RNS Number : 6910D
Seplat Petroleum Development Co PLC
30 October 2020

Please see the full Financial Results in attached PDF

Seplat Petroleum Development Company Plc

Unaudited results for the nine months ended 30 September 2020

Lagos and London, 30 October 2020: Seplat Petroleum Development Company Plc ("Seplat" or the "Company"), a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and the London Stock Exchange, announces its unaudited results for the nine months ended 30 September 2020. 

Operational highlights 

·      Working-interest production within guidance at 50,653 boepd, despite market volatility 

·      Liquids production of 33,327 bopd, gas production of 100 MMscfd

·      Eland OML40/Ubima assets produced 9,151 bopd, 27.5% of Group oil volumes, integration progressing well

·      TFP reconciliation losses reduced to 8.6%

·      Amukpe-Escravos Pipeline now expected operational in H2 2021

·      Low unit cost of production at US$8.73/boe, with cost-cutting initiatives ongoing, particularly at OML40/Ubima

·      ANOH project remains on track for Q4 2021 first gas, completion of financing imminent

Financial highlights

·      Strong cash balance of US$213 million after US$100 million RCF repayment, US$29 million 2019 final dividend, and US$109 million capex

·      Net debt steady at US$480 million with most maturities after 2021

·      Revenue US$388 million due to lower oil prices

·      IAS 36 COVID-19 impact assessment and IFRS 9 non-cash impairment provision of US$180 million. 

·      Provision reverses operating profit of US$100 million to operating loss of US$79 million

·      NPDC receivables further reduced to US$152 million

Interim dividend declared

·      Interim dividend of US$0.05 per share (2019: US$0.05) in line with Seplat's normal dividend distribution timetable

Outlook for 2020

·      Full-year production guidance narrowed to 48-52 kboepd, subject to market conditions

·      Oil hedging: 1.5MMbbl at US$30/bbl and 0.5MMbbl at US$35/bbl in Q4 2020

·      Full-year capex expected to be around US$120 million (US$109 million already invested)


Roger Brown, Chief Executive Officer, said:

"Seplat's third-quarter performance has again demonstrated the resilience of our business in challenging times and in addition to voluntarily reducing our debt leverage by US$100 million, we are maintaining our commitment to shareholders by declaring an interim dividend of US$0.05 per share, as we have in previous years. The business continues to operate effectively despite the restraints of the COVID-19 pandemic and the recent unrest in Nigeria.

After the tragic incident on OML40 in July, we have in consultation with our government partner NPDC and the regulatory authorities in Nigeria, conducted three separate and comprehensive investigations that have led to the implementation of new and strengthened safety procedures at the joint venture.  Our thoughts and prayers remain with the affected families and friends.

We continue to hedge our oil business against further price volatility and are pursuing further cost-cutting initiatives to ensure that we will remain profitable even at lower prices experienced earlier in the year.

We have strengthened our oversight with the appointment of two independent directors, Arunma Oteh and Xavier Rolet, who bring considerable local and international business and governance expertise to the Board. 

I have taken over the leadership of Seplat at a challenging time for our industry, but am confident that our actions to increase operational efficiencies, further reduce costs and continue our expansion into midstream gas processing to reduce carbon emissions by displacing inefficient and expensive diesel generated electricity, will ensure that Seplat remains at the forefront of Nigeria's exciting energy transition and provide sustainable energy for a young and rapidly growing population."     

Summary of performance






Gross profit

Impairment of assets *


Operating profit (loss)

Profit (loss) before tax

Operating cash flow

Working interest production (boepd)



Average realised oil price (US$/bbl)



Average realised gas price (US$/Mscf)



*Includes US$158.2 million impairment on revaluation of assets and US$21.4 million impairment of financial assets

**Adjusted for non-cash items


Outlook for 2020

Following our performance over the first nine months of the year we are narrowing guidance to 48,000-52,000 boepd for the full year. We continue to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices. We also continue to focus on cost savings to maintain profitability at the lower oil prices we have realised so far this year.

