Seplat’s 2016 was dominated by the stoppages at the Forcados terminal, with the company’s net working interest reduced by 40% to 25,877 boepd in 2016, from 43,372 boped in 2015. The company is taking action to tackle this reliance, marking progress in its gas business and in finding alternative export routes for its oil.
Seplat announced its 2016 results on March 30, with a net loss after tax of US$166 million, versus a US$66 million profit in the previous year.
“In addition to a difficult global oil market backdrop our business has had to contend with unprecedented operational challenges due to interruptions and these are reflected in our full year results. Whilst force majeure at the Forcados terminal has materially affected our oil production, I am particularly pleased to see the growth in our gas business which in 2016 exceeded the US$100 million revenue milestone demonstrating its robustness and providing a solid base from which to grow,” Seplat’s CEO, Austin Avuru, said.
Avuru went on to note the establishment of a new export route, via the Warri refinery jetty. The company is “nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bpd gross during [the second quarter of] 2017.” Furthermore, Seplat is supporting the Nigerian government’s plans for a link from Amukpe to Escravos, which would offer a third alternative route. “With multiple export routes expected to be operational during the second half of 2017, we will have significantly de-risked our route to market.”
Gas prices increased to US$3.03 per 1,000 cubic feet (US$83.8 per 1,000 cubic metres), from US$2.55 per 1,000 cubic feet (US$70.5 per 1,000 cubic metres) in 2015.
Reserves fell by 3.8% year on year, to 461.8 million boe, with 195.4 million barrels of liquids and 1.5 tcf (42.5 bcm) of gas. The reduction stems from a settlement on Oil Mining Licence (OML) 55, where Seplat now holds a revenue interest – until US$330 million has been paid to the company.
A deal was struck in July last year, between Seplat and BelemaOil. Under this agreement, Seplat would no longer hold an interest in BelemaOil, with the discharge amount being paid over six years through the allocation of crude reserves on the licence. The 40% stake in the licence will be jointly controlled by the two companies over this period.
The core of Seplat’s operations comes from its 45% stake in the onshore OMLs 4, 38 and 41, where it is also the operator. Production comes from seven fields, with more fields planned to be brought into production in the future.
Seplat noted that it was the first operator in the Niger Delta to install metering, with a Lease Automatic Custody Transfer (LACT) unit. As a result, it has been able to monitor more efficiently how much oil it injects into the Trans Forcados system. As a result, reconciliation losses have been reduced to 10-12%, from 18-20%.
According to Seplat, these blocks will also play an important role in supplying gas to the domestic market. The company plans to increase its production and processing capacity to meet growing demand. Seplat described its Oben facility as a major step forward in this area, where a modular design is used.
The company completed the second phase of work at the Oben plant, taking gross processing capacity to 465 mmcf (13.2 mcm) per day. Work is also under way on two more compressors, which should eliminate gas flaring, instead allowing the gas to be sold.
Three wells were drilled at OML 41 in 2015, on the Sapele Shallow field, before being put on hold in 2016. Seplat is now planning a development and drilling strategy on the field, which may hold 500 million barrels of stock tank oil initially in place (STOIIP). The field had not been developed because the crude is relatively heavy, at 21 degrees API, but Seplat now considers it to be a “material upside opportunity”.