Seplat Energy Plc · LSE:SEPL
Seplat Energy — Seplat Petroleum Development Company — Renaissance Capital 25th Anniversary EM & FM Conference 2020
56 slides from Seplat Energy's conference presentation, Nov 10, 2020
Slide 1: Leading Nigeria's Energy Transition
LEADING NIGERIA’S ENERGY TRANSITION RENAISSANCE CAPITAL 25TH ANNIVERSARY EM & FM CONFERENCE 10 NOVEMBER 2020 www.seplatpetroleum.com
Slide 2: Introducing Seplat
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 2 INVESTOR PRESENTATION INTRODUCING SEPLAT www.seplatpetroleum.com
Slide 3: Nigeria's Leading Independent Energy Producer
NIGERIA’S LEADING INDEPENDENT ENERGY PRODUCER Seplat is the investment partner of choice for Nigeria’s transition to cleaner energy production SEPLAT IN SUMMARY AT A GLANCE (9M 2020) Leading › Driving Nigeria’s › Gas delivered 21% of AVERAGE DAILY VOLUME energy transition Diversifying group revenues
Slide 4: A Rich Portfolio of Productive Oil & Gas Assets
A RICH PORTFOLIO OF PRODUCTIVE OIL & GAS ASSETS Eight blocks in the prolific Niger Delta, ideally located for export or internal demand centres W.I. 2P reserves * W.I. production MMboe 9M 2020 boepd Block Share Partner Oil Gas Total Oil Gas Total OML 38 OML 40 OML 4, 38, 41 45% NPDC 164 118 282 20,7
Slide 5: Exposure to an Energy Market Set for Growth
EXPOSURE TO AN ENERGY MARKET SET FOR GROWTH Seplat will be the leader in Nigeria’s inevitable energy expansion FACTORS INCREASING NIGERIA’S DEMAND FOR ENERGY Increase gas supply for › The population will more than double by 2050 energy generation, displacing diesel - (200m to 450m by 2050) generator
Slide 6: Multiple Catalysts for Low-Risk and Profitable Growth
MULTIPLE CATALYSTS FOR LOW-RISK AND PROFITABLE GROWTH Seplat has numerous opportunities to scale up and diversify, some at relatively low cost OIL OPPORTUNITIES GAS OPPORTUNITIES › Immediate uplift from acquired OML40 and Ubima operations › Significant opportunity to lead Nigeria’s strategic dash to
Slide 7: Clearly Focused Capital Allocation Priorities
CLEARLY FOCUSED CAPITAL ALLOCATION PRIORITIES We are focused on low-risk strategies to generate and deploying cash to grow the business and improve stakeholder returns GAS BUSINESS › Pay down $250m Revolving Credit › Invest in growing the gas business Facility ($100m headroom available) to fuel Nige
Slide 8: De-risking and Diversifying the Business
DE-RISKING AND DIVERSIFYING THE BUSINESS Gas development reduces exposure to oil price volatility, increasing the visibility and profitability of revenues ASSURING OIL DIVERSIFYING GAS OPPORTUNITY PRUDENT CAPITAL FINANCIALSTRENGTH REVENUES EXPORT ROUTES WILL DRIVE GROWTH MANAGEMENT EVEN AT LOW PRICE
Slide 9: Proven Resilience Through Prudent Management
PROVEN RESILIENCE THROUGH PRUDENT MANAGEMENT Financial discipline and a robust business model have protected Seplat through difficult times INCREASING GAS VOLUMES FOR GROWING MARKET NEEDS FOCUSED CASH MANAGEMENT STRATEGY 49,867 $900 50,000 46,498 $900 Gross debt ($m) $259m OML 53 Oil Gas 43,372 acqu
Slide 10: A Strong Commitment to Sustainability
A STRONG COMMITMENT TO SUSTAINABILITY Sustainability initiatives a priority, recognising climate impact but in local development context › Leader in Nigeria’s transition to gas, driving significant environmental, economic and social benefits that support UN Sustainable Development Goals › Board asse
Slide 11: A Compelling Case for Investment
A COMPELLING CASE FOR INVESTMENT Seplat offers low-risk but rewarding exposure to potentially high growth markets BEST-IN-CLASS EXPOSURE TO NIGERIA’S ENERGY EXPERIENCED MANAGEMENT TEAM WITH A TRANSITION TRACK RECORD OF DELIVERY AGAINST CRISES › Leading gas supplier in a potentially high-growth marke
Slide 12: Nigeria's Fossil Fuel Reality
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 12 INVESTOR PRESENTATION NIGERIA’S FOSSIL FUEL REALITY www.seplatpetroleum.com
Slide 13: Fossil Fuels in the Context of Nigeria's Development
FOSSIL FUELS IN THE CONTEXT OF NIGERIA’S DEVELOPMENT The oil and gas industries remain essential to Nigeria’s efforts to implement the UN’s Sustainable Development Goals LACK OF ECONOMIC DIVERSITY FORCES OIL DEPENDENCE GAS PROVIDES A TRANSITION PATH FOR ENERGY › Nigeria’s lack of economic diversity
Slide 14: Our Oil Business
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 14 INVESTOR PRESENTATION OUR OIL BUSINESS Serving global demand to benefit Nigeria’s growth www.seplatpetroleum.com
Slide 15: Why Invest in Nigerian Oil?
