By YANGE IKYAA
Seplat Energy Plc, a leading Nigerian independent energy company listed on both the Nigerian Exchange Limited and the London Stock Exchange, has announced its audited results for the full year ended 31 December 2021, recording a growth of its 2021 full-year gross profit by 128.9% to N114.2 billion.
The foremost indigenous energy company also announced a 38.2% rise in its 2021 full-year revenue to N293.6 billion and a growth in profit before tax by 321.1% to N71 billion.
“Seplat Energy announced a major acquisition last week and despite a challenging year for Nigerian oil and gas, the robust results delivered today clearly show how our increasing financial strength has made such an acquisition possible, without the need to dilute shareholders, by giving international financial partners the confidence to invest in our vision,” said Mr. Roger Brown, Chief Executive Officer, Seplat Energy.
The addition of MPNU, he further explained, nearly trebled the company’s production and doubled its reserves on a pro forma 2020 basis, reinforcing its leadership of Nigeria’s indigenous energy sector and enabling it to generate strong future cash flows that will underpin its investments in Nigeria’s energy transition and improve overall stakeholder returns.
Seplat’s 2021 performance was affected by outages at Forcados Terminal that will no longer have such an impact when the company switches to the new Amukpe-Escravos Pipeline, which it expects to launch in March.
In the words of Brown, “This is part of our strategy to diversify and derisk routes to market, assuring higher revenues from significantly better uptime and lower reconciliation losses. Furthermore, once we have completed our acquisition of MPNU, we will add significant production from offshore assets with dedicated export terminals that also have higher availability and lower reconciliation losses.”
The addition of MPNU offers a significant undeveloped gas resource base which, alongside Seplat’s ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed.
The company’s financial strength is matched by the skills and ambitions of its staff and it looks forward to welcoming more than a thousand highly trained colleagues from MPNU and working with them to ensure their smooth onboarding into Seplat Energy.
According to Brown, “together we will build a sustainable, world-class company that generates attractive returns for stakeholders and delivers energy transition for one of the world’s largest and most rapidly growing populations.”
In terms of operational highlights, the company posted a strong extended safety record of 28 million hours without LTI from Seplat Energy operated assets, delivered robust performance against challenging year for Nigerian oil & gas industry, with working interest production averaging 47,693 boepd, impacted by August and December FOT shut ins, while also completing nine wells: five oil and four gas.
Also, the Eland’s OML 40 had four wells drilled at a total gross cost of $60 million, now delivering 15.5 kbopd (gross), while Sibiri exploration on OML40 was drilled to TD in February, with initial indications it has encountered eight oil bearing reservoirs with 353 ft of gross hydrocarbon pay, net pay of 229 ft. Meanwhile, further data acquisition and analysis are underway.
On the financials, revenues went up 38% to $733 million divided into $747 million plus $14 million underlift, and adjusted EBITDA went up 40% to $372 million. There was also a strong cash generation of $394 million against capex of $137 million, excluding cost of rig acquisitions, with a strong balance sheet of $341 million cash at bank and net debt of $426 million, while Q4 dividend of 2.5 cents per share was recommended.
For corporate update, the company’s name changed to Seplat Energy to reflect evolving strategy, with proposed $1.28 billion MPNU acquisition adding transformational shallow water portfolio with dedicated export routes.
AEP mechanically completed in January, as hydrocarbons were introduced into line as part of commissioning process, while commercial agreements to enable production into terminal being are finalised, with injection expected in March
The ANOH project’s mechanical completion is expected H2 2022 and it is now 84% complete at present, with all materials in country, but delays to third-party spur line are likely to extend first gas to H1 2023, even as related party transactions were all eliminated from January 1, 2022.
As production guidance of 50-60 kboepd, with capex is expected to reach $160 million, MPNU next steps will focus on government approvals and transition planning, even as completion is being expected in H2, 2022.
Full-year production guidance for 2022 is set at 50,000 to 60,000 boepd on a working interest basis, comprising 30,000 to 35,000 bopd liquids and 116 to 150 MMscfd (20,000 to 25,000 boepd) gas production. This guidance does not include any contribution from MPNU and the ANOH Gas Plant.
Seplat expects production uptime of 75% for evacuation through the TFS and 90% for evacuation via the AEP, the latter being our preferred export route from OMLs 4, 38, & 41.
Capital expenditure for 2022 is expected to be around $160 million to drill a minimum of ten wells, including the Sibiri exploration well and one appraisal well, while completing ongoing projects, and investing in maintenance capex to secure the existing assets and continue investments in gas.
The 2022 drilling programme is designed to address production decline and, along with completion of maintenance activities, will support long-term production levels from the assets. With the recovery in oil prices, rig-based and other project activities will ramp-up in 2022.
Facilities and engineering projects will focus on delivery of an upgraded integrated gas processing facility at Sapele and further upgrades to the liquid treatment facility to enable increased deliveries of dry crude. Towards Seplat’s goal to end routine flaring by 2024, it will focus on the Oben, Amukpe, Sapele & Jisike end of routine flaring projects, which will capture and monetise gas for productive use.
At OML 53, in addition to drilling, the company plans to complete the Jisike flow station debottlenecking and gaslift compressor station and installation of the Ohaji South Lease Automatic Custody Transfer (LACT) Unit.
For the non-operated assets, in OML 40, in additional to the drilling plans, facilities and engineering work will focus on the Gbetiokun facilities upgrade to optimise the Gbetiokun barging operations, while Seplat completes all front-end activities for the Gbetiokun to Adagbasa pipeline which will replace the barging of the produced crude.
“In OPL 283, we have planned one gas well re-entry for production testing and the Igbuku gas plant design (FEED). The delivery of the 2022 workplan will be underpinned by a strong commitment to safety, asset integrity, GHG emissions reduction and operational excellence,” said the company in a February 28 note.