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Seplat Energy Plc has plenty of cash as the leading Nigerian independent energy Company benefitted from benign crude oil prices, but it is not spending enough in new capital expenditure.
For instance, the company’s capital expenditure (capEX) to cash flow from operating ratio (CF) or (CapEX/CF) ratio hit of 12.55 percent as June 2025, which is the percentage of the company’s operating cash flow allocated towards its capex spending, according to MoneyCentral’s calculation.
It is interesting to note that peer rival Aradel Holding Plc has a capEX/CF ratio of 34.17 percent, while Oando Energy Plc will have to borrow to fund its expansion plans as it has a negative cash flow.
The Capex to Cash Flow Ratio is the percentage of a company’s operating cash flow (OCF) allocated towards the purchase of long-term fixed assets, i.e. capital expenditures.
Seplat has earned Buy ratings from analysts because of its strong balance sheet and consistent revenue growth and its ability to save money for the rainy day.
The company’s operating cash flow from operations surged by 239.15 percent to $766.20 million in June 2025, from $226.0 million as at June 2024.
A stronger cash flow has supported leverage as an improvement in the leverage levels net debt at end-June of $676 million down 9.5% on the prior quarter (1Q 2025: $747 million). Pro-forma ND/EBITDA improves to 0.53x.
On April 25, Fitch Ratings upgraded Seplat Energy Plc’s Long-Term Issuer Default Rating (IDR) to ‘B’ from ‘B-‘. The Outlook is Stable. Fitch also assigned Seplat’s notes a final senior unsecured rating of ‘B’ with a Recovery Rating of ‘RR4’.
The rating reflects Seplat’s stable credit metrics and stronger business profile following its acquisition of Mobil Producing Nigeria Unlimited (MPNU) for around $1.3 billion.
Seplat projects it will generate a cumulative cash flow from operations of approximately US$5.0 billion in the next five years (2026-2030), according to filings on the Nigerian Stock Exchange.
This projection is 2.5-3.0x 9 (times) increase on the prior 5-year period (2020-2024) comes as the oil and gas giant hosts its Capital Markets Day to update investors on its medium term vision for the business following the transformational acquisition of Mobil Producing Nigeria Unlimited – “MPNU” (now known as Seplat Energy Producing Nigeria Unlimited – “SEPNU”), which was completed on 12 December 2024.
It projects capital (CAPEX) spending of $2.5 billion – $3.0 billion capital expenditure representing approximately 50 percent operating cash flow reinvestment, including drilling 120-150 new wells and sanctioning up to three new gas projects.
All the company’s targets are based long-term business plan assumptions. The plan assumes the following product prices: Crude and Condensate $65/bbl, NGL/LPG $39/bbl, Gas $2.75/mcf.
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