What we do

Measuring our performance

Seplat measures its progress through certain key performance indicators that are closely linked to the successful delivery of its strategy.

Key performance indicators

46,498
Progress
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Devlivering on our strategic pillars

Definition

The Company’s share of oil and gas produced during the year proportionate to its working interest in each producing block. Volumes expressed are as measured at the Company’s facilities, prior to any reconciliation losses.

Relevance

An indicator of production strength at the Company’s current blocks and the impact of development activities at organic and inorganic projects.

Progress

Four drilling rigs were operated by the second half of 2019 with eight wells executed during the year. The average annual production rate is also influenced by the number of days third party export infrastructure is shut-in. 2019 production performance reflects an uptime level of 92% over the full year. Average reconciliation losses arising from use of third party infrastructure was around 12%.

Outlook

The Company expects to drill a minimum of three wells in 2020 to achieve net average working interest production of 47k - 57kboepd in 2020.

Risk management

The Company has in depth understanding of the subsurface and constantly monitors individual well and reservoir performance in order to optimise the drawdown rate on each well and maximise long-term economic recovery of oil and gas from the reservoirs. It has also prioritised the establishment of alternative oil export routes to mitigate high concentration risk.

+6%
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Devlivering on our strategic pillars

Definition

The number of barrels of oil equivalent added to the 2P reserves base during the year, expressed as a percentage increase/decrease.

Relevance

An indicator of the Company’s ability to capitalise on organic opportunities within its portfolio and inorganic opportunities to replenish its reserves base.

Progress

Working interest 2P reserves at end 2019 stood at 509 MMboe, a significant increase of 6% year-on-year. The main driver to this revision year-on-year is the acquisition of Eland Oil and Gas in 2019.

Outlook

A working interest 2C resource base of 106 MMboe offers good long-term reserves with significant growth potential. Sanctioning of additional exploration projects would increase Seplat’s reserves further. The Company will also continue to evaluate acquisition opportunities and undertake a focused E&A drilling programme.

Risk management

The Company high grades its inventory of exploration and appraisal opportunities, each being subject to rigorous technical and commercial evaluation to de-risk as far as possible prior to committing capital. When evaluating new acquisitions the Company is careful to maintain price discipline and undertakes rigorous analysis.

6.20
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Devlivering on our strategic pillars

Definition

The operating costs (excluding non-cash flow expenses, and financing costs) net to the Company divided by the Company’s working interest barrels of oil and equivalent produced in the period.

Relevance

An indicator of how cost efficiently the Company is able to produce its oil and gas reserves. By controlling its operating cost base the Company is able to be more resilient to periods of depressed oil prices.

Progress

Opex cost per unit of production has remained flat over the last two years. It increased by 7% year on year to US$6.20 per boe as a result of lower production in 2019.

Outlook

The Company remains focused on cost control. Whilst increases in certain cost components are expected year-on-year there are areas where downwards pressure can be applied with the objective of achieving a stable unit cost.

Risk management

The Company carefully monitors expenditures and continually analyses its underlying cost base, making comparisons to prevailing market rates in order to ensure that the Company is identifying and able to action cost saving and efficiency gains, keeping it competitively positioned on the cost curve.

312
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Definition

The Company’s earnings before the deduction of interest and tax expenses.

Relevance

An indicator of the Company’s earnings ability. An increase in EBIT requires growth in revenue and/or strong cost control.

Progress

EBIT for the year was US$312 million (2018: US$310 million), helped by the gas-tolling revenue recognised but set against the reversal of previously recognised accrued interest of US$40 million on NPDC receivables due to the settlement of these receivables.

Outlook

Improved oil production levels, tight cost control and anticipated growth in gas production will ensure robust earnings potential in the future.

Risk management

The Company has robust financial processes in place and carefully monitors revenues, cost of sales and admin costs to ensure continued strong profitability. Oil price is a major influencing factor on the Company’s revenue. The Company analyses hedging strategies to help mitigate exposure to oil price volatility.

0
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Devlivering on our strategic pillars

Definition

The number of lost time incidents recorded per million man hours worked.

Relevance

An indicator of health and safety performance that is widely established within the oil and gas industry.

