SEPLAT PetDevCom Plc

Interim Management Statement

RNS Number : 7612H
SEPLAT Petroleum Development Co PLC
22 May 2014
 



 

SEPLAT Petroleum Development Company Plc

Interim Management Statement

Lagos and London, 22 May 2014:  Seplat Petroleum Development Company plc ("Seplat" or the "Company"), a leading Nigerian indigenous oil and gas company, listed on both the NSE and LSE, today announces its Interim Management Statement and update on its operations year-to-date 2014.

Key events summary:

·      Successful IPO on Nigerian Stock Exchange and London Stock Exchange on 14 April raised $535m at NGN 576 per share (£2.10)

·      As disclosed at the time of the IPO, total oil and gas production in the period impacted by 36 days of shut-down of Shell's Trans Forcados Pipeline (TFP) in Q1, and 7 days of shut-down in April.

·      Production has resumed at projected rates and Company remains on track to deliver its 2014 target gross operated production exit rate of 72,000 bbl/d.

·      Seplat's new pipeline to the Warri refinery now completed and commissioned, creating an alternative liquids export route to reduce impact of future third-party pipeline and terminal shut-downs.

·      Near term drilling programme currently being modified, aiming to accelerate field developments and partially offset the production deferment caused by the TFP shut-down.

·      15-year Gas Sales Agreement concluded with Azura Edo IPP, to supply 116 mmscf/d at $3/mscf from 2017.

·      Ogegere exploration well encountered oil-bearing sands and suspended pending further evaluation.

·      Seplat informed by Shell that it is not the preferred bidder for OMLs 29 and 24; assignment of Chevron's OML 53 to Seplat remains delayed by litigation.

Net Working Interest production:

Q1 2014

Q1 2013

FY 2013

Oil & condensate (1) (mmbbl)

1.5

1.9

8.4

Gas (bcf)

2.7

2.4

10.7

Total net WI production (mmboe)

1.9

2.3

10.3

Realised oil price (US$/bbl)

111.4

113.1

111.1

(1)    Measured at the LACT unit; excludes TFP reconciliation losses.

Austin Avuru, CEO of Seplat, commented today:

"Completion of our pipeline to the Warri refinery and commencement of crude deliveries to Warri was a strategically important milestone for Seplat.  This pipeline provides an alternative export route for our liquids, is under Seplat's control, and will further reduce the reconciliation losses imposed on our exports via Forcados.

Our gas strategy achieved a major step forward with the signing of the Gas Sales Agreement for the Azura Edo independent power project, at a price of $3/mscf.  This contract underpins Seplat's major investment programme to upgrade the Oben gas plant and expand our domestic gas business.

Our strong bid for OMLs 29 and 24 was not the highest priced offer, and therefore did not lead to our selection as preferred bidder; however we have a substantial pipeline of other material opportunities that are being pursued.  We will retain our focus on acquisition opportunities where we can leverage Seplat's technical and financial strength, and we will continue to exercise price discipline.

All of our development projects remain on track, and we are confident of delivering our target production exit rate for this year of 72,000 bbl/d, and of recovering as much of the production lost in the period as possible."

OPERATIONS REVIEW

Production

·      Average gross operated production in the first quarter was 36.5 mbbl/d of oil and 66.9 mmscf/d of gas, reflecting the TFP being shut down for a total of 36 days. 

·      Excluding the days when the TFP was not available, average gross operated production in Q1 was 59,227 bbl/d, with peak daily operated production of 62,567 bbl/d.  Average gross operated production in the first two weeks of May was 62,790 bbl/d, with peak daily operated production of 66,202 bbl/d

·      The realised oil price in the first quarter was US$111.35/bbl (Q1'13: US$113.07) a premium to Brent of US$3.61.  The realised gas price in the first quarter was US$1.43/mscf (Q1'13: US$1.36/mscf).

·      The total gross production deferment in the first quarter due to the TFP shut-down was approximately 2.2 mmbbls gross.  This was partially offset by the shipment of approximately 0.1 mmbbls to the Warri refinery when the new pipeline was completed, just before the end of the quarter.

·      Five rigs were active during the period with three new wells drilled on the Oben, Okporhuru and Ovhor fields (Oben-37, Okporhuru-07, Ovhor-15) expected to come into production before the end of the second quarter.

Development

·      Phase 1 of the Rapele-Warri Refinery alternative export route was completed, with the pipeline installed and commissioned, and all the necessary agreements put in place with refinery operator NNPC.     

·      Oil was exported through the pipeline for several days following commissioning, but the new pipeline will not be fully utilised until Seplat's new Liquids Treatment Facility (LTF) is fully operational, ensuring delivery of dry crude to the refinery.    LTF commissioning made good progress, commencing water injection in batch operation, and is expected to become fully operational in continuous injection mode during the second half.

