Seplat Petroleum Reports Three-Digit Q1 Growth, Nets N6.287bn Profit

Shareholders of Seplat Petroleum Development Company Plc can begin to hope for a superlative financial year, post-December 31, 2018 year-end, given the three-digit growth in revenue and profit at the end of the first quarter-ended March 31, 2018. The company reported Q1 profit from the previous N5.855bn loss, resulting to Earnings Per Share of N10.68, up from the previous N10.39 Loss Per Share.
Seplat reported total revenue of N55.236bn, up by 281.62% from N14.474bn, a breakdown of which showed that crude oil sales contributed a total N43.138bn, compared to the N9.214bn earned in the prior Q1; while gas sales fetched N12.098bn, up from N7.668bn. The company named the major off-taker for crude oil as Mercuria, while that for gas is the Nigerian Gas Marketing Company.
Cost of sales climbed to N26.833bn, representing a 211.14% rise over the N8.624bn reported in the corresponding period of 2017, comprising the handling fees of N4.567bn, up from just N168m; royalties, N9.758bn, as against N1.513bn; while depletion, depreciation and amortization cost N9.704bn, almost three-fold that of N3.474bn. Niger Delta Development Commission levy paid by Seplat Petroleum for the period rose to N519m, compared to N350m in the 2017Q1; just as rig related expenses dropped significantly to N8m, from N306m; just as operations and maintenance expenses was flat at N2.277bn, from N2.158bn; following which gross profit climbed to N28.403bn from N5.85bn.
Other income stood at N2.628bn, being what the management of Seplat Petroleum termed “c,” defined as revenue related “to shortfalls of the crude oil sold during the period below the participant’s ownership share of production.
“The amount is initially measured at the market price of oil at the date of lifting, consistent with the measurement of the sale and purchase. Subsequently, they are measured at the current market value,” with the change arising included as other income.
General and administrative expenses dropped 17.14% to N4.25bn from N5.129bn, the bulk of which was the employee benefits of N2.355bn, up from N1.787bn; followed by the N1.088bn in professional and consulting fees, up from N1.361bn. Gains on foreign exchange rose marginally to N572m from N529m. Fair value movements in contingent consideration rose to N1.73bn from N1.662bn.
Operating profit stood at N25.623bn, an improvement of 6,319.17% over the N412m recorded in the prior Q1. Finance income rose 582.81% from N63m to N437m, being interest income from bank deposits; while net finance costs climbed 53.57% from N5.257bn to N8.073bn, the lion’s share of which was the interest on bank loans of N7.35bn, compared to N5.25bn.
Profit before tax of Seplat Petroleum therefore stood at N17.987bn, up by 420.91% from the prior year’s N5.605bn loss; just as tax expenses soared by an equally significant 4,580% from N250m in 2017Q1 to N11.7bn.
This left the profit after tax of Seplat Petroleum at N6.287bn, 207.38% better than the N5.855bn reported in the preceding Q1.