Officer and Executive Director
on the Board of the Company effective 1 July 2022. Mr. Ezugworie comes with
over 30 years' extensive industry experience, the last 25 years being with
Royal Dutch Shell in Nigeria and overseas. Mr. Ezugworie has built a strong
reputation as a business / safety / ethical leader and integrator.
Mr. Effiong Okon, the Operations Director and Executive Director on the Board
of Seplat Energy, stepped down from the Board on 1 July 2022. Mr. Okon assumed
a new position as the Director New Energy to significantly accelerate the
development of the new energy business and advance the Company's agenda on
energy transition.
Update on proposed acquisition of MPNU
The Company announced on 11 July that the Nigerian National Petroleum Company
Limited (NNPC) commenced an action at the State High Court of the Federal
Capital Territory in Abuja, Nigeria (State High Court) in relation to the
acquisition of the entire shares of MPNU. MPNU, its shareholders (Mobil
Development Nigeria, Inc. and Mobil Exploration Nigeria, Inc.), and the NUPRC
are named as defendants in the action. This follows NNPC's request to the
State High Court to declare that a dispute has occurred between itself and
MPNU in relation to the interpretation of pre-emption rights under their Joint
Operating Agreement (JOA) and order NNPC and MPNU to arbitration as required
by the JOA.
The State High Court made an ex-parte order of interim injunction restraining
the defendants from completing any divestment in MPNU, including the SPA
signed with Seplat Energy Offshore Limited, while the matter was before the
Court.
Neither Seplat Energy nor Seplat Energy Offshore Limited is a party to the
suit. The Company cannot provide further comments as the matter is awaiting
resolution by the State High Court and is therefore sub judice. Seplat Energy
reiterates that the SPA is still valid and subsisting, and the we remain
confident that the proposed acquisition will be brought to a successful
conclusion in accordance with the law. We will provide further updates as and
when applicable.
Outlook
Full-year production guidance for 2022 reflects expected third party downtime
and the derecognition of Ubima and has been narrowed to 50,000 to 54,000 boepd
on a working interest basis, comprising 30,000 to 33,000 bopd liquids and 116
to 121 MMscfd (around 20,000 to 21,000 boepd) gas production.
Capital expenditure expectation for 2022 remains at around $160 million. The
Company expects to drill four additional oil wells in the coming quarter to
arrest decline and support production growth across the asset base, complete
ongoing projects, invest in maintenance capex to secure the existing assets
and continue investments in gas.
Financial review
Revenue
Revenue from oil and gas sales in 6M 2022 was $527.0 million, a 70.7% increase
from the $308.8 million achieved in 6M 2021. Adjusted for an underlift
(shortfalls of crude lifted below Seplat Energy's share of production, which
is priced at the date of lifting and recognised as other income) of $42.7
million representing 463 kbbls, total revenues were $569.7 million.
Crude oil revenue was 91.7% higher than for the same period last year at
$469.2 million (6M 2021: $244.8 million), reflecting higher average realised
oil prices of $107.35/bbl. for the period (6M 2021: $64.69/bbl.), the increase
being mostly attributable to the impact of the conflict in Ukraine on global
energy prices. The total volume of crude lifted in the period was 4.4 MMbbls,
higher than the 3.9 MMbbls lifted in 6M 2021. In addition, the Group's 6M 2022
produced liquid volumes were subject to reconciliation losses of 12.2%. We
expect these to improve from August, when we begin to evacuate the bulk of our
crude through the new Amukpe-Escravos underground pipeline.
Gas sales revenue decreased by 9.5% to $57.8 million (6M 2021: $63.9 million),
due to lower gas sales volumes of 21.3 Bscf compared to 21.7 Bscf in 6M 2021,
because of lower customer offtake, production stoppages at Oben, as well as
outages on the Trans Forcados Pipeline. In addition, the average realised gas
price was lower at $2.76/Mscf (6M 2021: 2.86 Mscf), reflecting the reduction
applied to the DGDO (Domestic Gas Delivery Obligation) gas-to-power volumes
from August 2021.
