TIDMSEPL
RNS Number : 3453V
SEPLAT Petroleum Development Co PLC
08 April 2019
8 April 2019
Seplat Petroleum Development Company Plc
2018 Annual Report and Notice of AGM
Seplat Petroleum Development Company Plc ("Seplat" or the
"Company") confirms it has today published its Annual Report and
Accounts for the year ended 31 December 2018 together with the
notice of the Company's sixth Annual General Meeting ("AGM") and
forms of proxy. The Company will hold its AGM at 11:00am (local
time) on Thursday 16 May 2019 at the Civic Centre, Ozumba Mbadiwe
Road, Victoria Island, Lagos, Nigeria.
In accordance with Listing Rule 14.3.6 copies of the Company's
Annual Report and Accounts for the year ended 31 December 2018, the
Notice of AGM and proxy forms have also been submitted to the FCA
for publication through the document viewing facility of the
National Storage Mechanism and will shortly be available for
inspection at http://www.morningstar.co.uk/uk/NSM
In accordance with Disclosure Guidance and Transparency Rule
("DTR") 6.3.5R(3), copies are available on the Company's website,
www.seplatpetroleum.com
The Company's audited financial statements and extracts of the
management report, were included in the Company's Final Results
announcement on 6 March 2019. That information, together with the
Appendices to this announcement, which contains the following
additional information that has been extracted from the 2018 Annual
Report, constitutes the material required for the purposes of
compliance with DTR 6.3.5 only:
-- the Statement of Directors' Responsibilities;
-- a description of principal risks and uncertainties that the Company faces; and
-- related party transactions.
This announcement should be read in conjunction with and is not
a substitute for reading the full 2018 Annual Report. Page and note
references in the text below refer to page numbers and notes in the
2018 Annual Report and terms defined in that document have the same
meanings in these extracts.
Enquiries
Seplat Petroleum Development Company plc
Roger Brown, CFO +44 (0) 203 725 6500
Andrew Dymond, Head of Investor Relations
Ayeesha Aliyu, Investor Relations +234 (01) 277 0400
Chioma Nwachuku, GM - External Affairs
and Communications
FTI Consulting
Ben Brewerton / Sara Powell +44 (0) 203 727 1000
seplat@fticonsulting.com
Notes to editors
Seplat Petroleum Development Company Plc is a leading indigenous
Nigerian oil and gas exploration and production company with a
strategic focus on Nigeria, listed on the Main Market of the London
Stock Exchange ("LSE") (LSE:SEPL) and Nigerian Stock Exchange
("NSE") (NSE:SEPLAT).
Seplat is pursuing a Nigeria focused growth strategy and is
well-positioned to participate in future divestment programmes by
the international oil companies, farm-in opportunities and future
licensing rounds. For further information please refer to the
company website, http://seplatpetroleum.com/
Appendices
Appendix A: Statement of Directors' responsibilities
The following Statement of Directors' responsibilities is
extracted from the 2018 Annual Report and Accounts (page 114).
The Companies and Allied Matters Act, CAP C20, Laws of the
Federation of Nigeria 2004, requires the Directors to prepare
financial statements for each financial year that give a true and
fair view of the state of financial affairs of the Group at the end
of the year and of its profit or loss. The responsibilities include
ensuring that the Group:
1. keeps proper accounting records that disclose, with
reasonable accuracy, the financial position of the Group and comply
with the requirements of the Companies and Allied Matters Act, CAP
C20, Laws of the Federation of Nigeria 2004;
2. establishes adequate internal controls to safeguard its
assets and to prevent and detect fraud and other irregularities;
and
3. prepares its financial statements using suitable accounting
policies supported by reasonable and prudent judgements and
estimates, consistently applied.
The Directors accept responsibility for the annual financial
statements, which have been prepared using appropriate accounting
policies supported by reasonable and prudent judgements and
estimates, in conformity with International Financial Reporting
Standards (IFRS), the requirements of the Companies and Allied
Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and
Financial Reporting Council of Nigeria Act, No. 6, 2011.
The Directors are of the opinion that the financial statements
give a true and fair view of the state of the financial affairs of
the Group and of its financial performance and cash flows for the
year. The Directors further accept responsibility for the
maintenance of accounting records that may be relied upon in the
preparation of financial statements, as well as adequate systems of
internal financial control.
Nothing has come to the attention of the Directors to indicate
that the Group will not remain a going concern for at least twelve
months from the date of this statement.
