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Tag: Seplat

  • Seplat, Oando, others becoming big players

    Indigenous independent oil companies such as Seplat, and Oando have what it takes to play at higher level, following their acquisition of big assets in the oil and gas industry, a Professor of Energy Economics, University of Port Harcourt, Prof Wunmi Iledare, has said.

    He said the companies are raising their game amid the sale of assets by Shell, and other International Oil Companies (IOCs). Iledare said the industry, which has long been dominated by the IOCs, is seeing the emergence of indigenous firms that acquire the assets divested by these IOCs resulting in increased production levels from the locals.

    Speaking against the backdrop of the acquisition of ConocoPhillips by Oando, the listing of Seplat in London and Nigerian Stock Exchanges, and the decision of Seven Energy to secure $225million of new equity investment from Singapore Investment Company- Tamasek, the International Finance Corporation (IFC) among others, Iledare said local firms have got what it takes to undertake big-ticket transactions in the oil and gas industry.

    Iledare, who is also the President, International Association of Energy Economics (IAEE) globally, said plans by IOCs to abandon onshore for offshore activities have opened up opportunities for indigenous firms to play better.

    He said: “Unfolding events in the industry show that local firms have stepped up their game through various acquisitions in the industry. Most of the acquisitions have helped the local companies to play better and bigger.  They can now venture into areas hitherto dominated by the foreign-owned companies such as Shell, Chevron and others.

    “The only area where the domestic operators are yet to wield considerable influence is in exploration. There are Nigerians who can handle exploration activities well. They have gotten the exposure, skills, funds, and other attributes, which foreigners have. However, they need to improve on what they have going by the ever-changing methods, ideas and technology in the industry.”

    Iledare said local firms played important roles in oil and gas industry in United States, adding that  Nigerian companies can as well do the same thing.

     

  • Seplat, Oando, others becoming big players

    Indigenous independent oil companies such as Seplat, and Oando have what it takes to play at higher level, following their acquisition of big assets in the oil and gas industry, a Professor of Energy Economics, University of Port Harcourt, Prof Wunmi Iledare, has said.

    He said the companies are raising their game amid the sale of assets by Shell, and other International Oil Companies (IOCs). Iledare said the industry, which has long been dominated by the IOCs, is seeing the emergence of indigenous firms that acquire the assets divested by these IOCs resulting in increased production levels from the locals.

    Speaking against the backdrop of the acquisition of ConocoPhillips by Oando, the listing of Seplat in London and Nigerian Stock Exchanges, and the decision of Seven Energy to secure $225million of new equity investment from Singapore Investment Company- Tamasek, the International Finance Corporation (IFC) among others, Iledare said local firms have gotten what it takes to undertake big-ticket transactions in the oil and gas industry.

    Iledare, who is also the President, International Association of Energy Economics (IAEE) globally, said plans by IOCs to abandon onshore for offshore activities have opened up opportunities for indigenous firms to play better.

    He said: “Unfolding events in the industry show that local firms have stepped up their game through various acquisitions in the industry. Most of the acquisitions have helped the local companies to play better and bigger.  They can now venture into areas hitherto dominated by the foreign-owned companies such as Shell, Chevron and others.

    “The only area where the domestic operators are yet to wield considerable influence is in exploration. There are Nigerians who can handle exploration activities well. They have gotten the exposure, skills, funds, and other attributes, which foreigners have. However, they need to improve on what they have going by the ever-changing methods, ideas and technology in the industry.”

    Iledare said local firms played important roles in oil and gas industry in United States, adding that  Nigerian companies can as well do the same thing.

     

  • Seplat aims at 50,000 bpd equity production by 2071

    Nigeria’s leading indigenous independent oil producer, Seplat Petroleum Development Company Plc, has set its eyes on achieving daily equity production of 50,000 barrels of oil and 250 million standard cubic feet per day (mmscf/d) of gas by end of 2017.

    Seplat’s Managing Director, Austin Avuru, told The Nation that the production milestones had been their target from the beginning. He said besides the newly acquired interests in oil mining leases (OMLs) 53 and 55, the operated production stands at between 70,000 and 74,000 barrels per day (bpd) and between 120 and 275 mmscf/d by end of this first quarter. However, Seplat’s equity production is 33,000 bpd.

