TIDMSEPL

RNS Number : 6155J

Seplat Energy PLC

28 April 2022

Seplat Energy

Unaudited results for the three months ended 31 March 2022

Lagos and London, 28 April 2022: Seplat Energy Plc ("Seplat Energy" or "the Company"), a leading Nigerian independent energy company listed on both the Nigerian Exchange Limited and the London Stock Exchange, announces its unaudited results for the three months ended 31 March 2022.

Operational highlights

 
 --   Strong safety record extended to 26.1 million hours without 
       LTI from Seplat Energy operated assets 
       (2.0m hours in Q1 2022) 
 --   Working interest production averaged 47,603 boepd (liquids 
       29,079 bopd, gas 18,524 boepd) 
 --   Full-year guidance remains unchanged at 50-60 kboepd 
 --   Amukpe-Escravos Pipeline mechanically completed, all commercial 
       terms have been agreed and are moving through counterparty 
       approval processes for signature. Expected to be fully operational 
       by end of Q2 2022. 
 --   Sibiri exploration well drilled and successful, data analysis 
       underway, working with partner to secure regulatory approval 
       for Extended Well Test 
 --   Decision to exit Ubima to focus on more profitable assets; 
       agreement reached to sell Seplat Energy's share to its JV 
       partner for $55 million. 2P reserves reduce by 2 MMboe from 
       457mmboe to 455 MMboe. 
 

Financial highlights

 
 --   Revenues up 58.6% to $241.8 million 
 --   EBITDA up 81.6% to $147.4 million (adjusted for non-cash items) 
 --   Strong cash generation of $178.7 million, capex of $25.7 million 
 --   Strong balance sheet with $312.2 million cash at bank, net 
       debt of $442.6 million 
 --   Q1 interim dividend of US2.5 cents per share 
 

Update on proposed acquisition of Mobil Producing Nigeria Unlimited

 
 --   Sales & Purchase Agreement signed on 25 February to acquire 
       Exxon's shallow water operations in Nigeria, Mobil Producing 
       Unlimited, Nigeria (MPNU) 
 --   Acquisition remains on track and awaiting necessary approvals, 
       expected to complete in H2 2022 
 

Roger Brown, Chief Executive Officer, said:

"Seplat Energy delivered a good quarter that benefited from higher oil pricing, which offset lower production owing to continuing problems with the Trans Forcados Pipeline. However, the alternative Amukpe-Escravos Pipeline is mechanically complete and once we have signed the commercial agreements, we expect Chevron to be lifting our oil through the Escravos Terminal in the third quarter.

Our proposed acquisition of MPNU remains on course. We are awaiting the necessary approvals from government and regulators and expect the transaction to complete in the second half of this year. The effective date of 1 January 2021 means we will benefit from higher recent oil prices and as we have previously reported, the addition of MPNU will nearly treble our production and double our reserves on a pro forma 2020 basis. The acquisition will reinforce 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. It will also bring 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.

We announce the decision to divest the Group's interest in the Ubima marginal field for a consideration of $55million, which marginally reduces the company's 2P reserves by 2 MMboe to 455 MMboe.

We have proven we have the financial strength and credibility to attract international finance into Nigeria's energy sector and this will help us in our aim to deliver energy transition and provide cleaner, more reliable and more affordable energy for Nigeria's young and growing population."

Summary of performance

 
                                            $ million                       billion 
                                        3M 2022   3M 2021   % change   3M 2022   3M 2021 
 Revenue                                  241.8   152.448      58.6%     100.6      57.9 
 Gross profit                             117.3      52.8     122.3%      48.8      20.1 
 EBITDA *                                 147.4      81.2      81.6%      61.3      30.8 
 Operating profit (loss)                  102.1      44.4     130.0%      42.5      16.9 
 Profit (loss) before tax                  83.4      28.0     197.8%      34.7      10.6 
 Cash generated from operations           178.7       4.4     3,961%      74.4       1.7 
 Working interest production (boepd)     47,603    48,239     (1.3%) 
 Average realised oil price ($/bbl)      $97.53    $60.76      60.5% 
 Average realised gas price ($/Mscf)      $2.76     $2.76         0% 
=====================================  ========  ========  =========  ========  ======== 
 
 

* Adjusted for non-cash items

Responsibility for publication

This announcement has been authorised for publication on behalf of Seplat Energy by Emeka Onwuka, Chief Financial Officer, Seplat Energy Plc.

Signed:

Emeka Onwuka

Chief Financial Officer

 
  Important notice 
   The information contained within this announcement is unaudited and deemed by the Company 
   to constitute inside information as stipulated under Market Abuse Regulations. Upon the publication 
   of this announcement via Regulatory Information Services, this inside information is now considered 
   to be in the public domain. 
   Certain statements included in these results contain forward-looking information concerning 
   Seplat Energy's strategy, operations, financial performance or condition, outlook, growth 
   opportunities or circumstances in the countries, sectors, or markets in which Seplat Energy 
   operates. By their nature, forward-looking statements involve uncertainty because they depend 
   on future circumstances and relate to events of which not all are within Seplat Energy's control 
   or can be predicted by Seplat Energy. Although Seplat Energy believes that the expectations 
   and opinions reflected in such forward-looking statements are reasonable, no assurance can 
   be given that such expectations and opinions will prove to have been correct. Actual results 
   and market conditions could differ materially from those set out in the forward-looking statements. 
   No part of these results constitutes, or shall be taken to constitute, an invitation or inducement 
   to invest in Seplat Energy or any other entity and must not be relied upon in any way in connection 
   with any investment decision. Seplat Energy undertakes no obligation to update any forward-looking 
   statements, whether as a result of new information, future events or otherwise, except to 
   the extent legally required. 
 

Enquiries:

 
 Seplat Energy Plc 
 Emeka Onwuka, Chief Financial Officer                          +234 1 277 0400 
 Carl Franklin, Head of Investor Relations 
 Ayeesha Aliyu, Investor Relations 
 Chioma Nwachuku, Director External Affairs & Sustainability 
=============================================================  ================================ 
 
 FTI Consulting 
 Ben Brewerton / Christopher Laing                              +44 203 727 1000 
                                                                 seplatenergy@fticonsulting.com 
=============================================================  ================================ 
 
 Citigroup Global Markets Limited 
 Tom Reid / Luke Spells                                         +44 207 986 4000 
=============================================================  ================================ 
 
 Investec Bank plc 
 Chris Sim / Charles Craven / Jarrett Silver                    +44 207 597 4000 
=============================================================  ================================ 
 

Notes to editors

Seplat Energy Plc is Nigeria's leading indigenous energy company. It is listed on 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/

Operating review

HSE performance

Safe and responsible operations are critical to the delivery of Seplat Energy's strategy. Staff and contractors worked a total of 2.0 million man-hours with no fatalities, lost-time injuries, or major injuries in the period.

The Company has now achieved more than 26 million man-hours without LTI on its operated assets. There were 20 HSE incidents in total, compared to 22 incidents in the first three months of 2021, including one reportable spill and two gas leaks, all of which were remediated with limited environmental impact. The Group established appropriate processes and safeguards for its people and operations against Covid-19.

By the end of March 2022, we had conducted nearly 18,000 Covid-19 tests since the start of the pandemic, with a positivity rate of 2.8%. We have a vaccination policy for Covid-19 management and continue to enforce all Covid-19 control protocols at our field operations and offices, with no major Covid-19 related incidents.

Working interest production for the three months ended 31 March 2022

 
                                          3M 2022                      3M 2021 
                               Liquids(1)      Gas    Total   Liquids      Gas    Total 
                    Seplat %         bopd   MMscfd    boepd      bopd   MMscfd    boepd 
=================  =========  ===========  =======  =======  ========  =======  ======= 
 OMLs 4, 38 & 41      45%          17,655    107.4   36,180    19,842      114   39,540 
 OML 40               45%           7,420        -    7,420     3,615        -    3,615 
 OML 53               40%           2,712        -    2,712     3,570        -    3.570 
 OPL 283              40%           1,291        -    1,291     1,178        -    1,178 
 Ubima                82%               -        -        -       337        -      337 
 Total                             29,078    107.4   47,603    28,541      114   48,239 
 
 

Liquid production volumes as measured at the LACT unit for OMLs 4, 38 and 41; OML 40 and OPL 283 flow station.

Volumes stated are subject to reconciliation and may differ from sales volumes within the period.

Working interest production for 3M 2022 averaged 47,603 boepd, (3M 2021: 48,239), with an oil and gas mix of 61% and 39% respectively. Within this, liquids production was up 1.9% year-on-year, to 29,078 bopd, with significantly higher volumes from OML 40 slightly offsetting lower volumes from OML 4, 38 and 41 due to further outages in the Trans Forcados System, which experienced higher than planned downtime of 18% in the first three months of this year. The impact of future FOT outages on production from OMLs 4, 38 and 41 will be alleviated by our use of the long-delayed Amukpe-Escravos Pipeline, which, having been completed mechanically, awaits finalisation of commercial agreements. We expect to be using the AEP in the third quarter.

Despite 23% downtime as a result of outages on the TEP and the TFP, produced volumes from OML 40 were higher than Q1 2021, as the four Gbetiokun wells drilled in the previous year came onstream. We expect to sustain higher production throughout the year.

Gas volumes were down 6.1% year-on-year to 107.4 impacted by lower gas offtake due to price renegotiation and issues with the hot oil burner at Oben that affected production. Price discussions with customers have been concluded and a new Burner-C was installed and commissioned late February, and gas production volumes have subsequently improved in March.

We have not reported any production for Ubima in Q1 2022 as the Seplat Energy Board approved an exit from the Ubima asset in April 2022. The Ubima asset, operated by All Grace Energy Limited (AGEL) was acquired in 2019 as part of the Eland acquisition. A settlement agreement of $55 million has been agreed with AGEL and we expect to receive payments in due course.

Ubima is in a high operating cost environment, with major evacuation challenges currently being experienced in the Niger Delta. Because substantial capital expenditure would be required to create more secure evacuation routes, the decision to exit will enable us to invest in other parts of our business that generate higher returns. Current reserves in Ubima stand at approximately 2 MMbbls and necessary adjustments to the financial statements will be made in the second quarter and reported in the 6M 2022 results.

Drilling activities

During the period, we spudded two wells (Amukpe and Sibiri) and completed a Gbetiokun well that was spudded in 2021.

In OML 38, the Amukpe-05 drilling commenced and is expected to be completed by the end of April 2022. In OML 53, we spudded the Owu appraisal well in early April and drilling operations are progressing.

Project activities associated with preparation for drilling the high-impact, near-field Sibiri (formerly Amobe) exploration well in OML 40 were completed in 2021 and the well was drilled in Q1 2022. The well has been drilled to TD, with initial indications it has encountered eight oil-bearing reservoirs with 353 ft of gross hydrocarbon pay, net pay of 229 ft. Further data acquisition and analysis on the well is underway. We are working with our partners to secure regulatory approval to carryout extended well testing (EWT), to confirm producibility, among other parameters critical to full field development.

The Gbetiokun-09 well, drilled late 2021 came onstream in the first quarter and is producing c.3.5 kbopd from both long and short strings, taking the Gbetiokun field to a production rate of c.21 kbopd IPSC. For the three-infill development wells campaign, the first Opuama well (OP-12) was spudded in April 2022 with drilling progressing according to plan with on stream date estimated to be late May 2022.

Oil business performance

Seplat Energy's liquids (oil and condensate) operations produced 2.6 MMbbls on a working interest basis in 3M 2022

(3M 2021: 2.6 MMbbls). The average realised price per barrel in the period was $97.53 (3M 2021: $60.76), the increase being mostly attributable to the impact of the Ukraine conflict on global energy prices.

Amukpe-Escravos Pipeline commissioning

Following the introduction of hydrocarbons into the pipeline in December 2021 as part of the start-up and testing process, mechanical completion has now been achieved. Commercial terms have been agreed and are moving through counterparty approval processes for signature. Once we have signed the commercial agreements, we expect Chevron to be lifting our oil through the Escravos Terminal in the third quarter.

Gas business performance

Working interest gas volumes for the period was 107.4 MMscfd at an average selling price of $2.76/Mscf (3M 2021: 114 MMscfd, $2.76/Mscf). The Gas business contributed 38.9% of the Group's volumes on a boepd basis and 10.6% of Group revenues. During the period we signed GSAs with three new customers, two of which commenced offtake at a combined rate of 66 MMscfd in January and March.

ANOH Gas Processing Plant

We have made progress on the ANOH plant but have seen some delays in shipments and releasing equipment essential to the project from the ports. To date, we have achieved 85% overall project completion at the gas plant site. Our government partner, the Nigerian Gas Company, (NGC) is delivering the pipelines that will take the gas from ANOH to Oben, namely the 23km spur line and the Obiafu-Obrikom-Oben (OB3) pipeline.

The OB3 pipeline project has seen a number of failed attempts to complete the 1.85km river crossing, which is needed to complete the pipeline. However, the latest contractor is making progress and the HDD drilling stands at around 25% complete. We do not anticipate the OB3 pipeline to delay the completion of the overall ANOH project.

The Spur Line project has seen significant delays due to contracting issues and payments. We have been informed that the milling of the line pipes, which is being undertaken in China, will now commence in Q2 and therefore will not arrive in Nigeria until later this year. The latest schedule provided by NGC shows completion in Q1 2023.

We had earlier communicated a first gas date by mid-year 2022, but based on our current risking, we now expect further delays of between 9-12 months to the original timeline, with the spur line expected to be the last piece of infrastructure delivered. The upstream development, including the drilling of six production wells, will be delivered by the upstream unit operator SPDC. We expect that the two wells on which drilling commenced in 2021 will be completed this year.

Outlook and update on MPNU acquisition

The proposed acquisition of MPNU remains on track and necessary regulatory approvals are anticipated. We expect completion to occur in the second half of 2022 and MPNU will then operate as a standalone subsidiary of Seplat Energy.

Full-year production guidance for 2022 remains at 50,000 to 60,000 boepd on a working interest basis, comprising 30,000 to 35,000 bopd liquids and 116 to 150 MMscfd (20,000 to 25,000 boepd) gas production. This guidance does not include any contribution from MPNU and the ANOH Gas Plant.

Capital expenditure for 2022 is expected to be around $160 million. We expect to drill a minimum of ten wells, including the Sibiri exploration well completed and the Owu appraisal well already spudded; we plan to 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.

Financial review

Revenue and other income

Revenue from oil and gas sales in 3M 2022 was $241.8 million, a 58.6% increase from the $152.4 million achieved in 3M 2021. Adjusted for an underlift of $13.6 million, total revenues were $255.5 million.

Crude oil revenue was 74.2% higher at $216.2 million (3M 2021: $124.1 million), reflecting higher average realised oil prices of $97.53/bbl for the period (3M 2021: $60.76/bbl). The total volume of crude lifted in the year was 2.2 MMbbls, higher than the 2.1 MMbbls lifted in 3M 2021. In addition, the Group's 3M 2022 produced liquid volumes were subject to reconciliation losses of 10.2%. We expect these to improve when we evacuate the bulk of our crude through the Amukpe-Escravos underground pipeline.

Gas sales revenue decreased by 9.7% to $25.6 million (3M 2021: $28.4 million), due to lower gas sales volumes of 9.7 Bscf compared to 10.3 Bscf in 3M 2021, as a result of lower customer offtake, production stoppages at Oben in February and March, as well as TFP outages during the same months.

