Seplat Energy Plc’s 2022 profit took a deep dive as losses associated with underlifts and disposal of fixed assets prevented the downstream oil and gas firm from reaping the gains of higher crude oil price.
For the year ended December 2022, Seplat’s net income was down 10.64 percent to $104.70 million from $117.17 million as at December 2021.
The loss after tax was caused by $36.05 million in shortfalls from under lifts and loss on disposal of property, plant, and equipment (PPE).
Overlifts/Underlifts are surplus/shortfalls of crude lifted above/below the share of production. It may exist when the crude oil lifted by the Group during the period is more/less than its ownership share of production.
The surplus/shortfall is initially measured at the market price of oil at the date of lifting and recognised as other loss/income. At each reporting period, the surplus/shortfall is remeasured at the current market value.
The resulting change, as a result of the measurement, is also recognised in profit or loss as other loss/income.
But the company’s revenue that increased by 29.81 percent to $951.79 million in 2022 was bolstered by a rally in crude price underpinned by Russia invasion of Ukraine and a pent up demand in the aftermath of the relaxation of the lockdown policy.
The upswing in commodities price put Energy stocks at the top industry returns as Seplat’s shares have gained 20.45 percent so far this year.
Shareholders’ rewards will continue to be the priority for cash as Seplat has the financial strength to meet obligations to the owners of the business.
The Board has recommended a final dividend of US2.5 cents per share for the financial year 2022 and following a review of
Seplat’s operational, liquidity and financial position post refinancing the Board has decided to declare an additional special dividend of US5.0 cents per share to be paid after approval at the Annual General Meeting, which will be held in Lagos, Nigeria, on 10 May 2023.
Chief Executive Officer, Seplat Energy Plc, Mr. Roger Brown said the company’s strong financial performance will enable the payment of a US7.5 cent final dividend, despite the significantly disrupted production it experienced in the second half of the year.
“As we enter 2023, the business is in a very healthy state, with new wells coming onstream, encouraging appraisal drilling underway at Sibiri, and alternative export routes ensuring good export performance in January and February, this year. Our gas business continues to develop, with first gas expected from ANOH in Q4 this year, and we are now in the process of separating our Midstream Gas business from the Upstream unit to unlock new value for shareholders.
“We are continuing to pursue the Presidential approval received on the 8 August 2022 for the MPNU acquisition and we remain focused on concluding the transaction within the remaining term of President Buhari before a new president is sworn into office at the end of May 2023.
“We are implementing our roadmap to net zero and have made encouraging progress with a 35 per cent reduction in emission intensity last year. The major reduction in carbon emissions is routine flaring which we are on target to eliminate by the end of 2024. Alongside these efforts, and as part of our stated strategy to become Nigeria’s energy champion across the entire value chain, we are planning to invest in gas-to-power and solar power projects with FID targeted for later this year if the projected returns meet our internal hurdle rates.
“We are confident in our outlook for 2023, with the new Amukpe-Escravos Pipeline working well, our drilling cost reductions and efficiencies being delivered, and ANOH’s first gas expected in Q4 once 3rd party infrastructure is completed, our business is on a firm footing to facilitate significant growth and higher returns for stakeholders,” Brown said.