Seplat Energy’s Valuation Rises 20% as Investors Take Position
Seplat Energy Plc sees its share price jumps 20% in a week amidst crude oil prices rally in the global market as equity investors take position ahead of dividend payment, data from the Nigerian Exchange shows.
The positioning is not just about dividend payout for 2021 which appears to be quite juicy for a company coming out from a downturn. However, the market is expecting future earnings to be better with the management’s continuous investment in related assets.
Also, as International Oil Companies are exiting the Nigerian market amidst uncertainties and moving to a net-zero emission target, Seplat is well placed to replace the gap to be created.
The company’s share price increase in the week drove the Nigerian Exchange oil and gas index upward by 10.61% amidst sell down in other segments. Read: Seplat Plc.’s Earnings Bounced Back Strongly on Higher Oil Prices
Market data shows that the indigenous energy company share price inched up from N859.9 per share at the beginning of the trading session and closed the week at N1,034.
Among other things, news of its acquisition of ExxonMobil’s asset in Nigeria and expectation that future stream of income would be stronger triggered buying interest in the company’s shares.
Consequent to a fifth upward revaluation, Seplat Energy Plc is now worth N608.841 billion calculated on its 588.444 million outstanding shares.
In its audited statement, Seplat Energy’s profit before tax provision for the financial year 2021 return to positive at N71.03 billion from N28.87 billion loss sustained in the pandemic year.
Earnings/Dividend Information
Amidst recovery, Seplat Energy recorded a 38.2 per cent rise in revenue to N293.6 billion in 2021 from N190.92 billion in 2020 when there was a disruption in the global supply chain and oil contango.
The revenue growth was helped by a higher average realised oil price of $70.54 per barrel, a strong surge when compared with $39.95 per barrel in the financial year 2020.
Following the board of directors’ recommendation, the company paid a quarterly interim dividend of US2.5 cents per share declared in April, July and October, in the financial year 2021.
In addition to this, the Board of Seplat is recommending a final dividend of US2.5 cents per share, which is subject to the approval of shareholders, at the Annual General Meeting (AGM).
Chief Executive Officer, Seplat Energy, Mr. Roger Brown in a statement said: “Seplat Energy announced a major acquisition last week and despite a challenging year for Nigerian oil and gas, the robust results delivered today clearly show how our increasing financial strength has made such an acquisition possible, without the need to dilute shareholders, by giving international financial partners the confidence to invest in our vision.
“The addition of MPNU nearly trebles our production and doubles our reserves on a pro forma 2020 basis, reinforcing our leadership of Nigeria’s indigenous energy sector and enabling us to generate strong future cash flows that will underpin our investment in Nigeria’s energy transition and improve our overall stakeholder returns.
“Our 2021 performance was affected by outages at Forcados Terminal that will no longer have such an impact when we switch to the new Amukpe-Escravos Pipeline, which we expect to launch in March.
This is part of our strategy to diversify and derisk routes to market, assuring higher revenues from significantly better uptime and lower reconciliation losses. Furthermore, once we have completed our acquisition of MPNU, we will add significant production from offshore assets with dedicated export terminals that also have higher availability and lower reconciliation losses.
The addition of MPNU offers a significant undeveloped gas resource base which, alongside our ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed.
“Our financial strength is matched by the skills and ambitions of our staff and we look forward to welcoming more than a thousand highly trained colleagues from MPNU and working with them to ensure their smooth onboarding into Seplat Energy.
“Together we will build a sustainable, world-class company that generates attractive returns for stakeholders and delivers energy transition for one of the world’s largest and most rapidly growing populations.”
The company plan a total capital expenditure of about $160 million for the current year as it looks to boost capacity to drive earnings further.
“We expect to drill a minimum of ten wells, including the Sibiri exploration well and one appraisal well, complete ongoing projects, invest in maintenance CAPEX to secure the existing assets and continue investments in gas.
“The 2022 drilling programme is designed to address production decline and along with completion of maintenance activities, will support long-term production levels from the assets. With the recovery in oil prices, rig-based and other project activities activity will ramp-up in 2022”, Seplat Chief said.
