TIDMSEPL
RNS Number : 0424X
Seplat Petroleum Development Co PLC
29 April 2021
Seplat Petroleum Development Company Plc
Unaudited results for the three months ended 31 March 2021
Lagos and London, 29 April 2021: Seplat Petroleum Development
Company Plc ("Seplat" or the "Company"), a leading Nigerian
independent energy company listed on both the Nigerian Stock
Exchange and the London Stock Exchange, today announces its
unaudited results for the three months ended 31 March 2021.
Operational highlights
-- Working-interest oil and production within guidance at 48,239 boepd
-- Average daily volumes of nearly 54,000 boepd achieved in first 21 days of April
-- Liquids production of 28,541 bopd in Q1 2021
-- Gas production of 114 MMscfd (19,698 boepd)
-- Low unit cost of production of $8.70/boe
-- Oben-50 gas well now producing, Oben-51 drilled and completed
with gas expected to flow in May
-- Safety record extended to more than 17 million hours without LTI on Seplat-operated assets
Financial highlights
-- Board adopts quarterly dividend policy; declares Q1 2021 dividend of US2.5 cents per share
-- Revenue up 16.8% to $152.4 million
-- EBITDA of $77.8 million
-- Cash at bank $236.3 million, net debt of $ 458.1 million
-- Successful issue of $650 million 7.75% senior notes to redeem
existing $350 million 9.25% senior notes
and repay $250 million drawn on $350 million RCF
-- Refinanced $100 million Westport RBL facility
-- Total capital expenditure of $32.6 million
Corporate updates
-- Seeking shareholder approval at the AGM on 20 May 2021 to
change name to Seplat Energy PLC to reflect evolving strategy
-- ANOH project now fully funded following successful $260 million debt issue
-- Plan to host Capital Markets Day on 29 July 2021
Outlook
-- Expected production unchanged at 48-55 kboepd for full year, subject to market conditions
-- Capex guidance unchanged, expected to be $150 million for the full year
-- 5.0MMbbls hedged at $35-$45/bbl from Q2 to Q4 2021
Roger Brown, Chief Executive Officer, said:
"We have made a progressive start to the year, delivering oil
and gas production volumes of 48,239 boepd, within our guidance
range. With the Gbetiokun field at OML40 now back in production, we
are currently achieving average daily volumes of nearly 54 kboepd
so far in April and we will build on this as we add additional oil
and gas wells this year.
Our flagship ANOH gas project is proceeding as planned and was
fully funded in February when our joint venture company, AGPC
successfully raised $260 million of debt financing. In addition,
the success of our $650 million Eurobond issuance in March
demonstrates investor confidence in our prudent financial
management and the exciting future ahead for the Company and its
stakeholders.
As we drive forward our strategy of being a low-cost energy
provider delivering reliable, affordable and sustainable energy to
the young, fast-growing population of Nigeria, energy transition -
which delivers on Nigeria's social development goals in tandem with
the climate agenda - is essential. This is the backbone of Seplat's
strategy and we will be communicating how we plan to achieve this
over the coming months. To that end, the Board took the decision to
change our name to Seplat Energy PLC, which more adequately
reflects our ambitions of providing a broader energy mix. We will
present the name change to our shareholders for approval at the AGM
on 20 May 2021."
Interim condensed consolidated statement of profit or loss and
other comprehensive income
for the three months ended 31 March 2021
Summary of performance
US$ million billion
====================================== ================ ======== ================
3M 2021 3M 2020 % change 3M 2021 3M 2020
-------------------------------------- ------- ------- -------- ------- -------
Revenue 152.4 130.5 16.8% 57.9 42.4
-------------------------------------- ------- ------- -------- ------- -------
Gross profit 52.8 33.1 59.5% 20.1 10.8
-------------------------------------- ------- ------- -------- ------- -------
Operating profit (loss) 44.4 (77.0) 16.9 (25.0)
-------------------------------------- ------- ------- -------- ------- -------
Profit before tax 28.0 (95.7) 10.6 (31.1)
-------------------------------------- ------- ------- -------- ------- -------
Cash flow from operations 5.3 64.5 (91.8%) 2.0 23.3
-------------------------------------- ------- ------- -------- ------- -------
Working interest production (boepd) 48,239 47,986 0.5%
-------------------------------------- ------- ------- -------- ------- -------
Average realised oil price (US$/bbl) 60.76 49.8 5 21.9%
-------------------------------------- ------- ------- -------- ------- -------
Average realised gas price (US$/Mscf) 2.76 2.89 (4.5%)
-------------------------------------- ------- ------- -------- ------- -------
Outlook for 2021
For 2021 we expect to produce an average of 48,000 - 55,000
boepd, taking into account the impact of OPEC+ quotas. We continue
to hedge against oil price volatility and expect a higher
proportion of revenues to come from long-term gas contracts at
stable prices.
We have significant cash resources and will continue to manage
our finances prudently in 2021, expecting to invest $150 million of
capital expenditure across the full year, with nearly $33 million
already invested. We remain confident that our ongoing cost-cutting
initiatives and prudent management of cash will enable further
reductions in debt, whilst supporting dividend payments and
investment for growth.
Following its successful funding, the completion of the ANOH
project remains a major priority. Although we expect some COVID-19
related delays to push completion into early 2022, following a cost
optimisation programme we now expect the project to cost no more
than $650 million, substantially below the $700 million budget
previously stated at Final Investment Decision.
Proposal to change name to Seplat Energy PLC
We are seeking shareholder approval to change our name to Seplat
Energy PLC to reflect the future direction of the Company. The
change of name will be accompanied by a new corporate brand
identity that we plan to unveil at the Seplat Energy Summit in
September. Before that, we intend to host a Capital Markets Day on
29 July 2021 to outline the Company's strategic direction and its
plans to develop its New Energy business.
Adoption of quarterly dividend
On 28 April 2021 the Board approved the payment of quarterly
dividends, commencing with an interim dividend of US2.5 cents, in a
change to Seplat's previous policy of declaring dividends twice a
year in the Q3 results and the full-year results. The change in
policy is intended to provide more frequent returns to
shareholders.
Enquiries:
Seplat Petroleum Development Company Plc
Emeka Onwuka, Chief Financial Officer +44 203 725 6500
Carl Franklin, Head of Investor Relations
Ayeesha Aliyu, Investor Relations
Chioma Nwachuku, General Manager, External Affairs +234 1 277 0400
& Communications +234 1 277 0400
==================================================== =========================
FTI Consulting +44 203 727 1000
Ben Brewerton / Sara Powell seplat@fticonsulting.com
==================================================== =========================
Citigroup Global Markets Limited
Tom Reid / Luke Spells +44 207 986 4000
==================================================== =========================
Investec Bank plc
Chris Sim / Rahul Sharma +44 207 597 4000
==================================================== =========================
Notes to editors
Seplat Petroleum Development Company Plc is a leading Nigerian
energy company, listed on the Nigerian Stock Exchange (NSE: SEPLAT)
and the Main Market of the London Stock Exchange (LSE: SEPL). For
further information please refer to the Company website,
http://seplatpetroleum.com/
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's strategy,
operations, financial performance or condition, outlook, growth
opportunities or circumstances in the countries, sectors, or
markets in which Seplat 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's control or can be predicted by Seplat. Although Seplat
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 or any other
entity, and must not be relied upon in any way in connection with
any investment decision. Seplat 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.
Operating review
Group reserves
Total working-interest 2P reserves, as assessed independently by
Ryder Scott Company, L.P., at 1 January 2021, stood at 499.4 MMboe,
comprising 240.5 MMbbls of oil and condensate and 1,501.3 Bscf of
natural gas. The change represents an organic decrease in overall
2P reserves of 1.9% year-on-year, due to production of 12.3 MMbbls
but mitigated by upward revisions of previous estimates.
Working-interest 2C resources stood at 94.8 MMboe, comprising 59.7
MMbbls of oil and condensate and 203.3 Bscf of natural gas.
Consequently, the Group's working-interest 2P reserves and 2C
resources stood at 594.1 MMboe at 1 January 2021, comprising 300.2
MMbbls oil and condensate and 1,704.7 Bscf of natural gas.
Drilling programme
During the first quarter of 2021 we completed the Oben-50 gas
well, which is now producing as expected. We also drilled and
completed Oben-51 and expect gas to be flowing in May. We plan
workover activity at Oben-44 and Oben-46 as an alternative to new
drilling. We also plan a development well and an appraisal well at
our Eastern Asset in the second half of the year, as well as three
wells at Gbetiokun and an exploration well at Sibiri (formerly
called Amobe). Shell, the unitised operator, has commenced drilling
the gas wells at ANOH, with a total of four wells being planned for
this year.
HSE performance
Staff and contractors worked a total of 1.9 million hours with
no fatalities, lost-time injuries or minor injuries. The Company
has achieved more than 17 million hours without LTI on
Seplat-operated assets. There were 23 HSE incidents in total,
compared to 26 in Q1 2020, including four spills and four gas
leaks, all of which were remediated with limited environmental
impact. By the end of March we had conducted 4,471 COVID-19 tests,
with a positivity rate of 2%. We continue to enforce all infection
control protocols at our field operations and offices.
Working-interest production for the three months ended 31 March
2021
Average working-interest production for the first quarter of
2021 was within guidance at 48,239 boepd, which represents an
overall increase of 0.5% year-on-year. Within this, liquids
production was down 13.2% to 28,541 bopd because of delays in
siting a new storage vessel at OML 40 to replace the MT Harcourt,
which was damaged in November 2020. There was 84% uptime for the
Trans Forcados Pipeline during the period and the produced liquid
volumes from OMLs 4, 38 and 41 were subject to 12.6% reconciliation
losses.
Working-interest gas production increased by nearly 30% to 114
MMscfd, compared to Q1 2020 in which maintenance was undertaken at
the Oben Gas Processing plant.
3M 2021 3M 2020
============================================= === ================================
Liquids(1) Gas Oil equivalent Liquids Gas Oil equivalent
===================== ============= ============== ============== === ======= ======= ==============
Seplat bopd MMscfd boepd bopd MMscfd boepd
%
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
OMLs 4, 38
& 41 45% 19,842 114 39,540 19,722 88 34,844
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
OML 40 45% 3,615 - 3,615 8,807 8,807
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
OML 53 40% 3,570 - 3,570 2,886 - 2,886
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
OPL 283 40% 1,178 - 1,178 705 - 705
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
Ubima 88% 337 - 337 744 - 744
-------------- ------ ------------- -------------- -------------- --- ------- ------- --------------
Total 28,541 114 48,239 32,863 88 47,986
============== ====== ============= ============== ============== === ======= ======= ==============
1. Liquid production volumes as measured at the LACT unit for
OMLs 4, 38, 41 and OML40, and at the flow station for OPL 283.
Volumes stated are subject to reconciliation and will differ
from sales volumes within the period.
Oil business performance
Seplat's oil operations produced an average 28,541 bopd on a
working-interest basis in Q1 2021. Although output increased at
OMLs 4,38, 41, OML 53 and OPL 283, the delays at OML 40 noted above
resulted in significantly lower volumes in the first quarter.
Production at the Gbetiokun field on OML 40 resumed in March and we
expect volumes to normalise in the second quarter. Similarly, the
Extended Well Test at Ubima has been completed and the production
phase commenced in March.
The average price realised per barrel in the first quarter of
2021 was $60.76 (2020: $49.85), following the recovery of Brent
prices on the receding threat from the Covid-19 pandemic and a
return to previous levels of economic activity.