Signed on behalf of the Directors by:
A.B.C Orjiako Austin Avuru
Chairman Chief Executive Officer
FRC/2014/IODN/00000003161 FRC/2014/IODN/00000003100
6 March 2019 6 March 2019
Appendix B: Principal risks and uncertainties
The following principal risks and uncertainties table is
extracted from the 2018 Annual Report and Accounts (pages 48 to
51).
The implementation of our strategy can be hindered by various
risks and uncertainties. The risks that the Board considers most
significant are described here.
Key risk Description Mitigation KPI/Performance Strategic Assessment Trend
metric pillars
Operational risks
Field Failure Focus on risk High We continue
operations to manage management * Net working interest production to refine
and project operational at planning phase our project
deliverability activities and mitigation management
in line plans activated. * Operating costs per boe approach
with planned Compulsory for improved
expectations 'peer-to-peer' speed of
can lead review for delivery
to production high-value and
misses, projects and efficiency
project better
delays project
and cost management
overruns, techniques.
high production Protracted
costs and land acquisition,
earlier preparation and
than expected rig startup have
field been contributory
decommissioning. factors which
have
received focused
attention and
significant
process
improvements
and improved
communications
with JV partner
and approving
regulators
to mitigate
delays.
Use of
smart/intelligent
wells to improve
recovery and
improved
rig performance
monitoring
and reporting to
manage NPTs.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Third An over-reliance Work is ongoing Very Remarkably
party on third to secure a * Net working interest production high improved
infrastructure party operated second uptime
downtime transportation export line to of Forcados
infrastructure complement * Days downtime export
can expose Forcados. system
the Company Export via and progress
to extended barging * EBIT made towards
periods is also retained completing
of production to do limited Amukpe
being shut-in. volumes - Escravos
in extreme cases. exportline
Have two as
contingency alternative
tanks in Amukpe
for partial
storage
during shut-in
over shorter
periods.
More tanks are
planned.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
HSSE Oil and Deployment of an High Though
gas activities HSSE Management * HSSE scorecards the risk
carry significant System in line is inherent,
levels with best we will
of HSSE practices. * LTIF continue
risks if Monitoring and to deploy
not properly reporting of HSSE our HSSE
managed. performance * TRIR risk
As activity scorecards management
levels at management and in line
continue Board levels. Our with best
to increase HSSE systems and practices
there is process are and with
a strong subject strong
focus on to independent emphasis
preventing review and on
major identified prevention.
environmental, improvement
health initiatives
or safety are deployed.
incidents. Continual
focus on HSSE
training
and initiatives
on incidence
prevention.
Emergency
Response
plan set for any
eventuality and
comprehensive
Incident
Review panels to
identify and
channel
lessons learnt
to improvement
activities.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Sustained Exploration Strict compliance Very Reduced
E&A programme and appraisal with reservoir * Reserve replacement high E&A
failure activities management activities.
carry significant guidelines. Will monitor
levels Building internal the outcomes
of subsurface capacity with as E&A
risk. Sustained skilled activities
E&A drilling subsurface ramp up.
failure expertise.
will impact
the Company's
ability
to organically
replace
reserves
and production.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
External risks
Niger The Company Continuous Very Significant
Delta operates security * LTIF high drop in
stability in a region monitoring and targeted
and security where security intelligence oil and
incidents work. * TRIR gas
such as Quick mechanism facilities
kidnappings, for security attacks
vandalism advisory * Security incidents in the
and criminal to staff and region
attacks movement in 2018.
on O&G restriction for We will
installations high alert continue
can occur. situations. our
Active monitoring
participation and
in industry vigilance.
pressure
groups to find
lasting solution.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Failure Failure Successful High We continue
to manage to manage operation * Net working interest production to enjoy
stakeholder stakeholders of the GMOU good working
relationships can result agreement relations
in business with host * LTIR with our
disruptions communities, stakeholders.
and interference. periodic
The Company engagement * TRIR
prioritises and feedback
the effective forums.
management Tailored CSR * Host community incidences
of relationships programmes,
with all capacity building
stakeholders and
including infrastructure
host communities, developments with
JV partners, the host
government, communities.
regulatory Organisational
bodies focus and clear
and shareholders. strategy to
deliver
shareholder value
pursued by the
Board and
management.
