Yemisi Izuora
Seplat Petroleum Development Co PLC said its profit plummeted in 2015 as a significant rise in production failed to offset the fall in oil prices, prompting the company to cut its dividend by almost half.
The oil and gas company focused on Nigeria said its pretax profit fell 65 percent in 2015 to $87.1 million from the $252.3 million profit booked in 2014 following a 29 percent decline in revenue to $570.5 million from $775.0 million.
The company’s cost of sales still increased in the year despite the fall in revenue, which led its gross margin to be squeezed. Gross profit in the year fell to $248.8 million from $459.4 million after a 2.0 percent rise in its cost of sales.
General and administrative expenses were slashed to $121.5 million from $151.6 million, and the company also reported a foreign exchange gain of $7.8 million in 2015 compared to a $17.2 million loss last year.
However, finance costs were considerably higher in the year, totalling $83.6 million compared to only $49.3 million the year before.
The dramatic drop in profit has led Seplat to severely cut its dividend for the year to $0.08 per share, a 47 percent drop from the $0.015 paid in 2014.
Seplat managed to increase production in 2015 by an impressive 41 percent to 43,372 barrels of oil equivalent per day, which was also ahead of guidance, but it was not enough to offset the fall in oil prices in the year.
The average oil price in 2015 was 47 percent lower at $51.2 per barrel from $97.2 per barrel in 2014, but gas prices went in the opposite direction and rose 34 percent in the year to an average of $2.55 per million standard cubic feet from $1.9 in 2014.
Seplat said production this year will be in the region of 41,000 to 48,000 barrels of oil equivalent per day, comprised of 23,000 to 28,000 barrels of oil and between 18,000 to 20,000 barrels of oil equivalent from the gas production.
Cash at the end of the year stood at $326.0 million whilst net debt amounted to $573.0 million.