Seplat Petroleum Development Company has announced a 51 percent rise in gas revenues for 2014 as it holds its annual general meting today.
Seplat, which is dual listed on the Nigeria and London Stock Exchanges, has always highlighted its gas commercialisation strategy as a key revenue driver for the company.
During its historic and oversubscribed IPO, Seplat with an average gross gas production of 99 million standard cubic feet per day in 2013 had projected that it would triple its gas production by end 2016 through massive investments in processing and delivery infrastructure.
In February, Seplat concluded a 10 day tie-in on its Oben plant to enable the company have a “single homogenous plant consisting of 2 by 45 MMSCF and 2 by 75 MMSCF trains able to deliver 240MMSCF/D WAGP specification gas post-commissioning, from the Oben node.
This facility expansion and upgrade will bring the company’s overall daily gas production capacity to slightly over 300mmscf/d.”
Nigeria, the holder of Africa’s largest gas reserves with about 182 Tcf of proven gas, raised the price of gas to power plants to $2.50 per million standard cubic feet plus 80 cents for transport last August.
In an interview with BusinessDay held earlier this year Seplat CEO Austin Avuru said the company could get as much as $5 per million standard cubic feet for supplying industries like cement or petrochemical plants.
“We have materially grown our reserve base, delivered full year average daily production in line with guidance and exceeded peak rate objectives. Expansion plans for our gas business gathered pace and the new Oben gas processing plant will allow us to increase supply to the domestic market,” Avuru said while commenting on the results.
Overall despite reaching record levels of peak oil production on OMLs 4, 38 & 41 in December 2014 of over 76,000 bopd, revenue declined from $880 million in 2013 to $775 million in 2014 showing a decrease of 12 percent.
The decrease was due to significant outages on the Trans – Forcados System as well as the impact of the fall in global oil prices in the second half of 2014.
Seplat has however proposed a total dividend of $0.15 per share for 2014, up from $0.10 in 2013.
“Seplat remains among our top picks in our African oils research coverage… we view Seplat as strongly positioned to capture upcoming non-organic growth opportunities, with potentially one or two deals in the next 6-12 months,” Renaissance Capital energy analysts led by Illdar Davletshin said in a January 13 note.
Seplat was named by government officials as one of eight oil companies it was negotiating with for new gas sales and purchase agreements. It is to supply 140,000 Mcf/d of gas to some of the 10 NIPPs.
Gas supplies have been constrained in Nigeria by low gas prices set by the government, which barely cover the cost of production and processing.
Seplats working interest natural gas reserve and resource base is 827 bcf of gas (2P and 2C), which provides a platform for significant potential growth for the company whilst simultaneously providing a solution to meet domestic gas demand.
The fact that domestic gas prices are de-linked to the oil price is an attractive proposition and means that Seplat’s gas strategy can also provide a natural hedge to the highly volatile oil price environment that faces the wider industry.
Seplat aims to be a leading energy company delivering premium value to all stakeholders and build and sustain a best practice oil and gas company through innovative partnerships and premium value delivery.
According to the firm’s annual report its business model has been carefully designed to create long-term value and shared prosperity for its shareholders and other stakeholders, leveraging core strengths and expertise to capitalise on growth opportunities available across the upstream value cycle.
PATRICK ATUANYA
