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| L-R: Director, External Affairs and Sustainability, Dr Chioma Nwachuku; Operations Director, Seplat, Effiong Okon; Shareholder/ Member Statutory Audit Committee, Sir Sunny Nwosu; Chairman, Seplat, Dr ABC Orjiako; Shareholder/ Member Statutory Audit Committee, Dr Faruk Umar; Chief Executive Officer, Seplat, Roger Brown; and Company Secretary/General Counsel, Edith Onwuchekwa, at Seplat’s hybrid 8th Annual General Meeting held at the company’s headquarters in Lagos |
In his address, Dr ABC Orjiako, the Chairman of Board, said
the company’s cash position remained strong in the full year of 2020.
Also, that the $318 million of cash it generated from
operations was significantly more than the $150 million invested for future
growth.
The company’s capital expenditure in the 2020 business year
was higher than the $125 million spent in 2019, which demonstrates the
company’s commitment to growth; as it voluntarily repaid $100 million of its
Revolving Credit Facility and ended the year with $225 million in cash and net
debt of $440 million.
The company’s average working interest production was
51,183boepd, including 33,714bopd of liquids and 101MMscfd gas (17,469boepd).
He said: “Of this, our Eland assets contributed 8,855bopd,
or 26% of total liquid volumes. Our financial performance enabled us to
maintain our commitment to paying dividends.
“While other companies were cutting back or cancelling
payments for the 2019 financial year, because of prevailing uncertainties, we
honoured our commitment and paid a final dividend of US$0.05, for a total
dividend of US$0.10 for 2019.
“In October 2020, we announced an interim dividend of
US$0.05 and the Board has since approved an additional top-up of US$0.05,
maintaining our US$0.10 dividend for the 2020 financial year. Since we raised
$535 million at our initial public offering in May 2014, we have returned $344
million to shareholders in the form of dividends.
“The strengthening of our Board is part of our ongoing
desire to achieve world-class governance of our company. Six of our 13-member
Board are independent and we continue to work towards increasing diversity.
“In addition, as we announced in March, we have taken the bold
decision to eliminate all Related-Party Transactions – a move that exceeds the
requirements of the UK Code of Corporate Governance.”
According to Dr Orjiako, it is the responsibility of the
Board to plan for the long-term sustainability of the company, as scenario
analyses on Seplat’s assets have been conducted under different climate change
and demand scenarios, whilst looking towards a future in which Seplat is much
more involved in promoting low carbon environment in its operations and the
company adopting Seplat Energy as its new name following the passage of the
resolution at its AGM.
“Such a transition will involve significant innovations,
technology, skills and relationships, compared to our existing expertise of
subsurface exploration, drilling and hydrocarbon processing, but we are
determined to be a major part of Nigeria’s future energy mix and help drive the
country towards more sustainable energy generation,” the Seplat Chairman
emphasized.
“Our ANOH Gas Processing Plant will be a major step forwards
in Nigeria’s drive to reduce carbon emissions, replacing potentially millions
of small-scale, inefficient, and polluting generators with cleaner
utility-scale power generation fired by Nigerian natural gas.
“In addition, we intend to increase our disclosure of
environmental, social and governance (ESG) data, by adopting the
recommendations of the Task Force on Climate-related Financial Disclosures and
will commit to reporting CO2 emission data to the Carbon Disclosure Project
shortly.
“Helping our communities Part of our ESG commitment is
already apparent in the long-term projects we implement in our host
communities. As the Covid-19 pandemic struck Nigeria, it was our duty to help
our host communities and States in whatever ways we could.”
Also at the AGM, Shareholders unanimously approved the
change of name resolution from Seplat Petroleum Development Company Plc to
Seplat Energy Plc in line with the company’s transition into a full energy
solutions company.
The Chairman said it was the responsibility of the board to
plan for the long-term sustainability of the company, as scenario analysis on
Seplat’s assets have been conducted under different climate change and demand
scenarios.
According to him, Seplat looks forward to a future in which
it is much more involved in promoting a low carbon environment in its
operations, hence the adoption of the new name, Seplat Energy, as its new name.
In the same vein, Mr Roger Brown, Chief Executive Officer,
Seplat, said there is pressure to reduce oil extraction and the carbon
emissions it creates; but that, he noted, depended on the rest of the world
adopting less oil-intensive ways to travel and generate power.
“Nigeria’s per-capita energy consumption and carbon
emissions are actually very low, and its national electricity grid is still
very poorly developed. This is why the country is so reliant on small-scale
diesel generation to satisfy its energy needs and this is the problem we need
to address most urgently.
“It’s important to recognise that Nigeria is a developing
country with low access to energy and a rapidly growing young population.
Hydrocarbons are the country’s main resource and provide significant help for
its economy.
“The proceeds from the oil industry fund a wide range of
Sustainable Development Goals (SDGs) and are crucial to the country’s societal
development.
“Nigeria needs to achieve significant growth in its capacity
to deliver education and health services, food production and energy security.
Without the development of its indigenous oil and gas industry, these goals
will become very difficult to achieve and so in Nigeria, the industry remains
not just relevant but essential.”
According to Mr Brown: “Seplat is embracing climate change
opportunities on two fronts. Firstly, we continue to invest heavily in
expanding our domestic gas business in line with the Government’s strategy to
achieve universal access to electricity, and to make that energy cheaper and
cleaner by replacing diesel generation, which is very damaging to the
environment and the economy. Gas is clearly the next step for Nigeria, and we
have a leading position domestically with the Nigerian Government declaring the
ANOH project as one of the seven critical gas development projects for the
country.
“Secondly, we have created a New Energy unit to focus on
lower carbon to zero-carbon fuel sources and the natural extension beyond gas
is for Seplat to participate in renewable energy, such as solar power, and
emerging technologies such as carbon capture and storage. Our view is that
Nigeria will benefit from being able to deploy renewable energy on its
electricity grid rather than solely developing an off-grid renewable solution.
By providing a baseload of cheaper, lower carbon gas on the grid, the
acceleration of grid-based renewables will be possible, which is why we are
currently focusing on accelerating our midstream gas business and additionally
expanding into LPG, which is a good fuel source for cooking, preventing
deforestation.”
“The priority for 2021 is to address our responsibilities as
part of the global energy transition and to set realistic targets for how we as
a company evolve to drive that transition along. Having survived the worst year
in the history of the oil and gas industry, the actions we’ve taken before and
during 2020 have left us in a position of strength and I am confident that as
demand recovers and the imperative for gas increases, Seplat will exit 2021 a
larger, stronger, more profitable company and strengthen its position as
Nigeria’s indigenous energy leader.”
To this end, Mr Emeka Onwuka, Chief Financial Officer,
Seplat, said the company’s robust financial performance in 2020 demonstrated the
importance of a prudent approach to managing its finances, focusing on capital
allocation, revenue diversification, cost control, hedging and debt management.
He added: “Despite a challenging year, we repaid $100
million debt, invested $150 million for growth and maintained our dividend at
$0.10 per share for the year.
“Financial sustainability begins with the decisions we make about capital allocation and the priorities we consider when using cash. Our aim has always been to maintain a healthy balance sheet, focusing on cash generation first and foremost so we can build up a large reserve for future deployment and protect ourselves against the kind of downturns the world experienced in 2020.”