We have significant cash resources available and will continue to manage our finances prudently in 2020, expecting now to invest US$120 million of capital expenditure across the full year (of which US$109 million has already been invested). We remain confident that our cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth.

The timely completion of the ANOH project in late 2021 remains a major priority and we expect that the debt financing will achieve financial close in the coming weeks.

Important notice

The information contained within this announcement is unaudited and deemed by the Company to constitute inside information as stipulated under Market Abuse Regulations. Upon the publication of this announcement via Regulatory Information Services, this inside information is now considered to be in the public domain.

Certain statements included in these results contain forward-looking information concerning Seplat's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors, or markets in which Seplat operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances and relate to events of which not all are within Seplat's control or can be predicted by Seplat. Although Seplat believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. Actual results and market conditions could differ materially from those set out in the forward-looking statements. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Seplat or any other entity, and must not be relied upon in any way in connection with any investment decision. Seplat undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.



Seplat Petroleum Development Company Plc

Roger Brown, Chief Executive Officer

Emeka Onwuka, Chief Financial Officer

Carl Franklin, Head of Investor Relations

Ayeesha Aliyu, Investor Relations

Chioma Nwachuku, General Manager, External Affairs & Communications

+44 203 725 6500



+234 1 277 0400

+234 1 277 0400

FTI Consulting

Ben Brewerton / Sara Powell

+44 203 727 1000

Citigroup Global Markets Limited

Tom Reid / Luke Spells

+44 207 986 4000

Investec Bank plc

Chris Sim / Rahul Sharma

+44 207 597 4000


Results call

At 09:00 GMT / 10.00 WAT on Friday 30 October 2020, the Executive Management team will host a conference call and webcast to present the Company's results.

The presentation can be accessed remotely via a live webcast link and pre-registering details are below. After the meeting, the webcast recording will be made available and access details of this recording are also set out below.

A copy of the presentation will be made available on the day of results on the Company's website at

Conference call pre-register link:

Webcast live event link: 

Archive link:

Notes to editors

Seplat Petroleum Development Company Plc is Nigeria's leading indigenous energy company. It is listed on the Nigerian Stock Exchange (NSE: SEPLAT) and the Main Market of the London Stock Exchange (LSE: SEPL).

Seplat is pursuing a Nigeria-focused growth strategy and is well positioned to participate in future asset divestments by international oil companies, farm-in opportunities, and future licensing rounds. The Company is a leading supplier of gas to the domestic power generation market. For further information please refer to the Company website,


Operating review

Working-interest production for the nine months ended 30 September 2020






9M 2019






Oil equivalent


Seplat %





OMLs 4, 38 & 41






OML 40












OPL 283






OML 53













Liquid production volumes as measured at the LACT unit for OMLs 4, 38 and 41; OML 40 and OPL 283 flow station.
Volumes stated are subject to reconciliation and may differ from sales volumes within the period. 


Average working-interest production for the first nine months of 2020 was within guidance at 50,653 boepd, up 7.4% on Q3 2019 and reflecting the first-time contribution of the acquired Eland assets.

Within this, liquids production was up 40.8% to 33,327 bopd, while gas production decreased to 100 MMscfd for the nine-month period (9M 2019: 136 MMscfd).

There was a 77% uptime for the Trans Forcados Pipeline during the period and the produced liquid volumes from OMLs 4, 38 and 41 were subject to 8.6% reconciliation losses.

Full-year production guidance has been updated to reflect the constrained production levels in Nigeria following cuts in OPEC+ production quotas. As a result, guidance for the year is refined to 48 kboepd - 52 kboepd. Within this, liquids production guidance is narrowed to 31 kbopd - 34 kbopd with the gas production guidance of 17 kboepd - 18 kboepd.