    With the recent acquisitions, the targets may likely be achieved before 2017, an industry stakeholder told our correspondent.

    Avuru said: “Our plans from the beginning has always been to increase not just gas or oil but continuously grow oil and gas production to a possible plateau at the end of 2017. But more importantly to a sustainable plateau, which means we must also find the reserves to underpin that plateau production and achieve a reserve production ratio of at least 20 years. In summary, we will grow oil, gas production and grow our reserves to a level that can sustain that growth in oil and gas production. It is a tripartite thing and we will focus on them, so for us these days, we no longer talk about operated production, we talk about our own equity production.

    “Today, we are on an operated production of about between 70,000 and 74, 000 barrels per day and our equity there is around 33,000 barrels per day. We hope to drive our own equity production for oil over the next three years closer 50,000 barrels per day, and drive our gas production equity to between 200 mmscf/d and 250 mmscf/d in the next three years.  Those are projections but that is where we want to be. Again, there are mitigants to all of these – oil price, cut down on capital expenditure (capex) but that is where we want to be.

    “By the end of this year’s first quarter, we would have doubled our producing capacity from 120mmscf/d to about 275mmscf/d. And our new plant is modular, so we can stick in two extra modules and add another 150mmscf within a short time and with a relatively small capex spend. What that means is that we can build it up to 375mmscf/d or 400 mmscf/d. So our target at the end of 2017, is to be able to process and deliver between 300 mmscf/d and 400 mmscf/d and they will all go into the domestic market. And by that time, our target is to see that 20-30 per cent of our bottom-line is from gas.

    Seplat just bought 40 per cent interest from OML 53 and 22.50 per cent interest from OML 55 to be able to meet their projected targets.

    On the acquisitions, Avuru said: “This transaction fits neatly with our strategy of securing, commercialising and monetising natural gas in the Niger Delta with a view to supplying the rapidly growing and evolving domestic market.  In addition to the large scale discovered, but undeveloped gas and condensate resources that are yet to be fully classified through detailed technical work, there are near term opportunities to increase and optimise oil production significantly above current levels.  We very much look forward to working with NNPC and leveraging our technical and commercial expertise as operator to realise the full potential of this high grade acreage.

    “The addition of OML 55 to our portfolio, also expands our footprint in the Niger Delta to six blocks and further cements our position as a leading indigenous independent exploration and production (E&P) in Nigeria.  OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritising those that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria. We are pleased to have extended our operating partnership with NNPC who we look forward to working with in our capacity as operator pursuant to the Joint Operating Model,” he added.

     

  • Seplat invests $391.6m in two oil blocks from Chevron

    Nigeria’s indigenous oil exploration and production company, Seplat Petroleum Development Company Plc, has acquired 40 per cent working interest, and another 56.25 per cent stake in two oil mining leases, (OML) 53 and 55  at a cost of $391.6 million.

    Seplat said it acqqured OML 53 located onshore Northeastern Niger Delta from Chevron Nigeria Limited, as well as  56.25 per cent of the share capital of Belema Oil Producing Limited, a Nigerian Special Purpose vehicle that has 40 per cent interest in OML 55, located in the swamp of South eastern Niger Delta, previously held by Chevron Nigeria Limited.

    The firm said in a statement yesterday, that with the acquisition, it’s effective working interest in OML 55 is 22.50 per cent, while the Nigerian National Petroleum Corporation (NNPC) holds the remaining 60 per cent in the two assets.

    Seplat  said the up-front acquisition cost of OML 53 to Seplat, after adjustments, is $259.4 million, out of which $69 million was deposited in 2013 and the balance of $190.4 million was paid   at completion.

    It explained that the adjustments to the up-front acquisition cost include a deferred payment of $18.75 million contingent on oil prices averaging $90 per barrel (bbl) or above for the 12 consecutive months over the next five years.

    The firm said its estimate of  net recoverable hydrocarbon volumes attributable to its 40 per cent working interest, to be approximately 51 million barrels of oil and condensate, and 611 billion standard cubic feet (Bscf) of gas, totaling 151 million barrels of oil equivalent (MMboe).

