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Seplat Energy Plc’s third-quarter operating profit dropped 7.42 percent, the company said, joining rivals hurt by the sharp decline in energy prices and lower fuel margins.
The company’s pre-tax profit dipped by 18.87 percent to N62.85 billion as at September 2023 from N77.47 billion the previous year.
Like its competitors, Seplat profited last year from the spike in gas and oil prices linked to the war in Ukraine, posting a record net profit.
There was a reversal of fortune in 2023, with the price of a barrel of North Sea Brent down 14 percent in the third quarter, at an average of $86.76.
This drop is however smaller than the 31 percent fall recorded in the second quarter, when the average price was $78.39 a barrel.
“This decline in operating profit was attributed to a combination of lower oil prices, foreign exchange (FX) losses due to Naira devaluation, and higher General and Administrative (G&A) expenses,” said the company.
A significant adjustment in the exchange rate by the central bank left Seplat with a foreign exchange loss of N16.17 billion while it incurred N75.13 billion in crude oil (overlift).
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.
Analysts now expects price of Brent to be $84 on average for 2023, compared to $80 forecast previously.
“Group production performance has improved in 2023, thanks to well performance on OML40 and reduced losses on our Western Asset. We have no significant planned turnaround activity in 4Q23, as such we can narrow our production guidance to a range of 46,000-50,000 boepd, within our original guidance range. Our guidance does not include any contribution from MPNU or ANOH,” said the company.
Seplat said it has narrowed its capital expenditure guidance for 2023 to a range of $160-180 million.
“Reduced well count modestly lowers total expenditure on drilling, while we also anticipate making some project milestone payments in the final quarter of the year. The focus on recovery of our drilling program continues. We are actively looking to contract a new swamp rig, that will increase rigs on our Western Asset to four,” summed the company.
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