In accordance with the revised OML 55 commercial arrangement
that was agreed in July 2016, which provides for a discharge sum of
$330 million to be paid to Seplat over a six-year period through
allocation of crude oil volumes produced from OML 55, Seplat
received payments amounting to $4.9 million in Q1 2021.
Update on export route
The minor completion works on the 160,000 bopd Amukpe-Escravos
Pipeline are not within Seplat's control and have been slower than
anticipated due to a combination of challenges associated with
access to the Escravos terminal owing to COVID-19 and issues
relating to ownership of the pipeline. Our partner, the NPDC, now
owns a direct stake in the pipeline and we understand they are
working with the other pipeline owner and their banks to enable the
completion of the project. We have consequently adjusted our plan
and budgets to expect commencement of export of the initial
permitted volume of 40,000 bopd through the Escravos terminal in
the second half of 2021. Once completed, we believe it will
significantly improve the assets' production uptime (84% in Q1
2021) and reduce losses from crude theft and reconciliation (12.6%
in Q1 2021).
Gas business performance
Seplat's working interest production for the first quarter of
2021 was 114 MMscfd (19,698 boepd) at an average selling price of
$2.76/Mscf. Gas volumes were higher than Q1 2020 (88 MMscfd),
during which period we undertook turnaround maintenance at the Oben
Gas Plant. Gas contributed 40.8% of Group volumes on a boepd basis,
and 18.6% of Group revenues.
Sapele Gas Plant
Work continues on the new Sapele Gas Plant with modules now
being fabricated overseas and foundation work being conducted at
the site. The project is expected to be completed in the second
half of 2022, with Sapele's processing capacity increasing from 60
MMscfd to 75MMscfd. The upgraded facility will produce gas that
meets export specifications, and the LPG processing unit module
will enhance the economics of the plant, as well as ensuring that
any gas flaring is eliminated. We are currently accelerating the
installation of AG Booster Compressors at Sapele which will reduce
the gas flare at the site. This is expected to be completed and
operational in Q4 this year.
ANOH gas plant development
The ANOH Gas Processing Plant development at OML 53 (and
adjacent OML 21 with which the upstream project is unitised) will
drive the next phase of growth for Seplat's expanding gas business.
The project will comprise a Phase One 300 MMscfd midstream gas
processing plant.
The ANOH plant, is being built by AGPC, which is an IJV owned
equally between Seplat and the Nigerian Gas Company ("NGC"), a
wholly owned subsidiary of Nigerian National Petroleum Corporation
("NNPC"). In February 2021, AGPC successfully raised $260 million
in debt to fund completion of the ANOH project. The project is now
fully funded following completion of equity investments of $210
million by each partner ($420 million combined).
ANOH is one of Nigeria's most strategic gas projects. It will
help Nigeria to accelerate its transition away from small-scale
diesel generators to cleaner, less expensive fuels such as natural
gas for power generation.
The upstream development, including the drilling of six
production wells, will be delivered by the upstream unit operator
Shell Petroleum Development Company (SPDC), with four wells
expected to be completed in 2021. We have made excellent progress
on the project despite the COVID-19 challenges, and we expect the
major gas processing units to arrive in Nigeria in Q3 2021. We hope
to commence installation before the end of the year, with
mechanical completion and pre-commissioning in Q1 2022, and have
first gas flowing to customers by the end of H1 2022. The initial
total project cost was budgeted at $700 million. Following a cost
optimisation programme, the AGPC construction cost is now expected
to be no more than $650 million, inclusive of financing costs and
taxes, significantly lower than the original projected cost at
FID.
Financial review
Revenue, production and commodity prices
On an average daily basis, Brent crude oil traded between
$51.1/bbl and $69.6/bbl in the first quarter of 2021, ending the
period at around $63.5/bbl. Brent prices averaged $61.3/bbl for the
quarter, 20.5% higher compared to $50.9/bbl in Q1 2020, which was
affected by the pandemic.
Total revenue for the period was $152.4 million, up 16.8% from
the $130.5 million achieved in 2020. Crude oil revenue was $124.1
million (Q1 2020: $107.4 million) a 15.5% increase compared to
2020, reflecting higher realised oil prices. The average oil price
realised in the first quarter of 2021 was $60.8/bbl (Q1 2020:
$49.9/bbl).
Average working-interest liquids production was 28,541 bopd,
down 13.2% from 32,863 bopd in 2020, whilst the total volume of
crude lifted in the period was 2.0 MMbbls compared to 2.1 MMbbls in
2020. The lower oil production in OML 40 was caused by a shut-in of
production from Gbetiokun in January and February, after the MV
Harcourt was damaged in November 2020, and there were delays in
siting the replacement storage vessel for evacuating oil produced
from the field.
Gas sales revenue increased by 22.8% to $28.4 million (Q1 2020:
$23.1 million), due to higher gas sales volumes achieved of 10.3Bcf
(Q1 2020: 7.9Bcf) reflective of the new gas wells brought onstream
during the period. The average realised gas price was lower at
$2.76/Mscf (Q1 2020: $2.89/Mscf).
Gas sales contributed 18.6% of total Group revenue in the period
(Q1 2020: 17.7%).
Gross profit
Gross profit increased by 59.5% to $52.8 million (Q1 2020: $33.1
million) as a result of higher revenues. Cost of sales in the
period totaling $99.7 million was comparable with $97.4 million in
the same period last year. The higher production opex of $37.6
million includes maintenance costs to support asset integrity works
carried out in the period, offset by lower crude handling charges
as the Liquid Heater Treater became operational with minimal water
volumes being evacuated through TFP. Consequently, production opex
for the period was $8.7/boe (Q1 2020: $7.7/boe). Non-production
costs primarily consisting of royalties and DDA, which were $59.3
million comparable to $59.8 million in the prior year reflect the
lower production volumes from OML 40.
The 43.1% reduction in general and administrative (G&A)
expenses resulted from a combination of the effect of cost
reduction initiatives (such as office maintenance,
telecommunication, travel and logistics) across the business,
one-off payments made for emoluments to former Eland directors in
prior period and G&A costs correctly classified in Q3 2020.
Operating profit
The operating profit was $44.4 million after recognising other
income from tariffs (fee from use of Group's pipeline to the Warri
refinery) of $6.6 million and underlift (shortfalls of crude lifted
below the share of production, which is priced at date of lifting)
of $8.1 million. This compared to a $77.0 million operating loss in
Q1 2020, which was impacted primarily by a $145.5 million IAS 36
impairment charge in the period. We achieved an EBITDA of $77.8
million in the period, when adjusted for non-cash items.
Tax
The Group's tax expense for the first quarter of 2021 was $3.2
million, compared to a tax expense of $10.8 million for the same
period in 2020. The tax expense is made up of a deferred tax credit
of $4.7 million and current tax charge of $7.9 million. The
effective tax rate for the period was 11.3%.
Net profit
The profit before tax adjustments was $28.0 million (Q1 2020:
$95.7 million loss). The net finance charge was $16.8 million,
compared to $20 million in 2020. The net profit for Q1 2021 was
$24.9 million (Q1 2020: $106.6 million net loss).
The resultant basic EPS was $0.06 in Q1 2021, compared to a loss
per share of $0.19 in Q1 2020.
Hedging
Seplat's hedging policy aims to guarantee appropriate levels of
cash flow assurance in times of oil price weakness and volatility.
The 2021 hedging programme consists of up-front premium put options
as follows: for Q1, 1.0MMbbls at a strike price of $30/bbl and
1.0MMbbls at a strike price of $35/bbl; for Q2, 2.0MMbbls at a
strike price of $35/bbl; for Q3, 1.0MMbbls at a strike price of
$35/bbl and 1.0MMbbls at a strike price of $40/bbl; and for Q4, 1
.0MMbls at a strike price of $45/bbl. 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.
Cash flows from operating activities
Operating cash flow before movements in working capital was
$84.1 million (Q1 2020: $81.0 million). For the purposes of cash
flow statements, restricted cash of $54.5 million has been excluded
from the cash balance at the end of the period. Cash generated in
the period was also affected by timing differences in the lifting
dates that were scheduled towards the end of the quarter and
resultant settlement dates that included $36.8 million for sale of
crude oil in trade receivables. Consequently, net cash flows from
operating activities, after movements in working capital, were $5.3
million (Q1 2020: $64.5 million).
Seplat received a total of $16.4 million towards the settlement
of outstanding dollar-denominated cash calls and $51.0 million
(Naira equivalent) to offset Naira cash calls, totalling $67.4
million in Q1 2021. The major JV receivable balance now stands at
$97.2 million, down from $107.0 million in December 2020. Seplat
has continued discussions with major partners to ensure that
receivables are settled promptly.
Cash flows from investing activities
Capital expenditures were $32.6 million in the period and
included drilling costs of $18.7 million in relation to the
completion of two gas development wells, pre-drill and ongoing
batch drilling operations costs for two ANOH upstream gas wells at
OML 53. Other expenditure included $8.7 million for costs
associated with the Sapele Gas Plant upgrade and $5.2 million for
other oil and gas facilities and engineering costs.
The Group received total proceeds of $4.9 million from partner
BelemaOil under the revised commercial arrangement at OML 55, for
the monetisation of 94.2 kbbls of crude oil during the period.
After adjusting for interest receipts, the net cash outflow from
investing activities for the period was $27.7 million (Q1 2020:
$44.8 million).
Cash flows from financing activities
Net cash outflows from financing activities were $20.4 million
(Q1 2020: $15.9 million). This reflects lower interest paid on
loans of $20.4 million, compared to the previous year, after $100
million was paid down on the RCF.
Net debt reconciliation at
31 March 2021 $ million Coupon Maturity
=========================== ========= =========== ====================
Senior Notes 345.8 9.25% June 2023
--------------------------- --------- ----------- --------------------
Revolving Credit Facility 250.7 Libor+6.00% June 2022 / December
(RCF) 2023
--------------------------- --------- ----------- --------------------
Westport RBL 97.9 Libor+8% March 2026
--------------------------- --------- ----------- --------------------
Total borrowings 694.4
--------------------------- --------- ----------- --------------------
Cash and cash equivalents 236.3
=========================== ========= =========== ====================
Net debt 458.1
=========================== ========= =========== ====================
Overall, Seplat's aggregate indebtedness at 31 March 2021 stood
at $694.4 million, with cash at bank of $236.3 million, leaving net
debt at $458.1 million.
Reserve-Based Loan (RBL) Refinancing
Eland's existing RBL was consolidated into the Group's balance
sheet in 2020. The initial RBL was entered into in November 2018,
via the Group's subsidiary Westport, and was a five-year loan
agreement with interest payable semi-annually. 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 that 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.
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%
+ 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).
Events after the reporting period
During the period, 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
RCF for general corporate purposes, and to pay transaction fees and
expenses. The RCF remains available for drawing if required.
