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CardinalStone Earnings Update - Seplat Energy Plc FY'23 audited results - SEPLAT joins the billion-dollar revenue club in FY23
(Source: CardinalStone Research, Date: 29-Feb-2024)

SEPLAT joins the billion-dollar revenue club in FY'23

In its FY'23 earnings release, Seplat Energy Plc recorded an 18.3% YoY growth in earnings to $123.9 million, owing to strong output growth, lower finance costs and a lower effective tax rate for the period. 


In line with our expectations, the company hit the billion-dollar revenue mark, up 11.5% YoY, owing to higher production, lower pipeline losses and crude over-lift recorded during the period. Notably, it recorded growth in total liquids and gas production of 14.4% and 1.5% to 10.3 MMbbl and 41.6 Bcf, respectively, driven by the new well stock, the availability of the Amukpe-Escravos Pipeline (AEP) and the improved operational performance of the Forcados Oil Terminal (FOT). Specifically, OML 40 contributed the most growth in the period, which is due to the success of the revised 2023 oil well drilling campaign, which delivered 14 new wells in FY'23. The higher output in the period masked the impact of the lower average realised oil price of $83.39/bbl (vs FY'22: $101.67/bbl). In addition, a higher average realised gas price of $2.90/Mscf (vs FY'22: $2.82/Mscf) supported gas revenues.  


Expectedly, the cost of sales grew by 8.7% YoY, largely following the increased volumes in the period. In addition, the company recorded higher crude-handling charges (CHC) from using alternative evacuation routes, especially on the Eastern assets (the off-take of approximately 1,000 barrels of oil per day (bopd) of JV crude from Ohaji to the Edo Refinery) in efforts to minimise reliance on single evacuation routes, resulting in lower outages and third-party infrastructure downtime. The increases in other non-production costs like royalties, depreciation, depletion, and amortisation were minimal in the period. Consequently, gross profits came in at 14.4% stronger YoY, culminating in a 50.1% gross margin (vs FY'22: 48.8%). 


However, the company recorded a 9.2% YoY decline in operating profits, largely a consequence of losses emanating from higher overlifts during the period and a substantial $27.5 million in foreign exchange losses. In addition, SG&A rose by 4.5% YoY, primarily due to professional fees associated with the litigation costs in response to minority shareholder actions, as well as costs related to the MPNU transaction. Meanwhile, net finance cost moderated (-11.0% YoY) due to offsets from strong

interest income, resulting in a PBT decline of 6.4% YoY and a PBT margin of 18.0% (vs FY'22: 21.5%).


Further down, the company recorded a lower effective tax rate of 35.2% (vs FY'22: 48.8%) due to the offsetting impact of deferred tax assets on its higher current tax charge for the period, resulting in an after-tax profit of $123.9 million. Consequently, EPS rose by 27.3% YoY to $0.14.


The company has maintained its quarterly dividend payout with an interim dividend of $0.03/share. In addition, it has declared a special dividend of $0.03 (vs FY'22: $0.05), bringing the total dividend for the year to $0.15 (vs FY'22: $0.15). The qualification date is 26 April 2024.


Our view is that the strong dividend payout reflects the company's strong balance sheet for the period, evidenced by its material cash balance of $450.1 million and its sustained business confidence.  

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CardinalStone Research 

Lagos Office: 5 Okotie Eboh Street 

                       South-West Ikoyi, Lagos


Abuja Office: 4 Misratah Street

                       Off Parakou Crescent, Wuse II

Abuja, Nigeria

Tel:                 +234(1) 7100433, 7100434



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