Oil business performance

The Group's oil operations continued despite the COVID-19 crisis and produced an average of 33,327 bopd on a working-interest basis for the period. This 40.8% increase reflects a maiden contribution of 9,151 bopd (27.5% of Group volumes) from the recently acquired OML 40 and Ubima assets, as well as higher production from OML 53 compared to 9M 2019. Exports from operations were constrained by approximately 10 kbopd on a gross basis as a result of the OPEC+ production cuts implemented in the third quarter. Production from OML 40 was further impacted by the suspension of operations for several weeks following the tragic BRVS accident in July, but exports were able to recommence at the end of August. Production output from both fields has increased as a result of newly connected wells drilled earlier in the year and we are in discussions with the DPR and NNPC for increased quotas.

Production from OMLs 4, 38 & 41 was largely unaffected as we benefited from the exemption of Nigerian condensates from the OPEC+ cuts.

The average price realised was US$38.60/bbl (9M 2019: US$64.22/bbl), a drop of 39.9%. We had already hedged 1.5 MMbbl / quarter at US$45/bbl for the first three quarters of 2020, while 1.5 MMbbl is hedged at US$30/bbl with another 0.5 MMbbl at US$35/bbl for the final quarter of the year, using put options.

We continue to address costs across the oil business and are renegotiating supplier contracts to achieve cost savings of at least 30%. At OML40, the mooring facilities rehabilitation and crude injection system upgrade was completed in August. This allowed the successful streamlining of the Gbetiokun barging operations with the use of a self-propelled, 28 kbbl capacity vessel to evacuate liquids. With the restart of exports from OML40 and the larger barges now in use, this has already driven barging costs down from US$14/bbl to US$5/bbl.

During the nine-month period, Seplat completed five oil wells (Sapele-35, Ovhor-6ST, Ovhor-20, Ohaji South-5, Ohaji South-6). Eland completed Gbetiokun-5, which is producing c.5,000 bopd from two strings, while the Extended Well Test for Ubima is in progress with a production of c.1,200 bopd, and this is expected to continue until the end of 2020. The Field Development Plan for Ubima has been finalised and is currently under review.

OPEC+ quotas

Following disruption to the oil market caused by the pandemic and market competition between Saudi Arabia and Russia, the Organization of Petroleum Exporting Countries and its allies (OPEC+) agreed in April 2020 to cut supply by 9.7 million barrels per day from May to June 2020, to stimulate oil prices that had collapsed as a result of the disruption. However, Nigeria did not fully comply with the OPEC+ cut and so it exceeded its production quotas in May and June.

On 6 June, at the same time as OPEC+ agreed to extend the record output cuts by another month to further support oil price recovery, it was also decided that Nigeria and other countries that had not complied with the May and June cuts would be penalised with extra cuts from July to September 2020. 

Nigeria had previously reaffirmed its commitment under the existing global agreement and had already committed to making additional cuts from July to September to compensate for exceeding its quotas in May and June. As a result, Seplat was advised of production quota cuts of between 20%-30% across its assets in July and August and its actual production was compliant with the required quota in the period. As the cuts are expected to hold through January 2021, Seplat will continue to comply with the OPEC+ cuts as directed by the Nigerian regulators for the rest of the year.

Seplat's Western Assets are largely unaffected by the quota owing to TFP downtime and the exemption of Nigeria's condensates. 

Integration of Eland

The integration of Eland is progressing well. The OML40 and Ubima fields contributed around 27.5% of Group oil volumes in the nine-month period and we continue to address cost cutting at OML40, notably through reduced barging costs with the use of larger barges to evacuate liquids from Gbetiokun.

As previously indicated, the integration process is expected to take a year to complete. We have conducted detailed reviews to assess how best to combine the operations of Eland and Seplat in the most optimal manner and begun implementing several initiatives to drive this integration.

Our Aberdeen office will become Seplat's Centre of Excellence, and will focus on training and technical support for subsurface, business development and future energy technologies. In addition, we are looking at ways to assist Elcrest implement whatever best practices may be beneficial from the wider experience of Seplat, for example in health and safety, operations management, community relations and external affairs etc.