Interim Condensed Consolidated Financial Statements
(Unaudited)
for the three months ended 31 March 2021
(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 2021
3 Months ended 3 Months ended 31 March 3 Months ended 3 Months ended 31 March
31 March 2021 2020 31 March 2021 2020
----- -------------- ------------------------- -------------- -------------------------
U naudited Unaudited U naudited Unaudited
----- -------------- ------------------------- -------------- -------------------------
Notes million million $'000 $'000
===== ============== ========================= ============== =========================
Revenue from contracts
with customers 7 57,930 42,408 152,448 130,493
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Cost of sales 8 (37,871) (31,651) (99,659) (97,387)
========================= ===== ============== ========================= ============== =========================
Gross profit 20,059 10,757 52,789 33,106
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Other income 9 5,781 15,646 15,214 48,141
------------------------- ----- -------------- ------------------------- -------------- -------------------------
General and
administrative expenses 10 (6,919) (10,396) (18,220) (31,994)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Impairment loss on
financial assets 11 (269) (47,270) (707) (145,453)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Fair value (loss)/gain 12 (1,776) 6,226 (4,676) 19,158
========================= ===== ============== ========================= ============== =========================
Operating profit/(loss) 16,876 (25,037) 44,400 (77,042)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Finance income 13 3 347 7 1,067
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Finance cost 13 (6,391) (6,943) (16,817) (21,364)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Finance cost-net (6,388) (6,596) (16,810) (20,297)
========================= ===== ============== ========================= ============== =========================
Share of profit from
joint venture accounted
for using the equity
method 159 522 418 1,607
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Profit/(loss) before
taxation 10,647 (31,111) 28,008 (95,732)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Income tax expense 14 (1,198) (3,516) (3,152) (10,819)
========================= ===== ============== ========================= ============== =========================
Profit/(loss) for the
period 9,449 (34,627) 24,856 (106,551)
========================= ===== ============== ========================= ============== =========================
Attributable to:
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Equity holders of the
parent 13,550 (34,627) 35,647 (106,551)
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Non-controlling interests (4,101) - (10,791) -
========================= ===== ============== ========================= ============== =========================
9,449 (34,627) 24,856 (106,551)
========================= ===== ============== ========================= ============== =========================
Other comprehensive
income:
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Items that may be
reclassified to profit or
loss:
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Foreign currency
translation difference - 93,911 - -
------------------------- ----- -------------- ------------------------- -------------- -------------------------
Total comprehensive
income/(loss) for the
period (net of tax) 9,449 59,284 24,856 (106,551)
========================= ===== ============== ========================= ============== =========================
Earnings/(Loss) per share attributable to the equity shareholders:
=================================================================== ====== ======== ===== =======
Basic earnings per share ( ) ($) 24 23.29 (60.19) 0.06 (0.19)
------------------------------------------------------------------- ------ -------- ----- -------
Diluted earnings per share ( )/($) 24 23.03 (59.95) 0.06 (0.18)
=================================================================== ====== ======== ===== =======
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 2021
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 2020
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Unaudited Audited Unaudited Audited
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Notes million million $'000 $'000
================================================= ===== ============= =========== ============= ===========
Assets
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Non-current assets
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Oil & gas properties 609,903 609,475 1,605,003 1,603,888
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Other property, plant and equipment 4,814 5,330 12,667 14,027
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Right-of-use assets 3,572 3,965 9,401 10,435
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Intangible assets 22,301 22,301 58,687 58,687
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Other asset 42,769 44,630 112,551 117,448
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Investment accounted for using equity accounting 84,800 84,642 223,159 222,741
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Prepayments 24,777 23,463 65,202 61,744
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Deferred tax asset 14 289,877 289,877 762,833 762,833
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Total non-current assets 1,082,813 1,083,683 2,849,503 2,851,803
================================================= ===== ============= =========== ============= ===========
Current assets
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Inventories 28,643 28,337 75,377 74,570
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Trade and other receivables 15 108,149 96,774 284,600 254,671
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Prepayments 1,219 1,385 3,208 3,644
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Contract assets 16 3,263 2,343 8,586 6,167
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Cash and cash equivalents 18 89,779 98,315 236,257 258,718
================================================= ===== ============= =========== ============= ===========
Total current assets 231,053 227,154 608,028 597,770
================================================= ===== ============= =========== ============= ===========
Total assets 1,313,866 1,310,837 3,457,531 3,449,573
================================================= ===== ============= =========== ============= ===========
Equity and Liabilities
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Equity
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Issued share capital 19 293 293 1,855 1,855
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Share premium 19 86,917 86,917 511,723 511,723
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Share based payment reserve 19 6,958 7,174 27,023 27,592
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Capital contribution 5,932 5,932 40,000 40,000
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Retained earnings 225,386 211,790 1,151,846 1,116,079
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Foreign currency translation reserve 331,289 331,289 992 992
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Non-controlling interest (15,159) (11,058) (44,987) (34,196)
================================================= ===== ============= =========== ============= ===========
Total shareholders' equity 641,616 632,337 1,688,452 1,664,045
================================================= ===== ============= =========== ============= ===========
Non-current liabilities
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Interest bearing loans and borrowings 20 242,606 229,880 638,436 604,947
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Lease Liabilities 1,737 1,591 4,570 4,187
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Provision for decommissioning obligation 61,941 61,795 163,002 162,619
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Deferred tax liabilities 14 200,197 202,020 526,835 531,632
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Defined benefit plan 4,453 4,063 11,718 10,691
================================================= ===== ============= =========== ============= ===========
Total non-current liabilities 510,934 499,349 1,344,561 1,314,076
================================================= ===== ============= =========== ============= ===========
Current liabilities
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Interest bearing loans and borrowings 20 21,268 35,518 55,968 93,468
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Lease Liabilities 511 679 1,345 1,787
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Derivative financial instruments 17 1,841 626 4,844 1,648
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Trade and other payables 21 122,720 130,468 322,952 343,340
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Contract liabilities 22 3,599 3,599 9,470 9,470
------------------------------------------------- ----- ------------- ----------- ------------- -----------
Current tax liabilities 11,377 8,261 29,939 21,739
================================================= ===== ============= =========== ============= ===========
Total current liabilities 161,316 179,151 424,518 471,452
================================================= ===== ============= =========== ============= ===========
Total liabilities 672,250 678,500 1,769,079 1,785,528
================================================= ===== ============= =========== ============= ===========
Total shareholders' equity and liabilities 1,313,866 1,310,837 3,457,531 3,449,573
================================================= ===== ============= =========== ============= ===========
The above interim condensed consolidated statement of financial
position should be read in conjunction with the accompanying
notes.
The Group financial statements of Seplat Petroleum Development
Company Plc and its subsidiaries (The Group) for three months ended
31 March 2021 were authorised for issue in accordance with a
resolution of the Directors on 28 April 2021 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
29 April 2021 29 April 2021 29 April 2021
Interim condensed consolidated statement of changes
in equity
for the three months ended 31 March 2021
Share Foreign Non-
Issued based currency controlling
share Share payment Capital Retained translation interest Total
capital premium reserve contribution earnings reserve equity
-----------------
million million million million million million million million
================= ======== ======= ======= ============ ========= =========== ============ =========
At 1 January 2020 289 84,045 8,194 5,932 259,690 202,910 (7,252) 553,808
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Loss for the
period - - - - (34,627) - - (34,627)
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Other
comprehensive
income - - - - - 93,911 - 93,911
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Total
comprehensive
income for the
period - - - - (34,627) 93,911 - 59,284
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Transactions with
owners in their
capacity as
owners:
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Share based
payments - - 636 - - - - 636
----------------- -------- ------- ------- ------------ --------- ----------- ------------ ---------
Total - - 636 - - - - 636
================= ======== ======= ======= ============ ========= =========== ============ =========
At 31 March 2020
(unaudited) 289 84,045 8,830 5,932 225,063 296,821 (7,252) 613,728
================= ======== ======= ======= ============ ========= =========== ============ =========
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 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
================= ======== ======= ======= ============ ========= =========== ============ =========
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 Capital Retained translation Non-controlling Total
capital premium reserve contribution earnings reserve interest equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
=================== ======= ======== ======== ============ ========== =========== =============== ==========
At 1 January 2020 1,845 503,742 30,426 40,000 1,249,156 2,391 (23,621) 1,803,939
------------------- ------- -------- -------- ------------ ---------- ----------- --------------- ----------
Loss for the period - - - - (106,551) - - (106,551)
------------------- ------- -------- -------- ------------ ---------- ----------- --------------- ----------
Other comprehensive - - - - - - - -
income
------------------- ------- -------- -------- ------------ ---------- ----------- --------------- ----------
Total comprehensive
loss for the
period - - - - (106,551) - - (106,551)
------------------- ------- -------- -------- ------------ ---------- ----------- --------------- ----------
Transactions with
owners in their
capacity as owners:
------------------- ------- -------- -------- ------------ ---------- ----------- --------------- ----------
Share based
payments - - 1,957 - - - 1,957
=================== ======= ======== ======== ============ ========== =========== =============== ==========
Total - - 1,957 - - - - 1,957
=================== ======= ======== ======== ============ ========== =========== =============== ==========
At 31 March
2020(Unaudited) 1,845 503,742 32,383 40,000 1,142,605 2,391 (23,621) 1,699,345
=================== ======= ======== ======== ============ ========== =========== =============== ==========
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
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 40,000 1,151,846 992 (44,987) 1,688,452
=================== ======= ======== ======== ============ ========== =========== =============== ==========
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 2021
3 months 3 months 3 months 3 months
ended ended ended ended
31-Mar-21 31-Mar-20 31-Mar-21 31-Mar-20
Note million million $'000 $'000
====================================== ===== ========== ==================== ========== ===================
Cash flows from operating activities
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Cash generated from operations 23 2,005 23,326 5,266 64,508
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Hedge premium paid (441) - (1,160) -
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Income tax credit 95 - 251 -
====================================== ===== ========== ==================== ========== ===================
Net cash inflows from operating
activities 1,660 23,326 4,357 64,508
====================================== ===== ========== ==================== ========== ===================
Cash flows from investing activities
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Payment for acquisition of oil
and gas properties (12,382) (16,558) (32,585) (45,866)
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Payment for acquisition of other
property, plant and equipment (17) - (45) -
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Receipts from other assets 1,861 - 4,897 -
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Interest received 3 347 7 1,067
====================================== ===== ========== ==================== ========== ===================
Net cash outflows from investing
activities (10,535) (16,211) (27,726) (44,799)
====================================== ===== ========== ==================== ========== ===================
Cash flows from financing activities
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Proceeds from loans - 3,610 - 10,000
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Lease payment (2) (42) (4) (117)
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Payments for other financing
charges - (941) - (2,606)
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Interest paid on loans (7,746) (8,369) (20,384) (23,184)
====================================== ===== ========== ==================== ========== ===================
Net cash outflows from financing
activities (7,748) (5,742) (20,388) (15,907)
====================================== ===== ========== ==================== ========== ===================
Net (decrease)/increase in cash
and cash equivalents (16,623) 1,373 (43,757) 3,802
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Cash and cash equivalents at
beginning of the year 85,554 100,184 225,137 326,330
-------------------------------------- ----- ---------- -------------------- ---------- -------------------
Effects of exchange rate changes
on cash and cash equivalents 225 17,337 607 (788)
====================================== ===== ========== ==================== ========== ===================
Cash and cash equivalents at
end of the period 69,156 118,894 181,987 329,344
====================================== ===== ========== ==================== ========== ===================
For the purposes of the cash flow statements, the restricted
cash balance of 5.1 billion ($13.5 million) has been excluded from
the cash and cash equivalents at the end of the period. These
amounts are subject to legal restrictions and are therefore not
available for general use by the Group.
An additional 7.9 billion ( $20.8 million) of funds deposited in
Access bank Plc bank accounts in the ordinary course of business
are being unilaterally restricted by Access bank Plc in connection
with the court case between Seplat Petroleum Development Company
Plc and Access Bank Plc.
Also included in the restricted cash balance is a cash-backed
guarantee of 7.6 billion ($20 million) set aside with Zenith Bank
Plc to fulfil the requirement of an order of the Court of Appeal,
to seek the release of any order relating to the case between
Seplat Development Petroleum Company Plc and Access Bank Plc.