The average realised gas price was unchanged at $2.76/Mscf and this reflects the reduction applied to the DSO gas-to-power volumes from August 2021.

Other income of $8.9 million includes an underlift of $13.6 million (shortfalls of crude lifted below Seplat's share of production, which is priced at the date of lifting and recognised as other income) representing 214 kbbls, as well as a $0.4 million tariff income generated from the use of the Company's pipelines, offset by an unrealised $6.0 million loss on foreign exchange.

Gross profit

Gross profit increased by 122.3% to $117.3 million (3M 2021: $52.8million). Non-production costs consisted primarily of $50.2 million royalties and DD&A of $33.8 million, compared to $28.4 million royalties and $30.9 million DD&A in the prior year. The higher royalties were the result of higher oil prices.

Direct operating costs, which include crude-handling fees and operation and maintenance costs, amounted to $37.4 million in 3M 2022 (3M 2021: $37.4 million).

On a cost-per-barrel equivalent basis, production opex was $8.7/boe, in line with 3M 2021.

Operating profit

The operating profit for the first quarter was $102.1 million, compared to $44.4 million in 3M 2021, an increase of 130%.

General and administrative expenses remained largely flat at $19.0 million (3M 2021: $18.2 million).

An EBITDA of $147.8 million adjusts for non-cash items which include impairment and exchange losses, equating to a margin of 60.9% for the year (3M 2021: $81.2 million; 53.2%).

Net result

The profit before tax was $83.4 million (3M 2021: $28.0 million). The income tax expense of $63.5 million includes a current tax charge of $17.9 million and deferred tax charge of $45.6 million. The deferred tax charge is mainly driven by the unwinding of previously unutilised capital allowances and higher under-lift in current year. The effective tax rate for the period was 76% (2021: 11%)

The profit for the period was $19.9 million (3M 2021: $24.9 million) with a resultant basic earnings per share of $0.03 in 3M 2022, compared to $0.06 per share in 3M 2021.

Cash flows from operating activities

Cash generated from operations in 3M 2022 was $180.9 million (3M 2021: $5.6 million). Net cash flows from operating activities were $178.7 million (3M 2021: $4.4 million), after accounting for tax payments of $0.4 million (3M 2021: $0.3 million) and a hedge premium of $1.8 million (3M 2021: $1.5 million).

In Q1 2022 the Group received $95.0 million from the JV partners towards the settlement of cash calls. The major JV receivable balance now stands at $51.0 million, down from $83.9 million at the end of 2021.

Cash flows from investing activities

Net capital expenditure of $26.0 million included $16.0 million invested in drilling and $8.6 million in engineering projects.

An outflow of $128.3 million was recorded as deposit for the Company's proposed acquisition of Mobil Producing Nigeria Unlimited, announced in February.

Cash flows from financing activities

Net cash outflows from financing activities were $30.6 million (3M 2021: $20.4 million), including $28.4 million interest paid on loans and $2.1 million commitment fee incurred on the $350 million revolving credit facility.

Liquidity

The balance sheet continues to remain healthy with a solid liquidity position.

 
 Net debt reconciliation                                     $ million   $ million drawn        Coupon     Maturity 
  at 31 March 2022 
 Senior notes*                                                   636.1             650.0         7.75%   April 2026 
 Westport RBL*                                                   108.4             110.0      Libor+8%   March 2026 
 Off-take facility*                                               10.3              11.0   Libor+10.5%   April 2027 
 Total borrowings                                                754.8             771.0 
 Cash and cash equivalents (exclusive of restricted cash)        312.2             312.2 
 Net debt                                                       4 42.6 
 

* Including amortised interest

Seplat Energy ended the first quarter with gross debt of $754.8 million (with maturities in 2026 and 2027) and cash at bank of $312.2 million, leaving net debt at $442.6 million.

Dividend

The Board has approved the Q1 2022 interim dividend of US2.5 cents per share (subject to appropriate WHT) to be paid to shareholders whose names appear in the Register of Members as at the close of business on 30 May 2022.

Hedging

Seplat's hedging policy aims to guarantee appropriate levels of cash flow assurance in times of oil price weakness and volatility. For 2022, the Group has dated Brent put options of 6.0 MMbbls through Q3 2022 at an average premium of $1.42/bbl as follows: (i) for Q1, 1.0 MMbbls at a strike price of $50/bbl and 1.0 MMbbls at a strike price of $55/bbl; (ii) for Q2, 2.0 MMbbls at a strike price of $55/bbl; and (iii) for Q3, 1.0 MMbbls at a strike price of $55/bbl and 1.0mmbbls are protected at $60/bbl. Further barrels are expected to be hedged for 2022 in the coming months in line with the approach to target hedging two quarters in advance.

The Board and management team continue to closely monitor prevailing oil market dynamics and will consider further measures to provide appropriate levels of cash flow assurance in times of oil price weakness and volatility.

Elimination of related-party transactions

In our continuous efforts to promote world-class governance, related-party transactions (RPT) were eliminated from

1 January 2022.

Share dealing policy

We confirm that, to the best of our knowledge, there has been compliance with the Company's share dealing policy during the period.

Board appointments

On 22 April 2022, the Company announced the appointment of three new directors: Mrs. Bashirat Odunewu will join as an Independent Non-Executive Director of the Company; Mr. Kazeem Raimi will join as a Non-Executive Director and nominee of Platform Petroleum Limited replacing Mr. Austin Avuru, who stepped down from the Board of Seplat Energy on 1(st) March 2022; and Mr. Ernest Ebi will join as a Non-Executive Director and a nominee of Shebah Petroleum Development Company Limited (BVI), replacing Dr. A.B.C. Orjiako who will step down from the Board on 18(th) May 2022 after the Annual General Meeting. The three appointees will join the Seplat Energy Board with effect from 18 May 2022.

The Board is pleased to welcome the new Directors and looks forward to the contributions they will make to the Group.

Interim Consolidated Financial Statements (Unaudited)

For the three months ended 31 March 2022

(Expressed in Nigerian Naira and US Dollars)

Interim condensed consolidated statement of profit or loss and other comprehensive income

For the three months ended 31 March 2022

 
                                  3 Months ended    3 Months ended 31 March  3 Months ended    3 Months ended 31 March 
                                   31 March 2022                       2021   31 March 2022                       2021 
                           =====  ==============  =========================  ==============  ========================= 
                                      U naudited                  Unaudited      U naudited                  Unaudited 
                           -----  --------------  -------------------------  --------------  ------------------------- 
                           Notes         million                    million           $'000                      $'000 
                           =====  ==============  =========================  ==============  ========================= 
 
Revenue from contracts 
 with customers                7         100,618                     57,930         241,837                    152,448 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Cost of sales                  8      (51,7 85 )                   (37,871)       (124,490)                   (99,659) 
=========================  =====  ==============  =========================  ==============  ========================= 
Gross profit                              48,833                     20,059         117,347                     52,789 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Other income                   9          3 ,710                      5,781          8 ,916                     15,214 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
General and 
 administrative expenses      10        ( 7,913)                    (6,919)       ( 19,018)                   (18,220) 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Impairment loss on 
 financial assets             11           (509)                      (269)         (1,223)                      (707) 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Fair value loss               12         (1,639)                    (1,776)         (3,941)                    (4,676) 
=========================  =====  ==============  =========================  ==============  ========================= 
Operating profit                         4 2,482                     16,876        1 02,081                     44,400 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Finance income                13              13                          3              32                          7 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Finance cost                  13         (7,731)                    (6,391)        (18,582)                   (16,817) 
=========================  =====  ==============  =========================  ==============  ========================= 
Finance cost-net                         (7,718)                    (6,388)        (18,550)                   (16,810) 
=========================  =====  ==============  =========================  ==============  ========================= 
Share of (loss)/profit 
 from joint venture 
 accounted for using the 
 equity method                              (52)                        159           (124)                        418 
=========================  =====  ==============  =========================  ==============  ========================= 
Profit before taxation                   3 4,712                     10,647         8 3,407                     28,008 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Income tax expense            14       ( 26,422)                    (1,198)       ( 63,505)                    (3,152) 
=========================  =====  ==============  =========================  ==============  ========================= 
Profit for the period                     8 ,290                      9,449         1 9,902                     24,856 
=========================  =====  ==============  =========================  ==============  ========================= 
Attributable to: 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Equity holders of the 
 parent                                   6 ,868                     13,550          16,484                     35,647 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Non-controlling interests                 1 ,422                    (4,101)           3,418                   (10,791) 
=========================  =====  ==============  =========================  ==============  ========================= 
                                          8 ,290                      9,449          19,902                     24,856 
=========================  =====  ==============  =========================  ==============  ========================= 
Other comprehensive 
income: 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Items that may be reclassified 
to profit or loss: 
--------------------------------  --------------  -------------------------  --------------  ------------------------- 
Foreign currency 
 translation difference                   7 ,374                          -               -                          - 
-------------------------  -----  --------------  -------------------------  --------------  ------------------------- 
Total comprehensive 
 income for the period 
 (net of tax)                            1 5,664                      9,449         1 9,902                     24,856 
=========================  =====  ==============  =========================  ==============  ========================= 
 
 
Earnings per share attributable to the equity shareholders: 
================================================================  ======  ====  ===== 
Basic earnings per share /$                         26     11.76   23.29  0.03   0.06 
-------------------------------------------------  ---  --------  ------  ----  ----- 
Diluted earnings per share /$                       26     11.70   23.03  0.03   0.06 
=================================================  ===  ========  ======  ====  ===== 
 

The above interim condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Interim condensed consolidated statement of financial position

As at 31 March 2022

 
                                                          31 March 2022  31 December  31 March 2022  31 December 
                                                                                2021                        2021 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
                                                              Unaudited      Audited      Unaudited      Audited 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
                                                   Notes        million      million          $'000        $'000 
=================================================  =====  =============  ===========  =============  =========== 
Assets 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Non-current assets 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Oil & gas properties                                15          665,025      660,745      1,597,662    1,604,025 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Other property, plant and equipment                              10,902       11,228         26,190       27,255 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Right-of-use assets                                               2,685        3,050          6,450        7,404 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Intangible assets                                   16           54,291       54,045        130,430      131,200 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Other assets                                                     46,849       46,363        112,551      112,551 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Investment accounted for using equity accounting    17           93,722       92,795        225,158      225,270 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Prepayments                                                      27,814       27,512         66,820       66,788 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Deferred tax asset                                 14. 1        433,485      428,986      1,041,406    1,041,406 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Total non-current assets                                      1,334,773    1,324,724      3,206,667    3,215,899 
=================================================  =====  =============  ===========  =============  =========== 
Current assets 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Inventories                                                      30,884       30,878         74,196       74,957 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Trade and other receivables                         18          140,464      105,274        337,455      255,557 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Prepayments                                                       1,063          711          2,554        1,726 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Contract assets                                     19            3,298        1,679          7,922        4,076 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Cash and cash equivalents                           21          129,973      133,667        312,242      324,490 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Restricted cash                                    21.1           6,732        6,603         16,172       16,029 
=================================================  =====  =============  ===========  =============  =========== 
Total current assets                                            312,414      278,812        750,541      676,835 
=================================================  =====  =============  ===========  =============  =========== 
Total assets                                                  1,647,187    1,603,536      3,957,208    3,892,734 
=================================================  =====  =============  ===========  =============  =========== 
Equity and Liabilities 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Equity 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Issued share capital                                22              296          296      1,862            1,862 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Share premium                                       22           90,383       90,383        520,138      520,138 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Share based payment reserve                         2 2           5,454        4,914         23,487       22,190 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Treasury shares                                                 (2,027)      (2,025)        (4,920)      (4,915) 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Capital contribution                                              5,932        5,932         40,000       40,000 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Retained earnings                                               246,372      239,429      1,201,747    1,185,082 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Foreign currency translation reserve                            392,722      385,348          1,933        1,933 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Non-controlling interest                                       (19,491)     (20,913)       (55,386)     (58,804) 
=================================================  =====  =============  ===========  =============  =========== 
Total shareholders' equity                                      719,641      703,364      1,728,861    1,707,486 
=================================================  =====  =============  ===========  =============  =========== 
Non-current liabilities 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Interest bearing loans and borrowings               23          288,950      290,803        694,174      705,953 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Lease Liabilities                                                   607          198          1,459          481 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Provision for decommissioning obligation                         64,620       63,709        155,244      154,659 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Deferred tax liabilities                           14. 1        365,755      343,179        878,693      833,101 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Defined benefit plan                                              4,900        4,181         11,772       10,149 
=================================================  =====  =============  ===========  =============  =========== 
Total non-current liabilities                                   724,832      702,070      1,741,342    1,704,343 
=================================================  =====  =============  ===========  =============  =========== 
Current liabilities 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Interest bearing loans and borrowings               23           25,250       24,988         60,661       60,661 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Lease Liabilities                                                   871        1,273          2,092        3,090 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Derivative financial instruments                    20            1,848        1,543          4,439        3,745 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Trade and other payables                            24          148,162      151,204        355,949      367,058 
-------------------------------------------------  -----  -------------  -----------  -------------  ----------- 
Current tax liabilities                                          26,583       19,094         63,864       46,351 
=================================================  =====  =============  ===========  =============  =========== 
Total current liabilities                                       202,714      198,102        487,005      480,905 
=================================================  =====  =============  ===========  =============  =========== 
Total liabilities                                               927,546      900,172      2,228,347    2,185,248 
=================================================  =====  =============  ===========  =============  =========== 
Total shareholders' equity and liabilities                    1,647,187    1,603,536      3,957,208    3,892,734 
=================================================  =====  =============  ===========  =============  =========== 
 

The above interim condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

The Group financial statements of Seplat Energy Plc and its subsidiaries (The Group) for three months ended 31 March 2022 were authorised for issue in accordance with a resolution of the Directors on 28 April 2022 and were signed on its behalf by:

 
A. B. C. Orjiako           R.T. Brown                 E. Onwuka 
FRC/2013/IODN/00000003161  FRC/2014/ANAN/00000017939  FRC/2020/003/00000020861 
Chairman                   Chief Executive Officer    Chief Financial Officer 
28 April 2022              28 April 2022              28 April 2022 
 
 

Interim condensed consolidated statement of changes in equity

For the three months ended 31 March 2022

 
 
                                                                                        Foreign 
                  Issued                   Share                                       currency          Non- 
                   share    Share  based payment  Treasury       Capital  Retained  translation   controlling     Total 
                 capital  premium        reserve    shares  contribution  earnings      reserve      interest    equity 
-------------- 
                 million  million        million   million       million   million      million       million   million 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
At 1 January 
 2021                293   86,917          7,174         -         5,932   211,790      331,289      (11,058)   632,337 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Profit/(Loss) 
 for the 
 period                -        -              -         -             -    13,550            -       (4,101)     9,449 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Other 
comprehensive 
income                 -        -              -         -             -         -            -                       - 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Total 
 comprehensive 
 income/(loss) 
 for the 
 period                -        -              -         -             -    13,550            -       (4,101)     9,449 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Transactions 
with owners in 
their capacity 
as owners: 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Unclaimed 
 dividend              -        -              -         -             -        46            -             -        46 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Share based 
 payments              -        -            544         -             -         -            -             -       544 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Vested shares          -        -          (760)         -             -         -            -             -     (760) 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Total                  -        -          (216)         -             -        46            -             -     (170) 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
At 31 March 
 2021 
 (unaudited)         293   86,917          6,958         -         5,932   225,386      331,289      (15,159)   641,616 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
 
