H1:2024 Earnings Note |Seplat Energy - Profitability Surge Despite Margin Squeeze
In H1:2024, Seplat’s topline expanded by a remarkable 106.61% year-on-year (YoY) to NGN575.05bn, compared to a growth of 26.98% to NGN278.33bn in H1:2023. This exceptional performance was fueled by substantial growth in both crude oil (+99.88% YoY to NGN491.53bn) and gas (up 184.84% YoY to NGN83.52bn) gross earnings. Average production slowed down to 48,407 barrels of oil and equivalent per day (boepd) compared to 50,805 boepd in H1:2023. This decline was largely due to reduced output from two of the company's assets (OMLs 4, 38 & 41, and OPL 283), caused by delays in implementing the previous year's drilling program, which was intended to mitigate the effects of natural production declines in OMLs 4, 38 & 41.Nevertheless,, higher oil (USD85.55pb in H1:2024 vs USD79.54pb in H1:2023) and gas (USD2.95/Mscf in H1:2024 vs. USD2.87/Mscf in H1:2023) prices over the period supported the surge observed in total earnings.Based on these positive developments, we have raised our target price to NGN4,064.00, implying an 8.84% upside from the closing price of NGN3,730 on August 8, 2024. Consequently, we maintain an Overweight rating on the 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.