The above interim condensed consolidated statement of cashflows
should be read in conjunction with the accompanying notes.
Notes to the interim condensed consolidated financial
statements
1. Corporate Structure and business
Seplat Petroleum Development Company Plc ('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 was
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 79.6 billion.
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 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 Petroleum Development Company
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. (See details in Note 4.1.vi) 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 Petroleum Development Company 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.
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 100% Oil & gas Direct
Limited exploration
and production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Seplat Petroleum 21 August 2014 United Kingdom 100% Technical, liaison Direct
Development Company and administrative
UK Limited support services
relating to oil &
gas exploration and
production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Seplat Gas Company 12 December 2014 Nigeria 100% Oil & gas Direct
Limited exploration and
production and gas
processing
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Seplat East Onshore 12 December 2014 Nigeria 100% Oil & gas Direct
Limited exploration and
production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Seplat East Swamp 12 December 2014 Nigeria 100% Oil & gas Direct
Company Limited exploration and
production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Seplat West Limited 16 January 2018 Nigeria 100% Oil & gas Direct
exploration and
production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Eland Oil & Gas 28 August 2009 United Kingdom 100% Holding company Direct
Limited
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Eland Oil & Gas 11 August 2010 Nigeria 100% Oil and Gas Indirect
(Nigeria) Limited Exploration and
Production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Elcrest Exploration 6 January 2011 Nigeria 45% Oil and Gas Indirect
and Production Exploration and
Nigeria Limited Production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Westport Oil Limited 8 August 2011 Jersey 100% Financing Indirect
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Tarland Oil Holdings 16 July 2014 Jersey 100% Holding Company Indirect
Limited
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Brineland Petroleum 18 February 2013 Nigeria 49% Dormant Indirect
Limited
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Wester Ord Oil & Gas 18 July 2014 Nigeria 100% Oil and Gas Indirect
(Nigeria) Limited Exploration
and Production
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Wester Ord Oil and 16 July 2014 Jersey 100% Holding Company Indirect
Gas Limited
-------------------- --------------------- -------------------- ---------- -------------------- -----------------
Destination Natural - Dubai 70% Dormant Indirect
Resources Limited
==================== ===================== ==================== ========== ==================== =================
2. Significant changes in the current reporting period
The following significant changes occurred during the reporting
period ended 31 March 2021:
-- During the period, the Group offered 7.75% senior notes with
an aggregate principal of $650 million ( 247 billion) due in April
2026. The notes, which were priced on 25 March and closed on 1
April 2021, were issued by the Group in March 2021 and guaranteed
by certain of its subsidiaries.
3. Summary of significant accounting policies
3.1 Introduction to summary of significant accounting policies
This note provides a list of the significant accounting policies
adopted in the preparation of these interim condensed consolidated
financial statements. These accounting policies have been applied
to all the periods presented, unless otherwise stated. The interim
financial statements are for the Group consisting of Seplat Plc and
its subsidiaries.
3.2 Basis of preparation
The interim condensed consolidated financial statements of the
Group for the first quarter ended 31 March 2021 have been prepared
in accordance with the accounting standard IAS 34 Interim financial
reporting. This interim condensed consolidated financial statement
does not include all the notes normally included in an annual
financial statement of the Group. Accordingly, this report is to be
read in conjunction with the annual report for the year ended 31
December 2020 and any public announcements made by the Group during
the interim reporting period.
The financial statements have been prepared under the going
concern assumption and historical cost convention, except for
financial instruments measured at fair value on initial
recognition, defined benefit plans - plan assets measured at fair
value. The financial statements are presented in Nigerian Naira and
United States Dollars, and all values are rounded to the nearest
million ( 'million) and thousand ($'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 accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2020, except for the adoption of new standards effective as of 1
January 2021. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Several amendments and interpretations apply for the first time
in 2021, but do not have an impact on the interim condensed
consolidated financial statements of the Group.
a) Amendments to IFRS 7, IFRS 9, IAS 39, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform - Phase 2
The amendments provide temporary reliefs which address the
financial reporting effects when an interbank offered rate (IBOR)
is replaced with an alternative nearly risk-free rate (RFR). The
amendments include a practical expedient to require contractual
changes, or changes to cash flows that are directly required by the
reform, to be treated as changes to a floating interest rate,
equivalent to a movement in a market rate of interest. The
practical expedient is required for entities applying IFRS 4 that
are using the exemption from IFRS 9 (and, therefore, apply IAS 39)
and for IFRS 16 Leases, to lease modifications required by IBOR
reform. The amendments also permit changes required by IBOR reform
to be made to hedge designations and hedge documentation without
the hedging relationship being discontinued. Any gains or losses
that could arise on transition are dealt with through the normal
requirements of IFRS 9 and IAS 39 to measure and recognise hedge
ineffectiveness. In addition, the amendments provide temporary
relief to entities from having to meet the separately identifiable
requirement when an RFR instrument is designated as a hedge of a
risk component. These amendments had no impact on the consolidated
financial statements of the Group as it does not have any interest
rate hedge relationships.
This amendment had no impact on the consolidated financial
statements of the Group.
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
-- Classification of Liabilities as Current or Non-current -
Amendments to IAS 1 - Effective for annual periods beginning on or
after 1 January 2022.
-- Amendments to IAS 16 Property, Plant and Equipment -
Effective date for annual periods beginning on or after 1 January
2022
-- Amendments to IAS 8 Accounting Policies and Accounting
Estimates - Effective date for annual periods beginning on or after
1 January 2022
-- Amendments to IAS 37 Onerous Contracts - Costs of Fulfilling
a Contract - Effective date for annual periods beginning on or
after 1 January 2022
-- Amendments to IFRS 3 Business Combination - Reference to the
Conceptual Framework - Effective date for annual periods beginning
on or after 1 January 2022
-- Amendments to IFRS 9 Financial Instruments - Fees in the '10
per cent' test for derecognition of financial liabilities -
Effective date for annual periods beginning on or after 1 January
2022
-- Amendments to IAS 41 Agriculture - Taxation in fair value
measurements - Effective date for annual periods beginning on or
after 1 January 2022
3.5 Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries as at 31 March
2021.
This basis of consolidation is the same adopted for the last
audited financial statements as at 31 December 2020.
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 2020 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.
iii. 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.
iv. 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.
v. 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 (Seplat's 45% share of $100
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.
vi. 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 5.8 billion, 2020: 4.2 billion.
vii. 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.
viii. 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 general manager (Finance), the
general manager (Gas) 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 2020 annual financial
statements.
The following are some of the estimates and assumptions
made.
i. Defined benefit plans (pension benefits)
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 forecasting Match and settle foreign
exchange transactions Sensitivity analysis denominated cash inflows
Recognised financial assets 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, Vitol, Eni Trading 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 runs for five
years until 31 July 2021 and on Vitol off-take agreement (OML53 -
Ohaji South Field) which expires in May 2021. While payment term is
10 days in the Eni off-take agreement (OML53 - Jisike Field) which
expires in December 2021. The Group is exposed to further credit
risk from outstanding cash calls from Nigerian Petroleum
Development Company (NPDC) and National Petroleum Investment
Management Services (NAPIMS).
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.
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 deposit
bearing current accounts, time deposits and money market
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 Less than 1 - 2 2 - 3 3 - 6 Total
interest 1 year year years years
rate
---------------------------
% million million million million million
=========================== ========== ========= ======= ======= ======= ========
31 March 2021
--------------------------- ---------- --------- ------- ------- ------- --------
Non - derivatives
--------------------------- ---------- --------- ------- ------- ------- --------
Fixed interest rate
borrowings
--------------------------- ---------- --------- ------- ------- ------- --------
Senior notes 9.25% - - 133,000 - 133,000
--------------------------- ---------- --------- ------- ------- ------- --------
Variable interest
rate borrowings
--------------------------- ---------- --------- ------- ------- ------- --------
Citibank, N.A., London
Branch 6% + Libor 5,790 5,067 - - 10,857
--------------------------- ---------- --------- ------- ------- ------- --------
Nedbank Limited London 6% + Libor 5,790 5,067 - - 10,857
--------------------------- ---------- --------- ------- ------- ------- --------
Stanbic IBTC Bank
Plc 6% + Libor 2,895 2,533 - - 5,428
--------------------------- ---------- --------- ------- ------- ------- --------
The Standard Bank
of South Africa Limited 6% + Libor 2,895 2,533 - - 5,428
--------------------------- ---------- --------- ------- ------- ------- --------
RMB International
(Mauritius) Limited 6% + Libor 5,790 5,067 - - 10,857
--------------------------- ---------- --------- ------- ------- ------- --------
The Mauritius Commercial
Bank Ltd 6% + Libor 5,790 5,067 - - 10,857
--------------------------- ---------- --------- ------- ------- ------- --------
JPMorgan Chase Bank,
N.A., London Branch 6% + Libor 4,343 3,800 - - 8,143
--------------------------- ---------- --------- ------- ------- ------- --------
Standard Chartered
Bank 6% + Libor 4,343 3,800 - - 8,143
--------------------------- ---------- --------- ------- ------- ------- --------
Natixis 6% + Libor 4,343 3,800 - - 8,143
--------------------------- ---------- --------- ------- ------- ------- --------
Société
Générale,
London Branch 6% + Libor 2,171 1,900 - - 4,071
--------------------------- ---------- --------- ------- ------- ------- --------
Zenith Bank Plc 6% + Libor 2,171 1,900 - - 4,071
--------------------------- ---------- --------- ------- ------- ------- --------
United Bank for Africa
Plc 6% + Libor 2,171 1,900 - - 4,071
--------------------------- ---------- --------- ------- ------- ------- --------
First City Monument
Bank Limited 6% + Libor 2,172 1,900 - - 4,072
--------------------------- ---------- --------- ------- ------- ------- --------
The Mauritius Commercial
Bank Ltd 8% + Libor - - 2,918 11,674 14,592
--------------------------- ---------- --------- ------- ------- ------- --------
Stanbic IBTC Bank
Plc 8% + Libor - - 2,979 11,917 14,896
--------------------------- ---------- --------- ------- ------- ------- --------
Standard Bank of South
Africa 8% + Libor - - 1,702 6,810 8,512
--------------------------- ---------- --------- ------- ------- ------- --------
Total variable interest
borrowings 50,664 44,334 7,599 30,401 132,998
=========================== ========== ========= ======= ======= ======= ========
Other non - derivatives
--------------------------- ---------- --------- ------- ------- ------- --------
Trade and other payables** 122,720 - - - 122,720
--------------------------- ---------- --------- ------- ------- ------- --------
Lease liability 933 1,551 731 25 3,240
=========================== ========== ========= ======= ======= ======= ========
123,653 1,551 731 25 125,960
=========================== ========== ========= ======= ======= ======= ========
Total 174,317 45,885 141,330 30,426 391,958
=========================== ========== ========= ======= ======= ======= ========
Effective Less than 1 - 2 2 - 3 3 - 5 Total
interest 1 year year years years
rate
---------------------------
% million million million million million
=========================== ========== ========= ======== ======== ======= ========
31 December 2020
--------------------------- ---------- --------- -------- -------- ------- --------
Non - derivatives
--------------------------- ---------- --------- -------- -------- ------- --------
Fixed interest rate
borrowings
--------------------------- ---------- --------- -------- -------- ------- --------
Senior notes 9.25% - - 133,000 - 133,000
--------------------------- ---------- --------- -------- -------- ------- --------
Variable interest
rate borrowings
--------------------------- ---------- --------- -------- -------- ------- --------
Citibank, N.A., London
Branch 6% + Libor 724 10,133 - - 10,857
--------------------------- ---------- --------- -------- -------- ------- --------
Nedbank Limited London 6% + Libor 724 10,133 - - 10,857
--------------------------- ---------- --------- -------- -------- ------- --------
Stanbic IBTC Bank
Plc 6% + Libor 362 5,067 - - 5,429
--------------------------- ---------- --------- -------- -------- ------- --------
The Standard Bank
of South Africa Limited 6% + Libor 362 5,067 - - 5,429
