Seplat Energy Plc

Good morning, everyone. Welcome to the 2022 results conference call for Cepta Energy. So turn to slide four and run through some group highlights. So first of all, we're declaring a dividend of 7.5 cents, which is a special dividend. It's made up of a 2.5 cents final dividend, and then we've topped it up with a special dividend of 5 cents. Total production is at 16.1 million barrels of oil equivalent for the year, which is slightly down on last year, largely down to the three shut-ins that we had, and Sam will deal with that when he goes through it. The revenue is up almost 30% on last year, largely to do with the higher oil prices, and then EBITDA numbers around 418, slightly up, to 12.1%. In terms of the 2022 achievers, we continue to pursue the mobile producing acquisition. We'll deal with that later in the slide. We're looking obviously at our new energy investment plan. We announced that at our strategy day and we've made a good inroads in terms of looking at new energy opportunities and we're looking to take FID and at least one of them by the end of this year. In terms of the PIA volatility conversion, obviously the PIA went in 2021, its ability to do a volatility conversion, we've opted to do that, and we did that in February. Work is ongoing to separate the midstream gas business. Under PIA, envisage is a separation of midstream away from upstream, and working hard to deliver that. We believe that will create a lot more value for shareholders in the longer term. We're going to disclose the first climate risk report and that'll be end of March this month, or actually next month, and it'll be under TCFD guidelines. We've commenced our implementation of achieving a zero and that's largely to do with taking a look at the flares. We've had some board changes. obviously we announced earlier this year uh a new independent chairman with bazaar um and then we have another board uh member which is today which is kusum kalyan joins as an independent non-exec director this is part of the refreshing of the board um for the future okay so moving on slide it's um just a few words about facility and we have a quite a number of corporate initiatives in our scorecard, sustainability in about 15% of the scorecard in 2023. And if you combine that with the safety at 10%, one quarter of the overall scorecard is now related to safety targets and sustainability targets. And in terms of reporting, talked about just putting out this, climate risk and resilience report. You'll see that at the end of March. We'll put that on the website and it's flying with TCFG guidelines. Just some stuff on the emissions reductions and we have committed and we're still on track to delivering a flares out initiative by 2024. So beyond, we will be flared out completely, except for obviously safety flares, which we'll need. And largely a lot of that reduction is coming from the AG compression, which we've put in place at the end of last year when we were not in operations. We've also re-looked the calculators for the scope one, scope two emissions. We have been making a lot of estimates around that, actually overstating them. We now have a new calculator in place, which is much more accurate now where our carbon intensity is down 2020 and 2021 levels, 29 kilograms per BOE. Our diesel program is underway across all of our apps. And obviously our Tree for Life project is making some inroads into the first pilot project. So I'm going to now move over to operating review and hand over to Sam Morrison, the COO, and he will then picture the slides.

