Earnings call transcript: Seplat Petroleum Q4 2024 sees stock rise 3.65%

Seplat Petroleum Development Company PLC (SEPL), with a market capitalization of $1.49 billion, reported robust financial performance for the fourth quarter of 2024, with total revenues surpassing $1 billion and adjusted EBITDA reaching $539 million. The company’s stock reacted positively, climbing 3.65% to a closing price of $192.5, moving closer to its 52-week high of $243. According to InvestingPro analysis, the company currently trades near its Fair Value, maintaining an impressive gross profit margin of 48.72%. This upward movement reflects investor confidence, bolstered by a 10% dividend increase and significant operational achievements.

Key Takeaways

• Revenues exceeded $1 billion for the year 2024.
• Adjusted EBITDA was reported at $539 million.
• Stock price increased by 3.65%, reflecting positive investor sentiment.
• Production increased to 52,000 barrels of oil equivalent per day.
• Major projects completed, boosting operational capacity.

Company Performance

Seplat Petroleum demonstrated strong performance in 2024, achieving over $1 billion in revenues and an adjusted EBITDA of $539 million. The company increased its production to 52,000 barrels of oil equivalent per day, marking a significant operational milestone. InvestingPro data reveals the company’s robust financial health with a "GOOD" overall score of 2.82, supported by strong cash flow metrics and an attractive dividend yield of 7.61%. InvestingPro subscribers have access to 10+ additional exclusive insights about Seplat’s financial health and growth prospects. This growth is attributed to the completion of major projects and increased drilling activities.

Financial Highlights

• Revenue: Exceeded $1 billion in 2024.
• Adjusted EBITDA: $539 million.
• Dividend: Increased by 10% to 16.5¢ per share.
• Cash Position: Ended the year with $470 million, up from $450 million.
• Net Debt to EBITDA Ratio: 0.7x.

Market Reaction

Seplat Petroleum’s stock price rose by 3.65% following the earnings announcement, closing at $192.5. This increase is indicative of positive investor sentiment, driven by the company’s strong financial results and strategic operational achievements. The stock is trending towards its 52-week high of $243, reflecting market confidence.

Outlook & Guidance

Looking ahead, Seplat Petroleum has set a production guidance of 120,000 to 140,000 barrels of oil equivalent for 2025. The company plans to focus its capital expenditures on integrity work and reopening wells, with an operational expenditure target of $14 to $15 per barrel of oil equivalent. With a healthy current ratio of 1.45 and moderate debt levels, the company appears well-positioned to fund its growth initiatives. Discover comprehensive analysis of Seplat’s financial outlook and peer comparison in the exclusive Pro Research Report, available on InvestingPro. Additionally, Seplat is exploring PIA conversion for tax benefits and plans a Capital Markets Day in Q3.

Executive Commentary

CEO Roger Brown highlighted the company’s strategic direction, stating, "These are first-rate, the best subsurface in the world," underscoring the quality of Seplat’s assets. He also emphasized the company’s resilience, noting, "We design our business to run through every cycle," and expressed confidence in the growing role of gas, saying, "Gas is gonna become more and more prevalent in our business going forward."

Risks and Challenges

• Geopolitical concerns could impact operations and investor sentiment.
• Challenges associated with reopening previously shut-in wells.
• Macroeconomic pressures and market volatility may affect financial performance.
• Potential risks from integration of acquired assets and expansion plans.

Q&A

During the earnings call, analysts inquired about Seplat’s well reopening strategy and tax optimization plans. Discussions also addressed geopolitical concerns and the company’s approach to maintaining personnel motivation following recent acquisitions.

Full transcript - Seplat Petroleum Development Company PLC (SEPL) Q4 2024:

Christa, Conference Operator: Good morning and welcome to Seplatz Energy Plc Full Year Results 2024. At this time, all participants are in a listen only mode. I would like to remind everyone that this call is being recorded. I will now hand over to James Thompson, Head of Investor Relations, to open the presentation. Please go ahead.

James Thompson, Head of Investor Relations, Seplatz Energy: Thank you, Christa. Hello, everybody. Good afternoon, good morning. Welcome to SEPLA Energy’s financial results for the full year 2024 and our first since the completion of the acquisition of MPNU. On the call today, are our CEO, Roger Brown, CFO, Eleonore Ataralegbe and COO Samson Azore.

After the presentation, we will move straight to the Q and A. Before we just start, I’ll just draw your attention to the forward looking statement on slide two. And now I’ll pass the call over to Roger. Thank

Roger Brown, CEO, Seplatz Energy: you. And good morning. Good afternoon, everyone. And, delighted to come here with our full year 2024 results. If you look on the slides, we just highlight some of the operational financial highlights for the year.

Now this is obviously now part of the enlarged group. We had, I think, nineteen days of the, Mogo producing or separate energy producing, it’s now called. So it’s not fully felt here, but you can see some of the impact. So in terms of the production, we’re delighted that we met guidance. We’re in the middle of the guidance range.

And if you in add in the impact of the set new acquisition, it adds it it takes to 48,600 barrels of oil equivalent up to 52, almost 53,000 barrels of oil equivalent. And that’s obviously up in last year. Then look at the reserves and the reserve numbers are, two x with the acquisition. If you actually look at our existing assets, our existing onshore assets, we’re seeing an organic reserve replacement ratio of, approaching 200%, one hundred and seventy six %. And that’s really an upgrade, moving some of our contingent resources, into reserves.

And that’s that increase is on the basis of, almost 80,000,000 barrels of production. So that’s that’s great for the existing business. And then obviously, MPNU brings on board a very sizable increase in reserves. Looking at adjusted EBITDA numbers, and again, that’s $539,000,000, of which $440,000,000 is the contribution from our onshore business. And for Septu, it’s almost a hundred million dollars for the nineteen days.

And the final one here is around dividends. So, you know, we have a lot of confidence in our business, a lot of stability, and this is why we’ve we’ve increased our dividend. So we’ve moved our 15¢ share dividend up to 16 and a half cents. We’ve paid 9.6¢ to date, and therefore, we’re declaring a core dividend and a special dividend, which is in aggregate 6.9¢ and will be paid shortly after the AGM in May, assuming it’s approved by the shareholders. That’s that’s a real confidence in terms of the business, going forward.

