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Powering
Nigeria for
the future
Seplat Energy Plc
Annual Report and Accounts 2022
About us
Seplat Energy is Nigeria’s leading independent energy
company, dedicated to supplying a young and growing
population with a diverse range of energy products that
will power Nigeria’s future prosperity.
Driving a just
and affordable
energy transition
As Nigeria’s energy champion, we want to drive our
nation’s transition to sustainable and affordable energy,
harnessing its power to improve lives by transforming
the economy of Africa’s largest country.
Achieving a just and affordable transition is our priority.
We recognise that Nigeria will remain dependent on
oil revenues until its economy diversifies and other
sectors prosper. This diversification will be driven by the
transition from small-scale diesel and petrol generation
to large-scale gas-to-power grid energy that will
improve efficiency, drive cost reductions and allow
new businesses to emerge and contribute to national
prosperity and the wellbeing of Nigeria’s people.
In time, we will lead Nigeria towards the most sustainable
forms of energy, which will harness its abundant sunlight,
wind and the power of its rivers for the benefit of its
people and the natural world.
Our ambition is simple but bold: to supply sustainable
energy that will drive economic growth, create
a stronger society and provide opportunities for
all Nigerians to live healthy and prosperous lives.
seplatenergy.com
Driven by
our purpose
Deliver sustainable energy
solutions for society.
Nigeria’s economic development is hampered by poor access to
reliable and affordable energy, especially in rural areas that are beyond
the reach of gas and power infrastructure. The country’s dependence
on imported fuel creates a drain on economic resources as hard-earned
currency leaves Nigeria to keep millions of small-scale, inefficient and
polluting generators powering homes and businesses.
By providing accessible, reliable and sustainable energy, fuelled
by Nigeria’s abundant gas and renewable resources, we will drive
Nigeria’s social and economic prosperity now and in the future.
Strategic report
Highlights
Quick guide
At a glance
Proposed acquisition of MPNU
Chairman’s statement
What guides our work
Market opportunity
Chief Executive Officer’s interview
Strategy
Value creation
Key performance indicators
Additional performance metrics
Risk management
Principal risks and uncertainties
Operational review
Financial review
Stakeholder engagement
Governance report
Governance dashboard
Chairman’s overview
Board of Directors
Corporate governance report
Board Committee reports
Directors’ remuneration report
Statutory Audit Committee report
Report of the Directors
Statement of Directors’ responsibilities
Audit Committee report
Statement of Corporate Responsibility
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38
44
54
58
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129
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134
Financial statements
Independent Auditors’ report
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement of cash flows
Notes to the consolidated
financial statements
222
Separate financial statements
223
Separate statement of financial position
Separate statement of changes in equity 225
Separate statement of cash flows
227
Notes to the separate financial statements 228
138
139
136
Additional information
Payments to governments (unaudited)
Notice of 10th Annual General Meeting
Unclaimed dividend list
General information
Glossary of terms
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272
Highlights
Highlights
2022
Cash generation was strong as high oil prices offset
lower production in 2022, which was affected mainly
by the impacts of oil theft and downtime on our major
export routes, notably the Trans Forcados.
Financial performance
Despite a challenging year for the Nigerian oil and gas
industry, high oil prices supported our robust financial
performance, with revenues up 29.8% and strong cash
generation that fortified the balance sheet.
Read more
Page 54
$404.3m
$404.3m
$324.5m
$225.1m
$416.9m
$416.9m
$371.8m
$265.8m
$365.9m
Cash at bank
2022
2021
2020
Adjusted EBITDA*
2021
2020
2019
Net debt
2022
2021
2020
Revenue
2022
2021
2020
$951.8m
$951.8m
$733.2m
$530.5m
Production cost/boe
$10.3/boe
2022
2021
2020
Operating cash flow
2022
2021
2020
Dividend Per Share
10.3
9.9
8.9
$571.2m
$571.2m
$376.8m
$329.4m
USc15/sh
15
10
10
$365.9m
$426.1m
$439.7m
2022
2021
2020
* Adjusted for non-cash items including impairments, fair value adjustments, abandonment, and exchange loss.
2
Seplat Energy PlcAnnual Report and Accounts 2022
Operational performance
Volumes of exported oil were lower than the previous
year because of downtime on the Forcados export route
in the third quarter of the year.
Read more
Page 44
Liquids
production
2022
2021
2020
24,735 bopd
24,735
29,091
33,714
2022
2021
2020
Number of wells drilled
2022
2021
2020
2P Reserves
13
13
8
9
438 MMboe
438
457
499
23.9
23.9
36.6
39.9
Gas production
112.3 MMScfd
Carbon intensity from
operated assets (kg/boe)
2022
2021
2020
Production uptime
112.3
107.9
101
2022
2021
2020
63%
Lost Time Injury Frequency (LTIF)
0.12
2022
2021
2020
63%
2022
0.12
75%
83%
2021
2020
0
0
3
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Quick guide
Delivering energy
transition
Read how Seplat Energy executes
its strategy to lead Nigeria’s energy
transition through development
of its gas business and, in time,
renewable energies and power.
What guides our work
Chief Executive Officer’s interview
Strategy
Value creation
Key performance indicators
14
20
24
26
28
Governance and
risk management
drive performance
Read more
Page 8
Read more
Page 20
Read more
Page 18
Read more
Page 19
Read more
Page 24
4
Read more
Page 32
Read more
Page 34
Despite lower volumes resulting from significant disruption to major export routes, Seplat Energy’s financial performance was stronger than last year because of higher oil prices.How would you characterise the year for Seplat Energy? Two factors beyond our control had a major impact on our operating and financial performance during the year. Events in Ukraine drove global energy prices to unprecedented levels, and our average realised price was nearly $102 per barrel, up 44% on 2021. This helped to offset the decline in production particularly in Quarter 3 due to higher than expected interruptions to third-party export pipelines and terminals across our portfolio. As a result, although our average daily volume was 44,104 boepd, our revenues rose nearly 30% to $952 million. It is easy to see that this could have been significantly better, but for the problems on the export routes. With higher costs in 2022, EBITDA was impacted, up 12% to $417 million, and obviously, cost control will be a major focus for us in 2023. So financially we performed well, and I believe we will do better in 2023, even though the oil price has settled down at a lower level. Routes to market were a major challenge in 2022, what are you doing to diversify?The high oil price encouraged an increase in theft to levels that were very damaging to the Nigerian economy, and to oil producers such as Seplat Energy because of shut-ins caused by the theft. There were third-party infrastructure problems on our major routes from OMLs 4, 38, 41, and from OML 40, as well as our smaller assets in the east. The Forcados Oil Terminal (FOT) was unavailable for 146 days in the year, and the Trans Escravos Pipeline (TEP), which evacuates oil from OML 40, was unavailable for 135 days. The impact of acquiring MPNU from Exxon Mobil Corporation will be very significant, not just for Seplat but for Nigeria’s energy industry. It will create an even more robust indigenous Nigerian energy champion of considerable scale, enabling the company to attract further foreign investment into Nigeria to develop the assets we are acquiring, particularly the gas resource which is currently underutilised. A major advantage we have is that we have a dual listing on both the Nigerian Exchange and the London Stock Exchange, operating to globally acknowledged best practices in our financial reporting. Furthermore, both exchanges are driving improvements in environmental performance and ESG reporting, so all stakeholders can be assured that these assets will be managed with global levels of regulatory oversight, combined with high standards of operating performance and safety for which both Exxon and Seplat have strong reputations. This will give us a significant edge when it comes to raising the finance necessary to develop MPNU to its fullest potential. We’re very excited about the prospect of taking these assets on and developing them for the benefit of Nigeria, particularly the large undeveloped gas resource that needs to be unlocked and commercialised so it can help to drive Nigeria’s energy transition in the coming years. authorities. The President, His Excellency President Muhammadu Buhari, in his capacity as the Honourable Minister of Petroleum Resources, gave his approval in August, 2022 but we still await final approvals for it to go ahead. The Sales & Purchase Agreement (SPA)we signed remains valid and we are working towards a successful resolution that will confirm that our proposed acquisition can be completed, enabling us to work with the assets’ partner, NNPC Limited, to develop them for Nigeria’s benefit as a whole. Thankfully, the Amukpe-Escravos Pipeline, came onstream in July 2022 after many months of delays and it was vital in the second half of the year, during which time we exported 1.6 million barrels through it. It is now our main and most reliable export route from our major assets at OMLs 4, 38 and 41, and going into 2023 we have continued to export large volumes through it in preference to the Trans Forcados Pipeline. We are looking at an additional export route for those assets through the Warri Refinery Jetty, so we will be able to use any or all of three routes to get our oil to market in future. We are also looking at alternative routes from OML 40, where the partners are looking at the potential for using barges in the short term, but focusing on completing the pipeline from Gbetiokun to Adagbassa, from which we can then tie into an existing route to the coast. All these initiatives will help to diversify our export routes and thereby improve revenue assurance for our existing business, but the main diversification will come when we are able to complete the proposed acquisition of MPNU, which will add a much larger offshore asset base from which we will be able to export more securely. What progress did you make with the proposed acquisition of MPNU and how will this transform the business?The proposed transaction will significantly increase the scale of the business and diversify Seplat Energy to the extent that we will have a significant offshore business to complement our existing onshore business. We announced it in late February 2022, and we are still awaiting final approvals from government The Amukpe-Escravos Pipeline was vital in the second half of the year, during which time we exported 1.6 million barrels through it. It is now our main and most reliable export route from our major assets at OMLs 4, 38 and 41.”Roger Thompson Brown Chief Executive OfficerSupplying Nigeria’s energy needs2021Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Chief Executive Officer’s interviewBuild a Sustainable BusinessDeliver Energy TransitionA strategy for sustainable growth In 2022, as part of our goal to be Nigeria’s leading energy supplier we began to implement our strategic imperatives, namely to Build a Sustainable Business and Deliver Energy Transition. Drive social developmentMake a positive impact on communities through improved access to energy, opportunities for local employment and suppliers, and initiatives that foster entrepreneurship, education, health and resilience.Progress• In line with PIA requirements, we have established a Host Communities Development Trust and, working with our communities, will allocate 3% of our total budget to invest in social and community projects• Grown CSR initiatives year on year that focus on education, health, youth development and empowerment• In 2023, we plan to equip hospitals and schools in our communities with reliable power Risk overviewWorking with other industry players in the Niger Delta, we continued to put pressure on the government to find a lasting solution to social unrest in the region. To mitigate any occurrence of business disruptions from community agitations, we continue to ensure consistent delivery of our community Initiatives (as well as full compliance with the terms of the GMOU) across all operational areas. We are participating in all ongoing engagements with stakeholders including community leadership for a better understanding of the PIA mechanism. UpstreamDevelop our Upstream business by selectively expanding our asset base, optimising the gas/oil mix, increasing production, reducing costs and carbon intensity, and increasing revenue assurance by diversifying routes to market.Progress• Sibiri appraisal delivered promising results• Farm-in to Abiala marginal field• Alternative evacuation from OMLs 4, 38 and 41, the AEP route operational in July• Improved uptime and losses • Developing other export routes• Higher availability of Oben and Amukpe compressors reduce from AEP AG gas flared by 18% and 40% respectively• 13 wells delivered in 2022Risk overviewWe focus on expanding our asset base through a clear exploration programme with an exploration objective in place to drill at least one exploration well each year with significant finds, as well as embarking on a continuous M&A programme to secure available opportunities at the right price. In order to increase production and revenue, we continue to ensure operability and availability of production facilities due to asset integrity issues. A key mitigation against problems is the inclusion of a maintainability and operability philosophy in engineering design stage.Focus on environmental care & reportingMinimise our impact on local and global environments, drive improvements where possible, commit to global standards and transparently report our progress.Progress• Implementing roadmap to eliminate all routine flaring by 2024• Deployment of the Noobyia GHG Management Tool to track emissions and improve on our GHG reporting• First TCFD report, embarked on programme to address its recommendations• Seplat received ISO 55001 certification• Commenced ISO 14001 accreditation• Signatory to the United Nations Global Compact initiative, since 2021Risk overviewWe recognise that as an oil and gas producer operating in the Niger Delta, our business faces significant risks from climate change. As such an important focus of 2022 has been to oversee the upgrading of climate-related risk as a principal risk within our risk management framework. In order to mitigate the risk of environmental impact due to spill, improper waste management, produced water and fresh water management, gas flaring, air emissions, we have enhanced our environmental compliance monitoring and asset integrity management.Midstream GasDevelopment of Nigeria’s gas resources to accelerate the replacement of diesel and biomass and support economic growth through the supply of reliable, low cost energy. Gas-to-power provides baseload electricity to support renewables.Progress• Signed GSAs with three new customers for combined 86 MMscfd offtake• Achieved 95% mechanical completion of the AGPC Plant• 60% project completion for the 85 MMscfd Sapele Gas Plant• AG compressors installed and will capture otherwise flared gas to processing and sell• Plan to unlock value by spinning out gas business in line with PIA provisionsRisk overviewWe continued to align our business to the new strategy that was announced in mid-2021, advancing the development of the Midstream Gas business and making the necessary decisions to realise the separation of the Gas business from the Upstream business. As a mitigation strategy, we focus on portfolio expansion strategy to diversify our current portfolio, through integrated long-term planning for the gas and future power and renewables business. The completion of the ANOH Gas Processing Plant will establish Seplat Energy as major player in the midstream gas business. Maximise returns for all stakeholdersManage our finances prudently, pay our share of taxes and royalties, service debt, invest for the future, and return dividends to shareholders.Progress• Ended 2022 with $404 million cash at bank, $366 million net debt, well within covenants• $140 million deposits for acquisitions (MPNU and Abiala)• Net debt/EBITDA of 0.88x• Paid $177 million in royalties and $57 million in taxes to government• Seplat has paid steady dividends to shareholders over the past few years, and has paid $476 million dividendsRisk overviewOur estimated proved reserve, revenue, operating cash flows and margins, liquidity, and future earnings are all impacted by the volatility of crude oil, and natural gas prices, as well as established prices emanating from the other products derived from the strategic energy mix. Our risk management strategy is to protect ourselves against adverse oil price movements through our oil price hedging policy, which targets hedging six months in advance via out-of-the-money puts. Also, to mitigate JV relationship risk, we continue to manage our JV relationships very closely. New EnergyAchieve a world-class capability in renewable energies, through the development or acquisition of new skillsets that open up new and profitable markets.Progress• Finalised Power & New Energy Investment Plan, identifying opportunities for FID consideration in 2023• Pursuing carbon offset possibilities on a wide range of emission reduction activities in various global carbon marketsRisk overviewWe developed a long-term business plan for the New Energy Business. These initiatives will drive long-term prosperity for Seplat Energy as we diversify and transition towards producing energy in multiple forms, and for a much wider customer base both at home and abroad. We have identified numerous business opportunities in power and new energy and will carefully consider these in advance of a final investment decision, subject to them meeting financial and technical requirements. INTEGRITYPARTNERSHIPAMBITIONAGILITY UNDERPINNED BY:SAFETYSAFETYIncrease access to energyReduce emissionsTransform the economyOverall strategic results:ENABLED BY STRONG GOVERNANCE2425Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Strategy16,384-11,8764,508-9523,556-3093,247-7092,538InstalledcapacityNon-availablecapacityAvailablecapacityNon-operationalcapacityOperationalcapacityTransmissionlossesCapacitytransmittedDistribution andcommercial lossesCapacitydistributedSource: Nigerian Electricity Regulatory Commission, Q2 2022.Source: Nigeria Power Baseline Report41%27%10%9%8%5%Market overviewWith a population of 200 million projected to double by 2050, improving access to affordable, reliable and sustainable energy is Nigeria’s most important imperative. At present, only an estimated 57% of Nigerians have access to electricity, meaning there is significant potential for growth just to serve our existing population, let alone a future population that could be twice as large as today. Fortunately, Nigeria is endowed with abundant hydrocarbon resources that are close to major population centres, with well-proven geology being tapped by a long-established industry, supported by good infrastructure and regulatory and fiscal regimes. Furthermore, Nigeria is also blessed with plentiful sunshine, especially in the North where gas and electrical grid infrastructure is scarce, as well as great potential for wind and hydro-electric development. But there are impediments. The national grid is undeveloped, power blackouts are frequent, and of a potential 12GW installed generating capacity, it is estimated that as little as 2-3GW actually reaches the customer. Of those with access to electricity, most are reliant on small-scale, inefficient and expensive diesel or petrol generators, resulting in the world’s highest cost of energy in the world at 49 cents per kWh.In addition, some 80% of Nigeria’s total energy use is biomass for cooking, which creates significant problems of deforestation, land erosion, particulate pollution and associated deaths and health problems. Nigeria’s energy transition imperative offers significant opportunities for Seplat Energy: develop gas-to-power to improve energy access; develop LPG markets to alleviate use of biomass; and develop renewable energy to serve large areas of the country not currently served by the national electricity grid. Nigeria represents a huge market opportunity for Seplat Energy, both in today’s hydrocarbon-based economy, and in the lower-carbon, renewable world of the future.Supplying power for Africa’s largest future energy marketNIGERIA’S ABUNDANT ENERGY RESOURCES Crude Oil Reserves (Source: NUPRC)37.05bnReserves remaining without addition (Source: NUPRC)60 YearsAverage National Daily Production 2022(Source: NUPRC)1.14 mbopdEstimated gas reserves (Source: NMDPRA)209.5 TcfCurrent gas requirement for the power sector (Source: NMDPRA)2.32 Bcfd2055 3774042050 35020452040203520302025 321 292 263 235Source: UN Population Division, World Population Prospects, 2022A LAND OF OPPORTUNITY…Nigeria’s power infrastructure challengeNigeria’s power system suffers an imbalance between generation and consumption. Across the value chain, from power generation to transmission and distribution to the end user, infrastructure deficit is a major challenge that has affected Nigeria’s grid electricity supply. Severe bottlenecks mean that power stations are not operating optimally, distribution is inefficient and energy losses are high, even before companies attempt to bill customers and collect payments. Population• Africa’s largest population, with more than 200 million people and growing rapidly• Currently seventh largest, will be the world’s third largest country in 2050 and second largest democracy• More children are born every day in Nigeria than in the whole of EuropeEstimated growth in Nigeria’s population (millions)2027 8369452026 738202520242023202220212020 651 574 504 442 429Source: IMF Regional Economic Outlook, October 2022Nigeria’s use of gasThe chart reveals the unfortunate fact that Nigeria’s abundant gas resource is not being used efficiently. Although some 41% of gas is exported, generating valuable foreign currency, more gas is wastefully flared than used for power generation in Nigeria. EconomyIn its World Economic Outlook, published in October 2022, the International Monetary Fund predicted that Nigeria’s economy would double in size between 2020 and 2027 (constant prices, US dollars). Growth in Nigeria’s GDP (US$bn) Exports41% Reinjection27% Flared10% Power generation9% Producer use8% Industry5%Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 591617Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Market opportunity1601402502001501005001001208060204002013201420152016201720182019202020222021Volumes (MMScfd) (LH)Revenue (RH)Gas volumes and revenue123456 Increase gas supply for energy generation, displacing small-scale diesel and petrol generators1Electricity supply becomes cheaper and more reliable, increasing adoption2Householders and businesses save money, which they can spend on other economically productive uses3Demand for reliable energy increases, driving energy investment to meet future demand6GDP, business profitability and domestic wealth improve, with positive impacts on lifespan4Business and homes increase energy use, e.g. for cooling 5Energy access will drive Nigeria’s developmentIncreasing access to energy is a priority for Nigeria’s economic and social growth – and for Seplat Energy. As with any infrastructure build-out, improving energy distribution will have multiplier effects on the economy that will inevitably feed back into greater demand for energy. Our aim is to support this growth by becoming a major supplier of affordable, reliable and sustainable energy to our nation’s rapidly growing population.Impediments • High cost of energy (74c/kWh) because most power is generated by inefficient, small-scale diesel and petrol generators that create significant economic drain as well as CO2 and particulate pollution• Low access to energy (57%) because of lack of grid infrastructure, especially in rural areas• Despite around 12.5GW installed capacity, only 2-3GW reaches customers because of losses and inefficiencies• 80% of energy use is biomass for cookingNigeria’s energy transition imperativeIncrease energy access to achieve universal coverage and drive social and economic developmentAchieve a Just and Affordable Transition using Nigeria’s gas resources to replace imported generator fuels, thereby reducing economic burden, improving GDP and reversing FX drain Increase use of renewables to exploit abundant sunlight, wind and hydro resources Achieve net zero emissions by 2060 and reduce particulate pollution from diesel and biomass Transition cooking from firewood to gas or electricity, to reduce deforestation and particulate pollution and free women from firewood collectionThe greatest business opportunity ahead of us is to supply the right mix of energy to support Nigeria’s growth.Addressing Nigeria’s demands for reliable energyNigeria has one of the lowest rates of electrification in the world and among the lowest per capita consumption of electricity. Most electrical power is provided by small-scale, inefficient and polluting petrol and diesel generators. At Seplat Energy, we are committed to displacing these generators with large-scale gas-to-power projects and to leading the country’s deployment of renewable energy technologies. Gas contribution to volumes in 2022 (boepd)44%Gas contribution to revenues in 202211.8%Average daily gas sales volume in 2022112.3 MMscfd100805540424870718486906020400NigeriaTanzaniaUgandaSSASenegalKenyaSouthAfricaGhanaWorld1,5001,3211,1348714804462972212132101931,0005000RussiaIranQatarTurkmenistanUnited StatesChinaVenezuelaSaudi ArabiaUAENigeriaAccess to electricity (%)Proven Gas Reserves (Tcf)Source:OPECSource:World Bank18Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 5919Seplat Energy PlcAnnual Report and Accounts 2022Market | continuedProtecting our businessStrong and effective risk management is central to how we run our business and enables the delivery of our strategy.Managing risk and protecting our businessRisk management is an integral part of all business activities of Seplat Energy. The Company’s Risk Management Policy is focused on: the identification of existing risks and future risks that might be encountered while pursuing its strategy, corporate objectives, and annual business plans; quantifying their possible impacts on the business; and developing measures that can be implemented to mitigate the identified risks so that Seplat Energy can continue to operate safely and effectively. Seplat Energy recognises that risk management is a continuous journey of improvement and not a destination and will continue to develop its risk management processes to ensure the Company is fully equipped to deal with the constantly evolving operating and business environment of the Energy sector.Our risk management systemThe Company’s risk management system is based on guidelines provided in ISO 31000, the international standard for risk management. The system is built on a top-down and bottom-up approach, with the Board of Directors (Board) determining the appropriate risk appetite necessary to achieve the Company’s corporate objectives, while our Business Units identify and mitigate risks at the unit and asset levels.The Risk Management and HSSE Committee assists the Board in overseeing the Company’s risk management framework and the risk/reward strategy as determined by the Board. The Committee ensures that the Company has an adequate risk management system in place to manage the diverse and changing risks and opportunities faced by the Company as it creates value for shareholders. It meets at least four times a year to analyse and evaluate the Company’s key risk profiles, proposed mitigation strategies, mitigation actions taken by management, and any residual risk exposures. The meetings are attended by Executive Directors who have accountability for ensuring that risk identification is comprehensive and proposing mitigating measures that are effective in achieving the desired objectives. Reports on the Company’s corporate risk register, key risk exposures in the business operations, and reviews of its risk management systems are compiled and presented to the Board of Directors.While key risks and associated risk appetites are determined at the top, the business units and functional managers are accountable for the respective risks within their areas. The Company’s enterprise risk management (ERM) system, coordinated by the Head, Enterprise Risk Management and overseen by the Board Risk Management and HSSE Committee, supports risk management across the business and functions. The Company’s ERM system includes robust risk identification, assessment, reporting, and monitoring mechanisms and approaches that include maintenance of both enterprise and functional/operational levels risk registers, risk dashboards, mitigation actions monitoring/tracking, and risk reporting. In a bid to continually embed risk management across the business and functions, the Company utilises specially appointed and trained Risk Champions to ensure common methodology, language, and approach in the way risks are managed across the business.The Internal Audit unit undertakes periodic audits of the various business units including the Company’s corporate governance systems and risk management processes. Key principles that underpin the Company’s risk management framework and system:• Strong focus on safety throughout the organisation.• Close oversight by senior management in day-to-day business operations.• Risk owners throughout the business.• Accountability of staff and/or key personnel.• Regular and timely reporting.• Clear line of sight on the system of internal controls.• Monitoring and independent reviews.Activities in 2022Our risk landscape remained largely stable concerning existing exposures noted in our last update in 2021, although we recorded a few noteworthy changes detailed in this report. As the global Covid-19 pandemic receded during 2022, we experienced a decrease in infection rate across the Company’s operations, with zero positive tests returned in the final quarter. Following global and local trends, we adopted a de-escalation strategy that aligns with the directives of Nigeria’s Federal Government.We continued to align our business to the new strategy that was announced in mid-2021, advancing the development of the Pillar 2 Midstream Gas business and making the necessary decisions to realise the spin-off of the gas business from the Pillar 1 Upstream business. Also, the Power & New Energy team developed a long-term business plan for the Pillar 3 Power & New Energy Business. Both initiatives will drive long-term prosperity for Seplat Energy as we diversify and transition towards producing energy in multiple forms, and for a much wider customer base both at home and abroad.We achieved the ISO 55001:2014 Standard (Asset Management System) certification, becoming the first energy company in Africa to achieve this remarkable feat. ISO 55001 is the international standard that helps organisations to manage their assets and optimise asset lifetime value. The certification will deliver benefits both now and in the future by helping to improve the Company's bottom line, reduce risks across the organisation, improve asset performance, and ultimately improve investors' confidence in how Seplat Energy manages its assets. The ISO 55001:2014 standard is a holistic business improvement tool that applies to many organisations in many different sectors. On project delivery, we commissioned the Amukpe-Escravos Pipeline in July, which helped to increase export volumes significantly in the final months of the year, compared to Q3 when our usual export routes were severely impaired, significantly impacting output for the year. In addition, the Sapele AG compressor project was completed, which will contribute to a reduction in our routine gas flares.We continue to focus on completing the ANOH Gas Processing Plant and the Sapele Gas Plant upgrade. These are strategic projects essential for Seplat Energy to demonstrate its commitment to Nigeria’s energy transition and to reduce emissions through our Flares Out programme.As the Russia-Ukraine crisis continues to disrupt global energy markets, we see a surge in prices across a broader set of energy-related commodities. The benchmark price of oil (Brent) continued to remain high, closing the year above $80/bbl and peaking at $139/bbl in March 2022. However, as we look ahead, we continue to focus on the matters we can control, drive down capital and operating costs and drive-up efficiencies. Overall, in 2022, the Committee analysed and evaluated the various key risk exposures for the Company. In doing so, the Corporate Risk Register was reviewed, and the risk reports were presented by management. These reports detail the key risks, the potential impact of the risks, and the likelihood of occurrence. Mitigating strategies were comprehensively considered, including but not limited to those related to climate-related risks, export line breaches and crude evacuation, stability in the Niger Delta, oil price volatility, and strategic project delivery. Other risks considered are Government and JV relations management, liquidity, geopolitical, environmental, market, contractual, and litigation risks. The status and effectiveness of mitigation actions were reviewed, and any residual gaps or follow-up actions were identified. Key performance indicators as well as other risk indicators and trends were monitored. Key risks requiring risk tolerance considerations and strategic actions were presented to and debated by the Board.The Committee reviewed the risk management systems including the risk dashboard and assessment tables. In line with keeping the risk management framework dynamic and up-to-date with current realities, a review of the Company’s Enterprise Risk Management framework was conducted by an independent consultant (Ernst & Young), to ensure the continued effectiveness of the framework. The Committee also gave further consideration to the achievements made by the Risk Champions appointed with a view to unifying risk management approaches and embedding risk culture across the organisation.Our risk management framework ISO 31000 based, top-down and bottom-up approachBello Rabiu Chairman, Risk Management and HSSE CommitteeBoard of Directors Company strategy | Risk appetite | Strategic risks oversightRisk identification, monitoring, mitigation action implementation and monitoring are bottom-up from assets, projects and function levelsRisk Management and HSSE Committee of the Board• Approves and updates risk management policy and system• Defines risk appetite• Oversees and monitors enterprise risksExecutive ManagementDelivery of Company strategy | Identify key risks against the achievement of strategy | Proffer and deploy actions and controls to address key risks | Monitor enterprise risksRisk Management TeamCoordinates enterprise risk management activities | Articulates and updates risk management policy and system | Risk identification, assessment, quantification and rating | Risk reporting and monitoring | Enterprise risk register and dashboard | Risk Champion activitiesInternal Audit• Independent assurance • Reports to Audit and Finance committees of the BoardBusiness UnitsBusiness objectives | Risk identification, assessment and rating | Mitigation actions and controls | Monitor risks and mitigation actions | Report risks and mitigation actions statusDuring the year, Seplat Energy took the opportunity to review its strategy and align it with the imperatives of the energy transition agenda.”3233Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Risk managementHigh-profile risks and uncertainties24Geo-political risk During 2022, we recorded no incidents resulting from geo-political activities such as terrorism and secessionist agitation. As a mitigation strategy, we continued to monitor Niger Delta geo-political developments and issued regular reports to management, partnering with security stakeholders in the sharing of intelligence regarding security. Also, concerning changes in regulation and policies, we kept a strong focus on understanding the impact of the new PIA (Petroleum Industry Act), especially as it touches on the inclusion of impacted communities, which well could serve as a driver for community agitation from our immediate host communities. Accordingly, we are participating in all ongoing engagements with stakeholders including community leadership for a better understanding of the PIA mechanism.1 Climate-Related RisksAn important focus in 2022 has been to oversee the upgrading of climate-related risk as a key (or principal) risk within our risk management framework. We recognise that as an oil and gas producer operating in the Niger Delta, our business faces significant risks from climate change. By implementing best practices, our processes for identifying and assessing climate-related risks are built on our increasing awareness of the nature of these risks. Between May and July 2022, the Enterprise Risk Management team led a series of risk workshops to carry out a fundamental reassessment of the Company’s approach to climate-related risk. The workshops brought together a multi-disciplinary team to:a) identify and assess the risks under each of the categories recommended by the Task Force on Climate-related Financial Disclosures (TCFD);b) assign a risk rating to each of the categories of risk using the Seplat 5x5 Risk Assessment framework; andc) consider how these risks can be managed and mitigated.In running the risk assessment, climate-related risks were considered under two broad headings: physical risk and transition risk. Physical risk can be divided into two types: acute risks from increased severity of extreme weather events such as storms and floods and increased incidence of wildfires and other climate-related emergencies; and chronic risks from changes in precipitation patterns, extreme variability in weather, rising temperatures, rising sea levels and increased incidence and intensity of droughts. Transition risk, the actual and potential impacts of risks associated with the energy transition on our business, strategy, and financial planning, are generally considered under four headings suggested by the TCFD: Policy and Legal, Technology, Market, and Reputation. This is the approach we have taken in carrying out our climate risk assessment. The key measures identified as necessary to manage and mitigate climate-related risk reflect the core elements of our overall corporate strategy: decarbonising our operations and diversifying our business into lower-carbon and renewable energy products. The physical and transition risks we have identified, our assessment of their impacts on the Company, actions being taken to mitigate these risks, as well as full details of the company’s climate change agenda can be found in our Sustainability Report and our Climate Risk and Resilience Report.Niger Delta stability/extended production shut-in due to third-party infrastructure downtime, and geo-political risk Seplat Energy’s core operations are located in the Niger Delta region of Nigeria and that comes with significant risks. Historically, the Niger Delta has always been a high-risk environment. Cases of militancy, crude oil theft, pipeline vandalism, environmental pollution arising from illegal bunkering activities, and other lawless activities are rife in the region. During the year 2022, the business recorded zero occurrences of militancy activities, similar to the previous year 2021. Accordingly, the Trans Forcados export system (a major export route for Seplat) remained operational throughout the year. The Company, working with other industry players in the region, continued to put pressure on the government to find a lasting solution to Niger Delta restiveness; also, the current security measures put in place by the facility operator, consolidated with the government’s strategy of dialogue with stakeholders in the region seems to be working.Concerning extended production shut-ins, efforts aimed at mitigating the risk proved successful with the second major export line, AEP, coming on stream during the second half of the year. In addition to the Forcados and AEP export systems in the West, we developed a production plan that proved successful with various activities that enhanced production capacity, resulting in production delivery within the limits of the communicated market guidance. We continue to progress commercial arrangements for additional crude evacuation from our main assets both in the East and in the West.3Low oil price environmentSeplat Energy’s operating results are highly dependent on the prices of crude oil, and natural gas. Our estimated proved reserve, revenue, operating cash flows and margins, liquidity, and future earnings are all impacted by the volatility of crude oil, and natural gas prices, as well as established prices emanating from the other products derived from the strategic energy mix. Seplat’s risk management strategy is to protect itself against adverse oil price movements through our oil price hedging policy, which targets hedging ca. six months in advance via out-of-the-money puts (i.e., “disaster protection insurance”). During the year, the volume of put protection was 7.5 MMbbls at an average strike price of $56/bbl. Our long-term natural gas contracts have escalation clauses that protect us against a severe price decline.Highlighted below are the high-profile risks that the Company dealt with in 2022 and will continue to monitor going into 2023....we continued to monitor Niger Delta geo-political developments and issued regular reports to management, partnering with security stakeholders in the sharing of intelligence regarding security.”3435Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Risk management | continuedPotential to developSignificant upsideOso Area2,309 Bscf + 528 Bscf 2P (gross)Yoho Area1,240 Bscf (gross)EAP Area3,727 Bscf (gross)Dedicated export routesWe believe there is great potential to develop a significant gas resource of 2,910 Bscf (W.I.) using existing infrastructure (see map and charts). The addition of MPNU will substantially increase Seplat Energy’s production from our 2022 volume of 44.1 kboepd. MPNU’s W.I. production in 2020 (latest available figures)was 95 kboepd, from well managed shallow water assets.MPNU operates its own dedicated export infrastructure, which includes the Qua Iboe Terminal and Bonny River Terminal. Potential to develop 7+ TSCF GROSS5281,1101,1997464945493,178Enhancing our portfolioA strategic acquisition that will significantly enhance Seplat Energy’s portfolio by adding well-managed offshore assets with dedicated export infrastructure and substantial hydrocarbon reserves.MPNU working interest production, 202095 kboepd2P W.I. liquids reserves, 2020 409 MMbbl2P W.I. gas reserve, 2020 211 BscfMPNU staff and contractors 1,000Potential W.I. gas resource, 2020 2,910 Bscf Associated Gas Non-Associated Gas 2P Reserves 89Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 599Proposed acquisition of MPNUStrategic rationaleMPNU operates and is the 40% owner of four shallow water assets: OMLs 67, 68, 70 and 104. It also owns the Qua Iboe Terminal, one of Nigeria’s largest export facilities, and a 51% interest in Bonny River Terminal, and Natural Gas Liquids Recovery plants at EAP and Oso. We will become one of the largest independent energy companies on the Nigerian Exchange and London Stock Exchange, thereby strengthening our market position and ability to drive growth, profitability and prosperity for all our stakeholders, including Nigeria itself. Balanced portfolioAdding these MPNU assets and their dedicated infrastructure will significantly increase our scale in the Nigerian energy industry, diversifying the business in favour of offshore assets with more secure export routes. Our existing onshore business, from which our Western Assets (OML 4, 38, and 41) produce most of our revenues, will be augmented by a substantially larger reserve and production base offshore. Furthermore, MPNU’s dedicated export infrastructure will provide additional assurance against the kinds of disruptions we have experienced at the Western Assets, which until the advent of the Amukpe-Escravos Pipeline, were reliant on the Trans Forcados Pipeline and Forcados Oil Terminal. The result for shareholders will be higher profitability from increased production and greater reliability of exports. A transformational acquisitionOn 25 February 2022 we announced that we had entered into a Sale & Purchase Agreement (SPA) to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) for a consideration of $1.283 billion, plus up to $300 million contingent consideration, subject to adjustments at closing. The proposed acquisition will deliver significant value for shareholders, substantially increasing Seplat Energy’s oil and gas reserves and production, while diversifying its operations offshore, where there is more secure, dedicated export infrastructure. In addition, Seplat Energy will benefit from the experience of a highly skilled local operating team and a track record of safe operations. As of early March 2023, we await the necessary approvals from the Federal Government and continue to work with all relevant stakeholders to achieve completion. Seplat Energy PlcAnnual Report and Accounts 2022 Rising to challenges
Higher global oil prices offset the impact
of prolonged outages at Nigeria’s key
Forcados export route, which affected
Seplat Energy’s oil exports in the third
quarter of 2022. However, the long-awaited
Amukpe-Escravos Pipeline finally came
onstream to provide an alternative export
route for our key assets.