Thank you very much Roger and then moving on to slide number seven. Good morning, good afternoon, good evening everyone depending on where you have joined this call from. Just to highlight our personal performance in the year under review continues to follow our very strong strategic agenda focusing on maximizing cash generation through operational efficiencies. we focus on our three key strategic pillars the upstream the midstream gas and the new energy and over the next few slides i would like to take you through some of the key initiatives that we are driving to strengthen our performance along those lines but specifically just on this point i would like to highlight that we continue to diversify our export routes to continue to assure revenue generation learning from the quarter three performance of 2022 when we had very significant pipeline and terminal outages that impacted our patient performance in the year. So if you just go to straight to the next slide on slide number eight, I will lead into one of the key strategic drives where you will see how robust our reserve base is. Looking at 2022 relative to 2021, our reserves decreased by 19 million barrels. 84% of that was significantly related to production, 9 million barrels of oil and 41 BCF of gas. 12% is due to the divestment of Udima and reclassification and revisions which is our strict petroleum engineering practice leading to 4% reduction. Our 2C resource volumes also decreased by 7.3%, 17 million barrels of oil equivalent, and we are currently farming into the Abiala marginal field through our LCRES non-operated venture. And that is not yet in the books. simply because we have not completed the farming operations by the time we have audit in the year. If we go to slide number nine, you will also see our growth agenda through the exploration well that we drilled in Sibiri in quarter one 2022. Significant progress has been made with this. We have very fastly moved to extended well testing of this particular opportunity following the discovery that we made. I would like to comment that the extended wells testing is underway as we speak here with very promising results. Well is currently flowing, good API, flow rate yet to be determined. And also we are driving the. For the appraisal of the Sibiri Discovery and also we have made some very significant discoveries with this. They are flat. The flank appraisal has yielded many more positive results, including two new pay zones. Overall, we see a very clear indication that the Sibiri discovery will be in the upper margin of our in place volume estimation. We are going to quickly move into field development planning and bring this to production shortly. Speaking to slide number 10 and our overall operational performance in terms of production in the year under review, we started the year very strongly. with very good quarter one and quarter two performance. And as I stated earlier, quarter three was heavily depressed by pipeline and export line challenges. But by October last year, we recovered and we also then made a very strong recovery in the last quarter of the year, leading to an exit of 53,000 barrels of oil per day at the end of the year. And learning from this, we will continue to drive additional export route opportunities to ensure resilience as we go into the market. On terms of operational performance and resilience, and we also achieved ISO 55,001, which is also a very big one for us at CEPLAT being the first in Africa to achieve this feat. So we also feel very proud about this. And lastly, our operational performance continued to run on a very strong safety performance in the Niger Delta area of Nigeria, where we actually achieved 31 million hours of LTI-free operations over a space of three years. However, we recorded one non-operational LTI in October last year, and since then, we have also ratcheted up to two million, almost three million man hours of LTI3 operations since the last incident. So if I go quickly to how we are building resilience on slide number 11, resilience for export operations into the market, we delivered the alternative, the Ambiquit to Excavose pipeline in July last year. And following that, that in itself has opened more opportunities for three additional export routes out of there. But learning from the incident that we also had, we continue now to look at all the opportunities to bring our crew to the market in OML 40 and in OML 53. And if I go to the very last slide for me, that is also how we are driving our midstream agenda in line with our strategy. The first big ticket item there is how we utilize the installed capacity in our facilities in urban and surplus. And there you will see that we continue to export very significant volumes into the market. In the year under review, we exported over 110 million scopes of gas, our year average, achieved an average gas price of $2.82 per thousand scoffs. We also additionally signed some three new GSAs to a total volume of 86 million scoffs per day. That now brings us to eight GSAs in total with offset capacity of 390,000 million scoffs of gas per day. We are also driving ANO. ANO is also a very strategic growth opportunity and the current outlook is that we would bring ANO to our own stream by the last quarter of this year. We achieved 95% mechanical completion in the course of the year under review and we are driving and working closely with our partners to achieve the pipeline a network that will bring this gas to the market. Lastly is the supply delivery where we are having a combination of three agenda here, driving cash flow from gas sales, LPG, and then also reducing our gas flaring with this opportunity. And this is supposed to come on stream by the last quarter of 2024 in line with our end of routine flaring agenda. So on this point, I would just like to end and hand over to Emeka who will take us to the financial performance. Thank you very much.