--------------------------- ---------- --------- -------- -------- ------- --------
RMB International
(Mauritius) Limited 6% + Libor 724 10,133 - - 10,857
--------------------------- ---------- --------- -------- -------- ------- --------
The Mauritius Commercial
Bank Ltd 6% + Libor 724 10,133 - - 10,857
--------------------------- ---------- --------- -------- -------- ------- --------
JPMorgan Chase Bank,
N.A., London Branch 6% + Libor 543 7,600 - - 8,143
--------------------------- ---------- --------- -------- -------- ------- --------
Standard Chartered
Bank 6% + Libor 543 7,600 - - 8,143
--------------------------- ---------- --------- -------- -------- ------- --------
Natixis 6% + Libor 543 7,600 - - 8,143
--------------------------- ---------- --------- -------- -------- ------- --------
Société
Générale,
London Branch 6% + Libor 271 3,800 - - 4,071
--------------------------- ---------- --------- -------- -------- ------- --------
Zenith Bank Plc 6% + Libor 271 3,800 - - 4,071
--------------------------- ---------- --------- -------- -------- ------- --------
United Bank for Africa
Plc 6% + Libor 271 3,800 - - 4,071
--------------------------- ---------- --------- -------- -------- ------- --------
First City Monument
Bank Limited 6% + Libor 271 3,800 - - 4,071
--------------------------- ---------- --------- -------- -------- ------- --------
First Bank of Nigeria 8% + Libor 1,140 2,993 428 - 4,561
--------------------------- ---------- --------- -------- -------- ------- --------
The Mauritius Commercial
Bank Ltd 8% + Libor 3,268 8,579 1,226 - 13,073
--------------------------- ---------- --------- -------- -------- ------- --------
Stanbic IBTC Bank
Plc/ The Standard
Bank of South Africa
Limited 8% + Libor 5,092 13,367 1,910 - 20,369
--------------------------- ---------- --------- -------- -------- ------- --------
Total variable interest
borrowings 15,833 113,605 3,564 - 133,002
=========================== ========== ========= ======== ======== ======= ========
Other non - derivatives
--------------------------- ---------- --------- -------- -------- ------- --------
Trade and other payables** 130,468 - - - 130,468
--------------------------- ---------- --------- -------- -------- ------- --------
Lease liability 933 895 731 25 2,584
=========================== ========== ========= ======== ======== ======= ========
131,401 895 731 25 133,052
=========================== ========== ========= ======== ======== ======= ========
Total 147,234 114,500 137,295 25 399,054
=========================== ========== ========= ======== ======== ======= ========
Effective Less than 1 - 2 2 - 3 3 - 6
interest rate 1 year year years years Total
% $'000 $'000 $'000 $'000 $'000
===================================== ============== ========= ========== ========= ====== =========
31 March 2021
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Non - derivatives
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Fixed interest rate borrowings
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Senior notes 9.25% - - 350,000 - 350,000
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Variable interest rate borrowings
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Citibank, N.A., London Branch 6% + Libor 15,238 13,333 - - 28,571
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Nedbank Limited London 6% + Libor 15,238 13,333 - - 28,571
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Stanbic IBTC Bank Plc 6% + Libor 7,619 6,667 - - 14,286
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Standard Bank of South Africa
Limited 6% + Libor 7,619 6,667 - - 14,286
------------------------------------- -------------- --------- ---------- --------- ------ ---------
RMB International (Mauritius) Limited 6% + Libor 15,238 13,333 - - 28,571
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Mauritius Commercial Bank Ltd 6% + Libor 15,238 13,333 - - 28,571
------------------------------------- -------------- --------- ---------- --------- ------ ---------
JPMorgan Chase Bank, N.A., London
Branch 6% + Libor 11,429 10,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Standard Chartered Bank 6% + Libor 11,429 10,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Natixis 6% + Libor 11,429 10,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Société Générale,
London Branch 6% + Libor 5,714 5,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Zenith Bank Plc 6% + Libor 5,714 5,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
United Bank for Africa Plc 6% + Libor 5,714 5,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
First City Monument Bank Limited 6% + Libor 5,715 5,000 - - 10,715
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Mauritius Commercial Bank Ltd 8% + Libor - - 7,680 30,720 38,400
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Stanbic IBTC Bank Plc 8% + Libor - - 7,840 31,360 39,200
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Standard Bank of South Africa 8% + Libor - - 4,480 17,920 22,400
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Total variable interest borrowings 133,334 116,666 20,000 80,000 350,000
===================================== ============== ========= ========== ========= ====== =========
Other non - derivatives
------------------------------------- ------------------------- --- ---- --- ---- ----------------
Trade and other payables** 322,952 - - - 322,952
----------------------------------------------------- --------- ---------- --------- ------ ---------
Lease liability 2,455 4,082 1,924 67 8,528
===================================================== ========= ========== ========= ====== =========
325,407 4,082 1,924 67 331,480
===================================================== ========= ========== ========= ====== =========
Total 458,741 120,748 371,924 80,067 1,031,480
===================================================== ========= ========== ========= ====== =========
Effective Less than 1 - 2 2 - 3 3 - 5
interest rate 1 year year years years Total
% $'000 $'000 $'000 $'000 $'000
===================================== ============== ========= ========== ========= ====== =========
31 December 2020
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Non - derivatives
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Fixed interest rate borrowings
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Senior notes 9.25% - - 350,000 - 350,000
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Variable interest rate borrowings
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Citibank, N.A., London Branch 6% + Libor 1,905 26,667 - - 28,572
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Nedbank Limited London 6% + Libor 1,905 26,667 - - 28,572
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Stanbic IBTC Bank Plc 6% + Libor 952 13,333 - - 14,285
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Standard Bank of South Africa
Limited 6% + Libor 952 13,333 - - 14,285
------------------------------------- -------------- --------- ---------- --------- ------ ---------
RMB International (Mauritius) Limited 6% + Libor 1,905 26,667 - - 28,572
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Mauritius Commercial Bank Ltd 6% + Libor 1,905 26,667 - - 28,572
------------------------------------- -------------- --------- ---------- --------- ------ ---------
JPMorgan Chase Bank, N.A., London
Branch 6% + Libor 1,429 20,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Standard Chartered Bank 6% + Libor 1,429 20,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Natixis 6% + Libor 1,429 20,000 - - 21,429
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Société Générale,
London Branch 6% + Libor 714 10,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Zenith Bank Plc 6% + Libor 714 10,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
United Bank for Africa Plc 6% + Libor 714 10,000 - - 10,714
------------------------------------- -------------- --------- ---------- --------- ------ ---------
First City Monument Bank Limited 6% + Libor 713 10,000 - - 10,713
------------------------------------- -------------- --------- ---------- --------- ------ ---------
First Bank of Nigeria 8% + Libor 3,000 7,875 1,125 - 12,000
------------------------------------- -------------- --------- ---------- --------- ------ ---------
The Mauritius Commercial Bank Ltd 8% + Libor 8,600 22,575 3,225 - 34,400
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Stanbic IBTC Bank Plc/ The Standard
Bank of South Africa Limited 8% + Libor 13,400 35,175 5,025 - 53,600
------------------------------------- -------------- --------- ---------- --------- ------ ---------
Total variable interest borrowings 41,666 298,959 9,375 - 350,000
===================================== ============== ========= ========== ========= ====== =========
Other non - derivatives
------------------------------------- ------------------------- --- ---- ----- --- -----------------
Trade and other payables** 343,341 - - - 343,324
----------------------------------------------------- --------- ---------- --------- ------ ---------
Lease liability 2,455 2,354 1,924 67 6,800
===================================================== ========= ========== ========= ====== =========
345,796 2,354 1,924 67 350,141
===================================================== ========= ========== ========= ====== =========
Total 387,462 301,313 361,299 67 1,050,142
===================================================== ========= ========== ========= ====== =========
** 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
2021 2020 2021 2020
-------------------------------------------
million million million million
=========================================== ============== ============ ============== ============
Financial assets at amortised cost
Trade and other receivables* 102,963 58,398 102,963 58,398
------------------------------------------- -------------- ------------ -------------- ------------
Contract assets 3,263 2,343 3,263 2,343
------------------------------------------- -------------- ------------ -------------- ------------
Cash and bank balances 89,779 98,315 89,779 98,315
------------------------------------------- -------------- ------------ -------------- ------------
196,005 159,056 196,005 159,056
=========================================== ============== ============ ============== ============
Financial liabilities at amortised cost
Interest bearing loans and borrowings 263,874 265,398 273,776 277,170
------------------------------------------- -------------- ------------ -------------- ------------
Trade and other payables** 122,720 93,537 122,720 93,537
=========================================== ============== ============ ============== ============
386,594 358,935 396,496 370,707
=========================================== ============== ============ ============== ============
Financial liabilities at fair value
------------------------------------------- -------------- ------------ -------------- ------------
Derivative financial instruments (Note 17) 1,841 626 1,841 626
------------------------------------------- -------------- ------------ -------------- ------------
1,841 626 1,841 626
=========================================== ============== ============ ============== ============
Carrying amount Fair value
============================ ============================
As at 31 March As at 31 Dec As at 31 March As at 31 Dec
2021 2020 2021 2020
$'000 $'000 $'000 $'000
=========================================== ============== ============ ============== ============
Financial assets at amortised cost
Trade and other receivables* 270,956 153,680 270,956 153,680
------------------------------------------- -------------- ------------ -------------- ------------
Contract assets 8,586 6,167 8,586 6,167
------------------------------------------- -------------- ------------ -------------- ------------
Cash and bank balances 236,257 258,718 236,257 258,718
------------------------------------------- -------------- ------------ -------------- ------------
515,799 418,565 515,799 418,565
------------------------------------------- -------------- ------------ -------------- ------------
Financial liabilities at amortised cost
Interest bearing loans and borrowings 694,404 698,415 720,463 729,395
------------------------------------------- -------------- ------------ -------------- ------------
Trade and other payables** 322,952 246,150 322,952 246,150
------------------------------------------- -------------- ------------ -------------- ------------
1,017,356 944,565 1,043,415 975,545
------------------------------------------- -------------- ------------ -------------- ------------
Financial liabilities at fair value
------------------------------------------- -------------- ------------ -------------- ------------
Derivative financial instruments (Note 17) 4,844 1,648 4,844 1,648
------------------------------------------- -------------- ------------ -------------- ------------
4,844 1,648 4,844 1,648
=========================================== ============== ============ ============== ============
* Trade and other receivables exclude 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 prepayments),
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 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 2021, revenue from the gas segment
of the business constituted 19% of the Group's revenue. Management
believes that the gas segment of the business will continue to
generate higher profits in the foreseeable future. It also decided
that more investments will be made toward building the gas arm of
the business. This investment will be used in establishing more
offices, creating a separate operational management and procuring
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 this
business segment's revenues and results, and its cash flows, will
be 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 2021 2020 31 March 2021 2020
'million ' million $'000 $'000
============================ ============== =========================== ============== ===========================
Oil 3,895 (43,395) 10,240 (133,530)
---------------------------- -------------- --------------------------- -------------- ---------------------------
Gas 5,554 8,768 14,616 26,979
============================ ============== =========================== ============== ===========================
Total profit from continued
operations for the period 9,449 (34,627) 24,856 (106,551)
============================ ============== =========================== ============== ===========================
Oil
3 Months ended 3 Months ended 31 March 3 Months ended 3 Months ended 31 March
31 March 2021 2020 31 March 2021 2020
----------------------------
'million ' million $'000 $'000
============================ ============== =========================== ============== ===========================
Revenue from contract with
customers
---------------------------- -------------- --------------------------- -------------- ---------------------------
Crude oil sales 47,152 34,900 124,084 107,389
============================ ============== =========================== ============== ===========================
Operating profit before