Our strategy is enabled by
strong corporate governance
and risk management, and
built upon the values of
safety, integrity, partnership,
ambition and agility.
Market
Risk management
Principal risks and uncertainties
Stakeholder engagement
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Upstream performance review
Midstream Gas performance review
Financial review
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•We rolled out a Company-wide engagement survey to feel the general pulse of the organisation. The survey was designed to examine the connection employees feel with their work, team and the Company, and the factors that influence it. •We held focused group sessions with all teams to further contextualise the report from the engagement survey with the aim to localise solutions to further improve overall engagement. •We maintain a constructive and ongoing dialogue with our staff through regular employee-led forums, CEO town halls and Q&A sessions, as well as the group intranet, social media channels, webinars and face-to-face meetings. •The Chairman, Chief Executive Officer, Chief Financial Officer, Vice President of Finance and Head of Investor Relations each met regularly with investors over the course of the year. A variety of topics were discussed with the investors and their views were conveyed to the Board. •Throughout the year, the CEO met virtually or in person with investors to discuss strategy and business performance, after the full year results and half year results. •In line with the JOA provisions, statutory meetings were held with partners (i.e., SUBCOM, TECOM and OPCOM). In addition, monthly review meetings were held with partners at the frontline levels and the CEO engaged the partner leadership at the Quarterly Management Review (QMR) sessions. •Annual engagement with NUPRC (formerly DPR) to present yearly work programme/budget and biannual operations review meetings. •Engagements held via virtual sessions and some onsite workshops. •There were two major supplier engagements held in the year. •Annual Seplat Energy Vendors’ forum held physically at two Locations (Lagos and Sapele) in November 2022 themed ‘The New Normal: Sustainability, Digital Transformation and Energy Transition’. The Base Manager and Community Relations Team held several seminars with various groups as follows: •Petroleum Industry Act 2021 (PIA) implementation related engagement with the CDC Forums, host community leaders, traditional rulers, government ministries to address various concerns and the PIA implementation expectations and GMOU transition. •Freedom to Operate (FTO) related discussions to enable vendors to carry out various operation activities and projects without hindrance. •Project pre-bid and kick-off meetings to discuss project details, ensure all parties’ readiness, health and safety and community benefits are fulfilled and general management of all stakeholders and for a hitch-free implementation phase. 88%Response rate to employee engagement surveysWorkforce337 Number of meetings held in the yearShareholdersand investors95%cost recovery from partners Nigerian Government and partners1,500vendors attended the Seplat Vendor Forum, 50% more than 2021 Suppliers and contractors113potentially disruptive incidents averted Host communities •Calibration and reward system •Compensation and benefit reviews •Future of Work •Job security •Consequence management •Uniform application of policies and procedures •Women’s representation in top management •Leadership transition •Energy transition and net zero targets •ESG performance •M&A opportunities •Capital allocation •Demonstrate compliance with regulatory requirements, licence conditions and Joint Operating Agreement (JOA). •Maintenance of a harmonious relationship with partners and regulators to ensure business objectives are met. •Drive an efficient cost recovery process. •Ensure adequate funding for capital projects e.g. ANOH Gas Processing Plant, Sapele Gas Plant, Alternative evacuation •Vendor capability •Performance reviews •Improved tendering process •Brand and corporate vision •Digital transformation •Strategic relationships •Employment opportunities. •Improvement in benefits for certain category of community employees. •Increasing contracting and procurement opportunities for community indigene vendors. •Addressing disagreements among community representatives. •Annual contributions to the applicable host communities’ development trust funds for OMLs, 4, 38 and 41. •Impact of projects on communities. •Community content. •Opportunities for community employment. •Land acquisition and adequate benefits. •We provided an Employee Assistance Program that supports the overall mental wellbeing of employees. •Increased D&I focus, held Company-wide diversity and inclusion awareness sessions to upskill managers on key diversity metrics. •Company-wide Standardised Competence Assessment roll-out. •100% implementation of the 2022 Training Plan. •Roll-out of FoW project and initiated implementation of recommendations – one day work-from-home pilot launched. •Operationalised the Aberdeen Learning Centre. •We established a crèche within our premises to ensure that parents of young babies have access to quality childcare while at work. •We awarded recognition bonuses through the year to frontline colleagues to further embed excellence across the Company. •We continue a programme of regular engagement with investors, analysts, lenders and others, providing updates on our performance. We also take their feedback. •We continue to drive 100% compliance with all statutory regulations to ensure business continuity. •We strive to maintain a cordial relationship with our partners and regulators to ensure the Company’s business objectives are met. •We support the operations of the business to enable optimal value creation for all critical stakeholders of the business – our investors, partners, government, communities and employees. •We are in constant dialogue with our suppliers and contractors to define expectations and to ensure mutually acceptable terms and conditions for continued partnership in a sustainable way. •We will continue to proactively engage with the stakeholders in our communities and focus our activities on content from community discussions. •We will continue to promote our grievances management and peace building workshops and implement sustainable youth programmes and community development projects. •We plan to apply ISO 26000:2010 standards from 2023 in support of our commitment to operating in a socially responsible way. StakeholderEngagement methodKey messagesOur response •The CEO hosted quarterly town hall events, which included open Q&A sessions throughout the year, as well as small group discussions, and took feedback through an anonymous survey and the Vault app. •We held quarterly Joint Consultative Committee (JCC) meetings. JCC is a platform used to discuss and address all staff welfare issues, and also share knowledge on the Company’s business performance. •The CFO hosted regular meetings with lending banks and bondholders as part of our funding and refinancing discussion. •The Chairman hosted a virtual Annual General Meeting which was also attended by the Directors. •Quarterly contract/performance reviews with NCDMB and submission of Project Performance Reports and other statutory reports. •In addition to the above, the Company held Contract Performance Reviews (CPR) with strategic contractors to sustain relationships and ensure an enabling environment to deliver on business goals. •Planned/ad hoc meetings to seek communities’ views and inputs during drilling/project planning, mobilisation, commencement of certain contracting processes as well as demobilisation activities. •For land acquisition including negotiation, document execution and crops and land compensation payment discussions. •Grievance and conflict management meetings to address concerns and threats from communities and other local communities-based stakeholders. •Capacity building, educational assistance, and community infrastructural development routes and intentional environmentally focused projects. •Both parties harmoniously agreeing on strategic social investments for the communities with the resulting Freedom to Operate (FTO). •Drive awareness of Nigerian content across Seplat Energy operations in order to support development of local talent and capacity. •Peaceful coexistence of communities. •Respect for community constitution. •Respect for surviving GMoU provisions/terms. •Explanation of Seplat processes and standards including industry standards, regulatory requirements, statutory obligations. •Explanation of Seplat governance processes. •Recruitment, contracting and procurement and community development projects plan. •Conflict prevention and peace building. Maintaining good relationships with all our stakeholders •Supplier engagement and development •Sustainability •Compliance with regulatory/statutory requirements •2021 full year results and 2022 quarterly operational and financial performance. •Board independence and other Governance matters. •Project delivery. Seplat Energy’s continuing success depends on many different stakeholders, including employees, suppliers and local communities. We recognise the importance of regular engagement with all our stakeholder groups and adopt the most appropriate channels for each.5859Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Stakeholder engagement2P reserves at 31/12/20222P reserves at 31/12/2021LiquidsGasTotal3 LiquidsGasTotalSeplat %MMbblBscfMMboeMMbblBscfMMboeOMLs 4, 38 & 41 45%138 629 246 144 651 256 OPL 283 40%4 61 15 5 68 17 OML 53 40%39 653 152 39 660 153 OML 55 Fin. interest3 – 3 4 – 4 OML 40145%22 – 22 25 – 25 Ubima2 82%– – – 2 – 2 Total206 1,343 438 219 1,379 457 1. Eland has a 45% working interest in OML40 until the Westport loan is fully repaid in accordance with the loan agreement, reverting to 20.25%.2. Eland had an 82% working interest in the Ubima marginal field.3. Quantities of oil equivalent are calculated using a gas-to-oil conversion factor of 5,800 scf of gas per barrel of oil equivalent. 2C resources at 31/12/20222C resources at 31/12/2021Liquids(1)GasTotalLiquidsGasTotalSeplat %MMbblBscfMMboeMMbblBscfMMboeOMLs 4, 38 & 4145%31 124 52 28 162 56 OPL 28340%7 24 11 4 21 8 OML 5340%3 11 5 4 14 6 OML 4045%2 0 2 3 0 3 Ubima82%– – – 2 0 2 Total43 159 70 41 197 75 1. Abiala has not been included in 2C resources because the farm in agreement had not been concluded at the time of closure of the reserves audit. Bonny BrassOhaji SouthJisikeOmereluIheomaOdinmaEmeabiamAlaomaOwuOwerriOroghoOkporhuruObenOkwefeSapeleUbalemeOkoporoOvhorMosogarAmukpeOML 38OML 4OML 41Umuseti (Pillar)Igbuku (Pillar)OML 53BonnyPort HarcourtNembeIndaKeBelemaSokuDamaRobert KiriAkasoKrakamaOML 55OPL 283OnitshaOML 40ABIALA ForcadosWarri EscravosSibiriOpuamaGbetiokunPoloboReserves and resourcesUpstream business performance Seplat’s current portfolio comprises direct interests in seven oil and gas blocks and a revenue interest in one block, all of which are located in onshore land and swamp areas of the Niger Delta. This portfolio provides the Group with a robust platform of oil and gas reserves and production capacity, as well as material upside opportunities to add reserves through future development. Samson EzugworieChief Operations Officer Operating review2P ReservesThe Group’s audited 2P reserves, as assessed independently by Ryder Scott Company, L.P., decreased by 19 MMboe from 457 MMboe at the end of 2021 to 438 MMboe at the end of 2022. The change is mostly due to production of 9 MMbbls of liquids and 41.0 Bscf of gas (7 MMboe). The divestment of Ubima, the discovery at Sibiri, and reclassifications and revisions of previous estimates makes up the difference.2C ResourcesThe Group’s audited 2C resources decreased by 7.3% from 75 MMboe to 70 MMboe, comprising 43 MMbbls of oil and condensate and 159 Bscf of natural gas. The decrease in 2C gas resources (boe) is mostly due to revisions in Emebiam, Owu and Oben fields. Consequently, the Group’s working interest 2P reserves and 2C resources stood at 507.5 MMboe as of 31 December 2022, comprising 248.5 MMbbls oil and condensate and 1,502.2 Bscf of natural gas (259 MMBoe). Oil & gas producing assets Oil producing assets4445Seplat Energy PlcSeplat Energy PlcAnnual Report and Accounts 2022Annual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Operational reviewProductionFull-year total working interest production for 2022 was 16.1 MMboe. Within this, liquids production was 9.03 MMbbls, down 26.6% year-on-year, and gas production was 7.1 MMBoe (41.0 Bscf), up 4.1% year-on-year. In addition, the Group recorded a total downtime of 37%, primarily because of problems with third-party export infrastructure. The transaction represents a consolidation of the Company’s strategic position on the OML 40 block. It provides an early monetisation opportunity using existing OML 40 facilities, subject to agreement with NEPL (NNPC E&P Limited, formerly NPDC), which operates the OML 40 asset.”Divestment of Ubima marginal field Wester Ord Oil and Gas Nigeria Ltd. (WON), a wholly owned subsidiary of the Company, agreed in Q1 2022 with the J.V. partner All Grace Energy Ltd. (AGEL) to divest WON’s rights in the Ubima Marginal Field for a consideration of $55.0 million. Under the agreement, the Company has received a total of $19.5 million, with $18.6 million received in 2022 and $0.9 million received in January 2023.As a result, Ubima’s production has been removed from the Group’s daily average output and WON has derecognised assets and liabilities in H1 2022, including Ubima’s current reserves of approximately 2 MMbbls.Farm-in to Abiala marginal field Following the 2020 marginal field bid round in Nigeria, Naphta Global E&P Ltd. (Naphta) was awarded 100% equity in the Abiala marginal field carved out of OML 40 by the NUPRC. The marginal field contains 2C gross oil resources of approximately 40 MMbbls.Elcrest (45% owned by Seplat Energy) has entered into an agreement with Naphta for a 95% equity farm-in to the Abiala marginal field, while Naphta will have a 5% carried interest. Elcrest will also assume the role of Operator and Technical & Financial Partner in the Elcrest/Naphta Joint Venture. The partners executed Heads of Agreement with a signature bonus of $12 million paid to NUPRC. The transaction represents a consolidation of the Company’s strategic position on the OML 40 block. It provides an early monetisation opportunity using existing OML 40 facilities, subject to agreement with NEPL (NNPC E&P Limited, formerly NPDC), which operates the OML 40 Asset.In developing the field, Elcrest is targeting first oil by the end of Q2 2023 and plans to focus on low-cost development with early monetisation opportunities that leverage existing contractual positions to accelerate the field’s development. Seplat Energy will also explore optimising its tax position to the extent possible under the new PIA. Drilling activities The drilling programme for 2022 spudded 13 wells and successfully delivered 11 wells below budgeted costs. An additional two wells (ANOH-03 and ANOH-04) were spudded by SPDC in 2022 but will not be completed until 2023 due to delays in the gas plant on-stream date. In OML 4, 38 and 41, we spudded and delivered four wells: the Amukpe-5ST2, Oben-52, Oben-53 and Ethiope-02 wells, which are expected to produce a combined gross rate of c.5,000 bopd and c.3.1 MMscfd of gas.In OML 53, we spudded three wells and delivered one well: the Owu-02 appraisal well was spudded and completed. The OHS-08 was completed in January 2023 and the OHS-07 expected to be completed later in Q1 2023. The expected peak production from OHS-07 and OHS-08 is c.3,500 bopd. In OML 40, we spudded and delivered six wells: the Opuama-12, Opuama-13, Opuama-14, Opuama-15, Opuama-16 wells and Sibiri-1. The Opuama wells have commenced production, with gross combined production of c.9,000 bopd.Total expected peak production for the production wells spudded in 2022 is expected to be c.17,500 bopd of oil and c.3.1 MMscfd of gas or working interest: c.7,700 bopd and 1.4 MMscfd. In OML 40, the Sibiri oil discovery is being appraised by two wells. The Sibiri-1 discovery well was drilled in Q1 2022 and as reported in our 2021 full-year results last year, encountered eight oil-bearing reservoirs with 353 ft of gross oil pay and 229 ft of net pay. The post discovery Oil In-Place was estimated in the range 24-34-94 million barrels.Appraisal drilling of Sibiri-2, with the objectives of testing the eastern and south-western flanks, commenced on 30 January 2023 and reached TD on 23 February, with initial results indicating significant uplift in mid-case Oil-In-Place volumes. In the eastern flank, four oil bearing reservoirs with 68 ft of gross oil and 48 ft net pay were encountered. In the south-western flank, nine oil bearing reservoirs with an initial estimate of 292 ft of gross oil and 180 ft net pay, including two new pay zones, were encountered. These preliminary results are in line with the high side of pre-appraisal Oil In-Place evaluation. Further well data acquisition is ongoing and subsequent technical studies are required to confirm the initial results.The extended well testing (EWT) of Sibiri-1 commenced on 21 February 2023 via a 6km flow line to the OML40 Opuama facilities. Testing and evaluation of crude properties is ongoing.The Field Development Plan is on schedule to be completed in Q4 2023, leading to the Final Investment Decision for the full field development soon after. Development drilling is anticipated in Q1 2024 with expected peak production of 5,000-6,000 barrels of oil per day in 2024/25. 2022 WI production2021 WI Production LiquidsGasTotalLiquidsGasTotalSeplat %bopdMMscfdboepdbopdMMscfdboepdOMLs 4, 38 and 4145% 15,422 112.3 34,791 18,243 107.9 36,844 OPL 28340% 1,067 – 1,067 1,012 – 1,012 OML 5340% 1,689 – 1,689 3,164 – 3,164 OML 4045% 6,557 – 6,557 5,923 – 5,923 Ubima – – – 749 – 749 Total 24,735 112.3 44,104 29,091 107.9 47,693 1. Liquid production volumes as measured at the LACT (Lease Automatic Custody Transfer) unit for OMLs 4, 38 and 41; OML 40 and OPL 283 flow station. 2. Gas conversion factor of 5.8 boe per scf.3. Following the decision to exit from the Ubima asset in April 2022, volumes from the marginal field have not been reported in 2022. 4. Volumes stated are subject to reconciliation and will differ from sales volumes within the period. Q1 2022 Q2 2022 LiquidsGasTotalLiquidsGasTotalSeplat %kbopdMMscfdkboepdkbopdMMscfdkboepdOMLs 4, 38 and 41 45% 17.7 107.4 36.2 17.1 127.9 39.2 OML 40 45% 7.4 – 7.4 10.1 – 10.1 OML 53 40% 2.7 – 2.7 1.6 – 1.6 OPL 283 40% 1.3 – 1.3 1.5 – 1.5 Total 29.1 107.4 47.6 30.3 127.9 52.4 Third party deferment MMbbls0.70.5Q3 2022 Q4 2022 LiquidsGasTotalLiquidsGasTotalSeplat %kbopdMMscfdkboepdkbopdMMscfdkboepdOMLs 4, 38 & 41 45% 9.5 103.1 27.2 17.5 111.0 37.5 OML 40 45% 1.6 – 1.6 7.3 – 7.4 OML 53 40% 1.1 – 1.1 1.3 – 1.4 OPL 283 40% 0.3 – 0.3 1.1 – 1.1 Total 12.5 103.1 30.3 27.2 111.0 46.4 Third party deferment MMbbls2.21.3Working interest production by quarterWorking interest production Liquids production for all assets was affected by evacuation issues during the year, particularly in Q3 on the Forcados export route, and this led to total deferred liquid volumes of 4.7 MMbbls for 2022.For OMLs 4, 38, and 41, which rely on the Forcados route, the Forcados Terminal (FOT) was unavailable for 146 days in 2022 (including 78 consecutive days in Q3 2022). The force majeure declared on the Trans Forcados pipeline (TFP) and other deferments due to maintenance activities impacted crude production. The situation would have been more acute had we not successfully operationalised the Amukpe to Escravos Pipeline (AEP) in the third quarter. A total of 1.6 MMbbls or 10.1 kbopd (working interest) was exported through the AEP from July 2022, when the pipeline became operational. As expected, there was an improvement in performance from the fourth quarter, with 90% of our liquids evacuated through the AEP in December 2022, enabling an exit rate for the year of 53 kboepd across the Group.Similarly, pipeline unavailability impacted production at OML 40. After a 39-day outage of the Forcados Oil Terminal (FOT) and Trans Escravos Pipeline (TEP) in the fourth quarter (135 days outage for the full year), production resumed, and evacuation commenced in November 2022. For OML 53, with production of around 1,000 bopd (gross) from the Jisike field being shut-in since February 2022, we could only evacuate an average of about 3,000 bopd from Ohaji to the Waltersmith Refinery. 47Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 5946Seplat Energy PlcAnnual Report and Accounts 2022Operational review | continuedSeplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Seplat Energy at a glance
Nigeria’s leading
independent
energy provider
In 2022, against a challenging environment of oil theft
and outages on our export routes, we averaged 24,735
barrels of liquids a day for export and 112.3 MMscfd of
processed natural gas for domestic power generation.
Gas
Seplat Energy’s gas business
consists of gas fields and associated
infrastructure in OML 4, which supports
our 465 MMscfd Oben Gas Processing
Plant, and OML 53, where our
independent joint venture ANOH Gas
Processing Company is building a
300 MMscfd gas processing plant.
ANOH is one of Nigeria’s most
important strategic energy transition
projects and we expect to begin
selling gas to the country’s power
sector in 2023.
As at 1 January 2023, Seplat Energy’s
2P gas reserve was 1,343 Bscf.
Proudly Nigerian
Seplat Energy’s oil generated foreign currency
income of $1.2 billion for Nigeria in 2022.
From this, we paid $177 million royalties
and a further $84 million in taxes and levies.
Our contributions supported Nigeria’s
economy, including its healthcare and
educational systems and the creation
of essential infrastructure.
At times, our gas powered up to 30% of
Nigeria’s domestic grid in 2022 and by
increasing gas production we can help to
reduce Nigeria’s dependence on small-scale,
costly and polluting generators. In addition,
we spent $10.8 million supporting our host
communities, focusing on jobs and business
opportunities, security, medical and other
assistance during the Covid-19 pandemic.
6
Oil
Seplat Energy’s oil portfolio contributed
56% of Group volumes in 2022
and 88% of its revenues. We have
operations across seven blocks in
the Niger Delta, our largest being
the combined operations of OMLs
4, 38 and 41.
As at 1 January 2023, our 2P liquids
reserves totalled 206.4 million barrels.
Read more
Page 44
Seplat Energy’s oil and gas production
2022 (boepd)
2021 (boepd)
19,369
18,601
15,422
18,243
44,104
42,312
1,067
1,689
6,557
1,012
5,923
3,164
*Includes 749 bopd for Ubima Marginal Field
OML 4, 38, 41
OPL 283
OML 53
OML 40
Gas (OML 4, 38, 41)
Seplat Energy PlcAnnual Report and Accounts 2022
Oil & gas producing assets
Oil producing assets
Since 2010, we have built a world-class energy
business based upon hydrocarbon production
in the Niger Delta, exporting oil that supports
Nigeria’s economy and delivering gas to power
its homes and businesses.
Oil and gas blocks in the Niger Delta
(4 operated directly)
Proportion of Nigeria’s electricity grid
powered by our gas
8
Staff
500+
30%
Generated in revenue share for Nigeria in 2022
$922m
Production in 2022
(24,735 bopd oil, 19,369 boepd gas)
Paid in dividends to shareholders since 2013
44,104boepd
$476m
Our portfolio
Seplat Energy’s portfolio comprises seven
oil and gas blocks in the prolific Niger Delta,
which we operate with partners including the
Nigerian Government and other oil producers,
as well as a revenue interest in OML 55.
The blocks are connected to well-established
export routes and with the commissioning of
the Amukpe-Escravos Pipeline, which serves
our major assets at OMLs 4, 38 and 41, we now
have a more secure and reliable alternative to
the Trans Forcados System, whose outages
have previously impacted production.
7
Bonny BrassOhaji SouthJisikeOmereluIheomaOdinmaEmeabiamAlaomaOwuOwerriOroghoOkporhuruObenOkwefeSapeleUbalemeOkoporoOvhorMosogarAmukpeOML 38OML 4OML 41Umuseti (Pillar)Igbuku (Pillar)OML 53BonnyPort HarcourtNembeIndaKeBelemaSokuDamaRobert KiriAkasoKrakamaOML 55OPL 283OnitshaOML 40ABIALA ForcadosWarri EscravosSibiriOpuamaGbetiokunFinancial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Proposed acquisition of MPNU
Enhancing
our portfolio
A strategic acquisition that will significantly
enhance Seplat Energy’s portfolio by adding
well-managed offshore assets with dedicated
export infrastructure and substantial
hydrocarbon reserves.
A transformational acquisition
On 25 February 2022 we announced that
we had entered into a Sale & Purchase
Agreement (SPA) to acquire the entire share
capital of Mobil Producing Nigeria Unlimited
(MPNU) for a consideration of $1.283 billion,
plus up to $300 million contingent consideration,
subject to adjustments at closing.
The proposed acquisition will deliver significant
value for shareholders, substantially increasing
Seplat Energy’s oil and gas reserves and
production, while diversifying its operations
offshore, where there is more secure, dedicated
export infrastructure. In addition, Seplat Energy
will benefit from the experience of a highly
skilled local operating team and a track record
of safe operations.
As of early March 2023, we await the
necessary approvals from the Federal
Government and continue to work with all
relevant stakeholders to achieve completion.
MPNU working interest production, 2020
95 kboepd
2P W.I. liquids reserves, 2020
409 MMbbl
2P W.I. gas reserve, 2020
211 Bscf
MPNU staff and contractors
1,000
Potential W.I. gas resource, 2020
2,910 Bscf
8
Seplat Energy PlcAnnual Report and Accounts 2022 Potential to develop 7+
TSCF GROSS
Oso Area
2,309 Bscf + 528 Bscf 2P (gross)
528
1,110
1,199
494
Yoho Area
1,240 Bscf (gross)
746
EAP Area
3,727 Bscf (gross)
549
3,178
Strategic rationale
MPNU operates and is the 40% owner of four
shallow water assets: OMLs 67, 68, 70 and
104. It also owns the Qua Iboe Terminal, one
of Nigeria’s largest export facilities, and a 51%
interest in Bonny River Terminal, and Natural
Gas Liquids Recovery plants at EAP and Oso.
We will become one of the largest
independent energy companies on the
Nigerian Exchange and London Stock
Exchange, thereby strengthening our
market position and ability to drive growth,
profitability and prosperity for all our
stakeholders, including Nigeria itself.
Balanced portfolio
Adding these MPNU assets and their
dedicated infrastructure will significantly
increase our scale in the Nigerian energy
industry, diversifying the business in favour
of offshore assets with more secure export
routes. Our existing onshore business, from
which our Western Assets (OML 4, 38, and 41)
produce most of our revenues, will be
augmented by a substantially larger reserve
and production base offshore. Furthermore,
MPNU’s dedicated export infrastructure will
provide additional assurance against the
kinds of disruptions we have experienced
at the Western Assets, which until the advent
of the Amukpe-Escravos Pipeline, were reliant
on the Trans Forcados Pipeline and Forcados
Oil Terminal. The result for shareholders
will be higher profitability from increased
production and greater reliability of exports.
Potential
to develop
Significant
upside
We believe there is great
potential to develop a
significant gas resource
of 2,910 Bscf (W.I.) using
existing infrastructure
(see map and charts).
The addition of MPNU will
substantially increase Seplat
Energy’s production from our
2022 volume of 44.1 kboepd.
MPNU’s W.I. production in
2020 (latest available figures)
was 95 kboepd, from
well managed shallow
water assets.
Dedicated
export routes
MPNU operates its
own dedicated export
infrastructure, which includes
the Qua Iboe Terminal and
Bonny River Terminal.
Associated Gas
Non-Associated Gas
2P Reserves
99
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Chairman’s statement
Mr. Basil Omiyi, CON
Independent Non-Executive Chairman
Nigeria’s
leading
energy
provider
We take pride in our unwavering
commitment to corporate governance
best practices, which not only bolsters our
credibility in international capital markets
but also enables us to secure funding
for investments in Nigeria.
10
Seplat Energy Plc
Distinguished Shareholders
It is with great pleasure that I warmly welcome
you all to the 10th Annual General Meeting
(AGM) of Seplat Energy PLC. On behalf of
the Board of Directors, I present the Annual
Report for the year 2022, along with our
separate Sustainability Report and our inaugural
Climate Risk and Resilience Report. These
documents collectively offer a comprehensive
overview of our accomplishments, and this
AGM provides an excellent opportunity for our
Executive Team to respond to any queries
you may have regarding our past performance
and the prospects of our Company.
This is my first AGM as Chairman of the
Board, having been appointed to succeed our
co-founder Chairman, Dr. A.B.C. Orjiako, who
retired after the 9th Annual General Meeting
held on 18th May 2022. I would like to take a
moment to acknowledge my predecessor,
who steered Seplat Energy to new heights
during his tenure. Despite the economic
downturns, production stoppages, and the
pandemic, Seplat Energy PLC has emerged
as a robust and internationally acclaimed
energy producer, with listings on the Nigerian
Exchange and London Stock Exchange.
We take pride in our unwavering commitment
to corporate governance best practices, which
not only bolsters our credibility in international
capital markets but also enables us to secure
funding for investments in Nigeria. We have
also demonstrated our capacity to generate
substantial cash flows, which support future
investments and allow us to provide cash
returns to our esteemed shareholders.
It is our strength that empowered us, a
Nigerian company, to consider acquiring a
much larger entity, Mobil Producing Nigeria
Unlimited (MPNU), from the global energy
giant, ExxonMobil, in February 2022. This
strength is also evident in my recommendation
for your consideration and approval today of
a final dividend of US 2.5 cents per share,
including a special dividend of US 5 cents per
share, bringing our total dividend for the year
to US 15 cents per share, which is our
highest-ever pay-out.
Annual Report and Accounts 2022 The global business environment
As an oil producer, our profitability is closely
aligned with the price of oil and the health
of the global economy. Although economic
activities continued to improve on the back
of wider vaccination coverage, and robust
labour market outcomes, there were many
challenges including monetary policy
tightening, the global impact of Covid-19,
energy price hikes, and supply chain disruptions
caused by the Russia-Ukraine conflict and
consequent sanctions against Russia,
particularly in the energy sector.
According to estimates from the International
Monetary Fund (IMF), the global economy
grew at an estimated rate of 3.4% in 2022,
2.7ppt lower than the 6.1% growth recorded in
2021. In Nigeria, data from the National Bureau
of Statistics (NBS) showed economic growth
remained sturdy, at 3.1% in 2022, only slightly
lower than the 3.4% growth achieved in 2021.
In the global energy market, the first half
of the year saw global demand recovery, oil
supply challenges, and the Ukraine crisis, all
of which increased the price of Brent crude
by 47.6% in that period. By the second half
of 2022, monetary policy tightening, fears of
recession across major commodity importers,
and release of strategic reserves by the
United States dampened sentiments, leading
to a 25.2% decline in Brent crude price in the
last six months of the year. Across the year,
the average Brent crude price was $99.8/bbl,
41.7% higher than 2021’s average price
of $70.44/bbl.
The persistent recovery in oil prices was
reflected in our financial performance for
2022 as investors remained bullish on the
E&P sector. Seplat’s share price in the UK
appreciated by 25.6% to close the year at
105p while the share price in Nigeria grew
by 69.2% to close at ₦1,100.
Business performance in 2022
Our operational and financial performance
in 2022 reflects the opposing forces acting
on our revenues. Although oil prices were
significantly higher, we were unable to enjoy
the full benefits of this because of serious
problems with the third-party infrastructure
through which we export our oil to buyers, as
you will read in this year’s review of operations.
As a result of these problems, our average
working interest production declined by 7.5%
to 44,104boepd, made up of 24,735bopd of
liquids and gas production of 112MMscfd
(19,369boepd).
Our oil business started the year on a strong
footing, with working interest production of
29,078bopd and 30,338bopd in Q1-2022 and
Q2-2022 respectively. However, in the third
quarter, production was impacted negatively
by evacuation problems at the Forcados Oil
Terminal (FOT), during which time the terminal
was unavailable for 78 consecutive days.
Thankfully, the much-delayed launch of the
Amukpe-Escravos Pipeline (AEP) provided
some relief as we were able to flow c.10,100bopd
(working interest production) during the period.
The AEP is now a major export route for our
largest assets at OMLs 4, 38 and 41. As a
result, our reliance on the Trans Forcados
Pipeline and FOT is significantly lower, reducing
risks of downtime while providing a solid base
for stronger export volumes and revenues.
Our gas business remained strong through
the year, and we made good progress with
the construction of the ANOH Gas Processing
Plant, which now awaits the completion of
third-party infrastructure before it can commence
operations, projected for the final quarter of
2023. The positive impact of renegotiated
Gas Sales Agreements (GSAs) in H2-2022
provided healthy support for revenue growth
and profitability and we continue to focus on
increasing capacity utilisation at our Oben
Gas Processing Plant.
Financial Performance
and Dividend
Total revenue rose by 29.8% to $951.8million
while profit before tax rose by 15.3% to
$204.4million. With the healthy financial
performance and solid cash position, the
Board has recommended a special dividend
of US 5 cents per share to be paid to
shareholders, in addition to the final quarterly
dividend of US 2.5 cents per share. This brings
total dividend for the year to US 15 cents per
share. Upon approval, payments will be made
on or around 16 May 2023 to shareholders whose
names appear in the Company’s Register at the
close of business on 18 April 2023.
Update on Proposed Acquisition
of MPNU
On 25 February 2022, we announced that
we had entered into a Sale & Purchase
Agreement (SPA) to acquire the entire share
capital of Mobil Producing Nigeria Unlimited
(MPNU) for a consideration of $1.283billion,
plus up to $300million contingent consideration,
subject to adjustments at closing.
On 8 August 2022, we announced that His
Excellency President Muhammadu Buhari,
in his capacity as Honourable Minister of
Petroleum Resources, had consented to the
proposed acquisition. We continue to work
with all relevant stakeholders to obtain the
necessary approvals to achieve completion.
11
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Chairman’s statement | continued
The proposed acquisition will deliver significant
value for shareholders, substantially increasing
Seplat Energy’s oil and gas reserves and
production, while diversifying its operations
offshore, where there is more secure, dedicated
export infrastructure. In addition, Seplat Energy
will benefit from the experience of a highly
skilled local operating team with a track
record of safe operations.
Progress in Sustainability
and ESG Reporting
In 2021, the Company changed its name from
“Seplat Petroleum Development Company
Plc” to “Seplat Energy Plc”, reflecting the
Board’s ambition to diversify our business
model beyond oil and gas and prepare it for
a leadership role in Nigeria’s energy transition.
We defined our purpose as to ‘Deliver
sustainable energy solutions for society’, with
a vision to ‘Transform lives through energy’.
These simple statements embody our
commitment to put sustainability at the
heart of our operations and to use our
resources to address energy poverty in
Nigeria, where half the population has little
or no access to electricity.
We defined our purpose as to
‘Deliver sustainable energy solutions
for society’, with a vision to ‘Transform
lives through energy’. These simple
statements embody our commitment
to put sustainability at the heart of our
operations and to use our resources
to address energy poverty in Nigeria,
where half the population has little or
no access to electricity.”
Over the past 12 months, we have taken
significant steps towards fulfilling our new
purpose and vision. We are scaling up our
Midstream Gas business to increase the
amount of natural gas we supply towards
powering Nigeria’s electricity grid thereby
displacing diesel use in power generation,
while our New Energy business has been
tasked with developing power and renewable
energy. At the same time, we have strengthened
our approach to understanding and evaluating
climate risk, which we have re-designated
as a key risk to our business.
We have adopted a new Board-approved
Climate Change Policy and have advanced
a major component of our decarbonisation
strategy: eliminating routine flaring by the end
of 2024 through our Flares Out initiative, which
is six years ahead of Nigerian regulatory
requirements and the World Bank’s initiative
to achieve Zero Routine Flaring by 2030.
These steps form part of a transition plan
that will align our business strategy with the
overarching goal of the Paris Agreement to
limit mean global temperature rise to well
below 2°C and contribute to supporting
Nigeria’s pathway to achieving carbon
neutrality by 2060. This plan is subject to
evaluation, approval and oversight of our
Board and Management teams and is
underpinned by actionable, specific initiatives
for decarbonising our operations and
increasing the overall sustainability of our
business model.
In accordance with guidance provided by
the Taskforce on Climate-related Financial
Disclosures, and as required under the terms
of our listing on the London Stock Exchange,
I am pleased to tell you that we have published
our first Climate Risk and Resilience Report,
which is a separate and comprehensive
document that outlines our approach to climate
change risk. The document is available on
our website (www.seplatenergy.com).
12
Seplat Energy PlcAnnual Report and Accounts 2022 The need for strong
Corporate Governance
Effective corporate governance is crucial for
the seamless operation of any organisation,
particularly one seeking to attract global
investors and foster growth and job creation
in the local economy. Investors place a high
premium on strong corporate governance
just as they do for strong and sound business
performance. Seplat Energy’s investors have
previously expressed dissatisfaction with
certain governance practices, notably
related-party transactions. You may recall
Bloomberg’s publication of last year that
reported that Seplat Energy had spent more
than $450 million on such transactions over
the previous 12 years. As of the time of that
report, Seplat was already far ahead in the
journey of eliminating all related party
transactions, and this has mostly been
accomplished.
As the Independent Chairman, my vision
for Seplat Energy is to be a model company,
an example of excellence and respectability,
inspiring other Nigerian companies to achieve
similar levels of success on the global
business stage.
I, and all my colleagues on the Board, have full
confidence in our Executive and Management
teams’ ability to deliver on the Company’s
purpose, vision and strategic objectives as
well as our transformational projects and
transactions. I thank you, our shareholders,
for your continued support and together,
I am confident that we will continue to deliver
sustainable energy to society and transform
lives through energy.
Basil Omiyi, CON
Independent Non-Executive Chairman
13
In it, you will read that in January 2023, we
carried out a scenario analysis to stress-test
the resilience of our portfolio under the three
scenarios developed by the International
Energy Agency (IEA) and published in its 2022
World Energy Outlook (WEO 2022). These
scenarios are:
1. Net-Zero Emissions by 2050 Scenario (NZE)
2. Announced Pledges Scenario (APS)
3. Stated Policies Scenario (STEPS)
Based on our stress tests, I am delighted to
report that our oil production portfolio is
shown to be resilient under all three scenarios,
including the most challenging NZE scenario,
in which the net present value (NPV) of our
assets is estimated to be 4% higher than our
internal Business Plan estimates, which assume
a flat $60 price of oil. Under APS the calculated
NPV is 48% higher and under STEPS it is 66%
higher. I urge you to read the full Climate Risk
and Resilience Report to see our detailed
assumptions and analysis.