Thank you Sam. Good morning. My name is Emeka Onka and it's CF4. I'll take you to the financial review starting from slide 14, which gives the financial highlights. You will see that total revenue will now be $1 million and EBITDA was $416 million and will end up with a very strong cash on our balance sheet of $404 million. You will also see the realized oil price at $101 per barrel and the gas price at $2.82 per million scope of gas. If you go to slide 15, we'll give more details on the financial results. You see oil revenue at $8.9 million and gas at $1.12 million. The gas revenue dropped a bit. This went to the earlier pressure we faced in 2022 on gas prices, particularly the domestic gas obligation price that came down to 265. However, during the year, we recovered in terms of a new GSS design, and we were able to build out the price of a $2.82 per million scope, like I said in the earlier slide. The cost of sale affected by the royalties given the higher oil prices for this year. The G&A went up significantly. One is increased NARA spend in 2022. Usually, there are FFM implications for that because you convert books and maintain a systemic rate of the central bank and FX rates. So when you spend NARA and convert, it has an implication in terms of the dollar reflected as the G&A cost. Also, the global inflation, which put MPARCA on the traveling side, travels and cost of imports as well. Staff emoluments increased margin during the year and we also had a prior cost of over $12 million that we had to charge this last year due to partner recovery issues. If you go to the impairments, we had On the UBIMA, we have a loss of sale of UBIMA at about $13 million on that, after the fall of that asset, like Sam already mentioned. The tax cut for this year, apart from that, that was also a defied tax cut of about $33 million, and that increased tax cut for the year. The higher oil prices meant that we need to reverse some of the fat tax obligations occurring in our books. So ended up with $104 million profit after tax for this year. The capital for this year was $3 million. And that takes us to the next slide, slide 16, where you see that we spent $123 million, $4 million of that on drilling. We did about two of that completed this year, 11 delivered in 2022. We also made part of the CAPEX also used for engineering projects and our gas plant. Also, on the drilling side, we continue to improve the cost of drilling. We're targeting $10 million in terms of average cost. And in the past two years, we've achieved about a 5% reduction in drilling costs. The details of the wells that will drill this field are also contained in page 16 of the slides. I'll take you to page 17, slide 17, which shows a very strong cash generation this past year. We opened with $324 million. I'll have $404 million cash from operations, which utilized the OBIMA receipt. That disposer will receive about $80 million during the year. And also on the MPA transaction, where the disposer wanted to get $8 million as part of our 10 10% of consideration for that effort that CBA held, which is part of adjusted on completion of the transaction. Capital for the year, $163 million, like I said in the previous slide. And we ended the year strong on liquidity of $404 million. I'll take you to the next slide. Slide 18, we showed a rubble liquidity situation of $404 million. We have debt of, they have bought out their $650 million, and Ultimately, what you have closing the year on net debt or trust is $5 million. And net debt is 0.8%. We also, on that same slide, have an indication of how we manage our capital. We are very conservative. We have our 70 by 70 and 70 by 70 in terms of Naira to dollar. We always hold about 30% of our liquidity in dollars. And also, 30% of that dollar is also held outside the contract. And for the year ended, as I said, December, I had what I want, a $3 million option. In fact, that for $9 million that came in just on the last day that we had offshore, of course, it nearly will open the next year. We'll transfer that offshore as well. We talked about debt management. Our target entirely is two times. Although our culminate is about three times EBITDA. I'll talk about our EBITDA figures earlier. We also engage in terms of capital investment, low-risk capital investment. Our third priority is to drill wells to arrest decline and also to continue to invest in midstream, which for us is a natural hedge. This last year, in terms of production for 4% was from gas and 46% of oil. This normally, for us, is a natural hedge, as I guess, fluctuates on crude oil prices. We also hedge our production. We are hedged on to the second half of 2023, about 3 million barrels at $50 a barrel. We jump back and forth with options. I'll take you to slide 19, which is on a special dividend, which Roger has spoken to. Our suppliers have consistently paid dividend in the past five years, including the dividend paid in 2022. Also, we paid about $436 million since we went to the market, where we raised $5.5 billion gross. And this year, we ended with a strong liquidity. I talked about our $404 million on the balance sheet on the back of higher oil prices. We reviewed our cash requirement for this year. including the capex or $116 million which we are going to speak about and also the MPO transaction where we're keeping funding for only pretty contribution on that transaction. All together after this review we also consider a couple of perfect things that we have in our bond covenant and the board has recommended beyond the 2.5% for for the last quarter of 2022, an additional top-up of $0.05 as well. And I'll bring it up together, $0.75 for final dividend, and for year 2022, $0.15 on the whole. I'll now hand over to Roger for the next section on Outlook.