The board of Seplat Petroleum Development Company, on Wednesday presented its audited financials for the year ended December 31, 2018, reporting that while revenue climbed N90bn, or 65.22% up, net profit slipped 44.44% down, following the N35.745bn deferred tax, compared to the N67.657bn tax credit in the corresponding period of 2017.
Initial investor reaction to the numbers was negative, following which its share price fell N22.10, or 3.37% at 11.45am at mid-week’s trading session.
Revenue stood at N228.391bn, up by about 65.22% from N138.281bn in prior year, out of which crude oil sales accounted for N180.751bn, compared to N100.369bn; while gas sales generated N47.64bn from N37.912bn. Also, oil and gas revenues from Nigeria stood at N11.218bn and N47.64bn respectively; while gas revenue from Switzerland amounted to N169.533bn.
As part of corporate governance requirement, the company reported that transactions with Mercuria, the major off-taker for its crude oil, stood at N169bn, or $554m which constitutes over 10% of total revenue from oil and the group as a whole; followed by N48bn, or $156m dealings with the Nigerian Gas Marketing Company (NGMC), which also constitutes over 10% of gas revenue and the group as a whole.
Cost of sales jumped by N35.227bn or 47.98% to N108.641bn, compared to N73.414bn, the bulk of which was the N38.008bn paid in royalties, as against N22.413bn in prior year; N36.57bn in depletion, depreciation and amortization, valued at N36.57bn, up from N25.102bn; followed by crude handling fees of N20.954bn, a jump from N9.831bn in 2017. There was also operational and maintenance expenses of N11.211bn, up from N10.972bn; and in addition to Niger Delta Development Commission Levy of N1.651bn, up from N1.2bn.
This resulted in gross profit of N119.75bn, up from N64.867bn; just as other income (net) soared to N4.618bn, from just N209m in 2017.
The management successfully constrained general and administrative expense to N24.417bn from N28.175bn in the preceding full-year; just as impairment losses on financial assets (net) stood at N4.483bn, from the N3.138bn reversal of losses on financial assets (net).
Net fair value loss dropped to N593m from N5.663bn; bringing operating profit to N94.875bn, as against N34.376bn in 2017.
Finance income, being interest income, stood at N3.032bn, from N1.326bn; and finance cost dropped from N22.248bn to N17.292bn, comprising interest on advance payments for crude oil sales of N530m, down from N1.77bn; as well as interest on bank loans, which dropped from N20.449bn in 2017 to N15.87bn. Net finance cost stood at N14.26bn, down from N20.922bn.
Profit before tax amount to N80.615bn from just N13.454bn, while income tax expense of N35.748bn, compared to a credit of N67.657bn, comprising mainly the deferred tax expense of N28.055bn, as against a credit of N68.344bn; total current tax of N7.693bn, up from N687m; current tax on profit for the year, N6.651bn; and education tax, N1.042bn, up from N687m. This left profit for the year at N44.867bn, as against N81.111bn in the previous year. Crude oil sales fetched just N8.437bn net profit, down from N58.752bn in 2017, after N35.748bn tax, segment profit from gas amounted to N36.43bn, up from N22.359bn, with zero provision for tax. Earnings Per Share therefore amounted to US$0.26, or N79.04, compared to US$0.47, or N143.96, from which the directors have recommended a dividend of US$0.05 per share.
Qualification date for the dividend is March 20, 2019, after which the register of members will be closed on March 21, while payment is slated for May 23, after approval at the annual general meeting on May 16, 2019.
Commenting on the results, Austin Avuru, Seplat’s Chief Executive Officer, in a note to the Nigerian Stock Exchange (NSE) described the result as “an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years.
“At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks. As we continue to enhance production and revenue diversification with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business. Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of US$350m.
“In 2018, we reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise,” he added.