Seplat PLC, one Nigeria’s indigenous oil and gas company reported that it suffered USD61 million net loss in its half year 2016 result.
Net loss for the first six months was US$61million on gross revenue of US$143 million; cash flow from operations before movements in working capital was US$42 million, against capital investments incurred of US$17 million.
Cash at bank and net debt at period end stood at US$180 million and US$598 million respectively. Owing to the prolonged shut-in of the Forcados terminal the Company has taken a prudent approach and entered discussions with lenders in the seven year secured term facility to amend the existing “front-ended” sculpted principal repayment profile to a more balanced repayment schedule over the remaining loan .
Seplat said it is continuing progress towards substantially reducing the NPDC receivables balance – confirmation received from Minister of State for Petroleum that 2016 cash calls will be paid current by NPDC. New funding protocol also agreed with additional crude oil allocation equivalent to around US$100 million due to Seplat in 2016 to offset against legacy balance. Seplat will also continue to withhold NPDC gas revenues.
Additional oil entitlement to be assigned by NPDC’s funding partner, Seven Energy, to Seplat in 2017 onwards which will be monetised through Seplat’s offtaker Mercuria to fund future cash calls (initial arrangement to run for period of up to two years). The net receivable at 30 June was USD344million (NGN98billion).
Commenting on the result, Austin Avuru, Seplat’s Chief Executive Officer said “The shut-in and suspension of oil exports at the Forcados terminal since mid-February means we have faced significant challenges in the first half of the year. However, our underlying fundamentals remain strong and we continue to invest to grow our gas business at a rapid rate” s
He further said “the first half results have been heavily impacted by events outside of the Company’s control at third party operated infrastructure. We expect the second half to see a resumption of exports via the Forcados terminal and concurrently a regular offtake schedule established via the Warri refinery jetty, which in turn will also help ensure gas sales into the domestic market are unconstrained.”
Seplat said Phase II expansion of the Oben gas processing plant remains on track and is set to increase our gross processing capacity from the current 300MMscfd to a minimum of 525MMscfd by year end. Although 2016 to date has proven challenging, we remain committed to our long-term strategy of maximising production and cash flows from our operated blocks to deliver value for our stakeholders.” Half-yearly results highlights
The company hinted that working interest production of 25,695 boepd for the first six months down -21% year-on-year due to shut-in of the Forcados export terminal from mid-February. Liquids production down -51% year-on-year at 11,526 bopd; gas production up 59% year-on-year at 85 MMscfd – Continuity of gas production achieved throughout the period, albeit at managed levels due to constraints associated with handling condensate volumes – FY 2016 production guidance issued in Q1 is no longer valid.
Guidance will be re-set and communicated once force majeure is lifted and exports have resumed from the Forcados terminal. Alternative crude oil evacuation route established via the Warri refinery and first cargo sold FOB from the Warri refinery jetty (funds received post period end on 8 July) to Seplat’s offtaker Mercuria. Following the successful initiation of barging operations the Company’s intention is to establish a regularised offtake pattern on a longer-term basis. This alternative liquids export solution will allow gas supply to be de-constrained.
Phase II expansion of the Oben gas processing facility remains on track. 3 x 75 MMscfd new processing modules have arrived in country with installation and commissioning expected by year-end to take overall Company processing capacity to a minimum of 525 MMscfd (gross).
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