TIDMSEPL
RNS Number : 0937J
Seplat Energy PLC
22 April 2022
22 April 2022
Seplat Energy Plc
2021 Annual Report and Notice of AGM
Seplat Energy Plc ("Seplat" or the "Company") confirms it has
today published its Annual Report and Accounts for the year ended
31 December 2021 together with the notice of the Company's ninth
Annual General Meeting ("AGM") and forms of proxy. The Company will
hold its AGM at 11:00am (WAT) on Wednesday 18 May 2022 at 16a
Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.
In accordance with Listing Rule 14.3.6 copies of the Company's
Annual Report and Accounts for the year ended 31 December 2021, the
Notice of AGM and proxy forms have also been submitted to the FCA
for publication through the document viewing facility of the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
In accordance with Disclosure Guidance and Transparency Rule
("DTR") 6.3.5R(3), copies are available on the Company's website,
https://www.seplatenergy.com/
The Company's audited financial statements and extracts of the
management report were included in the Company's Final Results
announcement on 28 February 2022. That information, together with
the Appendices to this announcement, which contains the following
additional information that has been extracted from the 2021 Annual
Report, constitutes the material required for the purposes of
compliance with DTR 6.3.5 only:
-- the Directors' Responsibilities Statement;
-- a description of principal risks and uncertainties that the Company faces; and
-- related party transactions.
This announcement should be read in conjunction with and is not
a substitute for reading the full 2021 Annual Report. Page and note
references in the text below refer to page numbers and notes in the
2021 Annual Report and terms defined in that document have the same
meanings in these extracts.
Enquiries
Seplat Energy plc
Emeka Onwuka, CFO +234 (0) 1 277 0400
Edith Onwuchekwa, Company Secretary/General
Counsel
Carl Franklin, Head of Investor Relations
Ayeesha Aliyu, Investor Relations
Chioma Nwachuku, Director - External Affairs
and Sustainability
FTI Consulting
Ben Brewerton / Christopher Laing +44 (0) 203 727 1000
seplat@fticonsulting.com
Notes to editors
Seplat Energy Plc is Nigeria's leading indigenous energy
company. It is listed on the Premium Board of the Nigerian Exchange
Limited (NGX: SEPLAT) and the Main Market of the London Stock
Exchange (LSE: SEPL).
Seplat Energy is pursuing a Nigeria-focused growth strategy
through participation in asset divestments by international oil
companies, farm-in opportunities, and future licensing rounds. The
Company is a leading supplier of gas to the domestic power
generation market. For further information please refer to the
Company website, http://seplatenergy.com/
Appendices
Appendix A: Statement of Directors' responsibilities
The following Statement of Directors' responsibilities is
extracted from the 2021 Annual Report and Accounts (page 136).
The Companies and Allied Matters Act, 2020, requires the
Directors to prepare financial statements for each financial year
that gives a true and fair view of the state of financial affairs
of the Group at the end of the year and of its profit or loss. The
responsibilities include ensuring that the Group:
1. keeps proper accounting records that disclose, with
reasonable accuracy, the financial position of the Group and comply
with the requirements of the Companies and Allied Matters Act,
2020;
2. establishes adequate internal controls to safeguard its
assets and to prevent and detect fraud and other irregularities;
and
3. prepares its financial statements using suitable accounting
policies supported by reasonable and prudent judgements and
estimates and are consistently applied.
The Directors accept responsibility for the annual financial
statements, which have been prepared using appropriate accounting
policies supported by reasonable and prudent judgements and
estimates, in conformity with International Financial Reporting
Standards (IFRS), the requirements of the Companies and Allied
Matters Act, 2020 and Financial Reporting Council of Nigeria Act,
No. 6, 2011.
The Directors are of the opinion that the financial statements
gives a true and fair view of the state of the financial affairs of
the Group and of its financial performance and cash flows for the
year. The Directors further accept responsibility for the
maintenance of accounting records that may be relied upon in the
preparation of financial statements, as well as adequate systems of
internal financial control.
