Seplat Petroleum Development Company is a leading indigenous oil and gas company in Nigeria, at the vanguard of the revolution taking place in the country’s oil and gas industry. In just few years of its existence, the company has demonstrated leadership, excellence, capabilities, as well as expertise in its operations, all thanks to local content law.
As a result of its operational excellence, the company has been able to ramp up production in some of the assets it inherited by over 600 percent. Seplat is the poster child of the local content law in the Nigeria’s oil and gas industry, and year-on-year, continues to demonstrate this.
Nigeria’s oil and gas industry before now was totally under the control of International Oil Companies (IOCs) and expatriates who ran the industry in their favour at the expense of Nigeria. Out of billions of dollars annual industry spend, only about 5 percent was retained in-country. The oil and gas industry contributed less than 8 percent to the country’s Gross Domestic Product (GDP). This made Nigeria a nominal oil producer as the country did not have firm control of its oil economy. However, in 2010, following the enactment of the Nigerian Oil and Gas Content Development (NOGICD) act, the country’s trajectory shifted to the positive path.
In the last 11 years since the enactment of the NOGICD act, more Nigerians are now actively involved in the industry, unlike in the past when they were passive participants in the scheme of things. We now have more local oil and gas services companies than foreign ones operating in the country; out of the about $20 billion annual industry spend, $9 billion is retained in-country; and local content has risen to over 30 percent. But of all the numerous benefits NOGICD act has brought to the country, the emergence of Seplat Petroleum Development Company and other indigenous oil and gas companies, is the Cinderella of all.
When some of the IOCs divested some of their assets to these indigenous oil and gas companies, there was palpable fear among some stakeholders that it was going to be mission impossible. The notion then was that these companies did not have the technical know-how, the expertise and the financial resources to man the divested assets. All that has been demystified by Seplat who today has become a key player in the industry.
At the time of acquisition, the company’s gross operated liquids production at Oil Mining Leases (OMLs) 4, 38 and 41 were 14,000 bopd. But the company, through the implementation of a focused re-development work programme and drilling campaign grew this to a peak rate of over 84,000 bopd, representing a six-fold increase and significantly ahead of the peak rate achieved by the previous operator of approximately 56,000 bopd in 1996.
The company, which is listed on both the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), also accounts for about 30 percent of gas used by power generating companies in Nigeria.
Despite the disruptions caused by Covid-19 pandemic, Seplat recorded a rise in revenue by 16.8 per cent to $152.4 million with increased operational efficiencies and further reduction in costs in its unaudited results for the three months ended March 31, 2021.
The Company also reported a Profit Before Tax (PBT) of $28 million for the period, from a loss position of $95.7 million in the same period of 2020 (3M 2020), whilst adopting a quarterly dividend policy of US2.5 cents per share in Q1 starting immediately.
Seplat maintained a strong cash position of $236.3 million in Q1 2021, with an EBITDA position of $77.8 million, delivering oil and gas production volumes of 48,239 boepd, within its guidance range.
With the Gbetiokun field at OML40 now back in production, the company is currently achieving average daily volumes of nearly 54 kboepd so far in April and plans to add additional oil and gas wells this year.
In February, seven primarily Nigeria banks agreed to provide $260 million of debt financing for the ANOH Gas Processing Company (AGPC). AGPC is an incorporated joint venture owned 50:50 by Seplat and the Nigerian Gas Company (NGA), a wholly-owned subsidiary of Nigerian National Petroleum Corporation (NNPC).
The Chief Executive Officer of the company, Roger Brown, while commenting on the Seplat’s Q1 results said: “Our flagship ANOH gas project is proceeding as planned and was fully funded in February when our joint venture company, AGPC successfully raised $260 million of debt financing. In addition, the success of our $650 million Eurobond issuance in March demonstrates investor confidence in our prudent financial management and the exciting future ahead for the Company and its stakeholders.”
Brown’s comment is a testament of what Seplat has become — a rising star who started from the cradle to reach an unimaginable height in just a little over a decade. The success of Seplat is a reflection of the ingenuity of Nigerians, their expertise, their work ethics and excellence.
Seplat success riding on the back of the NOGICD act, shows how the decisions of those in government can create opportunities for their citizens by proving enabling business environment with the right laws and policies. Seplat is evidence of local content in action and what Nigerians can do when given opportunity and support.