Home Business Seplat net income rose to $746m in 2018

Seplat net income rose to $746m in 2018

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Here is business report as Seplat has said that its total revenue stood at $746 million made up of $590 million oil and $156 million gas revenue in 2018. The increase in annual revenue it said was as a result of higher oil production together with higher oil price realisations. According to a release from the company gas revenue reached a new record of $156 million. Consequently, total revenue for 2018 was up 65 per cent from 2017 at $746 million. Operating profit for the year stood at $310 million and profit before deferred tax of $238 million. After adjusting for deferred tax of $91 million net profit after tax stood at $147 million.

According to the company “Cash flow from operations was $502 million and capital investments $88 million. Cash at bank and net cash at year end stood at $585 million and $135 million respectively. During the year the NPDC receivables balance was reduced to zero. In March the Company successfully concluded a refinancing of the existing $300 million revolving credit facility (“RCF”) with a new four-year $300 million RCF at LIBOR +6% and issued a debut $350 million bond priced at 9.25 per cent. Proceeds of the refinancing were used to repay and cancel pre-existing indebtedness and also to cash settle crude oil prepayments entered into during 2016 and 2017.

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“The refinancing has enabled the Company to longer date its debt maturities which in turn has freed up significant free cash flow in 2018 and beyond, providing a greater financial resource to reinvest in Seplat’s organic and inorganic growth plans. The bond issuance has also, in particular, diversified Seplat’s long term capital base. In August the bond was listed on the International Securities Market of the London Stock Exchange in addition to the original listing on the Euro MTF market of the Luxembourg Stock Exchange, further raising Seplat’s profile in the international capital markets”.

It also said “having emerged from a period of weak macro conditions and a disrupted operating environment in 2016 and 2017, where Seplat’s key focus was on preservation of liquidity and selective capital allocation to ensure the Company maintained a necessary level of financial flexibility, the Board reinstated the dividend in 2018 with a special dividend of $0.05 per share in April paid to normalise returns to shareholders after the dividend suspension and an interim dividend of $0.05 per share declared in October in line with our normal dividend distribution timetable. Further to this, the board of Seplat is recommending a final dividend of $0.05 per share. Subject to approval of shareholders, the dividend will be paid shortly after the AGM which will be held on 16 May 2019 in Lagos, Nigeria”.

Seplat said “production guidance for 2019 is set at 49,000 to 55,000 boepd on a working interest basis, comprising 24,000 to 27,000 bopd liquids and 146 to 164 MMscfd (25,000 to 28,000 boepd) gas production. Capex guidance for 2019 is set at US$200 million. Rig based activity will step-up significantly in 2019. In the western Niger Delta at OMLs 4, 38 and 41 the Company plans to drill up to seven new oil production wells, one new gas well, one rig based re-entry of an existing oil well and one appraisal well. 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 in sapele and Amukpe. At OPL 283 preparation work for development of the Igbuku gas field will continue with concept selection and FEED studies.

“In the eastern Niger Delta at OML 53 development of the Ohaji South oil reserves will continue with the drilling of three planned oil production wells while the Company expects to also undertake a rig based workover of one existing oil production well at the jisike field. In addition to this two appraisal wells are planned, one of which will be at the undeveloped Owu oil discovery. Facilities and engineering work will focus on the expansion of oil production facilities at the Jisike and Ohaji South oil fields. At OML 55 the Company will continue to monetise liftings towards full recovery of the US$330 million discharge sum. Seplat’s current portfolio comprises direct interests in five oil and gas blocks and a revenue interest in one further block, all of which are located in the onshore to swamp areas of the prolific Niger Delta. This portfolio provides the Company with a robust platform of oil and natural gas reserves and production capacity together with material upside opportunities through future development projects, 2C to 2P conversion and exploration and appraisal drilling. We also continue to view the shallow water offshore areas of the Niger Delta as an appealing opportunity set and one we hold ambitions to access in the future”.

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