·      Phase 2 of the Warri pipeline project, which comprises procurement and installation of a LACT unit, made good progress, and notice of factory acceptance test was received from the manufacturer. 

Gas business

·      In May the Company signed a 15-year Gas Sales Agreement (GSA) with the Azura Edo independent power project, to supply 116 mmscf/d to the 450MW gas-fired power plant being developed by Azura Edo close to Benin City.

·      The expansion of the Oben gas processing facilities remains on track, to enable the company to develop the capacity to its expand production and sales, in order serve to meet the fast growing domestic demand for gas.

Exploration

·      The Company's first exploration well, Ogegere-1, was drilled to a total depth of 12,260 ft MD (11,830 ft) and encountered a total of six (6) oil bearing sands. 

·      Based on the initial well results, especially within the deeper objective interval, and correlation with other results within the same stratigraphic interval, the Company believes that the deep interval opens up a potentially new play within the Seplat concession area.   The well has been suspended pending further evaluation.

FINANCIAL & CORPORATE UPDATE

·      Seplat's net cash position currently is approximately US$285 million, following receipt of the gross proceeds of the IPO of US$535 million and repayment of the MPI shareholder loan of US$48 million.

·      The current balance of the NPDC receivable is US$213 million, down from US$284 million at the end of 2013, reflecting receipts of US$211 million more than offsetting new expenditure of US$140 million.  The Company expects this receivables balance to reduce further during the course of the rest of the year.   

OUTLOOK

The Company is confident that it will achieve the target gross operated production exit rate for this year of 72,000 bbl/d as set out in the IPO Prospectus.

A modified drilling programme for the remainder of the year is being worked on, potentially including deployment of an additional drilling rig.  This plan aims to accelerate certain field developments and recover part of the first quarter production deferment.   The modified 2014 drilling programme will be finalised and implemented during the second quarter, and the Company intends to set out its expectations for total full-year production with the Interim Results, at the end of July.    

Conference call

The Company will hold a conference call for analysts and investors at 09:00 a.m. (Lagos and UK time) today (22 May).

To join the call, please use the dial in number below:

Conference call: +44 (0) 1452 555566 all participants

Conference ID (to be quoted) 48072872

A replay of the call will be available approximately four hours after the event for four weeks on the following number: +44 (0)1452550000 all participants

Future events

Seplat's Interim Results for the six months ending 30 June 2014 are expected to be announced in late July 2014.

 

Notes to editors:

SEPLAT Petroleum Development Company ("SEPLAT" or "the Company") is a leading indigenous oil and gas exploration and development company with a strategic focus on Nigeria, listed on the Main Market of the London Stock Exchange ("LSE") (LSE:SEPL) and Nigerian Stock Exchange ("NSE") (NSE:SEPLAT). In July 2010, SEPLAT acquired a 45 per cent participating interest in, and was appointed operator of, a portfolio of three onshore producing oil and gas leases in the Niger Delta (OMLs 4, 38 and 41), which includes the Oben, Ovhor, Sapele, Okporhuru, Amukpe and Orogho fields. Since acquisition, SEPLAT has more than tripled production on the three OMLs to over 59 mbbl/d in March 2014, and the Company is targeting 85 mbbl/d by the end of 2016. DMCL estimates that the Company's working interest proved plus probable reserves ("2P") in OMLs 4, 38 and 41 amount to 101,756 mbbl of oil and condensate and 573.5 bcf of gas as of 31 October 2013. In June 2013, Newton Energy, a wholly-owned subsidiary of the Company, entered into an agreement with Pillar Oil to acquire a 40 per cent participating interest in the Umuseti/Igbuku Fields, adding approximately 9.7 mmbbl to the Group's 2P oil and condensate reserves and 89.8 bcf of gas. SEPLAT is pursuing a Nigeria focused acquisition strategy and is well-positioned to participate in future divestment programmes by the international oil companies operating in the Niger Delta. For further information please refer to the company website, http://seplatpetroleum.com/.

 Enquiries:

Seplat Petroleum Development Company plc

Roger Brown, CFO

David Boyd, Investor Relations

Chioma Nwachuku, GM - Corporate Affairs & Business Development

 

+44 203 725 6500

 

+234 12 770 400

FTI Consulting

Ben Brewerton / Sara Powell / George Parker

[email protected]

 

+ 44 203 727 1000

Citigroup Global Markets Limited

Tom Reid / Chris Bucknall

 

+44 207 986 4000

RBC Europe Limited

Stephen Foss / Matthew Coakes

 

+44 207 653 4000

 

DISCLAIMER

FORWARD-LOOKING STATEMENTS

 

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth, strategies and the oil and gas business. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

 


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