Board changes
In line with our mandate to deliver best-in-class
corporate governance for the business, we
continue to appoint new directors and refresh
the Board composition. In March 2022, we
announced the resignation of Mr. Austin Avuru
from the Board. Subsequently, we announced
the retirements of the former Board Chairman,
Dr. A.B.C Orjiako as well as a former Executive
Director, Mr. Effiong Okon in May 2022, and
June 2022 respectively. Lastly, in July 2022,
we announced the retirement from the board
of Ms. Arunma Oteh, OON who was an
Independent Non-Executive Director,
effective 31st December 2022.
As part of efforts to refresh the board, we
also announced the appointment of several
board members. In May 2022, Mrs. Bashirat
Odunewu was appointed as an Independent
Non-Executive Director while Mr. Kazeem
Raimi and Mr. Ernest Ebi were both appointed
as Non-Executive Directors.
In May 2022, I was appointed as Seplat’s first
Independent Non-Executive Chairman, while
Dr. Charles Okeahalam was appointed as
Senior Independent Non-Executive Director.
Further appointments were made in June as
we announced the appointment of Mr. Samson
Ezugworie as the Company’s Chief Operating
Officer (COO) as well as an Executive Director
on the Board. Recently, we announced the
appointment of Ms. Koosum Kalyan as an
Independent Non-Executive Director effective
28th February 2023.
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 What guides our work
Our purpose:
To deliver sustainable energy
solutions for society
With the continent’s largest economy and by far its largest
population, Nigeria is Africa’s flagship – a dynamic and growing
country whose transition to reliable, sustainable, affordable
energy will be transformational, empowering every person,
business and community to thrive.
At Seplat Energy, we are making this future a reality. Our
energy will help to make Nigeria a global economic power.
Our journey continues
In 2021, we changed our name to Seplat
Energy to reflect the exciting future ahead
of us as a supplier of a more diverse range
of energy products in what will soon be one
of the most populous countries on Earth.
At the same time, we unveiled a new strategic
plan that would guide us to achieve our aims,
namely to Build a Sustainable Business and
Deliver Energy Transition.
In 2022 we built upon that plan and began
to execute on our strategy, which is guided
by the belief that the greatest business
opportunity we have is to supply the right
mix of energy to support Nigeria’s growth.
In doing so, we must also look to reduce
global CO2 emissions, enter the renewable
energy market, make a positive social impact
in Nigeria and contribute to its achievement
of the United Nations’ Sustainable
Development Goals.
The transition to gas is imperative. Too
much hard-earned Nigerian money is
spent importing diesel and petrol to run the
inefficient and polluting generators that power
Nigeria’s homes and business operations.
This is a huge opportunity, with the potential
to convert more than 20GW of energy
generation from imported diesel and petrol to
Nigerian gas, just to satisfy existing demand.
Beyond that is the need to increase energy
access from less than 60% at present, so we
can provide universal access to reliable and
affordable energy for more than 400 million
Nigerians in the future, and let them use it to
power their entrepreneurial spirit.
14
Our business strategy is driven by three core beliefs:
1. Oil will remain vital to Nigeria’s economy for many years to come,
because of its contribution to government revenues, which fund
the nation’s day-to-day activities as well as its future development
2. Gas will provide cleaner, lower-cost energy that will in turn help to
diversify and boost the economy and provide essential baseload
to support future renewables
3. Renewables are the future, for Nigeria and for Seplat Energy
Gas will drive
energy transition
and development
Seplat
Energy
Oil remains
crucial for
Nigeria’s
development
Renewables
are the future
Read more
Page 24
Seplat Energy PlcAnnual Report and Accounts 2022Page Header Our vision:
Transform lives
through energy.
Our mission:
Leading Nigeria’s energy
transition with accessible,
affordable and reliable
energy that drives social
and economic prosperity.
The values at the heart of our work
Safety
We will prioritise safety, which is a matter
of both individual and collective responsibility.
Integrity
We will behave with integrity in all our dealings.
Partnership
Our ambitions will be driven by partnerships,
so we strive to collaborate and be a trusted partner.
Ambition
We will be a driving and innovative force in the delivery
of energy solutions, for social and economic growth.
Agility
We strive to be an efficient organisation, proactive
and adaptive to changes in our environment.
15
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Market opportunity
Supplying power
for Africa’s largest
future energy market
Nigeria represents a huge market
opportunity for Seplat Energy,
both in today’s hydrocarbon-based
economy, and in the lower-carbon,
renewable world of the future.
Market overview
With a population of 200 million projected to double
by 2050, improving access to affordable, reliable
and sustainable energy is Nigeria’s most important
imperative. At present, only an estimated 57% of
Nigerians have access to electricity, meaning there
is significant potential for growth just to serve our
existing population, let alone a future population
that could be twice as large as today.
Fortunately, Nigeria is endowed with abundant
hydrocarbon resources that are close to major
population centres, with well-proven geology being
tapped by a long-established industry, supported by
good infrastructure and regulatory and fiscal regimes.
Furthermore, Nigeria is also blessed with plentiful
sunshine, especially in the North where gas and
electrical grid infrastructure is scarce, as well as great
potential for wind and hydro-electric development.
But there are impediments. The national grid is
undeveloped, power blackouts are frequent, and
of a potential 12GW installed generating capacity, it is
estimated that as little as 2-3GW actually reaches the
customer. Of those with access to electricity, most are
reliant on small-scale, inefficient and expensive diesel
or petrol generators, resulting in the world’s highest
cost of energy in the world at 49 cents per kWh.
In addition, some 80% of Nigeria’s total energy use
is biomass for cooking, which creates significant
problems of deforestation, land erosion, particulate
pollution and associated deaths and health problems.
Nigeria’s energy transition imperative offers
significant opportunities for Seplat Energy: develop
gas-to-power to improve energy access; develop
LPG markets to alleviate use of biomass; and develop
renewable energy to serve large areas of the country
not currently served by the national electricity grid.
16
A LAND OF OPPORTUNITY…
Population
• Africa’s largest population, with more than 200 million people
and growing rapidly
• Currently seventh largest, will be the world’s third largest country in 2050
and second largest democracy
• More children are born every day in Nigeria than in the whole of Europe
Estimated growth in Nigeria’s population (millions)
2055
2050
2045
2040
2035
2030
2025
404
377
350
321
292
263
235
Source: UN Population Division, World Population Prospects, 2022
Economy
In its World Economic Outlook, published in October 2022, the
International Monetary Fund predicted that Nigeria’s economy would
double in size between 2020 and 2027 (constant prices, US dollars).
Growth in Nigeria’s GDP (US$bn)
2027
2026
2025
2024
2023
2022
2021
2020
945
836
738
651
574
504
442
429
Source: IMF Regional Economic Outlook, October 2022
Seplat Energy PlcAnnual Report and Accounts 2022 Nigeria’s power
infrastructure challenge
Nigeria’s power system suffers an
imbalance between generation
and consumption. Across the value
chain, from power generation to
transmission and distribution to the
end user, infrastructure deficit is a
major challenge that has affected
Nigeria’s grid electricity supply.
Severe bottlenecks mean that
power stations are not operating
optimally, distribution is inefficient
and energy losses are high, even
before companies attempt to bill
customers and collect payments.
Nigeria’s use of gas
The chart reveals the unfortunate
fact that Nigeria’s abundant gas
resource is not being used efficiently.
Although some 41% of gas is
exported, generating valuable
foreign currency, more gas is
wastefully flared than used for
power generation in Nigeria.
Exports
Reinjection
Flared
Power generation
Producer use
Industry
41%
27%
10%
9%
8%
5%
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Source: USAID, NERC, Nigerian Power Baseline Report
5%
8%
9%
10%
27%
Source: Nigeria Power Baseline Report
41%
NIGERIA’S ABUNDANT
ENERGY RESOURCES
Crude Oil Reserves (Source: NUPRC)
37.05bn
Reserves remaining without addition
(Source: NUPRC)
60 Years
Average National Daily Production 2022
(Source: NUPRC)
1.14 mbopd
Estimated gas reserves (Source: NMDPRA)
209.5 Tcf
Current gas requirement for
the power sector (Source: NMDPRA)
2.32 Bcfd
17
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Market | continued
Addressing Nigeria’s
demands for reliable energy
Nigeria has one of the lowest rates of
electrification in the world and among the
lowest per capita consumption of electricity.
Most electrical power is provided by
small-scale, inefficient and polluting petrol
and diesel generators.
At Seplat Energy, we are committed to
displacing these generators with large-scale
gas-to-power projects and to leading the
country’s deployment of renewable
energy technologies.
Gas volumes and revenue
Gas contribution to volumes in 2022 (boepd)
160
140
120
100
80
60
40
20
0
250
200
150
100
50
0
44%
Gas contribution to revenues in 2022
11.8%
Average daily gas sales volume in 2022
112.3 MMscfd
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Volumes (MMScfd) (LH)
Revenue (RH)
84
86
90
70
71
Access to electricity (%)
100
80
60
55
48
40
42
40
20
0
Nigeria
Tanzania
Uganda
SSA
Senegal
Kenya
South
Africa
Ghana
World
Source:World Bank
Proven Gas Reserves (Tcf)
1,500
1,321
1,134
871
1,000
500
480
446
297
221
213
210
193
0
Russia
Iran
18
Qatar
Turk m enistan
United States
China
Venezuela
Saudi Arabia
UAE
Nigeria
Source:OPEC
Seplat Energy PlcAnnual Report and Accounts 2022 The greatest business opportunity
ahead of us is to supply the right mix
of energy to support Nigeria’s growth.
Energy access will drive Nigeria’s development
Increasing access to energy is a priority for Nigeria’s economic and social
growth – and for Seplat Energy. As with any infrastructure build-out,
improving energy distribution will have multiplier effects on the economy
that will inevitably feed back into greater demand for energy. Our aim is
to support this growth by becoming a major supplier of affordable, reliable
and sustainable energy to our nation’s rapidly growing population.
Nigeria’s energy
transition imperative
Increase energy access to achieve
universal coverage and drive social
and economic development
Achieve a Just and Affordable Transition
using Nigeria’s gas resources to replace
imported generator fuels, thereby
reducing economic burden, improving
GDP and reversing FX drain
Increase use of renewables to
exploit abundant sunlight, wind
and hydro resources
Achieve net zero emissions by 2060
and reduce particulate pollution from
diesel and biomass
Transition cooking from firewood to
gas or electricity, to reduce deforestation
and particulate pollution and free
women from firewood collection
5
6
4
1
3
2
Impediments
• High cost of energy (74c/kWh) because
most power is generated by inefficient,
small-scale diesel and petrol generators
that create significant economic drain as
well as CO2 and particulate pollution
• Low access to energy (57%) because
of lack of grid infrastructure, especially
in rural areas
• Despite around 12.5GW installed capacity,
only 2-3GW reaches customers because
of losses and inefficiencies
• 80% of energy use is biomass for cooking
1
Increase gas supply
for energy generation,
displacing small-scale
diesel and petrol generators
4
GDP, business profitability
and domestic wealth
improve, with positive
impacts on lifespan
2
Electricity supply
becomes cheaper
and more reliable,
increasing adoption
5
Business and homes
increase energy use,
e.g. for cooling
3
Householders and businesses
save money, which they can
spend on other economically
productive uses
6
Demand for reliable
energy increases, driving
energy investment to meet
future demand
19
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Chief Executive Officer’s interview
Roger Thompson Brown
Chief Executive Officer
How would you characterise
the year for Seplat Energy?
Two factors beyond our control had a
major impact on our operating and financial
performance during the year. Events in Ukraine
drove global energy prices to unprecedented
levels, and our average realised price was
nearly $102 per barrel, up 44% on 2021. This
helped to offset the decline in production
particularly in Quarter 3 due to higher than
expected interruptions to third-party export
pipelines and terminals across our portfolio.
As a result, although our average daily volume
was 44,104 boepd, our revenues rose nearly
30% to $952 million. It is easy to see that this
could have been significantly better, but for
the problems on the export routes.
With higher costs in 2022, EBITDA was impacted,
up 12% to $417 million, and obviously, cost
control will be a major focus for us in 2023.
So financially we performed well, and I believe
we will do better in 2023, even though the oil
price has settled down at a lower level.
Routes to market were a major
challenge in 2022, what are you
doing to diversify?
The high oil price encouraged an increase in
theft to levels that were very damaging to the
Nigerian economy, and to oil producers such
as Seplat Energy because of shut-ins caused
by the theft. There were third-party infrastructure
problems on our major routes from OMLs 4,
38, 41, and from OML 40, as well as our smaller
assets in the east. The Forcados Oil Terminal
(FOT) was unavailable for 146 days in the year,
and the Trans Escravos Pipeline (TEP), which
evacuates oil from OML 40, was unavailable
for 135 days.
Supplying
Nigeria’s
energy
needs
Despite lower volumes resulting from
significant disruption to major export
routes, Seplat Energy’s financial
performance was stronger than last
year because of higher oil prices.
20
Seplat Energy PlcAnnual Report and Accounts 2022 Thankfully, the Amukpe-Escravos Pipeline,
came onstream in July 2022 after many
months of delays and it was vital in the
second half of the year, during which time we
exported 1.6 million barrels through it. It is now
our main and most reliable export route from
our major assets at OMLs 4, 38 and 41, and
going into 2023 we have continued to export
large volumes through it in preference to the
Trans Forcados Pipeline. We are looking at an
additional export route for those assets
through the Warri Refinery Jetty, so we will be
able to use any or all of three routes to get our
oil to market in future. We are also looking at
alternative routes from OML 40, where the
partners are looking at the potential for using
barges in the short term, but focusing on
completing the pipeline from Gbetiokun to
Adagbassa, from which we can then tie into
an existing route to the coast.
All these initiatives will help to diversify our
export routes and thereby improve revenue
assurance for our existing business, but the
main diversification will come when we are
able to complete the proposed acquisition of
MPNU, which will add a much larger offshore
asset base from which we will be able to
export more securely.
What progress did you make
with the proposed acquisition of
MPNU and how will this transform
the business?
The proposed transaction will significantly
increase the scale of the business and diversify
Seplat Energy to the extent that we will have
a significant offshore business to complement
our existing onshore business. We announced
it in late February 2022, and we are still awaiting
final approvals from government authorities.
The Amukpe-Escravos Pipeline
was vital in the second half of the
year, during which time we exported
1.6 million barrels through it. It is now
our main and most reliable export
route from our major assets at
OMLs 4, 38 and 41.”
The President, His Excellency President
Muhammadu Buhari, in his capacity as the
Honourable Minister of Petroleum Resources,
gave his approval in August, 2022 but we still
await final approvals for it to go ahead. The
Sales & Purchase Agreement (SPA)we signed
remains valid and we are working towards
a successful resolution that will confirm that
our proposed acquisition can be completed,
enabling us to work with the assets’ partner,
NNPC Limited, to develop them for Nigeria’s
benefit as a whole.
The impact of acquiring MPNU from Exxon
Mobil Corporation will be very significant,
not just for Seplat but for Nigeria’s energy
industry. It will create an even more robust
indigenous Nigerian energy champion of
considerable scale, enabling the company
to attract further foreign investment into Nigeria
to develop the assets we are acquiring,
particularly the gas resource which is
currently underutilised. A major advantage
we have is that we have a dual listing on
both the Nigerian Exchange and the London
Stock Exchange, operating to globally
acknowledged best practices in our financial
reporting. Furthermore, both exchanges are
driving improvements in environmental
performance and ESG reporting, so all
stakeholders can be assured that these
assets will be managed with global levels
of regulatory oversight, combined with high
standards of operating performance and
safety for which both Exxon and Seplat
have strong reputations. This will give us a
significant edge when it comes to raising
the finance necessary to develop MPNU
to its fullest potential.
We’re very excited about the prospect of
taking these assets on and developing them
for the benefit of Nigeria, particularly the
large undeveloped gas resource that needs
to be unlocked and commercialised so it can
help to drive Nigeria’s energy transition in the
coming years.
21
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Chief Executive Officer’s interview | continued
How else will Seplat Energy’s
gas business evolve?
Gas is Nigeria’s natural transition fuel, and
we plan to further develop our gas business
so that Nigerians may transition from expensive
and wasteful diesel and petrol generators
to much cleaner, larger-scale gas-fired
power generation.
Aside from the gas resource that will form
part of MPNU, we have a thriving gas business
that will increase in scale over the next year
or two. At our existing Oben plant, we’ve
been focusing on increasing capacity and
processing gas for third-party providers, for
which we can generate a good stream of
revenues, as well as lowering unit costs. As
we highlight in our operating review, we
signed three new gas sales agreements
(GSAs) for a combined offtake of 86 MMscfd
and these bring us up to a total of eight GSAs
to provide nearly 400 MMscfd of gas.
Our joint venture 300 MMscfd ANOH Gas
Processing Plant is close to completion,
waiting for the completion of two key
government owned pipelines that will
connect the plant to centres of gas demand
around the southern regions of Nigeria.
Our government partners have assured us
that the pipelines will be completed by the
mid-year and after adding some contingency
for delays, we expect to begin providing gas
before the end of 2023. ANOH is a strategically
important project for Nigeria, and it will add
significant processing capacity to our
portfolio, generating income from wet gas
sales from our OML 53 asset to the plant,
as well as a stream of dividends from the joint
venture plant itself.
Our Sapele Gas Processing Plant is also
under construction at 60% completion, and
this will provide a further 85 MMscfd capacity
and produce gas that meets export
specifications. What’s more, we have installed
associated gas compressors at Sapele, to
capture gas that would otherwise be flared,
as part of our commitment to end routine
flaring by the end of 2024.
Beyond our existing Midstream Gas business,
we are looking at ways to combine gas with
power generation, including from renewables,
and in the longer term look to develop new
lines of business for gas, such as bottled gas
for domestic or automotive use.
An important project for 2023 will be to
advance plans to separate the gas business
from the Upstream, to create a standalone
unit that could potentially unlock value for
Seplat under the terms of the new Petroleum
Industry Act.
What progress did you make
on sustainability in 2022?
We made good progress in the area of
sustainability this year and this is evidenced
by our standalone Sustainability Report,
which details all our key initiatives in this area,
as well as our first Climate Risk and Resilience
Report, which we have published according
to the guidelines of the Taskforce on
Climate-related Financial Disclosures. Both
documents should be read alongside this
Annual Report.
We have begun to publish carbon intensity
figures, which showed a 35% drop in 2022,
and implemented a reliable carbon
accounting system that highlighted the fact
that we have previously overreported our
carbon emissions, so they have now been
restated this year. We made good progress
reducing flared gas and I am confident we will
eliminate all routine flaring by 2024. This is
part of our commitment to become carbon
neutral by 2050 and achieve net zero status
as an energy company.
22
Seplat Energy PlcAnnual Report and Accounts 2022 Our philosophy is not to settle for
being merely “responsible” but to hold
ourselves to the highest standards,
determined to leave a better legacy
for future generations by putting
sustainability considerations at the
heart of our decision-making.”
New Energy
As part of Seplat Energy’s drive to
become a leading supplier of lower-
carbon and renewable energy, we are
exploring ways to expand into these
new and exciting markets. The first and
most obvious option is to provide more
gas for Nigeria’s power sector, to reduce
the country’s reliance on imported
diesel fuel, which is highly carbon intensive
and a drain on the nation’s wealth. We
will also look at hybrid systems where
we install solar or other renewable
technology alongside gas, which will
provide baseload power at all times.
We have set sustainability-related KPIs for
the business and they now make up 15% of
KPIs in the corporate scorecard – 25% if you
include safety – and achieving these KPIs is
a factor in deciding levels of executive and
staff remuneration.
The improvements you can see in our
sustainability reporting have resulted from
improvements in our sustainability efforts
across Seplat Energy and this is because we
have embedded sustainability in our corporate
strategy rather than treating it as a separate
corporate goal. Sustainability is core to our
ambition to Build a sustainable business and
Deliver Energy Transition. Within those
overarching strategic ambitions, we have
identified more than 20 key initiatives for the
business that are related to what we would
describe as sustainability, whether it is
increasing energy access, ending gas flares
or developing policies for biodiversity and
water management.
Our philosophy is not to settle for being
merely “responsible” but to hold ourselves to
the highest standards, determined to leave a
better legacy for future generations by putting
sustainability considerations at the heart of
our decision-making. To that end, early in
March 2023 we introduced four sustainability-
related policies to guide our actions and
decision making, and these are our
Sustainability and ESG Policy, our Climate
Change Policy, a Child and Forced Labour
Policy and our Human Rights Policy.
What is the outlook for Seplat
Energy in 2023 and beyond?
I think 2023 will be an exciting year for Seplat
Energy, in which a lot of different initiatives will
help to drive value for shareholders.
Firstly, we are operating our major asset
with a much more reliable export route in
the Amukpe-Escravos Pipeline, and this is
demonstrably allowing us to export higher
volumes in the time it has been in operation,
so this underpins our current guidance of
45-55 kboepd for the year.
That guidance doesn’t include any
contribution from ANOH yet, and we have
perhaps been conservative in guiding
investors to expect first gas in the final quarter
of the year, but I am optimistic this can be
achieved. Once onstream, it will boost cash
flow in the ways I have already mentioned,
through wet gas sales and dividends.
We will also look at ways to unlock value
from the separation of the gas business into
a standalone unit, and look for more value
uplift from conversion of our assets to the
PIA regime.
We spudded 13 wells in 2022 and completed
11 which will deliver a strong contribution to
our volumes this year. We will also begin to
develop the Abiala marginal field, following
our farm-in last year, and I’m excited about
the Sibiri prospect, which has been showing
some very promising results in appraisals
we have conducted this year.
Above all, I remain confident our proposed
acquisition of MPNU will complete, enabling
us to create a much larger company that will
truly become an energy champion for Nigeria
and help to drive its energy transition by
unlocking its gas resources and commercialising
them for the national benefit. We will be
a driving force in this transition, helping to
wean the country of its wasteful reliance on
imported generators which result in Nigeria
having some of the highest electricity prices
in the world. By lowering the cost of power,
this will accelerate the delivery of increased
energy access for those who don’t have
electricity at present. We are already looking
at power generation and renewable energy
and hope to make investment decisions by
the end of this year, so I hope to have positive
news a year from now on all these initiatives.
We are a growing company, fully committed
to driving energy transition in Nigeria and
increasing value for all our stakeholders.
I am very confident in our outlook for 2023.
Roger Thompson Brown
Chief Executive Officer
23
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Strategy
A strategy for
sustainable growth
In 2022, as part of our goal to be Nigeria’s leading energy supplier
we began to implement our strategic imperatives, namely to
Build a Sustainable Business and Deliver Energy Transition.
ENABLED BY STRONG GOVERNANCE
Build a Sustainable Business
Drive social
development
Focus on environmental
care & reporting
Maximise returns
for all stakeholders
Make a positive impact on communities
through improved access to energy,
opportunities for local employment
and suppliers, and initiatives that foster
entrepreneurship, education, health
and resilience.
Minimise our impact on local and global
environments, drive improvements where
possible, commit to global standards and
transparently report our progress.
Manage our finances prudently, pay our
share of taxes and royalties, service debt,
invest for the future, and return dividends
to shareholders.
Progress
• In line with PIA requirements, we have
Progress
• Implementing roadmap to eliminate all
established a Host Communities Development
Trust and, working with our communities, will
allocate 3% of our total budget to invest in
social and community projects
routine flaring by 2024
Management Tool to track emissions
and improve on our GHG reporting
• Grown CSR initiatives year on year that
• First TCFD report, embarked on programme
Progress
• Ended 2022 with $404 million cash at bank,
$366 million net debt, well within covenants
(MPNU and Abiala)
• Net debt/EBITDA of 0.88x
• Paid $177 million in royalties and $57 million
• Deployment of the Noobyia GHG
• $140 million deposits for acquisitions
focus on education, health, youth
development and empowerment
• In 2023, we plan to equip hospitals
and schools in our communities with
reliable power
to address its recommendations
in taxes to government
• Seplat received ISO 55001 certification
• Commenced ISO 14001 accreditation
• Signatory to the United Nations Global
Compact initiative, since 2021
• Seplat has paid steady dividends to
shareholders over the past few years,
and has paid $476 million dividends
Risk overview
Working with other industry players in the
Niger Delta, we continued to put pressure
on the government to find a lasting solution
to social unrest in the region. To mitigate
any occurrence of business disruptions
from community agitations, we continue to
ensure consistent delivery of our community
Initiatives (as well as full compliance with the
terms of the GMOU) across all operational
areas. We are participating in all ongoing
engagements with stakeholders including
community leadership for a better
understanding of the PIA mechanism.
Risk overview
We recognise that as an oil and gas producer
operating in the Niger Delta, our business
faces significant risks from climate change.
As such an important focus of 2022 has
been to oversee the upgrading of climate-
related risk as a principal risk within our risk
management framework. In order to mitigate
the risk of environmental impact due to spill,
improper waste management, produced
water and fresh water management, gas
flaring, air emissions, we have enhanced
our environmental compliance monitoring
and asset integrity management.
Risk overview
Our estimated proved reserve, revenue,
operating cash flows and margins, liquidity,
and future earnings are all impacted by the
volatility of crude oil, and natural gas prices,
as well as established prices emanating from
the other products derived from the strategic
energy mix. Our risk management strategy is
to protect ourselves against adverse oil price
movements through our oil price hedging
policy, which targets hedging six months in
advance via out-of-the-money puts. Also, to
mitigate JV relationship risk, we continue to
manage our JV relationships very closely.
UNDERPINNED BY:
24
INTEGRITY
SAFETY
PARTNERSHIP
Seplat Energy PlcAnnual Report and Accounts 2022 Overall strategic results:
Increase access
to energy
Reduce
emissions
Transform
the economy
Deliver Energy Transition
Upstream
Midstream Gas
New Energy
Develop our Upstream business by
selectively expanding our asset base,
optimising the gas/oil mix, increasing
production, reducing costs and carbon
intensity, and increasing revenue assurance
by diversifying routes to market.
Development of Nigeria’s gas resources
to accelerate the replacement of diesel and
biomass and support economic growth
through the supply of reliable, low cost
energy. Gas-to-power provides baseload
electricity to support renewables.
Achieve a world-class capability in renewable
energies, through the development or
acquisition of new skillsets that open up new
and profitable markets.
Progress
• Sibiri appraisal delivered promising results
• Farm-in to Abiala marginal field
• Alternative evacuation from OMLs 4,
Progress
• Signed GSAs with three new customers
Progress
• Finalised Power & New Energy Investment
for combined 86 MMscfd offtake
• Achieved 95% mechanical completion
Plan, identifying opportunities for FID
consideration in 2023
38 and 41, the AEP route operational in July
of the AGPC Plant
• Improved uptime and losses
• Developing other export routes
• Higher availability of Oben and Amukpe
compressors reduce from AEP AG gas
flared by 18% and 40% respectively
• 13 wells delivered in 2022
• 60% project completion for the 85 MMscfd
Sapele Gas Plant
• AG compressors installed and will capture
otherwise flared gas to processing and sell
• Plan to unlock value by spinning out gas
business in line with PIA provisions
• Pursuing carbon offset possibilities on a
wide range of emission reduction activities
in various global carbon markets
Risk overview
We focus on expanding our asset base
through a clear exploration programme with
an exploration objective in place to drill at
least one exploration well each year with
significant finds, as well as embarking on
a continuous M&A programme to secure
available opportunities at the right price. In
order to increase production and revenue,
we continue to ensure operability and availability
of production facilities due to asset integrity
issues. A key mitigation against problems is
the inclusion of a maintainability and operability
philosophy in engineering design stage.
Risk overview
We continued to align our business to
the new strategy that was announced in
mid-2021, advancing the development of
the Midstream Gas business and making the
necessary decisions to realise the separation
of the Gas business from the Upstream
business. As a mitigation strategy, we focus
on portfolio expansion strategy to diversify
our current portfolio, through integrated
long-term planning for the gas and future
power and renewables business. The
completion of the ANOH Gas Processing
Plant will establish Seplat Energy as major
player in the midstream gas business.
Risk overview
We developed a long-term business plan
for the New Energy Business. These initiatives
will drive long-term prosperity for Seplat
Energy as we diversify and transition towards
producing energy in multiple forms, and for
a much wider customer base both at home
and abroad. We have identified numerous
business opportunities in power and new
energy and will carefully consider these
in advance of a final investment decision,
subject to them meeting financial and
technical requirements.
AMBITION
AGILITY
SAFETY
25
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 How we create value
Generating value for
all our stakeholders
Guided by our strategic framework, our business model applies
our core strengths, relationships and experience to create long-term
value and shared prosperity for all of our stakeholders.
Inputs, resources
and relationships
Our competitive
advantages
Outputs we delivered in 2022
Industry expertise
We are Nigeria’s leading
independent oil and gas
producer, with a long track record
of successful operations in the
Niger Delta. We deploy and develop
this expertise every day for the
benefit of all stakeholders.
Strong relationships
We are a trusted partner to the
Nigerian Government and other
operators in the region. Our ANOH
gas processing plant project is
classed as strategically important
for Nigeria, for which we are
a leading supplier of gas for
domestic power.
Low-cost production
We focus on maximising output
for the lowest cost possible and
this enables us to maximise
profitability even at low oil prices.
Strong cash generation
Our prudent approach to
investment and low cost base
drive strong cash generation
to repay debt, invest for the future
and pay dividends. This gives
us the strength to tap capital
markets when needed, as
evidenced by recent and
successful refinancings of debt.
Unified and motivated
workforce
500+
talented employees
Operational expertise
83%
of production is under Seplat’s control
Strong financial management
and access to capital
$790m
Cash at bank and undrawn facilities
Effective HSSE and
risk management
0.12
LTIF
Good corporate governance
91%
Corporate Governance Rating System
(2022 recertification by CBI and NGX)
Social investment
$10.8m
for community development projects in 2022
For our shareholders
– Capital growth
– Dividends
NSE
75.1%
Total Shareholder Return in 2022
For government
LSE
35.0%
– Royalty and tax revenue
– Foreign and local capital investments
Payments and production
entitlement to government
reported in 2022
For Nigeria
$1.2b
– Infrastructure development
– Multiplier effects from improved
gas-to-power supply
Proportion of Nigeria’s current power
generation that can be underpinned
by our gas production
1/3
292
14,412
For our host communities
– Economic empowerment
– Healthcare and education
Teachers trained and Youths empowered
following completion of skills acquisition
programme in 2022
For our employees
– Training and development
– Shares awarded
Hours of employee
training in 2022
Reduced GHG emissions
– Scope 1 and 2 emissions
reduction targets set
Reduction in
carbon intensity
-35%
26
Seplat Energy PlcAnnual Report and Accounts 2022 Acquire
Acquire
Explore & appraise
Develop
Acquire
Develop
Explore & appraise
Produce, process & sell
Explore & appraise
Produce, process & sell
Acquire
Develop
Explore & appraise
Produce, process & sell
New energy
Seplat Energy will be at the centre of Nigeria’s energy transition. We will
focus on increasing energy access by extending our business portfolio to
the renewable energy sector, thereby driving Nigeria’s transition to cleaner
and more sustainable power generation.
We will enter the power market in appropriate and profitable roles,
identifying and serving commercial and domestic markets that are
neglected by the status quo and offering innovative energy solutions.
Develop
Our expertise
Acquire
When completed, the proposed
acquisition of MPNU, announced in
February 2022, will be transformational
for Seplat Energy, more than doubling
our reserves and nearly trebling
our production.
Produce, process & sell
Explore & appraise
Appraisal drilling of Sibiri-2 reached
TD on 23 February, with initial results
indicating significant uplift in mid-case
Oil-In-Place volumes. The preliminary
results align with the high side of
pre-appraisal Oil-In-Place evaluation.
Develop
We completed 13 new wells in 2022,
recognising our need for continuous
development of our assets to ensure
future streams of oil and gas that will
drive profitable cash flow.
Produce, process & sell
We aim to maximise production of oil
and reduce pipeline losses wherever
possible, if necessary by developing
our own infrastructure. Our joint
venture ANOH gas processing plant
will increase our contribution to energy
production in Nigeria, with economic
benefits for the country and its people.
27
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022
Key performance indicators
Measuring
our progress
Key performance indicator
Net working interest production (boepd)
44,104
2022 19,369
24,735
44,104
2021 18,602
29,091
2020
17,469
33,714
47,693
51,183
2019
22,563
23,935
46,498
Gas
Oil
Definition and relevance
Our share of oil and gas produced during the
year proportionate to our working interest in
each producing block. Volumes expressed
are as measured at our facilities, prior to any
reconciliation losses.
Relevance
An indicator of production strength at our
current blocks and the impact of organic
and inorganic development projects.
Carbon intensity (kg/boe)
23.94
2022
2021
2020
2020 is the baseline year
23.94
36.61
39.85
A measure of Scope 1 and 2 emissions per
unit of production within Seplat’s operating
assets and facilities.
Relevance
An assessment of our carbon footprint
and its impact on our operations.
Production opex ($/boe)
$10.3/boe
2022
2021
2020
2019
2022
2021
2020
-32
2019
2022
0.12
2021 0
2020 0
2019 0
EBIT (million)
$275m
Lost Time Injury Frequency
0.12
28
10.30
9.90
8.90
6.20
275
251
312
The operating costs (excluding non-cash
flow expenses, and financing costs) net to
the Company divided by our working interest
barrels of oil and equivalent produced in
the period.
Relevance
An indicator of how cost efficiently we are
able to utilise its oil and gas reserves. By
controlling our operating cost base we can
be more resilient when oil prices are low,
and more profitable when they are high.
Our earnings before the deduction of interest
and tax expenses.
Relevance
An indicator of our earnings ability and
cash generation.
The number of lost-time incidents recorded
per million man-hours worked.
Relevance
An indicator of health and safety
performance that is widely established
within the oil and gas industry.
Seplat Energy PlcAnnual Report and Accounts 2022 Seplat Energy’s Key Performance Indicators align
strategy and execution, with consideration to
risk management and remuneration, enabling us
to measure our progress. As we further implement
our strategy, we will introduce new KPIs focused
on ESG and other metrics.
Progress and outlook
Risk management
We delivered average W.I. oil and gas production of 44,104 kboepd, nearly
8% lower than 2021 because of oil theft and problems with our export
routes resulting in a downtime of 37%. Average reconciliation losses arising
from use of third-party infrastructure were 10.7%. Liquids accounted for
24,735 kbopd, or 56% of boepd volumes.
Outlook
Production guidance on a average working interest production is set at
45-55 kboepd for 2023. We expect production uptime to improve now that
the Amukpe-Escravos export route is fully operational.
Carbon emissions at 2022 improved from 36.6 kg/boe in 2021 to 23.9 kg/
boe, a 34.7% decrease on 2021. The change represents an improvement
in efficiency due to improvements in performance of the AG compressor in
Oben and Amukpe, alongside regular asset integrity checks and other facility
improvement activities.
Outlook
We have committed to being carbon neutral in 2050, ending routine flares
by the end of 2024 is a priority. We plan to complete the Oben, Amukpe,
Sapele and Jisike Flares Out projects, which will capture and monetise gas
for productive use and significantly reduce our carbon intensity.
The Company has an in-depth
understanding of the subsurface and
constantly monitors individual well
and reservoir performance in order
to optimise the drawdown rate on
each well and maximise long-term
economic recovery of oil and gas
from the reservoirs. It has also
prioritised the creation and use
of alternative oil export routes to
mitigate high concentration risk.
The Company recognises that
the business faces significant risks
from climate change, and upgraded
climate-related risk as a principal risk
within the Company’s risk management
framework. Our primary commitment
is to reduce our GHG emissions
resulting from direct operations and
we have established a broad set of
investment activities designed to
reduce emissions from its operated
facilities and offset residual emissions.
Strategic pillars
1 — Drive social development
2 — Focus on environmental
care and reporting
3 — Maximise returns for all
stakeholders
4 — Upstream
5 — Midstream gas
6 — New Energy
Our strategy
Page 24
Progress
Below expectations
Links to strategic pillars
1 2 3 4 5 6
Linked to remuneration?
Yes (See page 125)
Progress
In line with expectations
Links to strategic pillars
3 4 5
Linked to remuneration?
Yes (See page 125)
Operational expenditure per unit of production increased by 4.4% year on
year to $10.3 per boe as a result of lower production in 2022 impacted by
prolonged periods of shut-in at the Forcados oil terminal. An excess storage
charge on use of the Escravos terminal, and the higher cost of crude
handling on the AEP, when compared to the TFP were other factors.