At 1 January 
 2022                296   90,383          4,914   (2,025)         5,932   239,429      385,348      (20,913)   703,364 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Profit for the 
 period                -        -              -         -             -     6,868            -         1,422     8,290 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Other 
 comprehensive 
 income                -        -              -         -             -         -        7,374             -     7,374 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Total 
 comprehensive 
 income for 
 the period            -        -              -         -             -     6,868        7,374         1,422    15,664 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Transactions 
with owners in 
their capacity 
as owners: 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Unclaimed 
 dividend              -        -              -         -             -        75            -             -        75 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Share based 
 payments              -        -            540         -             -         -            -             -       540 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Vested shares                   -              -         -             -         -            -             -         - 
--------------  --------  -------  -------------  --------  ------------  --------  -----------  ------------  -------- 
Shares 
 re-purchased          -        -              -       (2)             -         -            -             -       (2) 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
Total                  -        -            540       (2)             -        75            -             -       613 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
At 31 March 
 2022 
 (unaudited)         296   90,383       5,454      (2,027)         5,932   246,372      392,722      (19,491)   719,641 
==============  ========  =======  =============  ========  ============  ========  ===========  ============  ======== 
 
 

The above interim condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

 
                                        Share                                          Foreign 
                   Issued               based                                         currency 
                    share     Share   payment  Treasury       Capital    Retained  translation  Non-controlling       Total 
                  capital   premium   reserve    shares  contribution    earnings      reserve         interest      equity 
                    $'000     $'000     $'000     $'000         $'000       $'000        $'000            $'000       $'000 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
At 1 January 
 2021               1,855   511,723    27,592         -        40,000   1,116,079          992         (34,196)   1,664,045 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Profit/(Loss) 
 for the period         -         -         -         -             -      35,647            -         (10,791)      24,856 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Other 
comprehensive 
income                  -         -         -         -             -           -            -                -           - 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Total 
 comprehensive 
 income/(loss) 
 for the period         -         -         -         -             -      35,647            -         (10,791)      24,856 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Transactions 
with owners in 
their capacity 
as owners: 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Unclaimed 
 dividend               -         -         -         -             -         120            -                -         120 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Share based 
 payments               -         -     1,431         -             -           -            -                -       1,431 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Vested shares           -         -   (2,000)         -             -           -            -                -     (2,000) 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Total                   -         -     (569)         -             -         120            -                -       (449) 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
At 31 March 
 2021(Unaudited)    1,855   511,723    27,023         -       4 0,000   1,151,846          992         (44,987)   1,688,452 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
 
At 1 January 
 2022               1,862   520,138    22,190   (4,915)        40,000   1,185,082        1,933         (58,804)   1,707,486 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Profit for the 
 period                 -         -         -         -             -      16,484            -            3,418      19,902 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Other 
comprehensive 
income                  -         -         -         -             -           -            -                -           - 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Total 
 comprehensive 
 income for the 
 period                 -         -         -         -             -      16,484            -            3,418      19,902 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Transactions 
with owners in 
their capacity 
as owners: 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Unclaimed 
 dividend               -         -         -         -             -         181            -                -         181 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Share based 
 payments               -         -     1,297         -             -           -            -                -       1,297 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Vested shares           -         -         -         -             -           -            -                -           - 
----------------  -------  --------  --------  --------  ------------  ----------  -----------  ---------------  ---------- 
Shares 
 re-purchased           -         -         -       (5)             -           -            -                -         (5) 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
Total                   -         -     1,297       (5)             -         181            -                -       1,473 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
At 31 March 
 2022(Unaudited)    1,862   520,138    23,487   (4,920)        40,000   1,201,747        1,933         (55,386)   1,728,861 
================  =======  ========  ========  ========  ============  ==========  ===========  ===============  ========== 
 
 

The above interim condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Interim condensed consolidated statement of cash flows

For the three months ended 31 March 2022

 
                                                   3 months ended   3 months ended   3 months ended   3 months ended 
                                                        31-Mar-22        31-Mar-21        31-Mar-22        31-Mar-21 
                                            Note          million          million            $'000            $'000 
=========================================  =====  ===============  ===============  ===============  =============== 
 Cash flows from operating activities 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Cash generated from operations              25            75,280            2,127          180,906            5,586 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Hedge premium paid                                         (743)            (562)          (1,787)          (1,480) 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Income tax (paid)/credit                                   (166)               95            (400)              251 
=========================================  =====  ===============  ===============  ===============  =============== 
 Net cash inflows from operating 
  activities                                               74,371            1,660          178,719            4,357 
=========================================  =====  ===============  ===============  ===============  =============== 
 Cash flows from investing activities 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Payment for acquisition of oil and gas 
  properties                                             (10,721)         (12,382)         (25,767)         (32,585) 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Deposit for investment                                  (53,405)                -        (128,300)                - 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Payment for acquisition of other 
  property, plant and equipment                             (114)             (17)            (273)             (45) 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Proceeds from disposal of other 
  property, plant and equipment                                 2                -                4                - 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Receipts from other assets                                     -            1,861                -            4,897 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Interest received                                             13                3               32                7 
=========================================  =====  ===============  ===============  ===============  =============== 
 Net cash outflows from investing 
  activities                                             (64,225)         (10,535)        (154,304)         (27,726) 
=========================================  =====  ===============  ===============  ===============  =============== 
 Cash flows from financing activities 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Shares purchased for employees*                              (2)                -              (5)                - 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Interest paid on lease liability                            (20)                -             (47)                - 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Lease payment                                               (21)              (2)             (51)              (4) 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Payments for other financing charges**                     (874)                -          (2,100)                - 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Interest paid on loans                                  (11,821)          (7,746)         (28,412)         (20,384) 
=========================================  =====  ===============  ===============  ===============  =============== 
 Net cash outflows from financing 
  activities                                             (12,738)          (7,748)         (30,615)         (20,388) 
=========================================  =====  ===============  ===============  ===============  =============== 
 Net decrease in cash and cash 
  equivalents                                             (2,592)         (16,623)          (6,200)         (43,757) 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Cash and cash equivalents at beginning 
  of the year                                             133,667           85,554          324,490          225,137 
-----------------------------------------  -----  ---------------  ---------------  ---------------  --------------- 
 Effects of exchange rate changes on cash 
  and cash equivalents                                    (1,102)              225          (6,048)              607 
=========================================  =====  ===============  ===============  ===============  =============== 
 Cash and cash equivalents at end of the 
  period                                                  129,973           69,156          312,242          181,987 
=========================================  =====  ===============  ===============  ===============  =============== 
 
 

Included in the restricted cash balance is $8 million, 3.3 billion and $6.2 million, 2.6 billion set aside in the stamping reserve account and debt service reserve account respectively for the revolving credit facility. Also included in the restricted cash balance is $0.9 million, 0.4 billion and $1.1 million, 0.4 billion for rent deposit and unclaimed dividend respectively.

*Shares purchased for employees of $5,000, 2 million represent shares purchased in the open market for employees for the long-term incentive plan of the Group.

**Other financing charges include $2.1 million commitment fee incurred on the $350 million Revolving Credit Facility.

The above interim condensed consolidated statement of cashflows should be read in conjunction with the accompanying notes.

Notes to the interim condensed consolidated financial statement

   1.      Corporate Structure and business 

Seplat Energy Plc (hereinafter referred to as 'Seplat' or the 'Company'), the parent of the Group, was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014, under the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The Company commenced operations on 1 August 2010. The Company is principally engaged in oil and gas exploration and production and gas processing activities. The Company's registered address is: 16a Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.

The Company acquired, pursuant to an agreement for assignment dated 31 January 2010 between the Company, SPDC, TOTAL and AGIP, a 45% participating interest in OML 4, OML 38 and OML 41 located in Nigeria.

In 2013, Newton Energy Limited ('Newton Energy'), an entity previously beneficially owned by the same shareholders as Seplat, became a subsidiary of the Company. On 1 June 2013, Newton Energy acquired from Pillar Oil Limited ('Pillar Oil') a 40% Participant interest in producing assets: the Umuseti/Igbuku marginal field area located within OPL 283 (the 'Umuseti/Igbuku Fields').

On 21 August 2014, the Group incorporated a new subsidiary, Seplat Petroleum Development UK Limited. The subsidiary provides technical, liaison and administrative support services relating to oil and gas exploration activities.

On 12 December 2014, Seplat Gas Company Limited ('Seplat Gas') was incorporated as a private limited liability company to engage in oil and gas exploration and production and gas processing. On 12 December 2014, the Group also incorporated a new subsidiary, Seplat East Swamp Company Limited with the principal activity of oil and gas exploration and production.

In 2015, the Group purchased a 40% participating interest in OML 53, onshore north eastern Niger Delta (Seplat East Onshore Limited), from Chevron Nigeria Ltd for $259.4 million.

On 16 January 2018, the Group incorporated a subsidiary, Seplat West Limited ('Seplat West'). Seplat West was incorporated to manage the producing assets of Seplat Energy Plc.

In 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company Limited. The principal activity of the Company is the processing of gas from OML 53 using the ANOH gas processing plant.

In order to fund the development of the ANOH gas processing plant, on 13 August 2018, the Group entered into a shareholder's agreement with Nigerian Gas Processing and Transportation Company (NGPTC). Funding is to be provided by both parties in equal proportion representing their ownership share and will be used to subscribe for the ordinary shares in ANOH. The agreement was effective on 18 April 2019, which was the date the Corporate Affairs Commission (CAC) approval was received. Given the change in ownership structure as at 31 December 2019, the Group no longer exercises control and has deconsolidated ANOH in the consolidated financial statements. However, its retained interest qualifies as a joint arrangement and has been recognised accordingly as investment in joint venture.

On 31 December 2019, Seplat Energy Plc acquired 100% of Eland Oil and Gas Plc's issued and yet to be issued ordinary shares. Eland is an independent oil and gas company that holds interest in subsidiaries and joint ventures that are into production, development and exploration in West Africa, particularly the Niger Delta region of Nigeria.

On acquisition of Eland Oil and Gas Plc (Eland), the Group acquired indirect interest in existing subsidiaries of Eland.

Eland Oil & Gas (Nigeria) Limited, is a subsidiary acquired through the purchase of Eland and is into exploration and production of oil and gas.

Westport Oil Limited, which was also acquired through purchase of Eland is a financing company.

Elcrest Exploration and Production Company Limited (Elcrest) who became an indirect subsidiary of the Group purchased a 45 percent interest in OML 40 in 2012. Elcrest is a Joint Venture between Eland Oil and Gas (Nigeria) Limited (45%) and Starcrest Nigeria Energy Limited (55%). It has been consolidated because Eland is deemed to have power over the relevant activities of Elcrest to affect variable returns from Elcrest at the date of acquisition by the Group. The principal activity of Elcrest is exploration and production of oil and gas.

Wester Ord Oil & Gas (Nigeria) Limited, who also became an indirect subsidiary of the Group acquired a 40% stake in a licence, Ubima, in 2014 via a joint operations agreement. The principal activity of Wester Ord Oil & Gas (Nigeria) Limited is exploration and production of oil and gas.

Other entities acquired through the purchase of Eland are Tarland Oil Holdings Limited (a holding company), Brineland Petroleum Limited (dormant company) and Destination Natural Resources Limited (dormant company).

On 1 January 2020, Seplat Energy Plc transferred its 45% participating interest in OML 4, OML 38 and OML 41 ("transferred assets") to Seplat West Limited. As a result, Seplat ceased to be a party to the Joint Operating Agreement in respect of the transferred assets and became a holding company. Seplat West Limited became a party to the Joint Operating Agreement in respect of the transferred assets and assumed its rights and obligations.

On 20 May 2021, following a special resolution by the Board in view of the Company's strategy of transitioning into an energy Company promoting renewable energy, sustainability, and new energy, the name of the Company was changed from Seplat Petroleum Development Company Plc to Seplat Energy Plc under Companies and Allied Matters Act 2020.

On 7 February 2022, the Group incorporated a subsidiary, Seplat Energy Offshore Limited. The Company was incorporated for oil and gas exploration and production.

The Company together with its subsidiaries as shown below are collectively referred to as the Group.

 
                                                       Country of 
                                                incorporation and  Percentage 
Subsidiary            Date of incorporation     place of business     holding  Principal activities  Nature of holding 
====================  =====================  ====================  ==========  ====================  ================= 
Newton Energy                   1 June 2013               Nigeria                         Oil & gas             Direct 
Limited                                                                                 exploration 
                                                                        99.9%        and production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat Energy UK             21 August 2014        United Kingdom                        Corporate,             Direct 
Limited                                                                          technical, liaison 
                                                                                 and administrative 
                                                                                   support services 
                                                                                  relating to oil & 
                                                                                    gas exploration 
                                                                         100%        and production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat Gas Company         12 December 2014               Nigeria                         Oil & gas             Direct 
Limited                                                                             exploration and 
                                                                                 production and gas 
                                                                        99.9%            processing 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat East Onshore        12 December 2014               Nigeria                         Oil & gas             Direct 
Limited                                                                             exploration and 
                                                                        99.9%            production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat East Swamp          12 December 2014               Nigeria                         Oil & gas             Direct 
Company Limited                                                                     exploration and 
                                                                        99.9%            production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat West Limited         16 January 2018               Nigeria                         Oil & gas             Direct 
                                                                                    exploration and 
                                                                        99.9%            production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Eland Oil & Gas              28 August 2009        United Kingdom                   Holding company             Direct 
Limited                                                                  100% 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Eland Oil & Gas              11 August 2010               Nigeria                       Oil and Gas           Indirect 
(Nigeria) Limited                                                                   Exploration and 
                                                                         100%            Production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Elcrest Exploration          6 January 2011               Nigeria                       Oil and Gas           Indirect 
and Production                                                                      Exploration and 
Nigeria Limited                                                           45%            Production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Westport Oil Limited          8 August 2011                Jersey        100%             Financing           Indirect 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Tarland Oil Holdings           16 July 2014                Jersey                   Holding Company           Indirect 
Limited                                                                  100% 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Brineland Petroleum        18 February 2013               Nigeria                           Dormant           Indirect 
Limited                                                                   49% 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Elandale Nigeria            17 January 2019               Nigeria                   Receive, store,           Indirect 
Limited                                                                          handle, transport, 
                                                                                deliver $ discharge 
                                                                                      petroleum and 
                                                                          40%    petroleum products 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Wester Ord Oil & Gas           18 July 2014               Nigeria                       Oil and Gas           Indirect 
(Nigeria) Limited                                                                       Exploration 
                                                                         100%        and Production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Wester Ord Oil and             16 July 2014                Jersey                   Holding Company           Indirect 
Gas Limited                                                              100% 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Destination Natural                       -                 Dubai                           Dormant           Indirect 
Resources Limited                                                         70% 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
Seplat Energy               7 February 2022               Nigeria                       Oil and Gas             Direct 
Offshore Limited                                                                    exploration and 
                                                                         100%            production 
--------------------  ---------------------  --------------------  ----------  --------------------  ----------------- 
MSP Energy Limited            27 March 2013               Nigeria                       Oil and Gas             Direct 
                                                                                    exploration and 
                                                                         100%            production 
====================  =====================  ====================  ==========  ====================  ================= 
 
   2.        Significant changes in the current reporting period 

The following significant changes occurred during the reporting period ended 31 March 2022:

-- During the period, Seplat Energy Offshore Limited was incorporated on 7 February 2022. The percentage ownership of the Company is 100%.

