Seplat Energy turned in a moderately stronger net profit for the first half of the year compared to a year ago, bucking a steep slide in taxable profit, which ordinarily should have made net profit much lower.
Nigeria’s biggest oil & gas company by market value averted a drop in after-tax profit after a deferred tax credit of $28.7 million helped soften the blow of a 50.2 per cent decrease in pre-tax profit on the bottom line.
The profit growth was principally due to a change in the applicable tax rate on its Elcrest assets, an exploration and production joint venture in which it holds a 45 per cent stake.
“The effective tax rate for the period was 3% (6M 2022: 60%),” the oil driller said in its unaudited financials issued on Friday.
Seplat Energy is listed in Lagos and on the London Stock Exchange.
Revenue for the period expanded to N278.3 billion from N219, with crude oil accounting for 88.3 per cent of sales and gas the rest.
The company counts Mercuria, Chevron and Shell West as the major off-takers for its crude and Sapele Power, Geregu Power, Azura and Nigerian Gas Marketing Company as the ones for its gas.
The average realised oil price for the first six months of 2023 declined by 25.9% to $79.54 per barrel compared to the $107.35 reported a year earlier, impacting revenue.
Seplat Energy incurred N17.2 billion in foreign exchange loss in contrast to a gain of N2.5 billion at mid-year in 2022 due to the revaluation of financial assets resulting from a foreign exchange overhaul in Nigeria in June.
Africa’s largest crude producer allowed the official exchange rate of its currency to weaken by about 40 per cent in June to close the gap between it and the parallel market rate as part of the efforts to stabilise the local currency and win investors.
The closing rate at the end of June was N753.01/$ in contrast to N461.28/$ in the corresponding period of last year, throwing the firm into a net (non-cash) loss of $33.8 million.
Profit before tax plummeted by half to N43.5 billion, but post-tax profit surged to N42 billion from N35.4 billion.
CEO Roger Brown said: “We are benefiting greatly from the use of the new Amukpe-Escravos Pipeline, which has supported our robust cash generation this year, and remain focused on improving operations, reducing costs where possible, and further derisking the business.
“The distraction of frivolous legal actions is receding, and we are focused on developing our assets and launching our joint venture ANOH Gas Processing Plant, which will significantly boost our cash generation in the coming years.”
The company has extended its $1.6 billion share sale and purchase pact for the takeover of ExxonMobil’s Mobil Nigeria Unlimited to preserve the transaction, which hit the rock last July after the state oil company NNPC Limited blocked the deal, claiming a right of first refusal.
Should the transaction go through, the acquisition will increase Seplat Energy’s production by almost threefold.
The corporation noted the professional fees related to litigation costs in response to an “intense period of minority shareholder actions through the Courts and some costs associated with the MPNU transaction” as a pressure point for revenue.
Professional and consulting fees soared to N14.2 billion from N2.4 billion within the period.
In a separate statement, the company, the only Nigerian listed firm that pays quarterly dividends, announced a cash reward of 3 cents for shareholders for the second quarter. That compares to the 2.5 cents it paid for the same period last year.
Its share price jumped by the 10 per cent daily price movement limit on Lagos’ Customs Street following the news. But it fell 8.3 per cent in London.
The stock has yielded 54 per cent so far this year in Nigeria.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
TEXT AD: Call Willie – +2348098788999