Seplat to step up production growth

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Seplat Petroleum Development Company Plc has given assurance to its stakeholders that it will grow production, drive increased shareholder yield and capital appreciation.

The Company, which reiterated its commitment to stronger growth in the oil and gas sector as it held its sixth annual general meeting in Lagos, posted  N73 billion profit for the period ended, December 31st, 2018.

It also announced N228 billion revenue in its full year 2018.  This is an increase of 65 per cent from the N137billion the company made in the 2017.

Its N73 billion profit before differed tax, represented a 480 per cent increase from N13 billion which it made over the same period in 2017.

Gross profit for the period grew by 84% to N120billion from N65billion reported in December 2017. Operating profit stood at N95billion, representing a growth of 177% over N34billion recorded in the corresponding period of December 2017.

Seplat’s net profit after however dipped by 45% from N81billion recorded as at December 2017 to N45 billion in December 2018.

In his address to shareholders, the Chairman, A.B.C. Orjiako, said the company’s 2018 operational and financial performance reflected the significantly higher year-on-year levels of production uptime  at its core oil producing assets combined with a firmer, albeit still volatile, oil price and increased contribution from the company’s gas business.

“As you are aware, our results from the previous two years were characterised by  the extended period of force majeure at the Forcados terminal from February 2016 to June 2017.

“As we enter 2019, our reliable production base, low unit cost of production and discretion over capital commitments will allow the business to remain highly free cash flow generative and profitable. In the absence of any major interruption or force majeure event, this will enable Seplat Read More...

Tax credit masks Seplat’s weak operating performance

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Earnings after tax surged by 59.0 percent Year-on-year to $32.7 million, largely due to a $13.3 million tax credit that masked significant weakness in core operating performance in the review period.

 

 

Revenue contracted by 11.7percent Year-on-year to $159.5 million, dragged by a 16.5percent Year-on-year decline in oil revenue which concealed the impact of price-induced increase in gas revenue (+5.6 percent Year-on-year).

We attribute the weakness in oil revenue to a 19.9percent Year-on-year decline in oil production to 21,885 barrels of oil per day (bopd) and a 6.2percent Year-on-year moderation in realised crude price to $61.7/bbl. In our view, the decline in oil production may be slightly connected to Nigeria’s compliance to the OPEC production cut deal, which, according to the Minister of State for Petroleum, was kick-started in February 2019.

We also believe that oil price is yet to fully recover from the impact of the supply glut that saw crude oil price crash by 38.0percent to $52.2/bbl between October and December 2018. This lack of full recovery likely explains the lower realised oil price reported in Seplat’s Q1 2019 numbers. Going forward, management is optimistic that on-going capital expenditure (Capex) on drilling, which was ramped up in H2’18, would have a positive impact on crude volumes and revenue in the second half of 2019.

Therefore, the company retains FY’19 guidance of $200 million in capex, between 24,000 to 27,000 bopd in liquid production, and 146 to 164 Million standard cubic feet per day in gas production

 

EBITDA margin plunged to 35.1 percent in Q1’19 from 64.5 percent in Q1’18, predominantly due to $15.8 million overlift revaluation loss (vs. $8.6 million underlift revaluation gain in Q1’18), $7.0 million unrealized loss on derivatives (vs. nil in Q1’18), and $5.2 million cost of hedging … Read More...