Update on Amukpe-Escravos export route

The Amukpe-Escravos pipeline is set to provide a third and more secure underground evacuation option for liquids production from OMLs 4, 38 and 41. Once completed, we believe it will significantly improve the assets' production uptime (77% in 9M 2020) and reduce losses from crude theft and reconciliation (8.6% in 9M 2020).

The minor completion works on the 160 kbopd pipeline are unfortunately not within Seplat's control and have been frustratingly slower than anticipated due to a combination of access to the Escravos terminal due to COVID-19 and issues relating to ownership of pipeline. Our partner NPDC now owns a direct stake in the pipeline and we understand they are working with the other pipeline owner and their banks to facilitate the completion of the project.  We have consequently adjusted our plan and budgets to expect commencement of export of the initial permitted volume of 40 kbopd through the Escravos terminal in the second half of 2021.

Gas business performance 

Following the planned shutdown and maintenance work in the first quarter of the year, Seplat's working-interest production for the period was 100 MMscfd at an average selling price of US$2.88/Mscf (9M 2019: 136 MMscfd, US$2.82/Mscf). Gas contributed US$82.2 million of Group revenues, or 21.2%.

Oben Gas Plant 

The Company successfully completed a 15-day turnaround maintenance for the Oben Gas Plant in March. Gas production was affected during the maintenance period and this impact was exacerbated by third-party infrastructure downtime of 23% due to associated condensate handling challenges. 

The Oben-48 gas well, drilled in late 2019, came onstream in the first quarter of 2020. Oben-49 was drilled in the third quarter with well completion activities in progress. Following the completion of Oben-49, the drilling rig will move to the location of the second planned gas well and commence drilling activities. The initial well potential for both wells combined is expected to be 75 MMscfd on a gross basis, or 33.8 MMscfd net.

Sapele Gas Plant

Decommissioning of the existing gas plant reached 85% completion in the period, with only the last producing module and associated equipment outstanding. Decommissioning of the lone producing module commenced on the 1st of October 2020 and upon conclusion will complete the abandonment activities, after which site construction works will begin.

For the new plant, we have taken delivery of the AG compressors as production of other main processing components continues. Contracting is in progress for the procurement of the remainder of the plant equipment. The project is expected to be completed in the second half of 2022, with Sapele's processing capacity increasing from 60 MMscfd to 75 MMscfd. The upgraded facility will produce gas that meets the West African Gas Pipeline (WAGP) export specifications and the LPG module will enhance the economics of the plant as well as ensuring that any gas flaring is eliminated.

ANOH Gas Processing Plant 

The ANOH Gas Processing Plant development at OML 53 will comprise a 300 MMscfd midstream gas processing plant in its first phase.

The project is progressing as planned. Having reviewed the construction schedule and progress on the OB3 gas pipeline, as well as the effect of COVID-19 on equipment delivery, we believe the anticipated first-gas date of Q4 2021 remains on target. On the basis of this completion date, we have agreed with the upstream operator, Shell Petroleum Development Company (SPDC), to defer the initial well spud date of November 2020 to the first quarter of 2021. This will ensure the upstream first-gas target is in alignment with the midstream project delivery schedule.   

The total ANOH project cost is budgeted at US$700 million and both NGC and Seplat have fully funded their respective equity investments of US$210 million. The balance will be funded by debt and we expect to conclude the funding process in Q4 2020.

COVID-19 response

The direct impact of COVID-19 has been far less severe in Nigeria than in many other countries. As of 26 October 2020, the Nigeria Centre for Disease Control had reported less than 62,000 cases and 1,150 fatalities. We are keeping the situation under daily review and will respond accordingly to any significant developments.  

As we continue to monitor developments, the health and safety of our employees, communities, partners, and other stakeholders remain our top priority. We have implemented preventative measures across all Seplat sites, designed to protect our stakeholders whilst ensuring we can continue to provide the energy and fuels that Nigeria needs.

