Nigeria’s indigenous oil company Seplat suffers US$128m loss amid oil price crash

NIGERIA – Seplat Petroleum Development Company Plc, one of the nation’s indigenous independent oil companies, has posted a loss of $128.3 million (N49.8bn) in the first half of this year.

This is a great drop in the company’s operations when compared to a profit of US$78.40 million (N37bn) achieved during the same period of 2019.

The company’s fortunes were severely impacted by the oil crises which led to oil prices plummeting to below the US$40 per barrel from a high of US$70 at the start of the year.

Seplat Petroleum’s total revenue for the period fell by 34.2 per cent to US$233.5 million from a high of US$355.1 million reported in 2019.

Seplat said its oil operations produced an average 34,117 barrels of oil per day on a working-interest basis in H1 2020.

According to Seplat, this was a 48.5 per cent increase and it reflects a maiden contribution of 10,861 bopd (31.8 per cent of group volumes) from the recently acquired OML 40 and Ubima assets.

The increase in oil production was also attributed to higher production from OML 53 compared to H1 2019.

The company’s fortunes were however, curtailed by the price crash leading to its oil being sold at an average price of $34.94 per barrel a 50% drop when compared to the price of US$65.16 per barrel in H1 2019.

Seplat revealed that it has hedged 1.5 million barrels per quarter at $45 per barrel for the first three quarters of 2020 and 1.5 million barrels at $30 per barrel for the final quarter of the year, using put options.

It further noted that it was renegotiating supplier contracts in line with directives from its government partners to achieve cost savings of at least 30 per cent.

To this end, Seplat revealed that it had successfully reduced barging costs from $14 per barrel to $9 per barrel at OML 40.

The Chief Executive Officer, Mr Austin Avuru, said, “Seplat has delivered a robust performance despite the unprecedented crises we have experienced since March.”

“Our continued resilience is possible as a result of our financial strength, our careful management of risk and our prudent approach to capital allocation.” Ayuru added.

The Seplat CEO further noted that, “unlike many in our industry, we were able to protect our 2019 dividend and increase our capital investment to ensure continued growth.”

“Our oil hedging strategy and gas revenues continue to protect the business from price volatility,” Ayuru noted.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.