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

36,923
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

Oil production during H1 2017 was heavily influenced by force majeure at the Forcados terminal owing to disruption of the subsea export pipeline in February 2016. Force majeure was lifted on 6 June 2017 and full production operations were rapidly restored. Consequently, full year 2017 working interest production stood at 36,923 boepd (17,853 bopd and 114 MMscfd), up 43% year on year. Production uptime on the Trans Forcados System post lifting of force majeure was 81% while average reconciliation losses decreased significantly to 3.5% from previous levels of around 10%.

Outlook

The Company completed upgrades to the Warri refinery jetties in 2017 that will enable sustained exports of 30,000 bopd (gross), if required in the future. Alongside this, a third export option through the pipeline into the Escravos terminal is expected to be completed in Q3 2018 and will become available for Seplat to utilise. Having also increased gas processing capacity to 525 MMscfd, the Company expects to sign additional GSAs that will allow for gas production to be increased further.

Risk management

The Company has an 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.

+3.2%
Progress
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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 2017 stood at 477 MMboe, an increase of 3% year on year. The main drivers of the upward revision are an increase in oil reserves attributed to the Sapele Shallow reservoir at OML 41 and gas reserves at OML 53 more than offsetting volumes produced in the year.

Outlook

The Company has a significant working interest 2C resource base of 61 MMboe that offers good reserves growth potential. 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 them as far as possible prior to committing capital. When evaluating new acquisitions the Company is careful to maintain price discipline and undertake rigorous analysis.

5.96
Progress
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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 costs per unit of production fell by 32% year on year in 2017 as a result of continued efforts to improve operational efficiency, resulting in lower operating and maintenance costs, and the effect of resuming of exports through the Forcados terminal, as opposed to utilising higher cost barging operations via the Warri refinery jetties.

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.

112.4
Progress
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Devlivering on our strategic pillars

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 in 2017 reflects the higher oil and gas production and higher oil price realisations year on year. 2017 EBIT was also positively impacted by the lower opex per unit of production and lower general and administrative expenses.

Outlook

Improved oil production levels, tight cost control and anticipated growth in gas production at OMLs 4, 38 and 41 will ensure robust earnings potential in the future. Development of the substantial gas and condensate reserves at OML 53 will also enhance the future earnings profile.

Risk management

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

0.31
Progress
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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

Despite the low level of rig-based activity in 2017 the Company remained operationally active, completing the Oben gas plant Phase II expansion project and expanding the gross capacity of the alternative oil export route via the Warri refinery jetties to 30,000 bopd. The Company achieved an LTIF of 0.31 in the year, which is slightly lower than 0.33 in 2016.

Outlook

In 2018 efforts will continue to minimise the frequency of lost time incidents in all areas of operations. The Company will continue to ensure high HSSE standards are met and assess opportunities to constantly improve its HSSE systems and protocols.

Risk management

The Company has in place extensive and well developed HSSE policies and reporting procedures with an emphasis on the early identification and mitigation of HSSE risks.

The Company closely monitors its HSSE performance and is constantly evaluating ways to improve its performance.

Additional performance metrics

447
Devlivering on our strategic pillars

Definition

The Company’s net operating cash flow in the year.

Relevance

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

Progress

Seplat’s operating cash flow in 2017 reflects the higher oil and gas production following the resumption of full production operations after force majeure at the Forcados terminal was lifted on 6 June, together with higher oil price realisations, lower opex costs per unit of production and lower general and administrative costs. 2017 operating cash flow also reflects the accelerated recovery of legacy cash calls owed by NPDC through measures that included receipt of NPDC’s share of gas revenues and monetisation of oil volumes allocated by NPDC to Seplat.

Outlook

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

Risk management

Careful financial management and high levels of operating efficiency allow the Company to ensure positive cash generation from its operating activities. Access to multiple oil export routes will also de-risk distribution of oil production to market and improve uptime, positively influencing cash flows.

33
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 in particular has prioritized acceleration of gas capacity development to supply the domestic market. By having discretion over capex, 2017 spend was scaled back significantly owing to force majeure at the Forcados terminal from 21 February 2016 to 6 June 2017 and the Company’s prudent strategy of maintaining a liquidity buffer.

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.

50.4
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 improved overall in 2017 but remained volatile. Brent started the year at the US$55/ bbl level before recording a low of around US$44/bbl in June, recovering steadily thereafter to exit 2017 at the US$67/bbl level. The Company put in place dated Brent put options covering a volume of 3.69 MMbbls in 2017 at a combined weighted average strike price of US$48.38/bbl. This hedging programme has been rolled forward into 2018 with deferred premium put options in place covering 3.6 MMbbls at a strike price of US$40.0/bbl in H1 and covering 3.0 MMbbls at a strike price of US$50/bbl in H2.

Outlook

The Company has historically sold over 90% of 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

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.

2.7
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 a 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 caliber industry talent.

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