●●● Declares US2.5 cents per share for Q4
Seplat Energy Plc, a leading Nigerian independent energy company listed on both the Nigerian Exchange Limited and the London Stock Exchange, announces its audited results for the full year ended 31 December 2021, recording a growth of its 2021 full-year gross profit by 128.9% to N114.2bn.
The foremost indigenous energy company also announced a 38.2% rise in its 2021 full-year revenue to N293.6bn; and a growth in profit before tax by 321.1% to N71bn.
Commenting on the very impressive results, Mr. Roger Brown, Chief Executive Officer, Seplat Energy Plc, said: “Seplat Energy announced a major acquisition last week and despite a challenging year for Nigerian oil and gas, the robust results delivered today clearly show how our increasing financial strength has made such an acquisition possible, without the need to dilute shareholders, by giving international financial partners the confidence to invest in our vision.
The addition of MPNU nearly trebles our production and doubles our reserves on a pro forma 2020 basis, reinforcing our leadership of Nigeria’s indigenous energy sector and enabling us to generate strong future cash flows that will underpin our investment in Nigeria’s energy transition and improve our overall stakeholder returns.
Our 2021 performance was affected by outages at Forcados Terminal that will no longer have such an impact when we switch to the new Amukpe-Escravos Pipeline, which we expect to launch in March. This is part of our strategy to diversify and derisk routes to market, assuring higher revenues from significantly better uptime and lower reconciliation losses. Furthermore, once we have completed our acquisition of MPNU, we will add significant production from offshore assets with dedicated export terminals that also have higher availability and lower reconciliation losses.
The addition of MPNU offers a significant undeveloped gas resource base which, alongside our ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed.
Our financial strength is matched by the skills and ambitions of our staff and we look forward to welcoming more than a thousand highly trained colleagues from MPNU and working with them to ensure their smooth onboarding into Seplat Energy. Together we will build a sustainable, world-class company that generates attractive returns for stakeholders and delivers energy transition for one of the world’s largest and most rapidly growing populations.”
Operational highlights
§ Strong safety record extended, 28 million hours without LTI from Seplat Energy operated assets
§ Delivered robust performance against challenging year for Nigerian oil & gas industry
§ Working interest production averaged 47,693 boepd, impacted by August and December FOT shut ins
§ Completed nine wells: five oil and four gas wells
§ Eland’s OML 40: four wells drilled at a total gross cost of US$60million, now delivering 15.5 kbopd (gross)
§ Sibiri exploration on OML40 drilled to TD in February with initial indications it has encountered eight oil bearing reservoirs with 353 ft of gross hydrocarbon pay, net pay of 229 ft; further data acquisition and analysis are underway
Financial highlights
§ Revenues up 38% to $733 million ($747 million including $14 million underlift)
§ Adjusted EBITDA up 40% to $372 million,
§ Strong cash generation of $394 million against capex of $137 million (excluding cost of rig acquisitions)
§ Strong balance sheet with $341 million cash at bank, net debt of $426 million and
§ Q4 dividend of US2.5 cents per share recommended
Corporate updates
§ Name changed to Seplat Energy to reflect evolving strategy
§ Proposed $1.28 billion MPNU acquisition adds transformational shallow water portfolio with dedicated export routes
§ AEP mechanically completed in January, hydrocarbons introduced into line as part of commissioning process,
commercial agreements to enable production into terminal being finalised; injection expected in March
§ ANOH project mechanical completion expected H2 2022 (84% complete at present, all materials in country), however delays to third-party spur line likely to delay first gas to H1 2023
§ Related party transactions eliminated from 1 January 2022
Outlook for 2022 (excluding MPNU)
§ Production guidance of 50-60 kboepd, capex expected to be $160 million
§ MPNU next steps: focus on government approvals and transition planning, completion expected H2
Outlook and plans for 2022
Full-year production guidance for 2022 is set at 50,000 to 60,000 boepd on a working interest basis, comprising 30,000 to 35,000 bopd liquids and 116 to 150 MMscfd (20,000 to 25,000 boepd) gas production. This guidance does not include any contribution from MPNU and the ANOH Gas Plant.
We expect production uptime of 75% for evacuation through the TFS and 90% for evacuation via the AEP, the latter being our preferred export route from OMLs 4, 38, & 41.
Capital expenditure for 2022 is expected to be around $160 million. We expect to drill a minimum of ten wells, including the Sibiri exploration well and one appraisal well, complete ongoing projects, invest in maintenance capex to secure the existing assets and continue investments in gas. The 2022 drilling programme is designed to address production decline and along with completion of maintenance activities, will support long-term production levels from the assets. With the recovery in oil prices, rig-based and other project activities activity will ramp-up in 2022.
Facilities and engineering projects will focus on delivery of an upgraded integrated gas processing facility at Sapele and further upgrades to the liquid treatment facility to enable increased deliveries of dry crude. Towards our goal to end routine flaring by 2024, we will focus on Oben, Amukpe, Sapele & Jisike end of routine flaring projects, which will capture and monetise gas for productive use.
In OML 53, in addition to drilling, we plan to complete the Jisike flow station debottlenecking and gaslift compressor station and installation of the Ohaji South Lease Automatic Custody Transfer (LACT) Unit.
For the non-operated assets, in OML 40, in additional to the drilling plans, facilities and engineering work will focus on the Gbetiokun facilities upgrade to optimise the Gbetiokun barging operations; whilst we complete all front-end activities for the Gbetiokun to Adagbasa pipeline which will replace the barging of the produced crude. In OPL 283, we have planned one gas well re-entry for production testing and the Igbuku gas plant design (FEED). The delivery of the 2022 workplan will be underpinned by a strong commitment to safety, asset integrity, GHG emissions reduction and operational excellence.