Next (LON:NXT) slide, looking at, you know, I’ll summarize our year end of delivery in 2024. It was a big year for the company and you can see there, obviously we completed the MPNU transaction on the December 12 and that has increased oil production three times and two times against reserves. What we’ve seen since the acquisition is a very motivated workforce at Setnu. It’s about a thousand people have come across and very excited to to actually start to expand and grow these really prolific assets within Setnu. We’ll talk about that in a second.

Also, we’ve also seen in in terms of delivery this year, where we had previously, you know, predicted a a decline post acquisition. We’re actually not seeing that. And I think that decline has been abated and we’ll start to talk about some of the growth we’re going to be doing in those blocks. We completed three major oil and gas projects on our we call it now onshore existing assets and that’s Abiala, Sibiri and Sapedi gas plant. Sam will, our CEO will cover some of that in his slides.

In terms of the drilling campaign, again, Sam will deal with this but we’ve been very active with the drill bit this year and we can start to see some big increases with 13 wells being drilled. It’s the most active we’ve been since listing in 2014. And then in terms of the board itself, you know, we we continue to refresh the board. We, during the year we had a new chairman, a new independent senior INED, a new another new INED on the board and of course our CFO Eleanor has has came on the CFO in in May, this year or April, May this year. So pretty active from the board perspective.

If we then look at SEPnu itself, and we’d set a hundred day target at post post CIC change of control on the December 12. We are in the middle of that. We’re probably about eighty days through that. And, you know, what I would classify that as being is, it’s been very active. And in terms of those, activities post a hundred days, a lot of them have been completed.

The the transfer across, decoupling from the Exxon mothership into into CEPLA has been very smooth. It’s worked very well. Again, the staff are very motivated and ready to really grow these assets. And in terms of then, what we’re looking at now is obviously the integration. To the course of this year, we will be working through with consultants on board to look at putting the two businesses together in a very integrated fashion and and and really look at the group and positioning it for the future.

In terms of 2025 budget cycle, again, we’ve disapproved that through the board and and as a motivated partner, that sees a real growth in these these assets. And again, we’re delighted to say we’ve got full support to accelerate what we’re doing in terms of the work program. And you can see there on the right hand side of the slide, some of the operations. Again, you can see an increase in production, and we’ll work through that this year. Moving on then in terms of transforming our business, just let’s just do a recap.

So obviously the the Exxon mobile trans or the mobile producing transaction has brought four blocks, 67, 60 eight, 70, and one of four, and it’s a 40% interest. We have an in a, almost 10% in unitized interest in the Ammanin field with Total (EPA:TTEF). It brings, very significant infrastructure. You’ve got over a 20 shallow water and offshore facilities, 1,500 kilometers of pipelines, 90 producing wells, and importantly, you can see there 413 idle wells, and that’s something we’re gonna focus on. There’s three operated export terminals, Kwaibo, Yuho, and Bonny River Terminal, and a broad range of facilities, in the shallow water offshore with the, you know, the the outer limit of that is obviously 100 kilometres offshore.

So it’s fairly shallow water, but what it is is a closed loop system, from wellhead right through to export of the oil. We control and operate all of that. And that’s really quite materially changed, the business. If you then look at the foundation for growth, and we have a massive, launchpad for that. In terms of the subsurface, some of the best in the world, subsurface.

We’ve got large proven oil and gas accumulations in the license area, and I think this really is, we’ve said it before, a bit of a sleeping giant. I think when we start to wake this up, you know, we’re really gonna see some real growth here. In terms of 2P reserves, 2C resources, world class reservoir systems, you can see there in the bottom left some of the production numbers and reserve numbers against all these assets, correct material. If I then look at the right hand side and and, you know, beyond liquids, if you look at the gas side, what we’re gonna be doing this year is really working with our reserve auditor to really narrow the gap between what we saw on the way in when we had the CPR, which ERC did, under the prospectus. And, of course, that’s limited what can be done on that process and actually what our management estimates are and what even WoodMac is carrying on this, which is quite a big delta between, you know, the six six TCF.

You can see there in terms of 2P, TC, and 3C up to effectively 14 TCF, which management estimates are and, would max. So we’re going to be spending, at least part of this year working on narrowing that gap, but we’re very excited in the big upside potential, particularly in gas. Then look at the portfolio itself and again, we talk about the change of risk profile of the business. So if we compare the onshore, which is the existing business with pro form a SEPLAT, which obviously includes the SEPLAT. We’re moving from five off tick points to eight.

Obviously, there’s three new terminals. Third party owned export were a % on their onshore business. But when you can blend and combine the two, now 30% are third party owned and 70% are obviously operated by us. And so you can see there the onshore 0% operators now pro form a 70%. So very different and a lot more control over, the end to end production here.

Evacuation routes was 76% for Cadence, now it’s 55% QIT. And then look at the export volumes. There’s the the three times, the three x. And you can see that on the right hand side of that slide, you can see the export exports by volume, and you can see a big chunk of it is obviously Kuaibo, is the onshore terminal and Yoho, which is the FSO on OML104. So significant reduction in reliance on third parties and that is really going to pay dividends for us, into the future.

Get on to the next slide, looking at growth opportunities. And again, this is low cost short cycle growth opportunities. You know, if you recall, we have 14, four thirteen locked in wells. And so a lot of that activity level this year is going to be at reopening wells that previously locked in. There are other debottlenecking activities we can do and you can see that there which is the EAP, IGE which is the inlet gas exchanger project.

The equipment’s in country and it’s going to be installed and that will have an impact in reserves and production And then we’re we are going to be operating at least two jackup barges this year, possibly more, and we’re looking to see how we can accelerate this. And that has a, meter term reserve, addition and production addition and good payback with very good MPD volumes there. So you can see some of the, some of the projects and where they’re going to be. EAP, is really out in the East and it’s quite a prolific gas opportunity for us as well. On the next slide, I’ll just summarize before I hand across to Sam to run through some of the operations.

