Seplat targets expansion to sustain profitability

SEPLAT Petroleum Development Company Plc has said it will focus on expansion of its domestic natural gas business to improve on its profitability.

Chairman of the company, Ambrose Orjiako explained that the company made good progress as it focused on key priority to de-risk future cash flows through diversification of oil export routes, invest in and scale up its domestic gas business, maintain a liquidity buffer while continuing to reduce debt.

While addressing journalist  at the company’s 2017 Annual General Meeting (AGM) in Lagos, Orjiako explained that the company control 25 to 30 per cent of gas domestic market, noting that gas was a key driver underlining Seplat’s gas domestication strategy and demonstrating the robustness of gas source of growth and diversification, as well as delivering a much-needed reliable supply of gas to the Nigerian power sector.

He added that the company has positioned itself for sustainable growth even in harsh operating environment, saying that “our strategy to diversify and grow our sources of income through expansion of our gas business continues to gain momentum.”

Orjiako stated that following repeated disruption to the TransForcados export route, the company is now focused on providing multiple export routes to mitigate downtime and revenue loss, explaining that in 2017, the company successfully completed repairs and upgrades on two jetties at the Warri refinery that will enable sustained exports of 30,000 bopd up from 15,000 bopd.

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He stated that by third quarter, 2015, the Amukpe-Escravos 160,000 bopd capacity pipeline is set to come on stream, providing a third option for liquids production at OMLs, which presently accounts for around 90 per cent of Seplat’s total liquids production mix.

According to the company, profit before tax for the year stood at $44 million and reflects the return of profitability in the third and fourth quarters where net quarterly profit before tax of $24 million and $26 million respectively offset the $26 million loss before tax recorded at mid-year.

Chief Executive Officer of the company, Austin Avuru, also explained that Seplat made a return to full year profitability in 2017, with a strong cash flow performance and significantly strengthened the balance sheet.

Avuru said in the first half of the year, the company was plagued by force majeure at the Forcados terminal but with the management proactive and decisive coupled with the strong underlining fundamentals of the business, the company emerged from an exceptional challenging period to a much fitter and stronger business that is well equipped to deliver long-term value for its shareholders.