Seplat Cuts Debt, Spends on Gas
Nigerian producer Seplat generated $330mn from operations last year. The cash went mainly on its major Assa North Ohaji South (Anoh) gas project and repaying $100mn of debt. And despite the lowest oil prices in its 10-year history, the company said it had maintained dividends. It plans capital expenditure of $150mn this year.
Revenues of $530.5mn were down 24% on 2019 and pre-tax earnings (Ebitda) were down 44.7% at $265.8mn. Impairments of $144.3mn left Seplat with a pre-tax loss of $80.2mn, compared with a profit in 2019 of $293mn
The company said it was leading Nigeria's transition from expensive electricity that runs on imported diesel in favour of gas, which it says will provide the necessary baseload for a functioning electricity grid, along with renewable energy. An electricity tariff increase, which saw prices to consumers rise by an average of 75%, became effective in November last year, meaning cashflow to the power sector should improve and hence invoices paid more promptly.
Its "flagship" Anoh project, with the Nigerian Gas Co, is fully funded with major gas processing units expected to arrive in Nigeria in Q3 and installation to start later in the year. First commercial gas is due by the end of H1 2022 at a cost of no more than $650mn. Phase one capacity is 300mn ft³/day.
The gas for Anoh will come in part from OML 53: 70mn ft³/d has been earmarked to meet domestic supply obligations, it said. Four wells are planned to be delivered by the Anglo-Dutch Shell-operated Shell Petroleum Development Company in 2021. SPDC has started drilling the first set of two wells scheduled to be completed in Q2 2021, which will be followed by another set of two wells scheduled to be completed in Q4 2021.
Seplat’s working-interest production for the year was 101mn ft³/d at an average selling price of $2.87/'000 ft³, down by about a quarter from 131mn ft³/d last year as industrial demand fell. But the price was almost the same ($2.84'000 ft³). Gas contributed $112.5mn of revenues, or 21.2%. Delays in production from Oben-50 gas well further exacerbated the effect, following a restoration in demand in the later part of the year.
The Oben-48 gas well came on stream in the first quarter of 2020 and Oben-49 came on stream in the fourth quarter of 2020 and they account for gross 42mn ft³/day combined. Oben-50 was drilled in the fourth quarter and was launched in Q1 2021.
The Sapele processing plant is expected to be completed in the second half of 2022, with capacity rising a quarter to 75mn ft³/d. The upgraded facility will produce gas that meets export specifications, and the LPG processing unit module will enhance the economics of the plant, as well as ensuring that any gas flaring is eliminated.