For Seplat Energy, the preparation for the future has been done years ago under successive leaderships that were forward-looking. They paved the way for the company to start unleashing the future now. The oil giant, at its 11th Annual General Meeting (AGM) in Abuja, reeled off its high expectations concerning the future. CHINAKA OKORO reports
Every going concern works towards achieving its set objectives encapsulated in the values that guide it. These guiding values are also entrenched in the firm’s vision, mission and commitment to achieve set goals, especially in a turbulent environment not too conducive to healthy business transactions; such a going concern must go the extra mile to remain afloat in the face of an unhealthy business environment.
This may have informed Seplat’s management to commit to making integrity their catchphrase.
In recognition of this, Seplat Energy’s Managing Director and Chief Executive Officer (CEO), Mr Roger Brown, at the 2023 Nigeria Oil and Gas Conference (NOG) held in Abuja, said: “We will behave with integrity in all our dealings. Our ambitions will be driven by partnerships, so we strive to collaborate and be a trusted partner. We will be a driving and innovative force in the delivery of energy solutions, for social and economic growth.”
According to him, Seplat Energy remains committed to creating and sustaining value in the Nigerian upstream sector and has continued to do so via a strong investment work plan, host community development, partnerships with government and aggressive human capital development.
Based on the aforementioned, and looking at its contributions over the years in the oil and gas sector, many are not surprised that Seplat Energy, Nigeria’s leading energy supplier, is leading the drive for the country’s energy transition towards cleaner and more reliable energy that is accessible to all.
The oil giant is also pursuing a robust reward system in which its stakeholders and shareholders are adequately rewarded for their unflinching support over the years. It made significant progress on several of its growth projects, showing a willingness to, not just in delivering value in our day but to plan for tomorrow.
Seplat and 2023 positive reports
Undoubtedly, last year was a very good one for Seplat Energy in terms of growth as the firm delivered a strong set of results, against a weaker oil price environment.
This is despite the 17.0 per cent decline in the average price of Brent Crude; the company grew its oil and gas revenue by 11.5 per cent.
The company also increased average daily production by 8.3 per cent in 2023, to 47,758 boepd (barrels of oil equivalent per day), from 44,104 boepd in 2022, while revenue from oil and gas sales for 2023 rose by 11.5 per cent.
As Nigeria’s leading Indigenous energy company, the company is not shying away from its duty to minimise the impact of operations on the environment as it has plans to create increasingly sustainable energy solutions to provide access and meet increasing energy demand while addressing the critical challenge of climate change for society and the business.
A key focus for the company has been the aggressive programme to eliminate gas flares by 2025, which is a significant part of its commitment to achieving net zero by 2050. It is also exploring using solar power where feasible and has initiated a diesel replacement programme to increase the use of gas, a less carbon-intensive fuel, for power generation in its operations.
To support these decarbonisation efforts, Seplat Energy has committed substantial financial resources towards projects to end routine flares in operations.
This includes installing gas compression facilities and incineration at various flow stations. Upon completing these projects, it is expected to significantly improve its gas handling capacity and reduce flares, thus monetising flare gas in alignment with its corporate strategy and national initiatives.
At the Annual General Meeting (AGM), the new Chairman of the Board, Senator Udoma Udo Udoma said the company remained committed to pursuing strategic aims in the most sustainable way possible, for the benefit of all stakeholders and shareholders.
He said: “These are truly exciting times for us because, in the coming months, we intend to commence production from our joint venture ANOH Gas Processing Company and, we hope to complete our transformative acquisition of Mobil Producing Nigeria Unlimited (MPNU), which will diversify the business into offshore operations for the first time.
“We have been able to take on this acquisition alongside other strategic business decisions due to our focus on high standards of safety, responsible stewardship of Nigeria’s assets, excellence in operations, improvements in corporate governance and consistent strengthening of our finances.”
Promising to lead the firm toward more sustainable growth and development, Udoma Udo Udoma said he would maintain the positive trajectory of the company’s advancement.
He said: “As the new Board Chairman, I intend to continue driving the board in ensuring the organisation’s commitment to operating to the highest standards of governance and management. I am optimistic that by maintaining these standards Seplat Energy will be able to continue offering very attractive returns to shareholders.”
He added that the company’s vision remains unchanged as a model company, an example of excellence and respectability that inspires other Nigerian companies to achieve the highest levels of success on the global business stage.
Rewarding shareholders
In its commitment to improve the well-being of shareholders, the Seplat Board, in 2023, approved a total dividend of 15 cents per share for shareholders.
In the words of Eleanor Adaralegbe, Chief Financial Officer of Seplat: “The Seplat Energy Board recommended a special dividend of US 3 cents per share for the 2023 business year aside from the core dividend of US 12 cents per share, up 20 per cent in 2022. The payment of the special dividend reflects the board’s continued confidence in the future of the business and is underpinned by a strong balance sheet.
“Our financial strategy ensures we can appropriately fund our capital expenditures, meet necessary debt repayments, and return cash to our shareholders. It also provides the flexibility required to realise the value of our asset base…”
Investment
Though the proposed acquisition of MPNU began about two years ago, Udoma said the board remains confident that the transaction will be approved, and all associated legal issues will be resolved.