Nothing has come to the attention of the Directors to indicate
that the Group will not remain a going concern for at least twelve
months from the date of this statement.
Signed on behalf of the Directors by:
A.B.C Orjiako R.T. Brown
Chairman Chief Executive Officer
FRC/2014/IODN/00000003161 FRC/2014/ ANAN/00000017939
28 February 2022 28 February 2022
Appendix B: Principal risks and uncertainties
The following principal risks and uncertainties table is
extracted from the 2021 Annual Report and Accounts (pages 40 to
45).
The implementation of our strategy can be hindered by various
risks and uncertainties. The risks that the Board considers most
significant are described here.
Operational risks
Field operations and Third-party infrastructure HSSE risks
project deliverability downtime
-------------------------------- ------------------------------
Description Description Description
Failure to manage An over-reliance Oil and gas activities
operational activities on third-party operated carry significant
in line with planned transportation infrastructure levels of HSSE risks
expectations can lead can expose the Company if not properly managed.
to production misses, to an extended period As activity levels
project delays and of production being continue to increase
cost overruns, high shut in. there is a strong
production costs and focus on preventing
earlier than expected major environmental
field decommissioning. (including the emerging
climate change - GHG
emissions risk), health
or safety incidents.
-------------------------------- ------------------------------
Mitigation Mitigation Mitigation
Focus on risk management Work is ongoing to Deployment of an
at planning phase secure a second export HSSE Management System
and mitigation plans line to complement in line with best
activated. Compulsory Forcados. Continue practices. Monitoring
'peer-to-peer' review to explore export and reporting of HSSE
for high-value projects via barging as a back-up performance scorecards
and better project option in extreme at management and
management techniques. cases. FEED completed Board levels. Our
Protracted land acquisition, and outcome prepared HSSE systems and process
preparation and rig for presentation to are subjected to independent
startup have been JV Partners to pave review and identified
contributory factors way for Contracting improvement initiatives
which have received Strategy concurrence are deployed. Continual
focused attention for Engineering, Procurement, focus on HSSE training
and significant process Installation and Commissioning and initiatives on
improvements and improved (EPIC) of Amukpe LTF incidence prevention.
communications with Upgrade. Emergency Response
JV partner and approving Finalising the Amukpe plan set for any eventuality
regulators to mitigate to Escravos pipeline and comprehensive
delays. (AEP) project in a Incident Review panels
Use of smart/ intelligent bid to provide a major to identify and channel
wells to improve recovery alternative for crude lessons learnt to
and improved rig performance evacuation in the improvement activities.
monitoring and reporting core assets. The AEP Focus on the delivery
to manage NPTs. project is at 99.8% of projects earmarked
completion and crude to reduce and/or eliminate
deliverability test gas flaring as spelt
conducted. Two contingency out under the company's
tanks in Amukpe for "Gas Flares Out Roadmap"
partial storage during and new energy transition
shut-in over shorter plan..
periods.
-------------------------------- ------------------------------
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Net working interest Net working interest HSSE scorecards
production production LTIF
Operating costs per Days downtime TRIR
boe EBIT
-------------------------------- ------------------------------
Strategic pillars Strategic pillars Strategic pillars
1, 2, 3 2, 3 2, 3, 5
-------------------------------- ------------------------------
Assessment Assessment Assessment
Very high Very high High
-------------------------------- ------------------------------
Trend Trend Trend
Steady. We continue Steady. Remarkably Steady. Though the
to redefine our project improved uptime of risk is inherent,
management approach Forcados export system. we will continue to
for improved speed However, risk trend deploy our HSSE risk
of delivery and efficiency, is Steady, even though management in line
finalised the integration there is no near term with best practices
of the newly acquired line of sight for and with strong emphasis
Eland assets into an alternative evacuation on prevention.
our business, consolidate line, in the sudden
performance across event of prolonged
board, maximise production, outage of the TFP.
maintain a strong Alternative line (AEP)
balance sheet, and is now scheduled for
strategically position Q2 2021 delivery.
the Company for future
growth.
