Seplat Petroleum Development Company Plc, an indigenous independent oil and gas firm, has said it has optimised its capital structure to enable it invest more and continue to pursue its growth opportunities.
The Chief Executive Officer, Seplat, Mr Austin Avuru, who stated this at the firm’s ‘Facts behind the Figures’ presentation at the Nigerian Stock Exchange, disclosed that the company was targeting opportunities to acquire more assets.
Avuru said, “For us, almost everything we do, both in terms of emphasising our corporate governance structure and culture, and how we manage our assets and plan our work programme and budgets, is all about being a company that will consistently deliver natural gas into the domestic market and crude oil for exports.”
He said the firm would continue to manage its bottom line in such a way that “we remain profitable in the interest of all stakeholders, particularly our shareholders.”
He noted that in February 2016, the firm experienced a combination of the drop in crude prices and disruption in Trans Forcados Pipeline that almost led its production to near zero.
Avuru said, “Between that time and now, our emphasis has been to derisk and harvest cash flows. So, even in our work programme, we focus on delivering near-term value, and that has paid off.
“We have also optimised our capital structure. Following this rearrangement in our capital structure, we have headroom to invest more money in the ground. Going forward, between now and 2019 and beyond, we are going to be spending more money. So, we are upscaling our work programme to spend more money.
“We will, of course, continue to pursue our growth opportunities, which will be a combination of organic growth through our capital spend in drilling and appraisal and development wells, and also for any opportunities for acquisition. One of the key things we have targeted with our current capital structure and our balance sheet is to, at a very short notice, be able to participate in any acquisition opportunities.”
According to him, the refinancing of its balance sheet has significantly strengthened the firm’s liquidity position and allow for work programme to be scaled up and focus switch to delivery of growth strategy.
“The communities must feel happy that we are operating in their area. The staff must feel happy that with their contribution towards wealth generation, they have a reward for it. Our shareholders must have sufficient returns either in terms of dividends, capital appreciation or both. That is what we strive to achieve,” Avuru said.
He added, “Our biggest risk to our key business is evacuation. Our primary export facility remains the Trans Forcados, but because we cannot have 100 per cent faith on Trans Forcados, we have built an option of Warri Refinery as a last resort.
“Currently, we have stepped in to co-finance a third party pipeline infrastructure that has been under construction for over five years, and fortunately, that pipeline actually originates from where we are at Amukpe. Once that is completed, it will become our primary evacuation route and Trans Focados will be our secondary evacuation route, and the Warri Refinery becomes the last option.”
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