Corporate
governance,
transparency and
proactiveness in
dealings with
regulators
and JV partners.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Geo-political Nigeria Scenarios and High With
risk has at response * Occurrences of civil unrest and terrorism elections
times in options plan set. in 2019,
its history Crisis management we will
faced political team in place for continue
uncertainties high alert to monitor
and threats political situations
such as periods. Business closely.
terrorism continuity plans
aimed at actioned in light
de-stabilising of current
and undermining geo-political
the orderly situation.
and effective
rule of
central
government.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Financial risks
Oil price Oil prices Hedging continues Very Though
volatility have exhibited to be our price * Realised oil price high oil price
a history risk management rallied
of volatility tool. Price to above
and can sensitisation * Operating cash flow $80 in
fluctuate on project 2018, we
sharply economics will continue
in line and cost to take
with external discipline hedge
factors for capital positions
projects and apply
sanctioning. cost
Aggressive reduction
focus on cost strategies.
reduction.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Changes If the Perform High PIB is
to tax tax evaluation * Effective tax rate going through
status regime/legislation of business plan legislative
and under which and performance process.
legislation the Company metrics exclusive * Tax status Versions
operates of tax benefits. in
its assets Project economics circulation
were to were determined do not
change, on maximum tax have
profitability basis to mitigate significant
may be the impact of the impact
impacted. now expired on Seplat
pioneer valuation.
tax status.
Impact
assessment of
potential
tax legislature
monitored at
Board
level.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Availability The oil Working on High JV partners
of capital and gas different * JV receivables cash calls
industry funding are now
is highly arrangements on time
capital with JV partners. * Capex and legacy
intensive. Board review and cash call
Significant approval of receivables
amounts financial * New M&A activities have been
of capital strategy and debt cleared.
are required portfolio
to continue management
development with strong
activities banking
and fund relationships
M&A. Non
funding
of cash
calls by
JV partners
impacts
activities
and liquidity.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Ineffective Cost reduction Comprehensive High Cost
cost remains budgeting * Operating cost per boe discipline
control central process approved remains
to the by the joint key focus
Company's venture * EBIT of the
current partner and the business.
operating Board. Clear cost
strategy. management * Capex
High operating targets.
cost and Grading of
ineffective portfolio * Well costs
capital opportunities and
cost control project ranking
negatively for capital
impact allocation.
operating Focus on reducing
cash flows drilling costs
and profitability. at well design
phase. Cost
monitoring
and periodic
reporting.
Focus on
effective
contracting
strategies
for cost
reduction.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Liquidity Liquidity Manage liquidity High Improved
risk is risk by ensuring * Operating cash flow uptime
the risk that sufficient of TFP;
that the funds are improved
Company available * Capex JV cash
will not to meet call payment;
be able commitments oil price
to meet as they fall due. rally;
its financial Uses both and debt
obligations long-term refinance
as they and short-term have all
fall due. cash flow greatly
projections improved
to monitor liquidity
funding risk.
requirements for
activities and
to ensure there
are sufficient
cash resources
to meet
operational
needs. Cash flow
projections take
into
consideration
the Company's
debts
and covenant
compliance.
Surplus cash held
is transferred
to the treasury
department which
invests in
interest
bearing current
accounts, time
deposits and
money
market deposits.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Foreign The Company The Company has High Historically,
exchange is exposed options to manage * Operating cash flow the Company
to exchange its foreign holds
rate risk exchange majority
to the exposure * Capex of its
extent including cash and
that balances financial hedge cash
and transactions instruments such equivalent
are denominated as forward in US dollar.
in a currency exchange Gas contracts
other than contracts. are indexed
the US in US dollar.
dollar. However,
the Naira
may be
devalued
post
elections.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Strategic risks
Portfolio High dependency Focus on Very The Company
concentration on a concentrated portfolio * Successful execution of new acquisition and farm-in high is in
risk portfolio expansion opportunities portfolio
of producing strategy expansion
blocks from the Board phase.
and limited level to
number diversify
of wells current
can leave portfolio.
the Company Integrated
more susceptible long-term
to declining planning on crude
long-term oil and gas
growth business.
and reserves
depletion.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Merger Growth New business Very DRB process
& Acquisition through development * Successful execution of new acquisition and farm-in high in place
('M&A') M&A activities unit is always opportunities to vet
risk is part looking for the opportunities
of Seplat's right and deals.
strategy opportunities But current
to pursue for Seplat. M&A landscape
a focused Decision is
acquisition review board competitive.
and farm-in. (DRB)
M&A deals process is in
and transactions place
come with to ensure deals
significant are properly
risk including vetted
structural, and adequate due
commercial diligence done
and integration on new
risks. opportunities.
