Lagos and London, 13 December 2024
Seplat Energy Plc, Nigeria’s leading indigenous energy company, has reached a monumental milestone with the re-admission of its shares to the London Stock Exchange (LSE). This achievement, following the company’s transformative acquisition of Mobil Producing Nigeria Unlimited (MPNU), sets the stage for Seplat’s emergence as a global energy powerhouse while solidifying its leadership in Nigeria’s energy sector.
With a clear vision, robust financial performance, and a growing focus on sustainability, Seplat is shaping the future of Nigeria’s energy landscape and positioning itself as a strategic player in the global energy transition.
Strategic Re-Admission: Opening New Doors for Global Engagement
The re-admission of Seplat Energy’s shares to the LSE marks a strategic milestone in the company’s journey. The listing enables Seplat to deepen its engagement with international investors, tap into broader capital markets, and align its corporate governance with global standards.
This move reflects Seplat’s commitment to transparency, operational excellence, and long-term value creation for its stakeholders. With 588,444,561 ordinary shares now trading on the LSE’s main market, the company is positioned to leverage the dual benefits of being listed on both the Nigerian Exchange Limited and the LSE.
Financial Performance: A Year of Record-Breaking Growth
Seplat Energy has delivered exceptional financial results for the fiscal year, driven by its strategic acquisition, operational efficiencies, and favorable market conditions.
Revenue and Profit Margins
The company reported total revenue of ₦1.787 trillion, nearly doubling from ₦908 billion in 2023. This represents a staggering 96.65% year-on-year growth, primarily fueled by increased production volumes and higher global crude oil prices.
- Gross Profit: ₦850 billion, reflecting a robust gross margin of 47.6%.
- Operating Profit: ₦580 billion, with an operating margin of 32.5%.
- Net Profit: ₦152 billion, translating to a net margin of 8.54%.
- Earnings Per Share (EPS): ₦259.46, an increase of 20% compared to 2023.
Contribution of Gas Operations
Gas operations emerged as a significant revenue driver, contributing approximately ₦623 billion, or 35% of total revenue. This aligns with Seplat’s strategic focus on transitioning toward cleaner energy solutions and supporting Nigeria’s domestic power generation needs.
Robust Balance Sheet: Financial Stability and Growth Capacity
Seplat Energy’s financial health remains a cornerstone of its operations, underpinned by a well-capitalized balance sheet and prudent debt management.
- Total Assets: ₦2.1 trillion, a 25% increase from 2023, bolstered by the MPNU acquisition.
- Total Liabilities: ₦900 billion, with long-term debt accounting for ₦590 billion.
- Shareholders’ Equity: ₦1.2 trillion, showcasing strong investor confidence and retained earnings.
- Debt-to-Equity Ratio: 0.8, reflecting balanced leverage.
Liquidity and Cash Flow
Seplat’s operational efficiency translated into strong cash flow generation:
- Operating Cash Flow: ₦580 billion, up by 10% year-on-year.
- Free Cash Flow: ₦377 billion, ensuring ample liquidity for dividends, debt repayment, and future investments.
- Cash Reserves: ₦240 billion, providing flexibility for growth initiatives and market volatility.
Transformational Acquisition: Mobil Producing Nigeria Unlimited
The acquisition of Mobil Producing Nigeria Unlimited from ExxonMobil for $1.2 billion was a landmark transaction for Seplat. This deal significantly enhances the company’s upstream portfolio, adding valuable oil and gas assets to its operational base.
Key Benefits of the MPNU Acquisition
- Increased Production Capacity: Seplat’s daily production has risen from 65,000 barrels of oil equivalent per day (boepd) to 80,000 boepd, with projections exceeding 100,000 boepd in 2025.
- Enhanced Revenue Streams: MPNU assets are expected to contribute an additional ₦500 billion annually to Seplat’s revenue.
- Operational Synergies: The integration of MPNU’s assets with Seplat’s existing operations creates cost-saving opportunities and increases efficiency.
Operational Excellence: A Leader in Production and Gas Supply
Production Highlights
Seplat’s production growth has been a key driver of its financial success:
- Crude Oil Production: 55,000 barrels per day.
- Natural Gas Production: 150 million standard cubic feet per day (MMscfd).
The company’s gas output supports Nigeria’s power generation sector, with plans to further expand its processing capacity.
Capital Expenditures
Seplat invested ₦180 billion in capital projects during 2024, focusing on upstream development and gas infrastructure expansion. These investments are crucial for sustaining long-term production growth.
Sustainability and ESG Commitments
Seplat Energy is at the forefront of sustainability in Nigeria’s energy sector, integrating Environmental, Social, and Governance (ESG) principles into its operations.
- Gas Flaring Reduction: The company reduced flaring by 20% in 2024, aligning with global climate goals.
- Renewable Energy Investments: Seplat allocated ₦30 billion to pilot projects in renewable energy, signaling a commitment to cleaner energy solutions.
- Community Engagement: Through its Corporate Social Responsibility (CSR) initiatives, Seplat invested in healthcare, education, and infrastructure development in host communities.
Strategic Expansion and Future Plans
Global Growth Strategy
Seplat’s re-admission to the LSE provides access to a broader pool of international capital. The company aims to leverage this opportunity to pursue:
- Asset Acquisitions: Targeting divestments by international oil companies.
- Licensing Rounds: Expanding its exploration footprint in Nigeria and beyond.
Focus on Gas
Gas remains a central pillar of Seplat’s growth strategy, with plans to increase its contribution to revenue by 20% annually over the next five years. This aligns with Nigeria’s push for cleaner energy alternatives.
Commitment to Shareholders
Seplat continues to prioritize shareholder value, evident in its strong dividend policy:
- Total Dividends Paid: ₦111.73 per share.
- Dividend Yield: 5.11%, supported by consistent free cash flow generation.
The company’s robust financial performance ensures the sustainability of these payouts.
Risks and Mitigation Strategies
Oil Price Volatility
While global oil price fluctuations pose a risk, Seplat’s diversified portfolio and growing gas operations mitigate its impact.
Regulatory Challenges
Operating in Nigeria requires navigating complex regulations. Seplat’s proactive engagement with stakeholders ensures compliance and minimizes disruptions.
Energy Transition Pressures
The global shift toward renewables presents challenges. However, Seplat’s investments in cleaner energy solutions position it well for the transition.
Conclusion
Seplat Energy Plc’s re-admission to the LSE marks a defining moment in its growth story. With a strong balance sheet, record revenue, and a transformative acquisition in MPNU, Seplat is poised to lead Nigeria’s energy sector into a new era of sustainability and global competitiveness.
As the company continues to expand its gas portfolio and explore renewable energy solutions, investors can expect sustained value creation and long-term growth.
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