Nigerian Seplat Returns to Operating Profit
Nigerian independent producer Seplat returned to an operating profit in the first half of this year, and expects diversification of export routes for its crude, and growing gas business, to drive long-term profitability.
CEO Austin Avuru said: "After 18 difficult months, the company is now well-placed to secure a long-term return to profitability and growth."
Oil and gas realised prices were each down by a few percent year on year, at $45/b and $2.97/'000 ft3 respectively (from $3.05/'000 ft3 in 1H2016) -- prices per '000 ft3 being very close to those per million Btu.
Seplat made an operating profit of $7mn on revenue of $132mn, compared with a loss last year of $42mn on revenue of $153mn. It halved its net loss, from $61mn to $28mn. Its earnings were partly helped by the lifting of force majeure on exports from the Forcados terminal June 6. A cut in general administration costs of 27% also helped. Its operating expense was $5.85/barrel of oil equivalent.
After downtime, overall working interest production in H1 across all blocks stood at 9,507 b/d and 101.3mn ft³/d, or 26,383 boe/d.
Despite the Forcados shut-in that began February 2016, Seplat achieved continuity of gas production to supply the domestic market, albeit at managed levels during the force majeure period owing to condensate handling constraints. The restart of oil and condensate injection into the Forcados system enabled Seplat to successfully reinstate gross production at OMLs 4, 38 and 41 to pre-Force Majeure working interest levels of around 56,000 boepd, being liquids of around 34,000 bopd and gas volumes of around 130mn ft³/d.
Gas revenues of $54mn were 41% of the total for the period and up 15% year-on-year. The company is talking with counterparties to finalise new gas sales agreements and plans to take gross production towards 400mn ft³/d. It expects its own output this year to be between 110mn ft³/d and 130mn ft³/d. The company is also "proceeding towards final investment decision at the large scale ANOH gas and condensate development at OML 53," it said.
William Powell