License renewals cut Seplat profit by 45%

License renewals cut Seplat profit by 45%

London and Nigeria-listed indigenous oil and gas company, Seplat Petroleum Development Company Plc, said its net profit for the year 2018 fell by 45%.

In its latest financial disclosure, Seplat said it recorded a net profit of $147 million for the full year 2018 compared to $265 million it recorded in 2017.

The company’s full year working interest production of 49,867 boepd (comprising 25,669 bopd liquids and 145 MMscfd gas) within guidance range of 48,000 – 55,000 boepd; Uptime on the Trans Forcados System during 2018 was 85% (in line with budget), while average reconciliation losses stood at 8%

Seplat disclosed that license renewal for OMLs 4, 38 and 41 obtained with a new expiry date of 21 October 2038. US$25.9 million renewal bonus paid ensuring all conditions have been met (renewal bonus included in 2018 capex)

The company said its 2019 production guidance is set at 49,000 boepd to 55,000 boepd (liquids production range of 24,000 bopd to 27,000 bopd and gas production range of 146 MMscfd to 164 MMscfd).

Commenting on the results Austin Avuru, Seplat’s Chief Executive Officer, said

“Seplat has delivered an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years. At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks. As we continue to enhance production and revenue diversification with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business. Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of US$350m.

He added that “In 2018, we reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise.”