If we then look at the longer term growth in the offshore businesses, we we dimension this under four areas. Infrastructure. So infrastructure really is about debottlenecking. We have some water handling constraints at the QIT Terminal. We have some debottlenecking to do at the Bonney River Terminal and those will then allow us to increase production and be able to handle the water, etcetera.

That is something that’s focused on this year. We put it 2026 plus, but really we are looking at some of that now. Drilling, this would be beyond reopening wells. We’re gonna be looking at infill drilling, and bringing up jackup rigs to do that. What we need to do this year is obviously look at the subsurface, just making sure that we know to place the wells before we then launch that campaign.

And again, we need to contract. And some of this, of course, we will talk about and when we have a capital markets day in Q3. In gas, we’re very excited about the gas. The gas is very, very big potential here from domestic gas to export gas through LNG. And again, that will be around also EAP and Yoho.

And we’re working with our partner NMPC really to really advance this and start to develop the gas in the near term. And then future field development, I I think beyond getting the production up and looking at infill drilling, there’s a lot of exploration potential here. And certainly our regulator is very focused on ensuring that we actually have a have a long term plan for the business, but that which does look at expiration. So that will be probably 2026 plus. But that just sort of whets the appetite of what’s coming up, in in the future for us.

So let me hand across to, Sam.

Samson Azore, COO, Seplatz Energy: Thank you very much, Roger, and, very good morning, good afternoon, good evening, depending on where you’re joining us from. Let me go a little bit deeper into sharing with us the operational performance in 2024. Roger already highlighted the production performance in terms of numbers. We delivered 50 almost 53,000 barrels of oil equivalent and 48.6 of those from our legacy business against the guidance of, 46 to 52. But going beyond that, I just going be what is behind the numbers.

In terms of oil growth, we delivered and brought on stream, Siberia and Abiola fields. And, Siberia is currently producing at about 3,000 barrels of, 100% JBL. Abiola is also producing to storage tank. And, plan is to ramp up Abiola to 5,000, six thousand barrels of oil per day in the second quarter of this year. In the year under consideration, we delivered all 13 wells that we planned in the year, and eight of those wells are currently producing in the level of 6,000 barrels of, oil equivalent per day and 46,000,000 scoffs of gas.

Our gas delivery also got some very good boost in the year following the successful completion of the statutory turnaround maintenance of the urban gas plant, where we also leveraged the opportunity of the turnaround maintenance to displace the diesel engines into gas generators. The turnaround was delivered in time and under budget. And, if we look at that and the SIGP project as well, where we brought in the module one of that unit in the last quarter of last year. And now annual also is fully ready to receive gas, bearing the OB three completion. We are now well positioned to deliver an additional 400,000,000 of gas, to the domestic market, thereby positioning ourselves to meeting the growing demand of gas in the domestic market.

Our infrastructure in the year as well, held out very well, underlined by favorable security, out outlook. TMP Zone 4 Zone 6 in the East returned to full twenty four hour operation in the last quarter of the year. And if you look at the Western asset, we had forty days of downturn downtime in the TFP, the Transfocados pipeline, but this downtime was fully mitigated by the alternative line, the Amu Peto Escobar pipeline, bringing the overall, losses on the line to, barely less than 4%, which is the best in the year and in the period actually, and in the recent history. So lastly, our sustainability, journey also continued to make swift fashion where though we our CO2 emission went up a bit because of the increased production out of the Eastern asset following the return of TMPs on ’6, and it shut down the we took during the turnaround maintenance. We also see good progress in the other end of routine, flooding projects, like the vessel recovery unit in Agbu, Agupe, Oben and Saple were all delivered in the course of the year.

So if you go straight then into the next slide, you will then see a massive transformation in our resource base following the Exxon, MPNU acquisition that happened in the end of the year. The headline message here is there is a very big scale. Our two b reserve went up by 85, and our two c reserve also rose by 430%. This brings an aggregate value in terms of combined two b to c of, in excess of 1,200,000,000 barrels, of, of, of resource volume. So again, if you look at the bottom right corner of this chart, you will see our CapEx spend over the last three years, which shows consistent growth in the CapEx spend.

This in essence demonstrates clear commitment on our side in growing and maximizing value from these assets. If we then go to the next slide, this is giving you a deeper insight into the production performance across all the assets in the course of the year. We delivered 2% increase on year on year compared to 2023 and with the increase, inclusion of SEPNU, our end year performance, ended up at 11%. So in this case, you continue to see as well our continued drive in cost efficiencies and cost and for cost of our operations. The operating cost, if we peel off some, call it, underlining OPECs that we incurred in the course of the year, we would have ended operating cost at about $10 per $10.50 per barrel of oil equivalent, which is actually very competitive in the operating environment where we are.

Next slide is focusing on our midstream business performance, and, our midstream business also continues to demonstrate higher level of resilience in the course of the year, realizing competitive gas price of, $3.06 for thousand scoffs, and, our full year revenue of $125,000,000 which is a bit up from the previous year. Of note here is that with the completion of the turnaround maintenance of urban, establishing its resilience and now supply, integrated gas plant coming on stream and are not due to come on stream. We expect a major step change again in our gas performance in 2025 going forward. Next slide. On this, Roger Elier highlighted the growth opportunities on the CEPNAWA site.

So at this point, I will then take a few moments to highlight key activities and key growth opportunities that we have on the onshore side. Following the success that we have recorded in Siberia and Abialla, we now have planned three additional wells, in Sibiri, and Abiala also ramping up to the safe to to full potential in second quarter of this year. And the benefit of this is nearly 10,000 barrels of oil equivalent addition, in our portfolio. And, with the Eastern asset as well, we are going to resume drilling in the East following the availability of the TMP Zone 6. And Anur and SIGP already highlighted, while we focus on delivering the LPG products, the LPG projects, which are the, remainder of our end of routine flooding projects in the course of the year.

Okay. So let me then go into the guidance, for the year. So group guidance, is also going to take a step change in 2025, given the integration of SEPELU into our asset. We expect 20,000 barrels of oil per day year on year growth at the which takes us to the top end of our guidance. And the guidance for the group will be 120 to 140,000 barrels of oil equivalent.

