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Investing.com -- S&P Global Ratings has revised its outlook on Seplat Energy PLC to positive from stable while affirming its ’B’ rating on the company and its debt.
The rating action follows a similar outlook revision on Nigeria’s foreign and local currency ratings to positive from stable on November 14, based on improvements in the country’s external, economic, fiscal, and monetary performance.
Seplat’s rating remains higher than Nigeria’s under S&P’s criteria for rating issuers above sovereign levels. Despite being fully exposed to Nigeria as its only cash flow source, the company’s rating is capped at ’B’. S&P expects Seplat to continue passing sovereign rating stress test scenarios, supported by its policy of holding at least 70% of cash in hard currency with at least 70% of that offshore.
The company maintains a stand-alone credit profile of ’b+’, supported by expectations of strong cash flow generation following its acquisition of Mobile Producing Nigeria Unlimited (renamed Seplat Energy Producing Nigeria Unlimited). Current production exceeds 130,000 barrels of oil equivalent per day, with growth prospects and midstream onshore projects set to complete by the end of 2025.
S&P also highlighted Seplat’s commitment to maintaining relatively low net debt leverage between 0.5x and 1.5x, which reduces risk from unexpected transactions or lower oil prices.
Under S&P’s base case, which assumes a Brent crude oil price of $60 per barrel for the remainder of 2025 and in 2026, the agency forecasts average annual EBITDA of about $1.2 billion-$1.4 billion over 2025-2026, with funds from operations to debt averaging about 40%.
The outlook could revert to stable if risks to Nigeria’s reform program implementation rise or if Seplat’s liquidity position deteriorates. A rating upgrade could occur if Nigeria’s economic performance continues to exceed forecasts and the sovereign rating is upgraded to ’B’, provided Seplat maintains its financial metrics within expected ranges.
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