WHY INVEST IN NIGERIAN OIL? Nigeria’s oil industry offers substantial investment potential, supports local development goals Oil revenues fund Sub-Saharan New licensing Highly favourable, low- Decreasing essential national Africa’s largest rounds imminent risk geology with up to geopolitical develop
Slide 16: Seplat's Oil Business
SEPLAT’S OIL BUSINESS Nigeria has low-cost operations across Nigeria’s productive oil region A PORTFOLIO OF DE-RISKED ASSETS OPERATING AT LOW COST AT A GLANCE › Equity share of 7 OMLs Favourable › Substantial reserves W.I. 2P RESERVES * Eight OMLs › Operator of 4 blocks geology and › Prolific swamp
Slide 17: Value Creation Strategy 1: Increase Reserves
VALUE CREATION STRATEGY 1: INCREASE RESERVES Seplat has multiple options for increasing its reserves 2P WI RESERVES (1) YEAR ON YEAR MOVEMENT IN 2P RESERVES (BOE) › Unlock existing 2C resources (106MMboe, oil and gas), thereby derisking and adding to recognised reserves, enhancing valuation 509 257
Slide 18: Value Creation Strategy 2: Increase Production
VALUE CREATION STRATEGY 2: INCREASE PRODUCTION Focus on increasing efficiency and productivity at our diverse portfolio of fields boepd 35,000 Oil production › Average working interest production: 33,327 boepd (9M 2019: 23,658) 30,000 - Includes maiden contribution from OML 40 and Ubima › 77% produc
Slide 19: Value Creation Strategy 3: Diversify Export Routes
VALUE CREATION STRATEGY 3: DIVERSIFY EXPORT ROUTES Additional routes will diversify and de-risk exports, reducing losses and improving revenue flows AMUKPE-ESCRAVOS PIPELINE › Scheduled to open H2 2021 › Alternative to troubled Trans Forcados Pipeline › Mostly underground pipe, protected from vandal
Slide 20: Value Creation Strategy 4: Acquire Assets
VALUE CREATION STRATEGY 4: ACQUIRE ASSETS Example: acquisition of Eland diversified production and export routes, added significant exploration expertise and potential INCREASES RESERVES INCREASES PRODUCTION OML40 › Eland adds 41MMbbls › OML 40 adds c11Kbod WI 2P reserves › Diversifies Seplat’s prod
Slide 21: Integration of Eland Oil and Gas Plc
INTEGRATION OF ELAND OIL AND GAS PLC Year-long integration process is on track to deliver synergies and savings NON-TECHNICAL INTEGRATION › Consolidated and effective support functions Staff: 500 › Optimal use of locations Offices: Lagos, › Organisation, e.g. HR, payroll, London, Abuja, Sapele IT, f
Slide 22: Westport Loan Repayments Underpin Future Cash Flow
WESTPORT LOAN REPAYMENTS UNDERPIN FUTURE CASH FLOW Seplat has acquired the right to be repaid $414m between 2021-24 When Seplat paid EV $450m for Eland it acquired: › Eland’s 20.25% share of OML40 and its 40% share of Ubima Westport repays $414M › The right to be repaid more than $414m by Westport t
Slide 23: Our Gas Business
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 23 INVESTOR PRESENTATION OUR GAS BUSINESS Serving Nigeria’s growing domestic demand www.seplatpetroleum.com
Slide 24: Nigeria's Energy Problem
NIGERIA’S ENERGY PROBLEM Inefficient national generation forces domestic and industrial reliance on diesel/petrol generators and biomass › Population is nearly 200m and growing, but less than OFF-GRID GENERATION DOMINATES AND DAMAGES 60% have access to electricity and per-capita consumption is very
Slide 25: Nigeria's Gas Market Set for Massive Expansion