-------------------------------- ------------------------------
Infectious diseases Sustaining E&A programme
outbreak in Seplat
(e.g. Covid-19)
Description Description
Risk of an index Exploration and appraisal
case manifesting in activities carry significant
Seplat offices or levels of subsurface
field locations. This risk. Sustained E&A
leads to an unsuccessful drilling failure will
initial control of impact the Company's
an index case (probably ability to organically
resulting in communal replace reserves and
spread of the disease production.
in the Seplat community
as a result of late
detection of secondary
contact cases which
may have had close
contacts with index
case or close contacts
from other external
primary sources).
Risk also covers supply
chain disruptions
emanating from the
pandemic i.e. the
extent to which the
disease will have
an impact on all key
projects of the Company
(including ANOH) as
designed in the work
programme (impacting
the supply chain and
major contractors
scheduled to deliver
in a few months).
------------------------------
Mitigation Mitigation
The Company's leadership Strict compliance
through the COVIMOG with reservoir management
(monitoring and response guidelines. Building
team) continued to internal capacity
sustain the Company with skilled sub-surface
business and observed expertise. Drill a
all recommended preventive minimum of two exploration
measures advised by wells, as well as
both the Presidential continuous M&A work
Task Force (PTF) and to secure available
State Governments. opportunities at the
Over 90% of employees right price.
were fully vaccinated
via a concerted Industry
(OPTS) support, while
PCR tests remained
mandatory for everyone
carrying out activities
in the various areas
of the company's operation
and Travel Advisory
updates were shared
with staff. Provision
continued to remain
in place for targeted
tests of personnel
in all locations as
required. Follow up
treatment of positive
cases continued to
be managed and funded
by the Company. Also,
as facilitated by
the Lagos State Government,
the Covid-19 booster
dose vaccines are
now readily available
in Government Health
centres, and the Company
plans to keep on liaising
with appropriate bodies
in the industry to
facilitate this process.
Manage press/publicity
and communication
to avoid miscommunication/
wrong press.
------------------------------
KPI/Performance metric KPI/Performance metric
HSSE scorecards Reserve replacement
LTIF
TRIR
------------------------------
Strategic pillars Strategic pillars
2,5 1, 2, 3
------------------------------
Assessment Assessment
High Very high
------------------------------
Trend Trend
Steady. Our risk Steady. High grading
landscape remained our exploration portfolio
largely stable with through a thorough
respect to existing prospect screening
exposures since our exercise. In the near
last update in 2020. term, plan is to commence
The Company did well exploration drilling
to manage the lingering campaign in the West.
impact of Covid-19
(infectious disease
outbreak), via a strategic
management vehicle
called COVIMOG.
------------------------------
External risks
Niger Delta stability Stakeholder management Geopolitical risk
and security relationships
-------------------------------- --------------------------------
Description Description Description
Seplat Energy's core Failure to manage Nigeria has at times
operations are located stakeholders can result in its history faced
in the Niger Delta in business disruptions political uncertainties
region of Nigeria and interference. and threats such as
and that comes with The Company prioritises terrorism aimed at
significant risks. the effective management de-stabilising and
Historically, the of relationships with undermining the orderly
Niger Delta has always all stakeholders including and effective rule
been a high-risk environment host communities, of central government.
with security incidents JV partners, government,
such as kidnappings, regulatory bodies
vandalism and criminal and shareholders.
attacks on Oil and
Gas installations.