-- The Group made a deposit of $128.3 million to Exxon Mobil Corporation, Delaware as part of the consideration to acquire the entire share capital of Mobil Producing Nigeria Unlimited. The completion of the transaction is subject to ministerial consent and other required regulatory approvals.

   3.        Summary of significant accounting policies 
   3.1     Introduction to summary of significant accounting policies 

This note provides a list of the significant accounting policies adopted in the preparation of these interim condensed consolidated financial statements. These accounting policies have been applied to all the periods presented, unless otherwise stated. The interim financial statements are for the Group consisting of Seplat Energy Plc and its subsidiaries.

   3.2     Basis of preparation 

The interim condensed consolidated financial statements of the Group for the first quarter ended 31 March 2022 have been prepared in accordance with the accounting standard IAS 34 Interim financial reporting. This interim condensed consolidated financial statement does not include all the notes normally included in an annual financial statement of the Group. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021 and any public announcements made by the Group during the interim reporting period.

The financial statements have been prepared under the going concern assumption and historical cost convention, except for financial instruments measured at fair value on initial recognition, defined benefit plans - plan assets measured at fair value. The financial statements are presented in Nigerian Naira and United States Dollars, and all values are rounded to the nearest million ( 'million) and thousand ($'000) respectively, except when otherwise indicated.

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 these financial statements.

The accounting policies adopted are consistent with those of the previous financial year end corresponding interim reporting period, except for the adoption of new and amended standard which is set out below.

   3.3     New and amended standards adopted by the Group 

The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

   a)   Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37 

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

In accordance with the transitional provisions, the Group applies the amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments (the date of initial application) and has not restated its comparative information.

   b)   Reference to the Conceptual Framework - Amendments to IFRS 3 

The amendments replace a reference to a previous version of the IASB's Conceptual Framework with a reference to the current version issued in March 2018 without significantly changing its requirements.

The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to avoid the issue of potential 'day 2' gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no contingent assets, liabilities and contingent liabilities within the scope of these amendments arisen during the period.

   c)   Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16 

The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.

d) IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter

The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported in the parent's consolidated financial statements, based on the parent's date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as it is not a first-time adopter.

e) IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or

modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf. There is no similar amendment proposed for IAS 39 Financial Instruments: Recognition and Measurement.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no modifications of the Group's financial instruments during the period.

   3.4     Standards issued but not yet effective 

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's interim financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. Details of these new standards and interpretations are set out below:

 
 --   IFRS 17 Insurance Contracts - Effective for annual periods beginning 
       on or after 1 January 2023 
 --   Amendments to IAS 1: Classification of Liabilities as Current 
       or Non-current - Effective for annual periods beginning on or 
       after 1 January 2023 
 --   Amendments to IAS 8 Accounting Policies and Accounting Estimates: 
       Definition of Accounting Estimates - Effective date for annual 
       periods beginning on or after 1 January 2023 
 --   Disclosure of Accounting Policies - Amendments to IAS 1 and 
       IFRS Practice Statement 2- Effective date for annual periods 
       beginning on or after 1 January 2023 
 --   Amendments regarding deferred tax on leases and decommissioning 
       obligations - Effective date for annual periods beginning on 
       or after 1 January 2023 
 
   3.5     Basis of consolidation 

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 March 2022.

This basis of consolidation is the same adopted for the last audited financial statements as at 31 December 2021.

   3.6     Functional and presentation currency 

Items included in the financial statements of each of the Group's subsidiaries are measured using the currency of the primary economic environment in which the subsidiaries operate ('the functional currency'), which is the US dollar except the UK subsidiary which is the Great Britain Pound. The interim condensed consolidated financial statements are presented in Nigerian Naira and the US Dollars.

The Group has chosen to show both presentation currencies and this is allowable by the regulator.

   i.    Transactions and balances 

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end are generally recognised in profit or loss. They are deferred in equity if attributable to net investment in foreign operations.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss or other comprehensive income depending on where fair value gain or loss is reported.

   ii.   Group companies 

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 
 --   assets and liabilities for each statement of financial position 
       presented are translated at the closing rate at the date of 
       the reporting date. 
 --   income and expenses for statement of profit or loss and other 
       comprehensive income are translated at average exchange rates 
       (unless this is not - a reasonable approximation of the cumulative 
       effect of the rates prevailing on the transaction dates, in 
       which case income and expenses are translated at the dates of 
       the transactions), and all resulting exchange differences are 
       recognised in other comprehensive income. 
 

On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

   4.    Significant accounting judgements estimates and assumptions 
   4.1     Judgements 

Management judgements at the end of the first quarter are consistent with those disclosed in the 2021 Annual financial statements. The following are some of the judgements which have the most significant effect on the amounts recognised in this interim consolidated financial statement.

   i.        OMLs 4, 38 and 41 

OMLs 4, 38, 41 are grouped together as a cash generating unit for the purpose of impairment testing. These three OMLs are grouped together because they each cannot independently generate cash flows. They currently operate as a single block sharing resources for generating cash flows. Crude oil and gas sold to third parties from these OMLs are invoiced when the Group has an unconditional right to receive payment.

   ii.       Deferred tax asset 

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

   iii.      Lease liabilities 

In 2018, the Group entered into a lease agreement for its new head office building. The lease contract contains an option to purchase and right of first refusal upon an option of sales during the initial non-cancellable lease term of five (5) years.

In determining the lease liability/right-of-use assets, management considered all fact and circumstances that create an economic incentive to exercise the purchase option. Potential future cash outflow of $45 million, which represents the purchase price, has not been included in the lease liability because the Group is not reasonably certain that the purchase option will be exercised. This assessment will be reviewed if a significant event or a significant change in circumstances occurs which affects the initial assessment and that is within the control of the management.

   iv.      Foreign currency translation reserve 

The Group has used the CBN rate to translate its Dollar currency to its Naira presentation currency. Management has determined that this rate is available for immediate delivery. If the rate used was 10% higher or lower, revenue in Naira would have increased/decreased by 10 billion, 2021: 5.8 billion.

   v.       Consolidation of Elcrest 

On acquisition of 100% shares of Eland Oil and Gas Plc, the Group acquired indirect holdings in Elcrest Exploration and Production (Nigeria) Limited. Although the Group has an indirect holding of 45% in Elcrest, Elcrest has been consolidated as a subsidiary for the following basis:

 
 --   Eland Oil and Gas Plc has power over Elcrest through due representation 
       of Eland in the board of Elcrest, and clauses contained in the 
       Share Charge agreement and loan agreement which gives Eland 
       the right to control 100% of the voting rights of shareholders. 
 --   Eland Oil and Gas Plc is exposed to variable returns from the 
       activities of Elcrest through dividends and interests. 
 --   Eland Oil and Gas Plc has the power to affect the amount of 
       returns from Elcrest through its right to direct the activities 
       of Elcrest and its exposure to returns. 
 
   vi.      Revenue recognition 

Performance obligations

The judgments applied in determining what constitutes a performance obligation will impact when control is likely to pass and therefore when revenue is recognised i.e. over time or at a point in time. The Group has determined that only one performance obligation exists in oil contracts which is the delivery of crude oil to specified ports. Revenue is therefore recognised at a point in time.

For gas contracts, the performance obligation is satisfied through the delivery of a series of distinct goods. Revenue is recognised over time in this situation as gas customers simultaneously receives and consumes the benefits provided by the Group's performance. The Group has elected to apply the 'right to invoice' practical expedient in determining revenue from its gas contracts. The right to invoice is a measure of progress that allows the Group to recognise revenue based on amounts invoiced to the customer. Judgement has been applied in evaluating that the Group's right to consideration corresponds directly with the value transferred to the customer and is therefore eligible to apply this practical expedient.

Significant financing component

The Group has entered into an advance payment contract with Mercuria for future crude oil to be delivered. The Group has considered whether the contract contains a financing component and whether that financing component is significant to the contract, including both of the following;

 
 a)   The difference, if any, between the amount of promised consideration 
       and cash selling price and; 
 b)   The combined effect of both the following: 
 --   The expected length of time between when the Group transfers 
       the crude to Mercuria and when payment for the crude is received 
       and; 
 --   The prevailing interest rate in the relevant market. 
 

The advance period is greater than 12 months. In addition, the interest expense accrued on the advance is based on a comparable market rate. Interest expense has therefore been included as part of finance cost.

Transactions with Joint Operating arrangement (JOA) partners

The treatment of underlift and overlift transactions is judgmental and requires a consideration of all the facts and circumstances including the purpose of the arrangement and transaction. The transaction between the Group and its JOA partners involves sharing in the production of crude oil, and for which the settlement of the transaction is non-monetary. The JOA partners have been assessed to be partners not customers. Therefore, shortfalls or excesses below or above the Group's share of production are recognised in other income/ (expenses) - net.

Exploration and evaluation assets

The accounting for exploration and evaluation ('E&E') assets require management to make certain judgements and assumptions, including whether exploratory wells have discovered economically recoverable quantities of reserves. Designations are sometimes revised as new information becomes available. If an exploratory well encounters hydrocarbon, but further appraisal activity is required in order to conclude whether the hydrocarbons are economically recoverable, the well costs remain capitalised as long as sufficient progress is being made in assessing the economic and operating viability of the well. Criteria used in making this determination include evaluation of the reservoir characteristics and hydrocarbon properties, expected additional development activities, commercial evaluation and regulatory matters. The concept of 'sufficient progress' is an area of judgement, and it is possible to have exploratory costs remain capitalised for several years while additional drilling is performed or the Group seeks government, regulatory or partner approval of development plans.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of directors has appointed a steering committee which assesses the financial performance and position of the Group and makes strategic decisions. The steering committee, which has been identified as being the chief operating decision maker, consists of the chief financial officer, the Vice President (Finance), the Director (New Energy) and the financial reporting manager. See further details in note 6.

   4.2.      Estimates and assumptions 

The key assumptions concerning the future and the other key source of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are disclosed in the most recent 2021 annual financial statements.

The following are some of the estimates and assumptions made.

i. Defined benefit plans

The cost of the defined benefit retirement plan and the present value of the retirement obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and changes in inflation rates.

Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers market yield on federal government bonds in currencies consistent with the currencies of the post-employment benefit obligation and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation.

The rates of mortality assumed for employees are the rates published in 67/70 ultimate tables, published jointly by the Institute and Faculty of Actuaries in the UK.

ii. Oil and gas reserves

Proved oil and gas reserves are used in the units of production calculation for depletion as well as the determination of the timing of well closure for estimating decommissioning liabilities and impairment analysis. There are numerous uncertainties inherent in estimating oil and gas reserves. Assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may ultimately result in the reserves being restated.

   iii.   Share-based payment reserve 

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant.

This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share award or appreciation right, volatility and dividend yield and making assumptions about them. The Group measures the fair value of equity-settled transactions with employees at the grant date.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Such estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

iv. Provision for decommissioning obligations

Provisions for environmental clean-up and remediation costs associated with the Group's drilling operations are based on current constructions, technology, price levels and expected plans for remediation. Actual costs and cash outflows can differ from estimates because of changes in public expectations, prices, discovery and analysis of site conditions and changes in clean-up technology.

v. Property, plant and equipment

The Group assesses its property, plant and equipment, including exploration and evaluation assets, for possible impairment if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least at every reporting date.

If there are low oil prices or natural gas prices during an extended period, the Group may need to recognise significant impairment charges. The assessment for impairment entails comparing the carrying value of the cash-generating unit with its recoverable amount, that is, higher of fair value less cost to dispose and value in use. Value in use is usually determined on the basis of discounted estimated future net cash flows. Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, discount rates, production profiles and the outlook for regional market supply-and-demand conditions for crude oil and natural gas.

The Group uses the higher of the fair value less cost to dispose and the value in use in determining the recoverable amount of the cash-generating unit. In determining the value, the Group uses a forecast of the annual net cash flows over the life of proved plus probable reserves, production rates, oil and gas prices, future costs (excluding (a) future restructurings to which the entity is not yet committed; or (b) improving or enhancing the asset's performance) and other relevant assumptions based on the year end Competent Persons Report (CPR). The pre-tax future cash flows are adjusted for risks specific to the forecast and discounted using a pre-tax discount rate which reflects both current market assessment of the time value of money and risks specific to the asset.

Management considers whether a reasonable possible change in one of the main assumptions will cause an impairment and believes otherwise.

vi. Useful life of other property, plant and equipment

The Group recognises depreciation on other property, plant and equipment on a straight-line basis in order to write-off the cost of the asset over its expected useful life. The economic life of an asset is determined based on existing wear and tear, economic and technical ageing, legal and other limits on the use of the asset, and obsolescence. If some of these factors were to deteriorate materially, impairing the ability of the asset to generate future cash flow, the Group may accelerate depreciation charges to reflect the remaining useful life of the asset or record an impairment loss.

vii. Income taxes

The Group is subject to income taxes by the Nigerian tax authority, which does not require significant judgement in terms of provision for income taxes, but a certain level of judgement is required for recognition of deferred tax assets. Management is required to assess the ability of the Group to generate future taxable economic earnings that will be used to recover all deferred tax assets. Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. The estimates are based on the future cash flow from operations taking into consideration the oil and gas prices, volumes produced, operational and capital expenditure.

   viii.      Impairment of financial assets 

The loss allowances for financial assets are based on assumptions about risk of default, expected loss rates and maximum contractual period. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

ix. Intangible asset

The contract based intangible assets were acquired as part of a business combination. They are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line bases over their estimated useful lives which is also the economic life of the asset.

The fair value of contract based intangible assets is estimated using the multi period excess earnings method. This requires a forecast of revenue and all cost projections throughout the useful life of the intangible assets. A contributory asset charge that reflects the return on assets is also determined and applied to the revenue but subtracted from the operating cash flows to derive the pre-tax cash flow. The post-tax cashflows are then obtained by deducting out the tax using the effective tax rate.

Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group's investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service.