NIGERIA’S GAS MARKET SET FOR MASSIVE EXPANSION Strong demand growth expected as country transitions to gas-fired power generation and increases capacity DEMAND FOR GAS WILL GROW STRONGLY HOW NIGERIA USES GAS AT PRESENT › Nigeria has huge resources of natural gas, estimated at 188 Tcf, or 5.3 trillio
Slide 26: Nigeria's Imperative: Transition to Gas
NIGERIA’S IMPERATIVE: TRANSITION TO GAS Development of gas-fired power stations will boost GDP through wider and cheaper access to cleaner energy than diesel GAS HAS SUBSTANTIAL BENEFITS FOR POWER GENERATION COMPARING GAS AND DIESEL COSTS FOR POWER › Proximity of large gas fields close to demand cen
Slide 27: Seplat's Ambitious Gas Business
SEPLAT’S AMBITIOUS GAS BUSINESS Seplat already supplies enough gas to power 30% of Nigeria’s electricity OBEN HUB – 500MMscfd › Oben and Sapele located close to key demand centres in South and South West › Well-established off-take base with OMLs 4, 38, 41 long-term contracts, many of which are take
Slide 28: Gas Delivers Multiple Cash Flow Benefits
GAS DELIVERS MULTIPLE CASH FLOW BENEFITS Long-term visibility of revenues with higher drop-through of cash ADVANTAGES OF GAS FOR GROUP CASH FLOWS VOLUMES ALREADY VISIBLE OUT TO 2035 900 1. Gas pricing de-couples revenue from oil price volatility 800 700 2. 10-15 year off-take agreements deliver long
Slide 29: Seplat's Existing Gas Processing Facilities
SEPLAT’S EXISTING GAS PROCESSING FACILITIES Oben and Sapele have combined 525MMscfd gross capacity and supply enough gas to power 30% of Nigeria’s electricity needs OBEN GAS PROCESSING PLANT SAPELE GAS PROCESSING PLANT › Processing plant has 465 MMscfd capacity › Located on OML 41 › Oben field is lo
Slide 30: ANOH Gas Processing Plant
ANOH GAS PROCESSING PLANT Joint venture is one of Nigeria’s Strategic Gas Projects PROJECT OVERVIEW ANOH Gas Processing Plant › The Assa North / Ohaji South (“ANOH”) gas project is a midstream gas business in Nigeria, which will add 300MMscfd of new processing capacity to the Nigerian domestic marke
Slide 31: ANOH Downstream Infrastructure
ANOH DOWNSTREAM INFRASTRUCTURE Multiple evacuation routes for hydrocarbon products › Gas from the AGPC Gas Processing Facility will be routed via a 24km spur line to a fiscal metering facility located SALES GAS adjacent to Agip’s Obiafu-Obrikom field, and a new 127 km 48’’ east-west gas pipeline con
Slide 32: ANOH Pipeline Network Map
ANOH PIPELINE NETWORK MAP Gas processing plant is connected to existing and near-term infrastructure 32 SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | INVESTOR PRESENTATION
Slide 33: ANOH Commercial Structure
ANOH COMMERCIAL STRUCTURE One of Nigeria’s Strategic Gas Projects UPSTREAM MIDSTREAM DOWNSTREAM OML 21 JV OML 53 JV ₦ $ 50.0% Domestic Gas Regional Gas 50.0% 27.5% 15.0% Shareholders 30.0% 20.0% 50% of upstream wet gas production Condensate Export 5.0% 2.5% Wet gas purchased from upstream unit LPG S
Slide 34: ANOH Financing Structure
ANOH FINANCING STRUCTURE Robust funding structure with adequate headroom NGC SEPLAT › Seplat and NGC have funded their equal share of the Amount (US$M) Funding status Amount (US$M) Funding status project, i.e. US$210 million each for a total of 2 Oct 18 100.0 Funded 100.0 Funded 14 Dec 18 50.0 Funde
Slide 35: ANOH Sales Strategy Delivers Multiple Products