Although we have implemented a partial and carefully managed re-opening of our head office in Lagos, many employees continue to work from home and are supported by our robust technology platforms, enabling all staff to interact with our internal and external stakeholders. Our field operations continue to work with essential-only staffing based upon 28-day rotations instead of the usual 14-day rotations. All field staff are given regular health checks and undergo a period of quarantine before arriving at the field.

We will continue to monitor the rapidly changing dynamics and the impact of COVID-19 to comply with all State and Federal Government directives to help protect the health and safety of our stakeholders.

Results of investigations into accident at OML 40

On 7 July 2020, a tragic accident involving seven fatalities occurred because of an explosion during planned maintenance work by contractors at the Benin River Valve Station on OML 40 in Delta State. There were no other casualties. Our thoughts and prayers remain with the families and friends of all those who lost their lives and the NPDC/Elcrest joint venture has provided support where possible.

Field operations at Gbetiokun, 30km away, were unaffected, but we suspended operations to allow repairs to the export site, which were concluded in August. Three investigation teams including a DPR-led team, an independent investigator and a combined team of NPDC / Elcrest (led by NPDC as the operator) began separate investigations in the immediate aftermath of the accident. Over the course of the investigation, a multi-disciplinary team of experienced internal and external specialist personnel was constituted to distil out lessons from the accident and review operational practices with a view to revising operational controls to prevent such incidents in the future.

The investigations identified failure of the Permit to Work system as the root cause of the incident and recommended improvement actions. A total of 18 key findings related to the causes of the accident emerged. The team developed a series of recommendations to address each of its key findings, which are intended to enable prevention of similar accidents as well as address other potential issues. Categories of the findings included documentation, training, processes and interfaces. We recognised that full implementation of the eighteen recommendations would involve long-term commitment and a team was set up to drive HSE gap closure. A prioritised action plan was put in place with due dates and accountabilities for each element of the plan, with actions tracked to completion. Sixteen of the recommendations, including all high-urgency items, have been closed out and the final two items will be concluded shortly. Elcrest's management has prioritised building a robust HSE culture across the organisation and aims to finalise implementation of the enhanced standards across its locations.

Update on sustainability initiatives

Earlier in the year, we commissioned the environmental consultancy Critical Resource to conduct a Gap Analysis of our efforts on sustainability. The analysis identified numerous areas in which we could align with global best practices and will guide future initiatives across several areas including:

·      Scenario analysis of asset resilience under different climate scenarios

·      Board-level development of overall position on climate change and sustainability

·      Alignment of reporting with global standards such as TCFD and road map towards fully compliant reporting

·      Implementation of infrastructure to gather, verify and report data not yet fully reported

·      Development of policies and statements on biodiversity, human rights and other key areas

·      Identification and implementation of key sustainability indicators and alignment to internal performance targets

·      Change management and internal organisation to embed a sustainability mindset across the organisation to successfully implement the overall sustainability and climate change strategy

We anticipate that the next steps will be to conduct the scenario analysis of our assets and this will then guide the Board's consideration and development of a long-term strategy to address the impacts of climate change and other sustainability imperatives.

As a first step, we have created a New Energy group to manage our midstream gas business, which is a major sustainability initiative because of the imperative to replace Nigeria's wasteful use of small-scale, costly and polluting diesel generators with cleaner and more efficient utility-scale gas-fired power stations. The New Energy group will also explore the adoption of renewable energy both in our own operations and as a future business line for the Group.     

Management transition and Board appointments

As previously announced, our co-founder Austin Avuru stepped down as Chief Executive Officer on 31 July 2020 but remains a member of the Board. Roger Brown, who has been Seplat's Chief Financial Officer since 2013, assumed the position of CEO on 1 August 2020.

Emeka Onwuka joined as CFO and Board member on 1 August 2020. Mr. Onwuka has more than 30 years' experience in financial services within Sub-Saharan Africa. He has served as Group Managing Director / CEO of Diamond Bank Plc and is a former Chairman of Enterprise Bank Limited. Mr. Onwuka is a Partner at Andersen Tax Nigeria and holds various Board positions at companies including FMDQ Securities Exchange Limited, FMDQ Holdings Limited, Ecobank Nigeria Limited and Bharti Airtel Nigeria.

