By Dan Aibangbe

The real journey began emphatically on Monday, April 14, 2014! It was then that the Spectre of this African colossus, Seplat Energy Plc first appeared on the landscape of the Nigerian business environment. That was when the company made clear its intentions and purposes-to be the first and major Nigerian International Oil Company, IOC.

Seplat Energy did not come to play games and if at all anyone could somehow imagine so, it would be playing really big cards – Seplat was making plans to acquire onshore assets of multinational oil and gas companies such as Shell and Chevron, estimated to require at least $2billion, as part of its aggressive Oil and Gas production portfolio.

Although the journey to the land of the Most Valuable Companies, MVC by Seplat Energy PLC commenced way back in Y2009 when it was incorporated in Nigeria as Seplat Petroleum Development Company Limited, the Initial Public Offer, IPO of Y2014, which yielded $535 million, was tantamount to taking growth steroids. Getting listed on the Nigerian Exchange, NGX and the London Stock Exchange, LSE simultaneously through the Initial Public Offering of half a billion dollars was a historical feat in many regards. The size, the audacity, the sector and the pedigree were all firsts. It was ambitious and aggressive! It was a salvo similar to that gun that signifies the start of a marathon. Seplat’s landmark IPO was a very significant deal that added about N28 billion at that time ($173.9 million) to the NSE, as well as being the first purely upstream Oil and Gas Company to be listed.

Getting listed on the premium official window of the NGX was a no-brainer, but the listing missed that of FTSE 250 index for technical reasons such as the required International Accounting Standards, 50% minimum Free Float and the highest levels of Corporate Governance.

As a corporate vehicle, the Seplat proposition was power-packed with managerial and operational experience and sophistication. Also as an investment vehicle, the organisation portended great equity value and operational profitability, having been built majorly through the acquisition of tested assets with proven reserves and operability. Being listed on the NGX portended growth potential as the exchange was ranked second best performer in Y2023. The LSE listing also portends quality reporting and the highest standards of regulatory supervision and corporate transparency. As such, this hybrid breed of investment vehicle is worthy of analytical attention as it approaches the end of its first decade of existence on these exchanges. It is pertinent to chronicle its achievements, x-ray its challenges and amplify its potentials and future trajectory for the benefit of investors and the general public. What lessons can we learn and what advice can be given?

Chronicle of key achievements

Among the most notable achievements of this energy giant, is the acquisition of Eland Oil & Gas, first acquisition of UK listed company by Nigerian company in December 2019. Eland held participating interests in OML 40 and the Ubima marginal field. The Eland acquisition followed earlier acquisitions such as Belema Oil Producing (an Energy Exploration outfit) in February, 2015 and ANOH Gas Processing (an Energy refining company) in March 2019.

Earlier in July 2010, the Company acquired a 45% working interest in, and was appointed operator of, a portfolio of three onshore producing oil and gas leases: OMLs 4, 38 and 41, located in the prolific western delta basin of Edo and Delta states. Initially Seplat formed a JV partnership with NNPC, until NNPC transferred its 55% interest to NPDC. Today, Seplat operates the blocks on behalf of the Seplat/NPDC joint venture.

In June 2013, Newton Energy, a wholly-owned subsidiary of Seplat, reached an agreement with Pillar Oil to acquire a 40% participating interest (non-operated) in the Umuseti/Igbuku fields (OPL 283). Also In 2015, the Group purchased a 40% participating interest in OML 53, onshore north eastern Niger Delta, from Chevron Nigeria Ltd and a revenue interest in OML 55, south eastern Niger Delta.

In January 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company (AGPC) Limited, a midstream gas company committed to the processing of gas from OML 53 for distribution to the local market. In August 2018, the Group entered into a shareholder agreement with Nigerian Gas Processing and Transportation Company (NGPTC) to subscribe for equal ownership of AGPC.

After the successful consummation and consolidation of these acquisitions, it also embarked on the more ambitious quest for the acquisition of Mobil Producing Nigeria Unlimited by securing the share purchase agreement, SPA in February, 2022. The deal covers the takeover of all onshore production assets of this energy giant in Nigeria.

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The Seplat Energy portfolio now comprises eight oil blocks – direct interests in seven blocks in the Niger Delta area, four of which Seplat operates and one further of revenue interest. The company also established a robust Global Memorandum of Understanding with the local communities in the Niger Delta, setting out rules of engagement and mutual beneficiation.

The major effect of these acquisitions has been to position the company as the leading partner for Nigerian domestic gas supply for the power sector and a significant contributor to the crude supply to the export markets. They also culminate in delivering key performance indicators such as 478 million barrels of Oil Equivalent (MMBOE) in 2P reserves, 47,758 Barrels of Oil Equivalent per Day (BOEPD) production capacity, Adjusted Revenue of US$1.06 billion, Adjusted EBITDA OF US$448 million US$0.15c per share dividend and share value of GBP867.96 million (NGN1.98 Trillion) recorded as at its last reporting period in December 2023. The company has about 588 million shares outstanding on the Nigeria Exchange.

Another major achievement by Seplat Energy is its consistence with dividend payments, which have accumulated to about US$575 million since its IPO of UD$535 million in 2014 as at the end of Y2023 results. Of course, the organisation has remained ever liquid and share value has continued to grow steadily. The company has also successfully refinanced its debt portfolios instituted for the purpose of farming-in acquisitions of proven existing performing assets of exiting IOCs in Nigeria.

Away from the numbers and fundamentals, the key qualitative performance indicators for the company have also been very encouraging, considering the fact that quality human resources is a key performance factor, the company has successfully marshalled its HR Function to ensure retention of personnel, above average industry standard for reward and motivation, on-going training to ensure career growth for all employees, recruitment policy that offers promotion from within as much as possible. The staff turnover has been less than 4% on the average. Seplat has also been an equal opportunity employer with special consideration for the female gender. Seplat Energy currently features up to 60% Board Independence. In terms of sustainability, the company’s 91% CGRS and MSCI –BBB ratings are positive indicators.

Potentials of Seplat Energy

The Nigerian energy sector is going through a major transition as Gas resources and products (LNG, CNG & LPG) are set to play key roles. The Nigerian domestic market is deep enough to absorb whatever Seplat Energy can produce from its Gas Production plants especially with the mechanical completion of its 300mm/scf, ANOH Gas Plant, which is scheduled for first Gas in Q3 2024. Aside for contract for supplying the gas required for firing the electricity generators, there is increased potential for CNG infusion into the transportation systems as well as LPG for domestic use by the ever-increasing population of about 250 million people, as well as in regional markets of the ECOWAS. Incidentally, this increased demand for gas coincides with Seplat Energy program for reduction in routine gas flaring.

Another potential for the company is to consummate the development of 13 additional wells already identified as priorities for Y2024. This will greatly improve on its daily production output and revenue potentials as the world market prices appear to be rallying now.

The future of Seplat – What’s in it for stakeholders; for you and me?

As can be gleaned from the foregoing, this Energy giant promises to be a veritable vehicle for investment for discerning corporate and individual investors who desire continual growth in their equity values as well as sustained predictable returns in dividends. The growth opportunities in its operational trajectory ensure it will continue to seek both debt and equity finance from the stock markets.

The corporation is also poised for the long run, having overcome its teething problems from within. I foresee the company will continue to be a great place to work for the lucky and hardworking individuals who see personal development as a pathway to career growth.

At this junction, it is good to pause for readers to digest this content and make informed decisions about what to do. A big congrats to the bouncing and leaping giant, Seplat Energy!

• Dan Aibangbe is a Media and Public Relations Consultant