ANOH SALES STRATEGY DELIVERS MULTIPLE PRODUCTS Selling to creditworthy off-takers, often in long-term contracts Proposed off-taker(s) Volumes Price Remarks › 245mmscfd of dry gas will be produced as sales gas SALES GAS › At present 90MMscfd of gas has been contracted, 70MMscfd will be sold under the
Slide 36: Off-take Contracts Already Providing Visibility
OFF-TAKE CONTRACTS ALREADY PROVIDING VISIBILITY Off-takers for ~36% of dry gas; wet gas contract 90% take or pay, currently secured by condensate revenues Product Wet Gas Dry Gas - SPA Dry Gas - DSO Dry Gas - Marketing Condensate LPG Allocated end users 12 wholesalers responded to Counterparty NNPC/
Slide 37: Additional Value Creation from Gas
ADDITIONAL VALUE CREATION FROM GAS Ending flaring and developing LPG business will add substantial revenues END FLARING AND MONETISE GAS INSTEAD › Nigeria flares estimated 330 Bscf associated gas annually, enough to create 450,000 MT LPG › Nigerian Gas Flare Commercialization Programme aims to end f
Slide 38: Performance Update: 9M 2020 Results
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 38 INVESTOR PRESENTATION PERFORMANCE UPDATE 9M 2020 RESULTS www.seplatpetroleum.com
Slide 39: 9M 2020 Key Macroeconomic Events
9M 2020 KEY MACROECONOMIC EVENTS An unprecedented period of volatility as twin shocks hit the oil market › Oil price more stable after twin shocks of BRENT FUTURES IN 9M 2020 ($) COVID-19 demand drop and KSA-Russia price war, but will depend on scale of any 65 future lockdowns in major economies 55
Slide 40: 9M 2020 Performance Highlights
9M 2020 PERFORMANCE HIGHLIGHTS Seplat delivered production well within guidance and maintained a healthy cash balance despite low oil prices A STRONG PERFORMANCE DESPITE CHALLENGING MARKET KEY FIGURES › 50,653 boepd total › $38.60/bbl realised VOLUMES WITHIN GUIDANCE Production › Liquids 33,327 bopd
Slide 41: Recent Corporate Developments
RECENT CORPORATE DEVELOPMENTS Focus on efficiency and sustainability INTERNAL REORGANISATION UPDATE ON SUSTAINABILITY INITIATIVES › Creation of New Energy unit to spearhead gas › Streamlining to improve efficiency transition and examine renewable investments › Asset managers will report directly to
Slide 42: 9M 2020 Working Interest Production
9M 2020 WORKING INTEREST PRODUCTION Volumes are well within guidance for 2020 despite severe market challenges in second quarter boepd 60,000 FY 2020 guidance Oil production 48-52 kboepd PERFORMANCE Gas production 49,867 51,177 50,653 › Implemented robust strategy to 50,000 48,491 46,498 47,163 mana
Slide 43: Update on Operations
UPDATE ON OPERATIONS Focus on gas well development and reducing overall costs OIL BUSINESS GAS BUSINESS › OML40 production resumed late August after BVRS › 100 MMscfd achieved across nine-month period accident affected exports › New gas wells expected to produce 75MMscfd › 23% downtime at TFP owing
Slide 44: Update on Accident at Benin River Valve Station
UPDATE ON ACCIDENT AT BENIN RIVER VALVE STATION Investigation leads to new safety procedures SUMMARY › Seven fatalities amongst third-party contractors; our thoughts and prayers are with the families and friends of all those who lost their lives › Accident occurred as the mooring dolphin at Benin Ri
Slide 45: 9M 2020 Financial Highlights