    Seplat said following the development, it has been designated as Operator of OML 53 pursuant to the Joint Operating Model approved by the Minister of Petroleum Resources, adding that the consideration for the 22.50 per cent interest in OML 55 is $132.2 million after allowing for adjustments.

    The adjustments to the consideration include a deferred payment of $11.6 million net to Seplat contingent on oil prices averaging $90/bbl, or above for 12 consecutive months over the next five years.

    The company has also advanced $80 million credit to the other shareholders of Belemaoil to meet their share of investments and  associated costs with Belemaoil.

    In addition, discussions are underway to determine repayment terms for the initial deposit against the acquisition of $52.5 million that Belemaoil funded with bank debt.

    This amount may subsequently be added to the total amount loaned to Belemaoil by Seplat.

    Under the agreed terms, Seplat will recover the loaned amounts, together with an uplift premium of up to $20.6 million, and an annual interest of 10 per cent, from 80 per cent of the other shareholders’ oil lifting entitlements.

    Seplat’s estimates net recoverable hydrocarbon volumes attributable to its 22.50 per cent interest to be approximately 20million barrels of oil and condensate and 156 Bscf of gas (total 46 MMboe).

    The current gross production at OML 55 is approximately 8,000 bpd (1,800 bopd on a 22.50 per cent working interest basis). The deal is pursuant to the Joint Operating Model approved by the Minister of Petroleum Resources.

  • Seplat gets new deadline on Afren acquisition

    Seplat Petroleum Development Company Plc has up till this weekend to make formal acquisition offer to Afren Plc, according to the latest update on the ongoing business combination between the two oil companies.

    The acquisition will consolidate the listing of Seplat on the Nigerian Stock Exchange (NSE) and indirectly brought the London-listed Afren to the Nigerian stock market.

    Regulatory filing at the NSE obtained by The Nation indicated that Seplat and Afren has started exploratory talks on possible merger and acquisition, although the deal is still at a very early stage and shroud in uncertainties.

    According to Rule 2.6(a) of the UK City Code on Takeovers and Mergers, Seplat was initially expected to make a firm offer for Afren on January 19, 2015 but it was unable to conclude the talks.

    Regulatory filing obtained at the weekend indicated that the board of Afren has received the consent of the UK Takeover Panel for an extension of the offer deadline up till 5.00 pm on January 30, 2015 to enable the parties to continue their ongoing discussions.

    By the weekend, Seplat must either announce a firm intention to make an offer for Afren or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

    However, the parties can still extend the new deadline with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

    Seplat confirmed that it has made a highly preliminary approach regarding a possible combination with Afren. However, the company stated that there can be no certainty that an offer will be made or as to the terms of any offer.

    Afren, an international independent exploration and production company, has a premium listing on the London Stock Exchange (LSE) and it is ranked within the FTSE 250 Index. Seplat has dual listing on the NSE and LSE.

    Afren prides itself as a dynamic, entrepreneurial organisation with a portfolio of world-class assets located in many world’s most prolific and fast-emerging hydrocarbon basins in Africa and the Middle East. It has substantial operations in Nigeria.

    Afren’s activities span the full-cycle value chain of exploration, appraisal, development and production. It divides its operations into three core business units, Nigeria and other West Africa, Afren East Africa Exploration and the Kurdistan region of Iraq.

    In 2013, Afren’s exploration and appraisal campaign yielded remarkable results, with the play-opening discovery in OPL 310, offshore Nigeria, one of the largest discoveries in the world during the year.

  • Seplat stakes $700m on Afren

    Seplat Petroleum Development Co. secured the option to raise $700 million of debt for acquisitions as the Nigerian oil producer considers buying London-based Afren Plc.

    The company refinanced debt with $1 billion of new facilities split between a $700 million seven-year tranche and a $300 million three-year loan, it said in an e-mailed statement today. The debt maturing in 2022, provided by Nigerian banks, can be doubled for “qualifying acquisition opportunities,” the company based in Lagos said.