Gross profit
Gross profit increased by 208.5% to $274.3 million (6M 2021: $88.9 million)
and benefitted from higher realised oil prices. Non-production costs consisted
primarily of $108.8 million royalties and DD&A of $70.4 million, compared
to $63.4 million royalties and $64.5 million DD&A in the prior year. The
higher royalties were the result of higher oil prices.
Direct operating costs, which include crude-handling charges (CHC),
barging/trucking, operation and maintenance costs, amounted to $67.6 million
in 6M 2022, 23.7% lower than $88.6 million incurred in 2021. This was partly
because of a $5.3 million (net) credit note arising from 2020 & 2021
reconciliation of CHC invoices that offset fees incurred in the period as well
as lower operation and maintenance costs.
On a cost-per-barrel equivalent basis, the normalised production opex
(excluding the above credit note) was $8.1/boe, 16.5% lower than $9.7/boe
incurred in 2021 when extensive asset integrity works were carried out.
Operating profit
The operating profit for the period was $245.3 million, compared to $109.4
million in 6M 2021, an increase of 124.1%.
An impairment charge of $14.9 million was recognised in the period. This
includes a non-financial asset charge of $8.5 million reflecting a provision
for long outstanding line pipes and a $6.4 million provision for the ageing of
some government receivables. We expect these to reverse once recoveries are
secured.
General and administrative expenses of $46.4 million were 27.1% higher than
the H1 2021 costs of $36.5 million. The increase was driven by higher travel
and training costs, following relaxation of travel restrictions, and other
increases to staff salaries and emoluments.
An EBITDA of $342.7 million adjusts for non-cash items, which include
impairment and exchange losses, equating to a margin of 65.0% for the period
(6M 2021: $178.9 million; 57.9%).
Net result
The profit before tax was 238% higher at $209.9 million (6M 2021: $62.1
million). The income tax expense of $126.6 million includes a current tax
charge (cash tax paid) of $36.4 million and deferred tax charge of $90.2
million. The deferred tax charge is driven by the unwinding of previously
unutilised capital allowances and movements in underlift/overlifts in the
current year. The effective tax rate for the period was 60% (6M 2021: 42%).
The profit for the period was $83.3 million (6M 2021: $36.2 million) with a
resultant basic earnings per share of $0.14 in 6M 2022, compared to $0.10 per
share in 6M 2021.
Cash flows from operating activities
Cash generated from operations in 6M 2022 was $330.1 million (6M 2021: $125.6
million). Net cash flows from operating activities were $284.3 million (6M
2021: $109.9 million), after accounting for tax payments of $41.1 million (6M
2021: $12.4 million) and a hedge premium of $4.7 million (6M 2021: $3.4
million).
The Group continued to record improvements in the recovery of receivables from
the major JV partner and in H1 2022 received $141 million towards the
settlement of cash calls. The major JV receivable balance now stands at $55.5
million, down from $83.9 million at the end of 2021.
Cash flows from investing activities
Net capital expenditure of $70.7 million included $42.1 million invested in
drilling and $28.6 million in engineering projects.
Deposits for investment of $140.3 million include a deposit for the proposed
acquisition of Mobil Producing Nigeria Unlimited, announced in February of
$128.3 million and the $12.0 million farm-in fee for the Abiala marginal field
carved out of OML 40.
The Group received total proceeds of $10.8 million in the period under the
revised OML 55 commercial arrangement with BelemaOil for the monetisation of
298.4 kbbls of crude oil. In 2022, recovery has been affected by sabotage
along the Nembe Creek Trunk Line and the Trans Niger Pipeline, with theft
factors ranging from 30% to 90%.
Cash flows from financing activities
The Company paid $28.2 million dividends to shareholders in the period. Other
financing charges of $9.4 million reflect the commitment fee on the $350
million Revolving Credit Facility and $26.1 million reflects interest paid on
loans and borrowings.
