SEPLAT blames crude oil prices volatility for poor performance

One of the leading independent oil and gas exploration and production company, SEPLAT Petroleum Development Company Plc, has blamed the volatility in global oil prices and the shut-in and declaration of the force majeure at the Forcados terminal as the reasons it performed poorly in 2016.

Speaking during the company’s Annual General Meeting (AGM) in Lagos recently, the Chief Executive Officer, SEPLAT, Austin Avuru, disclosed that the company contended with operational challenges due to interruptions, adding that the force majeure at the Forcado terminal materially affected the firm’s oil production.

“In addition to a difficult global oil market backdrop our business has had to contend with unprecedented operational challenges due to interruptions and these are reflected in our full year results. Whilst force majeure at the Forcados terminal has materially affected our oil production.

“Gross profit for the year was $72 million, a decrease of 71 per cent on the prior year which was $249 million. This principally reflects the shut-in of the Forcados terminal resulting in lower production, lower oil price realisations and higher costs associated with the alternative export route to the Warri Refinery while operating loss for the year was $158 million when compared with a prior year operating profit of $158 million,” he said.

According to him, “Gas revenue increased significantly year on year to $105.5 million compared to $76.9 million in 2015. This trend was driven by a 19 per cent increase in the average realized gas price to $3.03/Mscf compared to $2.55/Mscf in 2015 and an 11 per cent increase in working interest production to 95MMscfd compared to 86 MMscfd in 2015.”

Seplat announced that it is actively pursuing alternative crude oil evacuation options for production at OMLs 4, 38 and 41 and potential strategies to further grow and diversify production in order to reduce over reliance on particular third party operated export system in the future.

On the outlook for 2017, the company said it will set full year production guidance at lifting the force majeure by Shell, adding its immediate priority was to increase exports via the Warri refinery jetty to a gross average level of 30,000 bopd.

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