Shareholders of Seplat Petroleum Development Company (Seplat) Plc, have approved the dividend of $59 million for the financial year ended December 31, 2019.
The shareholders approved the dividend, which translate to 10 cents per share at the seventh Annual General meeting held virtually by proxy and streamed live and in strict compliance with social distancing rules and the directives of the Federal and Lagos State Governments.
The shareholders also commended the board of management of the Company for an impressive financial year despite harsh operating business environment.
Speaking to shareholders, the chairman of Seplat, Dr A.B.C. Orjiako said the Company remains a resilient business that generates significant free cash flow from a low cost production base; has a balanced portfolio split evenly between oil and gas; and is focused on delivering shareholder returns through regular dividend distributions and capital growth.
According to Orjiako, amidst the current headwinds occasioned by the prevailing global coronavirus pandemic and low oil prices, Seplat will continue to maintain strict financial discipline over investment decisions, while also embedding high standards of corporate governance and transparency; strong commitment sustainable business; and effective management of risks with a strong HSE culture.
“I believe that Seplat has an important role to play throughout the energy transition that is set to occur in the years and decades ahead, not least through the impact we can have by scaling up our domestic gas supply business and displacing imported diesel fuels that are being burned for power generation and helping Nigeria benefit from the social and economic multiplier effects that reliable and affordable power availability can bring.”
Against this backdrop, Orjiako said Seplat plans to position itself for an ambitious next phase of growth which would see the expansion of its footprint in terms of energy business activities, a plan to pursue offshore assets acquisition, as well as opportunity driven entry into different geographies.
He added, “Looking forward, one of the main challenges facing the independent E&P sector is to remain relevant as the world makes the transition to a lower carbon future.
“The oil and gas industry face considerable challenges given that oil in particular plays such a significant part in today’s energy supply mix, with demand for the commodity still growing. A key part of my role as Chairman of the Board is to steer the Company through these transitions.
“The Board believes that such a corporate transition would require a different kind of organisational structure, people skills set and mentality to compete well in the expanded space. In view of this, over the course of 2020 we will be reviewing the current organisational and systems structure.”
The Seplat Chairman assured that the fundamentals of the company’s core business remain strong and through the effective integration of the Eland acquisition, the combined business will have greater scale and value creation opportunities to capture.
The chief executive officer, Seplat, Mr Austin Avuru, described 2019 as a solid year in which the robust fundamentals of the business once again kept the company on an extremely solid footing. “The strong cash generation we realised from our low-cost production base meant that our capital expenditures, debt service obligation and dividend distributions to shareholders were more than covered by cash generated from operations by a comfortable margin.”
From a strategic perspective, Avuru said 2019 will prove to be an inflection point in the company’s history, as it took a final investment decision (FID) for the 300 MMscfd ANOH midstream gas processing project in March.
“Once completed, the plant will process gas produced at the upstream unitised gas fields in OML 53, where Seplat has a 40 per cent working interest, and Shell’s OML 21,” he said.
On the outlook, Avuru said Seplat faces the same challenges as the rest of industry in terms of managing oil price volatility and other macro risks, adding that the emergence of the COVID-19 pandemic has thrown in another variable that has impacted the global economy.
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