   5.    Financial risk management 
   5.1     Financial risk factors 

The Group's activities expose it to a variety of financial risks such as market risk (including foreign exchange risk, interest rate risk and commodity price risk), credit risk and liquidity risk. The Group's risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

Risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

 
Risk                           Exposure arising from         Measurement                  Management 
=============================  ============================  ===========================  ============================ 
Market risk - foreign          Future commercial             Cash flow                    Match and settle foreign 
exchange                       transactions                   forecasting                 denominated cash inflows 
                               Recognised financial assets    Sensitivity analysis        with foreign denominated 
                               and liabilities not                                        cash outflows. 
                               denominated in US dollars. 
-----------------------------  ----------------------------  ---------------------------  ---------------------------- 
Market risk - interest rate    Interest bearing loans and    Sensitivity analysis         Review refinancing 
                               borrowings at variable rate                                opportunities 
-----------------------------  ----------------------------  ---------------------------  ---------------------------- 
Market risk - commodity        Future sales transactions     Sensitivity analysis         Oil price hedges 
prices 
-----------------------------  ----------------------------  ---------------------------  ---------------------------- 
Credit risk                    Cash and bank balances,       Aging analysis               Diversification of bank 
                               trade receivables and          Credit ratings              deposits. 
                               derivative financial 
                               instruments. 
-----------------------------  ----------------------------  ---------------------------  ---------------------------- 
Liquidity risk                 Borrowings and other          Rolling cash flow forecasts  Availability of committed 
                               liabilities                                                credit lines and borrowing 
                                                                                          facilities 
=============================  ============================  ===========================  ============================ 
 

5.1.1 Credit risk

Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Group. Credit risk arises from cash and bank balances as well as credit exposures to customers (i.e. Mercuria, Shell western, Pillar, Azura, Geregu Power, Sapele Power and Nigerian Gas Marketing Company (NGMC) receivables), and other parties (i.e. NAPIMS receivables, NPDC receivables and other receivables).

   a)   Risk management 

The Group is exposed to credit risk from its sale of crude oil to Mercuria and Shell western. There is a 30-day payment term after Bill of Lading date in the off-take agreement with Mercuria (OMLs 4, 38 &41) which expired in February 2022. The Group also has an off-take agreement with Shell Western Supply and Trading Limited which expires in September 2023. The Group is exposed to further credit risk from outstanding cash calls from Nigerian Petroleum Development Company (NPDC) and Nigerian National Petroleum Corporation (NNPC).

In addition, the Group is exposed to credit risk in relation to its sale of gas to its customers.

The credit risk on cash and cash balances is managed through the diversification of banks in which the balances are held. The risk is limited because the majority of deposits are with banks that have an acceptable credit rating assigned by an international credit agency. The Group's maximum exposure to credit risk due to default of the counterparty is equal to the carrying value of its financial assets.

   b)   Estimation uncertainty in measuring impairment loss 

The table below shows information on the sensitivity of the carrying amounts of the Group's financial assets to the methods, assumptions and estimates used in calculating impairment losses on those financial assets at the end of the reporting period. These methods, assumptions and estimates have a significant risk of causing material adjustments to the carrying amounts of the Group's financial assets.

   i.           Significant unobservable inputs 

The table below demonstrates the sensitivity of the Group's profit before tax to movements in the loss given default (LGD) for financial assets, with all other variables held constant:

 
                                                           Effect on other                               Effect on other 
                                    Effect on profit  components of equity       Effect on profit   components of equity 
                                          before tax            before tax             before tax             before tax 
                                       31 March 2022         31 March 2022          31 March 2022          31 March 2022 
=======================  ====  =====================  ====================  =====================  ===================== 
                                             million               million                  $'000                  $'000 
=======================  ====  =====================  ====================  =====================  ===================== 
Increase/decrease in 
loss given default 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
+10%                                           (179)                     -                  (450)                      - 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
-10%                                             179                     -                    450                      - 
=====================  ===  ========================  ====================  =====================  ===================== 
 
 
 
                                                           Effect on other                               Effect on other 
                                    Effect on profit  components of equity       Effect on profit   components of equity 
                                          before tax            before tax             before tax             before tax 
                                         31 Dec 2021           31 Dec 2021            31 Dec 2021            31 Dec 2021 
=======================  ====  =====================  ====================  =====================  ===================== 
                                             million               million                  $'000                  $'000 
=======================  ====  =====================  ====================  =====================  ===================== 
Increase/decrease in 
loss given default 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
+10%                                           (717)                     -                (1,800)                      - 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
-10%                                             717                     -                  1,800                      - 
=====================  ===  ========================  ====================  =====================  ===================== 
 
 

The table below demonstrates the sensitivity of the Group's profit before tax to movements in probabilities of default, with all other variables held constant:

 
                                                           Effect on other                               Effect on other 
                                    Effect on profit  components of equity       Effect on profit   components of equity 
                                          before tax            before tax             before tax             before tax 
                                       31 March 2022         31 March 2022          31 March 2022          31 March 2022 
=======================  ====  =====================  ====================  =====================  ===================== 
                                             million               million                  $'000                  $'000 
=======================  ====  =====================  ====================  =====================  ===================== 
Increase/decrease in 
probability of 
default 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
+10%                                           (170)                     -                  (426)                      - 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
-10%                                             170                     -                    426                      - 
=====================  ===  ========================  ====================  =====================  ===================== 
 
 
 
                                                           Effect on other                               Effect on other 
                                    Effect on profit  components of equity       Effect on profit   components of equity 
                                          before tax            before tax             before tax             before tax 
                                         31 Dec 2021           31 Dec 2021            31 Dec 2021            31 Dec 2021 
=======================  ====  =====================  ====================  =====================  ===================== 
                                             million               million                  $'000                  $'000 
=======================  ====  =====================  ====================  =====================  ===================== 
Increase/decrease in 
probability of 
default 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
+10%                                           (679)                     -                (1,704)                      - 
---------------------  ---  ------------------------  --------------------  ---------------------  --------------------- 
-10%                                             679                     -                  1,704                      - 
=====================  ===  ========================  ====================  =====================  ===================== 
 
 

The table below demonstrates the sensitivity of the Group's profit before tax to movements in the forward-looking macroeconomic indicators, with all other variables held constant:

 
                                                         Effect on other                               Effect on other 
                                 Effect on profit   components of equity       Effect on profit   components of equity 
                                       before tax             before tax             before tax             before tax 
                                    31 March 2022          31 March 2022          31 March 2022          31 March 2022 
  ========================  =====================  =====================  =====================  ===================== 
                                          million                million                  $'000                  $'000 
  ========================  =====================  =====================  =====================  ===================== 
Increase/decrease in 
forward looking 
macroeconomic 
indicators 
----------------------    -----------------------  ---------------------  ---------------------  --------------------- 
+10%                                          (5)                      -                   (12)                      - 
----------------------    -----------------------  ---------------------  ---------------------  --------------------- 
-10%                                            5                      -                     12                      - 
======================    =======================  =====================  =====================  ===================== 
 
 
 
                                                         Effect on other                               Effect on other 
                                 Effect on profit   components of equity       Effect on profit   components of equity 
                                       before tax             before tax             before tax             before tax 
                                      31 Dec 2021            31 Dec 2021            31 Dec 2021            31 Dec 2021 
  ========================  =====================  =====================  =====================  ===================== 
                                          million                million                  $'000                  $'000 
  ========================  =====================  =====================  =====================  ===================== 
Increase/decrease in 
forward looking 
macroeconomic 
indicators 
----------------------    -----------------------  ---------------------  ---------------------  --------------------- 
+10%                                         (19)                      -                   (48)                      - 
----------------------    -----------------------  ---------------------  ---------------------  --------------------- 
-10%                                           19                      -                     48                      - 
======================    =======================  =====================  =====================  ===================== 
 
 

5.1.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by ensuring that sufficient funds are available to meet its commitments as they fall due.

The Group uses both long-term and short-term cash flow projections to monitor funding requirements for activities and to ensure there are sufficient cash resources to meet operational needs. Cash flow projections take into consideration the Group's debt financing plans and covenant compliance. Surplus cash held is transferred to the treasury department which invests in interest bearing current accounts and time deposits.

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed maturity periods. The table has been drawn based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Group can be required to pay.

 
                                 Effective interest  Less than    1 - 2    2 - 3     3 - 6     Total 
                                               rate     1 year     year    years     years 
-------------------------------  ------------------ 
                                                  %    million  million  million   million   million 
===============================  ==================  =========  =======  =======  ========  ======== 
31 March 2022 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Non - derivatives 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Fixed interest rate borrowings 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Senior notes                                  7.75%     10,776   21,260   21,318   302,481   355,835 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Variable interest rate 
 borrowings 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
The Mauritius Commercial                8.00% + USD 
 Bank Ltd                                     LIBOR      1,322    4,452    6,539     7,738    20,051 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
The Stanbic IBTC Bank                   8.00% + USD 
 Plc                                          LIBOR      1,350    4,545    6,675     7,899    20,469 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
The Standard Bank of South              8.00% + USD 
 Africa Limited                               LIBOR        771    2,597    3,814     4,514    11,696 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
First City Monument Bank                8.00% + USD 
 Limited                                      LIBOR        344    1,159    1,703     2,015     5,222 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Shell Western Supply and                10.5% + USD 
 Trading Limited                              LIBOR        495      940      892     4,479     6,806 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Total variable interest 
 borrowings                                              4,282   13,695   19,623    26,644    64,243 
===============================  ==================  =========  =======  =======  ========  ======== 
 
Other non - derivatives 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Trade and other payables**                             157,015        -        -         -   157,015 
-------------------------------  ------------------  ---------  -------  -------  --------  -------- 
Lease liability                                          1,970       67       28         -     2,065 
===============================  ==================  =========  =======  =======  ========  ======== 
                                                       158,985       67       28         -   159,081 
===============================  ==================  =========  =======  =======  ========  ======== 
Total                                                  174,043   35,021   40,969   329,125   579,159 
===============================  ==================  =========  =======  =======  ========  ======== 
 
 
                                 Effective interest  Less than    1 - 2    2 - 3    3 - 5    Total 
                                               rate     1 year     year    years    years 
------------------------------- 
                                                  %    million  million  million  million  million 
===============================  ==================  =========  =======  =======  =======  ======= 
31 December 2021 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Non - derivatives 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Fixed interest rate borrowings 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Senior notes                                  7.75%     20,751   20,751   20,751  298,881  361,134 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Variable interest rate 
 borrowings 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
The Mauritius Commercial                8.00% + USD 
 Bank Ltd                                     LIBOR      1,298    4,390    6,456    7,650   19,794 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
The Stanbic IBTC Bank                   8.00% + USD 
 Plc                                          LIBOR      1,324    4,481    6,590    7,810   20,205 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
The Standard Bank of South              8.00% + USD 
 Africa Limited                               LIBOR        757    2,561    3,766    4,463   11,547 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
First City Monument Bank                8.00% + USD 
 Limited                                      LIBOR        338    1,143    1,681    1,992    5,154 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Shell Western Supply and                10.5% + USD 
 Trading Limited                              LIBOR        486      924      876    4,422    6,708 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Total variable interest 
 borrowings                                              4,203   13,499   19,369   26,337   63,408 
===============================  ==================  =========  =======  =======  =======  ======= 
 
Other non - derivatives 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Trade and other payables**                             151,204        -        -        -  151,204 
-------------------------------  ------------------  ---------  -------  -------  -------  ------- 
Lease liability                                          1,950       66       28        -    2,044 
===============================  ==================  =========  =======  =======  =======  ======= 
                                                       153,154       66       28        -  153,248 
===============================  ==================  =========  =======  =======  =======  ======= 
Total                                                  178,108   34,316   40,148  325,218  577,790 
===============================  ==================  =========  =======  =======  =======  ======= 
 
 
                                        Effective  Less than    1 - 2    2 - 3     3 - 6 
                                    interest rate     1 year     year    years     years       Total 
                                                %      $'000    $'000    $'000     $'000       $'000 
=============================  ==================  =========  =======  =======  ========  ========== 
31 March 2022 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
Non - derivatives 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
Fixed interest rate 
borrowings 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
Senior notes                                7.75%     25,887   51,075   51,215   726,682     854,858 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
Variable interest rate 
borrowings 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
The Mauritius Commercial Bank 
 Ltd                            8.00% + USD LIBOR      3,176   10,697   15,709    18,589      48,170 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
The Stanbic IBTC Bank Plc       8.00% + USD LIBOR      3,242   10,919   16,036    18,976      49,174 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
The Standard Bank of South 
 Africa Limited                 8.00% + USD LIBOR      1,853    6,240    9,164    10,843      28,099 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
First City Monument Bank 
 Limited                        8.00% + USD LIBOR        827    2,786    4,091     4,841      12,544 
-----------------------------  ------------------  ---------  -------  -------  --------  ---------- 
Shell Western Supply and 
 Trading Limited                10.5% + USD LIBOR      1,189    2,259    2,143    10,760      16,350 
-----------------------------  ------------------  ---------  -------  -------  --------  ========== 
Total variable interest 
 borrowings                                           10,286   32,900   47,142    64,009     154,338 
=============================  ==================  =========  =======  =======  ========  ========== 
 
Other non - derivatives 
-----------------------------  ------------------  ---------  -------  -------  -------------------- 
Trade and other payables**                           377,217        -        -         -     377,217 
-------------------------------------------------  ---------  -------  -------  --------  ---------- 
Lease liability                                        4,733      160       67         -       4,960 
=================================================  =========  =======  =======  ========  ========== 
                                                     381,950      160       67         -     382,177 
=================================================  =========  =======  =======  ========  ========== 
Total                                                418,123   84,135   98,424   790,691   1,391,373 
=================================================  =========  =======  =======  ========  ========== 
 
 
 
                                    Effective  Less than    1 - 2             2 - 3     3 - 5 
                                interest rate     1 year     year             years     years      Total 
                                            %      $'000    $'000             $'000     $'000      $'000 
=========================  ==================  =========  =======  ================  ========  ========= 
31 December 2021 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
Non - derivatives 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
Fixed interest rate 
borrowings 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
Senior notes                            7.75%     50,375   50,375            50,375   725,563    876,688 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
Variable interest rate 
borrowings 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
The Mauritius Commercial 
 Bank Ltd                   8.00% + USD LIBOR      3,150   10,656            15,672    18,572     48,050 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
The Stanbic IBTC Bank Plc   8.00% + USD LIBOR      3,215   10,878            15,998    18,959     49,050 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
The Standard Bank of 
 South Africa Limited       8.00% + USD LIBOR      1,837    6,216             9,142    10,834     28,029 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
First City Monument Bank 
 Limited                    8.00% + USD LIBOR        820    2,775             4,081     4,836     12,512 
-------------------------  ------------------  ---------  -------  ----------------  --------  --------- 
Shell Western Supply and 
 Trading Limited            10.5% + USD LIBOR      1,179    2,243             2,126    10,734     16,282 
=========================  ==================  =========  =======  ================  ========  ========= 
Total variable interest 
 borrowings                                       10,201   32,768            47,019    63,935    153,923 
=========================  ==================  =========  =======  ================  ========  ========= 
 
Other non - derivatives 
-------------------------  ------------------  ---------  ----------------  -------  ------------------- 
Trade and other payables**                       367,058                 -        -         -    367,058 
---------------------------------------------  ---------  ----------------  -------  --------  --------- 
Lease liability                                    4,733               160       67         -      4,960 
=============================================  =========  ================  =======  ========  ========= 
                                                 371,791               160       67         -    372,018 
=============================================  =========  ================  =======  ========  ========= 
Total                                            432,367            83,303   97,461   789,498  1,402,629 
=============================================  =========  ================  =======  ========  ========= 
 
 

** Trade and other payables (exclude non-financial liabilities such as provisions, taxes, pension and other non-contractual payables).

