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
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END
QRFBKOBQKBKBAQB
(END) Dow Jones Newswires
April 28, 2022 02:02 ET (06:02 GMT)
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