-------------------------------- --------------------------------
Mitigation Mitigation Mitigation
The Company, working Ensure consistent Scenarios and response
with other industry delivery of CSR initiatives options plan set.
players in the region, (as well as full compliance Crisis management
continues to put pressure with the terms of team in place for
on government to find the GMoU) across all high alert political
a lasting solution operational areas. periods. Continue
to Niger Delta restiveness Sustain local content to partner/network
and the current security development with priority with security stakeholders
measures put in place to community contractors. and share intelligence
by the facility operator, Tailored CSR programmes, regarding security.
together with the capacity building Business continuity
government's strategy and infrastructure plans actioned in
of dialogue with stakeholders developments with light of current geo-political
in the region, seems the host communities. situation.
to be working. Organisational focus
and clear strategy
to deliver shareholder
value pursued by the
Board and management.
Corporate governance,
transparency and proactiveness
in dealings with regulators
and JV partners.
-------------------------------- --------------------------------
KPI/Performance metric KPI/Performance metric KPI/Performance metric
LTIR Net working interest Occurrences of civil
TRIR production unrest and terrorism.
Security incidents LTIR
Operating cash flow TRIR
Host community incidences
-------------------------------- --------------------------------
Strategic pillars Strategic pillars Strategic pillars
2, 3, 5 2, 5 2, 3, 5
-------------------------------- --------------------------------
Assessment Assessment Assessment
Very high High High
-------------------------------- --------------------------------
Trend Trend Trend
Steady. Efforts by Steady. We continue Steady.
the government and to enjoy good working
industry pressure relations with our
groups, aimed at enhancing stakeholders.
security in the region
seems to be paying
off as the business
recorded zero occurrence
in militancy activities,
similar to the previous
year. We will continue
our monitoring and
vigilance.
-------------------------------- --------------------------------
Financial risks
Oil price volatility Changes to tax status Availability of capital
and legislation
------------------------------- --------------------------------
Description Description Description
Oil prices have exhibited If the tax regime/legislation The oil and gas industry
a history of volatility under which the Company is highly capital
and can fluctuate operates its assets intensive. Significant
sharply in line with were to change, profitability amounts of capital
external factors. may be impacted. are required to continue
development activities
and fund M&A. Non
funding of cash calls
by JV partners impacts
activities and liquidity.
------------------------------- --------------------------------
Mitigation Mitigation Mitigation
Hedging continues Perform evaluation Emphasis on compliance
to be our price risk of business plan and with requirements
management tool. Price performance metrics of the JV operating
sensitisation on project exclusive of tax benefits. agreement for effective/strict
economics and cost Project economics JV partner concurrence.
discipline for capital were determined on Board review and approval
projects sanctioning. maximum tax basis of financial strategy
Aggressive focus on to mitigate the impact and debt portfolio
cost reduction. of the now expired management with strong
pioneer tax status. banking relationships.
Impact assessment
of potential tax legislature
monitored at the Board
level.
------------------------------- --------------------------------
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Realised oil price Effective tax rate JV receivables
Operating cash flow Tax status Capex
New M&A activities
------------------------------- --------------------------------
Strategic pillars Strategic pillars Strategic pillars
2 2, 3 2, 3, 4
------------------------------- --------------------------------
Assessment Assessment Assessment
High High Very high
------------------------------- --------------------------------
Trend Trend Trend
Decreasing. In the Steady. PIB was passed Decreasing. JV partners
year 2021, we kept into law as an Act continue to remain
focus of our price (PIA) in August, 2021. current in paying
risk management policy Impact on Seplat is cash calls.
to protect the Company's assessed as moderate.
cash flow stream from
downside scenarios.
We will also continue
to take hedge positions
and apply cost reduction
strategies.
------------------------------- --------------------------------
Financial risks continued
Cost control risk Liquidity Foreign exchange risk
----------------------------------- ---------------------------
Description Description Description
Cost reduction remains Liquidity risk is The Company is exposed
central to the Company's the risk that the to exchange rate risk
current operating Company will not be to the extent that
strategy. High operating able to meet its financial balances and transactions
cost and ineffective obligations as they are denominated in
capital cost control fall due. a currency other than
negatively impacts the US Dollar.
operating cash flows
and profitability.
