Last checked at 
LONDON (Alliance News) - Seplat Petroleum Development Co PLC Friday said it entered the red in the first quarter of 2016 following a decline in oil prices and lower production caused by the suspension of oil exports at the terminal it uses, and said full-year production could rise or fall over the course of this year.
The company, which has interests in numerous licenses across Nigeria, said it made a pretax loss of USD15.0 million in the first three months of 2016, compared with the USD24.8 million profit that was reported a year earlier, as revenue declined thanks to lower oil prices and a fall in production.
Seplat was still making profit in the final two quarters of 2015, albeit at much lower levels, with the company squeezing out an overall USD87.0 million pretax profit over the whole of 2015.
Revenue in the first quarter of 2016 was down by more than 36% year-on-year to USD83.4 million from USD131.1 million, as production came in 5.0% lower at 34,179 barrels of oil equivalent per day compared to 35,811 barrels a day in early 2015.
The price Seplat received for its oil in the period was a third lower than a year earlier despite Seplat having some oil hedges in place, but the gas price went in the opposite direction by being 15% higher year-on-year. Importantly, Seplat's production mix in the first quarter was more weighted toward gas than liquids when compared to a year earlier.
Seplat's gas production more than doubled from last year whilst production of liquids, such as oil, declined 38% from the previous year.
With gas production and prices both up, revenue from the commodity was around 2.5 times higher year-on-year whilst revenue generated from oil sales around 53% lower.
That fall in production and revenue led to the company's gross profit plunging by over 59% to USD29.6 million from USD72.7 million, and despite reducing administrative costs, Seplat's operating profit declined at an even steeper rate of over 88% to USD4.9 million from USD41.9 million.
A 23% rise in finance charges to USD22.6 million from USD18.3 million then pushed Seplat to a pretax loss in the quarter.
Seplat said production was lower in the first quarter due to the shut-in and suspension of oil exports at the Forcados terminal from mid-February onwards as a result of damage to pipeline infrastructure at the loading arm. Prior to the shut-in, Seplat said production was running at 52,130 barrels of oil equivalent per day, around 53% higher than the average over the entire quarter.
To put the production figures into perspective, Seplat produced an average of 43,372 barrels per day over the course of 2015 - suggesting production would have risen by over 20% since the start of the year if the shut-in of oil exports had not occurred.
"Repairs are currently on-going to expedite the resumption of exports from the terminal. The company has, however, continued to produce and sell gas into the domestic market meaning it is better positioned to withstand such interruptions than in prior years," said Seplat.
Seplat Chief Executive Austin Avuru said the company is also looking for "reliable alternative export options" to give it more flexibility in the future and to shield itself from any similar incidents moving forward.
More importantly, Seplat said it is aiming to produce between 41,000 to 48,000 barrels of oil equivalent per day over the course of 2016, made up of 57% oil and liquids and 43% gas. If delivered, that guidance implies production this year is expected to either fall by up to 5.5% or increase by almost 11%.
Cash at the end of March stood at USD298.0 million whilst net debt amounted to USD540.0 million.
Seplat shares were trading up 0.1% to 109.50 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.