The chairman, Seplat Petroleum Development Company Plc, A.B.C. Orjiako has said the Nigerian independent oil and gas company remained a resilient business that generates significant free cash flow from a low-cost production base.
He stated that the company is focused on delivering shareholder returns through regular dividend distributions and capital growth.
The Seplat Chairman said this while addressing shareholders and other stakeholders during the company’s 7th Annual General Meeting held in Lagos on Thursday, where the Board announced a dividend distribution for shareholders with $59 million paid out in the 2019 calendar year
According to Orjiako, amidst the current headwinds occasioned by the prevailing global coronavirus pandemic and low oil prices, Seplat will continue to maintain strict financial discipline over investment decisions, while also embedding high standards of corporate governance and transparency; a strong commitment sustainable business; and effective management of risks with a strong HSE culture.
“I believe that Seplat has an important role to play throughout the energy transition that is set to occur in the years and decades ahead, not least through the impact we can have by scaling up our domestic gas supply business and displacing imported diesel fuels that are being burned for power generation and helping Nigeria benefit from the social and economic multiplier effects that reliable and affordable power availability can bring,” he said.
Against this backdrop, Orjiako said Seplat plans to position itself for an ambitious next the phase of growth which would see the expansion of its footprint in terms of energy business activities, a plan to pursue offshore assets acquisition, as well as opportunity-driven entry into different geographies.
He added: “Looking forward, one of the main challenges facing the independent E&P sector is to remain relevant as the world makes the transition to a lower-carbon future. The oil and gas industry faces considerable challenges given that oil, in particular, plays such a significant part in today’s energy supply mix, with demand for the commodity still growing. A key part of my role as Chairman of the Board is to steer the Company through these transitions.
“The Board believes that such a corporate transition would require a different kind of organisational structure, people skills set and mentality to compete well in the expanded space. In view of this, over the course of 2020, we will be reviewing the current organisational and systems structure.”
The Seplat Chairman assured that the fundamentals of the company’s core business remain strong and through the effective integration of the Eland acquisition, the combined business will have greater scale and value creation opportunities to capture.
“I believe the investment case for Seplat remains compelling,” adding that: “As we look ahead to 2020 and beyond, I would like to take this opportunity to thank all Seplat employees and wider stakeholders for their efforts and continuing support and I look forward to updating all of our stakeholders on our progress throughout the year ahead.”
Also addressing shareholders at the 7th AGM, the Chief Executive Officer, Seplat, Mr Austin Avuru described 2019 as a solid year in which the robust fundamentals of the business once again kept the company on an extremely solid footing.
“The strong cash generation we realised from our low-cost production base meant that our capital expenditures, debt service obligation and dividend distributions to shareholders were more than covered by cash generated from operations by a comfortable margin.”