----------------------------------- ---------------------------
Mitigation Mitigation Mitigation
Comprehensive budgeting Manage liquidity The Company has options
process approved by risk by ensuring that to manage its foreign
the joint venture sufficient funds are exchange exposure
partner and the Board. available to meet including financial
Clear cost management commitments as they hedge instruments
targets. Grading of fall due. Uses both such as forward exchange
portfolio opportunities long-term and short-term contracts.
and project ranking cash flow projections
for capital allocation. to monitor funding
Focus on reducing requirements for activities
drilling costs at and to ensure there
well design phase. are sufficient cash
Cost monitoring and resources to meet
periodic reporting. operational needs.
Focus on effective Cash flow projections
contracting strategies take into consideration
for cost reduction. the Company's debts
and covenant compliance.
Surplus cash held
is transferred to
the treasury department
which invests in interest-bearing
current accounts,
time deposits and
money market deposits.
----------------------------------- ---------------------------
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Operating cost per Operating cash flow Operating cash flow
boe Capex Capex
EBIT
Capex
Well costs
----------------------------------- ---------------------------
Strategic pillars Strategic pillars Strategic pillars
2, 3, 5 1, 2, 3 2, 3
----------------------------------- ---------------------------
Assessment Assessment Assessment
High Medium Low
----------------------------------- ---------------------------
Trend Trend Trend
Steady. Cost discipline Decreasing. Improved Decreasing. Historically,
remains key focus uptime of TFP; improved the Company holds
of the business. JV cash call payment; the majority of its
oil price rally; and cash and cash equivalent
strategic debt refinancing in US dollar. Gas
have all greatly improved contracts are indexed
liquidity risk. in US dollar.
----------------------------------- ---------------------------
Strategic risks
Portfolio concentration Merger & Acquisition Bribery and corruption
risk (M&A) risk risk
------------------------------- ------------------------------
Description Description Description
High dependency on Growth through M&A Bribery and corruption
a concentrated portfolio activities is part presents a risk throughout
of producing blocks of the Seplat's strategy the global oil and
and limited number to pursue a focused gas industry and represents
of wells can leave acquisition and farm-in. an ongoing risk to
the Company more susceptible M&A deals and transactions any oil and gas company.
to declining long-term come with significant
growth and reserves risk including structural,
depletion. commercial and integration
risks. There is also
the risk of nonachievement
of acquisition targets
due to highly competitive
landscape.
------------------------------- ------------------------------
Mitigation Mitigation Mitigation
Focus on portfolio New business development Extensive training
expansion strategy unit is always looking on anti-bribery and
from the Board level for the right opportunities corruption. Embedding
to diversify current for Seplat. Decision corporate governance
portfolio. Integrated review board (DRB) principles with key
long-term planning process is in place focus on areas of
on crude oil, gas to ensure deals are the business which
and other renewables properly vetted and may be more susceptible
business. adequate due diligence to corruption such
done on new opportunities. as the contracting
The DRB ensures the and procurement process.
commercial, structural, Processes exist to
KYC and integration guide dealings with
risks are fully considered public officials.
and addressed with
mitigation plan approved
and in place prior
to deal closing.
------------------------------- ------------------------------
KPI/Performance metric KPI/Performance metric KPI/Performance metric
Successful execution Successful execution Whistleblowing reports
of new acquisition of new acquisition Number of disciplinary
and farm-in opportunities and farm-in opportunities cases
------------------------------- ------------------------------
Strategic pillars Strategic pillars Strategic pillars
2, 3 1, 3, 4 5
------------------------------- ------------------------------
Assessment Assessment Assessment
High Very high Very high
------------------------------- ------------------------------
Trend Trend Trend
Steady. The Company Steady. DRB process Decreasing. Our geographical
is in transform phase. in place to vet opportunities location continues
and deals. Risk trend to be susceptible
steady following ongoing to corruption. However,
integration of Eland risk trend changed
Oil and Gas Plc, as from steady to decreasing
well as ongoing strategy following lower cases
to acquire more strategic of whistle blowing
assets. M&A landscape during the year.
remains competitive.
