The suspension of exports at the Forcados terminal and consequent lower oil sales together with lower oil prices have offset the year-on-year increase in gas production rates and step-up in gas revenues resulting from commissioning of the new 150 MMscfd Oben gas processing facility and higher gas pricing, Seplat Petroleum Development Company’s interim report released Thursday offered as explanation for its poor run.
Half-year 2016 gross revenue plunged 42 percent to N29billion compared to N48.8billion recorded in the same period in 2015. The Group loss after tax for the period was N12.8billion, compared to a profit in the same period in 2015 of N8.1billion.
Gross profit fell by 45 percent to N12billion in comparison with the same period in 2015 where it stood at N21.4 billion. It attributed the movement to lower revenues recorded in the same period outweighing a 39 percent reduction in cost of sales.
The company reported that direct operating costs decreased to N8billion in the period from N12.5billion in H1 2015, principally as a result of the shutdown of the Trans Forcados terminal.
However, rig related and other field expenses, which form part of direct operating costs increased by 3 percent compared to the same period in 2015 at N6 billion as a result of higher operation & maintenance costs.
“The shut-in and suspension of oil exports at the Forcados terminal since mid-February means we have faced significant challenges in the first half of the year. However, our underlying fundamentals remain strong and we continue to invest to grow our gas business at a rapid rate,” said Austin Avuru, Seplat’s CEO.
He explained, “The first half results have been heavily impacted by events outside of the company’s control at third party operated infrastructure. We expect the second half to see a resumption of exports via the Forcados terminal and concurrently a regular off take schedule established via the Warri refinery jetty, which in turn will also help ensure gas sales into the domestic market are de-constrained.
Meanwhile, Phase II expansion of the Oben gas processing plant remains on track and is set to increase our gross processing capacity from the current 300MMscfd to a minimum of 525MMscfd by year end.
Although, 2016 to date has proven challenging, we remain committed to our long-term strategy of maximising production and cash flows from our operated blocks to deliver value for our stakeholders.”
Seplat also reported to its shareholders that the company has agreed a new funding protocol between Nigerian Petroleum Development Company, (subsidiary of Nigerian National Petroleum Corporation), its funding partner Seven Energy, whereby an additional crude oil allocation equivalent to around $100 million is due to Seplat in 2016 that will also be offset against the legacy receivables balance.
According to the company, the new protocol will also see an additional oil entitlement assigned to Seplat in 2017 onwards which it expect to monetise through Seplat’s offtaker Mercuria to fund future cash calls as well as retiring legacy costs (initial arrangement to run for period of up to two years).
ISAAC ANYAOGU