Outlook
We remain focused on cost control. Whilst increases in certain cost
components are expected to increase year on year there are areas where
downwards pressure can be applied with the objective of achieving
a stable unit cost.
The Company carefully monitors
expenditures and continually
analyses its underlying cost base,
making comparisons to prevailing
market rates in order to ensure that
the Company is identifying and able
to action cost savings and efficiency
gains, keeping it competitively
positioned on the cost curve.
Progress
Above expectation
Links to strategic pillars
3 4 5
Linked to remuneration?
No
EBIT increased to $274.7 million in 2022 and reflects the rise in oil price
realisations year on year. G&A costs were 72% higher year on year at
$137.4 million because of global inflationary trends, including travel and
training costs, and the upward adjustments to staff salaries and emoluments
to reflect the true cost of living, and one-off increased spending on
professional and consulting fees associated with growth strategies.
Outlook
Improved oil production levels, tight cost control and anticipated growth
in gas production at OMLs 4, 38 and 41 will ensure robust earnings potential
in the future. Development of hydrocarbon resources in OML 40 and OML.
53 will also enhance our future earnings profile.
The Company has robust financial
processes in place and carefully
monitors revenues, cost of sales and
admin costs to ensure continued
strong profitability. Oil price is a major
influencing factor on the Company’s
revenue. The Company is analysing
hedging strategies to help mitigate
exposure to oil price volatility.
Progress
In line with expectations
Links to strategic pillars
3 4 5
Linked to remuneration?
Yes (See page 125)
After achieving 31 million hours with zero LTI recorded over the last four
years, a non-operating incident was recorded in October and Lost Time
Injury Frequency (LTIF) was 0.12 in 2022.
Outlook
In 2023, efforts will continue to minimise the frequency of lost time incidents
in all areas of operations. The Company will continue to ensure high HSE
standards are met and assess opportunities to constantly improve its HSE
systems and protocols.
The Company has in place extensive
and well-developed HSE policies
and reporting procedures with an
emphasis on the early identification
and mitigation of HSE risks. The
Company closely monitors its HSE
performance and is constantly
evaluating ways to improve its
performance.
Progress
In line with expectations
Links to strategic pillars
1 2 3 4 5
Linked to remuneration?
Yes (See page 125)
29
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Additional performance metrics
Tracking our
performance
2022
2021
2020
2019
2022
2021
2020
2019
2022
2021
2020
2019
2022
2021
2020
2019
Definition and relevance
Our operating cash flow
in the year before taking into account
movements in working capital.
Relevance
An indicator of the cash generative potential
of our producing oil and gas blocks.
571
377
329
342
163
136
150
125
The total amount of capital expenditure
invested during the year, excluding
acquisition costs.
Relevance
An indicator of our level of investment
activities in production, development
and exploration and appraisal activities.
101.7
The average oil price per barrel we sold
during the year.
Relevance
Our financial performance is closely linked
to the price of oil.
39.9
70.5
64.4
6.3
2.4
4.5
3.6
The rate at which full-time staff of Seplat
choose to leave the Company voluntarily,
expressed as a percentage of average
full time headcount during the year.
Relevance
An indicator of our ability to attract and retain
personnel. The loss of people can result in
skills shortage, loss of knowledge and higher
recruitment costs.
Key performance indicator
Cash flow from operations (million)
$571m
Capital expenditures (million)
$163m
Realised oil price ($/bbl)
$101.7/bbl
Staff turnover (%)
6.3%
30
Seplat Energy PlcAnnual Report and Accounts 2022 In addition to our key performance indicators, we
also track performance against additional metrics
that further assist in measuring progress. We will
add further metrics as appropriate in the coming
year, closely aligned to our strategic imperatives.
Strategic pillars
1 — Drive social development
2 — Focus on environmental
care and reporting
3 — Maximise returns for all
stakeholders
4 — Upstream
5 — Midstream gas
6 — New Energy
Our strategy
Page 24
Progress and outlook
Risk management
Our operating cash flow of $571.2 million was driven by higher oil prices
during the year.
Outlook
Strong underlying wellhead oil production capacity and anticipated
future growth in gas production will ensure continued robust cash flow
generation. Development of the Sibiri and Abiala fields together with
gas production from OML 53 and OPL 283 will also significantly augment
future cash flow potential.
Careful financial management and
high levels of operating efficiency
allow the Company to ensure
positive cash generation from its
operating activities.
Progress
In line with expectations
Links to strategic pillars
1 2 3 4 5 6
Linked to remuneration?
Yes (See page 121)
Capital expenditures in the period were $163.3 million, comprising
$94 million drilling costs and $64 million related to associated facilities
development and engineering costs.
Outlook
Capex for 2023 is expected to be $160 million, and we plan to drill 18 new
wells across our operated and non-operated assets. We will continue
to invest in our gas development projects and complete ongoing capital
projects. We will exercise discretion over drilling investments and selectively
consider opportunities in our existing portfolio, focusing on delivering the
highest cash return whilst diligently preserving a strong balance sheet.
Project investments are monitored
closely against budgets to minimise
the risk of over-runs. We benchmark
every investment opportunity to
ensure capital is deployed to only
the highest return projects, and
adheres to a price disciplined
acquisition strategy.
Progress
In line with expectations
Links to strategic pillars
2 3 4 5 6
Linked to remuneration?
Yes (See page 121)
Oil prices increased in 2022 as the impact of Russia’s invasion of Ukraine hit
global energy prices. The Brent spot price began the year at around $79/bbl
reaching a high of $139/bbl in March to close at $86/bbl. The average
realised oil price achieved by the Group in 2022 was $101.7/bbl. Seplat’s
hedging policy aims to guarantee appropriate levels of cash flow assurance
in times of oil price weakness and volatility. The total volume hedged in
2022 was 7.5 MMbbls, and the H1 2023 program consists of dated Brent
put options of 3.0 MMbbls at an average premium of $1.07/bbl.
We continue to closely monitor
prevailing oil market dynamics and
will consider further measures
and take advantage of opportune
periods to implement additional
hedges that provide appropriate
levels of cash flow assurance.
Progress
Above expectations
Links to strategic pillars
1 2 3 4 5 6
Linked to remuneration?
No
Outlook
Oil prices are expected to remain subject to global economic and
geopolitical activity. We have historically sold most of our oil under the
Forcados blend, which has generally received a premium to the Brent
market price. With the Amukpe-Escravos export route now available,
we expect to sell a significant amount at the Escravos Oil Terminal,
where prices also receive a premium to Brent.
We have continued to improve our employment policies, practices and
employee value proposition to attract, motivate and retain talented
employees. Staff turnover was only 6.3% in 2022, despite increased
migration of talents which was experienced globally during the year in view.
Outlook
In the long term, the industry will continue to face intense competition
for talent, but we will continue to be an attractive employer for the highly
qualified and experienced people we need for our future success.
Our response is to continue to
deploy strategies to support
the future of work expectations,
including those expressed in the
2022 employee survey. In addition,
we are working to ensure that we
continue to provide competitive pay
and benefit packages, progressive
career opportunities and good
working conditions.
Progress
In line with expectations
Links to strategic pillars
1 2 3 4 5 6
Linked to remuneration?
Yes (See page 121)
31
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Risk management
Protecting
our business
Strong and effective risk management is central to how we
run our business and enables the delivery of our strategy.
Managing risk and protecting
our business
Risk management is an integral part of all
business activities of Seplat Energy. The
Company’s Risk Management Policy is
focused on: the identification of existing risks
and future risks that might be encountered
while pursuing its strategy, corporate
objectives, and annual business plans;
quantifying their possible impacts on the
business; and developing measures that can
be implemented to mitigate the identified
risks so that Seplat Energy can continue to
operate safely and effectively. Seplat Energy
recognises that risk management is a
continuous journey of improvement and not
a destination and will continue to develop its
risk management processes to ensure the
Company is fully equipped to deal with the
constantly evolving operating and business
environment of the Energy sector.
Our risk management system
The Company’s risk management system
is based on guidelines provided in
ISO 31000, the international standard for
risk management. The system is built on a
top-down and bottom-up approach, with
the Board of Directors (Board) determining
the appropriate risk appetite necessary to
achieve the Company’s corporate objectives,
while our Business Units identify and mitigate
risks at the unit and asset levels.
The Risk Management and HSSE Committee
assists the Board in overseeing the
Company’s risk management framework and
the risk/reward strategy as determined by
the Board. The Committee ensures that the
Company has an adequate risk management
system in place to manage the diverse and
changing risks and opportunities faced by the
Company as it creates value for shareholders.
Bello Rabiu
Chairman, Risk Management
and HSSE Committee
Our risk management framework
ISO 31000 based, top-down and bottom-up approach
Board of Directors
Company strategy | Risk appetite | Strategic risks oversight
Risk Management and HSSE Committee of the Board
• Approves and updates risk management policy and system
• Defines risk appetite
• Oversees and monitors enterprise risks
Executive Management
Delivery of Company strategy | Identify key risks
against the achievement of strategy | Proffer
and deploy actions and controls to address
key risks | Monitor enterprise risks
Risk Management Team
Coordinates enterprise risk management
activities | Articulates and updates risk
management policy and system | Risk
identification, assessment, quantification
and rating | Risk reporting and monitoring |
Enterprise risk register and dashboard |
Risk Champion activities
Internal Audit
• Independent assurance
• Reports to Audit and
Finance committees
of the Board
Business Units
Business objectives | Risk identification, assessment and rating | Mitigation actions and controls |
Monitor risks and mitigation actions | Report risks and mitigation actions status
Risk identification, monitoring, mitigation action implementation and monitoring are bottom-up from assets,
projects and function levels
32
Seplat Energy PlcAnnual Report and Accounts 2022 It meets at least four times a year to analyse
and evaluate the Company’s key risk profiles,
proposed mitigation strategies, mitigation
actions taken by management, and any residual
risk exposures. The meetings are attended by
Executive Directors who have accountability for
ensuring that risk identification is comprehensive
and proposing mitigating measures that are
effective in achieving the desired objectives.
Reports on the Company’s corporate risk
register, key risk exposures in the business
operations, and reviews of its risk management
systems are compiled and presented to the
Board of Directors.
While key risks and associated risk appetites
are determined at the top, the business units
and functional managers are accountable
for the respective risks within their areas.
The Company’s enterprise risk management
(ERM) system, coordinated by the Head,
Enterprise Risk Management and overseen
by the Board Risk Management and HSSE
Committee, supports risk management
across the business and functions.
The Company’s ERM system includes robust
risk identification, assessment, reporting, and
monitoring mechanisms and approaches that
include maintenance of both enterprise and
functional/operational levels risk registers, risk
dashboards, mitigation actions monitoring/
tracking, and risk reporting.
In a bid to continually embed risk management
across the business and functions, the
Company utilises specially appointed and
trained Risk Champions to ensure common
methodology, language, and approach in the
way risks are managed across the business.
The Internal Audit unit undertakes periodic
audits of the various business units including
the Company’s corporate governance
systems and risk management processes.
Key principles that underpin the Company’s
risk management framework and system:
• Strong focus on safety throughout
the organisation.
• Close oversight by senior management
in day-to-day business operations.
• Risk owners throughout the business.
• Accountability of staff and/or key personnel.
• Regular and timely reporting.
• Clear line of sight on the system of
internal controls.
• Monitoring and independent reviews.
Activities in 2022
Our risk landscape remained largely stable
concerning existing exposures noted in our
last update in 2021, although we recorded
a few noteworthy changes detailed in this
report. As the global Covid-19 pandemic
receded during 2022, we experienced
a decrease in infection rate across the
Company’s operations, with zero positive
tests returned in the final quarter. Following
global and local trends, we adopted a
de-escalation strategy that aligns with the
directives of Nigeria’s Federal Government.
We continued to align our business to
the new strategy that was announced in
mid-2021, advancing the development of the
Pillar 2 Midstream Gas business and making
the necessary decisions to realise the
spin-off of the gas business from the Pillar 1
Upstream business. Also, the Power & New
Energy team developed a long-term business
plan for the Pillar 3 Power & New Energy
Business. Both initiatives will drive long-term
prosperity for Seplat Energy as we diversify
and transition towards producing energy
in multiple forms, and for a much wider
customer base both at home and abroad.
During the year, Seplat Energy took
the opportunity to review its strategy
and align it with the imperatives of
the energy transition agenda.”
We achieved the ISO 55001:2014 Standard
(Asset Management System) certification,
becoming the first energy company in Africa
to achieve this remarkable feat. ISO 55001
is the international standard that helps
organisations to manage their assets and
optimise asset lifetime value. The certification
will deliver benefits both now and in the future
by helping to improve the Company's bottom
line, reduce risks across the organisation,
improve asset performance, and ultimately
improve investors' confidence in how
Seplat Energy manages its assets. The ISO
55001:2014 standard is a holistic business
improvement tool that applies to many
organisations in many different sectors.
On project delivery, we commissioned
the Amukpe-Escravos Pipeline in July,
which helped to increase export volumes
significantly in the final months of the year,
compared to Q3 when our usual export
routes were severely impaired, significantly
impacting output for the year. In addition,
the Sapele AG compressor project was
completed, which will contribute to a
reduction in our routine gas flares.
We continue to focus on completing the
ANOH Gas Processing Plant and the Sapele
Gas Plant upgrade. These are strategic
projects essential for Seplat Energy to
demonstrate its commitment to Nigeria’s
energy transition and to reduce emissions
through our Flares Out programme.
As the Russia-Ukraine crisis continues to
disrupt global energy markets, we see a
surge in prices across a broader set of
energy-related commodities. The benchmark
price of oil (Brent) continued to remain high,
closing the year above $80/bbl and peaking
at $139/bbl in March 2022. However, as we
look ahead, we continue to focus on the
matters we can control, drive down capital
and operating costs and drive-up efficiencies.
Overall, in 2022, the Committee analysed and
evaluated the various key risk exposures for
the Company. In doing so, the Corporate Risk
Register was reviewed, and the risk reports
were presented by management. These
reports detail the key risks, the potential
impact of the risks, and the likelihood of
occurrence. Mitigating strategies were
comprehensively considered, including but
not limited to those related to climate-related
risks, export line breaches and crude evacuation,
stability in the Niger Delta, oil price volatility,
and strategic project delivery. Other risks
considered are Government and JV relations
management, liquidity, geopolitical,
environmental, market, contractual, and
litigation risks. The status and effectiveness
of mitigation actions were reviewed, and
any residual gaps or follow-up actions were
identified. Key performance indicators as
well as other risk indicators and trends were
monitored. Key risks requiring risk tolerance
considerations and strategic actions were
presented to and debated by the Board.
The Committee reviewed the risk
management systems including the risk
dashboard and assessment tables. In line
with keeping the risk management framework
dynamic and up-to-date with current realities,
a review of the Company’s Enterprise Risk
Management framework was conducted by
an independent consultant (Ernst & Young),
to ensure the continued effectiveness of
the framework. The Committee also gave
further consideration to the achievements
made by the Risk Champions appointed
with a view to unifying risk management
approaches and embedding risk culture
across the organisation.
33
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Risk management | continued
High-profile risks
and uncertainties
Highlighted below are the high-profile risks that the Company
dealt with in 2022 and will continue to monitor going into 2023.
1
Climate-Related Risks
An important focus in 2022 has been to
oversee the upgrading of climate-related
risk as a key (or principal) risk within our risk
management framework. We recognise that
as an oil and gas producer operating in the
Niger Delta, our business faces significant
risks from climate change. By implementing
best practices, our processes for identifying
and assessing climate-related risks are built
on our increasing awareness of the nature
of these risks. Between May and July 2022,
the Enterprise Risk Management team led
a series of risk workshops to carry out a
fundamental reassessment of the Company’s
approach to climate-related risk.
The workshops brought together a multi-
disciplinary team to:
a) identify and assess the risks under each
of the categories recommended by the
Task Force on Climate-related Financial
Disclosures (TCFD);
b) assign a risk rating to each of the
categories of risk using the Seplat 5x5
Risk Assessment framework; and
c) consider how these risks can be managed
and mitigated.
In running the risk assessment, climate-
related risks were considered under
two broad headings: physical risk and
transition risk.
34
Physical risk can be divided into two types:
acute risks from increased severity of
extreme weather events such as storms and
floods and increased incidence of wildfires
and other climate-related emergencies; and
chronic risks from changes in precipitation
patterns, extreme variability in weather, rising
temperatures, rising sea levels and increased
incidence and intensity of droughts.
Transition risk, the actual and potential
impacts of risks associated with the energy
transition on our business, strategy, and
financial planning, are generally considered
under four headings suggested by the
TCFD: Policy and Legal, Technology, Market,
and Reputation. This is the approach
we have taken in carrying out our climate
risk assessment.
The key measures identified as necessary
to manage and mitigate climate-related
risk reflect the core elements of our overall
corporate strategy: decarbonising our
operations and diversifying our business
into lower-carbon and renewable energy
products. The physical and transition risks
we have identified, our assessment of their
impacts on the Company, actions being taken
to mitigate these risks, as well as full details
of the company’s climate change agenda
can be found in our Sustainability Report
and our Climate Risk and Resilience Report.
Seplat Energy PlcAnnual Report and Accounts 2022 2
3
4
Niger Delta stability/extended
production shut-in due to third-
party infrastructure downtime,
and geo-political risk
Seplat Energy’s core operations are located
in the Niger Delta region of Nigeria and that
comes with significant risks. Historically,
the Niger Delta has always been a high-risk
environment. Cases of militancy, crude oil theft,
pipeline vandalism, environmental pollution
arising from illegal bunkering activities, and
other lawless activities are rife in the region.
During the year 2022, the business recorded
zero occurrences of militancy activities, similar
to the previous year 2021. Accordingly, the
Trans Forcados export system (a major
export route for Seplat) remained operational
throughout the year. The Company, working
with other industry players in the region,
continued to put pressure on the government
to find a lasting solution to Niger Delta
restiveness; also, the current security measures
put in place by the facility operator,
consolidated with the government’s strategy
of dialogue with stakeholders in the region
seems to be working.
Concerning extended production shut-ins,
efforts aimed at mitigating the risk proved
successful with the second major export line,
AEP, coming on stream during the second
half of the year. In addition to the Forcados
and AEP export systems in the West, we
developed a production plan that proved
successful with various activities that
enhanced production capacity, resulting
in production delivery within the limits of
the communicated market guidance.
We continue to progress commercial
arrangements for additional crude evacuation
from our main assets both in the East and
in the West.
Low oil price environment
Seplat Energy’s operating results are highly
dependent on the prices of crude oil, and
natural gas. Our estimated proved reserve,
revenue, operating cash flows and margins,
liquidity, and future earnings are all impacted
by the volatility of crude oil, and natural
gas prices, as well as established prices
emanating from the other products derived
from the strategic energy mix. Seplat’s risk
management strategy is to protect itself
against adverse oil price movements through
our oil price hedging policy, which targets
hedging ca. six months in advance via
out-of-the-money puts (i.e., “disaster
protection insurance”). During the year, the
volume of put protection was 7.5 MMbbls
at an average strike price of $56/bbl.
Our long-term natural gas contracts have
escalation clauses that protect us against
a severe price decline.
Geo-political risk
During 2022, we recorded no incidents
resulting from geo-political activities such
as terrorism and secessionist agitation. As a
mitigation strategy, we continued to monitor
Niger Delta geo-political developments
and issued regular reports to management,
partnering with security stakeholders in the
sharing of intelligence regarding security.
Also, concerning changes in regulation
and policies, we kept a strong focus on
understanding the impact of the new PIA
(Petroleum Industry Act), especially as
it touches on the inclusion of impacted
communities, which well could serve as
a driver for community agitation from our
immediate host communities. Accordingly,
we are participating in all ongoing
engagements with stakeholders including
community leadership for a better
understanding of the PIA mechanism.
...we continued to monitor Niger
Delta geo-political developments
and issued regular reports to
management, partnering with
security stakeholders in the sharing
of intelligence regarding security.”
35
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Risk management | continued
Conclusion
In conclusion, despite the challenges
and uncertainties posed by the Covid-19
pandemic, we demonstrated resilience and
commitment to delivering our 2022 work
programme, while proactively monitoring
and managing production costs across our
operations, to reap the benefit of the oil price
recovery and remain competitive. On project
delivery, we made tremendous progress in
key projects such as operationalising the
Amukpe-Escravos Pipeline, the completion
of the AGPC gas plant, and the acceleration
of the Sapele Gas Plant upgrade. These
projects are critical for the ability to evacuate
production from our core assets, demonstrate
leadership in the ESG space by eliminating
routine flares, and ensure near-term growth.
Accordingly, we continued to focus on
strengthening our approach and credibility on
climate related-risks and broader sustainability
imperatives, as well as introducing a system
for quantifying our greenhouse gas emissions.
Overall, the Committee is satisfied that the
Company has a robust Risk Management
System that serves to ensure the integrity of
business processes, decisions, and activities
going into the future. The Company’s HSSE
Management System is also mature and
reliable and has continued to deliver good
HSSE performance year after year.
Bello Rabiu
Chairman, Risk Management
and HSSE Committee
5
6
Infectious Diseases Outbreak
(COVID-19).
At the onset of Q1 2022, we ramped up return
to offices at 75% (with adequate rotation
plans) across all Nigerian office locations,
given the successful deployment of vaccines,
as well as other non-pharmaceutical measures
and testing, put in place to manage the
pandemic. However, towards the close of the
first quarter, return to offices was ramped up
to 100% across all Seplat’s Nigerian office
locations. Suspension of testing was also
introduced for vaccinated office-based
employees only. Our leadership, through the
COVIMOG framework and in collaboration
with Human Resources and Operations
teams, continued to sustain the business
and observed all recommended preventive
measures advised by both the NCDC, the
PSC, and State Governments.
During Q2 and Q3 2022, we continued
to encourage employees to comply with
prevention and control protocols. This
included the presentation of evidence of full
vaccination status or negative Rapid Antigen
Test as a requirement for access to the office
building as well as pre-embarkation testing
for field-based personnel. During Q4 2022,
a de-escalation of Covid-19 management
notice was issued. The use of face masks
and other facial coverings was no longer
mandatory. Given the unpredictable nature
of the Covid-19 pandemic and the evolving
variants, we continued to monitor key indices
and take appropriate steps aimed at ensuring
a safe work environment for all employees.
Overall, we remained in a controlled situation
to manage the Covid-19 pandemic
throughout the year.
JV receivable and future cash
call funding
Seplat Energy has the Nigerian government
as a Joint Venture (JV) partner in significant
parts of its business. Cash call funding from
government partners has historically been
poor, resulting in a buildup of legacy cash
call receivables over time. In 2022, the
government JV partners continued to remain
current in paying cash calls. However, the
risk of cash calls sliding back to the pre-2019
practice of late payments is still there.
To mitigate this exposure, we continue to
manage our JV relationships very closely and
actively engage the respective government
partners on timely payment of cash calls.
...we continue to manage our JV
relationships very closely and
actively engage the respective
government partners on timely
payment of cash calls.”
7
Liquidity risk
The combination of the AEP, Trans-Forcados
Pipeline up time, and the oil price assisted
Seplat’s liquidity position significantly in the
year. We manage liquidity risk by ensuring
that sufficient funds are available to meet
commitments as they fall due, using both
long-term and short-term cash flow
projections to monitor funding requirements
for activities; and ensuring there are sufficient
cash resources to meet operational needs.
Our cash flow projections take into
consideration the Company’s debts and
covenant compliance. Surplus cash held is
invested in interest-bearing current accounts,
time deposits, and money market deposits.
36
Seplat Energy PlcAnnual Report and Accounts 2022 Mapping our risk
The mapping of our risks considered both quantitative and qualitative
factors. Seplat Energy’s risk mapping is underpinned by a two-factor
spectrum – Likelihood and Impact, which are further plotted on the
basis of Seplat Energy 5x5 methodology, to arrive at a final assessment
for each risk.
i
n
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17
Consequences
14
19
1
11
21
15
18
5
20
3
8
7
16
2
6
12
9
13
4
10
Negligible
Minor
Moderate
Significant
Severe
Assessment
Very high
High
Medium
Low
Movement trend
Decreasing
Increasing
Steady
Topic
Trend
Topic
Trend
Infectious diseases outbreak in Seplat (Covid-19)
1.
2. Niger Delta Militancy/third party interference
3. Portfolio concentration risk
4. Sustaining E&A programme
5. Oil price volatility
6. Merger & acquisition (M&A) risk
7. Stakeholder management relationships
8. HSSE risks
9. Availability of capital
10. Liquidity
11. Changes to fiscal and tax status
12. Bribery and corruption risk
13. Fraudulent activity risk
14. Field operations and project deliverability
15. Geo-political risk
16. Cost control risk
17. Foreign exchange risk
18. Information security risk
19. New Energy and gas market risk
20. Corporate governance and compliance risk
21. Climate-related risk
37
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Principal risks and uncertainties
Monitoring and
mitigating risks
Operational risks
Definition
Mitigation
Links
Trends
Field operations and
project deliverability
Failure to manage operational activities
in line with planned expectations can
lead to production misses, project
delays and cost overruns, high
production costs and earlier than
expected field decommissioning.
Focus on risk management at planning phase
and mitigation plans activated. Compulsory
‘peer-to-peer’ review for high-value projects
and better project management techniques.
Protracted land acquisition, preparation and rig
startup have been contributory factors which
have received focused attention and significant
process improvements and improved
communications with JV partner and approving
regulators to mitigate delays. Use of smart/
intelligent wells to improve recovery and
improved rig performance monitoring and
reporting to manage non-productive times.
KPI/Performance metric
• Net working interest
production
• Operating costs per boe
Strategic pillars
3/4/5
Assessment
High
Third-party infrastructure
downtime
An over-reliance on third party
operated transportation infrastructure
can expose the Company to extended
period of production being shut-in.
Amukpe to Escravos pipeline (AEP) project
was completed and commissioned in the
third quarter 2022 to complement the Trans
Forcados Pipeline. Continue to explore export via
barging as a back-up option in extreme cases.
FEED completed and outcome prepared
for presentation to JV Partners to pave way
for Contracting Strategy concurrence for
Engineering, Procurement, Installation and
Commissioning (EPIC) of Amukpe LTF Upgrade.
KPI/Performance metric
• Net working interest
production
• Days downtime
• EBIT
Strategic pillars
3/4/5
Assessment
Very high
Decreasing. We continue to
redefine our project management
approach for improved speed
of delivery and efficiency;
Acquired the ISO 55001 Asset
Management System certification
for Asset Integrity, consolidate
performance across the board,
maximise production, maintain
a strong balance sheet, and
strategically position the
Company for future growth.
Steady. The Forcados export
system recorded significant
downtime towards the close of
the year – however, the AEP
coming onstream in July 2022
provided adequate evacuation
support for the business and
helped enhance bottom-line
liquidity. Risk trend is kept at
steady with the AEP availability in
the event of an outage of the TFP.
HSSE risks
Oil and gas activities carry significant
levels of HSSE risks which must
be properly managed. As activity
levels continue to increase there is
a strong focus on preventing major
environmental (including the emerging
Climate Change – GHG emissions
risk), health or safety incidents.
Deployment of an HSSE Management System
in line with best practices. Monitoring and
reporting of HSSE performance scorecards
at management and Board levels. Our
HSSE systems and process are subjected to
independent review and identified improvement
initiatives are deployed. Continual focus on HSSE
training and initiatives on incidence prevention.
Emergency Response plan set for any eventuality
and comprehensive Incident Review panels
to identify and channel lessons learnt to
improvement activities. Focus on the delivery on
projects earmarked to reduce and or eliminate
gas flaring as spelt out under the Company’s
“gas flares out roadmap” and new energy
transition plan.
KPI/Performance metric
• HSE scorecards
• LTIR
• TRIR
Strategic pillars
1/2/3/4/5
Assessment
High
Steady. Though the risk is
inherent, we will continue
to deploy our HSSE risk
management in line with best
practices and with strong
emphasis on prevention.
38
Seplat Energy PlcAnnual Report and Accounts 2022
The implementation of our strategy can be
hindered by various risks and uncertainties.
The risks that the Board considers most
significant are described here.
Strategic pillars
1 — Drive social development
2 — Focus on environmental
care and reporting
3 — Maximise returns for all
stakeholders
4 — Upstream
5 — Midstream gas
6 — New Energy
Our strategy
Page 24
Definition
Mitigation
Links
Trends
Climate-related risks
The Task Force on Climate-related
Financial Disclosures (TCFD) divided
climate-related risks into two major
categories:
(1) risks related to the transition to
a lower-carbon economy and
(2) risks related to the physical impacts
of climate change.
The Company has identified a number of
projects to reduce or eliminate gas flaring, as
outlined in our Flares Out roadmap; projects
include (i) delivery of the LPG projects at Sapele
and Oben, (ii) Installation of booster compressors,
and (iii) the Sapele integrated gas plant project.
Other mitigation include (1.) seek alternative
options for cleaner energy, (2.) Participate in
all industry discussions and initiatives aimed at
the introduction and deployment of Carbon-
emissions trading schemes in a developing
carbon-trading oil and gas economy.
KPI/Performance metric
• HSE scorecards
• LTIR
• TRIR
Strategic pillars
1/2/3/4/5/6
Assessment
Very high
Steady. The risk trend is being
kept at steady following the
company’s focus and commitment
to deliver key projects towards
reducing and or eliminating gas
flaring as spelt out under the “gas
flares out road map”. Additionally,
the company has developed
climate change and sustainability/
ESG policies, as well as developed
an inaugural TCFD report (Climate
risk and Resilience).
Infectious diseases
outbreak in Seplat
(e.g. Covid-19)
Risk of an index case manifesting in
Seplat offices or field locations. This
leads to an unsuccessful initial control
of index case (probably resulting in
communal spread of the disease in the
Seplat community as a result of late
detection of secondary contact cases
which may have had close contacts
with Index case or close contacts from
other external primary sources). Risk
also covers supply chain disruptions
emanating from the pandemic i.e. the
extent to which the disease will have
an impact on all key projects of the
company (Including ANOH) as
designed in the work programme
(impacting the supply chain and major
contractors scheduled to deliver in a
few months).
Sustaining Exploration
and Appraisal (E&A)
programme
Exploration and appraisal activities
carry significant levels of sub-surface
risk. Sustained E&A drilling failure
will impact the Company's ability
to organically replace reserves
and production.
KPI/Performance metric
• HSE scorecards
• LTIR
• TRIR
Strategic pillars
1/3/4/5
Assessment
Medium
Decreasing. The Company
remained in a controlled situation
to manage the Covid-19 pandemic
throughout the year via the
oversight coordination of the
strategic management vehicle
called COVIMOG.
The Company's leadership through the
COVIMOG (monitoring and response team)
continued to sustain the company business and
observed all recommended preventive measures
advised by both the Presidential Task Force (PTF)
and State Governments. Over 90% of employees
were fully vaccinated via a concerted Industry
(OPTS) support, while PCR test remained
mandatory for everyone carrying out activities
in the various areas of the Company’s operation
and Travel Advisory updates were shared with
staff. Provision continued to remain in place for
targeted tests of personnel in all locations as
required. Follow up treatment of positive cases
continued to be managed and funded by the
company. Also, as facilitated by the Lagos State
Government, the Covid-19 booster dose vaccines
are now readily available in Government Health
Centres, and the Company plans to keep on liaising
with appropriate bodies in the industry to facilitate
this process. Manage press/publicity and
communication to avoid mis-communication/
wrong press.
Strict compliance with reservoir management
guidelines. Building internal capacity with skilled
sub-surface expertise. Drill a minimum of two
exploration wells, as well as continuous M&A
work to secure available opportunities at the
right price.
KPI/Performance metric
• Reserve replacement
Strategic pillars
4
Assessment
Very high
Steady. High grading our
exploration portfolio through
a thorough prospect screening
exercise. In the near term, plan
is to commence exploration
drilling campaign in the West.
39
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Principal risks and uncertainties | continued
External risks
Definition
Definition
Mitigation
Links
Trends
Niger Delta stability
and security
Seplat Energy’s core operations are
located in the Niger Delta region of
Nigeria and that comes with significant
risks. Historically, the Niger Delta has
always been a high-risk environment
with security incidents such as
kidnappings, vandalism and criminal
attacks on O&G installations.
The Company, working with other industry
players in the region, continue to put pressure
on government to find a lasting solution to
Niger Delta restiveness and the current security
measures put in place by the facility operators,
consolidated with government’s strategy of
dialogue with stakeholders in the region seems
to be working.
KPI/Performance metric
• LTIR
• TRIR
• Security incidents
• Operating cash flow
Strategic pillars
1/2/3/4/5
Assessment
Very high
Steady. Efforts by the
Government and industry
pressure groups, aimed at
enhancing security in the region
seems to be paying off as
the business recorded zero
occurrence in militancy activities,
similar to the previous year 2021.
We will continue our monitoring
and vigilance.
Stakeholder management
relationships
Failure to manage stakeholders can
result in business disruptions and
interference. The Company prioritises
the effective management of
relationships with all stakeholders
including host communities, JV
partners, government, regulatory
bodies and shareholders.
Ensure consistent delivery of CSR Initiatives (as
well as full compliance with the terms of the
GMOU) across all operational areas. Sustain local
content development with priority to community
contractors. Tailored CSR programmes, capacity
building and infrastructure developments with
the host communities. Organisational focus
and clear strategy to deliver shareholder value
pursued by the Board and management.
Corporate governance, transparency and
proactiveness in dealings with regulators and
JV partners.
Geo-political risk
Nigeria has at times in its history faced
political uncertainties and threats such
as terrorism aimed at destabilising and
undermining the orderly and effective
rule of central government.
Scenarios and response options plan set. Crisis
management team in place for high alert political
periods. Continue to partner/network with security
stakeholders and share intelligence regarding
security. Business continuity plans actioned in
light of current geo-political situation.
KPI/Performance metric
• Net working interest
production
• LTIR
• TRIR
• Host community
incidences
Strategic pillars
1/2/3/4/5
Assessment
High
KPI/Performance metric
• Occurrences of civil
unrest and terrorism
Strategic pillars
1/2/3/4/5
Assessment
High
Steady. We continue to enjoy
good working relations with
our stakeholders.
Steady. During the year 2022, the
Company recorded no incidents
resultant from geo-political
activities such as terrorism and
secessionist agitations. As a
mitigation strategy, the Company
continued to monitor Niger Delta
geo-political developments
and issued regular reports
to management, as well as
partnered with security
stakeholders in the sharing of
intelligence regarding security.
40
Seplat Energy PlcAnnual Report and Accounts 2022
Financial risks
Strategic pillars
1 — Drive social development
2 — Focus on environmental
care and reporting
3 — Maximise returns for all
stakeholders
4 — Upstream
5 — Midstream gas
6 — New Energy
Our strategy
Page 24
Definition
Mitigation
Links
Trends
Oil price volatility
Oil prices have exhibited a history
of volatility and can fluctuate sharply
in line with external factors.
Hedging continues to be our price risk
management tool. We conduct price
sensitisation on project economics and enforce
cost discipline for capital projects sanctioning.
Aggressive focus on cost reduction.
KPI/Performance metric
• Realised oil price
• Operating cash flow
Strategic pillars
3/4
Assessment
High
Steady. In the year 2022, we
kept focus of our price risk
management policy to protect
the Company’s cash flow stream
from downside scenarios. We
will also continue to take hedge
positions and apply cost
reduction strategies.
Changes to tax status
and legislation
If the tax regime/legislation under
which the Company operates its
assets were to change, profitability
may be impacted.
Availability of capital
The oil and gas industry is highly
capital intensive. Significant amounts
of capital are required to continue
development activities and fund M&A.
Non-funding of cash calls by JV
partners impacts activities and liquidity.
Perform evaluation of business plan and
performance metrics exclusive of tax benefits.
Project economics were determined on maximum
tax basis to mitigate the impact of the now expired
pioneer tax status. Impact assessment of potential
tax legislation monitored at the Board level.
Emphasis on compliance with requirements of
the JV operating agreement for effective/strict JV
partner concurrence. Board review and approval
of financial strategy and debt portfolio management
with strong banking relationships.
Cost control risk
Cost reduction remains central to the
Company's current operating strategy.
High operating cost and ineffective
capital cost control negatively impacts
operating cash flows and profitability.
Comprehensive budgeting process approved
by the joint venture partner and the Board. Clear
cost management targets. Grading of portfolio
opportunities and project ranking for capital
allocation. Focus on reducing drilling costs at
well design phase. Cost monitoring and periodic
reporting. Focus on effective contracting
strategies for cost reduction.
Decreasing. The company is
participating in all ongoing
engagement with stakeholders
including community leadership
for a better understanding of the
PIA mechanism.
Decreasing. JV partners
continues to remain current
in paying cash calls.
Steady. Cost discipline remains
a key focus of the business.
