Seplat Petroleum Development Company Plc has assured that its increasing revenue from gas, low oil price hedging and good cash standing will provide strong resilience to the current oil price volatility.
Speaking on the outlook for the business against the background of performance in the first quarter, Chief Executive Officer, Seplat Petroleum Development Company Plc , Mr. Austin Avuru said the company’s business was hedged against low oil prices while a significant proportion of its revenues now come from gas, which offers further protection from oil price volatility.
He noted that the company has low production costs and can remain profitable even at lower oil prices.
“We have significant cash resources available and will continue to manage our finances prudently in 2020, expecting now to invest $120 million of capital expenditure across the year, including two new gas wells and associated infrastructure,” Avuru said.
According to him, against the twin crises of significantly reduced oil demand and the price war, Seplat has continued to demonstrate its resilience because of its ongoing philosophy of prudent financial management, the careful mitigation of risk and a keen focus on managing factors of the business that are within our control.
He said the company has the benefit of long-term contracted gas revenues that are insulated from oil market volatility while it is achieving substantial cost reductions from its suppliers and managing its own costs even more carefully in this challenging period.
“We are in constant dialogue with partners on monies owed and are pleased to report that our cash flow remains robust and we have significant cash in reserve.
This, coupled with the majority of our debt repayment obligations extending beyond 2021, gives us confidence that we can continue to operate comfortably within the covenants on all lines of debt,” Avuru said.