This is made up of 75 to 80% of liquids and 20 to 25% of gas. If you then deep dig deep into the onshore asset, our guidance is, 48 to 56, and this is split 57%, forty three %, liquid and gas, while Sapnu is, 72 to 84, split into 88% liquid and 12% of gas, in the course of the year. Alright. So I will end up with the outlook for CapEx as well, which is on the next slide. And the of importance here is to highlight that our strategy is first of all to stem the decline in several asset and return to growth first time in over ten years.

We have been on this asset now as Roger highlighted earlier for for about eighty days. The early indications are very positive and, we see quite significant opportunity to focus, and deliver more value in this asset in this in the course of the year. So we will lay a strong foundation for growth in the short term. We will maintain, OPEC’s activities to improve integrity and reliability and uptime. That will be our first and primary focus while we then bring in the well work badge to commence operations in the second quarter of this year.

And then the second JU Bijajakor badge that will continue to drive integrity work starting from April of this year. It is important to also highlight that in this asset, we are going to take a little bit of some downtime because some of the integrity activities will require that we take some downtime, but that is required at this point in time for us to be able to lay the serious foundation, the strong foundation for growth. Last but not the least, we have also included some long lead items for drilling activities in the CapEx guidance for the CEPPELO activities for this year, while the technical work is ongoing to mature the subsurface opportunities to commence drilling, starting starting from 2026. So that’s the highlight of the key guidance for the year. And at this point, I will be handing over to Eleanor, who will take us through the financials.

Thank you very much.

Eleonore Ataralegbe, CFO, Seplatz Energy: Thank you, everybody, and welcome again to to our call, and thank you for listening. So our first slide here just to highlight some of what Roger has already alluded to. So strong revenues over a billion dollars, including lifting that came in post completion from our set new asset. I think what’s positive here is, the commodity prices remained fairly high in 2024, and we benefited from that. Maybe not so much in the fourth quarter, but overall our realized oil price ended at $80 per barrel.

On adjusted EBITDA, the with the introduction of, Sefnu as well, that that went off, slightly. But if you think about the the business, before Setenu compared to prior year, it was largely flat but still very positive. I think we really benefited from increases in in our oil production, from from the underlying business. I mean, on the gas side, maybe slight it dipped slightly, but we had the benefit of slightly higher gas prices, that that that, you know, made the revenue sort of supported the revenue growth that you see on the screen. Pre tax profit, very positive.

I mean, we did have some one off items that I’m going to get into on the next slide. I think the most, positive points on on this slide is really our confidence on the outlook, and this supports the the dividend growth that we’ve highlighted. So 10% year on year on total dividend and for 2024, it’s 16.5¢ per share. On the next slide, it’s some more details on the on the financials. So you see on the oil revenue, it sort of highlights the the impact of the additional liftings we we got in, in Q4.

Gas revenue still exceeded our 2023 performance, mostly from, like I described, I mentioned earlier, the gas prices offset by, you know, slightly weaker production. Again, we we did have, some turnaround maintenance that that happened on our gas plants in the year. Again, part of shoring up the the quality of the the gas production. But now we’re beginning to see better performance even in the fourth quarter going into 2025. So total revenue, again, over a billion dollars, cost of sales.

I think one thing that we we would highlight, I think I’ll I’ll highlight that in in the coming slides is we did have some number of one off, costs that impacted our our our cost of sales or production costs and also our g and a. Again, a lot of that is mostly tied to the transaction costs that were included as part of G and A. Normally, this would have come as, as as part of a capitalized, cost in in the transaction. But because of the nature of the acquisition, we had to report this in G and A. The bargain purchase simply is, is what you would call sort of a negative goodwill, but it’s really the difference between the the valuation on the books and and and the value of the asset.

So so positive there is a noncash accounting impact on the books. But overall, profits before tax was quite significant after adjusting for the financing costs. On the tax side, we see some some big jumps there. A lot of that’s coming from the, CEP news post completion tax, and I’ll explain that in a bit more detail. But, you know, ending this slide really with the strong cap capital investment.

Again, one of the things we’ll see in our business is that year on year, we’ve continued to invest in the business, you know, drilling wells, growing production, arresting decline that we we see happen, on existing business and part of what we’re going to be doing on the set new assets as well. So we completed 11 wells with additional two wells, we completed 11 wells in 2024 with the additional two wells completed very early in January. So good cash generated from operations again impacted by some of the one offs that I already mentioned. Again Q4, is where we would see the impact of the acquisition, there was quite a lot going on in Q4 ahead of when we completed the transaction. So you see that on the next slide in the cash flow waterfall.

So cash remains very strong. We started the year with $450,000,000 and ended the year with $470,000,000 I think the biggest impact like I said is in the fourth quarter of the year. We did a lot in in getting the, the office ready for for the new staff that we inherited, along with a number of other items including the transaction costs. And then also we had some tax audits, you know, that the impact of that, you know, the impact of that is showing on our on our q performance. I think another maybe one important point is also the the lifting.

I mean, we did have around $40,000,000, almost half a million barrels of of of crude on on the underlying business that they we’ll see the cash came in, you know, in in q one. So the impact of that is is showing. But I think it’s all positive because everything that we did in Q4 was really around supporting the new business. And in addition we inherited some, you know, net cash flow transactions from, from the set new acquisition. So all in you see the, the impact of CapEx and proceeds from our other assets and then of course, what we paid in dividend showing up on this slide.

Again, part of, you know, what we’ve done to to to support the shareholder activity and then we’ve we’ve repaid some of our debts and financed our debts around a hundred and almost a hundred and $30,000,000. So next slide, just going, over to the, to the balance sheet again, still maintain a very strong balance sheet post the transaction at $470,000,000 in gross cash and our gross debt doubled with the the drawdown the full full drawdown of the RCF and the additional advanced payment facility that we got from ExxonMobil (NYSE:XOM) took on the transaction along with, $22,000,000 of cash, that we we we used to complete the the cash concentration in December of $800,000,000 I think what’s to highlight here is, on the on the leverage side, still very positive. We’ve maintained our leverage even with, the gross debt because again the combined business increases our EBITDA. So net debt EBITDA numbers but across some of them is still very much in line with, what we’ve seen in our underlying business. And then you can see the diversified debt structure in the chart.

