Nigeria’s Biggest Independent Oil Company Hit by OPEC Curbs


Seplat Petroleum Ltd., Nigeria’s biggest independent energy company, said the West Africa nation’s decision to comply strictly with OPEC+ production cuts will lead to a drop in its third-quarter output.

“We have managed the cut in such a way that it has had very little impact on our working interest production, and should have little impact on full year results” Seplat’s Chief Executive Officer Austin Avuru said on an investor call Wednesday.

Seplat’s gas revenue will start rising when its Anoh project starts producing in 2022. Physical installation of equipment should be done in the first half of next year, commissioning will follow, leading to first gas production in the last quarter of 2021. The equity-debt financing for the project is expected to be completed by year end, operations director, Effiong Okon said.

Seplat will drill two more gas wells in the next four months to bring total gas production to 300 to 350mscbf of gas per day, according to Okon.

The upstream oil producer spent $86 million in the first half out of $120 million full year capital expenditure budget on drilling six oil wells. Oben-48 gas well was also completed in the first half and now on-stream.

Seplat is negotiating 30% blanket reduction in savings from suppliers as this is also being pushed by the Nigerian government which plans to reduce crude production cost.

Lagos-based Seplat has $174 million receivables from Nigerian Petroleum Development Company reduced from $222 million at th end of last year, chief finance office, Roger Brown said. The $145 million loss made in the period resulted from oil price decline and impairment of financial assets in the first quarter. Company’s total debt stands at $457 million.

The share price rose 10%, the limit allowed on the Nigerian stock exchange, the most single-day move since December, with today’s traded volume more than six times the average for the past three months.

©2020 Bloomberg L.P.

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