Nigerian independent energy company, Seplat Energy Plc, has announced a stellar start to 2025, with its strategic acquisition of Seplat Energy Production Newco Unlimited (SEPNU) proving to be a significant catalyst for substantial financial growth. The company's first-quarter results for the period ending March 31, 2025, reveal impressive surges across key performance indicators, most notably a more than threefold increase in pre-tax profit.
Profit before tax witnessed a remarkable year-on-year jump of 203.97%, reaching N314.646 billion ($207 million), primarily driven by an exceptional expansion in revenue. Revenue itself soared by an impressive 356.97% year-on-year to N1.228 trillion ($804 million), a significant leap from the N268.618 billion recorded in the first quarter of 2024.
Key Financial Highlights (Q1 2025 vs. Q1 2024):
The substantial surge in Seplat's performance is primarily attributed to a significant increase in oil and gas production, coupled with the full consolidation of SEPNU's results into its financial statements.
Production Highlights:
- Oil Production (Crude and Condensates): More than tripled, rising by 224% to 9 million barrels from 2.8 million barrels in Q1 2024.
- Gas Production: Increased by 50% to 14.9 billion standard cubic feet (bscf), up from 10 bscf in the corresponding period last year.
- Natural Gas Liquids (NGLs): Production reached 304,000 barrels.
- Total Production (Oil, Gas, and NGLs): Increased by 164% to 11.8 million barrels of oil equivalent (boe), compared to 4.5 million boe in Q1 2024.
Seplat acknowledged that this robust production performance underscores the transformative impact of the SEPNU acquisition and operational improvements across its onshore assets.
Increased Dividend Signals Confidence:
Reflecting its strong financial performance and confidence in future earnings and cash flow generation, Seplat's Board of Directors has approved a quarterly dividend of US$ 4.6 cents per share for the first quarter of 2025. This represents a significant 28% increase compared to the Q4 2024 core dividend and a substantial 53% increase compared to the equivalent core dividend in Q1 2024.
The company further clarified that maintaining this dividend level throughout 2025 would result in a total dividend of $18.4 cents per share, marking an 11% increase over the total dividend declared for the entire year of 2024 ($16.5 cents per share). This enhanced shareholder return underscores the positive impact of the recent acquisition on the company's financial strength.
Solid Balance Sheet Underpins Growth:
Seplat Energy's balance sheet remains robust, with its oil and gas properties constituting over half of its total assets. As of the end of Q1 2025, the company reported gross debt of N1.662 trillion ($1.08 billion), a decrease from N2.100 trillion ($1.38 billion) in the previous year. Cash at bank stood at a healthy N514.1 billion ($334.6 million), contributing to a reduction in net debt to N1.148 trillion ($747 million).
Management highlighted that this 17% reduction in net debt was achieved through a combination of strategic debt repayments and strong free cash flow generation during the quarter. This improved financial position provides a solid foundation for future growth initiatives.
Outlook Remains Positive Despite Margin Pressures:
Following its strong first-quarter performance, Seplat Energy has reaffirmed its production, capital expenditure, and cost guidance for the full year 2025.
- Production Target: Maintained at 120,000–140,000 barrels of oil equivalent per day (kboepd), with onshore production projected at 48,000–56,000 kboepd (7% YoY growth) and SEPNU assets expected to contribute 72,000–84,000 kboepd (12% YoY growth).
- Capital Expenditure (CAPEX): Remains on track with a budget of $260 million–$320 million allocated for strategic drilling and reliability projects to sustain future production growth.
- Operating Expenditure (OPEX): While operating costs are anticipated to rise moderately due to offshore restoration activities, the elevated costs experienced in Q1 2025 have exerted pressure on profit margins. This is reflected in the decline in operating profit margin to 29.43% (a 35% decrease) and the pre-tax profit margin to 26.63% (a 33.48% decrease).
However, management anticipates that costs will moderate after 2025 as production volumes increase, which could potentially lead to improved profitability and a stabilization of margins in the future. Overall, Seplat Energy's strong first-quarter results, driven by the successful integration of SEPNU, position the company for continued growth and enhanced shareholder value in the remainder of 2025.