There is The DRB ensures
also the the commercial,
risk of structural, KYC
non achievement and integration
of acquisition risks are fully
targets considered and
due to addressed with
highly mitigation plan
competitive approved and in
landscape. place prior to
deal closin
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Bribery Bribery Extensive High As
and corruption and corruption training * Whistleblowing reports geographical
risk presents on anti-bribery location
a risk and corruption. continues
throughout Embedding * Number of disciplinary cases to be
the global corporate susceptible
oil and governance to
gas industry principles corruption.
and represents with key focus
an ongoing on areas of the
risk to business which
any oil may be more
and gas susceptible
company. to corruption
such
as the
contracting
and procurement
process.
Processes
exist to guide
dealings with
public
officials.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Loss The oil Annual benchmark Low Remains
of key and gas reviews to ensure * Staff turnover low risk
employees industry competitiveness for the
is very in reward and Company.
specialised recruitment.
in certain Succession
areas and planning
there is in place as part
competition of business
within continuity.
the industry Focus on training
to secure as a key
talent differentiating
and highly-skilled factor in the
and experienced operating
personnel environment.
in core
areas
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Fraudulent Fraudulent Extensive High Risk is
activity activity whistleblowing * Number of reported cases still high
risk presents campaign. and the
a risk Continuous Company
throughout monitoring and continues
the global improvement of to maintain
oil and the system of a zero
gas industry internal tolerance
and represents controls by all policy.
an ongoing lines of defence
risk to with strong
any oil internal
and gas audit activity.
company. Automation of
processes
where possible
to reduce manual
intervention.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Information Potential We monitor and Medium While cyber
security cyber attacks regularly upgrade * Information security identification and containment security
risk and information the Company's reports continues
technology information to hold
security technology and international
breaches security systems. attention,
could result The Company has there has
in loss a clearly defined not been
or compromise employee user a material
of sensitive policy IT breach
proprietary and control of on our
information, access rights. operations.
communication Our information
and IT security
business framework
continuity and
disruption infrastructure
across have been
operations. externally
reviewed in line
with the
requirements
of ISO 27001. IT
business
continuity
plan is in place
for quick
deployment.
------------------- ------------------ ---------------------------------------------------------- ---------- ----------- --------------
Appendix C: Related Party Transactions
The following Related party relationships and transactions are
extracted from the 2018 Annual Report and Accounts (pages 177 to
179)
37 Related party relationships and transactions
The Group is controlled by Seplat Petroleum Development Company
Plc (the parent Company). The parent Company is owned 7.81% either
directly or by entities controlled by A.B.C. Orjiako (SPDCL(BVI))
and members of his family and 12.04% either directly or by entities
controlled by Austin Avuru (Professional Support Limited and
Platform Petroleum Limited). The remaining shares in the parent
Company are widely held.
37a Related party relationships
The services provided by the related parties:
Abbeycourt Trading Company Limited: The Chairman of Seplat is a
director and shareholder. The company provides diesel supplies to
Seplat in respect of Seplat's rig operations.
Cardinal Drilling Services Limited (formerly Caroil Drilling
Nigeria Limited): Is owned by common shareholders with the parent
Company. The company provides drilling rigs and drilling services
to Seplat.
Charismond Nigeria Limited: The sister to the CEO works as a
General Manager. The company provides administrative services
including stationery and other general supplies to the field
locations.
Helko Nigeria Limited: The Chairman of Seplat is shareholder and
director. The company owns the lease to Seplat's main office at 25A
Lugard Avenue, Lagos, Nigeria.
Keco Nigeria Enterprises: The Chief Executive Officer's sister
is shareholder and director. The company provides diesel supplies
to Seplat in respect of its rig operations.
Montego Upstream Services Limited: The Chairman's nephew is
shareholder and director. The company provides drilling and
engineering services to Seplat.
Stage Leasing (Ndosumili Ventures Limited): Is a subsidiary of
Platform Petroleum Limited. The company provides transportation
services to Seplat.
Neimeth International Pharmaceutical Plc: The Chairman of Seplat
is also the chairman of this company. The company provides medical
supplies and drugs to Seplat, which are used in connection with
Seplat's corporate social responsibility and community healthcare
programmes.
