Seplat Energy Plc · LSE:SEPL
Seplat Energy — Seplat Petroleum Development Company — 9M 2020 Earnings Presentation
26 slides from Seplat Energy's earnings presentation, Oct 30, 2020
Slide 1: Leading Nigeria's Energy Transition: 9M 2020 Results
LEADING NIGERIA’S ENERGY TRANSITION 9M 2020 RESULTS 30 OCTOBER 2020 www.seplatpetroleum.com
Slide 2: Highlights
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 2 9M 2020 RESULTS HIGHLIGHTS Roger Brown Chief Executive Officer www.seplatpetroleum.com
Slide 3: 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 4: 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 5: 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 6: Operational Performance
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 6 9M 2020 RESULTS OPERATIONAL PERFORMANCE Effiong Okon Operations Director www.seplatpetroleum.com
Slide 7: 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 8: 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 9: 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 10: 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 11: 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 12: Financial Performance
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 9M 12 2020 RESULTS FINANCIAL PERFORMANCE Emeka Onwuka Chief Financial Officer www.seplatpetroleum.com
Slide 13: 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 14: 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 15: 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 16: 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 17: 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 18: Outlook
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 9M 18 2020 RESULTS OUTLOOK Roger Brown Chief Executive Officer www.seplatpetroleum.com
Slide 19: 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 20: 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 21: Appendix
SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC | 21 9M 2020 RESULTS APPENDIX www.seplatpetroleum.com
Slide 22: 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 23: 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 › Repaid $100m of $350m › Invest in growing the gas business Revolving Credit Facility to fuel Nigeria’s increasing dem
Slide 24: 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) $259m OML 53 Oil Gas 43,372 acqu
Slide 25: ANOH Financing Structure
ANOH FINANCING STRUCTURE Robust funding structure with adequate headroom NGC SEPLAT › Seplat and NGC have funded their equal share of the Amount (US$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 26: 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
Seplat Petroleum Development Company — 9M 2020 Earnings Presentation on 6ix