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LONDON (Alliance News) - Seplat Petroleum Development Co PLC on Tuesday reported a drop in quarterly profit due to a significant swing to an overlift loss, though operations are going well.
Seplat's pretax profit for the three months ended March was USD19.4 million, down from USD58.8 million the year prior, as revenue dipped to USD159.5 million from USD180.6 million.
Overlift was a negative USD15.9 million, from a positive USD8.6 million year-on-year.
"Shortfalls may exist between the crude oil lifted and sold to customers during the period and the participant's ownership share of production," said Seplat.
"The shortfall is initially measured at the market price of oil at the date of lifting and recognised as other income. At each reporting period, the shortfall is remeasured at the current market value. The resulting change, as a result of the remeasurement, is also recognised in profit or loss as other income."
Seplat, which operates in Nigeria, produced 46,581 barrels of oil equivalent per day during the period, on a working interest basis. Guidance for 2019 is maintained at between 49,000 barrels and 55,000 barrels of oil equivalent per day.
Revenue fell due to weaker oil prices and the production decline.
"Our operations have continued to perform in line with expectation, with the phasing of our 2019 work programme such that the production uplift will be felt throughout the second half of the year as we step up drilling activities to focus on capturing the numerous high margin and short-cycle cash return opportunities within our current portfolio," said Chief Executive Austin Avuru.
"The next phase of growth for our gas business is now gathering pace following a final investment decision for the Assa North/Ohaji South project, with the government's first tranche of equity investment received."
"We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria," Avuru added.
Shares were 2.2% higher on Tuesday morning at a price of 130.75 pence each.