Despite Significant Increase in Tax Expenses, Seplat Energy Declares N52.8bn Profit

Kayode Tokede 

With tax expenses that grew significantly by 1871per cent to N313.94 billion in unaudited nine months financial year ended September 2024, Seplat Energy Plc, yesterday, still declared N52.8 billion profit after tax, which is about 12.5 per cent increase from N46.93 billion reported in the corresponding nine months of 2023.

The company in the  result and accounts to Nigerian Exchange Limited (NGX), stated  that the income tax expense of N313.9 billion ($209.7 million) includes a current tax charge of $65.7 million (nine months 2023: $54.3 million) and a deferred tax charge of $144.0 million (nine months 2023: deferred tax credit of $27.3 million). The higher current tax this year resulted from higher taxable profit due to lower costs for the period.

According to the financial report, “The deferred tax charge in 9M 2024 was driven by the FX gains and underlift for the period which are excluded from petroleum profit tax (PPT) calculations, giving rise to the creation of a deferred tax liability. This contrasts with nine months 2023’s deferred tax credit which arose due to creation of deferred tax assets from the overlift and FX loss recorded in the period. The effective tax rate for the period was 86per cent (nine months 2023: 25per cent).”

The indigenous oil and gas company listed on the Nigerian Exchange Limited (NGX) in its nine months unaudited results declared N366.7 billion profit before tax, representing an increase of 483 per cent from N62.85 billion declared in nine months of 2023.

The company showed its revenue from contracts with customers at N1.07ttrillion in nine months of 2024, a growth of 124 per cent growth from N478.13billion reported in nine months of 2023.

According to the company, “In the first nine months of 2024, Brent crude oil benchmark price averaged $81.79/bbl, down two per cent on the average in the first six months of 2024, after weaker pricing in 3Q 2024, but flat on nine months 2023’s average of $81.96/bbl.

“The continued management of crude oil output by OPEC member nations, the elevated geopolitical tensions and mixed macroeconomic developments, have all contributed to keeping average prices around similar levels to last year.

The company continues to benefit from oil price realisations at a modest premium to Brent, realising $82.89/bbl, an average premium to Brent of $1.10/bbl. Our realised price was relatively flat compared to the equivalent figure in 9M 2023 ($82.76/bbl).

“Total crude revenues declined 12.7per cent to $625.2 million in 9M 2024, from $716.4 million in nine months 2023. The decline is largely attributed to lower liftings in the period, with total crude lifted in nine months 2024 13per cent lower at 7.54 MMbbl vs. the 8.66 MMbbl lifted in 9M 2023.

“9M 2024 crude revenue excludes an underlift of 7 kbbl (valued at $0.5 million), while nine months 2023 includes an overlift volume of 1.28 MMbbl (valued at $127.8 million). After adjusting for underlift at nine months 2024, crude oil revenue was $633.4 million, which is 7.6per cent higher than the adjusted nine months 2023 crude oil revenue of $588.5 million, this reflects slightly higher oil production and realised pricing in the period,” the report said.

It explained further that  Gas revenue fell by four per cent to $90.2 million in nine months of 2024 (compared to $94.0 million in nine months of 2023). The reduction in gas revenue was due to lower production, partially offset by higher gas price realisations.

“Production in 9M 2024 fell 10.7per cent to 28.4 Bscf, from 31.8 Bscf in 9M 2023. This was partially offset by the average realised gas price, which rose by 10.8% to $3.18/Mscf in nine months 2024, from $2.87/Mscf in nine months 2023. The average realised gas price improvement reflects the impact of price escalations on a gas contract which took effect in the period. In addition, higher prices for DGDO gas contracts (increased from $2.18/MMBtu to $2.42/MMBtu in April 2024) contributed to the realised gas price during the period, the report further said.

Chief Executive Officer, Seplat Energy, Mr Roger Brown, in a statement, said: “The first nine months of 2024 has seen Seplat Energy deliver a strong operational performance. Production has been consistent, drilling has improved and our main maintenance activities have been executed successfully.

“We have brought two new fields on stream, most recently Abiala, and are approaching completion of the Sapele gas plant. Further delays to the start up at ANOH are frustrating, but we have been pleased to see the commitment of our government partner in tackling the technically challenging river crossing. Based on the latest estimates received, and maintaining a cautious stance on any risk of further delays, we update our guidance for first gas to Q2 2025.

“Commodity prices remained supportive, combined with operational uptime and timely cash calls from our joint venture partner, helped cash generation improve year over year, enhancing our balance sheet position.

“As a result, we are pleased to announce a 20per cent increase in the core quarterly dividend and note that this is reflective of the strength of the underlying business. The increase does not factor in the organic (ANOH) and inorganic (MPNU) growth opportunities that the company is currently pursuing.

“We were delighted in recent days to receive Ministerial consent for the acquisition of MPNU. The transaction will be transformational for Seplat Energy, and every effort is now on completing the transaction.”