depreciation, depletion
and amortisation 20,092 14,654 52,862 45,093
============================ ============== =========================== ============== ===========================
Depreciation and impairment (12,311) (47,937) (32,398) (147,507)
============================ ============== =========================== ============== ===========================
Operating profit/(loss) 7,781 (33,283) 20,464 (102,414)
============================ ============== =========================== ============== ===========================
Finance income 3 347 7 1,067
---------------------------- -------------- --------------------------- -------------- ---------------------------
Finance costs (6,391) (6,943) (16,817) (21,364)
---------------------------- -------------- --------------------------- -------------- ---------------------------
Profit/(Loss) before
taxation 1,393 (39,879) 3,654 (122,711)
---------------------------- -------------- --------------------------- -------------- ---------------------------
Income tax credit/(expense) 2,502 (3,516) 6,586 (10,820)
---------------------------- -------------- --------------------------- -------------- ---------------------------
Profit/(Loss) for the period 3,895 (43,395) 10,240 (133,530)
============================ ============== =========================== ============== ===========================
Gas
3 Months ended 3 Months ended 31 March 3 Months ended 3 Months ended 31 March
31 March 2021 2020 31 March 2021 2020
'million ' million $'000 $'000
============================ ============== =========================== ============== ===========================
Revenue from contract with
customer
---------------------------- -------------- --------------------------- -------------- ---------------------------
Gas sales 10,778 7,508 28,364 23,104
---------------------------- -------------- --------------------------- -------------- ---------------------------
Operating profit before
depreciation, depletion
and amortisation 9,112 8,257 23,980 25,407
---------------------------- -------------- --------------------------- -------------- ---------------------------
Depreciation, amortization
and impairment (17) (11) (44) (35)
---------------------------- -------------- --------------------------- -------------- ---------------------------
Operating profit 9,095 8,246 23,936 25,372
---------------------------- -------------- --------------------------- -------------- ---------------------------
Finance income - - - -
---------------------------- -------------- --------------------------- -------------- ---------------------------
Finance cost - - - -
---------------------------- -------------- --------------------------- -------------- ---------------------------
Share of profit from joint
venture accounted
for using equity accounting 159 522 418 1,607
---------------------------- -------------- --------------------------- -------------- ---------------------------
Profit before taxation 9,254 8,768 24,354 26,979
---------------------------- -------------- --------------------------- -------------- ---------------------------
Taxation (3,700) - (9,738) -
---------------------------- -------------- --------------------------- -------------- ---------------------------
Profit for the period 5,554 8,768 14,616 26,979
============================ ============== =========================== ============== ===========================
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 3 Months 3 Months 3 Months 3 Months
ended ended ended ended ended ended
March 2021 March 2021 March 2021 March 2020 March 2020 March 2020
-----------------------
Oil Gas Total Oil Gas Total
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
'million 'million 'million ' million ' million ' million
======================= ============ ============= ============= ============= ============= =============
Geographical markets
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Nigeria 11,587 10,778 22,365 9,246 7,508 16,754
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Switzerland 35,565 35,565 25,654 25,654
======================= ============ ============= ============= ============= ============= -------------
Revenue from contract
with customers 47,152 10,778 57,930 34,900 7,508 42,408
======================= ============ ============= ============= ============= ============= =============
Timing of revenue
recognition
======================= ============ ============= ============= ============= ============= =============
At a point in time 47,152 - 47,152 34,900 - 34,900
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Over time - 10,778 10,778 - 7,508 7,508
======================= ============ ============= ============= ============= ============= =============
Revenue from contract
with customers 47,152 10,778 57,930 34,900 7,508 42,408
======================= ============ ============= ============= ============= ============= =============
3 Months 3 Months 3 Months 3 Months 3 Months 3 Months
ended ended ended ended ended ended
March 2021 March 2021 March 2021 March 2020 March 2020 March 2020
Oil Gas Total Oil Gas Total
$'000 $'000 $'000 $'000 $'000 $'000
======================= ============ ============= ============= ============= ============= =============
Geographical markets
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Nigeria 30,492 28,364 58,856 28,451 23,104 51,555
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Switzerland 93,592 - 93,592 78,938 78,938
======================= ============ ============= ============= ============= ============= -------------
Revenue from contract
with customers 124,084 28,364 152,448 107,389 23,104 130,493
======================= ============ ============= ============= ============= ============= =============
Timing of revenue
recognition
======================= ============ ============= ============= ============= ============= =============
At a point in time 124,084 - 124,084 107,389 - 107,389
----------------------- ------------ ------------- ------------- ------------- ------------- -------------
Over time - 28,364 28,364 - 23,104 23,104
======================= ============ ============= ============= ============= ============= =============
Revenue from contract
with customers 124,084 28,364 152,448 107,389 23,104 130,493
======================= ============ ============= ============= ============= ============= =============
The Group's transactions with its major customer, Mercuria,
constitutes more than 10% ( 35.6 billion, $94 million) of the total
revenue from the oil segment and the Group as a whole. Also, the
Group's transactions with Azura ( 3.7 billion, $11.8 million)
accounted for more than 10% of the total revenue from the gas
segment and the Group as a whole.
6.1.2 Impairment loss/(reversal) 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 2021 March 2021 March 2021 March 2020 March 2020 March 2020
----------------------
Oil Gas Total Oil Gas Total
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
'million 'million 'million 'million 'million 'million
====================== ============== ============== ============== ============== ============== ==============
Impairment
loss/(reversal) 252 17 269 (187) - (187)
====================== ============== ============== ============== ============== ============== ==============
3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended
March 2021 March 2021 March 2021 March 2020 March 2020 March 2020
Oil Gas Total Oil Gas Total
$'000 $'000 $'000 $'000 $'000 $'000
====================== ============== ============== ============== ============== ============== ==============
Impairment
loss/(reversal) 663 44 707 (575) - (575)
====================== ============== ============== ============== ============== ============== ==============
6.1.3 Impairment loss/(reversal) on non-financial assets by reportable segments
3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended
March 2021 March 2021 March 2021 March 2020 March 2020 March 2020
-------------------
Oil Gas Total Oil Gas Total
------------------- --------------- --------------- --------------- -------------- -------------- --------------
'million 'million 'million 'million 'million 'million
=================== =============== =============== =============== ============== ============== ==============
Impairment
loss/(reversal) - - - 47,457 - 47,457
=================== =============== =============== =============== ============== ============== ==============
3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended 3 Months ended
March 2021 March 2021 March 2021 March 2020 March 2020 March 2020
Oil Gas Total Oil Gas Total
$'000 $'000 $'000 $'000 $'000 $'000
=================== =============== =============== =============== ============== ============== ==============
Impairment
loss/(reversal) - - - 146,028 - 146,028
=================== =============== =============== =============== ============== ============== ==============
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 2021 1,232,834 81,032 1,313,866 3,244,289 213,242 3,455,331
--------------------- ---------- --------- ---------- ---------- -------- ----------
31 December 2020 1,101,463 209,374 1,310,837 2,898,588 550,985 3,449,573
===================== ========== ========= ========== ========== ======== ==========
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 2021 659,298 12,952 672,250 1,734,996 34,083 1,769,079
-------------------------- --------- --------- -------- ---------- ------- ----------
31 December 2020 654,095 24,405 678,500 1,721,305 64,223 1,785,528
========================== ========= ========= ======== ========== ======= ==========
7. Revenue from contracts with customers
3 months ended 3 months ended 3 months ended 3 months ended
31 March 2021 31 March 202 0 31 March 2021 31 March 202 0
million million $'000 $'000
================ ============== =============== ============== ===============
Crude oil sales 47,152 34,900 124,084 107,389
---------------- -------------- --------------- -------------- ---------------
Gas sales 10,778 7,508 28,364 23,104
---------------- -------------- --------------- -------------- ---------------
57,930 42,408 152,448 130,493
================ ============== =============== ============== ===============
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 2021 31 March 202 0 31 March 2021 31 March 202 0
million million $'000 $'000
============================================= ============== =============== ================== ===============
Royalties 10,793 10,400 28,404 32,002
--------------------------------------------- -------------- --------------- ------------------ ---------------
Depletion, depreciation and amortisation 11,748 9,021 30,915 27,758
--------------------------------------------- -------------- --------------- ------------------ ---------------
Crude handling fees 4,749 6,575 12,498 20,230
--------------------------------------------- -------------- --------------- ------------------ ---------------
Nigeria Export Supervision Scheme (NESS) fee 55 29 145 88
--------------------------------------------- -------------- --------------- ------------------ ---------------
Niger Delta Development Commission Levy 977 1,132 2,571 3,484
--------------------------------------------- -------------- --------------- ------------------ ---------------
Barging/Trucking 824 - 2,167 -
--------------------------------------------- -------------- --------------- ------------------ ---------------
Operational & maintenance expenses 8,725 4,494 22,959 13,826
============================================= ============== =============== ================== ===============
37,871 31,651 99,659 97,387
============================================= ============== =============== ================== ===============
Operational & maintenance expenses mainly relates to
maintenance costs, warehouse operations expenses, gas flare penalty
fees, security expenses, community expenses, clean-up costs, fuel
supplies and catering services.
9. Other income/(losses)
3 months ended 3 months ended 3 months ended 3 months ended
31 March 2021 31 March 202 0 31 March 2021 31 March 202 0
million ' million $'000 $'000
================================= ============== =============== ================== ===============
Underlift/(Overlift) 3,115 15,217 8,198 46,823
--------------------------------- -------------- --------------- ------------------ ---------------
Gains/(loss) on foreign exchange 114 425 301 1,308
--------------------------------- -------------- --------------- ------------------ ---------------
Others 25 4 66 10
--------------------------------- -------------- --------------- ------------------ ---------------
Tariffs 2,527 - 6,649 -
--------------------------------- -------------- --------------- ------------------ ---------------
5,781 15,646 15,214 48,141
================================= ============== =============== ================== ===============
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 as other expenses. 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.
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.
Gains on foreign exchange are principally as a result of
translation of naira 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 2021 31 March 202 0 31 March 2021 31 March 202 0
million ' million $'000 $'000
====================================== ============== =============== ================== ===============
Depreciation and amortisation 532 492 1,404 1,517
-------------------------------------- -------------- --------------- ------------------ ---------------
Depreciation of right-of-use assets 315 186 830 572
-------------------------------------- -------------- --------------- ------------------ ---------------
Professional and consulting fees 1,082 1,389 2,848 4,275
-------------------------------------- -------------- --------------- ------------------ ---------------
Directors' emoluments (executive) 263 824 692 2,534
-------------------------------------- -------------- --------------- ------------------ ---------------
Directors' emoluments (non-executive) 548 320 1,441 984
-------------------------------------- -------------- --------------- ------------------ ---------------
Employee benefits 3,975 4,301 10,467 13,234
-------------------------------------- -------------- --------------- ------------------ ---------------
Flights and other travel costs 198 266 522 817
-------------------------------------- -------------- --------------- ------------------ ---------------
Rentals 6 45 16 140
-------------------------------------- -------------- --------------- ------------------ ---------------
Other general expenses - 2,573 - 7,920
-------------------------------------- -------------- --------------- ------------------ ---------------
6,919 10,396 18,220 31,994
====================================== ============== =============== ================== ===============
Directors' emoluments have been split between executive and
non-executive directors. Included in executive directors'
emoluments are one-off termination payments of $2.3m made to the
directors of Eland in respect of the acquisition of Eland in 2020.