So the the doubling of our gross debts is a combination of our senior notes and the RCF and along with the, advanced payment facility. The next slide is a slide I’ll end with and it’s really looking forward. I know there have been a number of questions around the cash taxes especially with the historical performance of the NPNU asset. And that historical information has shown that taxes have been around 85%, on the cash flow from operations. And we’re looking to sort of, you know, optimize that, and and bring that down in 2025 by really focusing on investing in the business, both onshore, both, you know, via CapEx and and also OpEx.

I mean, Sam talked about the investments we want to put into the towards, you know, drilling, longer term, but there’s quite a lot of investments in the operating expenditure, and that’s taking advantage of the opportunities, the tax opportunities there. Now we are also looking to, you know, on the PIA side looking to to convert SEPNU. We’ll start the conversations with NUPRC in 2025 again because of the the transition and also, the period why we were trying to acquire the asset. That request for conversion was not done, but we’ll start that process. There are benefits there.

Royalties are gonna be a lot lower and there are some advantages on on the total tax side. Now for our existing business, we’ve progressed quite well and we’ve gotten a recent feedback from our regulator supporting, our application. So we’re expecting to close that out, in the first half of this year. Now on on our debt structure, so we have the the RCF which which matures in June of twenty twenty five. So once we are able to, refinance our 2026 notes, the RCF extends to the end of twenty twenty six.

Now on the hedging side, we’ve been quite proactive. So we’ve hedged our crude now up to the third quarter of twenty twenty five in view of obviously the bigger business. So we’ve we’ve we’ve assured, we’ve done assurances of that and we’re quite focused on doing that fairly quickly. So quite pleased that we managed to get that done. And then maybe finally on this slide is sort of to to pick up on, you know, how we’ve managed our working capital.

I think the the JV partners have been, we’ve gotten real good feedback from the JV partners on cash calls, very positive in 2024. And I think we’ve sort of seen a lot of the JV cash flow performance very positive in the last two years improved quite well. So we’re looking forward to those opportunities constantly improving in 2025. So with this I’d like to hand over to Roger to to do the wrap up. Thank you.

Roger Brown, CEO, Seplatz Energy: Thank you. So just to wrap up the last slide, I think the key messages here is that obviously the group now is much bigger and it will really unlock a number of material value creation opportunities. In terms of production numbers, there’s going to be, you know, decent, uplift in production. Now this is an average greater than 20,000 barrels of oil equivalent a day working interest. This is this is an average, and this is really going to be largely the drilling campaign and the onshore assets, as well as, really looking to reopen up, shut in wells in our shallow water offshore assets in Septuag.

And the timing of that will, you know, we’ve been concerned of in how we look at this. So that should add quite significant production. In the bottom left there is our low leverage. You know, we’re really running a pretty low leverage of 0.7 x net debt to EBITDA, which is well below our in house, our company approved target and well below the covenants in the debt. In terms of the reserves, there’s, if we look at 2P2C, you know, it’s 1,200,000,000 barrels working interest and it’s it’s probably more than that and again we’ll work through this year in in really reconciling what we’re reporting in in the CPR and what the management estimates are, but we we do expect that to grow in terms of reserves and resources.

And then in terms of post tax cash flow from operations, Eleanor’s talked about some of the stuff we’re gonna go into tax. You know, really, this is about re this is about investing and spending the money in the ground and that then choose reduce our effective tax rate accordingly. So the company’s well poised for growth, and it’s going to be quite an exciting 2025 and onwards. So that wraps up the presentation. Now I’ll hand it back to the operator for Q and A.

Thank you.

Christa, Conference Operator: Thank you. Participants can submit questions in written format via the webcast page by clicking the ask a question button. And our first question comes from Nicholas Stefanieux with Red. Please go ahead.

Nicholas Stefanieux, Analyst, Red: Hi, guys. It’s Nick Stefano. Thank you for taking my questions. I have a couple to ask on the operational side of things and a couple on the financial side of things. So, just for the development plan on the offshore assets, I can’t understand the sort of like fiscal appeal of doing workovers in sort of like shutting wells, as well as kind of like the early sort of like payback times there.

But I want to understand a bit more. Are you targeting reserves there that are not really captured by the CPR? And if you can give me a bit of background, those wells that are going to reopen, are they why were they starting to begin with? Was it in a period of kind of like low oil prices that were not very economic to kind of like have been running and now you think, you know, it’s sort of like more appropriate environment or are there like other reasons? And then the second one on the personal side, I just want to get an understanding, I think around 12% is sort of the production from MP and U will be gas.

What are the why are you selling that gas and what’s the price you get for that? Thank you. Then I’ve got some financial questions. Thanks.

Roger Brown, CEO, Seplatz Energy: Thanks, Nick. Okay. So just in terms of you know, the development plan, so obviously, we are looking to reopen, previously shut in wells. Maybe I start with that. And so now I’ll talk about, you know, some of the reserves, etcetera.

So in terms of, why was it shut in? They’re shut in for a whole host of reasons. Let’s put them in broad categories. One is bottlenecking. So a big part of this is obviously, mature, mature assets are gonna bring water with them.

So, there wasn’t the investment put into QIT, for water handling. And so so therefore, when the additional water came in, there was a processing constraint at QIT and therefore the the wells were shut in accordingly. Now there’s plenty of storage at QAT and again we’re looking at putting in together some projects to debottleneck that. We’ve done that existing at Seppladd anyway in the past and and the team is very clear how to do that. So as part of it is, balsamicing water handling constraints.

There’s the project at the IGE project we talked about and I won’t go into that in any level of detail. There’s some back pressure issues in some of the wells. And again, we’re looking at alternative solutions around that. There’s there’s other reasons like some of the platforms or some of the well head platforms, have got, aging infrastructure. So things like ladders and rails and stuff like that were were resting and they weren’t replaced, because Exxon was in divestment mode and has been for quite a number of years.

