Seplat assures shareholders of sustainable growth despite global headwinds
SEPLAT Petroleum Development Company Plc, a Nigerian independent oil and gas company listed on both the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), has said it remained a resilient business that generates significant free cash flow from a low cost production base; has a balanced portfolio split evenly between oil and gas, thus focused on delivering shareholder returns through regular dividend distributions and capital growth.
At the company’s 7th Annual General Meeting held in Lagos, Chairman of the company, Dr. Orjiako has said gave the assurance while addressing shareholders and other stakeholders, just as the board announced a dividend distribution for shareholders with US$59 million paid out in the 2019 calendar year (10 cents per share).
According to Dr Orjiako, amidst the current headwinds occasioned by the prevailing global coronavirus pandemic and low oil prices, Seplat will continue to maintain strict financial discipline over investment decisions, while also embedding high standards of corporate governance and transparency; strong commitment sustainable business; and effective management of risks with a strong HSE culture.
“I believe that Seplat has an important role to play throughout the energy transition that is set to occur in the years and decades ahead, not least through the impact we can have by scaling up our domestic gas supply business and displacing imported diesel fuels that are being burned for power generation and helping Nigeria benefit from the social and economic multiplier effects that reliable and affordable power availability can bring,” he said.
Against this backdrop, Dr. Orjiako said Seplat plans to position itself for an ambitious next phase of growth which would see the expansion of its footprint in terms of energy business activities, a plan to pursue offshore assets acquisition, as well as opportunity driven entry into different geographies.
He added: “Looking forward, one of the main challenges facing the independent E&P sector is to remain relevant as the world makes the transition to a lower carbon future. The oil and gas industry face considerable challenges given that oil in particular plays such a significant part in today’s energy supply mix, with demand for the commodity still growing. A key part of my role as Chairman of the Board is to steer the Company through these transitions.
“The Board believes that such a corporate transition would require a different kind of organisational structure, people skills set and mentality to compete well in the expanded space. In view of this, over the course of 2020 we will be reviewing the current organisational and systems structure.”
The Seplat Chairman assured that the fundamentals of the company’s core business remain strong and through the effective integration of the Eland acquisition, the combined business will have greater scale and value creation opportunities to capture.
Also addressing shareholders at the AGM, the Chief Executive Officer, Seplat, Mr Austin Avuru, described 2019 as a solid year in which the robust fundamentals of the business once again kept the company on an extremely solid footing. “The strong cash generation we realised from our low-cost production base meant that our capital expenditures, debt service obligation and dividend distributions to shareholders were more than covered by cash generated from operations by a comfortable margin.”
From a strategic perspective, Mr Avuru said 2019 will prove to be an inflection point in the company’s history, as it took a final investment decision (FID) for the 300 MMscfd ANOH midstream gas processing project in March.
On the outlook or 2020, Mr Avuru said Seplat faces the same challenges as the rest of industry in terms of managing oil price volatility and other macro risks, adding that the emergence of the COVID-19 pandemic has thrown in another variable that has impacted the global economy. “As these factors are not in our control we can only make sure that we have plans in place that can mitigate and de-sensitise the business to these risks as far as is possible.
Commenting on the company’s planned transition, Mr. Avuru said: “I am extremely honoured to have led Seplat for the past ten years, and I am proud of the role it has played in promoting indigenous participation in the Nigerian oil and gas space. My ultimate goal in the transition of the CEO role is for Seplat to achieve even greater things in the next decade, creating a blueprint for others to follow.”
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