Seplat assures shareholders returns on investments

THE Chairman of Seplat Petroleum Development Company Plc has reassured the company’s shareholders that the company has put in place strategies that would improve its financial performance and deliver better value on investments.

Speaking to journalist after the company’s Annual General Meeting (AGM) in Lagos, the Chairman, Dr ABC Orjiako, said with the diversity of export solutions in place and  increasing gas processing capacity, Seplat has the potential to deliver material production upside with less risk of significant constraints from any infrastructure disruption, adding that the company shelved dividend payment to give better returns to its investors.

According to the company, several economic headwinds and the shut-in of the Forcados terminal resulting in lower production, lower oil price realisations and higher costs, made Seplat’s revenue to fall from N113 billion in 2015 to N63.7 billion in 2016, while a loss of N45.4 billion was recorded compared with a profit of N13 billion in 2015.

The company which faced a challenging operating environment in 2016 acknowledge the impact on its revenue due to the extended Trans Forcados shut in as well as volatility in global oil prices. Avuru explained, that they have established a longer term alternative export route through the Warri refinery jetty and are nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bopd gross for second quarter of 2017.

Earlier at the AGM, The Chief Executive Officer, Austin Avuru disclosed this to shareholders at the company 4th Annual General Meeting (AGM) in Lagos, noted that the company’s its gas business surpassed the $100 million revenue target for the financial year ended December 31, 2016.

“While force majeure at the forcados terminal has materially affected our oil production, I am particularly pleased to see the growth in our gas business which in 2016 exceeded the $100 million revenue milestone demonstrating its robustness and providing a solid base from which to grow. It is easy to forget that in 2013 gas revenue were only $18 million, which shows how far we have come”.

Specifically gas revenue increased significantly year on year to $105.5 million compared to $76.9 million that was recorded same period in 2015. Avuru noted that this trend was driven by a 19 percent increase in the average realized gas price to $3.03/Mscf compared to $2.55/Mscf in 2015, which shows an increase of 11 percent in working interest production to 95 MMscfd (34.7Bscf) compared to 86 MMscfd (31.3Bscf) in 2015.

To significantly improve its alternative routes and avoid revenue losses from shut-ins, Avuru pointed out that they are also, in addition to the Warri and Forcados export routes, supporting the National Petroleum Investment Management Services (NAPIMS) a 100 percent subsidiary of the Nigerian National Petroleum Corporation (NNPC), he said on completion of the 160,000 bopd capacity Amukpe to Escravos pipeline that will offer a third export route through the Escravos terminal. With the intention is to utilize all three to ensure there is adequate redundancy in evacuation routes.

Going forward, he empathized that “the company has said it will set full year production guidance at the lifting of the force majeour by Shell, but the immediate priority is to increase exports via the Warri refinery jetty to a gross average level of 30,000 bopd and looking further ahead support NAPIMS to achieve completion of the new Amukpe to Escravos pipline”.

He said “Seplat will continue to prioritized expansion of its domestic natural gas business which provides a revenue stream that is de-linked from the oil price and underpinned by the strong fundamentals of high demand and increasing pricing. Eliminating the outstanding NPDC receivables balance remains an absolute priority.”