Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), announced its first quarter results. Information contained within this release is un-audited and is subject to further review.
Financial performance summary
- Revenue of US$160 million (2018: US$181 million) and gross profit of US$81 million (2018: US$93 million) represents a 51% gross profit margin (unchanged year-on-year); Revenue reflects the lower oil production and oil price realisation of US$61.7/bbl (2018: US$65.78/bbl). Average realised gas price of US$3.24/Mscf in the period (2018: US$2.79/Mscf)
- Operating profit of US$33 million (2018: US$84 million) reflects adjustments for a US$16 million overlift position and US$12 million charge in relation to the Company’s oil price hedges, comprising US$5 million cost of hedges and US$7 million fair value loss (reversing the US$9 million fair value gain booked at the end of 2018)
- Positive impact of the 2018 debt refinancing and subsequent deleveraging has resulted in a 38% year-on-year reduction in finance costs to US$16 million (2018: US$26 million); Net profit stood at US$33 million after adjusting for a tax credit of US$13 million
- Net cash generated from operations up 73% year-on-year at US$80 million (2018: US$46 million) versus capex incurred of US$16 million (2018: US$3 million). Further receipt in the period of US$17 million from liftings at OML 55
Further deleveraged with significant headroom preserved in the capital structure
- Repaid US$100 million on the four-year RCF bringing balance drawn to zero while retaining significant headroom in the capital structure to fund growth initiatives. US$4.5 million RCF fees written off in finance costs.
- Gross debt of US$350 million at 31 March 2019 solely comprised of the Company’s bond issuance due 2023. Cash at bank stood at US$644 million (which includes US$100 million temporarily held on behalf of Nigerian Gas Company (“NGC”) as the government’s initial equity investment into ANOH Gas Processing Company (“AGPC”)); Normalised cash at bank therefore stood at US$544 million with an effective resultant net cash position of US$194 million
- FID for the large scale ANOH gas and condensate project was announced in March and initial equity investment of US$100 million from government received; Project to comprise a Phase One 300 MMscfd midstream gas processing development with first gas targeted for Q1 2021
- Gas revenue from the existing business up 5% year-on-year at US$42 million (2018: US$40 million)
- Amukpe to Escravos pipeline anticipated to be operational in Q2 2019 with ramp up to initial permitted capacity of 40,000 bopd expected during Q3 2019
Commenting on the results Austin Avuru, Seplat’s Chief Executive Officer, said:
“Our operations have continued to perform in line with expectation, with the phasing of our 2019 work programme such that the production uplift will be felt throughout the second half of the year as we step up drilling activities to focus on capturing the numerous high margin and short-cycle cash return opportunities within our current portfolio. The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with governments first tranche of equity investment received. We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria.”