2023FY Seplat audited Financial Result | Strong Revenue Performance Drives Bottom Line Growth
Seplat Energy’s revenue grew significantly by 72.53% year-on-year (YoY) to NGN696.87bn in 2023FY. This exceptional performance was fueled by a substantial increase in crude oil production (72.90% YoY), which offset the decline in crude oil prices (Average of 82.71 in 2023FY vs Average of USD100.93pb in 2022FY). The company also saw significant growth in gas revenue stream (+69.74% YoY). The surge in earnings across these revenue streams can be attributed to an 8% rise in average production to 47,758 barrels of oil equivalent per day (boepd) compared to 44,104 boepd in 2022FY. This production boost was driven by the completion of 14 oil wells throughout 2023, resulting in a 77.13% YoY increase in gross earnings to NGN349.33bn. Operating profit remained strong during the period, experiencing a robust growth of 40.43% YoY to NGN163.73bn. This was primarily driven by a solid performance in revenue, despite facing increased costs. Specifically, administrative expenses saw a significant surge of 61.72% YoY, totaling NGN94.28bn, along with other operating activity losses, which rose by 423.24% YoY to NGN80.07bn. Net finance costs also increased by 37.77% YoY to NGN39.16bn. Despite these challenges, both profit before tax (PBT) and profit after tax (PAT) for the period showed strong growth, increasing by 44.75% YoY to NGN125.54bn and 83.04% YoY to NGN81.33bn, respectively.
We remain optimistic about Seplat Energy's prospects barring any significant plunge in crude oil prices. The company's recent investments, including 14 new oil wells that have boosted production across all revenue segments, and the recently approved full lifecycle field development plan (FDP) for the Sibiri oil discovery on OML 40, positions them well for sustained revenue growth. Furthermore, positive sentiment surrounds the potential approval of Seplat's acquisition of Exxon Mobil's share capital in Mobil Producing Nigeria Unlimited (MPNU). This acquisition is expected to significantly expand Seplat's production capacity and market share.
Considering these positive developments, we have revised our target price upwards to NGN 3,790.80, representing a compelling 12.49% upside potential from the current closing price of NGN 3,370 as of March 4th, 2024. Consequently, we maintain an Overweight rating on this stock.
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.