Independent oil giant Seplat, has begun to assemble equipment for the expansion of its Oben Phase 11 plant to increase natural gas plant to produce 525 million standard cubic feet (mmscf/d) daily.
Seplat, an exploration and production (E&P) company, completed the expansion of the Oben gas plant phase last year. The expansion raised the company’s overall processing capacity from about 150mmscf/d to 300mmscf/d.
Seplat Chairman, ABC Orjiako confirmed the expansion plan when he addressed shareholders at the firm’s annual general meeting in Lagos.
He said: “The Oben gas plant phase II expansion is underway with additional processing modules ordered. Once installed, the additional processing modules will take gross processing capacity to an expected minimum level of 525 mmscfd.”
Orjiako said the company’s management, despite the headwinds facing the oil and gas industry, made progress on all aspects of its strategy delivering best-in-class production and reserve growth.
“We were able to transform our gas business, which achieved 185 per cent year-on-year growth,” he said.
He added: “In a significant step forward for its gas business, during mid-year 2015, Seplat successfully completed and commissioned the Oben gas plant phase I expansion. This expansion saw the company’s overall gross processing capacity double to 300mmscfd.
“Alongside the significant increase in gas production, the positive2 financial impact of Seplat’s gas business was evident as revenues from gas sales increased to 185 per cent year-on-year to $77 million.
“Our (Seplat’s) position as Nigeria’s leading independent E&P company has been reinforced in the past 12 months during which we delivered on corporate performance target despite the oil price volatility. Our resilience is testament to the quality of our business, our strategy, our management team and staff, and our adherence to strong corporate governance policies.”
Seplat’s Chief Executive Officer CEO, Austin Avuru said the company’s corporate governance stance and transformation initiatives helped to shield it from being heavily impacted by the global low oil price regime. He noted that the company recorded growth in oil and gas production, but lamented the renewed attacks on oil and gas facilities by the Niger Delta militants. The attacks have led to shutting of Shell’s Forcados terminal a few times, which resulted in shut-in of Seplat’s output.
According to Avuru, the Forcados frequent closures have affected the 2016 financial year projections.
He said: “In 2015 we delivered on what was in our control, posting best-in-class reserves and production growth and taking our gas business across a transformational threshold with further expansion still to come. We acted quickly and decisively in response to the weak oil price environment, adjusting our work programme and cost structures. Against a bleak industry backdrop, we remained profitable with a strong balance sheet underpinning us.
“Our 2016 full year production expectation has been impacted by the current shut-in of the Forcados terminal. However, we are much better positioned to withstand such interruptions than in prior years. Our gas business takes on additional importance by providing a continuous revenue stream that is de-linked from the oil price. Our enlarged portfolio offers us the scope for greater diversification.
“I would like to re-emphasise that our strong focus remains on protecting the business and managing value through effective cost reductions, optimising operations, leveraging and strengthening the balance sheet. This will strategically position the company to take advantage of opportunities that will inevitably follow this current downturn.”
On production figures, he noted that the company’s working interest 2P (proven and probable) reserves at the end of 2015 had increased by 71 per cent year-on-year to 480mmboe, with a further 98mmboe recognised as 2C resources bringing the total reserves to 578mmboe. Recoverable resources discovered, but uncommercialised gas fields are classified as contingent resources and 2C denotes the best estimate of contingent resources.
Avuru said average working interest production in 2015 averaged 43,372 barrels of oil equivalent per day (boepd), adding that oil and condensate production accounted for 29,003 barrels of oil per day (bopd) up 20 per cent year-on-year while natural gas production was 86 mmscfd, up by 119 per cent year-on-year.
All the natural gas produced, he added, was supplied to the domestic market for industrial and power sector use. According to him, gross revenue for the 2015 full-year, stood at $570 million, down by 26 per cent year-on-year. Net profit stood at $67 million and cash flow from operations before movements in working capital stood at $190 million as against capital investments of $152 million. Cash at bank and net debt stood at $326 million and $573 million respectively.
He also stated that Seplat’s senior partner in the joint venture (JV) operation, Nigerian Petroleum Development Company’s (NPDC) net receivables balance stood at $435 million, down from $463 million at the end of 2014. Further receipts post-period end reduced the net NPDC receivables balance to a current level of about $350 million, he added.
He said the company has set a production target of between 41,000 and 48,000 boepd in the 2016 financial year and expects its capital expenditures to be around $130 million.