------------------------------- ------------------------------
Fraudulent activity Information security
risk risk
Description Description
Fraudulent activity Potential cyber-attacks
presents a risk throughout and information technology
the global energy security breaches
industry and represents could result in loss
an ongoing risk to or compromise of sensitive
any energy company. proprietary information,
communication and
IT business continuity
disruption across
operations.
------------------------------
Mitigation Mitigation
Extensive whistleblowing We monitor and regularly
campaign. Continuous upgrade the Company's
monitoring and improvement information technology
of the system of internal and security systems.
controls by all lines The Company has a
of defence with strong clearly defined employee
internal audit activity. user policy and control
Automation of processes of access rights.
where possible to Our information security
reduce manual intervention. framework and infrastructure
have been externally
reviewed in line with
requirements of ISO
27001. IT business
continuity plan is
in place for quick
deployment.
------------------------------
KPI/Performance metric KPI/Performance metric
Number of reported Information security
cases identification and
containment reports
------------------------------
Strategic pillars Strategic pillars
5 1, 5
------------------------------
Assessment Assessment
Very high High
------------------------------
Trend Trend
Steady. Risk is kept Steady. While cyber
at very high and the security continues
Company continues to hold international
to maintain a zero attention, there has
tolerance policy. not been a material
IT breach on our operations.
However, the triggering
of the work from home
policy has resulted
in a rising trend
of the risk, giving
the greater number
of employees working
externally.
------------------------------
Appendix C: Related Party Transactions
The following Related party relationships and transactions are
extracted from the 2021 Annual Report and Accounts (page 221-222
)
38. Related party relationships and transactions
The parent Company (Seplat Energy Plc) is owned 6.43% either
directly or by entities controlled by A.B.C Orjiako (SPDCL(BVI))
and members of his family and 8.20% either directly or by entities
controlled by Austin Avuru (Professional Support Limited and
Platform Petroleum Limited). The remaining shares in the parent
Company are widely held.
The goods and services provided by the related parties are
disclosed below. The outstanding balances payable to/receivable
from related parties are unsecured and are payable/receivable in
cash.
i. Shareholders of the parent company
Shebah Petroleum Development Company Limited SPDCL ('BVI'): The
Chairman of Seplat is a director and shareholder of SPDCL (BVI).
The company provided consulting services to Seplat. Services
provided to the Group during the period amounted to $1.1 million,
0.45 billion (2020: $900 thousand, 342 million). Payables amounted
to $101.8 thousand, 41.9 million in the current period.
ii. Entities controlled by key management personnel (Contracts>$1million in 2021)
Cardinal Drilling Services Limited (formerly Caroil Drilling
Nigeria Limited): The Company is owned by common shareholders with
the parent Company. The company provides drilling rigs and drilling
services to Seplat. Transactions with this related party amounted
to nil (2020: $5.7 million, 2.1 billion). Payables amounted to nil
in the current period (Payables in 2020: $591 thousand, 225
million).
iii. Entities controlled by key management personnel (Contracts<$1million in 2021)
Abbeycourt Trading Company Limited: The Chairman of Seplat is a
director and shareholder. The Company provides diesel supplies to
Seplat in respect of Seplat's rig operations. This amounted to $222
thousand, 88.9 million during the period (2020: $296 thousand, 106
million). Receivables amounted to $6, 2,649 (2020: $15,273, 5.8
million).
Stage leasing (Ndosumili Ventures Limited): A subsidiary of
Platform Petroleum Limited. The company provides transportation
services to Seplat. This amounted to $278 thousand, 111.3 million
(2020: $714 thousand, 257 million). Payables amounted to $3.2
thousand, 1 .3 million in the current period (2020: $23.6 thousand,
8.9 million).
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END
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