The Board appointed Ms. Arunma Oteh, OON and Mr. Xavier Rolet KBE as Independent Non-Executive Directors of the Company, with effect from October 1, 2020.

Ms. Arunma Oteh, OON is a seasoned C-suite executive with several years of experience operating at the highest levels at major multilateral agencies, global financial institutions and in Government. She has been an academic scholar at University of Oxford since January 2019 and a member of the London Stock Exchange Africa Advisory Group since January 2020. 

Ms. Oteh served as Treasurer and Vice President of the World Bank from 2015 to 2018. As Treasurer, she led a global team that managed the World Bank's $200 billion debt portfolio as well as an asset portfolio of $200 billion for the World Bank Group and several public sector clients including 65 Central Banks. She was the Director General of the Securities and Exchange Commission ("SEC") Nigeria from 2010 to 2015. As Director General of Nigeria's apex capital market regulator, she was responsible for the regulation of Nigeria's capital markets, including the Nigerian Stock Exchange, and led the rebuilding of the capital markets after the global financial crisis.  She also served on Nigeria's Economic Management team, chaired by the Nigerian President. Prior to the SEC Nigeria, she worked at the Africa Development Bank for 17 years in a variety of roles including Group Vice President, Corporate Services (2006 to 2009) and Group Treasurer (2001 to 2006).

Mr. Xavier Rolet, KBE, is an experienced CEO, Co-Founder, and Entrepreneur. Named as one of Harvard Business Review's 100 Best CEOs in the World in 2017, Mr. Rolet has demonstrated a history of successful turnarounds in the global financial services industry. In his decade at the helm of the London Stock Exchange, the LSE's market valuation rose from £800m to more than £15bn, transforming it into one of the world's largest exchanges by market capitalisation.

He is currently the Chairman, Board of Directors at Phosagro PJSC, a member of the Board of Directors of the Saudi Stock Exchange Tadawul as an appointee of the Public Investment Fund, and an Expert Adviser to the Shanghai Institute of Finance for the Real Economy. He has held various senior positions in the financial services industry throughout his career: CEO of CQS, a global hedge fund; CEO of Banque Lehman Brothers in Paris; Co-Head of Global Equity & Derivatives Trading at Lehman Brothers New York; Global Head of Risk and Trading at Dresdner Kleinwort Wasserstein; Vice-President, International Equity Risk Arbitrage at Goldman Sachs New York; and Co-Head of European Equities Sales and Trading at Goldman Sachs International Ltd in London.


Financial review

Oil market

Higher than anticipated oil demand in July and August, helped by OPEC+ production cuts, drove oil prices higher in the third quarter of 2020, with Brent averaging US$43.30/bbl in the period. However, demand softened in September over uncertainties as to the pace of recovery from the pandemic.

Revenue and production

Total revenue for the period was US$387.8 million, down 21.6% from the US$494.8 million achieved in 2019. Crude oil revenue was US$305.6 million (9M 2019: US$322.8 million) a 5.3% reduction compared to 2019, reflecting lower realised oil prices of US$38.6/bbl for the period (9M 2019: US$64.2/bbl) offset by added production from the Eland assets. A US$39.1 million oil underlift was recorded under other income in the period, compared to US$30.5 million in 9M 2019.

Total working-interest production volume for the period was 13.9 MMboe (9M 2019: 12.9 MMboe) with the total volume of crude lifted in the period being 7.9 MMbbl, compared to 5.0 MMbbl in 2019. The higher volume was due to a maiden contribution from OML40 and Ubima, and higher production from OML 53. The Company experienced TFP reconciliation losses of 8.6% for the nine-month period, but we expect these to fall when the delayed Amukpe-Escravos underground pipeline comes onstream.

