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(Alliance News) - Seplat Petroleum Development Co PLC on Wednesday reported a swing to loss in the first quarter of 2020 amid a fall in oil demand and the oil price war.
Shares in the Nigerian oil & gas firm were trading 3.2% lower at 51.40 pence each on Wednesday afternoon in London.
For the first three months to the end of March, Seplat posted a pretax loss of USD105.8 million, a sharp swing from a profit of USD35.8 million posted in the comparative period in 2019. Revenue was 18% lower at USD130.5 million, sinking from USD159.5 million.
Brent oil price during the quarter averaged USD50.90 per barrel, down from USD63.59 per barrel year-on-year.
Crude oil revenue was down 8.8% to USD107.4 million due to lower oil prices while gas revenue fell by 45% to USD23.1 million as gas prices fell to USD2.89 per million standard cubic feet from USD3.24 per million standard cubic feet.
Administrative expenses were higher at USD40.0 million compared to USD20.4 million the year prior. Finance costs were USD21.4 million, rising from USD15.9 million. Additionally, the company recorded impairment charges of USD145.5 million, up from USD144,000.
Looking ahead, Seplat said its business is hedged against low oil prices and a "significant" portion of its income now comes from gas, therefore offering further protection from oil price volatility. It added that it has low production costs and can remain profitable even at lower oil prices.
"We have the benefit of long-term contracted gas revenues that are insulated from oil market volatility. We are achieving substantial cost reductions from our suppliers and managing our own costs even more carefully in this unprecedented and challenging period. We are in constant dialogue with partners on monies owed and are pleased to report that our cash flow remains robust and we have significant cash in reserve. This, coupled with the majority of our debt repayment obligations extending beyond 2021, gives us confidence that we can continue to operate comfortably within the covenants on all lines of debt," said Chief Executive Austin Avuru.
As at the end of March, Seplat had cash of USD336 million and net debt of USD458 million.
By Ife Taiwo; ifetaiwo@alliancenews.com
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