5.1.3 Fair value measurements

Set out below is a comparison by category of carrying amounts and fair value of all financial instruments:

 
                                                   Carrying amount                  Fair value 
-------------------------------------------  ============================  ============================ 
                                             As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
                                                       2022          2021            2022          2021 
------------------------------------------- 
                                                    million       million         million       million 
===========================================  ==============  ============  ==============  ============ 
Financial assets at amortised cost 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Trade and other receivables*                         71,449        78,869          71,449        78,869 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Contract assets                                       3,298         1,679           3,298         1,679 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Cash and bank balances                              129,973       133,667         129,973       133,667 
===========================================  ==============  ============  ==============  ============ 
                                                    204,720       214,215         204,720       214,215 
===========================================  ==============  ============  ==============  ============ 
Financial liabilities at amortised cost 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Interest bearing loans and borrowings               314,200       315,791         318,143       307,447 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Trade and other payables**                          142,464       136,619         142,464       136,619 
===========================================  ==============  ============  ==============  ============ 
                                                    456,664       452,410         460,607       444,066 
===========================================  ==============  ============  ==============  ============ 
Financial liabilities at fair value 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Derivative financial instruments (Note 20)            1,848         1,543           1,848         1,543 
===========================================  ==============  ============  ==============  ============ 
                                                      1,848         1,543           1,848         1,543 
===========================================  ==============  ============  ==============  ============ 
 
 
                                                   Carrying amount                  Fair value 
                                             ============================  ============================ 
                                             As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
                                                       2022          2021            2022          2021 
                                                      $'000         $'000           $'000         $'000 
===========================================  ==============  ============  ==============  ============ 
Financial assets at amortised cost 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Trade and other receivables*                        171,651       191,463         171,651       191,463 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Contract assets                                       7,922         4,076           7,922         4,076 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Cash and bank balances                              312,242       324,490         312,242       324,490 
===========================================  ==============  ============  ==============  ============ 
                                                    491,815       520,029         491,815       520,029 
===========================================  ==============  ============  ==============  ============ 
Financial liabilities at amortised cost 
Interest bearing loans and borrowings               754,835       766,614         764,308       746,358 
-------------------------------------------  --------------  ------------  --------------  ------------ 
Trade and other payables**                          342,260       331,655         342,260       331,655 
===========================================  ==============  ============  ==============  ============ 
                                                  1,097,095     1,098,269       1,106,568     1,078,013 
===========================================  ==============  ============  ==============  ============ 
Financial liabilities at fair value 
===========================================  ==============  ============  ==============  ============ 
Derivative financial instruments (Note 20)            4,439         3,745           4,439         3,745 
===========================================  ==============  ============  ==============  ============ 
                                                      4,439         3,745           4,439         3,745 
===========================================  ==============  ============  ==============  ============ 
 
 

* Trade and other receivables exclude Geregu power, Sapele power, NGMC VAT receivables, cash advances and advance payments.

** Trade and other payables (exclude non-financial liabilities such as provisions, taxes, pension and other non-contractual payables), trade and other receivables (excluding non-financial assets), contract assets and cash and bank balances are financial instruments whose carrying amounts as per the financial statements approximate their fair values. This is mainly due to their short-term nature .

5.1.4 Fair Value Hierarchy

As at the reporting period, the Group had classified its financial instruments into the three levels prescribed under the accounting standards. There were no transfers of financial instruments between fair value hierarchy levels during the year.

 
 --   Level 1 - Quoted (unadjusted) market prices in active markets 
       for identical assets or liabilities. 
 --   Level 2 - Valuation techniques for which the lowest level input 
       that is significant to the fair value measurement is directly 
       or indirectly observable. 
 --   Level 3 - Valuation techniques for which the lowest level input 
       that is significant to the fair value measurement is unobservable. 
 

The fair value of the financial instruments is included at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of the Group's derivative financial instruments has been determined using a proprietary pricing model that uses marked to market valuation. The valuation represents the mid-market value and the actual close-out costs of trades involved. The market inputs to the model are derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models. The derivative financial instruments are in level 2.

The fair value of the Group's interest-bearing loans and borrowings is determined by using discounted cash flow models that use market interest rates as at the end of the period. The interest-bearing loans and borrowings are in level 2.

The fair value of the Group's contingent consideration is determined using the discounted cash flow model. The cash flows were determined based on probable future oil prices. The estimated future cash flow was discounted to present value using a discount rate.

The valuation process

The finance & planning team of the Group performs the valuations of financial and non-financial assets required for financial reporting purposes. This team reports directly to the General Manager (GM) Commercial who reports to the Chief Financial Officer (CFO) and the Audit Committee (AC). Discussions of valuation processes and results are held between the GM and the valuation team at least once every quarter, in line with the Group's quarterly reporting periods.

   6.    Segment reporting 

Business segments are based on the Group's internal organisation and management reporting structure. The Group's business segments are the two core businesses: Oil and Gas. The Oil segment deals with the exploration, development and production of crude oil while the Gas segment deals with the production and processing of gas. These two reportable segments make up the total operations of the Group.

For the period ended 31 March 2022, revenue from the gas segment of the business constituted 11% of the Group's revenue. Management is committed to continued growth of the gas segment of the business, including through increased investment to establish additional offices, create a separate gas business operational management team and procure the required infrastructure for this segment of the business. The gas business is positioned separately within the Group and reports directly to the (chief operating decision maker). As the gas business segment's revenues, results and cash flows are largely independent of other business units within the Group, it is regarded as a separate segment.

The result is two reporting segments, Oil and Gas. There were no intersegment sales during the reporting periods under consideration, therefore all revenue was from external customers.

Amounts relating to the gas segment are determined using the gas cost centres, with the exception of depreciation. Depreciation relating to the gas segment is determined by applying a percentage which reflects the proportion of the Net Book Value of oil and gas properties that relates to gas investment costs (i.e., cost for the gas processing facilities).

The Group accounting policies are also applied in the segment reports.

   6.1     Segment profit disclosure 
 
                              3 Months ended      3 Months ended 31 March  3 Months ended      3 Months ended 31 March 
                               31 March 2022                         2021   31 March 2022                         2021 
                                    'million                    ' million           $'000                        $'000 
============================  ==============  ===========================  ==============  =========================== 
Oil                                    2,400                        3,895           5,746                       10,240 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Gas                                    5,890                        5,554          14,156                       14,616 
============================  ==============  ===========================  ==============  =========================== 
Total profit from continued 
 operations for the period             8,290                        9,449          19,902                       24,856 
============================  ==============  ===========================  ==============  =========================== 
 

Oil

 
                              3 Months ended      3 Months ended 31 March  3 Months ended      3 Months ended 31 March 
                               31 March 2022                         2021   31 March 2022                         2021 
---------------------------- 
                                    'million                    ' million           $'000                        $'000 
============================  ==============  ===========================  ==============  =========================== 
Revenue from contract with 
customers 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Crude oil sales                       89,955                       47,152         216,209                      124,084 
============================  ==============  ===========================  ==============  =========================== 
Operating profit before 
 depreciation, depletion 
 and amortisation                     49,051                       20,092         117,865                       52,862 
============================  ==============  ===========================  ==============  =========================== 
Depreciation and impairment         (15,172)                     (12,311)        (36,460)                     (32,398) 
============================  ==============  ===========================  ==============  =========================== 
Operating profit                      33,879                        7,781          81,405                       20,464 
============================  ==============  ===========================  ==============  =========================== 
Finance income                            13                            3              32                            7 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Finance costs                        (7,731)                      (6,391)        (18,582)                     (16,817) 
============================  ==============  ===========================  ==============  =========================== 
Profit before taxation                26,161                        1,393          62,855                        3,654 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Income tax (expense)/credit         (23,761)                        2,502        (57,109)                        6,586 
============================  ==============  ===========================  ==============  =========================== 
Profit for the period                  2,400                        3,895           5,746                       10,240 
============================  ==============  ===========================  ==============  =========================== 
 

Gas

 
                              3 Months ended      3 Months ended 31 March  3 Months ended      3 Months ended 31 March 
                               31 March 2022                         2021   31 March 2022                         2021 
                                    'million                    ' million           $'000                        $'000 
============================  ==============  ===========================  ==============  =========================== 
Revenue from contract with 
customer 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Gas sales                             10,663                       10,778          25,628                      28,36 4 
============================  ==============  ===========================  ==============  =========================== 
Operating profit before 
 depreciation, depletion 
 and amortisation                      8,868                        9,112          21,314                       23,980 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Depreciation, amortization 
 and impairment                        (265)                         (17)           (638)                         (44) 
============================  ==============  ===========================  ==============  =========================== 
Operating profit                       8,603                        9,095          20,676                       23,936 
============================  ==============  ===========================  ==============  =========================== 
Share of (loss)/profit from 
 joint venture accounted 
 for using equity accounting            (52)                          159           (124)                          418 
============================  ==============  ===========================  ==============  =========================== 
Profit before taxation                 8,551                        9,254          20,552                       24,354 
----------------------------  --------------  ---------------------------  --------------  --------------------------- 
Income tax expense                   (2,661)                      (3,700)         (6,396)                      (9,738) 
============================  ==============  ===========================  ==============  =========================== 
Profit for the period                  5,890                        5,554          14,156                       14,616 
============================  ==============  ===========================  ==============  =========================== 
 

6.1.1 Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of commodities at a point in time or over time and from different geographical regions.

 
                     3 Months       3 Months 
                        ended          ended  3 Months ended  3 Months ended  3 Months ended  3 Months ended 
                   March 2022     March 2022      March 2022      March 2021      March 2021      March 2021 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
                          Oil            Gas           Total             Oil             Gas           Total 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
                     'million       'million        'million       ' million       ' million       ' million 
==============  =============  =============  ==============  ==============  ==============  ============== 
Geographical 
markets 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
Bahamas                10,022              -          10,022               -               -               - 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
Nigeria                     -         10,663          10,663          11,587          10,778          22,365 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
Switzerland            69,564              -          69,564          35,565               -          35,565 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
United Kingdom         10,369              -          10,369               -               -               - 
==============  =============  =============  ==============  ==============  ==============  ============== 
Revenue from 
 contract with 
 customers             89,955         10,663         100,618          47,152          10,778          57,930 
==============  =============  =============  ==============  ==============  ==============  ============== 
Timing of 
revenue 
recognition 
==============  =============  =============  ==============  ==============  ==============  ============== 
At a point in 
 time                  89,955              -          89,955          47,152               -          47,152 
--------------  -------------  -------------  --------------  --------------  --------------  -------------- 
Over time                   -         10,663          10,663               -          10,778          10,778 
==============  =============  =============  ==============  ==============  ==============  ============== 
Revenue from 
 contract with 
 customers             89,955         10,663         100,618          47,152          10,778          57,930 
==============  =============  =============  ==============  ==============  ==============  ============== 
                     3 Months       3 Months 
                        ended          ended  3 Months ended  3 Months ended  3 Months ended    3 Months ended 
                   March 2022     March 2022      March 2022      March 2021      March 2021        March 2021 
                          Oil            Gas           Total             Oil             Gas             Total 
                        $'000          $'000           $'000           $'000           $'000             $'000 
==============  =============  =============  ==============  ==============  ==============  ================ 
Geographical 
markets 
--------------  -------------  -------------  --------------  --------------  --------------  ---------------- 
Bahama s               24,088              -          24,088               -               -                 - 
--------------  -------------  -------------  --------------  --------------  --------------  ---------------- 
Nigeria                     -         25,628          25,628          30,492          28,364            58,856 
--------------  -------------  -------------  --------------  --------------  --------------  ---------------- 
Switzerland           167,199              -         167,199          93,592               -            93,592 
--------------  -------------  -------------  --------------  --------------  --------------  ---------------- 
United Kingdom         24,922              -          24,922               -               -                 - 
==============  =============  =============  ==============  ==============  ==============  ================ 
Revenue from 
 contract with 
 customers            216,209         25,628         241,837         124,084          28,364           152,448 
==============  =============  =============  ==============  ==============  ==============  ================ 
Timing of 
revenue 
recognition 
==============  =============  =============  ==============  ==============  ==============  ================ 
At a point in 
 time                 216,209              -         216,209         124,084               -           124,084 
--------------  -------------  -------------  --------------  --------------  --------------  ---------------- 
Over time                   -         25,628          25,628               -          28,364            28,364 
==============  =============  =============  ==============  ==============  ==============  ================ 
Revenue from 
 contract with 
 customers            216,209         25,628         241,837         124,084          28,364           152,448 
==============  =============  =============  ==============  ==============  ==============  ================ 
 
 

The Group's transactions with its major customer, Mercuria, constitutes more than 69% ( 69.6 billion, $167 million) of the total revenue from the oil segment and the Group as a whole. Also, the Group's transactions with Geregu Power, Sapele Power, NGMC and Azura ( 10.7 billion, $25.6 million) accounted for the total revenue from the gas segment.

6.1.2 Impairment loss on financial assets by reportable segments

 
                  3 Months ended  3 Months ended  3 Months ended  3 Months ended  3 Months ended  3 Months ended 
                      March 2022      March 2022      March 2022      March 2021      March 2021      March 2021 
----------------  --------------  --------------  --------------  --------------  --------------  -------------- 
                             Oil             Gas           Total             Oil             Gas           Total 
----------------  --------------  --------------  --------------  --------------  --------------  -------------- 
                        'million        'million        'million        'million        'million        'million 
================  ==============  ==============  ==============  ==============  ==============  ============== 
Impairment loss               82             427             509             252              17             269 
================  ==============  ==============  ==============  ==============  ==============  ============== 
 
 
                  3 Months ended  3 Months ended  3 Months ended  3 Months ended  3 Months ended  3 Months ended 
                      March 2022      March 2022      March 2022      March 2021      March 2021      March 2021 
                             Oil             Gas           Total             Oil             Gas           Total 
                           $'000           $'000           $'000           $'000           $'000           $'000 
================  ==============  ==============  ==============  ==============  ==============  ============== 
Impairment loss              196           1,027           1,223             663              44             707 
================  ==============  ==============  ==============  ==============  ==============  ============== 
 
   6.2     Segment assets 

Segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the reporting segment and the physical location of the asset. The Group had no non-current assets domiciled outside Nigeria.

 
                             Oil        Gas       Total         Oil       Gas      Total 
Total segment assets   ' million  ' million    'million       $'000     $'000      $'000 
=====================  =========  =========  ==========  ==========  ========  ========= 
31 March 2022          1,417,916    229,271   1,647,187   3,406,408   550,800  3,957,208 
---------------------  ---------  ---------  ----------  ----------  --------  --------- 
31 December 2021       1,393,987    209,549   1,603,536   3,384,033   508,701  3,892,734 
=====================  =========  =========  ==========  ==========  ========  ========= 
 
   6.3     Segment liabilities 

Segment liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment.

 
                                        Oil        Gas     Total        Oil      Gas       Total 
Total segment liabilities         ' million  ' million  'million      $'000    $'000       $'000 
==========================  ===============  =========  ========  =========  =======  ========== 
31 March 2022                       786,267    141,279   927,546  1,888,937  339,410   2,228,347 
--------------------------  ---------------  ---------  --------  ---------  -------  ---------- 
31 December 2021                    775,644    124,528   900,172  1,882,945  302,203   2,185,248 
==========================  ===============  =========  ========  =========  =======  ========== 
 
   7.      Revenue from contracts with customers 
 
                  3 months ended  3 months ended  3 months ended  3 months ended 
                   31 March 2022   31 March 2021   31 March 2022   31 March 2021 
                         million         million           $'000           $'000 
================  ==============  ==============  ==============  ============== 
Crude oil sales           89,955          47,152         216,209         124,084 
----------------  --------------  --------------  --------------  -------------- 
Gas sales                 10,663          10,778          25,628          28,364 
================  ==============  ==============  ==============  ============== 
                         100,618          57,930         241,837         152,448 
================  ==============  ==============  ==============  ============== 
 

The major off takers for crude oil are Mercuria and Shell West. The major off takers for gas are Geregu Power, Sapele Power, Nigerian Gas Marketing Company and Azura.

