Seplat Petroleum Development Company Plc on Thursday expressed hope of increased revenue through expansion of alternative oil export routes.
Austin Avuru, the company’s Chief Executive Officer, expressed the optimism at the company’s 2016 Post Annual General Meeting (AGM) news conference in Lagos.
Avuru said that the company would improve its alternative export routes and avoid revenue loss from shut-in.
He said that the company had strengthened Warri and Forcados export routes to diversify production.
Avuru said that the company pursued alternative crude oil evacuation options for production at OMLs 4, 38 and 41 to increase production.
He said that the company, in the second quarter of 2016, implemented an alternative export solution whereby crude oil production from OMLs 4, 38 and 41 were sent via its 100,000bopd capacity pipeline to storage tanks at the Warri Refinery.
“As at Dec. 31, 2016, a gross volume of three million barrels had been evacuated via this route.
“The company’s intention is to establish regular exports of 30,000 bopd (gross) through Warri,” Avuru said.
He added that the company was collaborating with government on the completion of the Amukpe-Escravos Pipeline that would offer a third export route through the Escravos Terminal.
“With multiple export routes expected to be operational during the second half of 2017, we will have significantly de-risked our route to market,’’ Avuru said.
He said that extended Trans Forcados shut-in and volatility in global oil prices affected the company’s revenue in 2016.
Avuru noted that the shut-in and declaration of force majeure at the Forcados terminal, by Shell, made average daily production to fall from 52,000 boepd as at mid-February 2016 to 25,877 boepd by the end of 2016.
He said that the company would also continue to prioritise expansion of its domestic natural gas business to provide a revenue stream away from oil.
He added that the company would ensure right-sizing of capital investments to match prevailing environment and continued downward pressure on cost base.
Dr ABC Orjiako, the company’s Chairman, gave the assurance that Seplat would continue to deliver enhanced value to all its stakeholders.
“With the diversity of export solutions in place and our increasing gas processing capacity, Seplat has the potential to deliver material production upside with less risk from any infrastructure disruption,” Orjiako said.
The chairman said that the company decided not to pay dividend during the year under review in order to maintain the necessary level of financial flexibility.
He added that the decision would enable the company to deploy the available capital in its portfolio of production opportunities while preserving a tight liquidity buffer.