Having survived the worst year in the history of the oil and gas industry, Roger Brown, Chief Executive Officer of Seplat Petroleum Development Company Plc, on Thursday in Lagos, assured that the group would finish the 2021 financial year not just larger and stronger, but more profitable.
The confidence, he told shareholders at a hybrid annual general meeting, is based on the expected recovery in demand for gas, helped by the actions the company took before and during 2020 that have left it in a position of strength.
“The priority for 2021 is to address our responsibilities as part of the global energy transition and to set realistic targets for how we as a company evolve to drive that transition along,” Brown stressed.
He noted the pressure to reduce oil extraction and the carbon emissions it creates, a situation he said, depend on the rest of the world adopting less oil-intensive ways to travel and generate power.
According to the CEO, “Nigeria’s per-capita energy consumption and carbon emissions are actually very low, and its national electricity grid is still very poorly developed. This is why the country is so reliant on small-scale diesel generation to satisfy its energy needs and this is the problem we need to address most urgently.
“It’s important to recognise that Nigeria is a developing country with low access to energy and a rapidly growing young population. Hydrocarbons are the country’s main resource and provide significant help for its economy. The proceeds from the oil industry fund a wide range of Sustainable Development Goals (SDGs) and are crucial to the country’s societal development.
“Nigeria needs to achieve significant growth in its capacity to deliver education and health services, food production and energy security. Without the development of its indigenous oil and gas industry these goals will become very difficult to achieve and so in Nigeria, the industry remains not just relevant but essential.”
Seplat, he continued, “is embracing climate change opportunities on two fronts. Firstly, we continue to invest heavily in expanding our domestic gas business in line with the Government’s strategy to achieve universal access to electricity, and to make that energy cheaper and cleaner by replacing diesel generation, which is very damaging to the environment and the economy. Gas is clearly the next step for Nigeria, and we have a leading position domestically with the Nigerian Government declaring the ANOH project as one of the seven critical gas development projects for the country.
“Secondly, we have created a New Energy unit to focus on lower carbon to zero carbon fuel sources and the natural extension beyond gas is for Seplat to participate in renewable energy, such as solar power, and in emerging technologies such as carbon capture and storage. Our view is that Nigeria will benefit from being able to deploy renewable energy on its electricity grid rather than solely developing an off grid renewable solution. By providing a base load of cheaper, lower carbon gas on the grid, the acceleration of grid-based renewables will be possible, which is why we are currently focusing on accelerating our midstream gas business and additionally expanding into LPG, which is a good fuel source for cooking, preventing deforestation.”
Addressing the shareholders and other stakeholders earlier, the chairman, Dr. Bryant Orjiako, noted the company’s strong cash position in the 2020 full-year and the $318m cash generated from its operations, which was significantly more than the $150 million invested for future growth.
Capital expenditure in 2020, he noted also, was higher than the $125m spent in 2019, a demonstration of its commitment to growth; in addition to voluntarily repaying $100m of its Revolving Credit Facility. The year, he added, ended with $225m in cash, while net debt stood at $440m.
Average working interest production for the period stood at 51,183boepd, including 33,714bopd of liquids and 101MMscfd gas (17,469boepd), of which the “Eland assets contributed 8,855bopd, or 26% of total liquid volumes.
“Our financial performance enabled us to maintain our commitment to paying dividends. While other companies were cutting back or cancelling payments for the 2019 financial year, because of prevailing uncertainties, we honoured our commitment and paid a final dividend of US$0.05, for a total dividend of US$0.10 for 2019.”
The company’s board, he stressed, has been strengthened as part of an ongoing desire to achieve world-class corporate governance, following which six of the 13 directors are independent, noting the need to work towards increasing the diversity.
At the AGM, shareholders also adopted a proposal by the board to rename the company Seplat Energy.
Explaining the decision, the chairman said the board is foreseeing a future in which the company is much more involved in promoting low carbon environment in its operations.
This transition, he said “will involve significant innovations, technology, skills and relationships, compared to our existing expertise of subsurface exploration, drilling and hydrocarbon processing, but we are determined to be a major part of Nigeria’s future energy mix and help drive the country towards more sustainable energy generation.”
Picture caption: From left, Operations Director, Seplat, Effiong Okon; Director, External Affairs and Sustainability, Dr. Chioma Nwachuku; Chief Executive Officer, Roger Brown; Chairman, Dr. ABC Orjiako; and Company Secretary/General Counsel, Edith Onwuchekwa, at Seplat’s hybrid 8th Annual General Meeting held at the company’s headquarters in Lagos … on Thursday.