Nerine Support Services Limited: Is owned by common shareholders
with the parent company. Seplat leases a warehouse from Nerine and
the company provides agency and contract workers to Seplat.
Oriental Catering Services Limited: The Chief Executive Officer
of Seplat's spouse is shareholder and director. The company
provides catering services to Seplat at the staff canteen.
ResourcePro Inter Solutions Limited: The Chief Executive Officer
of Seplat's in-law is its UK representative. The company supplies
furniture to Seplat.
Shebah Petroleum Development Company Limited ('BVI'): The
Chairman of Seplat is a director and shareholder of SPDCL (BVI).
The company provided consulting services to Seplat.
The following transactions were carried by Seplat with related
parties:
37b Related party transactions
Year-end balances arising from related party transactions:
2018 2017 2018 2017
million million US$ US$
'000 '000
-------------------------------------------------- --------- --------- -------- --------
Shareholders of the parent Company
SPDCL (BV) 333 413 1,088 1,350
-------------------------------------------------- --------- --------- -------- --------
Total 333 413 1,088 1,350
-------------------------------------------------- --------- --------- -------- --------
Entities controlled by key management personnel:
Contracts > $1million in 2018
Nerine Support Services Limited* 2,335 2,161 7,627 7,066
Cardinal Drilling Services Limited 621 1,001 2,029 3,272
Helko Nigeria Limited - 444 - 1,453
Abbey Court Trading Company Limited 334 199 1,090 650
Stage Leasing (formerly Ndosumuli Venture
Limited) 434 171 1,419 560
-------------------------------------------------- --------- --------- -------- --------
3,724 3,976 12,165 13,001
-------------------------------------------------- --------- --------- -------- --------
Contracts < $1million in 2017
Montego Upstream Services Limited 24 131 79 427
Oriental Catering Services Limited 199 159 650 520
Keco Nigeria Enterprises 78 110 254 361
ResourcePro Inter Solutions Limited 3 9 9 31
Neimeth International Pharmaceutical Plc - 1 - 2
Charismond Nigeria Limited 23 17 74 55
-------------------------------------------------- --------- --------- -------- --------
327 427 1,066 1,396
-------------------------------------------------- --------- --------- -------- --------
4,051 4,403 13,231 14,397
-------------------------------------------------- --------- --------- -------- --------
1 Nerine on average charges a mark-up of 7.5% on agency and
contract workers assigned to Seplat. The amounts shown above are
gross i.e. it includes salaries and Nerine's mark-up. Total cost
for agency and contracts during 2018 is 0.2 billion, 2017: 1.4
billion ($0.6 million, 2017: $4.6million).
37c Balances
The following balances were receivable from or payable to
related parties as at the end of the year:
2018 2017 2018 2017
million million US$ '000 US$ '000
--------------------------------------- --------- --------- ---------- ----------
Entities controlled by key management
personnel
Cardinal Drilling Services Limited
- current portion 1,495 1,681 4,869 5,498
Montego Upstream Services Limited 8 - 26 -
ResourcePro Inter Solutions Ltd 2 - 6 -
--------------------------------------- --------- --------- ---------- ----------
1,505 1,681 4,901 5,498
--------------------------------------- --------- --------- ---------- ----------
2018 2017 2018 2017
million million US$ '000 US$ '000
--------------------------------------- --------- --------- ---------- ----------
Entities controlled by key management
personnel
Montego Upstream Services Limited - 115 - 375
Nerine Support Services Limited - 2 - 8
Keco Nigeria Enterprises 19 8 61 25
Oriental Catering Services Ltd 14 - 47
Cardinal Drilling Services Limited - 292 - 954
Abbey Court Trading Company Limited 9 - 28
Charismond Nigeria Limited - - 1
Stage Leasing Limited 13 - 43
--------------------------------------- --------- --------- ---------- ----------
55 417 180 1,362
--------------------------------------- --------- --------- ---------- ----------
The outstanding balances payable to/receivable from related
parties are unsecured and are payable/receivable in cash.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOABUGDSCSGBGCU
(END) Dow Jones Newswires
April 08, 2019 02:01 ET (06:01 GMT)
Seplat Energy (LSE:SEPL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Seplat Energy (LSE:SEPL)
Historical Stock Chart
From Apr 2023 to Apr 2024