By Michael Eboh

THE low price of crude oil has taken a toll on the finances of Seven Energy International Limited, as the company posted a loss after tax of $53 million, about N10.6 billion in six months, between January and June 2015. The company, in its financial statement for the half year, HY1 2015, released to its investors and other stakeholders, disclosed that the loss, compared to a profit of $27 million, about N5.4 billion recorded in the same period of 2014, was primarily due to the fall in oil price.


In addition, the company also blamed the loss on increased depletion charges and financing costs, saying the increase in its gas revenues helped in no small measure in partially offsetting some of the losses. The loss was fuelled by a decline in its top line figures, as the company’s revenue dropped by 12.44 per cent to $144.8 million in HY1 2015, from $165.36 million recorded in HY1 2014.

Despite the drop in its revenue, its cost of sales recorded significant increases as production expenses rose by 21.22 per cent to $109.022 million from $89.937 million recorded in HY1 2014.

Commenting on the result, the Chief Executive Officer, Seven Energy, Mr. Phillip Ihenacho, said, “Rapid ramp-up in sales from our gas assets continues, with first half volumes averaging 57million cubic feet per day (MMcfpd). As a result, gas sales accounted for 27 per cent of the Group’s total revenue, a significant rise from 10 per cent in the same period last year. This partially mitigated the reduction in oil revenues, which were largely a result of the lower oil price environment.

“I am pleased with the progress we have made on our funding plan, including the securing of $52 million of new debt and the successful refinancing of our “Accugas” debt facilities. Our current focus remains to further increase our gas sales and targeted investment to provide the Group with the platform for the next stage of growth.”

The company further said that it refinanced the Accugas Project Finance and Acquisition Finance facilities with the closure of a senior debt facility of up to $445 million of which $385 million is drawn. It also said it closed two separate debt facilities, for a combined $52 million with up to a six year tenor.

These facilities, according to the company, will rank paripassu for security with, and have substantially the same covenants as, the Senior Secured Loan Notes and Private Bond issued in October 2014.

“This funding plan progress has further improved the average debt maturity of the Group to 4.2 years, from 2.0 years at the same time last year, better aligning our repayment profile with our build up in gas sales,” the company said. The company recorded capital investment, including additions and acquisitions, for HY1 2015 of $136 million, compared to $571 million in HY1 2014, of which $333 million was in relation to the East Horizon Gas Pipeline and OPL 905 acquisitions.

Giving a breakdown of capital investments in 2015, Seven Energy said this comprised $62 million of intangible capital expenditure. About $45 million is related to the acquisition of a further 50 per cent interest in OPL 905 in the Anambra Basin, and $17 million related to the drilling of the Uquo North East-1 prospect.

It also included tangible capital expenditure of $75 million, including expenditures incurred at the OMLs and costs related to the Oron to Creek Town pipeline.

“The Group spent $72 million in the first half of 2015, compared to $182 million in half year 2014, on property plant and equipment and intangible assets predominantly related to cash paid in relation to the OMLs, the 26 km Oron to Creek Town pipeline, the Uquo North East-1 prospect, and the Uquo and Stubb Creek fields,” the company added.


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