Seplat Energy with $128 million cash deposit raises hopes that Tinubu government will approve Mobil – Worldstage takeover

WorldStage Newsonline – Seplat Energy PLC, a leading independent Nigerian energy company listed on both the Nigerian Stock Exchange and the London Stock Exchange, has released its unaudited results for the three months ended March 31, 2024, achieving revenues of $236.3 million vs. from USD 255.6 million in the first quarter of 2023

This comes after the company said it was working with NNPC and the government to complete the acquisition of ExxonMobil’s share capital in Mobil Producing Nigeria Unlimited (MPNU).

Cash on the balance sheet decreased to $335.8 million in the first quarter from $450.1 million in 2023, excluding the $128 million cash deposit to MPNU.

“We are confident that President Tinubu’s administration will approve the transaction,” the company said.

Roger Brown, the company’s chief executive officer, said: “Our message to investors in MPNU remains unchanged. The dialogue between the key parties is active and constructive and we are confident that we will be able to reach a conclusion on this transformational acquisition.”

The most important financial results of the group include revenues of USD 179.8 million from USD 331.0 million in 3 months of 2023 (after taking into account the volumes of crude oil lifted and lifted, revenues for 3 months of 2024 amounted to USD 236.3 million compared to USD 255.6 million in 3 months of 2023); Average realized oil price USD 86.17/bbl (3M 2023: USD 82.32/bbl); average realized gas price USD 3.11/Mscf (3M 2023: USD 2.88/Mscf); Unit operating costs of USD 9.6/boe (3 months 2023: USD 9.0/boe); Cash generated from operations of $16.8 million, primarily due to the timing of raises, $95 million received in April for volumes collected in March, compared to $145.0 million in Q1 2023. Capital expenditure was USD 47.1 million (3M 2023: USD 44.7 million); Net debt at the end of March increased to $385 million (December 2023: $305 million) and another $19.3 million of RBL loans were repaid during the quarter. Net debt to EBITDA was 0.9x; The declared dividend for Q1 2024 will be 3.0 cents per share.

Group operational highlights include production averaging 49,258 boepd, down 4.8% compared to the prior period (3M 2023: 51,720 boepd), but 5.7% above production in Q4 2023 and towards upper end 2024 (44,000 boepd – 52,000 boepd); Work is underway before the preliminary acceptance of the ANOH gas plant. Seplat maintains the first gas target in the third quarter of 2024; Sibiri-1 will be launched a few weeks after FDP approval, work is underway to start production with Sibiri-2; Discovery of hydrocarbons in previously unexplored deep deposits at Sapele-37 and Okporhuru-9; Carbon intensity: 29.4 kg CO2/boe (3M 2023: 26.4 kg CO2/boe). End of Routine Flaring (“EORF”) projects are on track, with EORF expected in the second half of 2025; they will ensure a significant reduction in emissions intensity; We achieved over 2.3 million lost-time-injury (“LTI”)-free hours on Seplat-served assets in the first quarter of 2024.

Corporate news includes: On April 1, 2024, Mr. Udoma Udo Udoma became an independent non-executive chairman and Mr. Bello Rabiu became a senior independent non-executive director of the Seplat Energy Board; On May 1, 2024, Ms. Eleanor Adaralegbe will join the Seplat Management Board as Executive Director and will succeed Mr. Emeka Onwuka as Chief Financial Officer on May 21, 2024; The company maintained full-year guidance with production of 44,000-52,000 boeps per day, capital expenditures of $170-200 million; NMDPRA has increased the domestic gas price to $2.42/Mscf from $2.18/Mscf with effect from April 1, 2024. The new prices will apply to approximately 30% of gas volumes; April 14^volin 2024, after approximately 2 years of downtime, the SPDC-operated Trans Niger Pipeline (“TNP”) resumed operations, four months ahead of management expectations.

The CEO said: “Seplat Energy continued its trend of strong operating performance in the first quarter. Oil production on OML 4, 38, 40 and 41 exceeded expectations thanks to low pipeline losses and delays that exceeded plan. Cash flow declined in the first quarter, but this is largely due to a difference in the timing of crude receipt from terminals. The business remains strong, production is healthy this year and price realization continues to support cash generation.

“In our FY2023 results, we have outlined several growth opportunities for 2024. The first of these to start generating revenue for Seplat is Sibiri, which was launched just weeks after receiving FDP approval from NUPRC. At Abiala (marginal field within OML 40), the drill program is expected to begin in the second quarter. We were delighted with the resumption of operations on the Trans Niger pipeline in April, approximately four months ahead of schedule. Access to the gas pipeline will enable us to increase production from OML53, and will also provide a basic route for the export of condensate from AGPC, for which the first gas will be available in the third quarter of 2024.

“Looking ahead, we are pleased to report that we have discovered hydrocarbons in reservoirs deeper than previously tested at Sapele-37 and Okhorpuru-9. The preliminary results are promising and once again highlight the world-class quality of geology in Nigeria.

“In Nigeria, we were pleased to see more progressive actions taken by President Tinubu and industry regulators. In March, the president signed executive orders that will provide fiscal incentives to our gas and midstream utilities. In addition, an implementing regulation was signed and published, which can significantly improve our contracting process and ensure an appropriate level of efficiency that will support cost reduction. We applaud this change, which has the potential to deliver much-needed efficiency gains across our industry. “NMDPRA recently increased the domestic gas price to $2.42 per mscf, supporting revenue generation and re-emphasizing the government’s commitment to the development of Nigeria’s gas resources, a factor in line with Pillar 2 of our strategy.”