Gas sales revenue decreased by 21.8% to US$82.2 million (9M 2019: US$105.1 million), due to lower gas sales volumes of 27.5 Bscf compared to 37.2 Bscf in 9M 2019. The lower volumes reflect higher downtime at third-party infrastructure and a planned 15-day shutdown of the Oben Gas Plant for turnaround maintenance in March. There were no gas processing revenues in the period, compared with the one-off gas processing revenue of US$66.9 million in 2019, which was the Oben gas plant tolling payment by NPDC. Gas sales contributed 21.2% of total Group revenue in the period
(9M 2019: 24.6%, excl. tolling) and the average realised gas price was US$2.88/Mscf (9M 2019: US$

Cost-cutting initiatives

To adapt to current market conditions the Company aims to reduce costs by at least 30% across the business. Towards opex and G&A reduction, IT, administrative and travel costs have been reduced to the essentials and all third-party and service contracts are being renegotiated to reduce costs. We expect the benefits of the cost reductions implemented across assets in the period to be reflected from the fourth quarter of 2020. Drilling of oil wells has been suspended, with all non-essential capex under review to consider only activities that can be supported in the new oil price environment.

Gross profit

Gross profit decreased to US$90.6 million (9M 2019: US$264.7 million) due to lower revenues and higher non-production costs primarily consisting of royalties and DD&A, which were US$172.7 million compared to US$144.3 million in the prior year. Following the completion of its acquisition, Eland revenues and costs are included in 9M 2020 and not reflected in 9M 2019. Production evacuation from the Gbetiokun and Ubima fields resulted in barging and trucking costs of US$13.3 million. These increased costs reflect the additional production volumes from the Eland assets and resultant increase in royalties and crude handling fees. On a cost-per-barrel equivalent basis, production opex was higher at US$8.73/boe (9M 2019: US$6.2/boe), due to barging and trucking costs, higher core operations and maintenance expenses and the effect of OPEC+ restrictions that curtailed production volumes.

General and administrative expenses of US$52.4 million (9M 2019: US$54.6 million) fell in the period as administrative activities dropped due to the Covid-19 pandemic. Following the acquisition of Eland, one-off termination payments of US$2.3 million were made to its Directors, while the inclusion of Eland staff and office costs was partially offset by lower travel and other administrative costs during the period.

IAS 36 impairments

As previously reported, under IAS 36 the Company identified the need to revalue its assets due to the significant economic uncertainty of the COVID-19 crisis. Following a reassessment of the business models and assumptions to establish their reasonableness and practicality, particularly in the current and expected oil price environment, we decided to book a provision of US$158.2 million across its non-financial assets in the period.

Operating loss

An impairment loss of US$179.7 million was booked in the period. This includes a non-financial asset charge of US$158.2 million (IAS 36 as detailed above) and financial asset charges of US$21.4 million (IFRS 9). Financial asset charge include charges against a deposit made for a potential investment that the Company will no longer pursue. This was offset by other income of US$42.2 million that includes an adjustment for a US$39.1 million underlift position (shortfalls of crude lifted below the share of production, which is priced at date of lifting and recognised as other income) and the US$1.5 million tariff income generated from the use of the Company's pipeline. Hedging income US$22.0 million was received in the period; US$19.9 million recognised is net of fair value charges. 

The Impairment provision reverses an operating profit of US$100 million to operating loss of US$79.3 million (9M 2019: US$211.2 million profit) and an EBITDA of US$205.6 million that adjusts for impairment and other non-cash items.


The Group's tax position for the period was a credit of US$33.8 million, compared to a tax expense of US$3.4 million for the same period in 2019. The tax credit is made up of a deferred tax credit of US$44.5 million and a current tax charge of US$10.4 million. The deferred tax credit is mainly driven by the unutilised capital allowances for the period.

Net result

The net finance charge was US$51.8 million, compared to US$27.1 million in 2019. The loss before tax adjustments was US$130.1 million (9M 2019: US$120.4 million profit before tax). The net loss for the period was US$96.3 million
(9M 2019: US$184.6 million net profit). The resultant basic loss per share was US$0.17 (9M 2019 EPS: US$0.32).

