Nigerian Seplat in the Black as Gas Grows
Nigerian Seplat Petroleum made a return to profit for full-year 2017, and CEO Austin Avuru said gas had made a strong contribution. It has also begun supplying commissioning gas to Nigeria's newest power plant.
Plagued in 1H2017 by the shutdown at the Shell-operated Forcados crude export terminal until early June, the company still "registered strong cash flow performance and significantly strengthened the balance sheet," he said.
He said that "with line of sight on the availability of multiple export routes, we aim to significantly de-risk distribution of oil production to market. Notably, our gas business made another record contribution in 2017 and continues to demonstrate the robustness of its revenues providing a key source of growth and diversification, as well as delivering a much-needed reliable supply of gas to the Nigerian power sector. Seplat is now better positioned to return to sustainable growth."
Full year working interest production of 36,923 barrels of oil equivalent/day (boe/d) was roughly half liquids, half gas, with 17,853b/d liquids and 114mn ft³/d gas, but the second half was higher, at 47,522 boe/d, of which there were 126mn ft³/d of gas.
Full year revenue was $452mn on which it made an operating profit of $112mn and profit before current year tax and deferred tax adjustments of $44mn. Net profit was $266m, compared with 2016's loss of $166mn. Cash flow from operations was $447mn against capital expenditures of $33mn.
Seplat has also prioritised its gas reserves and resources, the lifting of force majeure at Forcados translating into "an immediate uplift in gross gas production," which averaged 283mn ft³/d in 2H2017, up 26% on the first half. And with Phase II of 465mn ft³/d Oben gas processing plant early in 2017 bringing overall operated gas processing capacity to the 525mn ft³/d level – there is a further 60mn ft³/d at Sapele – Seplat is actively engaged with counterparties to increase contracted gas sales with the intention of taking gross production towards the 400mn ft³/d level.
Seplat has begun supplying commissioning gas to the 459 MW Azura independent power plant, which is due to come fully online in first half 2018. Seplat is supplying 116mn ft³/d on a take-or-pay basis.
The first 153 MW turbine at Azura Power was synchronized to Nigeria's national grid December 20 2017 and began producing electricity for distribution across the country; the other two same-sized turbines will follow later.
Of Seplat's total processing capacity, 465mn ft/d is at Oben and the remaining 60mn ft³/d at Sapele. Oben is geared towards eliminating routine flares and monetisation of associated gas, while Sapele is for non-associated gas.
The Anoh gas development at OML 53 – and adjacent OML 21 with which the upstream project is unitised – is expected to underpin the next phase of growth for the gas business. Seplat (40% owner and operator) says it is one of the largest greenfield gas and condensate developments onshore the Niger Delta to date. Seplat says it has made good progress in formalising an incorporated joint venture relationship with the government. Seplat expects to take a final investment decision, aligned with state oil company NNPC (60% owner) approvals, in the first half of this year.