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Nigeria: Seplat’s Eland acquisition takes it to number one

By Ruth Olurounbi
Posted on Wednesday, 23 October 2019 10:49

Seplat may benefit in the short term from the Russian-Saudi oil production agreement. Photo: Seplat Petroleum Resources.

A $490m expansion plan could help the Nigeria-based Seplat Petroleum Development Company clinch the number one spot among exploration and production (E&P) projects in Africa’s largest crude oil producing country.

The Nigeria and UK-listed Seplat Petroleum will boost its oil production in the Niger Delta by some 10,000 barrels per day (bpd) via an acquisition of Eland Oil & Gas plc before the year ends. This follows an agreement by 75% of Eland shareholders at its annual general meeting.

  • Seplat’s growth strategy to “target both organic and inorganic opportunities to grow shareholder returns” could potentially see the company producing more than 72,000 bpd by half-year 2020.
  • The company says it has secured the necessary rig capacity to drive a production rate of 62,000 bpd prior to the Eland Oil & Gas acquisition.

Seplat’s first half-year revenue in 2019 stood at $355m versus $343m a year ago.

The company’s half-year operating profit, however, declined by more than 12% to $139m from $158m in the first half year of 2018, impacted by “unforeseen delays from rig contractors as well as the need to undertake higher levels of maintenance and asset integrity work for longer-term benefit of the assets”.

Its profit after tax stood at $37.5m, versus $14.8m in the first half year of 2018, on “significantly lower finance costs”.

Safety upgrades

The company delayed drilling of the planned new oil production wells at Sapele Shallow due to requirements for the drilling contractor to undertake certain safety upgrades, according to Austin Avuru, Seplat’s CEO.

The company says it expects to drill a new production well at Ohaji South in the last quarter of 2019, and will begin drilling at the upstream gas field at Assa North-Ohaji South (ANOH) in 2020, when the first wells will be spudded by the upstream unit operator Shell.

“Work commenced on the first Sapele Shallow well in July, which will be brought onstream in Q4 2019, with the remaining three wells to be batch drilled across the remainder of the year and hooked up with production to commence in early 2020,” Bryant Orjiako, Seplat’s co-founder and chairman said.

The company says it remains “on an extremely solid financial footing”, prioritising commercialisation and development of substantial gas reserves as a leading supplier of processed natural gas to the domestic market in Nigeria.

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