Included in the non-executive directors' emoluments are amounts
paid to four new non-executive directors. Other general expenses
relate to costs such as office maintenance costs, telecommunication
costs, logistics costs and others.
11. Impairment (loss)/reversal
3 months ended 3 months ended 3 months ended 3 months ended
31 March 2021 31 March 202 0 31 March 2021 31 March 202 0
million million $'000 $'000
=============================================== ============== =============== ============== ===============
Impairment (loss)/reversal on financial assets (269) 187 (707) 575
----------------------------------------------- -------------- --------------- -------------- ---------------
Impairment loss on non-financial assets - (47,457) - (146,028)
----------------------------------------------- -------------- --------------- -------------- ---------------
(269) (47,270) (707) (145,453)
=============================================== ============== =============== ============== ===============
Impairment reversal on financial assets relates to the reversal
of previously recognised impairment losses on other
receivables.
12. Fair value gain/(loss)
3 months ended 3 months ended 3 months ended 3 months ended
31 March 2021 31 March 2020 31 March 2021 31 March 2020
million million $'000 $'000
=============================================== ============== ============== ============== ================
Realised fair value gain/(loss) on derivatives (562) 6,226 (1,480) 19,158
----------------------------------------------- -------------- -------------- -------------- ----------------
Unrealised fair value loss on derivatives (1,214) - (3,196) -
----------------------------------------------- -------------- -------------- -------------- ----------------
(1,776) 6,226 (4,676) 19,158
=============================================== ============== ============== ============== ================
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 2021 31 March 2020 31 March 2021 31 March 2020
million million $'000 $'000
====================================================== ============== ============== ============== ==============
Finance income
------------------------------------------------------ -------------- -------------- -------------- --------------
Interest income 3 347 7 1,067
------------------------------------------------------ -------------- -------------- -------------- --------------
Finance cost
------------------------------------------------------ -------------- -------------- -------------- --------------
Interest on bank loans (6,222) (6,584) (16,373) (20,259)
------------------------------------------------------ -------------- -------------- -------------- --------------
Interest on lease liabilities (57) (123) (149) (379)
------------------------------------------------------ -------------- -------------- -------------- --------------
Unwinding of discount on provision for decommissioning (112) (236) (295) (726)
------------------------------------------------------ -------------- -------------- -------------- --------------
(6,391) (6,943) (16,817) (21,364)
====================================================== ============== ============== ============== ==============
Finance (cost) - net (6,388) (6,596) (16,810) (20,297)
====================================================== ============== ============== ============== ==============
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 2021 is 85% for crude oil
activities and 30% for gas activities. As at 31 December 2020, the
applicable tax rate was 85%, 65.75% and 30% respectively.
The effective tax rate for the period was 11.25% (2020:
101.5%)
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 2021 31 March 2020 31 March 2021 31 March 2020
million million $'000 $'000
================================================ ============== ============== ============== ==============
Current tax:
------------------------------------------------ -------------- -------------- -------------- --------------
Current tax expense on profit for the period (2,565) (219) (6,750) (674)
------------------------------------------------ -------------- -------------- -------------- --------------
Education tax (456) (35) (1,199) (108)
================================================ ============== ============== ============== ==============
Total current tax (3,021) (254) (7,949) (782)
------------------------------------------------ -------------- -------------- -------------- --------------
Deferred tax:
------------------------------------------------ -------------- -------------- -------------- --------------
Deferred tax income/(expense) in profit or loss 1,823 (3,262 ) 4,797 (10,037)
------------------------------------------------ -------------- -------------- -------------- --------------
Total tax expense in statement of profit (1,198) (3,516) (3,152) (10,819)
================================================ ============== ============== ============== ==============
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 2021 31 Dec 2020 31 March 2021 31 Dec 2020
'million 'million $'000 $'000
Deferred tax assets
========================================================== ============== ============ ============== ============
Deferred tax asset to be recovered in less than 12 months 9,437 9,437 33,151 33,151
---------------------------------------------------------- -------------- ------------ -------------- ------------
Deferred tax asset to be recovered after more than 12
months 280,440 280,440 729,682 729,682
========================================================== ============== ============ ============== ============
289,877 289,877 762,833 762,833
========================================================== ============== ============ ============== ============
As at As at As at As at
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 2020
'million 'million $'000 $'000
Deferred tax liabilities
Deferred tax liabilities to be settled in less than 12
months (459) (2,282) (2,659) (7,456)
Deferred tax liabilities to be settled after more than 12
months (199,738) (199,738) (524,176) (524,176)
(200,197) (202,020) (526,835) (531,632)
Net deferred tax asset 89,680 87,857 235,998 231,201
15. Trade and other receivables
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 202 0
million million $'000 $'000
Trade receivables 33,971 20,662 89,394 54,375
Nigerian Petroleum Development Company (NPDC)
receivables 36,932 40,681 97,191 107,053
National Petroleum Investment Management Services
(NAPIMS) receivables 11,885 11,353 31,276 29,876
Underlift 10,473 7,827 27,561 20,600
Advances to suppliers 7,115 10,280 18,724 27,053
Receivables from ANOH 5,269 4,926 13,865 12,963
Other receivables 2,504 1,045 6,589 2,751
Total 108,149 96,774 284,600 254,671
15.1 Trade receivables
Included in trade receivables is an amount due from Geregu Power
8.7 billion, $23.1 million (Dec 2020: 8.6 billion, $22.9 million),
Sapele Power 3 billion, $7.9 million (Dec 2020: 2.7 billion, $7
million) and Nigerian Gas Marketing Company (NGMC) 3.7 billion,
$9.8 million (Dec 2020: 1.3 billion, $3.4 million) totalling 15.4
billion, $40.9 million (Dec 2020: 13.6 billion, $33.3 million) with
respect to the sale of gas. Also included in trade receivables is
an amount of 12.9 billion (Dec 2020: 0) $34.2 million (Dec 2020:
$0) and 1 billion (Dec 2020: 7 billion) $2.6 million (Dec 2020: $19
million) million due from Mercuria and Shell Western for sale of
crude respectively.
15.2 NPDC receivables
The outstanding cash calls due to Seplat from its JOA partner,
NPDC is 36.9 billion (Dec 2020: 44 billion) $97.1 million (Dec
2020: $107 million).
15.3 Other receivables
Other receivables are amounts outside the usual operating
activities of the Group.
16. Contract assets
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 202 0
'million ' million $'000 $'000
Revenue on gas sales 3,270 2,343 8,605 6,167
Impairment on contract assets (7) - (19) -
3,263 2,343 8,586 6,167
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 NGMC for the delivery of gas supplies which NGMC 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 NGMC authorising the quantities, this will be reclassified
from contract assets to trade receivables.
16.1 Reconciliation of contract assets
The movement in the Group's contract assets is as detailed
below:
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 2020
'million ' million $'000 $'000
Balance as at 1 January 2,343 6,527 6,167 21,259
Addition during the period 3,279 29,200 8,628 91,115
Receipts for the period (2,352) (32,895) (6,167) (106,161)
Price Adjustments - (13) (23) (46)
Impairment (7) - (19) -
Exchange difference - (476) - -
Balance as at 31 December 3,263 2,343 8,586 6,167
17. Derivative financial instruments
The Group uses its derivatives for economic hedging purposes and
not as speculative investments. However, where derivatives do not
meet the hedge accounting criteria, they are accounted for at fair
value through profit or loss. They are presented as current
liabilities.
The fair value of the derivative financial instrument as at 31
March 2021 is as a result of a fair value gain on crude oil hedges.
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 2021 31 Dec 2020 31 March 2021 31 Dec 202 0
'million ' million $'000 $'000
Foreign currency options-crude oil hedges (1,841) (626) (4,844) (1,648)
(1,841) (626) (4,844) (1,648)
18. Cash and bank balances
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 and restricted cash balances.
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 202 0
'million ' million $'000 $'000
Cash on hand 2,464 2,620 6,484 6,896
Short-term fixed deposits 66 160 175 422
Cash at bank 66,626 82,867 175,328 218,065
Gross cash and cash equivalent 69,156 85,647 181,987 225,383
Loss allowance (93) (93) (246) (246)
Net cash and cash equivalents per cash flow statement 69,063 85,554 181,741 225,137
Restricted cash 20,716 12,761 54,516 33,581
Cash and bank balance 89,779 98,315 236,257 258,718
Included in restricted cash, is a balance of 5.1 billion ($13.5
million) set aside in the Stamping Reserve account for the
revolving credit facility (RCF). 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). The amounts
are restricted for a period of three (3) years, which is the
contractual period of the RCF. These amounts are subject to legal
restrictions and are therefore not available for general use by the
Group. These amounts have therefore been excluded from cash and
bank balances for the purposes of cash flow .
An additional 7.9 billion ($20.8 million) of funds deposited in
Access bank Plc bank accounts in the ordinary course of business
are being unilaterally restricted by Access bank Plc in connection
with the court case between Seplat Petroleum Development Company
Plc and Access Bank Plc.
Also included in the restricted cash balance is a cash-backed
guarantee of 7.6 billion ($20 million) set aside with Zenith Bank
Plc to fulfil the requirement of an order of the Court of Appeal,
to seek the release of any order relating to the case between
Seplat Development Petroleum Company Plc and Access Bank Plc.
19. Share Capital
19.1 Authorised and issued share capital
31 March 2021 31 Dec 2020 31 March 2021 31 Dec 202 0
'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
581,840,856 (2020: 581,840,856) issued shares
denominated in Naira of 50 kobo per share 293 293 1,856 1,856
The Group's issued and fully paid as at the reporting date
consists of 581,840,856 ordinary shares (excluding the additional
shares held in trust) of 0.50k each, all with voting rights. Fully
paid ordinary shares carry one vote per share and the right to
dividends. There were no restrictions on the Group's share
capital.
19.2 Movement in share capital and other reserves
Number of shares Issued share capital Share Premium Share based payment Total
reserve
Shares ' million ' million ' million ' million
Opening balance as at 1
January 2021 581,840,856 293 86,917 7,174 94,384
Share based payments - - - 544 544
Vested shares - - - (760) (760)
Closing balance as at 31
March 2021 581,840,856 293 86,917 6,958 94,168
Number of shares Issued share capital Share Premium Share based payment Total
reserve
Shares $'000 $'000 $'000 $'000
Opening balance as at 1
January 2021 581,840,856 1,855 511,723 27,592 541,170
Share based payments - - - 1,431 1,431
Vested shares - - - (2,000) (2,000)
Closing balance as at 31
March 2021 581,840,856 1,855 511,723 27,023 540,601
19.3 Employee share-based payment scheme
As at 31 March 2021, the Group had awarded 60,487,999 shares
(Dec 2020: 60,487,999 shares) to certain employees and senior
executives in line with its share-based incentive scheme. During
the three months ended 31 March 2021, 1,809,857 shares were vested
(Dec 2020: 6,519,258 shares).
