Huge tax expenses drag down Seplat's profit by 44.7%

…As Management Proposes $0.05 Dividend
With a colossal payment of N35.7 billion as tax expenses in 2018 audited result and accounts, Seplat Petroleum Development Company Plc has announced 44.7 per cent drop in profit.

The indigenous oil and gas company, listed on both the Nigerian Stock Exchange (NSE) and London Stock Exchange had reported tax credit of about N67.65 billion in 2017.

The company in its report to the NSE on Tuesday said profit dropped from N81.11 billion in 2017 to N44.87 billion reported in 2018.

The company revenue grew by 65.2 per cent to N228.39billion in 2018 from N138.28 billion reported in 2017.

Having emerged from a period of weak macro conditions and a disrupted operating environment in 2016 and 2017, the Board reinstated the dividend in 2018 with a special dividend of $0.05 per share in April paid to normalise returns to shareholders after the dividend suspension and an interim dividend of $0.05 per share declared in last October in line with its normal dividend distribution timetable.

Commenting on the results, Seplat's Chief Executive Officer, Austin Avuru said “Seplat has delivered an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years.

“At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks.

“As we continue to enhance production and revenue diversification with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business.

“Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of $350million.

“In 2018, we reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise.”

For 2019, the company production guidance for 2019 is set at 49,000 to 55,000 boepd on a working interest basis, comprising 24,000 to 27,000 bopd liquids and 146 to 164 MMscfd (25,000 to 28,000 boepd) gas production. Capex guidance for 2019 is set at US$200 million.

Rig based activity will step-up significantly in 2019. In the western Niger Delta at OMLs 4, 38 and 41 the Company plans to drill

up to seven new oil production wells, one new gas well, one rig based re-entry of an existing oil well and one appraisal well.

Facilities and engineering projects will focus on delivery of an upgraded integrated gas processing facility at Sapele and further upgrades to the liquid treatment facility to enable increased deliveries of dry crude in sapele and Amukpe. At OPL 283 preparation work for development of the Igbuku gas field will continue with concept selection and FEED studies.

In the eastern Niger Delta at OML 53 development of the Ohaji South oil reserves will continue with the drilling of three planned oil production wells while the Company expects to also undertake a rig based workover of one existing oil production well at the jisike field. In addition to this two appraisal wells are planned, one of which will be at the undeveloped Owu oil discovery.

Facilities and engineering work will focus on the expansion of oil production facilities at the Jisike and Ohaji South oil fields. At

OML 55 the Company will continue to monetise liftings towards full recovery of the $330 million discharge sum.