Seplat says buyers secured for NNPC gas agreement

With a desire to expand revenue, Seplat Petroleum Development Company Plc said the recent gas agreement for delivering about 3.4 billion standard cubic feet of gas per day, with state-owned Nigeria National Petroleum Corporation (NNPC) already has a market outlet.
Speaking to BusinessDay on his 60th birthday celebration Seplat’s CEO Austin Avuru said there is a market ready for the gas to be produced under its signed agreement with NNPC as Seplat has plans to expand and invest more in its gas businesses.
“The market in Nigeria is currently under-served as total supply today is far less than the market demand; there is still a lot more market demand for Seplat to meet,” Avuru told Businessday.
Also, Chairman of Seplat Ambrose Orjiako said all commitments Seplat made with NNPC towards producing gas already has a market as there is an increasing market demand to meet and with good pricing.
“Nigeria’s environment remains short of gas supply for power, short of gas supply for industry and short of gas supply for agriculture; so we have a whole lot to do,” Orjiako told Businessday.
Orjiako further said that the company made good progress last year as it focused on key priority to de-risk future cash flows through diversification of oil export routes, investing in and scaling up its domestic gas business.
Recall, last week, NNPC and Seplat signed five agreements to expedite the development of a project aimed at delivering about 3.4 billion standard cubic feet of gas per day by 2020.
The NNPC said the project, Assa North and Ohaji South gas development scheme, was one of the seven critical gas development projects that would boost gas production and infrastructure development.
Seplat’s gas business continues to make increasing contribution to revenues as it generated $85.3 million at an average gas price of $3.04/Mscf in H1 2018 which is a 57 percent increase compared to $54.4 million in the same period last year.
The half year 2018 financial statement showed overall Seplat’s aggregate indebtedness at 30 June 2018 stood at $550 million while cash at bank stood at $509.9 million to give a net debt position of $40.1 million with $100 million undrawn headroom on the Revolving Credit Facility (RCF) which implies the firm is well capitalised and fully funded to execute its organic growth plans and also well positioned to pursue inorganic growth opportunities in line with its price disciplined approach.
RCF is a line of credit where the customer or firms pays a commitment fee to a financial institution to borrow money, and is then allowed to use the funds when needed.
Earlier in March 2018, Seplat announced it had successfully refinanced its existing $300 million revolving credit facility due December 2018 with a new four year $300 million revolving credit facility due June 2022.
Seplat Petroleum Development Company Plc was incorporated on June 17, 2009, as a private limited liability company and re-registered as a public company on October 3, 2014.

Olusola Bello & Dipo Oladehinde