Seplat oil development company plc has shown strong recovery in profitability as Q4 sales rose by 318% y/y to US$174m while Q4 PBT of US$46m compares with a loss before tax of -US$85m in Q4 2016; tax credit of US$224m provided significant boost to profitability
The result to a large extent, reflected positives from undisrupted exports via the TransForcados System (TFS). This is the second consecutive quarter that the firm is posting profits. Seplat’s sales came in at US$174m, up 318% y/y while PBT of US$46m compares with a loss before tax of -US$85m in Q4 2016.
Sales growth was boosted by a recovery in oil sales which grew by over 900% y/y to US$136m. Full year oil production came within management’s guidance at 17,853 barrels of oil per day (bopd). According to management statements, uptime post lifting of force majeure was 81%.
Additionally, average reconciliation losses are now down to just 3.5% from 10% a year ago. Gas sales which were up 36% y/y to US$38m also benefitted from incremental gas production from associated gas fields. Full year gas production came in at 114 million standard cubic feet of gas per day (MMscfd), also within management’s guidance. On a y/y basis, average combined production was up 43% for FY2017 to 36,923 barrels of oil equivalent per day (boepd). While average realised oil prices were up 25% y/y to US$50.4, gas prices were flattish y/y.
Other positives on the P&L include a significant expansion of gross margin to 50.5% and a -36% y/y decline in opex. In 2017, average production costs came in at US$6.0 per barrel compared with US$8.8/b in 2016. However, Seplat posted a PAT of US$271m, primarily driven by a tax credit of US$224m. On a q/q basis, both sales and PBT were up, by 18% q/q and 81% q/q respectively. Similar to the y/y trends, PAT was up significantly, driven by tax credits.