Progress

Rig-based activity increased in 2019 as eight wells were executed in the year. The Company achieved an LTIF of zero during the year, a safety achievement despite one million more man hours compared to 2018.

Outlook

In 2020 efforts will continue to minimise the frequency of lost time incidents in all areas of operations to achieve the zero target for incidence. The Company will continue to ensure high HSE standards are met and assess opportunities to constantly improve its HSE systems and protocols.

Risk management

The Company has in place extensive and well developed HSE policies and reporting procedures with an emphasis on the early identification and mitigation of HSE risks. The Company closely monitors its HSE performance and is constantly evaluating ways to improve its performance.

Additional performance metrics

338
Devlivering on our strategic pillars

Definition

The Company’s operating cash flow in the year before taking into account movements in working capital.

Relevance

An indicator of the cash generative potential of the Company’s producing oil and gas blocks.

Progress

The Company’s operating cash flow was affected by lower oil prices and production levels during the year.

Outlook

Strong underlying wellhead oil production capacity and anticipated future growth in gas production will ensure continued robust cash flow generation. Development of the recently acquired OML 40 block together with OML 53 and OPL 283 will also significantly augment future cash flow potential.

Risk management

Prudent financial management and high levels of operating efficiency allow the Company to ensure positive cash generation from its operating activities.

125
Devlivering on our strategic pillars

Definition

The total amount of capital expenditure made during the year, excluding acquisition costs.

Relevance

An indicator of the Company’s level of investment activities in production, development and exploration, and appraisal activities.

Progress

The Company has continued to invest in the development of its portfolio of blocks onshore the Niger Delta and stepped up field development in the second half of 2019. By having discretion over capex, the US$125 million spend was directed mainly towards drilling new development wells and facilities upgrade projects.

Outlook

The Company will continue to invest in the development of its portfolio, allocating capital to the opportunities that offer the best returns and volume growth potential whilst scaling and timing investments at appropriate levels to closely match cash flow generation.

Risk management

Project investments are monitored closely against budgets to minimise the risk of over-runs. The Company benchmarks every investment opportunity to ensure capital is deployed to only the highest return projects, and adheres to a price disciplined acquisition strategy.

64.4
Devlivering on our strategic pillars

Definition

The average oil price per barrel sold by the Company during the period.

Relevance

The Company’s financial performance is closely linked to the oil price.

Progress

Oil prices declined compared to 2018; Brent opened the year at US$54/bbl and ranged between US$54 – 75/bbl, closing at US$66/bbl. The Company put in place dated Brent put options covering a volume of 4.0 MMbbls in 2019 at a combined weighted average strike price of US$50.0/bbl. This hedging programme has been continued in 2020 where upfront premium put options at a strike price of US$45.0/bbl were entered into, protecting a volume of 4.5MMbbls in aggregate for the first three quarters of 2020.

Outlook

The Company has historically sold its produced oil under the Forcados blend that has generally received a premium to a Brent marker price. Oil prices are expected to remain subject to macro-economic volatility.

Risk management

The management continue to closely monitor prevailing oil market dynamics and will consider further measures and take advantage of opportune periods to implement additional hedges to provide appropriate levels of cash flow assurance.

3.6
Devlivering on our strategic pillars

Definition

The rate at which full time staff of Seplat choose to leave the Company voluntarily, expressed as a percentage of average full time headcount during the year.

Relevance

An indicator of the Company’s ability to attract and retain personnel. The loss of people can result in skills shortage, loss of knowledge and higher recruitment costs.

Progress

The Company has continued to develop its employment policies with the aim of attracting and retaining high calibre industry talent. Staff turnover remained low in 2019 at 3.6%.

Outlook

The industry is still expected, over the longer term, to continue to face skills shortages in key areas with competition for high performing individuals amongst competitors being intense.

Risk management

The Company’s policy is to provide industry competitive benefits packages and provide progressive career opportunities to retain and attract high performing employees.

Year on year progress

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    Below expectations
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    In line with expectations
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    Above expectations

Delivering on our strategic pillars

  • Maximise production and cash flows from operated assets
  • Move up 2C resources into 2P reserves category
  • Commercialise and produce gas reserves
  • Pursue a focused acquisition and farm-in strategy
  • Be a highly responsible corporate citizen