Our 2020 performance shows prudent management – Onwuka

The Chief Financial Officer of Seplat Petroleum Development Company Plc, Mr Emeka Onwuka, has said the company’s robust financial performance in 2020 demonstrated prudent approach to finance management and focus on capital allocation, revenue diversification, cost control, hedging and debt management.

In a statement on Friday after the company’s 8th Annual General Meeting in Lagos, the COO noted, “Despite a challenging year, we repaid $100m debt, invested $150m for growth and maintained our dividend at $0.10 per share for the year.”

The hybrid AGM brought together shareholders, auditors, regulators, company directors and the media, among other stakeholders who joined physically or virtually.

Financial Street gathered that Seplat has paid $344m dividend to shareholders since 2014.

The Nigerian independent energy company is listed on the Nigerian Stock Exchange and the London Stock Exchange.

At the AGM, the Chairman of Board, Dr ABC Orjiako, said the company’s cash position remained strong in the full-year of 2020 and that the $318m it generated from operations was significantly more than the $150m investment.

According to him, the company’s capital expenditure in the 2020 business year is higher than the $125m it spent in 2019, which demonstrates the company’s commitment to growth; as it voluntarily repaid $100m of its Revolving Credit Facility and ended the year with $225m and incurred $440m debt.

The chairman noted, “In October 2020, we announced an interim dividend of $0.05 and the board has since approved additional top-up of $0.05, maintaining our $0.10 dividend for the 2020 financial year. Since we raised $535m at our Initial Public Offering in May 2014, we have returned $344m to shareholders in the form of dividends.

“The strengthening of our board is part of our ongoing desire to achieve world-class governance of our company. Six of our 13-member board are independent and we continue to work towards increasing diversity. In addition, as we announced in March, we have taken the bold decision to eliminate all Related-Party Transactions – a move that exceeds the requirements of the UK Code of Corporate Governance.”

It is the responsibility of the board to plan for the long-term sustainability of the company, as scenario analyses on Seplat’s assets have been conducted under different climate change and demand scenarios, while looking towards a future in which Seplat is more involved in promoting low carbon environment in its operations and the company adopting ‘Seplat Energy’ as its new name following the passage of the resolution at its AGM, he added.

“Such a transition will involve significant innovations, technology, skills and relationships, compared to our existing expertise of subsurface exploration, drilling and hydrocarbon processing. But we are determined to be a major part of Nigeria’s future energy mix and help drive the country towards more sustainable energy generation,” the Seplat chairman emphasised.

The Chief Executive Officer, Mr Roger Brown, said there was pressure to reduce oil extraction and the carbon emissions it creates; but that, he noted, depended on the rest of the world adopting less oil-intensive ways to travel and generate power.

He explained, “Nigeria’s per capita energy consumption and carbon emission are actually very low, and its national electricity grid is still very poorly developed. This is why the country is so reliant on small-scale diesel generation to satisfy its energy needs, and this is the problem we need to address most urgently.

“It’s important to recognise that Nigeria is a developing country with low access to energy and a rapidly growing young population. Hydrocarbons are the country’s main resource and provide significant help for its economy. The proceeds from the oil industry fund a wide range of Sustainable Development Goals and are crucial to the country’s societal development.”

Onwuka added, “Financial sustainability begins with the decisions we make about capital allocation and the priorities we consider when using cash. Our aim has always been to maintain a healthy balance sheet, focusing on cash generation first, so we can build up a large reserve for future deployment and protect ourselves against the kind of downturns the world experienced in 2020.”

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