   8.      Cost of sales 
 
                                               3 months ended  3 months ended    3 months ended  3 months ended 
                                                31 March 2022   31 March 2021     31 March 2022   31 March 2021 
                                                      million         million             $'000           $'000 
                                                                               ================ 
Royalties                                              20,883          10,793            50,195          28,404 
Depletion, depreciation and amortisation               14,083          11,748            33,848          30,915 
Crude handling fees                                     5,370           4,749            12,908          12,498 
Nigeria Export Supervision Scheme (NESS) fee               90              55               217             145 
Niger Delta Development Commission Levy                 1,193             977             2,867           2,571 
Barging/Trucking                                        1,230             824             2,957           2,167 
Operational & maintenance expenses                      8,936           8,725            21,498          22,959 
                                                       51,785          37,871           124,490          99,659 
 

Operational & maintenance expenses mainly relates to maintenance costs, warehouse operations expenses, security expenses, community expenses, clean-up costs, fuel supplies and catering services. Also included in operational and maintenance expenses is gas flare penalty of 686 million, $1.7 million.

Barging and Trucking costs relates to costs on the OML 40 Gbetiokun field and OML 17 Ubima field respectively under Eland Group.

   9.      Other income. 
 
                                   3 months ended  3 months ended    3 months ended  3 months ended 
                                    31 March 2022   31 March 2021     31 March 2022   31 March 2021 
                                          million       ' million             $'000           $'000 
Underlift                                   5,666           3,115            13,618           8,198 
(Loss)/gains on foreign exchange          (2,517)             114           (6,048)             301 
Others                                        375              25               900              66 
Tariffs                                       186           2,527               446           6,649 
                                            3,710           5,781             8,916          15,214 
 

Underlifts are shortfalls of crude lifted below the share of production. It may exist when the crude oil lifted by the Group during the period is less than its ownership share of production. The shortfall is initially measured at the market price of oil at the date of lifting and recognised as other income. At each reporting period, the shortfall is remeasured at the current market value. The resulting change, as a result of the remeasurement, is also recognised in profit or loss as other income.

(Loss)/gains on foreign exchange are principally as a result of translation of Naira, Pounds and Euro denominated monetary assets and liabilities.

Tariffs which is a form of crude handling fee, relate to income generated from the use of the Group's pipeline.

   10.    General and administrative expenses 
 
                                                  3 months ended  3 months ended    3 months ended  3 months ended 
                                                   31 March 2022   31 March 2021     31 March 2022   31 March 2021 
                                                         million       ' million             $'000           $'000 
Depreciation                                                 435             532             1,042           1,404 
Depreciation of right-of-use assets                          410             315               985             830 
Professional and consulting fees                             972           1,082             2,336           2,848 
Directors' emoluments (executive)                            319             263               766             692 
Directors' emoluments (non-executive)                        561             548             1,348           1,441 
Employee benefits                                          4,432           3,975            10,657          10,467 
Loss on disposal of property, plant & equipment                5               -                12               - 
Donation                                                      11               -               2 6               - 
Flights and other travel costs                               702             198            1 ,687             522 
Rentals                                                       66               6              1 59              16 
                                                           7,913           6,919            19,018          18,220 
 

Directors' emoluments have been split between executive and non-executive directors.

   11.    Impairment loss 
 
                                      3 months ended  3 months ended  3 months ended  3 months ended 
                                       31 March 2022   31 March 2021   31 March 2022   31 March 2021 
                                             million         million           $'000           $'000 
Impairment loss on financial assets              509             269           1,223             707 
                                                 509             269           1,223             707 
 
   12.    Fair value loss 
 
                                            3 months ended  3 months ended  3 months ended  3 months ended 
                                             31 March 2022   31 March 2021   31 March 2022   31 March 2021 
                                                   million         million           $'000           $'000 
Realised fair value loss on derivatives                743             562           1,787           1,480 
Unrealised fair value loss on derivatives              896           1,214           2,154           3,196 
                                                     1,639           1,776           3,941           4,676 
 

Fair value loss on derivatives represents changes arising from the valuation of the crude oil economic hedge contracts charged to profit or loss.

   13.    Finance income/(cost) 
 
                                                        3 months ended  3 months ended  3 months ended  3 months ended 
                                                         31 March 2022   31 March 2021   31 March 2022   31 March 2021 
                                                               million         million           $'000           $'000 
Finance income 
Interest income                                                     13               3              32               7 
Finance cost 
Interest on bank loans                                         (7,468)         (6,222)        (17,950)        (16,373) 
Interest on lease liabilities                                     (20)            (57)            (47)           (149) 
Unwinding of discount on provision for decommissioning           (243)           (112)           (585)           (295) 
                                                               (7,731)         (6,391)        (18,582)        (16,817) 
Finance (cost) - net                                          ( 7,718)         (6,388)       ( 18,550)        (16,810) 
 

Finance income represents interest on short-term fixed deposits.

   14.    Taxation 

Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the period to 31 March 2022 is 85% for crude oil activities and 30% for gas activities.

The effective tax rate for the period was 76% (2021: 11.25%)

The major components of income tax expense in the interim condensed consolidated statement

 
                                                  3 months ended  3 months ended  3 months ended  3 months ended 
                                                   31 March 2022   31 March 2021   31 March 2022   31 March 2021 
                                                         million         million           $'000           $'000 
Current tax: 
Current tax expense on profit for the period             (6,347)         (2,565)        (15,255)         (6,750) 
Education tax                                            (1,106)           (456)         (2,658)         (1,199) 
Total current tax                                        (7,453)         (3,021)        (17,913)         (7,949) 
Deferred tax: 
Deferred tax (expense)/credit in profit or loss         (18,969)           1,823        (45,592)           4,797 
Total tax expense in statement of profit                (26,422)         (1,198)        (63,505)         (3,152) 
 
   14.1   Deferred tax 

The analysis of deferred tax assets and deferred tax liabilities is as follows:

 
                                                                     As at         As at           As at         As at 
                                                             31 March 2022   31 Dec 2021   31 March 2022   31 Dec 2021 
                                                                  'million      'million           $'000         $'000 
Deferred tax assets 
Deferred tax asset to be recovered in less than 12 months           40,703        40,280          97,785        97,785 
Deferred tax asset to be recovered after more than 12 
 months                                                            392,782       388,706         943,621       943,621 
                                                                   433,485       428,986       1,041,406     1,041,406 
 
 
                                                                     As at         As at           As at         As at 
                                                             31 March 2022   31 Dec 2021   31 March 2022   31 Dec 2021 
                                                                  'million      'million           $'000         $'000 
Deferred tax liabilities 
Deferred tax liabilities to be settled in less than 12 
 months                                                          (117,085)     (121,995)       (281,286)     (296,156) 
Deferred tax liabilities to be settled after more than 12 
 months                                                          (248,670)     (221,184)       (597,406)     (536,945) 
                                                                 (365,755)     (343,179)       (878,693)     (833,101) 
 
Net deferred tax asset                                              67,730        85,807         162,713       208,305 
 

15. Oil & Gas properties

D uring the three months ended 31 March 2022, the Group acquired assets amounting to 10.7 billion, $25.8 million (Dec 2021: 54.6 billion, $136.4 million) .

   16.      Intangible Asset 
 
                        License    Total  License    Total 
Cost                    million  million    $'000    $'000 
At 1 January 2022        60,435   60,435  146,713  146,713 
Additions                     -        -        -        - 
Exchange difference         634      634        -        - 
At 31 March 2022         61,069   61,069  146,713  146,713 
Amortisation 
At 1 January 2022         6,390    6,390   15,513   15,513 
Charge for the period       320      320      770      770 
Exchange difference          68       68        -        - 
At 31 March 2022          6,778    6,778   16,283   16,283 
Net Book Value (NBV) 
At 31 March 2022         54,291   54,291  130,430  130,430 
At 31 December 2021      54,045   54,045  131,200  131,200 
 
   17.      Investment accounted for using equity method 
 
                                     31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                           million      million          $'000        $'000 
Investment in Joint venture (ANOH)          93,722      9 2,795        225,158      225,270 
Total                                       93,722      9 2,795        225,158      225,270 
 
   18.      Trade and other receivables 
 
                                                             31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                                                   million      million          $'000        $'000 
Trade receivables                                                   15,860      2 5,923         38,101       62,929 
Nigerian Petroleum Development Company (NPDC) receivables           21,247       34,571         51,046       83,924 
Nigerian National Petroleum Corporation (NNPC) receivables          12,637       10,154         30,359       24,650 
Underlift                                                           24,018       20,657         57,702       50,147 
Advances to suppliers                                                6,312        5,746         15,163       13,947 
Receivables from ANOH                                                5,154        5,259         12,382       12,766 
Other receivables                                                   55,236        2,964        132,702        7,194 
Total                                                              140,464      105,274        337,455      255,557 
 
   18.1   Trade receivables 

Included in trade receivables is an amount due from Geregu Power 8.17 billion, $19.6 million (Dec 2021: 7.1 billion, $17.1 million), Sapele Power 2.25 billion, $5.40 million (Dec 2021: 2.4 billion, $5.9 million) and Nigerian Gas Marketing Company (NGMC) 4.23 billion, $10.2 million (Dec 2021: 3 billion, $7.3 million) totalling 14.65 billion, $35.17 million (Dec 2021: 12.5 billion, $30.3 million) with respect to the sale of gas. Also included in trade receivables is an amount of 1.67 million (Dec 2021: 3.04 billion ) $4 thousand (Dec 2021: $7.4 million) and nil (Dec 2021: 11.6 billion) nil (Dec 2021: $28.1 million) million due from Mercuria and Shell Western for sale of crude respectively.

   18.2   NPDC receivables 

The outstanding cash calls due to Seplat from its JOA partner, NPDC is 21.2 billion (Dec 2021: 34.6 billion) $51 million (Dec 2021: $83.9 million).

   18.3   Other receivables 

Other receivables include a deposit of $128.3 million transferred to Exxon Mobil Corporation, Delaware as part of the consideration to acquire the entire share capital of Mobil Producing Nigeria Unlimited. All other receivables are amounts outside the usual operating activities of the Group.

   18.4   Reconciliation of trade receivables 
 
                              31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                    million      million          $'000        $'000 
Gross carrying amount                24,616       34,698         59,136       84,230 
Less: Impairment allowance          (8,756)      (8,775)       (21,035)     (21,301) 
Balance as at 31 March 2022          15,860      2 5,923         38,101       62,929 
 
   18.5   Reconciliation of NPDC receivables 
 
                              31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                    million      million          $'000        $'000 
Gross carrying amount                26,255      3 9,514         63,077       95,924 
Less: Impairment allowance          (5,008)      (4,943)       (12,031)     (12,000) 
Balance as at 31 March 2022          21,247      3 4,571         51,046       83,924 
 
   18.6   Reconciliation of NNPC receivables 
 
                              31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                    million      million          $'000        $'000 
Gross carrying amount                13,465      1 0,819         32,348      2 6,265 
Less: Impairment allowance            (828)        (665)        (1,989)      (1,615) 
Balance as at 31 March 2022          12,637      1 0,154         30,359       24,650 
 
   18.7   Reconciliation of other receivables 
 
                              31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                    million      million          $'000        $'000 
Gross carrying amount                74,100       21,632        178,021       52,513 
Less: Impairment allowance         (18,864)     (18,668)       (45,319)     (45,319) 
Balance as at 31 March 2022          55,236        2,964        132,702        7,194 
 

19. Contract assets

 
                                31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                     'million    ' million          $'000        $'000 
Revenue on gas sales                    3,298        1,679          7,923        4,077 
Impairment on contract assets               -            -            (1)          (1) 
                                       3 ,298        1,679          7,922        4,076 
 

A contract asset is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer. The Group has recognised an asset in relation to a contract with Geregu power, Sapele power and NGMC for the delivery of gas supplies which the three Companies has received but which has not been invoiced as at the end of the reporting period.

The terms of payments relating to the contract is between 30- 45 days from the invoice date. However, invoices are raised after delivery between 14-21 days when the receivable amount has been established and the right to the receivables crystallizes. The right to the unbilled receivables is recognised as a contract asset. At the point where the final billing certificate is obtained from Geregu power, Sapele Power and NGMC authorising the quantities, this will be reclassified from contract assets to trade receivables.

   19.1   Reconciliation of contract assets 

The movement in the Group's contract assets is as detailed below:

 
                              31 March 2022  31 Dec 2021   31 March 2022  31 Dec 2021 
                                   'million    ' million           $'000        $'000 
Balance as at 1 January               1,679        2,343           4,076        6,167 
Addition during the period            3,296       44,849           7,923      111,987 
Receipts for the period             (1,696)     (45,662)         (4,077)    (114,017) 
Price Adjustments                         -         (24)               -         (60) 
Impairment                                -            -               -          (1) 
Exchange difference                      19          173               -            - 
Balance as at 31 December             3,298        1,679           7,922        4,076 
 

20. Derivative financial instruments

The Group uses its derivatives for economic hedging purposes and not as speculative investments. Derivatives are measured at fair value through profit or loss. They are presented as current liability to the extent they are expected to be settled within 12 months after the reporting period.

The fair value has been determined using a proprietary pricing model which generates results from inputs. The market inputs to the model are derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models.

 
                                             31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                                  'million    ' million          $'000        $'000 
Foreign currency options-crude oil hedges            1,848        1,543          4,439        3,745 
                                                     1,848        1,543          4,439        3,745 
 

21. Cash and bank equivalents

Cash and bank balances in the statement of financial position comprise of cash at bank and on hand, short-term deposits with a maturity of three months or less.

 
                                  31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                       'million    ' million          $'000        $'000 
Cash on hand                             12,583        5,916         30,233      1 4,361 
Short-term fixed deposits                   203       29,040            488       70,498 
Cash at bank                            117,289       98,812        281,767      239,877 
Gross cash and cash equivalent         130 ,075      133,768        312,488      324,736 
Loss allowance                            (102)        (101)          (246)        (246) 
Net Cash and cash equivalents           129,973      133,667        312,242      324,490 
 

21.1 Restricted cash

 
                             31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                  'million    ' million          $'000        $'000 
Restricted cash (Current)            6,732        6,603         16,172       16,029 
                                     6,732        6,603         16,172       16,029 
 

Included in the restricted cash balance is $8 million, 3.3 billion and $6.2 million, 2.6 billion set aside in the stamping reserve account and debt service reserve account respectively for the revolving credit facility. The amount is to be used for the settlement of all fees and costs payable for the purposes of stamping and registering the Security Documents at the stamp duties office and at the Corporate Affairs Commission (CAC).

Also included in the restricted cash balance is $0.9 million, 0.4 billion and $1.1 million, 0.4 billion for rent deposit and unclaimed dividend respectively.

These amounts are subject to legal restrictions and are therefore not available for general use by the Group.