KPI/Performance metric
• Effective tax rate
• Tax status
Strategic pillars
3
Assessment
Medium
KPI/Performance metric
• JV receivables
• CAPEX
• New M&A activities
Strategic pillars
3/4/5/6
Assessment
Very high
KPI/Performance metric
• Operating cost per boe
• EBIT
• CAPEX
• Well costs
Strategic pillars
3/4/5
Assessment
High
41
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Principal risks and uncertainties | continued
Financial risks
Definition
Liquidity
Liquidity risk is the risk that the
Company will not be able to meet its
financial obligations as they fall due.
Mitigation
Links
Trends
Manage liquidity risk by ensuring that sufficient
funds are available to meet commitments
as they fall due. Uses both long-term and
short-term cash flow projections to monitor
funding requirements for activities and to ensure
there are sufficient cash resources to meet
operational needs. Cash flow projections take
into consideration the Company’s debts and
covenant compliance. Surplus cash held is
transferred to the treasury department which
invests in interest bearing current accounts,
time deposits and money market deposits.
KPI/Performance metric
• Operating cash flow
• CAPEX
Strategic pillars
3
Assessment
Medium
Steady. The combination of the
AEP and the Trans-Forcados
Pipeline assisted Seplat’s liquidity
position significantly in the year.
We manage liquidity risk by
ensuring that sufficient funds are
available to meet commitments
as they fall due, using both
long-term and short-term cash
flow projections to monitor
funding requirements for activities.
Foreign exchange risk
The Company is exposed to exchange
rate risk to the extent that balances
and transactions are denominated in
a currency other than the US dollar.
The Company has options to manage
its foreign exchange exposure including
financial hedge instruments such as forward
exchange contracts.
KPI/Performance metric
• Operating cash flow
• CAPEX
Strategic pillars
3
Assessment
Low
Decreasing. Historically, the
Company holds the majority of
its cash and cash equivalent in
US dollars. Gas contracts are
indexed in US dollars.
Strategic risks
Definition
Mitigation
Links
Trends
Focus on portfolio expansion strategy from
the Board level to diversify current portfolio.
Integrated long-term planning on crude oil,
gas and other renewables business.
Portfolio
concentration risk
High dependency on a concentrated
portfolio of producing blocks and
limited number of wells can leave
the Company more susceptible to
declining long-term growth and
reserves depletion.
KPI/Performance metric
• Successful execution of
new acquisition and
farm-in opportunities.
Strategic pillars
3/4/5/6
Assessment
High
Decreasing. The company
strategic direction is targeted at
accessing oil and gas reserves
and resources to support growth
in Pillar 5 (midstream) and Pillar 6
(new energy)
42
Seplat Energy PlcAnnual Report and Accounts 2022
Strategic risks
Strategic pillars
1 — Drive social development
2 — Focus on environmental
care and reporting
3 — Maximise returns for all
stakeholders
4 — Upstream
5 — Midstream gas
6 — New Energy
Our strategy
Page 24
Definition
Definition
Mitigation
Mitigation
Links
Links
Trends
Trends
Merger & Acquisition
(M&A) risk
Growth through M&A activities is part
of the Seplat's strategy to pursue a
focused acquisition and farm-in. M&A
deals and transactions come with
significant risk including structural,
commercial and integration risks.
There is also the risk of non-achievement
of acquisition targets due a to highly
competitive landscape.
New business development unit is always
looking for the right opportunities for Seplat.
Decision review board (DRB) process is in place
to ensure deals are properly vetted and adequate
due diligence done on new opportunities. The
DRB ensures the commercial, structural, KYC
and integration risks are fully considered and
addressed with mitigation plan approved and
in place prior to deal closing.
KPI/Performance metric
• Successful execution
of new acquisition and
farm-in opportunities
Strategic pillars
3/4/5/6
Assessment
Very high
Steady. Excom process in place
to vet opportunities and deals.
Risk trend steady following
ongoing strategy to acquire more
strategic assets. M&A landscape
remains competitive.
Bribery and
corruption risk
Bribery and corruption presents a risk
throughout the global oil and gas
industry and represents an ongoing
risk to any oil and gas company.
Extensive training on anti-bribery and corruption.
Embedding corporate governance principles
with key focus on areas of the business which
may be more susceptible to corruption such
as the contracting and procurement process.
Processes exist to guide dealings with
public officials.
Fraudulent activity risk
Fraudulent activity presents a risk
throughout the global energy industry
and represents an ongoing risk to any
energy company.
Extensive whistleblowing campaign. Continuous
monitoring and improvement of the system
of internal controls by all lines of defence with
strong internal audit activity. Automation of
processes where possible to reduce manual
intervention.
KPI/Performance metric
• Whistle blowing reports;
• Number of disciplinary
cases
Strategic pillars
3
Assessment
Very high
KPI/Performance metric
• Number of reported
cases
Strategic pillars
3
Assessment
Very high
Decreasing. Our geographical
location continues to be
susceptible to corruption.
However, the risk trend is kept at
decreasing following lower cases
of whistle blowing recorded
during the year.
Steady. Risk is kept at very high
and the Company continues to
maintain a zero tolerance policy.
Information security risk
Potential cyber attacks and information
technology security breaches could
result in loss or compromise of
sensitive proprietary information,
communication and IT business
continuity disruption across operations.
We monitor and regularly upgrade the
Company’s information technology and security
systems. The Company has a clearly defined
employee user policy and control of access
rights. Our information security framework and
infrastructure have been externally reviewed in
line with requirements of ISO 27001. IT business
continuity plan is in place for quick deployment.
KPI/Performance metric
• Information security
identification and
containment reports
Strategic pillars
3
Assessment
High
Steady. While cyber security
continues to hold international
attention, there has not been
material IT breach on our
operations. However, the reduced
state of the work from home
policy has resulted in a steady
trend of the risk, giving the
greater number of employees
working externally.
43
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Operational review
Operating
review
Seplat’s current portfolio comprises direct interests in
seven oil and gas blocks and a revenue interest in one block,
all of which are located in onshore land and swamp areas
of the Niger Delta. This portfolio provides the Group with
a robust platform of oil and gas reserves and production
capacity, as well as material upside opportunities to add
reserves through future development.
Samson Ezugworie
Chief Operations Officer
Upstream
business
performance
Reserves
and resources
2P Reserves
The Group’s audited 2P reserves, as
assessed independently by Ryder Scott
Company, L.P., decreased by 19 MMboe
from 457 MMboe at the end of 2021 to
438 MMboe at the end of 2022. The change
is mostly due to production of 9 MMbbls
of liquids and 41.0 Bscf of gas (7 MMboe).
The divestment of Ubima, the discovery at
Sibiri, and reclassifications and revisions of
previous estimates makes up the difference.
Seplat %
45%
40%
40%
Fin. interest
45%
82%
OMLs 4, 38 & 41
OPL 283
OML 53
OML 55
OML 401
Ubima2
Total
2P reserves at 31/12/2022
2P reserves at 31/12/2021
Liquids
MMbbl
138
4
39
3
22
–
Gas
Total3
Bscf MMboe
246
629
61
653
–
–
–
15
152
3
22
–
Liquids
MMbbl
144
5
39
4
25
2
Gas
Bscf
651
68
660
–
–
–
Total
MMboe
256
17
153
4
25
2
206
1,343
438
219
1,379
457
1. Eland has a 45% working interest in OML40 until the Westport loan is fully repaid in accordance with the loan agreement,
reverting to 20.25%.
2. Eland had an 82% working interest in the Ubima marginal field before divestment in 2022.
3. Quantities of oil equivalent are calculated using a gas-to-oil conversion factor of 5,800 scf of gas per barrel of oil equivalent.
44
Bonny BrassOhaji SouthJisikeOmereluIheomaOdinmaEmeabiamAlaomaOwuOwerriOroghoOkporhuruObenOkwefeSapeleUbalemeOkoporoOvhorMosogarAmukpeOML 38OML 4OML 41Umuseti (Pillar)Igbuku (Pillar)OML 53BonnyPort HarcourtNembeIndaKeBelemaSokuDamaRobert KiriAkasoKrakamaOML 55OPL 283OnitshaOML 40ABIALA ForcadosWarri EscravosSibiriOpuamaGbetiokunPoloboSeplat Energy PlcAnnual Report and Accounts 2022 Oil & gas producing assets
Oil producing assets
2C Resources
The Group’s audited 2C resources
decreased by 6.7% from 75 MMboe to
70 MMboe, comprising 43 MMbbls of oil
and condensate and 159 Bscf of natural
gas. The decrease in 2C gas resources
(boe) is mostly due to revisions in
Emebiam, Owu and Oben fields.
Consequently, the Group’s working
interest 2P reserves and 2C resources
stood at 507.5 MMboe as of 31 December
2022, comprising 248.5 MMbbls oil and
condensate and 1,502.2 Bscf of natural
gas (259 MMBoe).
Seplat %
Liquids1
MMbbl
2C resources at 31/12/2022
2C resources at 31/12/2021
Gas
Total
Bscf MMboe
52
124
24
11
0
–
11
5
2
–
Liquids
MMbbl
28
4
4
3
2
Gas
Bscf
162
21
14
0
0
Total
MMboe
56
8
6
3
2
31
7
3
2
–
43
159
70
41
197
75
OMLs 4, 38 & 41
OPL 283
OML 53
OML 40
Ubima
Total
45%
40%
40%
45%
82%
1. Abiala has not been included in 2C resources because the farm in agreement had not been concluded at the time of
closure of the reserves audit.
45
Bonny BrassOhaji SouthJisikeOmereluIheomaOdinmaEmeabiamAlaomaOwuOwerriOroghoOkporhuruObenOkwefeSapeleUbalemeOkoporoOvhorMosogarAmukpeOML 38OML 4OML 41Umuseti (Pillar)Igbuku (Pillar)OML 53BonnyPort HarcourtNembeIndaKeBelemaSokuDamaRobert KiriAkasoKrakamaOML 55OPL 283OnitshaOML 40ABIALA ForcadosWarri EscravosSibiriOpuamaGbetiokunPoloboSeplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Operational review | continued
Production
Full-year total working interest production for 2022 was 16.2 MMboe. Within this, liquids
production was 9.3 MMbbls, down 26.6% year-on-year, and gas production was
6.9 MMBoe (40.4 Bscf), up 4.1% year-on-year. In addition, the Group recorded a total
downtime of 37%, primarily because of problems with third-party export infrastructure.
Working interest production
Liquids production for all assets was
affected by evacuation issues during the
year, particularly in Q3 on the Forcados
export route, and this led to total deferred
liquid volumes of 4.7 MMbbls for 2022.
For OMLs 4, 38, and 41, which rely on the
Forcados route, the Forcados Terminal
(FOT) was unavailable for 146 days in 2022
(including 78 consecutive days in Q3 2022).
The force majeure declared on the Trans
Forcados pipeline (TFP) and other
deferments due to maintenance activities
impacted crude production. The situation
would have been more acute had we not
successfully operationalised the Amukpe to
Escravos Pipeline (AEP) in the third quarter.
A total of 1.6 MMbbls or 10.1 kbopd (working
interest) was exported through the AEP
from July 2022, when the pipeline became
operational. As expected, there was an
improvement in performance from the
fourth quarter, with 90% of our liquids
evacuated through the AEP in December
2022, enabling an exit rate for the year
of 53 kboepd across the Group.
Similarly, pipeline unavailability impacted
production at OML 40. After a 39-day
outage of the Forcados Oil Terminal (FOT)
and Trans Escravos Pipeline (TEP) in the
fourth quarter (135 days outage for the full
year), production resumed, and evacuation
commenced in November 2022.
For OML 53, with production of around
1,000 bopd (gross) from the Jisike field being
shut-in since February 2022, we could only
evacuate an average of about 3,000 bopd
from Ohaji to the Waltersmith Refinery.
46
2022 WI production
2021 WI Production
Liquids
Gas
Total
Liquids
Gas
Total
Seplat %
bopd MMscfd
OMLs 4, 38 and 41 45%
15,422
112.3
OPL 283
OML 53
OML 40
Ubima
Total
40%
40%
45%
1,067
1,689
6,557
–
–
–
–
–
boepd
34,791
1,067
1,689
6,557
–
bopd MMscfd
boepd
18,243
107.9
36,844
1,012
3,164
5,923
749
–
–
–
–
1,012
3,164
5,923
749
24,735
112.3
44,104
29,091
107.9
47,693
1. Liquid production volumes as measured at the LACT (Lease Automatic Custody Transfer) unit
for OMLs 4, 38 and 41; OML 40 and OPL 283 flow station.
2. Gas conversion factor of 5.8 boe per scf.
3. Following the decision to exit from the Ubima asset in April 2022, volumes from the marginal field
have not been reported in 2022.
4. Volumes stated are subject to reconciliation and will differ from sales volumes within the period.
Working interest production by quarter
Q1 2022
Q2 2022
Liquids
Gas
Total
Liquids
Gas
Total
Seplat %
kbopd MMscfd
45%
45%
40%
40%
OMLs 4, 38 and 41
OML 40
OML 53
OPL 283
Total
Third party deferment
MMbbls
17.7
7.4
2.7
1.3
107.4
–
–
–
29.1
107.4
kboepd
36.2
7.4
2.7
1.3
47.6
0.7
kbopd MMscfd
kboepd
127.9
39.2
17.1
10.1
1.6
1.5
–
–
–
30.3
127.9
10.1
1.6
1.5
52.4
0.5
Q3 2022
Q4 2022
Liquids
Gas
Total
Liquids
Gas
Total
Seplat %
kbopd MMscfd
OMLs 4, 38 & 41
OML 40
OML 53
OPL 283
Total
45%
45%
40%
40%
Third party deferment
MMbbls
9.5
1.6
1.1
0.3
12.5
103.1
–
–
–
103.1
kboepd
27.2
kbopd MMscfd
kboepd
17.5
111.0
37.5
1.6
1.1
0.3
30.3
2.2
7.3
1.3
1.1
–
–
–
27.2
111.0
7.4
1.4
1.1
46.4
1.3
Seplat Energy PlcAnnual Report and Accounts 2022
In OML 53, we spudded three wells and
delivered one well: the Owu-02 appraisal well
was spudded and completed. The OHS-08
was completed in January 2023 and the
OHS-07 expected to be completed later in Q1
2023. The expected peak production from
OHS-07 and OHS-08 is c.3,500 bopd.
In OML 40, we spudded and delivered six
wells: the Opuama-12, Opuama-13, Opuama-14,
Opuama-15, Opuama-16 wells and Sibiri-1.
The Opuama wells have commenced
production, with gross combined production
of c.9,000 bopd.
Total expected peak production for the
production wells spudded in 2022 is expected
to be c.17,500 bopd of oil and c.3.1 MMscfd of
gas or working interest: c.7,700 bopd and
1.4 MMscfd.
In OML 40, the Sibiri oil discovery is being
appraised by two wells. The Sibiri-1 discovery
well was drilled in Q1 2022 and as reported in
our 2021 full-year results last year, encountered
eight oil-bearing reservoirs with 353 ft of
gross oil pay and 229 ft of net pay. The post
discovery Oil In-Place was estimated in the
range 24-34-94 million barrels.
Appraisal drilling of Sibiri-2, with the objectives
of testing the eastern and south-western
flanks, commenced on 30 January 2023 and
reached TD on 23 February, with initial results
indicating significant uplift in mid-case
Oil-In-Place volumes. In the eastern flank, four
oil bearing reservoirs with 68 ft of gross oil
and 48 ft net pay were encountered. In the
south-western flank, nine oil bearing reservoirs
with an initial estimate of 292 ft of gross oil
and 180 ft net pay, including two new pay
zones, were encountered. These preliminary
results are in line with the high side of
pre-appraisal Oil In-Place evaluation. Further
well data acquisition is ongoing and subsequent
technical studies are required to confirm the
initial results.
The extended well testing (EWT) of Sibiri-1
commenced on 21 February 2023 via a 6km
flow line to the OML40 Opuama facilities.
Testing and evaluation of crude properties
is ongoing.
The Field Development Plan is on schedule
to be completed in Q4 2023, leading to the
Final Investment Decision for the full field
development soon after. Development drilling
is anticipated in Q1 2024 with expected peak
production of 5,000-6,000 barrels of oil per
day in 2024/25.
47
Divestment of Ubima
marginal field
Wester Ord Oil and Gas Nigeria Ltd. (WON),
a wholly owned subsidiary of the Company,
agreed in Q1 2022 with the J.V. partner All
Grace Energy Ltd. (AGEL) to divest WON’s
rights in the Ubima Marginal Field for a
consideration of $55.0 million. Under the
agreement, the Company has received a total
of $19.5 million, with $18.6 million received in
2022 and $0.9 million received in January 2023.
As a result, Ubima’s production has been
removed from the Group’s daily average
output and WON has derecognised assets
and liabilities in H1 2022, including Ubima’s
current reserves of approximately 2 MMbbls.
Farm-in to Abiala marginal field
Following the 2020 marginal field bid round in
Nigeria, Naphta Global E&P Ltd. (Naphta) was
awarded 100% equity in the Abiala marginal
field carved out of OML 40 by the NUPRC.
The marginal field contains 2C gross oil
resources of approximately 40 MMbbls.
Elcrest (45% owned by Seplat Energy) has
entered into an agreement with Naphta for
a 95% equity farm-in to the Abiala marginal
field, while Naphta will have a 5% carried
interest. Elcrest will also assume the role of
Operator and Technical & Financial Partner in
the Elcrest/Naphta Joint Venture. The partners
executed Heads of Agreement with a
signature bonus of $12 million paid to NUPRC.
The transaction represents a consolidation of
the Company’s strategic position on the OML
40 block. It provides an early monetisation
opportunity using existing OML 40 facilities,
subject to agreement with NEPL (NNPC E&P
Limited, formerly NPDC), which operates the
OML 40 asset.
The transaction represents a
consolidation of the Company’s
strategic position on the OML 40
block. It provides an early
monetisation opportunity using
existing OML 40 facilities, subject to
agreement with NEPL (NNPC E&P
Limited, formerly NPDC), which
operates the OML 40 asset.”
In developing the field, Elcrest is targeting first
oil by the end of Q2 2023 and plans to focus
on low-cost development with early
monetisation opportunities that leverage
existing contractual positions to accelerate
the field’s development. Seplat Energy will
also explore optimising its tax position to the
extent possible under the new PIA.
Drilling activities
The drilling programme for 2022 spudded 13
wells and successfully delivered 11 wells below
budgeted costs. An additional two wells
(ANOH-03 and ANOH-04) were spudded by
SPDC in 2022 but will not be completed until
2023 due to delays in the gas plant on-
stream date.
In OML 4, 38 and 41, we spudded and
delivered four wells: the Amukpe-5ST2,
Oben-52, Oben-53 and Ethiope-02 wells,
which are expected to produce a
combined gross rate of c.5,000 bopd
and c.3.1 MMscfd of gas.
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Operational review | continued
Export infrastructure
diversification
We continue to pursue alternative crude oil
evacuation options for production at all
assets, to increase our export flexibility and
reduce over-reliance on any one third-party
operated export system. In line with this
objective, we successfully commenced
evacuation through the AEP export route
during the third quarter of 2022. Crude oil
production from OMLs 4, 38 and 41 is now
sent via the Trans Forcados Pipeline (TFP) and
AEP, with significant volumes now flowing
through the latter. For a third export route, we
intend to establish regular exports of 10,000
bopd (gross) through the Warri Refinery jetty,
from which it will be sold FOB to our off-taker
at the jetty. We intend to keep this option
available for the foreseeable future.
All three export routes will provide significant
flexibility and ensure we have adequate
redundancy in evacuation routes, significantly
reducing downtime to promote higher levels
of revenue assurance and profitability.
For OML 53, we have engaged with our J.V.
partner NUIMS (formerly NAPIMS) and the
NUPRC to operationalise an alternative
evacuation option of trucking for the Jisike
and Ohaji South fields in OML 53, and we
will commence a pilot test when approvals
are secured.
At OML 40, the partners are exploring the
potential of barging operations to evacuate
liquids from the Gbetiokun fields to the LEC
floating storage and offloading facility (FSO)
to mitigate the impact of increasing
FOT/TEP unavailability.
Towards a permanent solution, the partners
have begun constructing a pipeline from
Gbetiokun to Adagbassa to replace the more
expensive barging operation that we currently
run. The 30cm x 30km pipeline will take
produced crude from the Gbetiokun field in
OML 40 to the Adagbassa manifold, from
where the pipeline will tie into the existing
36km Opuama-Otumara export pipeline.
48
Seplat Energy PlcAnnual Report and Accounts 2022 Midstream
Gas business
performance
Seplat is a leading supplier of processed
natural gas to the expanding Nigerian
domestic market. Working interest gas
volumes for the period averaged 112.3
MMscfd (2021: 107.9 MMscfd), a contribution
of 44% of the Group’s total production
volume on a boe basis. Our gas business was
affected by the outages on the TFP because
of the limited liquid handling capacity for
condensate produced alongside the gas.
Gas contracts and pricing
During the period, we signed short-term
gas sales agreements (GSAs) with three new
customers, for a combined offtake of 86
MMscfd. As a result, Seplat now has a total
of eight GSAs for the supply of 396 MMscfd
of gas.
In addition, we concluded price renegotiation
with customers during the second quarter,
and following the DGDO gas pricing revision
in August 2021, the average gas price
achieved was $2.82/Mscf (2021: $2.85/Mscf),
which is weighted against volumes supplied
to each customer in the period. The gas sold
under the new GSAs (mentioned above) at
more favourable terms offset the impact of
the lower gas prices realised at the first half
of the year.
Midstream Gas business
separation from Upstream
The decision to convert to the PIA regime
considered the implications for our Midstream
Gas business. In line with the provisions of the
PIA, we believe the Midstream Gas business
could achieve a higher value when operated
as a separate, standalone unit, independent
of our Upstream business. This will unlock
new value for the Company and increase
returns for stakeholders. An implementation
roadmap for the spin-out opportunity has
been developed and the process is expected
to take 12 to 18 months, subject to regulatory
approval and stakeholder engagement.
Additional third-party volumes
We are focused on developing third-party
gas resource opportunities that can utilise
the remaining processing capacity at Oben.
Securing additional volumes from counterparties
will secure long-term supplies of raw natural
gas from which we can maximise the plant’s
utilisation and generate tolling revenues. We
progressed discussions with targeted third-party
gas producers during the year and are finalising
contracting to facilitate a tripartite gas
development workshop with three producers.
ANOH Gas Processing Plant
To date, the IJV (AGPC) has achieved 95%
overall mechanical project completion at
the gas plant site, and we expect the plant
to be mechanically complete in Q2 2023.
Our government partner, NGIC, is delivering
the pipelines that will take the gas from ANOH
to the demand centres, namely the 23km
spur line and the Obiafu-Obrikom-Oben
(OB3) pipeline.
The OB3 pipeline has been affected by the
collapsing of the HDD wall in a section of the
river crossing. Experts from the UK have been
brought in to ‘grout’ the section and grouting
will commence in March with the drilling and
pipe installation to commence thereafter.
NGIC has confirmed that they expect the
pipeline to be complete before the end of
Q2 2023.
In line with the provisions of the
PIA, we believe the Midstream
Gas business could achieve a
higher value when operated
as a separate, standalone unit,
independent of our Upstream
business. This will unlock new
value for the Company and
increase returns for stakeholders.”
Line pipes for the 23km spur line are in
country and project completion is almost
70%, with the revised completion date
communicated by NGIC as 30 June 2023.
Despite estimated completion for the pipeline
infrastructure being Q2 2023, we have further
risked the completion dates and have moved
the first gas to the final quarter of 2023. Once
completed, ANOH will deliver two income
streams for Seplat Energy: from OML 53’s wet
gas sales to the plant, and from dividends
returned to Seplat Energy from the joint
venture ANOH Gas Processing Company,
which will operate the plant.
The upstream development, including the
drilling of six production wells, will be delivered
by the upstream unit operator SPDC. We
expect the drilling of ANOH-03 and ANOH-04
by SPDC to be completed in Q2 2023.
Sapele Gas Plant
Work continues on the new Sapele Gas Plant,
with project progress at 60%. Upon completion,
the processing capacity will be 85 MMscfd.
The upgraded facility will produce gas that
meets export specifications, and the LPG
processing unit module will enhance the
economics of the plant and reduce routine
gas flaring. During this period, we accelerated
the installation of A.G. Compressors to reach
mechanical completion, and we have
commenced commissioning activities to
meet our target to end routine flares by the
end of 2024.
49
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Operational review | continued
New Energy
business
At our Capital Markets Day in 2021, we
announced our intention to invest in
opportunities that will capture more value
across the entire energy value chain, including
renewable energy generation, on a medium
to large scale.
We have completed evaluation studies and
finalised a ten-year integrated Gas and New
Energy Investment Plan. Near-term opportunities
we have identified in gas-to-power and solar
energy will be subject to technical and business
evaluation assessments, environment and
social impact assessments, and project
licensing, and we expect to move to FID
before the end of 2023. The key investment
opportunities being considered include
selective entry to off-grid power generation
using gas-fired generation integrated with
solar. Natural gas will be the mainstay of our
energy transition programme and this in turn
will ensure the sustainability and financial
viability of the renewables programme. We
are also pursuing carbon offset possibilities
on a wide range of emission reduction activities
in various global carbon markets. The identified
opportunities have considered advancement
in technology, availability of resources within
Nigeria and feasibility of execution.
50
Reducing our emissions
towards Net Zero
Our primary commitment is to reduce our
GHG emissions resulting from its direct
operations. In addition, we have established
a broad set of investment activities designed
to reduce emissions from its operated
facilities and offset residual emissions.
Our Flares Out project, which forms part
of our commitment to achieving Net Zero
by 2050, is on schedule to reach our target
of ending routine flares by the end of 2024.
In 2022, improvements in performance of
the AG compressor in Oben and Amukpe,
alongside regular asset integrity checks and
other facility improvement activities, were
effective and AG flare volume was reduced
by 18.2% at Oben (5.7 MMscfd against 6.97
MMscfd in 2021) and by 39.9% at Amukpe
(1.1 MMscfd against 1.83 MMscfd in 2021).
The Sapele Gas Plant (AG solution) with
installed capacity of 40 MMscfd achieved
mechanical completion in December. The AG
solution is expected to process c.26 MMscfd
and will make a significant contribution to
flared gas utilisation, reducing emissions and
carbon intensity. In addition, we acquired an
LDAR system at our Oben Gas Plant and
trained 40 employees on use of the technology,
which has enabled detection of invisible
leaks and allowed our in-house O&M team
to act promptly.
Our diesel replacement programme seeks
to increase the use of gas, a less carbon
intensive fuel for power generation and where
feasible, solar power is also being considered.
We are piloting solar at our Amukpe warehouse
to power equipment on site and plan to
power the security outposts located around
our operations using solar energy in 2023.
Seplat Energy PlcAnnual Report and Accounts 2022 Focus on asset
integrity
At the core of our operations is a focus on
asset integrity, process safety management
and maintenance culture to ensure and
improve our facilities’ safety, reliability, and
availability. This focus also promotes higher
revenue assurance and contributes to our
cost savings initiatives. Our goal, through
various asset integrity initiatives, is expected
to reduce deferment by c.120 kbbl annually
and end routine flares, increasing revenue
assurance and profitability in line with our
defined strategic priorities.
Projects completed in the period included
the Oben Gas Plant life extension project to
restore health to the plant’s old modules and
extend life by a minimum of 15 years, and the
sectional re-routing of 5.1km x 10” Sapele to
Amukpe trunkline to reduce the risk of pipeline
failure on a heavily encroached right of way
and extend the life span of the pipeline.
Seplat Energy was awarded the ISO 55001
Asset Management certification and is now
subject to annual surveillance audits in April
2023 and 2024 and a recertification audit in
April 2025 in line with ISO 55001 three-yearly
certification renewal cycle. These audits will
test how we can effectively sustain and
continually improve our asset management
system. In addition, the tests will encourage a
continuous improvement drive in all our asset
management processes to ensure that our
asset management system remains aligned
with the ISO 55001 standard in readiness for
all future surveillance/recertification audits.
Improving asset management systems will
enable us to operate our assets more
effectively and at higher rates of return.
51
...we have committed $1 million
towards planting trees across
Nigeria as part of afforestation
efforts that will capture residual
emissions.”
We have committed $11.5 million in 2023
towards projects that will end routine flares in
our operations, including $10.8 million towards
installing gas compression facilities at the
flow stations in Amukpe, Oben and Sapele,
and $0.7 million towards incineration at the
Amukpe flow station.
Upon completion of these projects, we
expect to improve our gas handling capacity
and reduce flares by c.30 MMscfd in 2023
and c.20 MMscfd in 2024, which will in turn
monetise flare gas in line with our corporate
strategy and the national flare gas
commercialisation initiative. In addition, we
have committed $1 million towards planting
trees across Nigeria as part of afforestation
efforts that will capture residual emissions.
Our focus in 2023 will be on mobilising
community stakeholders and completing
land acquisition to enable the
commencement of tree planting in Imo,
Edo and Abuja.
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Operational review | continued
HSE performance
Our HSE Policy conforms with the ISO 45001
and ISO 14001 standards and is supported by
our HSE Management System, which assures
adherence to local regulations, industry
standards, and international best practices.
Promoting healthy practices
During the year, we provided comprehensive
health services and access to all employees.
Environmental care
During the year, we focused on determining
and assessing the environmental effects of
our actions, we continued to be dedicated to
environmental sustainability and protection.
• Four fields – Ethiope, Ovhor, Okporhuru
and Orogho – underwent first-season
Environmental Evaluation Studies (EES) to
assess ongoing operational impacts and
EIA Studies for potential impacts of the
new projects.
• To maintain environmentally sound
operations, we sustained our Environmental
Compliance Monitoring Programme to
assure compliance with statutory
environmental limits.
Safe operations and prevention
of major incidents
During the year, a technical safety audit was
performed for assurance of our processes.
• We achieved a 10.3% reduction of GHG
emissions through ongoing flares-out
efforts, including improved asset integrity
and better uptime of gas compressors.
• We strengthened our Incident Management
System significantly with the implementation
of the Emergency Response, Crisis
Management & Business Continuity Plans.
• Employees were challenged to be more
• We intensified our HSE awareness
health conscious and proactively take steps
towards a healthy lifestyle, through health
campaigns in all facilities.
• A Health Ambassador initiative was
launched, and campaign material was
shared with all staff in all locations.
• The Covid-19 pandemic was de-escalated
in Q4 2022 following successful
management that resulted in no fatalities
or disruption to Seplat operations, with the
positivity rate dropping from 0.68% in Q3
to zero in Q4 2022.
campaign through the implementation of a
core HSE programme that includes training
of first responders (CNA Class A Spill
Response) with newly recruited spill
responders and the IMS 300 training.
• Operationalisation of HSE framework
roadmap, and risk-based HSE
improvement programme.
Health and Safety – 2022 performance review:
Fatalities (employee and contractor)
Lost Time Injury Frequency (‘LTIF’)
Incidents Trend: 2019-2022
• We automated the calculation of GHG
emissions through use of the Noobyia
GHG emission accounting system.
• We prepared Seplat Energy’s Environmental
Policy and developed the Environmental
Management System Manual to commence
the ISO 14001 certification process.
• Prepared and submitted 12 EMPs to NUPRC/
NMDPRA in compliance and
operationalisation PIA.
2019
0
0.00
2020
0
0.00
2021
0
0.00
2022
0
0.12
35
30
25
20
15
10
5
0
52
FAT
LTI
RWC
MTC
FAC
RTA
MTA
PD
DO
NM
Sabotage Security
Fire
Spill
Gas
release
Health
condition
BTON
2019
2020
2021
2022
Seplat Energy PlcAnnual Report and Accounts 2022 2022 performance review
Staff and contractors completed a total
of 8.6 million hours in the period, and there
were 93 HSE incidents in total, compared
to 88 in 2021.
During 2022 we updated our environmental
policy and EMS manual in line with the ISO
14001 standard, as well as relevant local,
national, and international regulations, and
industry best practice.
After achieving 31 million hours with zero LTI
recorded over the last four years, a non-
operating incident was recorded in October
when a third-party contractor fractured his
right leg while crossing the road during a
community awareness campaign. The
contributing factors to the incident were
determined, and lessons learned have been
adopted to prevent such accidents and expand
the scope of safety beyond our operations.
Throughout our activities, we took proactive
measures to protect biodiversity and
groundwater, and zero groundwater
contamination was maintained.
During an internal process review, it was
discovered that data pertaining to emissions
sources contained discrepancies caused by
an inadequate accounting system. Therefore,
we launched a new GHG Emissions Accounting
System and recalculated historical GHG
emissions data. This exercise revealed a 49%
overestimation of our GHG emissions
for 2020 and 43% for 2021; the restated
figures are 1.4 and 1.2 million tonnes CO2
equivalent, respectively.
The Scope 1 and 2 emissions recorded for
2022 were 0.7 million tonnes CO2 equivalent,
resulting in a carbon intensity of 23.9kg/boe
(2021: 36.6kg/boe), slightly above the upstream
industry carbon intensity average of 18.9kg/
boe (Source: Oil & Gas Climate Initiative).
Environment – 2022 performance review:
KPI
Flaring – million standard cubic feet (MMscf)
Volume of oil spilled through own operations
(‘000 tonnes)
Volume of oil spilled through sabotage
(‘000 tonnes)
Groundwater contamination
Freshwater consumption (MMbbls)
Total greenhouse gas emissions (MM tonnes CO2 equivalent)
Scope 1+2*
Scope 3
2019
8,910
0.001
2020
15,313
2021
12,780
2022
7,835
0.0091 0.0000086 0.00000043
0.0001
0.0037
0.000027
0.0000010
nil
0.19
n/a
n/a
nil
0.19
1.42
0.01
nil
0.196
nil
N/A
1.27
0.73
0.002
0.009
* Scope 1+2 emissions have been restated for 2020 and 2021. LRQA Group (a leading global assurance provider) has independently
verified the new GHG accounting system. The same standards and methodologies in previous years were applied – API and IPPC.
Outlook
Seplat Energy’s long-term outlook is
positive, with the AEP now operating as
expected and the ANOH Gas Processing
Plant due to come onstream in the final
quarter of this year. Full-year production
guidance for 2023 is set at 45,000 to
55,000 boepd on a working interest basis.
This guidance does not include any expected
contribution from MPNU or ANOH.
Capital expenditure for 2023 is expected to be
around $160 million, and we plan to drill 18 new
wells across our operated and non-operated
assets as follows:
• OMLs 4, 38 and 41: Eight wells (Three oil wells,
three gas wells, one water disposal well and
one exploration well);
• OML 53: One oil well;
• OML 40: Five wells (Four oil wells and one
appraisal well; Abiala: Development of one
workover and one oil well);
• ANOH: Two gas wells.
The 2023 drilling programme will address
production decline and, along with the
completion of maintenance activities, will
support long-term production levels from the
assets. Facilities and engineering projects will
focus on completing an upgraded integrated
gas processing facility at Sapele. The year
under review showed the importance of the
sustainability of our evacuation options, and we
will prioritise alternative route projects in 2023.
Achieving our ESG performance targets is
a primary focus for 2023, and in our climate
strategy, where we have committed to
being carbon neutral in 2050, ending routine
flares by the end of 2024 is a priority. We
plan to complete the Oben, Amukpe, Sapele
and Jisike Flares Out projects, which will
capture and monetise gas for productive
use and significantly reduce our carbon
intensity. In addition, we plan to contribute
to the growth of our communities by
equipping hospitals and schools with
reliable power and, in return, progress our
goal to increase access to energy while
developing our power and renewable
capabilities on socially important projects.
Samson Ezugworie
Chief Operations Officer
Annual Report and Accounts 2022
53
Seplat Energy PlcFinancial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Financial review
Emeka Onwuka
Chief Financial Officer
Financial
review
We will continue to closely monitor the
performances of the oil price, our assets
and evacuation routes, and their implications
on cash generation to appropriately scale
and phase our capital allocation, ensuring
that we have a sound financial platform
from which we can build and grow further.
54
Revenue
Revenue from oil and gas sales in 2022
was ₦403.9 billion, $951.8 million, a 29.8%
increase from the ₦293.6 billion, $733.2 million
achieved in 2021.
Crude oil revenue was 35.7% higher than for
the same period in the previous year at
₦356.2 billion, $839.3 million (2021: ₦247.7
billion, $618. 4 million), reflecting higher
average realised oil prices of ₦43,158/bbl,
$101.7/bbl. for the period (2021: ₦28,334/bbl
$70.5/bbl). The increase is attributable to the
impact of the conflict in Ukraine on global
energy prices and the steady post-pandemic
recovery in global oil demand, particularly in
China and the United States. The total volume
of crude lifted in the period was 8.3 MMbbls,
6.8% lower than the 8.9 MMbbls lifted in 2021.