Liquidity
The balance sheet continues to remain healthy with a solid liquidity position.
Net debt reconciliation $ million $ million drawn Coupon Maturity
31 March 2022
Senior notes* 661.7 650.0 7.75% April 2026
Westport RBL* 98.3 110.0 Libor+8% March 2026
Off-take facility* 8.6 11.0 Libor+10.5% April 2027
Total borrowings 768.6 771.0
Cash and cash equivalents (exclusive of restricted cash) 350.0 350.0
Net debt 418.6
* Including amortised interest
Seplat Energy ended the first half of the year with gross debt of $768.6
million (with maturities in 2026 and 2027) and cash at bank of $350.0 million,
leaving net debt at $418.6 million. Included in the restricted cash balance is
$8.0 million and $6.2 million set aside in the stamping reserve account and
debt service reserve account respectively for the revolving credit facility.
Dividend
The Board has approved a Q2 dividend of US2.5 cents per share (subject to
appropriate WHT) to be paid to shareholders whose names appear in the Register
of Members as at the close of business on 12 August 2022. This takes H1
dividend payments to US5.0 cents per share, in line with the Company's
dividend policy.
Hedging
Seplat's hedging policy aims to guarantee appropriate levels of cash flow
assurance in times of oil price weakness and volatility. Total volumes hedged
in 2022 was 7.5 MMbbls and the program for the remainder of 2022 consists of
dated Brent put options of 3.5 MMbbls at an average premium of $1.32/bbl. as
follows: (i) for Q3, 1.0 MMbbls are protected at a strike price of $55/bbl.
and 1.0 MMbbls at $60/bbl. and (ii) for Q4, 1.5 MMbbls at a strike price of
$65/bbl. Further barrels are expected to be hedged for 2023 in the coming
months in line with the approach to target hedging two quarters in advance.
The Board and management team continue to closely monitor prevailing oil
market dynamics and will consider further measures to provide appropriate
levels of cash flow assurance in times of oil price weakness and volatility.
PIA 2021
The Petroleum Industry Act (PIA) was signed into law on 16 August 2021. The
Group is required to notify the NUPRC of the decision to either convert to the
PIA tax regime or remain in the existing PPTA regime in October 2022. The
conversion deadline is February 2023. The Group has reviewed the fiscal
provisions of the PIA and a preliminary impact analysis across all assets has
just been concluded resulting in an overall favourable position for Seplat
Energy to convert to the PIA regime for all its assets. However, certain
issues such as relinquishing parts of the existing acreages are still under
consideration by the Board.
There are some compliance requirements of the PIA that are applicable to all
companies in the industry irrespective of conversion and a multi-disciplinary
team is managing the Group's readiness to comply with the various aspects.
Share dealing policy
We confirm that, to the best of our knowledge, there has been compliance with
the Company's share dealing policy during the period.
Free float
The Company's free float on 27 July 2022 was 36.2%.