22. Share Capital

   22.1   Authorised and issued share capital 
 
                                                 31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                                      'million    ' million          $'000        $'000 
Authorised ordinary share capital 
1,000,000,000 ordinary shares denominated in 
 Naira of 50 kobo per share                                500          500          3,335        3,335 
Issued and fully paid 
584,035,845 (2021: 584,035,845) issued shares 
 denominated in Naira of 50 kobo per share                 296          296          1,862        1,862 
 

Fully paid ordinary shares carry one vote per share and the right to dividends. There were no restrictions on the Group's share capital.

   22.2   Movement in share capital and other reserves 
 
                         Number of  Issued share capital      Share  Share based payment  Treasury shares      Total 
                            shares                          Premium              reserve 
                            Shares             ' million  ' million            ' million        ' million  ' million 
Opening balance as at 
 1 January 2022        584,035,845                   296     90,383                4,914          (2,025)     93,568 
Share based payments             -                     -          -                  540                -        540 
Share re-purchased               -                     -          -                    -              (2)        (2) 
Closing balance as at 
 31 March 2022         584,035,845                   296     90,383                5,454         (2, 027)     94,106 
                                                                     =================== 
 
 
                          Number of  Issued share capital     Share    Share based payment  Treasury shares    Total 
                             shares                         Premium                reserve 
                             Shares                 $'000     $'000                  $'000            $'000    $'000 
Opening balance as at 
 1 January 2022         584,035,845                 1,862   520,138                 22,190          (4,915)  539,275 
Share based payments              -                     -         -                  1,297                -    1,297 
Share re-purchased                -                     -         -                      -              (5)      (5) 
Closing balance as at 
 31 March 2022          584,035,845                 1,862   520,138                 23,487          (4,920)  540,567 
 
   22.3   Employee share-based payment scheme 

As at 31 March 2022, the Group had awarded 79,272,577 shares (Dec 2021: 73,966,540 shares) to certain employees and senior executives in line with its share-based incentive scheme. During the three months ended 31 March 2022, no new shares were vested (Dec 2021: 7,151,098 shares).

   22.4   Treasury shares 

This relates to Share buy-back programme for Group's Long-Term Incentive Plan. The programme commenced from 1 March 2021 and are held by the Trustees under the Trust for the benefit of the Group's employee beneficiaries covered under the Trust.

23. Interest bearing loans and borrowings

   23.1   Net debt reconciliation 

Below is the net debt reconciliation on interest bearing loans and borrowings for 31 March 2022:

 
                        Borrowings due      Borrowings due                Borrowings due      Borrowings due 
                                within               above                        within               above 
                                1 year              1 year     Total              1 year              1 year     Total 
                               million             million   million               $'000               $'000     $'000 
Balance as at 1 
 January 2022                   24,988             290,803   315,791              60,661             705,953   766,614 
Addition                             -                   -         -                   -                   -         - 
Interest accrued                 7,468                   -     7,468              17,950                   -    17,950 
Interest 
 capitalized                       326                   -       326                 783                   -       783 
Principal 
repayment                            -                   -         -                   -                   -         - 
Interest repayment            (11,821)                   -  (11,821)            (28,412)                   -  (28,412) 
Other financing 
 charges                         (874)                   -     (874)             (2,100)                   -   (2,100) 
Transfers                        4,901             (4,901)         -              11,779            (11,779)         - 
Exchange 
 differences                       262               3,048     3,310                   -                   -         - 
Carrying amount as 
 at 31 March 2022               25,250             288,950   314,200              60,661             694,174   754,835 
 

Below is the net debt reconciliation on interest bearing loans and borrowings for 31 December 2021:

 
                       Borrowings due      Borrowings due                Borrowings due      Borrowings due 
                               within               above                        within               above 
                               1 year              1 year      Total             1 year              1 year      Total 
                              million             million    million              $'000               $'000      $'000 
Balance as at 1 
 January 2021                  35,518             229,880    265,398             93,468             604,947    698,415 
Additions                     268,725                   -    268,725            671,000                   -    671,000 
Interest accrued               29,765                   -     29,765             74,322                   -     74,322 
Interest 
 capitalized                    4,995                   -      4,995             12,473                   -     12,473 
Principal 
 repayment                  (240,291)                   -  (240,291)          (600,000)                   -  (600,000) 
Interest repayment           (27,728)                   -   (27,728)           (69,236)                   -   (69,236) 
Other financing 
 charges                      (8,154)                   -    (8,154)            (20,360                   -   (20,360) 
Transfers                    (40,451)              40,451          -          (101,006)             101,006          - 
Exchange 
 differences                    2,609              20,472     23,081                  -                   -          - 
Carrying amount as 
 at 31 December 
 2021                          24,988             290,803    315,791             60,661             705,953    766,614 
 

650 million Senior notes - April 2021

In March 2021, the Group offered 7.75% senior notes with an aggregate principal of $650 million due in April 2026. The notes, which were priced on 25 March and closed on 1 April 2021, were issued by the Group in March 2021 and guaranteed by certain of its subsidiaries.

The gross proceeds of the Notes were used to redeem the existing $350 million 9.25% senior notes due in 2023, to repay in full drawings of $250 million under the existing $350 million revolving credit facility for general corporate purposes, and to pay transaction fees and expenses. The amortised cost for the senior notes as at the reporting period is $636.1 million, although the principal is $650 million.

$110 million Reserved based lending (RBL) facility - March 2021

The Group through its subsidiary Westport on 5th December 2019 entered into a five-year loan agreement with interest payable semi-annually. The RBL facility has an initial contractual interest rate of 8% + USD LIBOR as at March 2022 (8.2%) and a settlement date of 29 November 2023.

The RBL is secured against the Group's producing assets in OML 40 via the Group's shares in Elcrest, and by way of a debenture which creates a charge over certain assets of the Group, including its bank accounts.

The available facility is capped at the lower of the available commitments and the borrowing base. The current borrowing base is more than $100 million, with the available commitments at $100 million. The commitments were scheduled to reduce to $87.5 million on 31 March 2021. The first reduction in the commitments occurred on 31(st) December 2019 in line with the commitment reduction schedule contained within the Facility Agreement. This resulted in the available commitments reducing from $125.0 million to $122.5million, with a further reduction to $100.0 million as at December 2020.

The RBL is secured against the Group's producing assets in OML 40 via the Group's shares in Elcrest, and by way of a debenture which creates a charge over certain assets of the Group, including its bank accounts.

The RBL has a maturity of five years, the repayments of principal are due on a semi-annual basis so that the outstanding balance of the RBL will not exceed the lower of (a) the borrowing base amount and (b) the total commitments. Interest rate payable under the RBL is USD LIBOR plus 8%, as long as more than 50% of the available facility is drawn.

On 4th February 2020 Westport drew down a further $10 million increasing the debt utilised under the RBL from $90 million to $100 million.

The interest rate of the facility is variable. The interest accrued at the reporting period is $2.2 million using an effective interest rate of 8.2%. The interest paid was determined using 6-month USD LIBOR rate + 8 % on the last business day of the reporting period.

On 17th March 2021, Westport signed an amendment and restatement agreement regarding the RBL. As part of the new agreement, the debt utilised and interest rate remain unchanged at $100 million and 8% + USD LIBOR respectively, however, the maturity date was extended by either five years after the effective date of the loan (March 2026) or by the reserves tail date (expected to be March 2025). Due to the modification of the original agreement and based on the facts and circumstances, it was determined that the loan modifications were substantial. Therefore, the existing facility was derecognised, and a new liability was recognised, and the present value of the loan commitment was moved to long term liabilities (Borrowings due above 1 year).

On 24 May 2021 Westport drew down a further $10 million increasing the debt utilized under the RBL from $100 million to $110 million. The amortized cost for this as at the reporting period is $108.4 million (Dec 2021: $108.8 million), although the principal is $110 million.

$50 million Reserved based lending (RBL) facility - July 2021

In July 2021, the Group raised a $50 million offtake line to the Reserved Based Lending Facility. The Facility has a 6-year tenor, maturing in 2027. The amortised cost for this as at the reporting period is $10. 3 million , although the principal is $11 million.

   24.      Trade and other payables 
 
                               31 March 2022  31 Dec 2021  31 March 2022  31 Dec 2021 
                                     million      million          $'000        $'000 
Trade payable                         27,933       49,607         67,107      120,426 
Accruals and other payables           76,878       67,630        184,694      164,175 
NDDC levy                              6,133        5,283         14,734       12,826 
Royalties payable                     25,005       14,100         60,073       34,228 
Overlift                              12,213       14,584         29,341       35,403 
                                     148,162      151,204        355,949      367,058 
 

Included in accruals and other payables are field accruals of 17.1 billion (Dec 2021: 34.4 billion) $41.2 million (Dec 2021: $83.5 million), and other vendor payables of 33.33 billion (Dec 2021: 6.4 billion) $80.07 million (Dec 2021: $15.6 million). Royalties payable include accruals in respect of crude oil and gas production for which payment is outstanding at the end of the period.

Overlifts are excess crude lifted above the share of production. It may exist when the crude oil lifted by the Group during the period is above its ownership share of production. Overlifts are initially measured at the market price of oil at the date of lifting and recognised in profit or loss. At each reporting period, overlifts are remeasured at the current market value. The resulting change, as a result of the remeasurement, is also recognised in profit or loss and any amount unpaid at the end of the year is recognised in overlift payable.

25. Computation of cash generated from operations

 
                                                      3 months ended  3 months ended  3 months ended  3 months ended 
                                                           31-Mar-22       31-Mar-21       31-Mar-22       31-Mar-21 
                                                             million         million           $'000           $'000 
Profit before tax                                             34,712          10,647          83,407          28,008 
Adjusted for: 
Depletion, depreciation and amortization                      14,518          12,281          34,890          32,319 
Depreciation of right-of-use asset                               410             315             985             830 
Impairment losses on financial assets                            509             269           1,223             707 
Interest income                                                 (13)             (3)            (32)             (7) 
Interest expense on bank loans                                 7,468           6,222          17,950          16,373 
Interest on lease liabilities                                     20              57              47             149 
Unwinding of discount on provision for 
 decommissioning                                                 243             112             585             295 
Unrealised fair value loss on derivatives                        896           1,214           2,154           3,196 
Realised fair value loss on derivatives                          743             562           1,787           1,480 
Unrealised foreign exchange loss/(gain)                        2,517           (114)           6,048           (301) 
Loss on disposal of property, plant & equipment                    5               -              12               - 
Share based payment expenses                                     540             544           1,297           1,431 
Share of loss/(profit) in joint venture                           52           (159)             124           (418) 
Defined benefit expenses                                         675               -           1,623               - 
Changes in working capital: 
Trade and other receivables                                   18,308        (11,844)          44,004        (31,169) 
Prepayments                                                    (358)         (1,148)           (860)         (3,022) 
Contract assets                                              (1,601)           (919)         (3,847)         (2,419) 
Trade and other payables                                     (4,622)         (7,647)        (11,109)        (20,124) 
Restricted Cash                                                 (59)         (7,955)           (143)        (20,935) 
Inventories                                                      317           (307)             761           (807) 
Net cash inflow from operating activities                     75,280           2,127         180,906           5,586 
 

26. Earnings per share (EPS)

Basic

Basic EPS is calculated on the Group's profit after taxation attributable to the parent entity and on the basis of weighted average number of issued and fully paid ordinary shares at the end of the year.

Diluted

Diluted EPS is calculated by dividing the profit after taxation attributable to the parent entity by the weighted average number of ordinary shares outstanding during the year plus all the dilutive potential ordinary shares (arising from outstanding share awards in the share-based payment scheme) into ordinary shares.

 
                                                            31 March 2022  31 March 2021  31 March 2022  31 March 2021 
                                                                  million        million          $'000          $'000 
Profit attributable to Equity holders of the parent                 6,868         13,550         16,484         35,647 
(Loss) attributable to Non-controlling interests                    1,422        (4,101)          3,418       (10,791) 
Profit for the year                                                 8,290          9,449         19,902         24,856 
                                                              Shares '000    Shares '000    Shares '000    Shares '000 
Weighted average number of ordinary shares in issue               584,036        581,841        584,036        581,841 
Outstanding share-based payments (shares)                           2,801          6,604          2,801          6,604 
 
  Weighted average number of ordinary shares adjusted for 
  the effect of dilution                                          586,837        588,445        586,837        588,445 
Basic earnings per shares                                                                             $              $ 
Total basic earnings per share attributable to the 
 ordinary equity holders of the Group                               11.76          23.29           0.03           0.06 
Diluted earnings per shares                                                                           $              $ 
Total diluted earnings per share attributable to the 
 ordinary equity holders of the Group                               11.70          23.03           0.03           0.06 
 

The weighted average number of issued shares was calculated as a proportion of the number of months in which they were in issue during the reporting period.

The decrease in the weighted average number of ordinary shares adjusted for the effect of dilution was due to the shares forfeited (share award scheme) in 2021.

27. Proposed dividend

The Group's directors proposed an interim dividend of 2.5 cents per share for the reporting period (2021: 2.5 cents).

28. Related party relationships and transactions

The Group is controlled by Seplat Energy Plc (the parent Company). The parent Company is owned 6.43% either directly or by entities controlled by A.B.C Orjiako (SPDCL(BVI)) and members of his family and 12.19% 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 party is disclosed below. The outstanding balances payable to/receivable from related parties are unsecured and are payable/receivable in cash.

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 $430,206, 179 million (2021: $203,661, 77.3 million). Payables amounted to $532,037, 221 million (2021: $101.8 thousand, 41.9 million ).

29. Commitments and contingencies

   29.1   Contingent liabilities 

The Group is involved in a number of legal suits as defendant. The estimated value of the contingent liabilities is 11.5 billion, $27.6 million ( Dec 2021: 7.9 bi llion, $19.2 million). The contingent liability for the year is determined based on possible occurrences, though unlikely to occur. No provision has been made for this potential liability in these financial statements. Management and the Company's solicitors are of the opinion that the Company will suffer no loss from these claims.

30. Events after the reporting period

During the period, the Group agreed a $55 million settlement with the operator (All Grace Energy Limited) of Ubima asset which was acquired in 2019 during the acquisition of Eland, the agreed settlement will be paid in due course. The board approved an exit from the asset's operations in April 2022. The current reserve of the asset stands at circa 2mmbbls. However, the Group did not report any production under Ubima in the interim financial statements.

31. Exchange rates used in translating the accounts to Naira

The table below shows the exchange rates used in translating the accounts into Naira.

 
                                   Basis                 31 March 2022  31 March 2021  31 Dec 2021 
                                                                    /$             /$           /$ 
Fixed assets - opening balances   Historical rate           Historical     Historical   Historical 
Fixed assets - additions          Average rate                  416.06         380.00       400.48 
Fixed assets - closing balances   Closing rate                  416.25         380.00       411.93 
Current assets                    Closing rate                  416.25         380.00       411.93 
Current liabilities               Closing rate                  416.25         380.00       411.93 
Equity                            Historical rate           Historical     Historical   Historical 
Income and Expenses:              Overall Average rate          416.06         380.00       400.48 
 
, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

QRFBKOBQKBKBAQB

(END) Dow Jones Newswires

April 28, 2022 02:02 ET (06:02 GMT)

Seplat Energy (LSE:SEPL)
Gráfica de Acción Histórica
De May 2022 a Jun 2022 Haga Click aquí para más Gráficas Seplat Energy.
Seplat Energy (LSE:SEPL)
Gráfica de Acción Histórica
De Jun 2021 a Jun 2022 Haga Click aquí para más Gráficas Seplat Energy.