So had no appetite to invest in it. And again, what we’re gonna be doing is with these barges is going around, you know, wellhead by wellhead, platform by platform, etcetera, and really fixing, infrastructure and then reopening the wells accordingly. So there’s a plan around it. I mean, we’re we’re talking probably, I don’t know, 10% of the locked in wells that’s sort of the target for this year, but maybe it’s gonna be more than that. And it’s gonna be quite a systematic process.

You know, you we need to spend money on these these assets. We’ve showed that in our existing business, and CEPA’s pretty well versed in how we do it. So that’ll be the focus this year. In terms of the reserves, and again, it’s not so much probably less so on the oil side of things, but but I mean, certainly, I think there will be some reserve upgrades. But really on the gas side, which the gas gets sold in through BRT, which ultimately goes into Nigerian LNG.

It’s about 100,000,000 scuffs a day. And there’s obviously a project to increase that to about a 70. But but realistically, there was no gas solution, which means a lot of those gas, are resources because there’s no development plan. And we’re we’re looking at a whole range of development plans, domestic gas plans, LNG, floating LNGs, etcetera. Now they keep the management estimates and looking at things that would mark what they’re carrying.

There’s quite a big delta. And the problem is that when you go into these acquisitions, the constraint around the competent person’s report is they have to assume that Exxon are running this into perpetuity. And and so the stuff that SEPLAT will do, they couldn’t assume that. So no very little investment, decline rates, etcetera, no reduction in taxes and everything else or investments to reduce the effective tax rate. And that’s why you get quite a big delta between the two.

The ability to look at the actual assets themselves is very limited. So we will be working with a reserve auditor, Ryder Scott this year and really going bit by bit with the team we have now, obviously, with the Exxon acquisition. The team is at SEPLAT, and we will work our way through that. We will narrow that gap, and that will then we’ll communicate that into our Capital Markets Day. And that’s why we’ve set it for q three because we need to do that technical work and have the CPR, you know, relook at the reserves, etcetera.

So we’re very confident that these resources are greater than we’re projecting here and also we’ll be able to convert them into reserves in the near term. In terms of gas pricing again, you know it’s it’s a bit early in this but but but realistically, you know, at the minute we’re supplying into, Nigeria and LNG, we’re getting dollars for that. We would expect gas prices to be in the 2 to $3 range, I think long term that that sits with our existing business. And there may be potential for uplifts on that into the future with more access to to international market.

Nicholas Stefanieux, Analyst, Red: Very clear. Thank you. And then the financial questions. So, So, Elinor, these are probably for you both of them. I saw there was this massive 200,000,000 plus working capital buildup in the fourth quarter.

And my understanding is that is related to the acquisition. But I just want to know a bit more, what is the nature of that buildup? Is it sort of like something that could revert in 2025? Or it’s just kind of like maybe call it like a hidden acquisition cost? And then the other question is on the refinancing plans.

My impression is that you do need to kind of like the final notes by margin that’s like three months in order to extend the RCF. Is the idea to kind of like do one of the final six for both the RCF and the notes? Or is it or are you thinking of doing maybe two sort of like two different bonds or a bond with something else? Like what is the thinking about the balance? Thank you.

Eleonore Ataralegbe, CFO, Seplatz Energy: All right. Thank you, Nick. So on the first question, and you’re right, we did spend significant cash flows in the fourth quarter to support the, acquisition. Again, a lot of it was getting the office ready. We had systems, software, insurance, a lot of things that will allow us not to have disruptions.

That’s where the focus was, along with a number of one off items that you would have seen in OPEX and GNA, around things like gas flare. And then we also had significant, fairly significant, under lift, in the period, which I think we would we would catch up in in the first quarter. So a lot of it is not, that’s why we call it one off. It’s not what we expect to see, in 2025. So a lot of this is really associated, mostly associated with the acquisition.

On the second point, yes, you know, we as we’ve reported, our notes become current on the 04/01/2026. The RCF as well, will get, also, you know, at the June, also expires then. So if we if we get the notes, refinanced, then there’s the opportunity for the RCF to move, to be extended to the end of, December of twenty twenty six. And we have until the May 30 anyway, to to consider that. So yes, that is, definitely in our plan, to consider that.

You know, again, if you look at the what we’ve shared already, you could see our maturity balance sheet still very strong. We’re very confident about the outlook. And again, depending on the market, what the market is saying, we will be looking to come into the market. Thank you.

Nicholas Stefanieux, Analyst, Red: Thank you.

Christa, Conference Operator: And there are no further questions on the conference line. I will now hand over to James Thompson, Head of Investor Relations to read out the written questions.

James Thompson, Head of Investor Relations, Seplatz Energy: Thank you, Chris. So, yeah, we do have a few. So thank you very much for sending those in. If you have any more, please continue to do so. Maybe I could start we had a few questions in terms of, kind of capital allocation and the dividend.

You know, as a bigger business, Roger, how are we sort of thinking about the balance between growth, the dividend, and obviously the the the debt piece, and specifically maybe the dividend? You know, obviously, investor was pleased to see the uplift today. How do we think about sort of 2025 in the current

Roger Brown, CEO, Seplatz Energy: environment? Okay. Well, I got on on the dividend itself, and you’ve seen an uplift in the dividend. As we communicated previously we have certain covenant constraints on our on our debt package particularly in the bond and we are limited to how much we can pay out as dividend. And it is the higher off 15¢ a share or 7% of the market cap, which is why you’ve seen us increase it slightly.

Now, as as Eleanor has indicated, you know, obviously, we’re looking at refinancing opportunities on that, and one of the aspects will be is is having a a, amendment to some of the covenants, which will allow us to put in place a progressive dividend policy, and that’s what we wanna be doing. We spent a lot of time in the capital allocation just thinking about it as a board and and what makes sense to the company going forward. Clearly you can see massive growth opportunities here. Now the assets themselves can fund that growth opportunity. And you can certainly see that they will be, all the assets be self funding.