The lower volumes lifted in 2022 resulted
from a drop in production output, especially
in the third quarter, because of the prolonged
unavailability of the export terminals. However,
significant improvements were made in Q4
2022 as we began to evacuate the bulk of
our crude through the newly operational
Amukpe-Escravos underground pipeline.
The average reconciliation loss factor for the
Group was 10.7%.
Gas sales revenue declined marginally by 2.1%
to close the year at ₦47.7 billion, $112.5 million
(2021: ₦45.9 billion, $114.8 million) because of
weaker average realised gas prices following
price reviews conducted in the second quarter
of the year, down 1.1% to ₦1,197 /Mscf, $2.82/Mscf
(2021: ₦1,141/Mscf, $2.85/ Mscf). Nevertheless,
gas sales volumes improved despite the effect
of oil evacuation curtailments and increased
4.1% to 41.0 Bscf, compared to 39.4 Bscf in 2021.
Gross profit
Gross profit increased by 63.0% to ₦197.2 billion,
$464.7 million (2021: ₦114.2 billion, $285.2 million)
and benefited from higher realised oil prices.
Non-production costs consisted primarily of
₦76.7 billion, $180.8 million in royalties, which
was higher compared to ₦51.9 billion, $129.8
million in 2021 because of higher oil prices,
and DD&A of ₦54.6 billion, $128.7 million, which
was lower compared to ₦56.5 billion, $141.1 million
in 2021, reflecting lower depletion of reserves
because of decreased production compared
to the prior year.
Direct operating costs, which include crude-
handling fees, barging/trucking, operation and
maintenance costs, amounted to ₦70.5 billion,
$166.1 million in 2022, 3.1% lower than the
₦68.9 billion, $172.1 million incurred in 2021.
However, on a cost-per-barrel equivalent basis,
production opex was ₦4,371/ boe, $10.3/boe,
4.4% higher than the $9.9/boe incurred in
Seplat Energy PlcAnnual Report and Accounts 2022 2021, primarily because of the effect of lower
produced volumes, an excess storage
charge on use of the Escravos terminal, and
the higher cost of crude handling on the AEP,
when compared to the TFP.
Operating profit
The operating profit for the period was
₦116.6 billion, $274.7 million, an increase of 9.6%,
compared to ₦100.4 billion, $250.7 million
in 2021.
The Group recognised a financial asset
impairment charge of ₦2.9 billion, $6.4 million
related to the ageing of some government
receivables, which is expected to reverse
once recoveries are secured. Included in
other income was a ₦5.6 billion, $13.1 million
loss on disposal for the sale of the Ubima
field. In addition, there was an overlift charge of
₦11.5 billion, $27.2 million, representing 263 kbbl.
and a ₦0.5 billion, $1.1 million loss on foreign
exchange, principally due to the translation of
Naira, Pounds and Euro-
denominated monetary assets and liabilities.
General and administrative expenses of
₦58.3 billion, $137.4 million were 71.5% higher
than the 2021 costs of ₦32.1 billion, $80.1 million.
The increase was driven by the impact of
global inflationary trends on expenses, including
travel and training costs (activities having
increased following the relaxation of travel
restrictions), increased spending on professional
and consulting fees associated with business
growth strategies and the upward adjustments
to staff salaries and emoluments to reflect
the true cost of living. The bulk of the staff
costs are denominated and paid in Naira but
translated in the financial statements at the
NAFEX currency exchange rate, which does
not reflect fully the macroeconomic reality of
the strength of the Naira against the US dollar.
A correction downwards in the exchange rate
will lower the USD reported costs accordingly.
After adjusting for non-cash items, which
include impairment and exchange losses,
the EBITDA of ₦176.9 billion, $416.9 million,
equates to a margin of 43.8% for the period
(2021: ₦148.9 billion, $371.8 million; 50.7%).
Taxation
The income tax expense of ₦42.3 billion, $99.7 million includes a current tax charge (cash tax)
of ₦28.7 billion, $67.7 million and a deferred tax charge of ₦14 billion, $32.0 million. The deferred
tax charge is driven by the unwinding of previously unutilised capital allowances and movements
in underlift/overlift in the current year. The effective tax rate for the period was 49 % (2021: 34%).
The higher tax this year resulted from higher taxable profit due to higher oil prices.
Effective tax rate analysis
Income tax expense
Profit before tax ($’million)
Current
Deferred
204.4
67.7
32.0
Tax rate
ETR
(Effective
Tax Rate)
Current Tax
Rate
49%
33%
Total
99.7
Net result
The profit before tax was 15.2% higher at
₦86.7 billion, $204.4 million (2021: ₦71 billion,
$177.3 million). The profit for the year was
$ 104.7 million (2021: ₦46.93 billion, $117.2 million)
with a resultant basic earnings per share of
₦46.68, $0.11 in 2022, compared to ₦96.11,
$0.24 per share in 2021.
Cash flows from
operating activities
Cash generated from operations in 2022
was ₦242.4 billion, $571.2 million, 51.6% higher
than ₦150.9 billion, $376.8 million generated
in 2021. Net cash flows from operating
activities were 41.6% higher at ₦211.0 million,
$497.3 million (2021: ₦141.1 billion, $352.3
million) after accounting for tax paid of
₦24.4 billion, $57.5 million (2021: ₦5.2 billion,
$13.0 million) and a hedging premium of
₦4.4 billion, $10.3 million (2021: ₦3.6 billion,
$9.0 million). The Group continued to record
improvements in the recovery of receivables
from the major JV partner and, in 2022,
received ₦116 billion, $259 million towards
the settlement of cash calls. As a result, the
major JV receivable balance now stands at
₦40. 7 billion, $91 million (2021: ₦34.6 billion,
$83.9 million); these are mainly cash calls
owed within the last 60 days and are
expected to be settled within Q1 2023.
As of February 2023 we have received more
than ₦31 billion, $70 million as part settlement
of the 2022 outstanding amounts.
Cash flows from
investing activities
Net capital expenditure of $163.3 million
included $94 million invested in drilling and
$64 million in oil and gas engineering projects.
Deposits for investment of $140.3 million
include a $128.3 million (which is refundable)
deposit for the proposed acquisition
announced in February 2022 of Mobil
Producing Nigeria Unlimited and the $12.0
million farm-in fee for the Abiala marginal
field carved out of OML 40.
The Group received total proceeds of $10.8
million in the period under the revised OML
55 commercial arrangement with BelemaOil
for the monetisation of 298.4 kbbls of crude
oil. In 2022, recovery was affected by
sabotage along the Nembe Creek Trunk
Line and the Trans Niger Pipeline, with theft
factors ranging from 30% to 90%.
Cash flows from
financing activities
The Company paid ₦24.9 billion, $58.8 million
dividends to shareholders in the period. Other
financing charges of ₦5.3 billion, $12.5 million
reflect the commitment fee and other
transaction costs on the Group’s facilities,
and ₦26.9 billion, $63.3 million reflects
interest paid on loans and borrowings.
55
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Financial review | continued
Refinancing of the $350 million
revolving credit facility (RCF)
On 30 September 2022, Seplat Energy Plc
refinanced its existing $350 million revolving
credit facility due in December 2023 with a
new three-year $350 million revolving credit
facility due in June 2025. The RCF includes an
automatic maturity extension until December
2026 once a refinancing of the existing $650
million bond due in April 2026 is implemented.
The RCF is scheduled to reduce from July 2024,
with such date automatically extended to July
2025 once the existing $650million bond is
refinanced. The RCF carries an initial interest
of 6% over the base rate (SOFR plus applicable
credit adjustment spread), with the margin
reducing to 5% after production flowing through
the Amukpe – Escravos Pipeline is stabilised
at an average working interest production
of at least 15,000 bopd over a period of 45
consecutive days, which was achieved on
1 February 2023. The pricing is in line with the
current RCF pricing, although it reflects a change
in the base rate from LIBOR to SOFR plus the
applicable credit adjustment spread.
Final and Special Dividend
The Board has recommended a final dividend
of ₦10.3 per share, US2.5 cents per share for
the financial year 2022 and following a review
of Seplat’s operational, liquidity and financial
position post refinancing, the Board has decided
to declare an additional special dividend of
₦22.36 per share, US5.0 cents per share, to
be paid after shareholders’ approval at the
Annual General Meeting, which will be held
on 10 May 2023. This brings the total dividend
declared for 2022 to ₦67.07 per share, US15
cents per share (2021: ₦41.19 per share, US10
cents per share). The payment of the special
dividend reflects the Board’s confidence in
the future of the business and is underpinned
by a strong balance sheet.
Liquidity
The balance sheet continues to remain healthy with a solid liquidity position.
Net debt reconciliation at 31 December 2022
Senior notes*
Westport RBL*
Off-take facility*
Total borrowings
Cash and cash equivalents (exclusive of restricted cash)
Net debt
* including amortised interest.
$ million
666.8
Coupon Maturity
April 2026
7.75%
SOFR
8.2
rate+8% March 2026
SOFR
rate+10.5%
April 2027
95.2
770.2
404.3
365.9
Seplat Energy ended the year with gross debt of ₦344.4 billion, $770.2 million (with maturities
in 2026 and 2027) and cash at bank of ₦180.8 billion, $404.3 million, leaving net debt at ₦163.6 billion,
$365.9 million. The restricted cash balance of ₦10.7 billion, $23.9 million includes ₦3.6 billion,
$8.0 million and ₦5.6 billion, $12.5 million set aside in the stamping reserve and debt service
reserve accounts for the revolving credit facility; in addition to ₦0.4 billion, $0.8 million and ₦0.4 billion,
$1 million for rent deposit and unclaimed dividend, respectively. A garnishee order of $1.6 million,
₦0.7 billion is included in the restricted cash balance as at the end of the reporting period.
We monitor the gearing ratio with the objective to maintain a net debt to gearing ratio of
20%-40%. The ratio for 2022 was 17% (2021: 21%).
56
Seplat Energy PlcAnnual Report and Accounts 2022
Our aim has always been to
maintain a healthy balance
sheet, focusing on cash
generation first and foremost
so we can build up a large
reserve for future deployment
and protect ourselves against
global activity downturns.”
Credit ratings
Seplat maintains corporate credit ratings
with Moody’s Investor Services (Moody’s),
Standard & Poor’s (S&P) Rating Services and
Fitch. The current corporate ratings are as
follows: (i) Moody’s Caa1 (stable); (ii) S&P B
(stable) and (ii) Fitch B- (stable).
The Group’s substantial exposure to the
Nigerian operating environment led to a
downgrade by Fitch and Moody’s, in November
2022 and February 2023 respectively, as both
agencies downgraded the Sovereign. Fitch
downgraded Seplat Energy Plc’s Long-Term
Issuer Default Rating (IDR) and senior unsecured
rating to ‘B-’ from ‘B’, and Moody’s downgraded
the ratings to Caa1 from B3.
Outlook
Our financial strategy will driven by the
preservation and flexibility required to realise
the value of our asset base. We will continue
to closely monitor the performances of the oil
price, our assets and evacuation routes, and
their implications on cash generation to
appropriately scale and phase our capital
allocation, ensuring that we have a sound
financial platform from which we can build
and grow further.
Hedging
Oil put options
Volume hedged (MMbbls)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
1.5
2.0
2.0
2.0
1.5
1.5
Price hedged ($/bbl.)
52.5
55
57.5
65
50
50
Seplat’s hedging policy aims to guarantee appropriate levels of cash flow assurance in times
of oil price weakness and volatility. The total volume hedged in 2022 was 7.5 MMbbls, and the
current programme for 2023 consists of dated Brent put options of 3.0 MMbbls at an average
premium of ₦454/bbl, $1.07/bbl. Additional barrels are expected to be hedged for 2023 in the
coming months in line with the approach to target hedging two quarters in advance. The Board
and management team closely monitor prevailing oil market dynamics and will consider further
measures to provide appropriate levels of cash flow assurance in times of oil price weakness
and volatility.
Conversion to PIA fiscal regime
The Petroleum Industry Bill was signed into
law on 16 August 2021 and provides for the
voluntary conversion of existing prospecting
licences and mining leases to the terms of the
PIA within 18 months, i.e., February 2023 or at
the expiration of such licences and leases.
In fulfilment of section 92 (4) – (6) of the PIA,
Seplat executed the conversion contract on
15 February 2023, which confers on applicants
the right but not an obligation to complete the
conversion to the PIA. The contract includes a
longstop date of 30 April 2023 (or any later date
agreed by the Commission), by which time
key regulations and guidelines are expected
to be issued by the Commission, and all
conversion conditions have either been
satisfied by the applicant or waived (“effective
date”). Ministerial approval of the conversion
of OMLs/OPLs to PMLs/PPLs will remain
subject to meeting all Conditions Precedent.
In October 2022, following the Group’s review
of the fiscal provisions of the PIA, Seplat West
Limited (OMLs 4, 38 & 41) and Seplat East
Onshore Limited (OML 53) together with their
respective joint venture partners (NEPL and
NNPCL) made provisional applications to NUPRC
“the Commission” for the voluntary conversion
of operated Oil Mining Leases according to
section 92 and 93 of the PIA in October 2022.
NEPL, the operator of OML 40, together with
Elcrest, also made a conversion application.
The pursuit of conversion was based on
our assessment of the new PIA fiscal terms,
specifically the improved oil and gas royalty
structure and rates, tax system and introduction
of production-based allowance, all of which
resulted in an overall net favourable position
for Seplat Energy.
Seplat continues to monitor the regulatory
landscape ahead of 30 April and reserves the
right to withdraw or amend the application
following when the full scope of the PIA’s
impact on its assets is assessed.
Emeka Onwuka
Chief Financial Officer
57
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Stakeholder engagement
Maintaining good
relationships with
all our stakeholders
Stakeholder
Workforce
88%Response rate to employee
engagement surveys
Engagement method
• We rolled out a Company-wide engagement survey
to feel the general pulse of the organisation. The survey
was designed to examine the connection employees
feel with their work, team and the Company, and the
factors that influence it.
• We held focused group sessions with all teams to
further contextualise the report from the engagement
survey with the aim to localise solutions to further
improve overall engagement.
• We maintain a constructive and ongoing dialogue with
our staff through regular employee-led forums, CEO
town halls and Q&A sessions, as well as the group
intranet, social media channels, webinars and
face-to-face meetings.
Shareholders
and investors
337
Number of meetings
held in the year
• The Chairman, Chief Executive Officer, Chief Financial
Officer, Vice President of Finance and Head of Investor
Relations each met regularly with investors over the course
of the year. A variety of topics were discussed with the
investors and their views were conveyed to the Board.
• Throughout the year, the CEO met virtually or in person
with investors to discuss strategy and business
performance, after the full year results and half year results.
Nigerian Government
and partners
95%cost recovery from partners
• In line with the JOA provisions, statutory meetings were
held with partners (i.e., SUBCOM, TECOM and OPCOM).
In addition, monthly review meetings were held with
partners at the frontline levels and the CEO engaged the
partner leadership at the Quarterly Management Review
(QMR) sessions.
• Annual engagement with NUPRC (formerly DPR) to
present yearly work programme/budget and biannual
operations review meetings.
• The CEO hosted quarterly town hall events, which
included open Q&A sessions throughout the year,
as well as small group discussions, and took feedback
through an anonymous survey and the Vault app.
• We held quarterly Joint Consultative Committee (JCC)
meetings. JCC is a platform used to discuss and
address all staff welfare issues, and also share
knowledge on the Company’s business performance.
• The CFO hosted regular meetings with lending banks
and bondholders as part of our funding and refinancing
discussion.
• The Chairman hosted a virtual Annual General Meeting
which was also attended by the Directors.
• Quarterly contract/performance reviews with NCDMB
and submission of Project Performance Reports and
other statutory reports.
Suppliers and
contractors
1,500
vendors attended the Seplat Vendor
Forum, 50% more than 2021
Host communities
113potentially disruptive incidents
averted
• Engagements held via virtual sessions and some
• In addition to the above, the Company held Contract
onsite workshops.
• There were two major supplier engagements held in
the year.
• Annual Seplat Energy Vendors’ forum held physically
at two Locations (Lagos and Sapele) in November 2022
themed ‘The New Normal: Sustainability, Digital
Transformation and Energy Transition’.
The Base Manager and Community Relations Team
held several seminars with various groups as follows:
• Petroleum Industry Act 2021 (PIA) implementation
related engagement with the CDC Forums, host
community leaders, traditional rulers, government
ministries to address various concerns and the PIA
implementation expectations and GMOU transition.
• Freedom to Operate (FTO) related discussions to enable
vendors to carry out various operation activities and
projects without hindrance.
• Project pre-bid and kick-off meetings to discuss project
details, ensure all parties’ readiness, health and safety
and community benefits are fulfilled and general
management of all stakeholders and for a hitch-free
implementation phase.
Performance Reviews (CPR) with strategic contractors to
sustain relationships and ensure an enabling environment
to deliver on business goals.
• Planned/ad hoc meetings to seek communities’ views
and inputs during drilling/project planning, mobilisation,
commencement of certain contracting processes as
well as demobilisation activities.
• For land acquisition including negotiation, document
execution and crops and land compensation payment
discussions.
• Grievance and conflict management meetings to
address concerns and threats from communities and
other local communities-based stakeholders.
• Capacity building, educational assistance, and
community infrastructural development.
58
Seplat Energy PlcAnnual Report and Accounts 2022 Seplat Energy’s continuing success depends on
many different stakeholders, including employees,
suppliers and local communities. We recognise
the importance of regular engagement with all
our stakeholder groups and adopt the most
appropriate channels for each.
Key messages
Our response
• Calibration and reward system
• Compensation and benefit reviews
• Future of Work
• Job security
• Consequence management
• Uniform application of policies and
procedures
• Women’s representation in top management
• We provided an Employee Assistance Program that supports
the overall mental wellbeing of employees.
• Increased D&I focus, held Company-wide diversity and inclusion
awareness sessions to upskill managers on key diversity metrics.
• Company-wide Standardised Competence Assessment roll-out.
• 100% implementation of the 2022 Training Plan.
• Roll-out of FoW project and initiated implementation of
recommendations – one day work-from-home pilot launched.
• Operationalised the Aberdeen Learning Centre.
• We established a crèche within our premises to ensure that
parents of young babies have access to quality childcare
while at work.
• We awarded recognition bonuses through the year to frontline
colleagues to further embed excellence across the Company.
• Leadership transition
• Energy transition and net zero targets
• ESG performance
• M&A opportunities
• Capital allocation
• 2021 full year results and 2022 quarterly
operational and financial performance.
• Board independence and other
• We continue a programme of regular engagement with
investors, analysts, lenders and others, providing updates
on our performance. We also take their feedback.
Governance matters.
• Project delivery.
• Demonstrate compliance with regulatory
requirements, licence conditions and Joint
Operating Agreement (JOA).
• Maintenance of a harmonious relationship
with partners and regulators to ensure
business objectives are met.
• Drive an efficient cost recovery process.
• Ensure adequate funding for capital
projects e.g. ANOH Gas Processing Plant,
Sapele Gas Plant, Alternative evacuation
routes and intentional environmentally
focused projects.
• We continue to drive 100% compliance with all statutory
regulations to ensure business continuity.
• Both parties harmoniously agreeing
• We strive to maintain a cordial relationship with our
on strategic social investments for the
communities with the resulting Freedom
to Operate (FTO).
• Drive awareness of Nigerian content
across Seplat Energy operations in order
to support development of local talent
and capacity.
partners and regulators to ensure the Company’s business
objectives are met.
• We support the operations of the business to enable optimal
value creation for all critical stakeholders of the business – our
investors, partners, government, communities and employees.
• Vendor capability
• Performance reviews
• Improved tendering process
• Brand and corporate vision
• Digital transformation
• Strategic relationships
• Supplier engagement and development
• Sustainability
• Compliance with regulatory/statutory
requirements
• We are in constant dialogue with our suppliers and
contractors to define expectations and to ensure mutually
acceptable terms and conditions for continued partnership
in a sustainable way.
• Employment opportunities.
• Improvement in benefits for certain
category of community employees.
• Increasing contracting and procurement
opportunities for community indigene
vendors.
• Addressing disagreements among
community representatives.
• Annual contributions to the applicable
host communities’ development trust
funds for OMLs, 4, 38 and 41.
• Impact of projects on communities.
• Community content.
• Opportunities for community employment.
• Land acquisition and adequate benefits.
• Peaceful coexistence of communities.
• Respect for community constitution.
• Respect for surviving GMoU
provisions/terms.
• Explanation of Seplat processes
and standards including industry
standards, regulatory requirements,
statutory obligations.
• Explanation of Seplat governance
processes.
• Recruitment, contracting and procurement
and community development projects plan.
• Conflict prevention and peace building.
• We will continue to proactively engage with the stakeholders
in our communities and focus our activities on content from
community discussions.
• We will continue to promote our grievances management and
peace building workshops and implement sustainable youth
programmes and community development projects.
• We plan to apply ISO 26000:2010 standards from 2023 in
support of our commitment to operating in a socially
responsible way.
59
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Governance Report
Governance
Report Governance
Governance dashboard
Chairman’s overview
Board of Directors
Corporate governance report
Board Committee reports
Directors’ remuneration report
Statutory Audit Committee report
Report of the Directors
Statement of Directors’ responsibilities
Audit Committee report
Statement of Corporate Responsibility
60
62
64
68
74
86
103
121
122
126
127
128
60
Seplat Energy PlcAnnual Report and Accounts 2022 61
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Governance dashboard
Governance
overview
Board attendance
Independent Director tenure
No. of
meetings
in the year
No. of
times in
attendance
83%
17%
S/N Name
Designation
1.
2.
3.
4.
5.
6.
7.
8.
9.
A.B.C. Orjiako1
Basil Omiyi, CON1
Roger Brown
Emeka Onwuka
Austin Avuru2
Effiong Okon3
Chairman until 18 May 2022
Senior Independent Non-Executive
Director/Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Operations Director
Samson Ezugworie3
Chief Operating Officer
Olivier Langavant
Non-Executive Director
Nathalie Delapalme
Non-Executive Director
10. Charles Okeahalam
Independent Non-Executive Director/Senior
Independent Non-Executive Director
11.
Arunma Oteh, OON4
Independent Non-Executive Director
12. Fabian Ajogwu, SAN, OFR
Independent Non-Executive Director
13.
14.
15.
Bello Rabiu
Independent Non-Executive Director
Emma FitzGerald
Independent Non-Executive Director
Bashirat Odunewu5
Independent Non-Executive Director
16. Kazeem Raimi5
Non-Executive Director
17.
Ernest Ebi, MFR5
Non-Executive Director
8
11
11
11
4
8
3
11
11
11
11
11
11
11
3
3
3
8
11
11
11
0
8
3
11
11
11
11
11
11
11
3
3
3
1. On 18 May 2022, Dr. A.B.C Orjiako retired as Chairman and Director of the Board while Mr. Basil Omiyi, CON was
immediately elected as the Chairman of the Board.
2. On 1 March 2022, Mr. Austin Avuru formally retired as a Director from the Board after he was recused from Board
meetings following his declaration of conflict.
3. On 1 July 2022, Mr Effiong Okon retired as the Operations Director of the Board and took up a new role as the Director,
New Energy while Mr. Samson Ezugworie joined the Board as the Chief Operating Officer.
4. On 31 December 2022, Ms. Arunma Oteh, OON resigned from the Board as an Independent Non-Executive Director.
5. On 18 May 2022, Mrs Bashirat Odunewu joined the Board as an Independent Non-Executive Director while
Mr. Ernest Ebi, MFR and Mr. Kazeem Raimi joined the Board as Non-Executive Directors.
Board experience
1. Executive and strategic leadership
2. Governance and Board
3. Work health, safety, environment and sustainability
4. Financial and risk management
5. Capital management
6. Oil & gas
7. Strategy
0-3 years
6-9 years
Board diversity
79%
21%
Women
Men
Senior Leadership diversity
73%
27%
Women
Men
1. Senior executive experience including international experience exposed to a range of political, cultural, regulatory and business environment.
2. Experience as a Board member or member of a governance body.
3. Experience related to health, safety, environment, sustainability or social responsibility.
4. Senior executive or equivalent experience in financial accounting and reporting, corporate finance, risk and internal controls.
5. Experience in capital management strategies, including capital partnerships, debt financing and capital raisings.
6. Experience in oil and gas industry with knowledge of markets, competitors, operational issues, technology and regulatory concerns.
7. Track record of developing and implementing successful business strategies including assets or business portfolio.
62
Seplat Energy PlcAnnual Report and Accounts 2022 Board refreshment
Following a review of the Board composition in light of the
Group’s goals and needs, two Independent Non-Executive
Directors joined the Seplat Energy Board and four Directors
retired in 2022.
Read more
Page 89
Board composition
as at 1 March 2023
6
1
Chairman
Executive Directors
Non-Executive Directors
Independent Non-Executive Directors
3
4
Board meetings and main subjects
discussed in 2022
40%
30%
15%
10%
5%
Corporate strategy
Finance
Structure and capital
Risk management and internal control
Corporate governance and ESG
Board Focus for 2022
The Board focused on the following major
topics in the 2022 Financial Year:
• Successful Transition of a New
Board Chairman
• Board composition and
committee restructuring
• Project financing and Refinancing
• M&A and divestments including MPNU
Acquisition, Abiala Farm-in and Ubima Exit
• ESG and Net-Zero roadmap implementation
Read more
Page 86
Board Priorities for 2023
Some of the key Board priorities for 2023
include:
• Board Succession Planning and Board
refreshment
• Risk Management and Sustainability
• New Energy business
• Midstream business spin-out
• Net Zero roadmap implementation
63
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Chairman’s overview
Mr. Basil Omiyi, CON
Chairman
Implementing
Succession Program and
Just Transition through
Corporate Governance
64
Dear Shareholders
It is with great pleasure that I present to
you the Corporate Governance report for the
financial year ending 31 December 2022.
One of the promises made by Seplat at the
launch of the Company’s Initial Public Offering
(IPO) in 2014, was to institutionalize sound
corporate governance as the bedrock of
the corporate existence of our Company.
The Board believes that a strong corporate
governance practice is essential to the
achievement of the Company’s strategy,
and in transforming our Company into an
energy Company that is truly independent
of thought and that abides by the best in
class corporate governance practice.
As a dual listed company, Seplat continues
to be bound by applicable corporate
governance laws and regulations both in
Nigeria and in the United Kingdom. These
laws and regulations include but are not
limited to, the Companies and Allied Matters
Act, 2020 as amended (‘CAMA’), the Financial
Reporting Council of Nigeria (“FRCN”)’s
Nigerian Code of Corporate Governance,
2018 (“NCCG”), the Securities & Exchange
Commission (‘SEC’) Code of Corporate
Governance for Public Companies in Nigeria
(the ‘Nigerian Code’), the Nigerian Stock
Exchange (‘NSE’) Rulebook, the United
Kingdom (“UK”) Corporate Governance Code,
2018 (the ‘UK Code’), UK Listing Rules (‘LRs’)
and the Market Abuse Regulations (UK MAR),
2016 as amended by the Market Abuse Exit
Regulations 2019 (‘MAR’).
I am happy to report on behalf of the Board
that the Company and the Board continues
to abide by these principles of corporate
governance as well as the governance
policies put in place by the Board, in the
running of the affairs of the Company.
Seplat Energy PlcAnnual Report and Accounts 2022 The 2022 Financial Year commenced with
a global resolve of businesses to return
back to work following almost two (2) years
of disruptions to life and business by the
Coronavirus (Covid-19) pandemic. As an
agile, adaptive, and resilient organization,
our Company was able to quickly transition
back to working from the office. However,
the Company put in place a framework which
provided work flexibility for employees in
recognition of the mobility occasioned by
the Covid-19 pandemic.
In February 2022, the Company announced
that it had entered into an agreement to
acquire the entire share capital of Mobil
Producing Nigeria Unlimited (“MPNU”)
from Exxon Mobil Corporation, Delaware
(“ExxonMobil”) (the “Transaction”). The
Completion of the Transaction is subject
to Ministerial Consent and other required
regulatory approvals. The execution of the
Share Purchase Agreement with ExxonMobil
was a major signaling of the Company’s
commitment to – creating one of the largest
independent energy companies on both
the Nigerian and London Stock Exchanges,
bolstering the Company’s ability to drive
increased growth, profitability and overall
stakeholder prosperity, and partnering with
the Federal Government to bring these
strategically important national assets fully
into Nigerian ownership alongside Nigerian
National Petroleum Corporation (NNPC)
Limited. Upon Completion of the Transaction,
the development of MPNU’s gas resources
will support both the Seplat and Federal
Government’s objective to achieve a
pragmatic, progressive and just energy
transition for Nigeria.
Roadmap to building
an enduring Independent
Energy Company.”
Board Succession
As a Board, succession planning is a priority.
Our approach to succession planning is not
that of a box ticking exercise or a ‘nice to
have.’ The Board considers succession
planning as an integral part of effective board
governance which is intrinsically tied to the
implementation of the Company’s strategy
and effective management of attendant
risks peculiar to the environment in which
our Company operates. The Board takes
cognisance of the need to have the right
people around the table at such a crucial time
in the corporate existence of our Company,
to ensure increased and sustainable value
creation for all stakeholders.
A Structured Board
Succession Program
The Board takes cognisance of the need to
implement a structured succession program
that ensures diversity, alignment with the
Company’s purpose, strategy, culture, talent
development, and operational resilience.
Our Board Succession Policy provides for
selection criteria which accounts for current
and future needs of the Company and its
stakeholders, and that promotes diversity of
thought. We recognize that a diverse board
is better prepared for challenges that could
arise and enables the Seplat Board in its
ability to leverage different perspectives
and think outside of the box; as opposed
to a homogeneous board, which is likely to
miss out on crucial elements of expertise
and experience.
When considering candidates, the following
qualities and competency elements are of
prime importance to us – candidates who
have proven experience in leading large,
complex, international organisations. Such
candidates would have had – significant
experience in cost leadership; ability to
balance the transformational changes that
Seplat needs to make against the timing of
these changes, particularly as the Company
implements its energy transition objectives;
demonstration of ability to implement the
Company’s climate change agenda; and an
understanding of the energy market.
Board Exits in 2022
In the year under review, our Board continued
the implementation of its succession program
which commenced as far back 2019. On
2 March 2022, the Board announced
the resignation of Mr. Austin Avuru, a
Non-Executive Director (“NED”) from the
Board of Company with effect from 1 March
2022. On behalf of the Board, I sincerely
thank Mr. Avuru for his founding role and
immense contributions to Seplat.
As announced on 17 November 2021,
Dr. A.B.C. Orjiako retired as Chairman of the
Board at the conclusion of the Company’s
Annual General Meeting (AGM) on 18 May
2022. Dr. A.B.C. Orjiako led the Board in
transforming Seplat into a globally respected
energy Company, instilling best practice
corporate governance, and several
successful acquisitions. He was also one of
the driving forces behind Seplat Energy
becoming the first Nigerian corporate to be
dual listed on both the Nigerian Exchange
and the Main Board of the London Stock
Exchange in 2014. On behalf of the Board,
I would like to thank Dr A.B.C. Orjiako for his
immense contribution as Chair of Seplat
since inception.
Effective 31 December 2022, Ms. Arunma
Oteh OON, an Independent Non-Executive
Director (“INED”) retired from the Board.
On behalf of the Board, I would like to thank
Ms. Oteh for her immense contributions,
strategic drive and the wealth of experience
she brought to the Board especially about
positioning Seplat Energy as a pacesetter in
the global energy transition agenda.
On behalf of the Board, Management and
Staff, we wish these Directors great success
in their future endeavours.
65
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Chairman’s overview | continued
New Directors in 2022
It is indeed with great pleasure that we
welcome Mrs. Bashirat Odunewu as an
Independent Non-Executive Director (INED).
Mrs. Odunewu is a Banking and financial
expert with about thirty (30) years’ experience
in the Finance and Banking Industry. Up till
June 2021, she served as a C-Suite executive,
corporate banking (Energy, Natural Resources
& Infrastructure), at First Bank Nigeria Ltd,
prior to which she was the line executive
for their international banking group where
she supervised CEOs of the subsidiaries
of First Bank in six (6) African countries as
well as the Bank’s Representative office in
China and served as a board member for
several of them.
I would also like to welcome Mr. Kazeem
Raimi and Mr. Ernest Ebi, MFR (both of whom
joined the Board as Non-Executive Directors).
Mr. Raimi is a nominee of Platform Petroleum
Limited replacing Mr. Austin Avuru on the
Board, while Mr. Ebi is a Shebah Petroleum
Development Company Limited (BVI) nominee,
replacing Dr. A.B.C Orjiako on the Board. Their
appointment on the Board of Seplat is in line
with the provisions of the Company’s
Memorandum and Articles of Association.
Mr. Raimi is presently the Executive Director,
Commercial for Platform Petroleum Limited.
Mr. Raimi, who was previously with Seplat
Energy as General Manager Commercial,
was charged with the responsibility of driving
commercial, economics, valuation, planning
and treasury activities across the entire
organisation. He also served previously as
Manager, Corporate Planning and Economics
at Seplat Energy. Mr. Raimi has extensive
experience in project economics and risk
analysis having been Lead Petroleum
Economics and Commercial Advisor at Addax
Petroleum Nigeria, where he also served in
different capacities. Prior to this, Mr. Raimi
served as Treasury Manager at Cadbury
Nigeria Plc and Finance Analyst at Citibank
Nigeria Limited.
Mr. Ebi is an executive whose vast experience
in the banking and finance industry spans
over four (4) decades. From June 1999 to
June 2009, he was appointed as a Deputy
Governor at the Central Bank of Nigeria,
Nigeria’s apex bank, where he covered policy
and corporate services portfolios. Prior to this,
Mr. Ebi held several executive positions in the
banking industry in Nigeria and the United
States of America. He was the Deputy
Managing Director of Diamond Bank Limited,
where he led the bank’s financial services
marketing strategy & initiatives for new
business development amongst others.
Mr. Ebi served as the Board Chairman of
Fidelity Bank Plc (2016–2020) and AIICO
Pension Managers (2010-2021) and currently
serves as an Independent Director on the
Board of Dangote Cement Plc., Julius Berger
Nigeria Plc., Coronation Capital Limited, and
Coronation Asset Management Limited.
66
The Board is equally pleased to welcome
Mr. Samson (Sam) Chibogwu Ezugworie
as the new Chief Operating Officer (COO)
and Executive Director on the Board of the
Company. Mr. Ezugworie, who joined the
Board on 1 July 2022, comes with over thirty
(30) years extensive industry experience. The
last twenty (25) years were with Royal Dutch
Shell in Nigeria and Overseas. Mr. Ezugworie
has built a strong reputation as a business/
safety/ethical leader and integrator. Prior to
joining Seplat Energy, Mr. Ezugworie delivered
exceptional business performance as
Manager Geosolutions, Manager, Land
Asset and General Manager Development
& Subsurface for Shell Companies in
Nigeria. He also served as a Director in Shell
Exploration & Production Africa Limited
(SEPA), Shell Petroleum Development
Company of Nigeria Limited (SPDC) and Shell
Nigeria Business Operations Limited (SNBO).
This transformational Transaction
which will see Seplat’s oil and gas
infrastructure increase to about ten
(10) times larger than its current
assets, with a higher degree of
complexity and operational risk,
a quadruple increase in investment
capital and similar increase in
deployed manpower.”
We also welcome the newest addition to
the Board as an Independent Non-Executive
Director, Ms. Koosum Kalyan, who joined the
Board on 28 February 2023. Ms. Kalyan is
a businesswoman and economist whose
career began in the Electricity Commission
in Melbourne Australia as an economist.
She subsequently joined Shell South Africa
as an economist and became a member
of the Shell Global Scenario Planning Team
after which she embarked on her expatriate
posting to Shell International London for nine
(9) years. The scope of her work included
projects in Nigeria, Gabon, Mozambique,
Tanzania; etc. Ms. Kalyan has a proven track
record of operating across the African
continent and her experience spans over
decades and cuts across the oil and gas
industry as well as the wider energy industry.
The Board eagerly looks forward to the
enormous contribution she will make towards
the Company’s growth plans for achieving
global success.
Succession Look Ahead
The significant attrition in the membership
of the Board that occurred in the Financial
Year 2021 and 2022, has put the Board’s
experience of the Company’s historical
knowledge, operational dynamics and the
challenges associated with the environment
in which the Company operates, at a very
low level. The Independent Non-Executive
Directors (INEDs) currently have an average
tenure of 3.3 years; the Non-Executive
Directors an average of 2.3 years; and the
Executive Directors an average of 4.3 years.
