29th Oct 2019 11:25
(Alliance News) - Seplat Petroleum Development Co PLC on Tuesday said profit declined in the third quarter of 2019 due to a combination of reduced production and lower prices.
Shares in Seplat were up 1.3% at 118.50 pence in London in morning trade.
The Nigerian oil and gas firm, which is dual listed in Nigeria and London, posted a pretax profit of NGN19.84 billion for the three months to September 30 - equivalent to around USD54.9 million - down 29% versus NGN27.95 billion the year before.
Revenue from contracts with customers sank 38% to NGN42.91 billion from NGN68.92 billion, pulled down by a drop in production and sales.
In addition, there was a reduction in price realisation year-on-year for the nine months to September 30 to USD64.22 per barrel from USD71.14 per barrel and to USD2.8 per thousand standard cubic feet from USD3.06 per thousand standard cubic feet.
For the nine months to September 30, working interest production came to an average of 47,163 barrels of oil equivalent per day versus 50,303 boepd year-on-year. Seplat put this down to "slippage to the intended production drilling programme as a result of rig mobilisation delays and availability".
The company has revised its 2019 average working interest production guidance down to between 45,000 boepd and 48,000 boepd, having previously been 49,000 boepd to 55,000 boepd.
Nine-month revenue figures showed a 13% drop to NGN151.88 billion from NGN173.71 billion, while pretax profit dropped 13% to NGN56.71 billion from NGN65.05 billion.
Cash generated from operations stood a USD306 million on September 30, down from USD386 million the year before, while capital expenditure rose to USD64 million from USD29 million. Seplat is predicting a 2019 annual capex of approximately USD120 million.
The firm's September 30 gross USD350 million debt was entirely made up of its 2023 senior notes and it has a USD225 headroom undrawn in the form of a revolving credit facility. The firm's cash at bank totalled USD445 million at the end of September, giving a USD105 million net cash position.
The company has declared a USD0.05 per share interim dividend, flat year-on-year.
In terms of immediate focus, Seplat has agreed to acquire fellow Nigeria-focused energy company Eland Oil & Gas PLC.
Seplat Chief Executive Austin Avuru said: "2019 so far has seen us make significant progress towards furthering our ambitious growth strategy. While our production and financial performance has dipped in Q3 as a result of slippage to our drilling programme and weaker pricing, the core business remains highly cash generative and with four rigs now operational in the field we expect to quickly regain momentum. This is reflected in our decision to declare an interim dividend of USD29 million.
Avuru added: "In another major step, and inline with our overall growth strategy, we have made a strong statement of intent by becoming the first Nigerian company to undertake a public market acquisition of a London Stock Exchange listed company, and in doing so highlighted our ambitions to be a consolidator within our space. The recommended acquisition of Eland for GBP382 million is a logical continuation of our business model and represents a rare opportunity to secure a well run asset base that lies firmly within our core geographical area of focus and expertise. Following completion, the enlarged asset base will enhance our inventory of production, development, appraisal and exploration opportunities and enable us to ensure capital continues to be deployed to the most value creative opportunities for shareholders."
By Anna Farley; [email protected]
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