    Seplat said in November it is looking to buy Nigerian gas assets, including those of Royal Dutch Shell Plc, to take advantage of higher prices in Africa’s biggest economy. Seplat, which listed its shares in Lagos nine months ago, has until Jan. 19 to make a firm offer to Afren after approaching the U.K. explorer, it said last week. Shares of the companies, which have a combined market value of about $1.5 billion, have been battered as crude oil prices plunged.

    “They should be able to secure more deals as there are so many more assets becoming vulnerable, including public companies, in this weak oil price environment,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by phone from Moscow.

    The acquisition would extend Seplat’s reach beyond its fields in Nigeria to include Iraq’s Kurdistan region, which Afren focuses on in addition to the African country. Seplat produces about 70,000 barrels of oil a day at three Nigerian fields, in which it owns a 45 percent working interest.

    Seplat’s shares rose 3 percent in Lagos to 310 naira today, trimming its plunge since they started trading in April to 46 percent. The stock added 1.1 percent to 117.75 pence in London today, snapping a five-day decrease.

    Afren surged 24 percent in London, headed for the steepest advance since 2009 and trimming a loss this year to 43 percent. The company’s market value increased to £296 million ($451 million).

  • Communities hail Seplat’s safe motherhood initiative

    SEPLAT Petroleum Development Company PLC has been commended for their commitment towards the lives of women, children and the vulnerable in its host communities through the company’s support for the Safe Motherhood Programme, a global initiative to address the rising pandemic of infant and maternal mortality across the continent, especially in sub-Sahara Africa.

    Speaking on the company’s contribution towards this initiative, the General Manager External Affairs and Communications, Dr. (Mrs.) Chioma Nwachukwu said the host communities in Delta and Edo states the social service delivery of the company through the Safe Motherhood Programme being supported by Seplat.

    Nwachukwu in statement made available to The Nation said, “Safety is our first core value which is why we are committed to promoting safe delivery for expectant mothers and safety of children in order to help curb their mortality in our host communities. This year 2014 we are providing vaccinations and de-worming children. The good news is pneumonia is preventable and treatable which is why we are supporting our host communities to fight this disease by providing vaccination to children under five years old in our communities. We are happy to also add that we are carrying out de-worming exercises to help eradicate worm infestation in the children.”

    The spokesperson of the company further stressed that the Safe Motherhood Programme is one of the company’s health-based corporate social investment initiatives which was launched in 2011 and runs in the company’s contiguous host and impacted communities in Delta and Edo states in Nigeria.

    Every year the programme impacts the lives of pregnant women in over 60 communities where women receive antenatal care and medical counseling as well as over 3, 500 pregnancy kit bags and insecticide treated nets among others.

    The 2014 programme, which focused on Pneumonia and De-worming of children under five years old, saw a lot of beneficiaries being taken on board.

    Mrs. Dele Ovwigho, one of the many beneficiaries treated at the Central Hospital Sapele, said the programme was well thought out, noting that her daughter, Miss Favor Ovwigho, who was suffering from a debilitating ailment, received the best of care, courtesy of the initiative.

    Among the dignitaries present at the event include: Anthony Owunmi, representing Seplat Base Manager, Chukwuka Oboroma Opara, Medical Representative, Pfizer Worldwide Bio Pharmaceutical Business near, Nigeria/East African region.

    Others include: Dr. (Mrs.) Werribi Omoaghoja, Chief Medical Director, Central Hospital, Chief W.O. Oyo, Chief William Avwigborighe, Chief Omamurumu Omomor to mention just a few.

  • Seplat restates commitment to capacity building

    SEPLAT Petroleum Development Company Plc has reiterated its commitment to building strong human capacity in their area of operation.

    The Managing Director, Austin Avuru, gave this hint at a public forum in Sapele, Delta state recently.

    The event was the grand finale quiz competition for secondary schools in Delta and Edo states.

    Justifying the need for the competition, Avuru, who was represented by Dr (Mrs) Chioma Nwachuku, General Manager, External Affairs and Communications, said it was borne out of the need to build the skills set of members of its host communities.

    “Our company’s commitment to intellectual capacity building remains strong and unshakable. This is our third edition  spanning for three years of organising the Pearls Quiz Competition and we are constantly impressed by the performance of  the students especially the female students who are disadvantaged on account of their gender. We are convinced that the future of these children is bright indeed,” he stressed.

