Seplat Energy has seen its performance improve in the third quarter of the year, but its deal for ExxonMobil’s local assets remains elusive as does completion of its ANOH project.
Revenue in the nine-month period was up 31% at $810.4 million, against $618.6mn for the same period in 2022.
Production was up 11%, at 41,852 barrels of oil equivalent per day, with liquids up 17%. The company noted performance at the Forcados terminal had improved and the alternative Amukpe-Escravos pipeline’s availability.
Offsetting this increase, though, were lower prices. Oil averaged $82.76 per barrel, from $108.25 in 2022.
As a result, cash generation was flat year on year at $365.1mn, with capital expenditure of $125.4mn. It reduced net debt to $347.6mn, from $452.2mn last year.
CEO Roger Brown said the company’s operational performance had been strong in the third quarter and that the company had produced more than $170mn of free cash flow this year.
The company is working on a major gas project, ANOH, with Shell Petroleum Development Co. (SPDC). In February this year, Seplat predicted it would reach first gas at ANOH in the fourth quarter of this year.
Today, the company pushed this back to the third quarter of 2024. The gas plant has faced some delays while the upstream wells are making good progress. However, the OB3 river crossing and spur line – connecting that line to the gas plant – are a challenge.
“Ongoing third-party delays to ANOH’s export infrastructure remain a source of frustration, but we are confident that the quality of the project will support dividend growth for Seplat in the coming years as we diversify the business and deliver on our strategy to provide more affordable energy for Nigeria,” said Brown.
The company said ANOH had faced challenges in the “security situation, poor weather, and contractor performance”.
SPDC completed a third well on the project in the first half and is working on the fourth.
State-owned NNPC Gas Infrastructure Company (NGIC) is working on the pipelines. The company is making progress on the river crossing, with half of the 1,850 metre distance now ready to tunnel. However, NGIC expects to install the pipe only by the end of the year.
The 23.3 km spur line has faced challenges, including a security-driven stoppage in September. The contractor is also expecting to complete the work by the end of the year.
Seplat has said the first quarter of 2024 is more likely. It has also baked in a six-month margin of error, leading it to its third quarter of next year prediction for first gas.
The company has also taken a more conservative view on the future of its assets around ANOH. Seplat said there was greater scope for pipeline disruptions and the wet gas price for the project would be lower than the rest of its portfolio. As such, it expects a dividend from the project of around $30 million per year.
In February 2022, Seplat announced a deal to buy Exxon’s onshore assets with the acquisition of Mobil Producing Nigeria Unlimited (MPNU). It is still waiting.
The company said it was still confident that the deal would be approved and that financiers were supportive.
“We wholly align with and support President Tinubu’s efforts to make Nigeria a more attractive place to invest, and we will play our part by delivering affordable and reliable energy that will support our nation’s growth,” said CEO Brown.
In August, a rig working for Seplat toppled during a move, with two workers missing and two confirmed dead, one of whom was UK expatriate Carl Aston.
Depthwize Nigeria is the drilling contractor and this company is carrying out an investigation. It is still working to salvage the rig. Seplat said it had carried out its own investigation and was offering support to Depthwize where it could.
“Our own investigations are ongoing, but I can assure all stakeholders of our unwavering commitment to safety on all of our operations,” said Brown.
Seplat’s drilling plans are currently behind schedule. It now has three land rigs in its western area and aims to drill 14 wells this year.