BY CHARLES ABUEDE
An offer by Seplat Energy of $2.5 cents in interim dividend and first-quarter revenues of N100.6 billion have helped to produce an overwhelmingly positive reaction from investors after the publication of the unaudited result on of the oil producer as the stock popped 9.09 percent against the 0.55 percent gain for the NGX All-Share Index on the day of release.
The dividend is in line with the company’s quarterly dividend distribution timetable as the final dividend will become payable on 24 June 2022 to all shareholders registered in the company’s books at the close of business on 30 May 2022.
Seplat Energy released its Q1 2022 results last Thursday showing it recorded strong operational performance with a 73.7 percent year on year jump in revenues to N100.6 billion from N57.9 billion in Q1 of 2021, while its net profit of N8.3 billion declined from the N9.5 billion same period last year on the back of deferred tax.
The company’s revenue from oil surged 90.8 percent year on year to N90 billion in the first quarter as against the N47.2 billion reported last year reflecting higher realised oil prices and a marginally higher production volume, while the gas revenue edged 1.1 percent lower to N10.7 billion from N10.8 billion last year due to lower gas sales volumes as a result of lower customer offtake and production stoppages.
According to the first-quarter financial statement for the oil-producing and exploration company, the rise in oil revenue reflects higher realised oil prices of $97.53 per barrel for the period as against $60.76 per barrel last year and is attributable to the impact of the Ukraine conflict on global energy prices. The total volume of crude lifted in the year was 2.2 MMbbls, marginally higher than the 2.1 MMbbls in the corresponding quarter of 2021.
In addition, the company’s Q1 22 produced liquid volumes were subject to reconciliation losses of 10.2 percent. The company produced an average of 29,078 bopd in the first three months of 2022, up 1.9 percent against 28,541 during the last period. The oil production in the first quarter charged higher as the four Gbetiokun wells drilled in the previous year came onstream in 1Q22.
Furthermore, Seplat’s gross profit shot up 143.4 percent year on year to N48.8 billion due to higher revenues and a less than proportionate increase in the cost of sales which was up 36.7 percent year on year. The increase in the cost of sales was primarily due to higher royalties resulting from higher oil prices.
Other income for the quarter tumbled 35.8 percent year on year to N3.7 billion, resulting from N2.5 billion loss on foreign exchange. The company recorded a 14.4 percent year on year rise in general and administrative expenses to N7.9 billion in the reviewed quarter against N6.9 billion last year. Also, the impairment loss on financial assets sprung 89.2 percent year on year to N509 million, compared to N269 million in Q1 of 21. The company’s operating profit increased 151.7 percent year on year to N42.5 billion versus the N16.9 billion in the corresponding quarter of 2021.
Further afield, the energy company’s tax expense for the first three months of 2022 was N26.4 billion compared to the N1.2 billion in the same period last year, resulting from a deferred tax expense of N19 billion charged against revenues in the first quarter for FY22.
However, it was recorded that the increased deferred tax charge was mainly due to the winding down of previously unutilised capital allowances and a higher under-lift in the current quarter. The basic EPS fell 49.5 percent year on year to N11.76/share in Q1 of 2022, compared to N23.29/ share in Q1 of 2021.
Looking at the company’s performance for the quarter from the last quarter of 2021, Seplat’s revenues slipped 9.3 percent quarter on quarter lower to N100.6 billion in Q1 of 2022 from N111 billion in the final three months of 2021. Due to lower revenues reported, the gross profit also declined 12.9 percent quarter on quarter to N48.8 billion in Q1 of 2022.
Roger Brown, chief executive officer, speaking on the result, said, “Seplat Energy delivered a good quarter that benefited from higher oil pricing, which offset lower production owing to continuing problems with the Trans Forcados Pipeline. However, the alternative Amukpe-Escravos Pipeline is mechanically complete and once we have signed the commercial agreements, we expect Chevron to be lifting our oil through the Escravos Terminal in the third quarter. We have proven we have the financial strength and credibility to attract international finance into Nigeria’s energy sector and this will help us in our aim to deliver energy transition and provide cleaner, more reliable and more affordable energy for Nigeria’s young and growing population.”
In a related development, during the quarter, Seplat Energy, in a disclosure filed to the Nigerian Exchange said that there was an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) from Exxon Mobil Corporation and that the completion of the transaction is subject to ministerial consent and other required regulatory approvals.
The acquisition, which is still on course, is expected to be completed in the second half of 2022, and the MPNU will then operate as a standalone subsidiary.
Meanwhile, the company has also disclosed, separately, the decision to divest the group’s interest in the Ubima marginal field for $55 million, which marginally reduces the company’s 2P reserves by 2 MMboe to 455 MMboe.