Seplat Announce consolidated interim financial results for the nine months ended 30 September 2016
Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), announced its results for the for the nine months ended 30 September 2016 and provided an operational update.
Average working interest production for the first nine months stood at 26,233 boepd, down 34% year-on-year owing to the disruption caused by the suspension of exports at the Forcados terminal. However, working interest gas production was up 22% year-on-year at 93 MMscfd as a result of the capacity expansion at the Oben gas processing plant.
Total revenue in the period was US$203 million. Within this, crude revenue after lifting adjustments was US$125 million, 66% lower than the same period in 2015. Gas revenue increased by 48% year-on-year to US$77 million as the step-change in gas production and higher pricing continue to take effect.
Gross profit stood at US$74 million and net loss after tax US$98 million, reflecting the shut-in of the Forcados terminal and lower realised oil price.
Capital investments incurred during the first nine months totaled US$27 million against cash generated from operations of US$106 million. With the support of its lenders the Company has successfully concluded the re-profiling of its seven-year secured term facility over the period to the end of 2017, reducing principal service obligations by US$150 million with no adjustments to the existing tenor of the loan. Cash at bank was US$137 million and net debt US$571 million at 30 September 2016, down from the US$598 million reported at half-yearly results.
The Company has continued to utilise the alternative liquids evacuation route established via the Warri refinery jetty, which in turn permitted gas deliveries into the domestic market during the third quarter to be de-constrained to a gross rate of 243 MMscfd. Phase II of the Oben gas processing plant expansion remains on-track and is set to increase total gross Company operated processing capacity to a minimum of 525 MMscfd. Meanwhile, although the Forcados terminal remains under force majeure a part cargo of Seplat equity crude oil was lifted from the terminal post period end.
“Whilst the obvious challenges we have been confronted with are reflected in our results for the first nine months, we have responded by delivering on what is within our control and by implementing a range of solutions. An alternative liquids export route has been established via the Warri refinery jetty where we are making good progress towards establishing a regular offtake schedule. This in turn has been the enabling factor that has permitted gas production to be de-constrained and can be used going forward as a means of improving security of gas supply to the domestic market. Elsewhere, we are on-track to deliver the Phase II expansion of the Oben gas processing plant and in the coming months step up gas production further to help meet domestic demand”
said Austin Avuru, Seplat’s Chief Executive Officer.
“Financially, the approval to re-profile our seven-year term loan facility underscores the strength of our relationship with our lenders based on strong business fundamentals, which reflect the quality of our portfolio and strong operating track record. The smoothing of the repayment profile will assist in ensuring that we preserve a sufficient liquidity buffer to operate under prevailing business conditions, at the same time enabling us to invest on a fully discretionary basis in our portfolio of production opportunities” he added.
Information contained within this announcement is un-audited and is subject to further review. The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.
· Average total working interest production for the first nine months stood at 26,233 boepd, down 34% year-on-year (2015: 40,012 boepd) due to the shut-in and suspension of oil exports at the Forcados terminal from mid-February to mid-October as a result of damage to pipeline infrastructure at the loading arm. Prior to this, the Company’s working interest production was averaging over 52,000 boepd.
– average liquids production down 61% year-on-year at 10,701 bopd
– average gas production up 22% year-on-year at 93.2 MMscfd
· Although the Forcados terminal still remains under force majeure, a part cargo of Seplat equity crude oil was lifted from the terminal post period end. The terminal operator is currently in the process of returning the terminal to steady state which will enable Seplat to establish a regular pattern of production into the Trans Forcados Pipeline and loading from the terminal.
· The Company has continued to utilise an interim export solution whereby crude oil and condensate production from OMLs 4,38 and 41 is sent via the joint venture’s own 100,000 bopd capacity pipeline to available storage tanks at the Warri refinery and sold FOB to Seplat’s off-taker Mecuria at the Warri refinery jetty. At period end a net volume of 782,417 barrels had been monetised via this route (Seplat’s equity barrels), with the target being to export a gross average of 30,000 bopd on a longer-term basis. The Company is also working on upgrades to the jetty and liquid treatment infrastructure to be able to secure a reliable continuous export route.
· As a direct result of the alternative liquids export route via the Warri refinery jetty the Company was able to de-constrain gas production during the third quarter to 243 MMscfd on a gross basis, all of which was supplied to the domestic market.
· It is Seplat’s intention to keep this alternative export route available for the foreseeable future. Exports via the Warri refinery jetty will not be subject to the reconciliation losses (typically in the order of 10% to 12%) or crude handling charges, to which the Company is subject when exporting via the Trans Forcados System (“TFS”). Availability of the alternative export route will greatly improve security of gas supply to the domestic market.
· Liquid production transported via the TFS in year-to-date was subject to an average reconciliation loss of 10%.
· Average oil price realisation of US$42.82/bbl (2015: US$49.30/bbl) and an average gas price of US$3.03/Mscf (2015: US$2.53/Mscf).