20. Interest bearing loans and borrowings
20.1 Net debt reconciliation
Below is the net debt reconciliation on interest bearing loans
and borrowings for 31 March 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
Addition - - - - - -
Interest accrued 6,222 - 6,222 16,373 - 16,373
Principal - - - - - -
repayment
Interest repayment (7,746) - (7,746) (20,384) - (20,384)
Other financing - - - - - -
charges
Transfers (12,726) 12,726 - (33,489) 33,489 -
Exchange - - - - - -
differences
Carrying amount as
at 31 March 2021 21,268 242,606 263,874 55,968 638,436 694,404
Below is the net debt reconciliation on interest bearing loans
and borrowings for 31 December 2020:
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 2020 34,486 207,863 242,349 112,333 677,075 789,408
Interest accrued 17,504 - 17,504 48,634 - 48,634
Interest
capitalized 5,449 5,449 15,140 15,140
Principal
repayment (35,991) - (35,991) (100,000) - (100,000)
Interest repayment (23,310) - (23,310) (64,767) - (64,767)
Proceeds from loan
financing - 3,599 3,599 - 10,000 10,000
Transfers 29,559 (29,559) - 82,128 (82,128) -
Exchange
differences 7,821 47,977 55,798 - - -
Carrying amount as
at 31 December
2020 35,518 229,880 265,398 93,468 604,947 698,415
$350 million Senior notes - March 2018
Interest bearing loans and borrowings include revolving loan
facility and senior notes. In March 2018 the Group issued 107
billion, $350 million, senior notes at a contractual interest rate
of 9.25% with interest payable on 1 April and 1 October, and
principal repayable at maturity. The notes were expected to mature
in April 2023. The interest accrued at the reporting date is 3.3
billion ($8.7 million) using an effective interest rate of 9.85%.
Transaction costs of 2.1 billion ($7 million) have been included in
the amortised cost balance at the end of the reporting period. The
amortised cost for the senior notes at the reporting period is
131.4 billion (December 2020: 134.3 billion) $345.8 million
(December 2020: $353.8 million).
$350 million Revolving credit facility - December 2019
The Group's parent company on 20 December 2019 also entered into
a four-year revolving loan agreement with interest payable
semi-annually. There is a two-year moratorium on the principal
which ends on 1 July 2021 but will be extended to 1 July 2022 if
the Notes are not refinanced before then. The revolving loan has an
initial contractual interest rate of 6% +Libor (7.9%) and a
settlement date of 31 December 2023.
The interest rate of the facility is variable. The interest
accrued at the reporting period is 1.6 billion ($4.3 million) using
an effective interest rate of 6.92%. The interest paid was
determined using 3-month LIBOR rate + 6 % on the last business day
of the reporting period. The outstanding amount of this borrowing
as the reporting
period is 95.2 billion (Dec 2020: 94.2 billion) $250.7 million (Dec 2020: $250 million).
$125 million Reserved based lending (RBL) facility - December
2018
The Group through its subsidiary Westport on 28 November 2018
entered into a five-year loan agreement with interest payable
semi-annually. The RBL facility has an initial contractual interest
rate of 8% +Libor as at half year (8.30%) and a final maturity 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 are scheduled to reduce to $87.5 million
on 31 March 2021. The first reduction in the commitments occurred
on 31st December 2019 in line with the commitment reduction
schedule contained within the Facility Agreement. This resulted in
the available commitments reducing from N45 billion ($125.0
million) to N40.6 billion ($112.5 million), with a further
reduction to N36.1 billion ($100.0 million) as at December
2020.
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 LIBOR plus 8%, so long as more than 50% of the
available facility is drawn.
On 4th February 2020 Westport drew down a further 3.6 billion
($10 million) increasing the debt utilised under the RBL from 32.4
billion ($90 million) to 36.1 billion ($100 million).
The interest rate of the facility is variable. The interest
accrued at the reporting period is 1.3 billion ($3.5 million) using
an effective interest rate of 8.3%. The interest paid was
determined using 6-month 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 38 billion ($100
million) and 8% + 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). The outstanding amount
of this borrowing as at the reporting period is 37 billion (Dec
2020: 37.4 billion) $97.9 million (Dec 2020: $98.6 million).
21. Trade and other payables
31 March 2021 31 Dec 202 0 31 March 2021 31 Dec 2020
million million $'000 $'000
Trade payable 45,908 51,351 120,810 135,134
Accruals and other payables 57,614 56,816 151,619 149,521
NDDC levy 1,287 4,780 3,387 12,578
Royalties payable 11,361 10,500 29,898 27,632
Overlift 6,550 7,021 17,238 18,475
122,720 130,468 322,952 343,340
Included in accruals and other payables are field accruals of
22.6 billion (Dec 2020: 41 billion) $59.4 million (Dec 2020: $109
million), and other vendor payables of 5.3 billion (Dec 2020: 19
billion) $14.1 million (Dec 2020: $49 million). Royalties payable
include accruals in respect of crude oil and gas production for
which payment is outstanding at the end of the period.
22. Contract liabilities
31 March 2021 31 Dec 202 0 31 March 2021 31 Dec 2020
million million $'000 $'000
3,599 3,599 9,470 9,470
22.1 Reconciliation of contract liabilities
The movement in the Group's contract liabilities is as detailed
below:
31 March 2021 31 Dec 202 0 31 March 2021 31 Dec 2020
million million $'000 $'000
Opening balance 3,599 5,005 9,470 16,301
Recognised as revenue during the year - (1,406) - (6,831)
3,599 3,599 9,470 9,470
Contract liabilities represents take or pay volumes contracted
with Azura for 2019 which is yet to be utilized. In line with
contract, Azura can make a demand on the makeup gas but only after
they have taken and paid for the take or pay quantity for the
respective year. The contract liability is accrued for two years
after which the ability to take the makeup gas expires and any
outstanding balances are recognised as revenue from contracts with
customers.
23. Computation of cash generated from operations
3 months ended 3 months ended 3 months ended 3 months ended
31-Mar-21 31-Mar-20 31-Mar-21 31-Mar-20
million million $'000 $'000
Profit/(Loss) before tax 10,647 (31,111) 28,008 (95,732)
Adjusted for:
Depletion, depreciation and amortization 12,281 9,513 32,319 29,275
Depreciation of right-of-use asset 315 186 830 572
Impairment losses/(reversal) on financial assets 269 (187) 707 (575)
Interest income (3) (347) (7) (1,067)
Interest expense on bank loans 6,222 6,584 16,373 20,259
Interest on lease liabilities 57 123 149 379
Unwinding of discount on provision for
decommissioning 112 236 295 726
Unrealised fair value (gain)/loss on derivatives 1,214 (6,226) 3,196 (18,673)
Realised fair value gain 562 1,480
Unrealised foreign exchange loss/(gain) (114) 2,944 (301) (525)
Impairment loss on non-financial assets - 47,457 146,028
Share based payment expenses 544 636 1431 1,957
Share of profit in joint venture (159) (522) (418) (1,607)
Defined benefit expenses - - -
Changes in working capital: -
Trade and other receivables (11,966) 24,980 (31,489) 69,196
Prepayments (1,148) (945) (3,022) (2,617)
Contract assets (919) 6,335 (2,419) 17,549
Trade and other payables (7,647) (34,525) (20,124) (95,637)
Contract liabilities - (3,743) - (10,369)
Restricted Cash (7,955) (3) (20,935) (7)
Inventories (307) 1,941 (807) 5,376
Net cash inflow from operating activities 2,005 23,326 5,266 64,508
24. 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 2021 31 Dec 2020 31 March 2021 31 Dec 2020
million million $'000 $'000
(Loss)/profit attributable to Equity holders of the parent 13,550 (34,627) 35,647 (106,551)
(Loss)/profit attributable to Non-controlling interests (4,101) - (10,791) -
(Loss)/profit for the year 9,449 (34,627) 24,856 (106,551)
Shares '000 Shares '000 Shares '000 Shares '000
Weighted average number of ordinary shares in issue 581,841 579,638 581,841 579,638
Outstanding share-based payments (shares) 6,604 8,807 6,604 8,807
Weighted average number of ordinary shares adjusted for the
effect of dilution 588,445 588,445 588,445 588,445
Basic (loss)/earnings per shares $ $
Total basic (loss)/earnings per share attributable to the
ordinary equity holders of the Group 23.29 (46.42) 0.06 (0.13)
Diluted (loss)/earnings per shares $ $
Total diluted (loss)/earnings per share attributable to the
ordinary equity holders of the
Group 23.03 (45.72) 0.06 (0.13)
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.
25. Proposed dividend
The Group's directors propose an interim dividend of 2.5 cents
per share for the reporting period (2020: Nil).
26. Related party relationships and transactions
The Group is controlled by Seplat Petroleum Development Company
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 parties are
disclosed below. The outstanding balances payable to/receivable
from related parties are unsecured and are payable/receivable in
cash.
x. Shareholders of the parent company
Shebah Petroleum Development Company Limited SPDCL ('BVI'): The
Chairman of Seplat is a director and shareholder of SPDCL (BVI).
The company provided consulting services to Seplat. Services
provided to the Group during the period amounted to 77.3 million
(2020: 408 million) $203.7 thousand (2020: $1.255 million).
xi. Entities controlled by key management personnel
(Contracts>$1million in 2021)
Cardinal Drilling Services Limited (formerly Caroil Drilling
Nigeria Limited): Is owned by common shareholders with the parent
Company. The company provides drilling rigs and drilling services
to Seplat. Transactions with this related party amounted to nil
(2020: 1.249 billion, $3.843 million). Payables amounted to nil in
the current period (payables in 2020: 775million, $2.1
million).
xii. Entities controlled by key management personnel
(Contracts<$1million in 2021)
Abbeycourt Trading Company Limited: The Chairman of Seplat is a
director and shareholder. The company provides diesel supplies to
Seplat in respect of Seplat's rig operations. This amounted to 30.4
million, $80 thousand during the period (2020: 20 million, $63
thousand).
Stage leasing (Ndosumili Ventures Limited): is a subsidiary of
Platform Petroleum Limited. The company provides transportation
services to Seplat. This amounted to 99.6 million, $262 thousand
(2020: 111 million, $343 thousand). Receivables and payables were
nil in the current period.
27. Commitments and contingencies
27.1 Contingent liabilities
The Company is involved in a number of legal suits as defendant.
The estimated value of the contingent liabilities is 152 million,
$0.4 million (Dec 2020: 23.2 million, $0.61 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.
28. Events after the reporting period
During the period, the Group offered 7.75% senior notes with an
aggregate principal of $650 million ( 247 billion) 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 $350 million revolving credit facility for general
corporate purposes, and to pay transaction fees and expenses.
29. Exchange rates used in translating the accounts to Naira
The table below shows the exchange rates used in translating the
accounts into Naira.
Basis 31 March 2021 31 March 202 0 31 Dec 202 0
/$ /$ /$
Fixed assets - opening balances Historical rate Historical Historical Historical
Fixed assets - additions Average rate 380.00 324.98 359.91
Fixed assets - closing balances Closing rate 380.00 361.00 380
Current assets Closing rate 380.00 361.00 380
Current liabilities Closing rate 380.00 361.00 380
Equity Historical rate Historical Historical Historical
Income and Expenses: Overall Average rate 380.00 324.98 359.91
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END
QRFEKLBLFZLXBBD
(END) Dow Jones Newswires
April 29, 2021 02:00 ET (06:00 GMT)
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