SEPLAT PLC FY'17 - Solid FY18 operations in view
SEPLAT’s FY’17 earnings showed strong performances across all line items, buoyed by continued militancy ceasefire in the Niger-DeTotal FY’17 hydrocarbon production rose 43% to 37k boed, slightly behind our 38k estimate, and translating to FY’17 revenue of $45 million (up 78% y/y). With stability maintained in Q4, FY’17 operating profit printed at $113 million (FY’16: $158 million loss), in line with our $112 million estimate. FY’17 PBT also turned positive to $45 million from a loss position in FY’16. However, the number came in 30% lower than our estimate due to higher than expected net finance charges. The biggest deviation in the full year numbers however came from the recognition of net tax credit of US$221 million in Q4, lifting reported net profit to $266 million (Vetiva: $33 million estimate).
Continued production stability and stronger oil price outlook (up 26% ytd) should see SEPLAT recover further from recent earnings slump. According to management, year-to-date (as at Feb 22) WI production stood at 55.9k boe (29.0k bpd, 161 MMscfd). Continued production stability and stronger oil price outlook (up 26% ytd) should see SEPLAT recover further from recent earnings slump. Overall, we raise our FY’18 hydrocarbon production forecast to 55.9k boe (Previous: 52.7k boe), largely on the back of higher gas volume. Overall, our FY’18 revenue is revised higher to $759 million (Previous: $730 million). With most of our erstwhile cost assumptions maintained, we forecast FY’18 operating profit at $304 million (Previous: $264 million).
At current NAFEX rate of NGN360.41/USD, our NAV translates to ₦977.22. Meanwhile, SEPLAT announced the launch of a 5 or 7 year U.S. dollar denominated Regulation S/144 A senior notes offering, the proceeds of which will be used to refinance existing debts and general corporate purposes. We would be on the lookout for pricing on the bond to unlock yet more value for equity holders.
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