On the gas side of things, it’s it’s a bit early to be saying of, you know, how how we do this, but it looks like some of the gas opportunities we should be able to do is is not requiring a massive amount of investment for us as a business to to get, monetize in the near term. And so a lot of the capital allocation will be focused on obviously growth, maintenance, integrity work, looking at advancing the gas and having progressive dividend policy. We will, probably later this year, we actually will be coming out with, some changes to that. We’ll communicate this to the investors over the course of this year. But really the focus on this year is at the minute is to get set new working and really growing and and then really setting the future for the business on a long term basis.

But there will be changes that will come. And again, we’ve said Capital Markets Day, we’re debating whether we have that earlier in the year. But what we wanna be doing is set in the Capital Markets Day, the real future, the five year plan, and capital allocation will be part of that. So watch the space. We will be coming through every quarter, with some uplift, some some future projections, etcetera, but the bulk of it will really come in q three in the C and D.

James Thompson, Head of Investor Relations, Seplatz Energy: Great. Thanks. We’ve got another one here. You know, thinking about the first hundred days of the, of the business, could you maybe, kind of elaborate on any of the, positive surprises that might have come through it compared to December and going into this now that you’ve had a bit of a chance to look at the assets firsthand?

Roger Brown, CEO, Seplatz Energy: Yeah. So I think for us, I mean, obviously, we look at this carefully and we we obviously signed a sale and purchase agreement back in 2022, but but we were very limited in what information we could get because of the court case and the arbitration between Exxon and and MPC. It was no doubt about it that these are first rate, the best subsurface in the world. And and these assets, I mean, I think 1,400 square kilometers of of of acreage, full full supply system end to end. I think one of the upsides has been here is, I don’t know why we’ve challenged this, but, it’s it’s just the personnel that came across.

You know, one of the things that you worry about is just the morale and because it’s it had been suspension mode for quite a number of years. This has really pleasantly surprised us, you know. You know, there’s a thousand staff have come across really fired up. They’re really grabbing the opportunities. And I think in a way that they they know what these assets can do.

Quite a number of people in the leadership team and just below leadership team were were in the company in in the early two thousands when the company was heading at that point, on its way to a million barrels a day. Quite a number of them were drilling the wells, etcetera. So they know what’s possible. And now having a shareholder that is absolutely a % focused on Nigeria that is really gonna spend the money and and grow it, the enthusiasm is very good. I also think also to add to that, the interaction between the SEPLAT existing staff and the and the new, it’s it’s it’s almost as if they’ve been together forever.

So I think there’s a really good camaraderie there. And, you know, I think, yes, subsurface and technical and all that sort of stuff, determines the future. But I think also it’s culture, it’s the people, and the enthusiasm around the people will really deliver that. And we can see it already. I mean, we’re expecting some drop in production.

We’re seeing an increase in the production, and we’re we are absolutely seeing an enthusiasm the growth is very big.

James Thompson, Head of Investor Relations, Seplatz Energy: Very good. Thanks, Roger. So we have a few questions on the tax side of things, Emma. You know, can we provide, any kind of guidance in terms of, you know, obviously, outlook for tax rates for the year, the impact of the investments, that is being made, in 2025? You know, provide some more color effectively around the the tax rate maybe between, P and L and also kind of cash tax rates as we go through this year.

Eleonore Ataralegbe, CFO, Seplatz Energy: Right. Thank you, James. So so thanks for the question. You know, I think like I said we would be working towards bringing the tax rates down. I think the focus for us as we’ve been talking on this call is really you know you know building the foundation again, focusing on integrity so you would be seeing, especially when we start releasing our performance, that a lot of this is going into OPEX, some very, very important projects and work we need to do, that are really short term generating, oil, you know, bringing the wells back on stream.

And doing that, we’re even bringing in jackup barges to do that. So the focus really is on building the business, and also providing starting to provide for, drilling in in the coming years. So I think what we we are focused on this, we’re we’re we’re quite keen on bringing the the cash taxes down again. The the the more we build the business as a whole, the more that, you know, we pay the right taxes to the government as well as, you know, managing managing the business more effectively. So what I can say is that we will be obviously bringing the, the cash taxes down, you know, in 2025 compared to what we saw, which was around 85% in the in the past three years.

I mean, by double digits, we’ll we’ll be, you know, double digit percentage, we’ll be bringing that down, but we’ll we’ll guide as as we go on. And the more that we understand, the business. Again, there’s also focus on trying to convert this to PIA, so there’s some benefits there. It will take some time to do that for our existing for the underlying business. We started the, the process on the PIA conversion in 2022 and and just recently are getting to the point where NUPRC is is looking to approve this.

So so quite a number of of moving targets. I think, you know, what to what to focus on is the fact that, you know, we’re bringing investments back into this thing. We’ve done that historically. We’re at anytime they we’ve taken assets from IOCs. I mean, we’ve worked them, invested, and and long term, this is what would ultimately build the shield and the capital allowances that we need, you know, to to have a more efficient business.

Thank you.

James Thompson, Head of Investor Relations, Seplatz Energy: Thanks, Alana. Maybe pivoting back to the, onshore business question here, you know, the, the the the legacy business, settler onshore. You know, production is looking to go over 50,000 barrels a day this year, you know, first time being up there for for a little while. What what’s the what are the main drivers there? Can we say anything about exit rates, and also, you know, rolling into this in terms of Anno and I was thinking about Anno for, 2025.

There’s continued to see some challenges there. What are we doing to, avoid kinda downside outcomes of continued, challenges with the OB3 line? Maybe, Sam, you could follow-up.

Samson Azore, COO, Seplatz Energy: Let me, David, thank you, James, and thanks for that question. On the offshore side, we’ve continuously built some level of resilience within the assets. Operational efficiency, driving operational efficiency, I’m using technology to ensure that we don’t incur unnecessary downtime, has been a key driver. What we’re also getting a very good handle of is, making sure that our export route systems are also very resilient in the course of the year. If you recall, prior to this past year, 2024, we had three years running where we had failures in the export systems in the third quarter of the year.