Directors' interest in shares
In accordance with Section 301 of the Companies and Allied Matters Act, 2020,
the interests of the Directors (and of persons connected with them) in the
share capital of the Company (all of which are beneficial unless otherwise
stated) are as follows:
31-Dec-20 31-Dec-21 27-July-22
No. of Ordinary Shares No. of Ordinary Shares As a percentage of Ordinary Shares in issue No. of Ordinary Shares As a percentage of Ordinary Shares in issue
Roger Brown 2,840,585 3,224,702 0.55% 4,296,462 0.73%
Samson Ezugworie n/a n/a 0.00% 0 0.00%
Bello Rabiu n/a 20,000 0.00% 20,000 0.00%
Emeka Onwuka 0 0 0.00% 0 0.00%
Oliver De Langavant 0 0 0.00% 0 0.00%
Charles Okeahalam 495,238 495,238 0.08% 699,990 0.12%
Basil Omiyi 495,238 495,238 0.08% 495,238 0.08%
Nathalie Delapalme 0 0 0.00% 0 0.00%
Arunma Oteh, OON 0 0 0.00% 0 0.00%
Emma Fitzgerald 0 0 0.00% 0 0.00%
Kazeem Raimi n/a n/a n/a 0 0.00%
Bashirat Odunewu n/a n/a n/a 0 0.00%
Ernest Ebi n/a n/a n/a 0 0.00%
Fabian Ajogwu 0 0 0.00% 0 0.00%
Total 3,831,061 4,235,178 0.71% 5,511,690 0.93%
Substantial interest in shares
On 27 July 2022, the following shareholders held more than 5.0% of the issued
share capital of the Company:
Shareholder Number of holdings %
MPI 120,400,000 20.46
Petrolin Group 81,015,319 13.77
Professional Support 47,929,438 8.15
Sustainable Capital 45,850,413 7.79
Allan Gray Investment Management 44,212,357 7.51
Principal risks and uncertainties
The Board of Directors is responsible for setting the overall risk management
strategy of the Company and the determination of what level of risk is
acceptable for Seplat Energy to bear. The principal risks and uncertainties
facing Seplat Energy at the year-end are detailed in the risk management
section of the 2021 Annual Report and Accounts.
The Board has identified the principal risks for the remainder of 2022 to be:
· Infectious diseases outbreak
· Niger Delta stability, security, and other Geopolitical risks
· Field operations and project deliverability
· Low oil price
· OPEC quota restrictions
· Climate Change
· JV receivables and future cash call funding
· Liquidity risk
Responsibility Statement
The Directors confirm that to the best of their knowledge:
a) The condensed set of financial statements have been prepared in accordance
with lAS 34 'Interim Financial Report';
b) The interim management report includes a fair review of the information
required by UK DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
c) The interim management report includes a fair review of the information
required by UK DTR 4.2.8R disclosure of related parties' transactions and
changes therein.
The Directors of Seplat Energy Plc are as listed in the Group's 2021 Annual
Report and Accounts. A list of current Directors is included on the company
website: www.seplatenergy.com.
By order of the Board,
B. Omiyi R.T. Brown E. Onwuka
FRC/2016/IODN/00000014093 FRC/2014/ANAN/00000017939 FRC/2020/003/00000020861
Chairman Chief Executive Officer Chief Financial Officer
28 July 2022 28 July 2022 28 July 2022
Important notice
The information contained within this announcement is unaudited and deemed by
the Company to constitute inside information as stipulated under Market Abuse
Regulations. Upon the publication of this announcement via Regulatory
Information Services, this inside information is now considered to be in the
public domain.
Certain statements included in these results contain forward-looking
information concerning Seplat Energy's strategy, operations, financial
performance or condition, outlook, growth opportunities or circumstances in
the countries, sectors, or markets in which Seplat Energy operates. By their
nature, forward-looking statements involve uncertainty because they depend on
future circumstances and relate to events of which not all are within Seplat
Energy's control or can be predicted by Seplat Energy. Although Seplat Energy
believes that the expectations and opinions reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations
and opinions will prove to have been correct. Actual results and market
conditions could differ materially from those set out in the forward-looking
statements. No part of these results constitutes, or shall be taken to
constitute, an invitation or inducement to invest in Seplat Energy or any
other entity and must not be relied upon in any way in connection with any
investment decision. Seplat Energy undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
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 IR BKOBBDBKBQOBRecent news on Seplat Energy
See all newsRCS - Seplat Energy PLC - Completion of Inlet Gas Exchanger Project
AnnouncementREG - Seplat Energy PLC - CURRENCY EXCHANGE FOR Q3 2025 INTERIM DIVIDEND
AnnouncementREG - Seplat Energy PLC - CORPORATE ANNOUNCEMENT
AnnouncementREG - Seplat Energy PLC - Unaudited results for the 9M ended 30 Sept 2025
AnnouncementREG - Seplat Energy PLC - Capital Markets Day Update
Announcement