9M 2020 FINANCIAL HIGHLIGHTS Cash balance increases, NPDC receivables fall, capex increased, interim dividend of $0.05 / share REVENUES LOSS BEFORE TAX CASH AT BANK 22% 170% 36% US$388 million US$130 million US$213 million Impact of COVID-19 and oil price fall Loss results from IAS36 impairment Afte
Slide 46: 9M 2020 Financial Results
9M 2020 FINANCIAL RESULTS Non-cash impairments impact P&L but cash position remains strong $ million 9M 2020 9M 2019 Change › Lower oil revenues reflect price falls in Q2; average price of $38.60/bbl achieved Total revenue 387.8 494.9 (21.6%) across 9M with a low of $17.50/bbl Cost of sales (297.2)
Slide 47: Cost-Cutting Initiatives Proving Successful
COST-CUTTING INITIATIVES PROVING SUCCESSFUL Seplat is focused on reducing costs to ensure greater profitability Federal NNPC targeting Negotiating at Targeting cuts in Central Government has $10/bbl cost of least 30% cost OML 40 barging costs including mandated that production savings from costs thr
Slide 48: Cash Position Remains Strong
CASH POSITION REMAINS STRONG ENABLES $100m LOAN REPAYMENT IN Q3 2020, EVEN AFTER DIVIDEND AND INCREASED CAPEX Hedging strategy of put options to provide cash flow assurance Q3 Q4 Q1 Hedge 2020 2020 2021 1.5 / 0.5 1.0 / 1.0 Amount 1.5 MMbbl MMbbl MMbbl Price $45 $30 / $35 $30 / $35 $m Cash at 31/12/1
Slide 49: Robust Capital Structure
ROBUST CAPITAL STRUCTURE Seplat is in a position of financial strength to capitalise on profitable opportunities › Capital structure amended following acquisition of Eland Oil & Gas PLC NET DEBT POSITION REFLECTS STRONG CASH BALANCE › $100m Eland reserve-based loan now part of structure. › $100m of
Slide 50: Outlook
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 50 INVESTOR PRESENTATION OUTLOOK Roger Brown Chief Executive Officer www.seplatpetroleum.com
Slide 51: Outlook
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 51 INVESTOR PRESENTATION OUTLOOK Roger Brown Chief Executive Officer www.seplatpetroleum.com
Slide 52: Timetable of Key De-risking Events
TIMETABLE OF KEY DE-RISKING EVENTS Seplat is progressively de-risking the business EVENT EXPECTED IMPACT EXPECTED › Successful completion of funding substantially ANOH FINANCING de-risks ANOH project Q4 2020 › Dividend stream from AGPC joint venture ANOH FIRST GAS › Strengthens Seplat’s position as
Slide 53: Outlook for 2020 and Drivers of Future Value
OUTLOOK FOR 2020 AND DRIVERS OF FUTURE VALUE Short term focus on efficiency, cash generation, longer term significant growth prospects SHORT TERM VALUE DRIVERS (0-2 YEARS) GUIDANCE FOR 2020 1. New gas wells expected to increase gas production in 2021 (75MMscfd gross) 2. Increase in production from E
Slide 54: Appendix
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 54 INVESTOR PRESENTATION APPENDIX www.seplatpetroleum.com
Slide 55: Quarterly Performance
QUARTERLY PERFORMANCE 9M RESULTS SHOW CONTINUING RECOVERY FROM TWIN CRISES $ million Q1 2020 Q2 2020 Q3 2020 9M 2020 9M 2019 FINANCIAL Revenue 130.5 103.0 154.2 388.8 494.9 EBIT (77.0) (35.8) 33.5 (79.3) 211.2 PBT (95.7) (49.6) 15.3 (130.1) 184.8 Realised oil price ($/bbl) 50.09 25.69 42.65 38.60 64
Slide 56: Head Office, London Office, Investor Relations
Head Office Seplat Plc 16A, Temple Road, Ikoyi, Lagos, Nigeria. +234 (0)1 277 0400 info@seplatpetroleum.com www.seplatpetroleum.com London Office Seplat UK Ltd. 4th Floor, 50 Pall Mall, London SW1Y 5JH +44 (0)20 3725 6500 Investor Relations CFranklin@seplatpetroleum.com AAliyu@seplatpetroleum.com