By Ben Uzoh
Seplat Petroleum Development Company Plc, an oil and gas upstream operator listed on the Nigerian and London Stock Exchanges, announced Wednesday that it bounced back to full year profitability during the 2017 financial year ended December 31, 2017.
It said the positive turn of events was driven by gas advantage which it had explored aggressively since the company was dually listed in the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE) February 2014.
It also said it had embarked on innovative avenues of cost cutting which has enabled it to operate more efficiently as global challenges in the sector persist.
These disclosures were made by Seplat Chairman, Dr A.B.C. Orjiako, at the company’s 2018 Annual General Meeting (AGM) held in Lagos.
Orjiako told the shareholders that the company had aggressively launched into gas production and marketing to ensure maximum market share as the commodity is in great demand in both domestic and foreign markets.
He assured the shareholders that the company will sustain its return to profitability and that their investment in the company would continue to yield satisfactory returns, noting that innovative approach adopted by management would facilitate this target.
He disclosed that developing alternative supply route to Warri Refinery during the trans-Forcados shutdown, was a major success story for the company as the development boosted the “Warri export blend” during a period of production crisis in the Niger Delta region.
“I am pleased to report that in 2017, we made good progress as we reviewed our vision, mission and strategy towards refocusing the company on our key priorities: to de-risk future cash flows through diversification of oil export routes; invest in and scale up our domestic gas business; maintained a liquidity buffer while continuing to reduce debt; keep tight financial control with discretion in spending; and position Seplat.
“Our strategy to diversify and grow our sources of income through the expansion of our gas business continues to gain momentum,” Orjiako said.
The company reported that gas revenue grew seven-fold from $18 million in 2013 to a record $124 million in 2017, a development the Chief Executive Officer, Austin Avuru, described as impressive.
Avuru also said that gas business earned the company remarkably high revenues of $124 million which is over 27 percent of the company’s total earnings.
Seplat, which recorded a loss of N47.42 billion in 2016, posted N13.45 billion profit before tax in 2017.
It also posted N81.11 billion profit after tax as against N45.38 billion post-tax in 2017 and 2016 financial years respectively.
This represents a growth of 260 per cent.
Similarly, the company’s revenue rose to N138.28 billion in 2017 from N63 billion in 2016 – a growth of 78 per cent.
In its drive to maximize the opportunity in gas business, Seplat completed and commissioned the Phase 2 expansion of its Oben gas processing hug in early 2017.
This added a further 225 MMscfd of processing capacity to lift total capacity at Oben plant to 465 MMscfd.
Seplat now operates 525 MMscfd of gross gas processing capacity when taken into account its 60 MMscfd capacity at the Sapele plant.
Seplat expects to complete the Amukpe-to-Escravos alternate export pipeline in third quarter of 2018 which will guarantee an export route for 160,000 bopd.
According to the company, this provides a third export option for liquids production at OMLs 4, 38 and 41 which accounts for 90 percent of Seplat’s total liquids production mix.
Avuru explained that the company’s aggressive drive in gas business underscored its focus to diversify its operations towards satisfying the growing domestic demand for the commodity as government intensifies effort to pursue its economic development agenda.
He re-echoed the company’s determination to ensure continued operations as threats of disruptions continued to trail the TransForcads export route.
He said the company is focused on providing multiple export routes to mitigate downtime and revenue loss in the face of volatility that characterizes global oil business with ripple effects on domestic market.
Seplat completed repairs and upgrades on two jetties at the Warri Refinery in 2017.
It said the project will enable it achieve sustained exports of 30,000 bopd (gross) up from 15,000 bopd.