The levels of experience are only this high as
they benefit from the longer experience (8.8
years each) of the Chairman, Mr. Basil Omiyi
and the Senior Independent Non-Executive
Director (SINED), Dr. Charles Okeahalam.
Indeed, without the experience of these two
(2) Directors, the average years on the Board
for INEDs is 1.6 years.
We consider this level of experience for the
Seplat Board to be too low to undertake
the major tasks associated with the major
business framework and organizational
transformation that will be necessitated
by the planned onboarding of MPNU from
ExxonMobil. This transformational Transaction
which will see Seplat’s oil and gas infrastructure
increase to about ten (10) times larger than
its current assets, with a higher degree of
complexity and operational risk, a quadruple
increase in investment capital and similar
increase in deployed manpower. The
onboarding of MPNU requires Seplat Energy
to create the crucial initial strategy and the
major investment program for the new entity.
The Board after extensive deliberations,
agreed that it is in the overall best interest
of the Company and its Shareholders to
maintain the current full board strength and
experience for the onboarding of the new
acquisition, by allowing two (2) of its Directors
a short extension beyond the best practice
period of nine (9) years, and to be considered
to be Independent Directors.
The Board therefore proposes an additional
period of no longer than twelve (12) months
for the SINED Dr. Okeahalam, and eighteen
(18) months for the Board Chairman, Mr. Omiyi
(beyond the best practice date of June 2023).
This additional period covers the phase
during which the Board will be, transitioning
the business from Exxon to Seplat, building
a management structure to manage what
was MPNU, work on a new partnership
relationship with NNPC Limited, as well as
manage all the risks inherent in the transfer
of such a major and complex corporate entity
to Seplat.
Seplat Energy PlcAnnual Report and Accounts 2022 The Board is aware that the principal
regulatory consideration with the above
decision is – to what extent can the two (2)
Directors still be considered independent
of thought at Board meetings. In considering
the above, the Board agreed that it had not
seen evidence of Dr. Okeahalam or Mr. Omiyi
being less independent than previously
experienced. The Board considers Dr.
Okeahalam and Mr. Omiyi to be independent
in character, in judgment and accordingly be
free from such relationships or circumstances
with the Company, its management, or
substantial shareholders as may, or appear
to, impair their ability to make independent
judgment. The Board, mindful that Seplat
Energy Plc is a listed company in both Nigeria
and the UK, has considered legal and best
practice requirements in both countries. In
doing so, it seeks to comply with the
requirements of the codes of corporate
governance and explain the reason for any
divergence. The Board believes it is in the
overall business interest of Shareholders that
the proposed extension of tenure, being
definitive and time-bound to within eighteen
(18) months, be implemented.
Highlights of some Key Activities
In furtherance of the Company’s strategic
framework which is to – Build A Sustainable
Business (through social development, focus
on environmental care, maximize returns)
and Deliver Transition (by increasing access
to energy, reducing emissions, and transforming
the economy through its Pillars 1 – 3 Upstream,
Midstream Gas, and New Energy), the Board
engaged extensively with Management in the
Financial Year under review, through the various
Board Committees. Specifically, the Board
facilitated an intensive two (2) day Board and
Management Sessions with the theme: “Moving
from Strategy Formulation to Implementation
& Delivery.” Key highlights of the Sessions
included – (i) Analysing Our External Environment
& Business Premise (which was externally
facilitated by the Oxford Institute for Energy
Studies); (ii) Deliver Transition – New Energy;
Midstream; Upstream (Gas to Power Generation
& Renewables); (iii) Midstream (Gas Business
Restructure, Gas Midstream Expansion &
Distribution); (iv) Upstream (Business Plan Insights
from Pillar 1, the Role of Exploration, Development
and Monetization of Reserves, Crude Export
and losses, Cost Trajectory & Management,
Efficient Project Delivery); (v) Petroleum Industry
Act (PIA): 5 Year Business Plan Valuation and
Insights; (vi) Delivering Our Business in a
Sustainable Way (externally facilitated by the
University of Edinburgh); and (vii) People &
Capabilities (externally facilitated by Korn Ferry).
On 17 May 2022, the Company launched its
“Tree4Life” initiative as part of its commitment
to addressing the effects of climate change
and to signal the Company’s support of the
Federal Government’s commitment on net-zero
carbon emissions by 2060. Tree for Life
initiative is essentially a commitment by SEPLAT
to embark on an ambitious endeavor to plant
five (5) million trees in five years, starting with
the five states of Edo, Delta, Imo and two
Northern states. Some of the dignitaries that
graced the launch of the initiative were,
Minister of State Petroleum Resources, Chief
Timipre Sylva, Minister of State Environment,
Sharon Ikeazor, Chairman of NNPC Limited
board, Senator Margret Okadigbo.
In the financial year under review, our
Company successfully obtained the ISO
55001:2014 Standard Asset Management
System certification, becoming the first
energy company in Africa to achieve this
remarkable feat. ISO 55001 is the international
standard that helps organisations to manage
their assets and optimize asset lifetime
value effectively.
In line with the culture of continuous learning,
particularly as it relates to corporate governance,
the Board had a joint Board training session
on Share Dealing and Disclosure Obligations
which was facilitated by the Nigerian Exchange
Limited, represented by Ms. Tinuade Awe
(CEO, NGX Regulation Limited). Highlights
of the session included – (i) Understanding
Corporate Disclosures; (ii) Disclosure Obligation
on Share Dealing and Ownership; (iii) Restriction
on Share Dealing Transactions; (iv) Case
Studies and Discussions. The Board is
grateful to the NGX for their insights on the
expectations of the Company and obligations
of the Directors in complying with the listing
and disclosures rules.
The Board also had series of engagements
with key shareholders and institutional
investors in the course of the financial year
under review, where updates were provided
regarding the Company’s strategic objectives,
energy transition and the overall governance
of the Company.
In the course of the Financial Year under
review, the Company received a number
of awards which attests to the Company’s
commitment to upholding the highest
standards of corporate governance.
Other governance activities of the Company,
including Board actions for the Financial Year
2022 and other key governance issues
relating to the Company in the early part of
the Financial Year 2023 are as contained in
this governance section of the Annual Report.
I would like to specially thank our
shareholders for their commitment and
support in ensuring good governance of the
Company through the years. I thank all past
and present members of the Board. I also
thank Management and Staff for all their
hard work in implementing the Company’s
transformational objectives. Seplat has
overcome great challenges over the years
and the Company is well positioned for the
actualization of its transformational objectives.
Together, we will continue to deliver
sustainable energy for society and transform
lives through energy.
Mr. Basil Omiyi, CON
Chairman
67
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Board of Directors
Effective
leadership
The Seplat Energy Board consists of highly
experienced professionals and business
experts with profound understanding of
the dynamics of the oil and gas industry
at both local and international levels.
Our Board of Directors
Our Board members have the
appropriate balance of skills and
diversity of experience which
cuts across geology, engineering,
law, business management,
accounting and finance as
applies to the energy industry.
Mr. Basil Omiyi, CON
Independent Non-Executive Chairman
Roger Thompson Brown
Chief Executive Officer; Executive Director
Emeka Onwuka
Chief Financial Officer; Executive Director
Charles Okeahalam
Senior Independent Non-Executive Director
Nathalie Delapalme
Non-Executive Director
Olivier de Langavant
Non-Executive Director
Fabian Ajogwu, SAN, OFR
Independent Non-Executive Director
Bello Rabiu
Independent Non-Executive Director
Emma FitzGerald
Independent Non-Executive Director
Bashirat Odunewu
Independent Non-Executive Director
Kazeem Raimi
Non-Executive Director
Ernest Ebi, MFR
Non-Executive Director
Samson Ezugworie
Chief Operations Officer
Koosum Kalyan
Independent Non-Executive Director
68
Independent Non-Executive Chairman
Mr. Basil Omiyi, CON
Chairman, Independent Non-Executive Director
Biography
Mr. Omiyi spent most of his career at the Royal
Dutch Shell Group where he held various technical
leadership roles in Nigeria as well as in the UK
and the Netherlands. As Nigeria Country
Production Director, he managed capacity of
over 1.4 million barrels per day oil and circa 2 billion
standard cubic feet per day of gas from about
100 plants in the Niger Delta.
He was subsequently appointed Managing
Director of the Shell Petroleum Development
Company of Nigeria Ltd in 2004, becoming the
first indigenous Managing Director of an
international oil company in Nigeria. He later
became the Chairman of Royal Dutch Shell
Companies in Nigeria until his retirement in 2009.
In 2011, Mr. Omiyi was awarded the Nigerian
National Honour of Commander of the Order of
the Niger (CON) in recognition of his pioneering
role in Oil and Gas Industry leadership in Nigeria.
Mr. Omiyi is Chairman of Stanbic IBTC Holding
Plc, and of TAF Nigeria Homes Ltd. He has
held several oil and gas leadership positions
in his esteemed career including: Chairman,
Upstream Industry Group – OPTS (Oil
Producers Trade Section, Lagos Chambers of
Commerce & Industry), from 2007 to 2010;
Chairman of the Oil & Gas Commission of the
Nigerian Economic Summit Group (NESG) 2005
to 2010; Board Member, Nigerian Extractive
Industry Transparency Initiative (NEITI) 2007
to 2010; Chairman, Shell Closed Pension Fund
Administrator Limited, 2004 to 2010; and
President Nigeria-Netherlands Chamber of
Commerce, 2008 to 2010..
Mr. Omiyi studied at the University of Ibadan
where he obtained a B.Sc. degree in Chemistry
in 1969 and a Post-graduate Diploma in
Petroleum Technology in 1970, after which he
joined the then Shell-BP Petroleum Ltd in 1970 as
a Wellsite Petroleum Engineer.
Experience
Mr. Omiyi has extensive insight into and
experience in the global oil and gas industry
and combines a detailed knowledge and
understanding of the Nigerian oil and gas
sector with senior management expertise
gained in a large-scale multi-national
organisation.
Date of appointment
• As Independent Chairman 18 May 2022
• As Independent NED 1 March 2013
Board meetings attended
• 11/11
Committee membership
• Not applicable
Independent
• Yes
Seplat Energy PlcAnnual Report and Accounts 2022 Executive Directors
Mr. Roger Thompson Brown
Chief Executive Officer
Mr. Emeka Onwuka, OON
Chief Financial Officer; Executive Director
Mr. Samson Ezugworie
Chief Operations Officer, Executive Director
Biography
Mr. Brown joined what was then Seplat
Petroleum Development Company as Chief
Financial Officer in 2013. With a background in
finance, he is a qualified Chartered Accountant
with the Institute of Chartered Accountants of
Scotland and also a member of Association
of National Accountants of Nigeria.
Mr. Brown has more than 25 years’ experience
in the financial sector, primarily focused on
emerging markets, with extensive experience
in structuring energy and infrastructure
transactions on the African continent. Prior to
joining the Company, he held the position of
Managing Director of Oil and Gas EMEA for
Standard Bank Group.
Following the retirement of the founding CEO,
Mr. Brown was appointed CEO and assumed
the role on 1 August 2020.
Since becoming CEO, has led the Company’s
rebranding as Seplat Energy, reflecting its new
strategic direction as a provider of diverse and
more sustainable energy solutions for Nigeria.
Experience
Mr. Brown has extensive financial, accounting,
M&A, debt and equity capital markets
experience in the emerging markets space,
and in particular the African oil and gas sector.
He advised on some of the largest and
highest-profile transactions that occurred
in Nigeria the years before he joined Seplat.
Biography
Mr. Ezugworie was appointed to the Board
of Seplat Energy on 1 July 2022. He comes
with more than 30 years extensive industry
experience, building a strong reputation as a
business, safety, ethical leader, and integrator.
Prior to joining Seplat Energy, Mr. Ezugworie
was the General Manager, Development and
Subsurface, with Royal Dutch Shell, where he
worked in Nigeria and abroad for 25 years.
He also served as a Director at Shell Exploration
& Production Africa Limited (SEPA), the Shell
Petroleum Development Company of Nigeria
Limited (SPDC) and Shell Nigeria Business
Operations Limited (SNBO).
Mr. Ezugworie holds a bachelor’s degree in
Geology from University of Nigeria, Nsukka.
Experience
Mr. Ezugworie has been a Fellow of Nigerian
Association of Petroleum Explorationists (NAPE)
for more than 25 years, serving the association
in different capacities including: Chairman,
Port Harcourt chapter; Member of NAPE
advisory board in 2016/2017; NAPE Elections
Committee and NAPE@40 organising
committee, among others.
He believes in inspiring staff and is a strong
advocate for continuous improvement and
work simplification to drive organisational
efficiency and productivity, whilst leveraging
digitisation and technology as key enablers.
Biography
Mr. Emeka Onwuka has more than 30 years’
experience in the financial services sector in
the Sub-Saharan Africa region. He was the
former Group Managing Director & CEO of
Diamond Bank Plc and former Chairman Board
of Directors, Enterprise Bank Limited. Emeka
was a Partner at Andersen Tax Nigeria until
his appointment in Seplat.
Emeka received his B.Sc. in Political Science
from the University of Nigeria, Nsukka and holds
an MBA from the University of Benin. He is a
Chartered Accountant, a Fellow of the Institute
of Chartered Accountants of Nigeria, a Fellow of
Chartered Institute of Taxation of Nigeria, and a
Fellow of the Institute of Directors Nigeria (FIoD).
He has attended executive programs at the
Lagos Business School, Wharton Business
School, and Harvard Business School.
He holds the Nigerian National Honour of
Officer of the Order of the Niger (OON).
Experience
Mr. Onwuka brought to Seplat his extensive
board experience as non-executive Director
at several companies in the financial sector in
Nigeria and West Africa including Chairman of
the Board of FMDQ Securities Exchange Limited,
FMDQ Holdings Limited, and Bharti Airtel Nigeria
and formerly First Atlantic Bank Ghana.
Mr. Onwuka began his professional career
with Arthur Andersen Nigeria in 1988 as a
Staff Assistant and left in 1992 as a Senior
Consultant, providing accounting, audit,
tax, business advisory and strategic services
to companies in banking, oil and gas,
manufacturing, and general commerce.
At Diamond Bank, he successfully manoeuvered
the bank through the industry-wide consolidation
and recapitalisation challenges of 2004/2005
through private placements, listing on the
Nigerian Stock Exchange and the acquisition of
Lion Bank Plc. He also expanded the bank into
the West African sub region from Benin Republic
to Senegal, Ivory Coast and Togo. He concluded
a strategic partnership in 2007 with Actis and
launched in 2008 a GDR offering on the London
Stock Exchange (LSE).
Date of appointment
• As Chief Financial Officer and Executive
Director on 22 July 2013
• As Chief Executive Officer on 1 August 2020
Board meetings attended
• 11/11
Committee membership
• Not applicable
Independent
• Not applicable
Date of appointment
• As Chief Financial Officer and Executive
Director on 3 August 2020
Board meetings attended
• 11/11
Committee membership
• Not applicable
Independent
• Not applicable
Date of appointment
• 1 July 2022
Board meetings attended
• 3/3
Committee membership
• Risk Management & HSE Committee
(Member)
Independent
• Not applicable
69
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board of Directors | continued
Non-Executive Directors
Dr. Charles Okeahalam
Senior Independent Non-Executive Director
Mr. Olivier Cleret De Langavant
Non-Executive Director
Mr. Kazeem Raimi
Non-Executive Director
Biography
Dr. Okeahalam is a co-founder and Chairman
of AGH Group, a private equity and diversified
investment holding company with assets in
several African countries. Prior to co-founding
AGH Group in 2002, he was a professor of
corporate finance and banking at the University
of the Witwatersrand in Johannesburg. His other
roles have included advising a number of African
central banks and government ministries, the
World Bank and the United Nations.
He has held Board positions in several
companies including ABSA, South African
Airways, Sun International and is a former
Non-Executive Chairman of Heritage Bank
Limited, Nigeria and Non-Executive Chairman
of the Nigeria Mortgage Refinance Company.
Dr. Okeahalam is a distinguished economist
and has received several awards including a
Senior Fellowship of the Bank of England for
his work primarily on econometric analysis of
financial systems in Africa. He is currently a
Visiting Professor of Practice at the London
School of Economics and Political Science
(LSE). Charles is involved in philanthropy and
currently serves as the Chairman of the Board
of Directors of AMREF Health Africa.
Experience
Dr. Okeahalam brings extensive corporate finance,
banking and capital markets expertise and
experience to the Board. He was appointed the
Senior Independent Non-Executive Director on
the Board of Seplat Energy Plc on 18th May 2022.
Biography
Mr. Olivier Cleret de Langavant has been CEO
of Maurel & Prom since 1 November 2019.
Before that position, he served in various
capacities within the Total Group which he
joined in 1981. He started as a Reservoir
Engineer, holding positions in France, Congo,
the United States and Colombia, before being
appointed Senior Vice President, Operations
in the Netherlands. Mr. De Langavant was then
Deputy Managing Director of Total E&P Angola
from 1998 to 2002, during which time he was
heavily involved in the early development phase
of the deepwater Girassol field. Following this
post, he was appointed Managing Director of
Total E&P Myanmar. In 2005, Mr. de Langavant
returned to Angola as Managing Director of
Total E&P Angola, a position he held until 2009.
Upon leaving Angola in 2009, Mr. de Langavant
was appointed Senior Vice President, Finance,
Economics & Information Systems of Total’s
Exploration Production (E&P) branch. Mr. de
Langavant holds an engineering degree from
the National School of Mines of Paris (1978).
Experience
In March 2011, Mr. de Langavant took up the
position of Senior Vice President E&P Strategy,
Business Development and R&D, which he
held until February 2015. In March 2015, he was
appointed Senior Vice President, Asia Pacific.
Mr. de Langavant became a member of the
Total Group Management Committee
(thereafter Performance Group Committee)
in January 2012.
Biography
Mr. Raimi is a nominee of Platform Petroleum
Limited, replacing Mr. Austin Avuru who
stepped down from the Board of Seplat Energy
on 1 March 2022. Mr. Raimi is presently the
Executive Director, Commercial for Platform
Petroleum Limited. Previously with Seplat
Energy as General Manager, Commercial,
Mr. Raimi was charged with the responsibility
for driving commercial, economics, valuation,
planning and treasury activities across the
entire organisation. He also served previously
as Manager, Corporate Planning and
Economics at Seplat Energy.
Experience
Mr. Raimi has extensive experience in project
economics and risk analysis having been Lead
Petroleum Economics and Commercial Advisor
at Addax Petroleum where he also served in
different capacities in Nigeria and at the Head
Office in Switzerland. He had significant
involvement in commercial and economic
evaluations of new ventures, farm-in and
company acquisition opportunities with a
thorough appreciation of tax, fiscal issues and
project economics especially as they relate
to Nigeria, Gabon, Iraq and Cameroon. Prior
to this, Mr. Raimi served as Treasury Manager
at Cadbury Nigeria Plc and Audit Finance
Analyst at Citibank Nigeria Limited. In addition
to his role at Platform Petroleum Limited, Mr.
Raimi also serves as a Non-Executive Director
at PNG Gas Limited, Egbaoma Gas Processing
Company Limited and Ase River Transport
Company Limited.
Mr. Raimi holds a First-Class Honors in
Economics from the University of Ibadan,
an MSc in Oil and Gas Economics from the
University of Dundee and has undertaken several
courses including the Certificate of Management
Excellence at Harvard Business School.
Date of appointment
• 1 March 2013 – Independent Non-Executive
Date of appointment
• 28 January 2020
Director
• 18 May 2022 – Senior Independent
Non-Executive Director
Board meetings attended
• 11/11
Committee membership
• Board Finance & Audit Committee (Chairman)
• Energy Transition Committee (Member)
• Remuneration Committee (Member)
• Nomination & Governance Committee (Member)
Board meetings attended
• 11/11
Committee membership
• Statutory Audit Committee (Member)
Independent
• No
Date of appointment
• 18 May 2022
Board meetings attended
• 3/3
Committee membership
• Energy Transition Committee (Member)
• Sustainability Committee (Member)
Independent
• No
Independent
• Yes
70
Seplat Energy PlcAnnual Report and Accounts 2022 Non-Executive Directors
Mr. Ernest Ebi, MFR
Non-Executive Director
Madame Nathalie Delapalme
Non-Executive Director
Prof. Fabian Ajogwu, SAN, OFR
Independent Non-Executive Director
Biography
Mr. Ebi is a nominee of Shebah Petroleum
Development Company Limited (BVI), replacing
Dr. A.B.C Orjiako who stepped down from the
Board of Seplat Energy on 18 May 2022. Mr. Ebi
is a seasoned professional whose experience
in the banking and finance industry spans more
than four decades.
He served as Deputy Governor of the Central
Bank of Nigeria, Nigeria’s Reserve Bank from
June 1999 to June 2009, where he covered the
Policy and Corporate Services Directorates. Prior
to this, Mr. Ebi held several executive positions in
the banking industry in Nigeria and the USA. He
was the Deputy Managing Director of Diamond
Bank Ltd, where he led the bank’s financial
services marketing strategy and initiatives for
new business development. In 1995, he was
appointed by the Central Bank of Nigeria and the
Nigeria Deposit Insurance Corporation as the
Managing Director & CEO of New Nigerian Bank
Plc. During his time at New Nigerian Bank Plc.,
he was responsible for the development and
implementation of a turnaround plan for the bank
and contributed significantly to the recovery of
a large portfolio of non-performing risk assets.
Mr. Ebi has also held senior positions at the
International Merchant Bank, as the Assistant
General Manager (credit & marketing
department) and Assistant. General Manager
(Loan Review & Audit). Mr. Ebi served as the
Board Chairman of Fidelity Bank Plc (2016-2020)
and AIICO Pension Managers (2010-2021) and
currently serves as an Independent Director on
the Board of Dangote Cement Plc., Julius Berger
Nigeria Plc., Coronation Capital Ltd, and
Coronation Asset Management Ltd etc.
Experience
Mr. Ebi is a Fellow, Chartered Institute of
Bankers, and a Fellow of the Institute of
Directors Nigeria. He has undertaken several
leadership courses in Harvard Business and
Kennedy Schools, Oxford Said Business School
and Columbia University. He was awarded
the National Honour of Member of the Order
of the Federal Republic (MFR) by the Federal
Government of Nigeria in 2007 in recognition
of his meritorious service.
Biography
Madame Delapalme has been a Non-Executive
Director of Maurel et Prom since 2011 and
acted as an alternate to Maurel et Prom’s
nominee, Michel Hochard, from 30 June 2014,
until 18 July 2019, when she was appointed a
Non-Executive Director on the Board of Seplat.
Experience
Madame Delapalme brings more than 35 years’
experience in public and global affairs with a
strong focus on development and governance
challenges, specifically in Africa. Between 1988
and 2010, she served as advisor to the Finance
and Budgetary Commission of the French
senate, as advisor for Africa and Development
to various Foreign French Ministers, and as
Inspector General of Finances at the French
Ministry of Economy and Finance. Since 2010,
she has been an Executive Director of the
Mo Ibrahim Foundation, which focuses on
governance in Africa. Over the last 15 years,
she has served as Non-Executive Director of
the Boards of various companies, non-profit
organisations, and think-tanks, operating in,
or focusing on Africa.
Biography
Prof. Ajogwu is a Senior Advocate of Nigeria
with Kenna Partners, and Lagos Business
School Professor of Corporate Governance.
He is an Alumnus of the Said Business School
of Oxford University, and the Lagos Business
School. He holds a Doctorate in Law from
University of Aberdeen, Scotland, an MBA from
the IESE Business School, Barcelona, and law
degrees from the University of Nigeria and the
University of Lagos.
Professor Ajogwu is the Founder of the Society
for Corporate Governance Nigeria, a Fellow of the
Nigerian Institute of Chartered Arbitrators, Fellow
of the African Leadership Initiative West Africa,
Henry Crown Global Leadership of the Aspen
Institute, Fellow of the AIFA Reading Society,
and Fellow of the Society for Art Collection.
He is a member of the International Council
for Commercial Arbitration, London Court of
International Arbitration, the Oxford Philosophical
Society, and the Royal Institute of Philosophy.
Experience
Professor Ajogwu assisted the Securities
& Exchange Commission in drafting Nigeria’s
pioneer Code of Corporate Governance in
2003. He chaired the Nigerian Communications
Commission Committee on Corporate
Governance for the Telecommunications sector
in 2014. He served on the Financial Reporting
Council of Nigeria Committee on the 2018
National Code of Corporate Governance. He is
President of the Nigerian Institute of Chartered
Arbitrators. He chairs the Body of Senior
Advocates of Nigeria Committee on Continuing
Legal Education and is the author of ‘Corporate
Governance in Nigeria’, ‘Corporate Governance
& Group Dynamics’, ‘Petroleum Law &
Sustainable Development’, and ‘Mergers
& Acquisitions in Nigeria’. In 2022, he was
awarded the National Honour of Officer of the
Order of the Federal Republic (OFR).
Date of appointment
• 18 May 2022
Board meetings attended
• 3/3
Date of appointment
• 18 July 2019
Board meetings attended
• 11/11
Date of appointment
• 9 July 2021
Board meetings attended
• 11/11
Committee membership
• Risk Management & HSE Committee
(Member)
Committee membership
• Sustainability Committee (Chairman)
• Risk Management & HSSE Committee
• Sustainability Committee (Member)
(Member)
Independent
• No
Independent
• No
Committee membership
• Energy Transition Committee (Chairman)
• Nomination & Governance Committee
(Chairman)
• Board Finance & Audit Committee (Member)
• Remuneration Committee (Member)
Independent
• Yes
71
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board of Directors | continued
Independent Non-Executive Directors
Mr. Bello Rabiu
Independent Non-Executive Director
Dr. Emma FitzGerald
Independent Non-Executive Director
Mrs. Bashirat Odunewu
Independent Non-Executive Director
Biography
Mr. Rabiu is Founder and Chief Executive Officer
of Dankiri Farms and Commodities Limited,
prior to which he had an extensive career in
the Nigerian oil industry.
He spent 28 years with the NNPC, from which he
retired in July 2019, when he was Chief Operating
Officer/Group Executive Director, Upstream
Business Unit. Prior to his appointment as COO/
GED Upstream, Mr. Rabiu held dual positions of
Group General Manager, Corporate Planning &
Strategy Division and Senior Technical Assistant
to Group Managing Director, NNPC. He was also
the General Manager, Competitive Analysis
Department of the same Division from September
2010 to 11 August 2015. He was at various times
between 1991 and 2005 a planning officer and
Pioneer Head, Material Management, Frontier
Exploration Services at the National Petroleum
Investment Management Services (NAPIMS)
Division of NNPC.
Mr. Rabiu holds a Bachelor’s and Master’s
Degrees in Mathematical Statistics from
Ahmadu Bello University Zaria, Nigeria and a
Master’s Degree in Petroleum Engineering from
Imperial College, London, United Kingdom. He
attended many career advancements courses
in Nigeria and abroad including the prestigious
Wharton Executive Development Program from
the University of Pennsylvania in Philadelphia,
USA and Leading Global Business Program
from Harvard Business School, Boston, USA.
Experience
Mr. Rabiu has an extensive knowledge of the
exploration and production industry in Nigeria,
combining commercial and financial knowledge
with operational expertise. This broad
experience was particularly valuable in his work
on the development of the 2016 Nigerian
Government’s approved upstream Joint Venture
funding scheme. He was also responsible for
the implementation of the Seven Critical Gas
Development Projects, an offshoot of Nigerian
Gas Master Plan aimed at using gas for Nigeria’s
industrialisation, economic growth and
development, where significant consideration
had to be given to strategic intent, fiscal rules
and commerciality of supply.
Date of appointment
• 9 July 2021
Board meetings attended
• 11/11
Committee membership
• Risk Management & HSSE Committee
(Chairman)
• Energy Transition Committee (Member)
• Remuneration Committee (Member)
• Sustainability Committee (Member)
Independent
• Yes
72
Biography
Dr. FitzGerald is a seasoned executive in the
energy and water industries, with hands-on
experience in transformation through her many
years of working at Shell, ranging from building
its lubricants business in China to running its
global retail network. From 2007 to 2010, she
was accountable for Shell’s downstream
strategy and played a key role in reshaping
Shell’s renewables strategy, including the
creation of Raizen, a game-changing biofuels
JV with Cosan in Brazil.
From 2013 to 2018 she ran gas distribution for
National Grid and water and waste networks at
Severn Trent, successfully positioned both as
sustainability thought leaders in their respective
industries. Most recently, Dr. FitzGerald served
as CEO of Puma Energy International, a global
energy company owned by Trafigura and
Sonangol, which is focused on high potential
developing markets in Africa, Asia and Central
America. In 2020 she set up Puma’s Future
Energies division to play a critical role in helping
customers and communities find the right
energy solutions to support the energy transition.
Experience
Over the last 10 years she has served on
various Boards in executive and non-executive
capacities and currently sits on the following
Boards: UPM Kymmene, an international
paper and biomaterials business focused
on innovating for a future beyond fossil fuels;
Newmont Corporation, the world’s largest gold
miner and the recognised industry leader in
execution of principled environmental, social
and governance practices; and Graphene
Manufacturing Group a clean technology
company developing the next generation
of batteries. She is also Co-Chair of the WEF
Global Future Council for Energy Transition.
Biography
Mrs. Odunewu is a banking and finance expert
with 30 years’ experience in the sector. Up to
June 2021, she served as a C-Suite executive,
corporate banking (Energy, Natural Resources
& Infrastructure), at First Bank Nigeria Ltd, prior
to which she was the line executive for their
international banking group where she
supervised CEOs of the subsidiaries of First Bank
in six African countries, as well as the Bank’s
representative office in China, and she served
as a Board member for several of these units.
She is a business development veteran, well
versed in business strategy with more than
10 years’ hands-on experience at C-suite and
executive management level, an alumnus of
Imperial College London and the University
of Manchester. Mrs. Odunewu is a Chartered
Accountant (FCA) and a certified member
of the Chartered Institute of Arbitrators-UK.
She is also a member of various professional
associations including the Chartered Institute
of Bankers Nigeria and the Institute of Directors.
Mrs. Odunewu currently serves as an INED
on the Board of Leadway Holdings and as a
Non-Executive Director (NED) on the Boards
of some African Subsidiary Banks of First Bank
Nigeria. She is also a member of the Board of
Directors for the Franco-Nigeria Chamber of
Commerce and Industry, where she serves
as the Treasurer.
Experience
Mrs. Odunewu has experience spanning audit
and accounting, corporate and commercial
banking, investment banking and treasury in
various financial institutions. She has
specialised in oil and gas financing projects
and led notable successful syndications for
acquisitions and development.
Date of appointment
• 1 August 2021
Board meetings attended
• 11/11
Date of appointment
• 18 May 2022
Board meetings attended
• 3/3
Committee membership
• Remuneration Committee (Chairman)
• Energy Transition Committee (Member)
• Board Finance & Audit Committee (Member)
Committee membership
• Risk Management & HSE Committee
(Member)
• Nomination & Governance Committee
Independent
• Yes
(Member)
• Board Finance & Audit Committee (Member)
• Statutory Audit Committee (Member)
Independent
• Yes
Seplat Energy PlcAnnual Report and Accounts 2022 Independent Non-Executive Directors
Ms. Koosum Kalyan
Independent Non-Executive Director
Biography
Ms. Koosum Kalyan is a South African
businesswoman and economist whose
career began in the Electricity Commission
in Melbourne Australia as an economist. She
subsequently joined Shell South Africa as
an economist and became a member of the
Shell Global Scenario Planning Team after
which she embarked on her expatriate posting
to Shell International London for nine years. The
scope of her work included projects in Nigeria,
Gabon, Mozambique, Tanzania; etc. Ms. Kalyan
assisted governments in transforming its
energy policies and in joining the Extractive
Industries Transparency Initiative during her
tenure at Shell and also assisted in digitising
government institutions.
She has served on the Boards of several
prestigious companies where she expertly
contributed her wealth of knowledge to the
progress of these companies and was recently
appointed the Chairperson of Control Risk for
Southern Africa.
Experience
Ms. Kalyan has a B. Com Law degree
and a degree in Economics from the
University of Durban Westville. She has also
completed the Senior Executive Management
Program at London Business School and a
Leadership Management Program at Shell
Leadership Institute.
Date of appointment
• 28 February 2023
Board meetings attended
• n/a
Committee membership
• Board Finance & Audit Committee
• Nomination & Governance Committee
• Sustainability Committee
Independent
• Yes
73
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Corporate governance report
Corporate governance report
The Board of Directors of Seplat Energy Plc. (the “Board”) regards
Corporate Governance as fundamental to the success of the Company
and continues to ensure that the principles of good governance
are applied in all the company’s dealings. The Board implemented
a tone-from-the-top approach that emphasizes the need to act in
accordance with the highest standards of corporate governance.
Seplat as a Company with dual listing under both the Nigerian Exchange
and the London Stock Exchange, is subject to several listing and
governance provisions. Some of the key provisions that applied to
Seplat for the year ended 31 December 2022, are the Companies and
Allied Matters Act 2020 (‘CAMA’), the Nigerian Securities Exchange
Commissions’ Rules and Regulations on Code of Corporate
Governance for Public Companies (2011) as amended (“SEC Code”),
the Nigerian Code of Corporate Governance 2018 (“NCCG”), UK Listing
Rules (‘LRs’), the UK Market Abuse Regulation (‘UK MAR’), the UK
Corporate Governance Code as updated and published by the
Financial Reporting Council (FRC) in July 2018 (UK Code).
In line with the requirements of these Laws, rules and regulations, the
Board of Seplat, as the highest governing body in Seplat, is aware of its
overall responsibility in providing oversight of the performance and affairs
of the Company on behalf of the shareholders and all stakeholders.
The Company has a Board of Directors consisting of fourteen (14)
members. The Directors have diverse backgrounds, experiences, and
expertise, which they brought to bear in the discharge of their duties in
the financial year under review. The Board equally has the appropriate
mix of Executive, Non-Executive, and Independent Non-Executive
Directors. The majority of the Seplat Board are Non-Executive
Directors, most of whom are Independent Non-Executive Directors.
The Board regards corporate governance as a critical factor in the
achievement of the Company’s objectives and has therefore put in
place and adopted appropriate charters, policies, and processes
for the day to day running of the Company.
Board processes
Scope and authority
In line with relevant codes of corporate governance and regulations,
the Board is responsible for ensuring compliance with all applicable
laws, rules, and regulations. In discharging this responsibility, the Board
is supported by the Company Secretariat, Compliance and Legal Unit
headed by the Director Legal/Company Secretary. Additionally, the
Board is supported by key members of the Senior Leadership Team
and management as are required from time to time. To aid the
Directors’ effective participation and making of informed decisions
at Board and committee meetings, all Board and Board Committee
papers are circulated to each Director in advance of their meetings
using the Board pad software that is designed for that purpose.
Formal minutes of Board and all Committee meetings are taken by the
Company Secretariat team and are reviewed, discussed by the Board
prior to approval, and adopted at the subsequent Board and Committee
meetings. The Company Secretary also advises and provides
guidance to the Board in the discharge of its obligations as stipulated
in the applicable Nigerian and UK laws, codes, rules, and regulations.
Members of the Board are aware of their right to obtain independent
professional advice at the Company’s expense and did obtain
independent professional advice in the financial year under review.
The roles and responsibilities of the Chairman and the CEO are
clearly separated and are outlined in the Board Charter and in the
appointment letters of the Chairman and the CEO. This role separation
is monitored by the Senior Independent Non-Executive Director (‘S.I.D’)
and is periodically assessed during Board evaluations.
The Board has adopted a comprehensive Board Charter that sets out
the matters that are exclusively reserved for its approval. The matters
that require exclusive approval of the Board are also captured in the
Authority Matrix of the Company to ensure strict compliance by the
Senior Leadership Team and management.