    This year competition was keenly contested by over 1500 schools with Hebrew International Secondary School coming tops.

  • Seplat stakes N71b deposit on new oil asset

    •Firm records N60b sales in six months

    Seplat Petroleum Development Company has placed a preemptive refundable deposit of about N71 billion, ($453 million), as part of strategic measure to edge competition in the bid for a new oil asset as the upstream company continues its expansion programme.

    A management report on the ongoing business initiatives and earnings of the company indicated that the company made the deposit on an oil asset, which may be due for sale soon while it has shown interests in other acquisitions in line with its strategy of acquiring competitive onshore and shallow waters offshore Nigerian oil assets that offer near-term production, cash-flow and reserve replacement potential.

    It would be recalled that Seplat was simultaneously listed on Nigerian and London Stock Exchanges in April 2014. It was listed at N576. The listing followed the success of its initial public offering (IPO), which raised gross proceeds of $535 million, about N88 billion.

    The company indicated that it was in the process of acquiring an additional rig which is planned to commence operations this year while 11 new wells are planned to be completed by the year-end, taking the total of completed new wells in the year to 20.

    “Following completion of these new wells, which are mainly oil producers, the focus of the drilling campaign at the end of the second half will switch to gas production, with three new gas wells planned to be spudded in the fourth quarter and completed in 2015,” the report stated.

    The report outlined that as part of efforts to increase gas production to meet the growing domestic demand, it is investing to increase gas processing capacity at its Oben Gas Plant by 150 mmscfd, to 300 mmscfd in 2015, in the first phase of a programme to expand gas processing to at least 450 mmscfd by 2017.

    It added that its Integrated Amukpe AG flare-out and Ovhor gas-lift project will provide artificial lift in the Ovhor field for improved oil recovery, by re-injecting associated gas produced at Amukpe. The project is well advanced, with pipeline installation near completion and processing and compression equipment delivered to site. Completion and commissioning is scheduled by the end of the year.

    Interim report and accounts of the company for the six-month period ended June 30, 2014 showed that total revenue stood at $388.2million, about N60.3 billion, in first half of 2014 as against $419.4 million or N65.1 billion recorded in comparable period of 2013. Gross profit closed first half 2014 at $247.2 million or N38.4 billion as against $250.3 million or N38.9 billion in first half 2013. Profit after tax stood at stood at $156.0 million or N24.3 billion compared with $303.3 million or N47.1 billion. The company continues to enjoy pioneer status, which exempts it from income tax.

    It made capital investments of $116 million in the first half funded by net operating cash flow before working capital of $180 million.

    Commenting on the performance of the company, chief executive officer, Seplat Petroleum Development Company Plc, Mr. Austin Avuru noted that although production in the period was impacted by the shutdown of third party infrastructure, the company continues to drive growth with gross daily average production from OMLs 4, 38 and 41 was over 60,000 barrels.

    According to him, the company plans to have up to seven drilling rigs actively engaged, and are progressing plans at a fast pace to develop our oil and gas reserves and increase production, aiming to build momentum through the second half and into 2015.

    “The completion of our new pipeline to the Warri refinery provides us with an alternative export option and reduces our exposure to any future downtime of the Trans Forcados system, as well as the reconciliation losses imposed on producers using that system. In our gas business, the signing of a 15 year gas supply agreement to supply the Azura-Edo IPP is further evidence of our commitment to remain at the forefront of assisting Nigeria to realise its vast natural gas potential,” Avuru said.

    He pointed out that Seplat is in a strong financial position as its profitable production base and conservative capital structure give it the necessary financial resources and flexibility to actively pursue a range of attractive, material new business opportunities.

    In July 2010, SEPLAT acquired a 45 per cent participating interest in, and was appointed operator of, a portfolio of three onshore producing oil and gas leases in the Niger Delta (OMLs 4, 38 and 41), which includes the producing Oben, Ovhor, Sapele, Okporhuru, Amukpe and Orogho fields. Since acquisition, Seplat has more than tripled production from these OMLs. In June 2013, Newton Energy Limited, a wholly-owned subsidiary of the Company, entered into an agreement with Pillar Oil Limited to acquire a 40 per cent participating interest in the Umuseti/Igbuku marginal field area within OPL 283.