That did not happen in 2024. Now with leveraging the government security agencies and the government, set up on the security, you have also you would have also seen that the losses on the line had now gone to, not just single digit, but somewhere 3.4% in the whole of the year. So those are the key things that we are driving, making sure that operationally, we are stable. And then the export route system that used to be a challenge, we also maintained some level of resilience there. In terms of exit rate for for for the year as well, we actually intend to exit pretty high with annual coming on stream.

We on the legacy business, we see a potential to go up to 70,000 virus per equivalent. And then on the side, we have a potential to go, somewhere, around, eighty, ninety. So overall, we have quite, strong, exit rate for the year because we intend to run a very, operational efficient business because of the year. So that’s the the outlook.

James Thompson, Head of Investor Relations, Seplatz Energy: Thanks, Sam. We got any more on the call? Any more on the line? Okay. Not at this point in time.

Maybe we could touch back on, we got some sort of, granular points. You know, obviously, we’ve given CapEx and CapEx guidance for 2025. Is there anything we can more we can say maybe around, beyond that, you know, in terms of changes to to OpEx, obviously, optically a bit higher than we’ve had historically? And what can we say about CapEx, sort of more longer term outlook? I I guess, the principally to do with the, the offshore.

Eleonore Ataralegbe, CFO, Seplatz Energy: Okay. Maybe I’ll just pick off

Nicholas Stefanieux, Analyst, Red: pick up on

Eleonore Ataralegbe, CFO, Seplatz Energy: that one. I mean, we we have guided, 14 to $15, OpEx per BOE for 2025. I think one thing to highlight there is is, you know, around $4 per barrel is very much focused on maintenance, what would normally sort of be maintenance capex type activity, but that’s we need to we need to do that in 2025 in the short term. I think going forward you know we we should be sort of looking looking to bring that down and sort of staying around sub $10 per boe on our business that’s that’s always been our drive and our target so we’re hoping to get get to that in the medium term and more importantly is to to really say what we’ve said really on this call which is you know capex is going to be quite key for us longer term. We need to start building a capex activity drilling wells and the true value of this business will start to see it combined with you know bringing back a lot of these idle wells.

I mean I think the opportunities are huge and SEPLAC historically has been a low cost producer. I mean in the last two years there have been a number of one offs but you know, now we’re going to stabilize a lot more. So we start to see a lot of these metrics coming down. So it’s a very, very positive outlook to the future. Thank you.

James Thompson, Head of Investor Relations, Seplatz Energy: Thanks, Elena. So, we got another one in terms of, hedging strategy, minor point, you know, plans for 2025. I mean, obviously, we put some of that on the side and just hedging strategy going forward.

Eleonore Ataralegbe, CFO, Seplatz Energy: I think, right now, pretty pretty much the same. I mean, the focus for us is to ensure the downside. I mean, these are simple puts that we’ve put in place. We’ve done that historically. We’ll continue to maintain that subject to any, changes or discussions, with our board.

Thank you.

James Thompson, Head of Investor Relations, Seplatz Energy: Okay. That’s, that that that covers most of the questions we’ve had on the line. And, well, actually, one more here just in terms of granularity and maybe another one for you, actually, Eleanor. Can we say anything in terms of unit cost in terms of G and A for you? Yeah.

Eleonore Ataralegbe, CFO, Seplatz Energy: I mean, so for for G and A, I mean, we’d always want to be sub five, you know, lower than five. I think, you know, isolating all these, one offs, G and A is something that will continue to should remain fairly flat, on our combined business and we can sort of share more on that as we share results quarter on quarter. Thank you.

James Thompson, Head of Investor Relations, Seplatz Energy: One bit more of an oblique one here, but maybe more in terms of geopolitics, Roger. You know, have we got, it’s a bit of a volatile environment out at this point in time with, new, regimes, particularly in The US. So how do we see that affecting that plan if at all?

Roger Brown, CEO, Seplatz Energy: Yeah. I think we, agree. We I guess we design our business to run through every cycle. So, you know, if you’re a producer, that’s what you need to be able to do. We’ve seen real variety of oil price.

COVID, we saw $10 a barrel. So when we design our business, our business, we’re able to, because we’re short cycled, is to actually dial it up, dial it back as we need to, and we’ve proved that in the past. And that will change, obviously, with the big focus on cost, cost control, efficiencies, etcetera. And with obviously set new acquisitions, we have a lot more control end to end. And I think that will then obviously, change the risk profile of the business.

Gas is gonna become more and more, prevalent in our business going forward and that’s obviously decoupled largely to the oil price. So on a macro level, that is where we are in terms of running our business. You know, we had predicted a softening of oil prices this year and, others covered that we we have obviously we continue to hedge, as downside protection. We run our budget at $70 oil, but we run a range of different scenarios, 60 and below, and see what the how the business is gonna react to that, looking at breakevens, etcetera, and low leverage for us as a business to make sure that we can continue to operate in all sorts of cycles. So it’s a long well, we answered your question, but we can’t predict what’s going to go in the future.

We’ve seen what’s happening with OPEC. We’ve seen what’s happening in The US and the macro side of the business. We’re armed for lower oil prices this year. And I think over time as a mix of our business changes and gas is gonna be a much bigger part of our business in the future, I think we’re gonna be set up, to to manage it. It’s a dynamic process, but we’re not overly concerned where we are at the minute.

We obviously love higher oil prices. Everyone would. But the reality is we’re ready and armed and ready for lower oil prices.

James Thompson, Head of Investor Relations, Seplatz Energy: Very good. Thanks, Roger. That covers most of the, the key topics and the questions. So maybe I can pass back to Christa for, if there’s any more from the call.

Christa, Conference Operator: We have no further questions on the phone at this time. I will now turn the conference back over to Roger Brown for closing remarks.

Roger Brown, CEO, Seplatz Energy: Okay. Well, thanks everyone for listening and thanks for those questions. We’re looking forward to an exciting 2025 and beyond. We are obviously coming out with our Q1 results in towards the April. And again, we will be, you know, updating, the market accordingly.

We’ll probably tighten some of those guidance ranges as we go throughout the year and obviously working forward and looking forward to a Capital Markets Day in as early as we can, but it looks like into Q3. So thanks everyone. Have a good day.

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