After 36 days of Shell’s Trans Forcados Pipeline (TFP) shutdown in the first quarter of the year and seven days in April which affected Seplat Petroleum Development Company’s oil and gas production, the firm says production has resumed at projected rates.
Seplat, in an interim management statement, yesterday, said it remains on track to deliver its 2014 target gross operated exit rate of 72,000 barrels per day.
The came barely one month after the company concluded its’ highly successful IPO on the Nigerian Stock and London Stock Exchanges which raised $535m at NGN 576 per share (£2.10).
“Average operated production in the first quarter was 36.5 mbbl/d of oil and 66.9 mmscf/d of gas”, the statement said.
“The total gross production deferment in the first quarter due to the TFP shut-down was approximately 2.2 mmbbls gross. This was partially offset by the shipment of approximately 0.1 mmbbls to the Warri refinery when the new pipeline was completed, just before the end of the quarter. Near term drilling programme is currently being modified and it aims to accelerate field developments and partially offset the production deferment caused by the TFP shut-down”.
Seplat, which recently signed a five-year Gas Sales Agreement with Azura Edo IPP to supply 116 mmscf/d at $3/mscf from 2017, also stated in the Interim Management Statement that its expansion of the Oben gas processing facilities remains on track, to enable the company develop the capacity to its expand production and sales, in order to meet the fast growing domestic demand for gas.
Commenting on these developments, Austin Avuru, CEO of SEPLAT, noted: ““The pipeline to the Warri refinery and commencement of crude deliveries to Warri was a strategically important milestone for Seplat. This pipeline, which provides an alternative export route for our liquids, is under Seplat’s control, and will further reduce the reconciliation losses imposed on our exports via Forcados.”
The company’s gas strategy achieved a major step forward with the signing of the Gas Sales Agreement for the Azura Edo independent power project at a price of $3/mscf. Avuru added that this contract with Azura “underpins Seplat’s major investment programme to upgrade the Oben gas plant and expand our domestic gas business”.
The company also reports that SEPLAT’s strong bid for OMLs 29 and 24 was not the highest priced offer, and therefore did not lead to the company’s selection as preferred bidder. The company is confident that there is “a substantial pipeline of other material opportunities that are being pursued”. Avuru asserts that “we will retain our focus on acquisition opportunities where we can leverage Seplat’s technical and financial strength, and we will continue to exercise price discipline.”
Seplat’s net cash position currently is approximately US$ 285 million, following receipt of the gross proceeds of the IPO of US$535 million and repayment of the MPI shareholder loan of US$48 million.
The CEO added: “All of our development projects remain on track, and we are confident of delivering our target production exit rate for this year of 72,000 bbl/d, and of recovering as much of the production lost in the period as possible.”
Seplat’s interim results for the six months ending 30 June 2014 are expected to be announced in late July 2014.