  • Analysts say Seplat’s $500m IPO expensive, risky

    Analysts at Morgan Capital Group have expressed concerns over what they described as possible risks and overvaluation of the $500 million initial public offering (IPO) of SEPLAT Petroleum Development Company Plc.

    An equity research made available by Morgan Capital at the weekend indicated that Seplat’s IPO pricing range might be overvalued by more than 200 per cent and there are many inherent risks. The report however noted that Seplat is a good company.

    SEPLAT had commenced the book building for its IPO with indicative price range of N535 and N700. However, the final price will be determined by the bid prices. The minimum order for individual investors is set at 25,000 shares, implying minimum investment of N13.375 million and N17.500 million at the indicative price range of N535 and N700. Also, the minimum order for institutional investors is set at 85,000 shares, which implies minimum application size of N45.475 million and N59.50 million at the bottom and ceiling prices.

    The initial offer size is expected to raise gross proceeds of approximately $500 million, equivalent to £300.9 million and N82.5 billion. SEPLAT plans to list its ordinary shares on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NSE) after the IPO. With this, and based on the mid-point of the price range, SEPLAT’s implied market capitalisation upon listing would be about £1,200.9 million, equivalent to $ 1,995.5 million and N329.5 billion.

    Morgan Capital stated that it undertook a fundamental valuation of SEPLAT and got a target price of N173.25, after the investment banking firm has factored tax and earnings risks.

    According to the report, while SEPLAT made 65 per cent tax provision in 2011 and 63 per cent tax provision in 2012, it reported a tax credit of $93 million in 2013. The exclusion of tax provision consequently boosted the profit recorded in 2013.

    SEPLAT in the prospectus indicated that with effect from January 1, 2013, the company was granted the pioneer tax status incentive by the Nigerian Investment Promotion Commission (NIPC) for a five-year period. For the period the incentive applies, the company is exempt from petroleum profits tax on crude oil profits, corporate income tax on natural gas profits and education tax of two per cent.

    “We do not see the justification for the NIPC to grant pioneer tax status incentive to SEPLAT for acquiring already existing assets that the previous owners were already paying the Petroleum Profit Tax (PPT) on, before the sale to Seplat, except there is a newly developed ingenious technology for mining crude oil that is yet to be disclosed to the public,” Morgan Group stated.

    Analysts noted that if NIPC sets this precedence, it will give rise to similar claims from other companies who have acquired similar assets and the already fast depleting Federation account will bear the brunt of the largesse. The list of potential litigants includes other upstream players who will see this as unfair advantage and even state governments whose allocation will suffer as a result of this leakage.

    The report underlined a caveat in the IPO Prospectus which notes that “there can be no assurances that current or future governments will not revoke these tax incentives prior to the end of the five-year period or seek to recover taxes waived under the scheme from the company and or Newton Energy in the future”.

    Morgan Capital also cautioned that there is a strong likelihood for potential litigation, considering that SEPLAT was granted a tax waiver which puts them at an advantage among their peers citing the 400 per cent increase in profit after tax rise in 2013.

    According to the report, the likelihood that other players who have invested in assets similar to that of SEPLAT and even stakeholders, like state governments whose allocations are dwindling and Nigerian citizens, may contest this waiver is very high.

    Analysts said any litigation or possible revocation of the waiver will lead to massive sell down on the shares as most investors will seek to exit their positions even before any ruling is made.

    The equity report also noted that while the absence of cash flow and profit forecasts in the SEPLAT prospectus may be within the ambit of waivers by the Securities and Exchange Commission (SEC) and NSE, it may diminish the ability of analysts to project future earnings of the company.

    “We have placed a sell rating on the shares of SEPLAT because we consider it over priced, given the inherent tax waiver issue and the uncertainty of the cash flow. We think this is a play on tax which may not be sustainable, since government can always revoke and or recover any previously waived taxes, even as already disclosed in the Prospectus. We however see SEPLAT as a good company and a fair price of N173.25 is in our opinion, achievable on the floor of the NSE in the coming months,” Morgan Capital added.