Cash flows from operating activities

Net cash flows from operating activities, after movements in working capital, were US$187.4 million (9M 2019: US$306.3 million). An income tax payment of US$10.4 million was made in the period. Seplat received a total of US$147 million from NPDC towards the settlement of outstanding dollar-denominated cash calls and US$100 million (Naira equivalent) to offset Naira cash calls.

The NPDC receivable balance now stands at US$151.6 million, down from US$222.4 million at the end of 2019. Seplat maintains a good dialogue with NPDC to ensure that receivables are settled promptly. The Group continues to receive the proceeds of gas sales from NPDC in lieu of Naira cash calls for ongoing operations.

Cash flows from investing activities

Capital expenditures in the period were US$108.6 million comprising US$74.4 million in relation to the drilling and completion of eight wells- two gas wells (completion of Oben 48 and Oben 49) and Six development oil wells.   Associated facilities and engineering costs amounted to US$19.4 million and other gas business costs including the Sapele Gas Plant upgrade project totalled US$14.7 million.

The Group received total proceeds of US$4.7 million in the period under the revised OML55 commercial arrangement with Belema Oil for the monetisation of 68 kbbls. The joint venture payment of US$30.0 million reflects an additional equity contribution towards the ANOH Gas Processing Plant project. An additional US$30 million was paid after the period ended.

After adjusting for interest receipts of US$2.0 million, the net cash outflow from investing activities for the period was US$131.8 million, compared to a net cash outflow in 2019 of US$295.1 million, when AGPC's cash balance was deconsolidated from the Group accounts in April 2019. 

Cash flows from financing activities

Net cash outflows from financing activities were US$180.5 million (9M 2019: US$146.7 million). This reflects a further US$10.0 million drawn from the Westport RBL facility, interest and lease payment totalling US$61.3 million and the payment of US$29.2 million for the 2019 final dividend. In August 2020, the Company repaid US$100.0 million of the RCF, with US$250.0 million currently drawn. The US$100.0 million remains available for drawing if required.

Net debt reconciliation at 30 September 2020

US$ million



Senior Notes *



June 2023

Revolving Credit Facility *



June 2022 / December 2023

Westport RBL *



November 2023

Total borrowings




Cash and cash equivalents




Net debt




*including amortised interest

Seplat's gross debt was US$692.8 million as at 30 September 2020, with cash at bank of US$213.0 million, leaving net debt at US$479.8 million.


Following a review of Seplat's operational, liquidity and financial positions the Board has declared an interim dividend of US$0.05 per share (2019: US$0.05 per share), in line with Seplat's normal dividend distribution timetable.

Hedging strategy

Seplat's hedging policy aims to assure appropriate levels of cash flow in times of oil price weakness and volatility. The 9M 2020 hedging programme consisted of put options at a strike price of US$45.0/bbl protecting a volume of 4.5 MMbbl (in aggregate) for the first three quarters of 2020. For the fourth quarter of 2020, 1.5 MMbbl are protected at US$30/bbl and 0.5 MMbbls at US$35/bbl. We are hedged through Q1 2021 with 1.0 MMbbl at $30/bbl and 1.0 MMbbl at US$35/bbl. 

Following the oil price fall at the end of Q1 2020, hedging income received for the nine-month period totalled US$22 million net off by a mark to market fair value loss of US$2.1 million.

The Board and management team continue to closely monitor prevailing oil market dynamics and will consider further measures to provide to provide appropriate levels of cash flow assurance in times of oil price weakness and volatility.

Principal risks and uncertainties

The Board of Directors is responsible for setting the overall risk management strategy of the Company and the determination of what level of risk is acceptable for Seplat to bear. The principal risks and uncertainties facing Seplat at the year-end are detailed in the risk management section of the 2019 Annual Report and Accounts. The board has identified the principal risks for the remainder of 2020 to be:


Share Dealing Policy

We confirm that to the best of our knowledge that there has been compliance with the Company's Share Dealing Policy during the period.

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