Yemisi Izuora
L Seplat Petroleum Development Company Plc, has assured that its increasing revenue from gas, low oil price hedging and good cash standing, provide strong resilience to the current oil price volatility.
This position is contained in the company’s unaudited results for the three months ended 31 March 2020 released to the NSE and LSE yesterday.
Mr. Austin Avuru, Chief Executive Officer, SEPLAT, was quoted in the release as saying that: “The business is hedged against low oil prices and a significant proportion of our revenues now come from gas, which offers further protection from oil price volatility. The Company has low production costs and can remain profitable even at lower oil prices.
“We have significant cash resources available and will continue to manage our finances prudently in 2020, expecting now to invest US$120 million of capital expenditure across the year, including two new gas wells and associated infrastructure.”
Austin Avuru, Chief Executive Officer, added:“Against the twin crises of significantly reduced oil demand and the price war, Seplat continues to demonstrate its resilience because of its ongoing philosophy of prudent financial management, the careful mitigation of risk and a keen focus on managing factors of the business that are within our control.
We have the benefit of long-term contracted gas revenues that are insulated from oil market volatility. We are achieving substantial cost reductions from our suppliers and managing our own costs even more carefully in this unprecedented and challenging period. We are in constant dialogue with partners on monies owed and are pleased to report that our cash flow remains robust and we have significant cash in reserve. This, coupled with the majority of our debt repayment obligations extending beyond 2021, gives us confidence that we can continue to operate comfortably within the covenants on all lines of debt.”
To assist with the COVID-19 pandemic, the company provided medical and food donations as part of our ongoing commitment to our local and state communities and we will continue to do whatever we can to support those upon whom we depend for our business.
According to Avuru, “challenges before us remain significant, but through our extensive scenario planning, we are confident that the resilience and discipline of our business will help us through this unprecedented time and strengthen our position as Nigeria’s leading independent oil and gas producer.”