“We continue to work with all parties to achieve a successful outcome, including our financiers, who remain supportive. We have been encouraged by the continued efforts of President Tinubu’s administration to drive positive change in Nigeria and a more supportive environment for businesses that want to invest and grow in the country.
“We hope to complete our acquisition of the entire share capital of MPNU and integrate its business with ours, welcoming its highly skilled and experienced staff to the Seplat family. I am confident that the larger group we become will be synonymous with excellence in Nigeria, reflecting the boundless energy and limitless potential of its people.”
Explaining further, Brown said the ANOH gas plant achieved mechanical completion on December 29 2023, without recording any Lost Time Incident (LTI) across 11 million hours.
He added that current activity on the ANOH gas project involves moving all key work streams to completion ahead of the first gas, planned for 3Q of this year.
He said: “All upstream wells required for first gas were completed by the operator, SPDC, in 2023, with well deliverability tests conducted in Q1 2024. Work is ongoing to connect the wells to the gas plant.
“Our government partner, NNPC Gas Infrastructure Company (NGIC), is responsible for delivering the pipelines required to transport the gas from ANOH to the demand centres, including the 23km spur line and the Obiafu-Obrikom-Oben (OB3) pipeline.
“Concerning the OB3 pipeline, grouting of the unconsolidated formation along the tunnelling pathway on the River Niger has been completed, and our government partners announced that tunnelling operations are ongoing. Our partners recently reaffirmed their guidance for the completion of construction of the OB3 pipeline in Q2 2024.
“About the Spur Line project, the operations in Imo State are witnessing improved progress following the engagement of additional contractors to expedite the completion of the remaining pipeline sections. NGIC is advising an expected completion date of the end of Q2 2024.
“The project has achieved several notable milestones in recent months, providing greater assurance that the project is on track to achieve first gas as estimated by Seplat in Q3 2024.
Upon commencement of operations, ANOH will provide two income streams to Seplat.”
New energy business
In line with its strategy to lead in energy transition, Seplat has assessed various midstream gas, power, and renewable investment opportunities that are focused on increasing energy supply and reliability, lowering costs, and reducing carbon intensity of Nigeria’s electricity consumption.
“Given this, we have high-graded a gas-to-power development project, which should be matured during 2024 and presented to the Board for approval. In addition, following the completion of internal due diligence, Seplat is reviewing two other potential acquisition opportunities in the Compressed Natural Gas (CNG) and Renewable Power Generation markets,” Brown said.
Commitment to host communities
Seplat Energy recognises the importance of its relationship with the communities in which it operates and the company is committed to contributing to the growth and development of these communities. Seplat Energy has several initiatives in place to support communities, including health, and educational programs. The company also engages in continuous dialogue with community members beginning from project initiation and throughout the operation and decommissioning phases.
Providing more insight, Samson Ezugworie, the COO of Seplat mentioned that as a sustainable company, Seplat Energy remains dedicated to contributing to the growth and development of our people and communities. We believe that the sustainability of our business is dependent on the relationships we forge with the communities in which we operate and the contribution we make to them.
“We have successfully attained the ISO 26000 endorsement, which underscores our adherence to internationally recognised sustainable and ethical business practices standards. In 2023, we made substantial progress by installing solar panels and granting 100% renewable energy access to five (5) schools and three (3) hospitals, advancing our goal of increasing energy access while enhancing our capabilities in the power and renewable energy sectors.
“In 2024, we plan to provide additional community hospitals, schools, and households with reliable and renewable power. We executed successful direct intervention programs in health and education as well in our communities, and these initiatives underscore our commitment to social responsibility and creating long-term value for all stakeholders.”
Going forward
Brown believes that this year will be a fantastic one for Seplat as its production has recorded improved stability in the past year.
He said: “In 2024, we expect this to continue, our 2024 capex programme aims to maintain production, and we provided initial guidance at 44 – 52 kboepd with Q1 2024 average production was 49kboepd. The guidance assumes the availability of the Trans-Niger Pipeline (TNP) from the end of 3Q 2024. It also assumes the first gas on ANOH in line with guidance, and a gradual ramp-up of contribution from the gas field through the end of the year.
“Capital expenditure for 2024 is expected to be in the range of $170-$200 million. The programme includes drilling 13 new wells across our operated and non-operated assets, as follows: OMLs 4, 38 and amp; 41- Nine wells (seven oil w ells, two gas wells); OML 40-Four oil wells (including two wells in Abiala).
“Additionally, we are committed to exploring and developing new business opportunities, especially along our New Energy business, fostering growth and diversification within our portfolio.
“Finally, a significant priority for the business will be the elimination of routine gas flares through the delivery of Oben, Amukpe, Sapele and Ohaji flares out projects, aligning with our commitment to environmental sustainability and regulatory compliance.
“These deliverables underscore our dedication to innovation, sustainability and value creation across all operations. We recognise the importance of the sustainability of our evacuation options and strive to bolster security measures along our evacuation routes to safeguard our operations. These initiatives are also geared towards maximising the volume of oil sales and revenue for the company, highlighting our commitment to operational efficiency and financial sustainability.
The company’s environmental, social and governance (ESG) performance and 2024 targets reflect the company’s heightened emphasis on ESG measurement and reporting.
Seplat Energy was one of the early adopters of the IFRS S1 and amp; S2 Disclosure Standards and commenced reporting in alignment with these standards from the 2023 annual report.
