Seplat Energy’s buyout of ExxonMobil’s Nigeria onshore asset last year, a deal worth $1.3 billion at initial consideration, was the cornerstone on which it built its latest quarterly profit of N35.4 billion.
The company’s earnings report, out on Monday, acknowledged the acquisition contributed nearly three-fifths of the average production for the period, driving turnover in addition to helping reverse a N2.9 billion loss recorded a year earlier.
Revenue for the quarter sped up more than four times to N1.3 trillion, compared to the same period of last year.
“Production has been strong, showing the benefit of the continuous drilling programme, investment in asset integrity and the availability of multiple evacuation routes,” Chief Executive Roger Brown said.
“Financial performance was also strong, allowing us to be pro-active in materially reducing gross debt, maintaining low balance sheet leverage, and further strengthening our company as the near term global economic outlook becomes less predictable.”
In December, the deal for Seplat’s full purchase of Mobil Producing Nigeria Unlimited received approval from the Nigerian Government, after nearly two years of regulatory delay.
The transaction mirrors the new turn that Big Oil companies’ investment in Nigeria’s energy industry has taken lately as IOCs discontinue onshore operations to move offshore.
The oil and gas multinationals have cited security risks from vandals and oil thieves among grounds for exit.
But the fear of litigation and potentially high compensation arising from communities seeking legal redress for oil spills and environmental pollution also exists.
Local counterparts such as Aradel, ND Western and Waltersmith Group are turning facilities deserted by the likes of Shell and Total Energies into an opportunity to scale.
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For the three months to March, Seplat incurred N20 billion ($13.2 million) in gas flare penalty as part of its cost of sales that jumped by 237.9 per cent. Profit before tax increased by threefold to N314.6 billion.
Seplat, Nigeria’s biggest public company by market value, increased dividend per share for the quarter to US4.6 cents, 28 per cent bigger when compared to the fourth quarter of last year.
Its share price, had appreciated by 6.3 per cent on the London Stock Exchange as of 11:26 WAT on Monday after the earnings release. Yet, it remained unchanged in Lagos, where the stock is also quoted.
Assets totalled N9.6 trillion at the end of March, down from N9.8 trillion as of December.
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