Seplat Petroleum Development Company has announced a 51% rise in gas revenues for 2014. The news was conveyed in its full year results released in Lagos and London on Thursday March 26, 2015.
Seplat, which is dual listed on the Nigeria and London Stock Exchanges, has always highlighted its gas commercialisation strategy as a key revenue driver for the company.
The company highlighted this in its annual report and accounts for 2014 where it noted that gas remains a priority in the years ahead. “We see the commercialisation and monetisation of Nigeria’s natural gas resource as an attractive long-term opportunity as we seek to go beyond our domestic supply obligations by selling to commercial ventures in Nigeria, such as power generation plants. Pursuant to the Nigerian Gas Master Plan 2008, Nigeria is currently undergoing significant changes in the domestic gas pricing environment which has resulted in increased gas demand and improving pricing dynamics.”
During its historic and oversubscribed IPO, Seplat with an average gross gas production of 99 million standard cubic feet per day in 2013, had projected that it would triple its gas production by end 2016 through massive investments in processing and delivery infrastructure.
In February 2015, Seplat concluded a 10 day tie-in on its Oben plant to enable the company have a “single homogenous plant consisting of 2 by 45 MMSCF and 2 by 75 MMSCF trains able to deliver 240MMSCF/D WAGP specification gas post-commissioning, from the Oben node. This facility expansion and upgrade will bring the company’s overall daily gas production capacity to slightly over 300mmscf/d.”
Commenting on the result, Austin Avuru, CEO of Seplat said “We have materially grown our reserves base, delivered full year average daily production in line with guidance and exceeded peak rate objectives. Expansion plans for our gas business gathered pace and the new Oben gas processing plant will allow us to increase supply to the domestic market.”
In his own comments, Dr. ABC Orjiako, Chairman of Seplat also harped on the company’s gas commercialisation policy. According to him, “We have made successful efforts in our gas development strategy by the expansion of our gas processing facility in Oben. This is against the back drop of the Nigerian gas to power transformation agenda which has occasioned increasing gas demand at good prices in the domestic market. Seplat will take advantage of this to boost revenue from gas in 2015 and in the coming years.”
Overall, despite reaching record levels of peak oil production on OMLs 4, 38 & 41 in December 2014 of over 76,000 bopd, revenue declined from US$880 million in 2013 to US$775 million in 2014 showing a decrease of 12% . The decrease is due to significant outages on the Trans-Forcados System as well as the impact of the reduction of the global oil price in the second half of 2014.
Seplat has however proposed a total dividend of $0.15 per share for 2014, up from $0.10 in 2013.