By Omobayo Azeez
Seplat Petroleum Development Company Plc recorded 13.4 per cent uptick in profit before deferred taxes to $270m for the financial year ended December 31, 2019.
The full year financial report of the listed oil company filed at the Nigeria Stock Exchange (NSE) also shows revenue of $698m with total capital expenditure of $125m, $114m on oil and gas assets.
Cash flow from operations stood at $338m; cash at bank $333m while it resolved to pay final dividend of $0.05 per share, just as in previous year, 2018.
Commenting on the report, Austin Avuru, its chief executive officer, said as the global economy enters a challenging phase, Seplat will benefit from being a resilient company built on the solid foundations of prudent financial management and the careful mitigation of risk.
“We have previously been tested by crisis. We successfully navigated the twin challenges of the 2014/2015 oil price shock, which was immediately followed by the 16-month Trans Forcados shut-in, which drastically reduced our liquids production. Thanks to our flexibility in managing cash flows, we emerged a stronger and better-funded company, ready to take advantage of new opportunities,” he said.
He said compared to those difficult periods, today’s Seplat has more cash on its balance sheet and is even more robust and diversified, based on its continuing investments in gas, with its long-term contracts and independence from oil price volatility.
“We are a low-cost producer and will continue to manage our finances prudently. With the recent addition of Eland and the availability of new pipelines, our oil business is broadening and de-risking its production fields and routes to market to assure even greater security of revenues in the future.
“In the coming year, we will focus our investment only on the highest-returning projects, whilst carefully balancing our future needs with prevailing market realities,” according to him.
Avuvu also noted that while challenges before Seplat may be significant, it is confident that the resilience and discipline of the business will help it consolidate its position as Nigeria’s leading independent oil and gas producer.
He said the emergence of the COVID-19 pandemic in the first quarter of 2020, as well as pressure on oil prices in March, had placed a premium on solid financial management that focused on low-cost production, robust cash management, a strong balance sheet and investment in high-return projects for sustainable future growth.
“The business is hedged against low oil prices and a significant proportion of our revenues now comes from gas, which offers further protection from oil price volatility.
“The company has low production costs and can remain profitable even at lower oil prices.
“We have significant cash resources available and will manage our finances prudently in 2020, expecting now to invest just $100m of capital expenditure ($50m spent in Q1 2020), with a target of three new wells across our portfolio,” he explained.