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

49,867
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

Rig based activity at OMLs 4, 38 and 41 was limited in the year to the drilling of one new gas production well at the Oben field and the workover on one further existing gas well. The average annual production rate is also influenced by the number of days third party export infrastructure is shut-in. 2018 production performance reflects an uptime level of 85% over the full year.

Working interest gas production increased year-on-year by 27% to 145 MMscfd while oil production increased by 44%, meaning total production was up 35% at 49,867 boepd. Average reconciliation losses arising from use
of third party infrastructure were around 8%.

Outlook

The Company expects net working interest production in 2019 to be between 49,000 to 55,000 boepd, comprising 24,000 to 27,000 bopd liquids production and 146 to 164 MMscfd (or 25,000 to 28,000 boepd) gas production.

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.

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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 2018 stood at 481 MMboe, an overall increase of 1% year-on-year and 121% reserve replacement ratio. The main driver to this revision year-onyear is due to the incorporation of updated 3D seismic data into field reservoir models (in the case of oil) and the anticipated compression benefits resulting from upgrades to the Sapele gas plant. Sustained good performance from the Oben gas wells also contributed to the upward revision, partially offsetting the gas volumes that were produced during the year.

Outlook

The Company has a significant working interest 2C resource base of 80 MMboe that offers good long-term 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.

5.77
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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 reduced 3% year-on-year to US$5.77d per boe as a result of continued efforts to improve operational efficiency, helped by increased production.

Outlook

The Company remains focused on cost control. Whilst increases in certain cost components are expected to increase 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.

310
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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 2018 increased to US$310m from US$112m in 2017, and reflects the higher oil and gas production year-on-year combined with higher oil price realisations. It has also been positively impacted by ensuring operational efficiency and improved cost controls.

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.

0.14
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

Rig-based activity in 2018 was selective and the Company remained operationally active as full year uptime increased to 85% compared to 50% in 2017. The Company achieved an LTIF of 0.14 in the year, a reduction of 55% compared to 0.31 in 2017.

Outlook

In 2019 efforts will continue to minimise the frequency of lost time incidents in all areas of operations. 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 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

502
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

The Company's operating cash flow in 2018 primarily reflects the higher year-on-year production levels at OMLs 4, 38 and 41 during the year. Cash flow was also positively impacted by higher oil prices and a greater contribution from the gas business, which continued to increase during the year. In 2018, all the outstanding legacy cash calls due from NPDC were settled.

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 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.

88
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 2018. By having discretion over capex, 2018 spend was increased to US$88 million, which was directed mainly towards the gas business 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.

70.1
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 in 2018, recording a high of US$86.29/bbl in October and exiting the year with a low around US$51/bbl. The Company put in place dated Brent put options covering a volume of 6.60 MMbbls in 2018 at a combined weighted average strike price of US$44.5/bbl. This hedging programme has been continued in 2019 where upfront premium put options at a strike price of US$50.0/bbl were entered into, protecting a volume of 4.0MMbbls.

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

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.

2.2
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 calibre industry talent. Staff turnover remained low in 2018 at 2.2% which isslightly lower than the prior year which was 2.7%.

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