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Record Profit Could Convince Seplat to Hike Dividend

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Nigeria’s largest oil and gas firm Seplat Energy might follow international oil majors in raising final dividends as the company posted exceptional record quarterly earnings due to high commodity prices and multi-year-high refining margins.

Investors have been swooping on the oil giant’s shares, buying into its growth prospect as It is one of the best performers on the NGX ASI index as its share price has grown 120.08 percent so far.

For the first six months through June 2022, Seplat’s net income surged by 151.16 percent to N35.44 billion from N14.11 billion as at June 2021.

Earnings before interest, taxation, depreciation, and amortization (EBITDA) spiked by N142.60 billion in June 2022 from N75 billion the previous year. Operating income surged by 138.88 percent to N102 billion in the period under review from N42.70 billion the previous year.

Analysts expect the company to announce an increase in dividends at year end amid record cash flows and record or near-record earnings.

Oil above $100 per barrel throughout the second quarter and surging refining margins amid rebounding gasoline demand have helped strengthen Nigerian oil and gas giant’s earnings and build a solid reserve to fund future drilling.

Operating cash flow from operations surged by 179.63 percent to N137.30 billion as at June 2022 from N49.10 billion the previous year.

The company has announced an interim dividend of 2.50 cents per ordinary share of N0.50, payable in August.

Sepat said the proposed acquisition of Mobil Producing Nigeria Unlimited (MPNU) which was announced in February 2022 will almost triple production and boost reserves.

It reiterates that the Sales & Purchase Agreement (SPA) signed on 25 February 2022 to acquire Exxon’s  shallow water operations in Nigeria, MPNU, remains valid and the Company remains confident that the proposed acquisition will be brought to a successful conclusion in accordance with the law.

“Production increased strongly in the second quarter, achieving 52.4 kboepd across our operations, and we expect to maintain higher volumes for the rest of the year now that we plan to export liquids through the more secure Amukpe Escravos Pipeline.

“Having divested our interest in Ubima because of its high production costs and export difficulties, we recently acquired a 95% interest in the Abiala marginal field and plan to begin operations there next year using existing infrastructure in OML 40. This is consistent with the strategy for low-cost, low-risk upstream growth we announced last year,” said Roger Brown, Chief Executive Officer of Seplat Energy.

“We remain confident that our transformational acquisition of MPNU will be approved, adding significant reserves and  production capacity that will strongly reinforce Seplat Energy’s position as Nigeria’s leading indigenous oil and gas producer,” said Brown.

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