Some of the key matters the Board deliberated upon for the financial
year under review include, but are not limited to the following:
• Review of the Annual Declaration of Conflict of Interest
for the Directors;
• Consideration of Updates on Project Apollo including review and
approval of the transaction documents;
• Consideration and review of reports from all the Board Committees
on quarterly basis;
• Consideration and Approval of the proposal for the incorporation
of a subsidiary company;
• Review and approval of the 2021 Full Year Financial Results and the
Quarterly Financial Results for 2022;
• Consideration and approval of Final and Quarterly Interim dividend
payments to the Shareholders;
• Received presentation on the Company’s Reserves summary;
• Held Executive Sessions with all the Directors; and separate sessions
with the INEDs;
• Considered and approved the appointment of the following Directors
to the Board: (a) Ernest Ebi, MFR (NED); (b) Mrs. Bashirat Odunewu
(INED); (c) Mr. Kazeem Raimi (NED); and (d) Mr. Samson Ezugworie
(COO);
• Received and accepted the resignation letter of Mr. Avuru (NED) and
Ms. Arunma Oteh (INED) from the Board;
• Successfully transitioned the Board from an NED Chairman
(Dr. A. B. C. Orjiako) to an INED Chairman (Mr. Basil Omiyi, CON) and
appointed Dr. Charles Okeahalam as the Senior INED;
• Appointed Prof. Ajogwu, SAN as the Chair of the Energy Transition
Committee; Mr. Rabiu as the Chair of the Risk Management & HSE
Committee. Following the resignation of Ms. Oteh from the Board
effective 31 December 2022, Prof. Ajogwu, SAN, OFR was appointed
as the Chair of the Nominations & Governance Committee;
• Consideration and approval of the documents for the 2022 Annual
General Meeting of the Company and successfully held the AGM on
18 May 2022;
• Reviewed and approved the change of names of two Committees to:
(a) Board Finance & Audit Committee; and (b) Statutory Audit Committee;
74
Seplat Energy PlcAnnual Report and Accounts 2022 • Consideration and approval of the 2023 budget and work
programme by the Board;
In carrying out the evaluation, the following seven (7) key corporate
governance areas were considered:
• Training session on Share Dealing and Disclosure obligations
1. Board Structure and Composition;
by the Directors was delivered by the Nigerian Exchange Limited;
• Successful Energy Summit held in October 2022 and the launch
of the SEPLAT Tree for Life project;
• OML 55 – Recovery of Belemaoil Investment.
To facilitate an efficient and effective discharge of its responsibilities,
the Board has delegated specific aspects of its responsibilities to
these six (6) Committees. These Board Committees are:
1. The Board Finance and Audit Committee (formerly known
as the Finance Committee).
2. The Remuneration Committee.
3. The Nomination and Governance Committee.
4. The Risk Management and HSSE Committee.
5. The Sustainability Committee
6. The Energy Transition Committee.
The Board renamed the former “Finance Committee” to the “Board
Finance and Audit Committee” to reflect the Committee’s role of
overseeing the Internal Audit Function and External Audit. Consequently,
the “Audit Committee” of the Company which was established in line
with the provisions of the Nigerian Companies and Allied Matters Act
is now referred to as the “Statutory Audit Committee”. In line with the
updated nomenclatures, the Terms of Reference of both committees
were updated and approved by the Board.
The Board Finance and Audit Committee, which comprises only
Independent Non-Executive Directors was constituted in 2013 in
compliance with the UK Code’s requirement for an audit committee.
The Statutory Audit Committee which was established at the 30 June
2014 Annual General Meeting (‘AGM’) consists of three (3) shareholder
representatives and two (2) Non-Executive Directors who are elected
at every AGM to sit on the Statutory Audit Committee in line with
Sections 404(2) & (3) of CAMA 2020.
All seven (7) Committees (including the Statutory Audit Committee)
have their respective Terms of Reference that guide their members in
the discharge of their assigned duties, and these Terms of Reference
are available for review by the public. All the Committees present a
report to the Board, highlighting matters deliberated upon as well as
each Committee’s proposals/recommendations on matters within the
remit of their respective Terms of Reference. The details of these
seven (7) Committees are contained in the individual Committee
reports in this governance section.
Board review and evaluation
In line with the NCCG and the UK Code, which prescribes the
establishment of a formal and rigorous annual evaluation of the
performance of the board, its committees, the chairman, individual
directors and that the process should be externally facilitated by an
independent external consultant at least once in three (3) years, the
Board in the year under review, engaged the services of an
independent external consultant, Ernst & Young Nigeria to carry out
an evaluation of the Board for the financial year 2022. The independent
consultant also carried out an assessment of the corporate governance
practices within the Company.
2. Strategy and Planning;
3. Board Operations and Effectiveness;
4. Measuring and Monitoring of Performance;
5. Risk Management and Compliance;
6. Corporate Citizenship (Social, Ethics & Environment); and
7. Transparency and Disclosure.
Other core element aspects considered by Ernst & Young Nigeria
in its Board Effectiveness review using the four (4) “P”s were –
• Purpose: what the Board focuses on (i.e., Company’s Purpose,
Board Role, Strategy and Risk Alignment, Sustainability/ESG/Human
Capital Management oversight, Corporate Governance Review;
• People: who sits at the table (i.e., Board Leadership Roles and
Succession, Board Succession Planning, Individual Director
Contribution and Peer Review;
• Process & Structure: how work gets done (i.e., In person and
virtual meetings, Agendas and Charters, Committee Structure,
Information Flow, Meeting materials); and
• Partnership: culture and relationship (i.e., Board Leadership
Coaching, Board Relationship with Management, Board Inclusion,
and Stakeholder relations).
Board meetings
One of the principal ways in which the Board performs its oversight
function and monitoring of the Company’s performance is through
Board meetings. In accordance with regulatory requirements, the
Board meets at least once every quarter. However, additional meetings
are scheduled as matters which require the attention of the Board prior
to the convening of next quarterly Board meeting arise.
The Board held eleven (11) meetings during the 2022 financial year.
The dates of the meetings and attendance of each Director at the
meetings are as stated below. During the year under review, the
Independent Non-Executive Directors held exclusive meetings,
without the Executive Directors. In addition, the Chairman, and the
Senior Independent Non-Executive Director each held different
meetings with the Non-Executive Directors, with the absence of the
Executive Directors. In compliance with the Nigerian Code and the UK
Code, it is the policy and practice of Seplat that no Director is involved
in any deliberation pertaining to his/her remuneration.
Dates of 2022 Board meetings are as follows:
1. 27 January 2022;
2. 11 February 2022;
3. 24 February 2022;
4. 25 February 2022;
5. 17 March 2022;
6. 12 April 2022;
7. 27 April 2022;
8. 18 May 2022;
9. 27 July 2022;
10. 12 September 2022; and
11. 25 October 2022.
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S/N
1.
Name
Basil Omiyi
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16
17.
18.
ABC Orjiako1
Roger Brown
Emeka Onwuka
Samson Ezugworie2
Effiong Okon1
Austin Avuru1
(Recused from Board Meetings
following his Declaration of Conflict)
Olivier De Langavant
Nathalie Delapalme
Charles Okeahalam
Arunma Oteh, OON1
Fabian Ajogwu, SAN, OFR
Bello Rabiu
Emma FitzGerald
Ernest Ebi, MFR2
Bashirat Odunewu2
Kazeem Raimi2
Koosum Kalyan3
Designation
Chairman
(Retired) Chairman
Chief Executive Officer
Chief Financial Officer
Chief Operations Officer
Executive Director, Operations
Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
No. of meetings
in the year
11
No. of times
in attendance
11
11
11
11
11
11
11
11
11
11
11
11
11
11
11
11
11
–
8
11
11
3
9
–
11
11
11
11
11
11
11
4
4
4
–
1. ABC Orjiako retired from the Board in May 2022; Effiong Okon, Austin Avuru, and Arunma Oteh, OON voluntarily resigned from the Board in July 2022, March 2022 and December 2022
respectively.
2. Samson Ezugworie joined the Board in July 2022 as Chief Operations Officer; Ernest Ebi, MFR and Kazeem Raimi joined in May 2022 as Non-Executive Directors while Bashirat Odunewu
also joined in May 2022 as Independent Non-Executive Director.
3. Koosum Kalyan joined the Board on 28 February 2023 as an Independent Non-Executive Director.
Board policies and insurance cover
In addition to the Board Charter earlier mentioned, the company has
a Code of Conduct that applies to all employees, including the CEO and
the Board of Directors. The Code of Conduct outlines the company’s
values and ethical principles, including integrity, accountability, respect,
and transparency. The company regularly reviews and updates its
Code of Conduct to ensure it reflects the company’s values and evolving
best practices. The company also has other corporate governance
policies covering anti-bribery and corruption, anti-fraud policy, related
party transactions, conflicts of interest, share dealing, whistleblowing,
diversity and inclusion, community relations, risk management,
electronic information, and communication systems etc, details
of which are discussed later in this governance section.
The Board has also adopted the UK Market Abuse Regulation
(‘UK MAR’) which replaced the Model Code for Directors’ dealings.
The UK MAR governs the disclosure and control of inside information
and the reporting of transactions by persons discharging managerial
responsibilities (‘PDMRs’).
The Board is responsible for taking appropriate steps to ensure
observance of the Article provisions of the UK MAR by the Directors.
The Company is therefore committed to observing the UK MAR provisions
as part of its commitment to good corporate governance practices.
The Company has arranged appropriate insurance cover for legal
action against its Directors. This insurance covers losses and actions
arising from matters involving a Director’s failure to act in good faith
and in the Company’s best interest, failure to exercise powers for a
proper purpose, failure to use skill reasonably, failure to comply with
the law, etc. The Company regularly reviews this insurance coverage
to ensure adequate protection of its Directors.
Appointment, Development, and Evaluation of Directors
The Board has adopted a Board Succession Policy to guide the
appointment of its Directors in accordance with corporate laws,
corporate governance codes, regulations, and international best
practice. The Board Succession Policy which requires the Nomination
and Governance Committee (“NomGovCo”) to submit to the Board on
a yearly basis a succession plan identifying key and critical positions,
definitive designation of successors for such positions, articulation of
specific development plans for identified successor which is tied to
the Company’s overall performance management and career
communication. NomGovCo has overall responsibility for the Board
appointment, induction, training, and evaluation processes, as well as
changes to the Company Secretary and other senior management
staff, all of which are subject to approval by the Board.
The fundamental principles of the appointment process include
evaluation of the balance of skills, knowledge and experience on
the Board, leadership needs of the Company and ability of the
candidate to fulfil his/her duties and obligations as a Director. New
Directors are required to attend an induction programme on the
Company’s business, their legal duties, and responsibilities as well
as other information that would assist them in effectively
discharging their duties.
The Company believes in and provides continuous training and
development opportunities for its Directors to equip them with
required skills to effectively discharge their duties.
Retirement of the Board Chairman
On 17th November 2021 Dr. A.B.C. Orjiako decided to step down as
Chairman of the Board, after twelve (12) years of meritorious service, after
the 2022 Annual General Meeting (AGM) in May 2022. On 18th May 2022,
he formally stepped down from the Board as the Chairman and a NED
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Seplat Energy PlcAnnual Report and Accounts 2022 and was replaced by Mr. Basil Omiyi, CON as the new INED Chairman
while Mr. Ernest Ebi, MFR was appointed as his nominee (Founding
Shareholder) on the Board. As Chairman of the Group, Dr. Orjiako led
the transformation of Seplat into a globally respected energy Company.
Notable achievements include instilling best practice corporate governance,
and significant growth through several successful acquisitions. He was
also the driving force behind Seplat Energy becoming the first and only
Nigerian energy company to dual list on both the Nigerian Exchange
and the Main Board of the London Stock Exchange in 2014.
The Board is deeply grateful to Dr. Orjiako for his immense contribution
as Chairman of the Board of Seplat Energy since inception and will miss
the depth of his oil and gas expertise which he has garnered over the
decades, the wealth of his global perspective in addressing industry
issues, his uncanny foresight in designing strategies to address budding
issues of climate change and reduction of footprint in carbon emissions,
his unparalleled versatility in human relations and stakeholder management,
and inspirational leadership.
Board Corporate Governance Training
In October 2022, the Board held a Corporate Governance training
session on Share Dealing and Disclosure Obligations for Directors and
PDMRs as part of its continuing corporate governance knowledge
development. The refresher training was curated by the Nigerian
Exchange Limited (“NGX”) while the session was facilitated by the
Chief Executive Officer of NGX Regulation Limited in person of
Mrs. Tinuade Awe.
Topics covered during the Session included – Understanding
Corporate Disclosures; Share Dealing Disclosure Regulatory
Requirements; Disclosure Obligation on Share Dealing and Ownership;
Restriction on Share Dealing Transactions; and Case studies.
Appointment of Mr. Basil Omiyi, CON as the New Board
Chairman on 18 May 2022
Mr. Omiyi spent most of his career years at the Royal Dutch Shell
Group where he held various technical leadership roles in Nigeria as
well as in the UK and the Netherlands. On return to Nigeria in 1992, Mr.
Omiyi held many leadership roles as Production Manager, Director of
External Relations and Environment and later Country Production Director.
As Country Production Director, Mr. Omiyi managed installed production
capacity of over 1.4 million barrels per day oil and circa 2 billion standard
cubic feet per day of gas from about 100 plants across the Niger Delta.
He was subsequently appointed the Managing Director of The Shell
Petroleum Development Company of Nigeria Ltd in 2004 thus
becoming the first indigenous Managing Director of an International Oil
Company in Nigeria and later in addition, became the Chairman of
Royal Dutch Shell Companies in Nigeria until his retirement in 2009.
Mr. Omiyi is also currently the Chairman of Stanbic IBTC Holding Plc,
and TAF Nigeria Homes Ltd. He has held several Oil and Gas
leadership positions in his esteemed career including Chairman,
Upstream Industry Group-OPTS (Oil Producers Trade Section, Lagos
Chambers of Commerce & Industry) 2007-2010. Chairman of the
Energy Sector of NEPAD Business Group, Nigeria, and Board Member
NEPAD Business Group, Nigeria 2005-2010, Chairman, of the Oil & Gas
Commission of the Nigerian Economic Summit Group (NESG)
2005-2010, Board Member, Nigerian Extractive Industry Transparency
Initiative – NEITI, 2007-2010, Chairman; Shell Closed Pension Fund
Administrator Limited, 2004-2010 and President Nigeria-Netherlands
Chamber of Commerce, 2008-2010.
He is a Fellow of many professional bodies, including The Petroleum
Institute, UK, FEI, The Nigerian Mining and Geoscience Society,
FNMGS, The Nigeran Association of Petroleum Explorationist, FNAPE,
and The Chartered Institute of Arbitrators of Nigeria, FCIArb. Mr. Omiyi
was awarded with National Honour of Commander of the Order of the
Niger, CON in 2011 in recognition of his pioneering role in Oil and Gas
Industry leadership in Nigeria.
Mr. Basil Omiyi studied at the University of Ibadan from 1965 to 1970
where he obtained a Bachelor of Science degree in Chemistry in 1969
and a Post-graduate Diploma in Petroleum Technology in 1970 after
which he joined the then Shell-BP Petroleum Ltd in 1970 as a Wellsite
Petroleum Engineer.
Experience: Mr. Omiyi has extensive insight into and experience
in the global oil and gas industry and in particular brings a detailed
knowledge and understanding of the Nigerian oil and gas sector
together with senior management expertise gained in a large-scale
multinational organisation.
Rotation of Directors
In accordance with the provisions of Section 285 of CAMA 2020, one
third of the Directors of the Company are required to retire from office.
The Directors to retire every year shall be those who have been longest
in office since their last election.
However, in accordance with Article 131 of the Company’s Articles
of Association, apart from the Executive Directors and Founding
Directors, all other Directors are appointed for a fixed term and are
eligible for re-appointment upon expiration of their term.
In the last twelve (12) months, the Board went through a few changes
with a view to strengthening its capabilities in terms of injecting fresh
perspective and promoting diversity. The following two (2) Independent
Non-Executive Directors, who have stayed longest in office, retired
during the last AGM and were duly re-elected: (1) Mr. Basil Omiyi, CON;
and (2) Dr. Charles Okeahalam.
In the year under review, the Board presented for the approval of the
shareholders, the appointment of: (a) Prof. Fabian Ajogwu, SAN, OFR
(NED); (b) Mr. Bello Rabiu (INED); (c) Dr. Emma FitzGerald (INED);
(d) Mrs. Bashirat Odunewu (INED); (e) Mr. Ernest Ebi, MFR (NED); and
(f) Mr. Kazeem Raimi (NED) on the Board of the Company.
The Board also appointed the following Directors as representatives
on the Statutory Audit Committee: (a) Ms. Arunma Oteh, OON (Board
Rep); and (b) Mr. Olivier Cleret De Langavant. Thereafter, Ms. Oteh was
replaced by Mrs. Bashirat Odunewu on the Statutory Audit Committee.
The two Directors (Board Representatives) Mr. Langavant and Mrs.Odunewu
served alongside the three (3) shareholders’ representatives who were
elected at the last AGM: Chief Anthony Idigbe S.A.N., Mrs. Hauwa Umar;
and Sir Sunday Nwosu.
Appointment of Chief Operations Officer
The Board is pleased to formally introduce Mr. Samson Ezugworie
as the newly appointed Chief Operations Officer of the Company.
Mr. Ezugworie was appointed to the Board of Seplat Energy on the
1st of July 2022. He comes with over 30 years extensive industry
experience, building a strong reputation as a business, safety, ethical
leader, and integrator. Prior to joining Seplat Energy, Mr. Ezugworie was
the General Manager Development and Subsurface with Royal Dutch
Shell where he worked in Nigeria and Overseas for 25 years. He also
served as a Director in Shell Exploration & Production Africa Limited
(SEPA), The Shell Petroleum Development Company of Nigeria Limited
(SPDC) and Shell Nigeria Business Operations Limited (SNBO) whilst
on this Job. Mr. Ezugworie has been an active member of Nigerian
Association of Petroleum Explorationists (NAPE) for 25 years and
served the association in different capacities. He was the Port
Harcourt chapter chairman for 5 years. A member of NAPE advisory
board in 2016/2017, Elections committee and NAPE @40 organising
committees among others. Mr. Ezugworie holds a bachelor’s degree
in Geology from University of Nigeria, Nsukka.
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Appointment of Two (2) Non-Executive Directors
and One (1) Independent Non-Executive Director
The Board is equally pleased to formally introduce Mr. Ernest Ebi, MFR
and Mr. Kazeem Raimi as newly appointed Non-Executive Directors,
and Mrs. Bashirat Odunewu as a newly appointed Independent
Non-Executive Director of the Company, with effect from May 18, 2022.
Mr. Ernest Ebi, MFR is a nominee of Shebah Petroleum Development
Company Limited (BVI) replacing Dr. A.B.C Orjiako who stepped down
from the Board of Seplat Energy on 18th May 2022 after the Annual
General Meeting. Mr. Ebi is an executive whose vast experience in the
banking and finance industry spans over four (4) decades. From June
1999 to June 2009, he was appointed as a Deputy Governor at the
Central Bank of Nigeria, where he covered policy and corporate
services portfolios. Prior to this, Mr. Ebi held several executive positions
in the banking industry in Nigeria and the United States of America. He
was the Deputy Managing Director in Diamond Bank Ltd where he led
the bank’s financial services marketing strategy & initiatives for new
business development amongst others. In 1995, he was appointed
by the Central Bank of Nigeria and the Nigeria Deposit Insurance
Corporation as the Managing Director & CEO of New Nigerian Bank
Plc. During his time at New Nigerian Bank Plc., he was responsible for
the development and implementation of a credible turn-around plan
for the bank and contributed significantly to the recovery of a huge
portfolio of non-performing risk assets. Mr. Ebi has also held senior
positions at the International Merchant Bank, as the Assistant General
Manager (credit & marketing department) and Assistant General
Manager (Loan Review & Audit). Mr. Ebi served as the Board Chairman
of Fidelity Bank Plc (2016-2020) and AIICO Pension Managers
(2010-2021) and currently serves as an Independent Director on the
Board of Dangote Cement Plc., Julius Berger Nigeria Plc., Coronation
Capital Ltd, and Coronation Asset Management Ltd. Mr. Ebi is also
a Fellow, Chartered Institute of Bankers, FCIB and Fellow, Institute of
Directors Nigeria (F.IOD). Mr Ebi has a very distinguished career within
the Banking and financial services industry and has undertaken
several leadership courses in Harvard Business School and Oxford
Said Business School. He was awarded the National Honour of
Member of the Order of the Federal Republic (MFR) by the Federal
Government of Nigeria in 2007 in recognition of his meritorious service.
Mr. Kazeem Raimi is a nominee of Platform Petroleum Limited
replacing Mr. Austin Avuru who stepped down from the Board of
Seplat Energy on 1st March 2022. Mr. Raimi is presently the Executive
Director, Commercial for Platform Petroleum Limited. Previously with
Seplat Energy as General Manager, Commercial, Mr. Raimi was
charged with the responsibility for driving commercial, economics,
valuation, planning and treasury activities across the entire
organisation. He also served previously as Manager, Corporate
Planning and Economics at Seplat Energy. Mr. Raimi has extensive
experience in project economics and risk analysis having been Lead
Petroleum Economics and Commercial Advisor at Addax Petroleum
Nigeria where he also served in different capacities. Prior to this, Mr.
Raimi served as Treasury Manager at Cadbury Nigeria Plc and Finance
Analyst at Citibank Nigeria Limited. He had significant involvement in
commercial and economic evaluations of new ventures, farm-in and
company acquisition opportunities with a thorough appreciation of
tax, fiscal issues and project economics especially as they relate to
Nigeria, Gabon, Iraq and Cameroon. In addition to his role at Platform
Petroleum Limited, Mr. Raimi also serves as a Non-Executive Director
at PNG Gas Limited and Ase River Transport Company Limited. Mr.
Raimi holds a First-Class Honors in Economics from the University of
Ibadan, an Msc in Oil and Gas Economics from the University of Dundee
and has undertaken several courses in Harvard Business School.
Mrs. Bashirat Odunewu is a Banking and financial expert with about
30 years’ experience in the Finance and Banking Industry. Up till June
2021, she served as C-Suite executive, corporate banking (Energy,
Natural Resources & Infrastructure), at First Bank Nigeria Ltd, prior to
which she was the line executive for their international banking group
where she supervised CEOs of the subsidiaries of First Bank in 6
African countries as well as the Bank’s Representative office in China
and served as a board member for several of them. She is a business
development veteran, well versed in business strategy with over 10
years hands-on experience at C-suite Executive Management level,
an alumnus of Imperial College (University of London) and University
of Manchester. Mrs. Odunewu is a Chartered accountant (FCA) and
a certified member of the Chartered Institute of Arbitrators-UK
(MCIArb). She is also a member of various reputable professional
associations including the Chartered Institute of Bankers Nigeria (CIBN)
and Institute of Directors (IoD). Mrs. Odunewu currently serves as an
INED on the board of Leadway Holdings and Non-Executive Director
(NED) on the Boards of some African Subsidiary Banks of First Bank
Nigeria. She is also a member of the Board of Directors for the
Franco-Nigeria Chamber of Commerce and Industry where she
serves as the Treasurer. Mrs. Odunewu has experience spanning
audit/accounting, corporate & commercial banking, Investment
banking and treasury in various financial institutions. She has
specialized in Oil and Gas financing projects and led notable
successful syndications for acquisitions and development. She has
been the recipient of several Merit Awards in the organizations she
has worked in recognition of her stellar performance. Mrs. Odunewu
is passionate about supporting younger ones towards fulfilling their
aspirations and is a mentor/sponsor to many in this regard.
The Seplat Board is indeed privileged to have Mr. Ezugworie,
Mr. Ebi, Mr. Raimi and Mrs. Odunewu on board and look forward
to their contributions towards the continued success of the Board
and the Company.
Accountability
Details of the Directors’ responsibility for preparing the Company’s
financial statements and accounts, and a statement that they consider
the financial statements and accounts, taken as a whole, to be fair,
balanced, and understandable and to contain the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy, are given on page 26
of this report. Seplat’s business model and strategy for delivering the
objectives of the Company and the assumptions underlying the
Directors’ assessment of the business as a going concern are given
on pages 24 and 25 of this report, respectively.
The Board, during the financial year under review, carried out an
assessment of the Company’s risk management and internal controls
systems, including financial, operational and compliance controls, and
reviewed their effectiveness, details of which are given on pages 32
to 43 of this report.
In compliance with CAMA and the NCCG, the Company has
established a Statutory Audit Committee (mentioned earlier), and in
compliance with the UK Code’s requirement for an Audit Committee,
the Board has established a Board Finance and Audit Committee
comprising four Independent Non-Executive Directors. Details of the
Board Finance and Audit Committee and Statutory Audit Committees’
memberships and activities are given in their respective reports, on
pages 86 and 119. The Board has also established the Risk Management
and HSSE Committee, which is responsible for reviewing on behalf
of the Board, operational risk, health and safety, and environment
matters. Details of the Committee’s membership and activities are
given in its report on page 95.
78
Seplat Energy PlcAnnual Report and Accounts 2022 Remuneration
In compliance with the Nigerian Code of Corporate Governance and
UK Code, the Board has established a Remuneration Committee solely
comprising Independent Non-Executive Directors and was chaired by
Dr. Emma FitzGerald for the financial year under review. Details of the
Committee’s membership and activities are given in its report on page
84. Details of how Seplat’s remuneration policy links remuneration to
the achievement of the Company’s strategy and the level of
remuneration paid to each of the Directors during the financial year
are outlined on page 111.
Seplat stated at the time of the IPO that remuneration for certain
Non-Executive Directors may include performance-related elements
and certain Executive Directors’ service contracts may include an initial
fixed term of more than one year. In compliance with both the Nigerian
Code and the UK Code, no Executive Director is a member of the
Remuneration Committee, and no Director is involved in any
deliberation of his/her remuneration. The Company’s remuneration
policy and practices are outlined on page 108 of this report.
Engaging with Our Stakeholders
The Board recognises the need to nurture successful relationships
with our stakeholders to secure the Company’s long-term goals. Through
regular engagement, the Board is able to understand the views of all
stakeholders and considers them in their decision making process.
Protection of Shareholder Rights
The Board ensures that the statutory and general rights of
shareholders are always protected. It further ensures that all
shareholders are treated equally. On 25 March 2014, the Company
entered into a Relationship Agreement with its founding shareholders
(who are represented on the Board) to regulate their degree of control
over the Company so that the rights of minority shareholders and the
independence of the Board are protected. All other shareholders are
given equal access to information and no shareholder is given
preferential treatment.
Communication with Shareholders
Seplat values effective communication with its shareholders.
As a matter of practice and based on regulatory requirements, the
Company reports formally to shareholders four (4) times a year with
the announcement of quarterly and full-year results as well as
providing disclosure on material changes to the business as and when
required. However, with the SEC requirement for Public companies
to elect whether to file their fourth (4th) Quarter report, the Company
elected to file its Annual Audited Financial Statement within the
regulatory stipulated period. The full-year Annual Report and Accounts
are issued to shareholders and are published on the Company’s website.
Results presentations are also made available on the Company’s
website together with webcast replays of the live presentations.
Due to the COVID-19 pandemic, Seplat obtained approval from the
Corporate Affairs Commission and held its ninth(9th) Annual General
Meeting (AGM) on 18 May 2022 in Lagos, Nigeria by proxy ONLY. This
was in accordance with the Guidelines on Holding of AGM of Public
Companies taking advantage of Section 254 of the Companies and
Allied Matters Act (CAMA) 2020 using proxies. The 2022 AGM was
attended by 18 shareholders in person while 224shareholders were
represented by proxies. The business transacted at the meeting was
based on CAMA requirements and as such, diverged in some respects
from that common to UK companies. The Company’s AGM affords
shareholders present the opportunity to discuss matters regarding the
Company’s business with the Chairman, the Committee Chairmen,
and individual Directors. The AGM also provides the opportunity for
shareholders and Board representatives to be elected to sit on the
Statutory Audit Committee, as required by CAMA.
The notice of the 2023 AGM was sent to shareholders with this Annual
Report and Accounts and it is intended that the best practice for AGMs
as detailed in the Nigerian Code and the UK Code will be followed.
The Board maintains a dialogue with investors outside the AGM to
foster mutual understanding of objectives and to gain a balanced view
of key issues and concerns of shareholders. The primary contact
is through the Executive Directors.
The Board members are available to attend meetings if requested
specifically by shareholders.
Engagement with existing and potential shareholders regarding
business strategy and performance is coordinated by the Company’s
Investor Relations Team. The Head of Investor Relations reports directly
to the Chief Financial Officer. Matters regarding the general administration
of shareholdings are coordinated by the Company Secretary.
The Company conducts an active investor relations programme with
institutional investors and analysts. This includes participation at
conferences, both within and outside Nigeria, where a few one-on-one
meetings and group presentations are made, including the
organisation of investor roadshows in key financial centres.
Regular analysis of Seplat’s shareholder register and major movements,
together with market feedback, trading analysis and peer performance,
are communicated to the Board via the Chief Financial Officer and the
Head of Investor Relations.
The Board welcomes enquiries from shareholders, encourages
attendance at the Company’s AGM and participation in its results
presentations and webcasts. The Board further encourages
shareholders to subscribe to receiving news alerts via the subscription
service on the Company’s website.
Host Community Engagement
Sustainable community development remains a priority and we have
continued to work collaboratively with our local partners to foster
positive social and economic development.
Following the mandate of the Nigerian Upstream Petroleum Regulatory
Commission (NUPRC) to implement the Petroleum Industry Act (“PIA”)
2021, the Company implemented the roadmap developed for
transitioning all community programmes to the PIA from the GMoU
regime. This includes engagement of all Community stakeholders,
setting up of the Board of Trustees to manage the Host Communities
Development Trusts in our Western and Eastern Assets, and the
setup of the Management and Advisory Committees for the proper
application of the capital fund set aside for the development of the
host communities. Members of Senior Management met with leaders
of the host communities, visited community events and projects in
areas of operations. Additionally, Directors met with Ministers and
Governors in the respective states where the Company operates, as well
as other key government officials during the financial year under review.
The Company continued its regular and effective stakeholder
engagement with the host communities, and also carried out various
CSR programmes within these communities. These CSR programmes
included the provision of scholarships that were beneficial to indigent
students, financial empowerment for the youths of the communities
through skill acquisitions and trainings as well as empowerment of
teachers within these communities. The Company, to show its
commitment to sustainability, made provisions for cleaner energy
sources such as solar to supply electricity in these communities.
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Employee Engagement
The Company has over the years established a Joint Consultative
Council (“JCC”) which comprises of Senior Management and
representatives of SEPLAT employees drawn from across the various
business units of the Company. The JCC, which is headed by the
Director Corporate Services, meets at least once every quarter to
update employee representatives on key management decisions
regarding the Company and to address issues which are of concern
to employees. Deliberations, suggestions, and recommendations
made during such meetings are cascaded to the employees.
Recommendations which require approval are cascaded to the Senior
Leadership Team headed by the CEO and to the Board, where necessary.
The Company also facilitated (4) four town hall interactive sessions,
where the CEO updated all employees of happenings and developments
within the organization (including Company’s quarterly performance).
Disclosure of Information
As a company listed on both the Premium Board of the NSE and on
the Main market of the LSE, Seplat strives to comply with the highest
standards of disclosure. As a matter of practice, the Company
simultaneously releases announcements through the relevant
regulatory channels in both Nigeria and the UK. It also ensures that
all announcements are available on the Company’s website together
with copies of its latest results, financial reports, and other relevant
information. The Company has put in place relevant controls and
processes for the management of inside information. The Executive
Directors are ultimately responsible for the approval of Company
announcements and ensuring that such documents comply with
relevant legal and regulatory requirements.
Corporate Governance Framework and Other
Governance Initiatives
The Board places high premium on corporate governance as a
veritable tool for compliance risk management, ensuring the
Company’s sustainability, achievement of the Company’s strategic
objectives and enhancement of shareholders’ value. Consequently,
the Board in fulfilment of its primary responsibility has put in place a
corporate governance framework with “tone from the top” approach
to governance compliance. The Board regularly subjects itself to
evaluations to determine its level of corporate governance compliance
and takes remedial action to resolve any areas of potential or
perceived non-compliance.
To foster an effective day to day implementation of our well-
established corporate governance framework, the Company has
put in place the following dedicated business units/directorates
comprising of – Company Secretariat, Governance Compliance,
Legal, Internal Audit, Enterprise Risk Management, Business Integrity,
Health, Safety & Environment and Sustainability. The Company
collaborates with its regulators (NGX, SEC, FRCN, CAC, LSE and FCA)
as at when necessary to ensure the Company maintains its robust
corporate governance framework and an effective compliance
program. The Company frequently attends engagement sessions
with its regulators.
Environment, Social and Governance (ESG)/
Sustainability.
The Company will publish a separate Sustainability Report and its first
Climate Risk and Resilience Report, which will include the disclosures
recommended by the Task Force on Climate-related Financial
Disclosures (TCFD). These reports will describe our commitment to the
environment and our approach to managing climate risk and represent
disclosure of initiatives within our corporate strategy to build a
sustainable business and deliver energy transition. In addition, the
Corporate Scorecard for 2022 was tied to climate-related and other
sustainability KPIs, which were expressly linked to executive pay. ESG
accounted for 15% of KPIs and 10% for safety in the year under review.
Our primary commitment is to reduce our GHG emissions resulting
from direct operations. In addition, we have established a broad set of
investment activities designed to reduce emissions from our operated
facilities and offset residual emissions. Seplat’s Flares Out project, which
forms part of our commitment to achieving Net Zero by 2050, is on
schedule to reach the target of ending routine flares by the end of 2024.
ISO 55001 Certificate issued to Seplat Energy Plc
In the year under review, Seplat Energy Plc was formally issued the ISO
55001 Certification. As announced to the market in the H1 2022
Financial Reports, this is indeed a milestone achievement and another
first of many “firsts” for Seplat as she becomes the first African E&P
Company to become ISO 55001 certified. ISO 55001 certification is a
life-long journey and not just a sprint. As required by the Standard,
Seplat will, going forward, be subjected to annual surveillance audits
in April 2023 and 2024 as well as a recertification audit in April 2025 in
line with the ISO 55001 3-year certification renewal cycle. These audits
will test how the company will effectively sustain and continually
improve its asset management system in accordance with the
Standard. The company will continue to drive improvement in all its
asset management processes to ensure that it remains aligned with
the ISO 55001 Standard in readiness for all future surveillance/
recertification audits.
Seplat Energy Wins Highest Net Asset Ratio Award
at The Pearl Award 2022
Seplat Energy Plc emerged as winner of the prestigious ‘Highest Net
Asset Ratio’ award at The Pearl Award 2022. The Return on Net Assets
(RONA) ratio compares a firm’s net income with its assets and helps
investors to determine how well the company is generating profit from
its assets. The higher a firm’s earnings relative to its assets, the more
effectively the company is deploying those assets. The Board of
Governors of the PEARL Awards Nigeria congratulated Seplat Energy
Plc for emerging as winner in the Market Excellence Awards Category
for companies quoted on the Stock Market.
Seplat Energy Excels at SPE NAICE 2022, Wins Awards
The 45th edition of the Society of Petroleum Engineers (SPE) Nigeria
Annual International Conference and Exhibition (NAICE) which held at
the Eko Hotel and Suites Lagos State from August 1 to 3, 2022, was a
remarkable outing for Seplat Energy as the company took centre
stage in not only the conference participation, but also in the exhibitions.
Seplat Energy won a total of four awards: Best Indigenous Exhibitor for
Outstanding Display of Creativity and Technical Excellence; 2nd Overall
Best Exhibitor; Sponsor Award; and Special Industry Recognition
Award at the conference. The coveted awards which crowned the
hard work put in by the SEPLAT team, were presented to the company
during the conference proper and at the closing ceremony held on
Wednesday, 3rd August 2022.
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Seplat Energy PlcAnnual Report and Accounts 2022 Best Exhibiting Indigenous E&P Player at NAPE AICE 2022
The 40th Nigerian Association of Petroleum Explorationists’ Annual
International Conference and Exhibition (NAPE AICE 2022) which held
at the Eko Hotel and Suites Lagos State from November 13 to 17, 2022,
was a remarkable outing for Seplat Energy as the company led
discussions at the conference proper as well as displayed excellence
at the exhibitions.
Seplat Energy, once again, won the Best Exhibiting Indigenous E&P
Award at the NAPE AICE 2022. The company sponsored the event
in the Titanium category, and also got an award in appreciation of
its contributions to the success of the conference.
The theme of the Conference and Exhibition was “Global Energy
Transition and the Future of the Oil and Gas Industry: Evolving
Regulations, Emerging Concepts & Opportunities.”
2nd Edition of Educational Roundtable
and STEP Award Ceremony
Last year, Seplat Energy held the second edition of the Seplat JV
Education Roundtable and the Seplat Teachers Empowerment
Programme (STEP) Certificate Award Ceremony on Thursday,
17th March, 2022 in Benin, Edo State.
A total of 220 participants comprising 214 teachers and 6 Chief
Inspectors of Education in Edo and Delta States were awarded
certificates under the initiative, which is aimed at improving the
standard of education in Nigeria especially Seplat Energy’s host
states and communities.
Over the years, Seplat Energy has made significant impacts with
critical initiatives focused on providing quality education for states
of its operations and the country. To consolidate its achievements
on Sustainability Development Goal 4 for inclusive and equitable quality
education, the Company introduced STEP, a customized training
programme for secondary school teachers. STEP is a three-month
intensive training programme that equips teachers with tools to teach
STEAM (Science, Technology, Engineering, Arts and Mathematics).
To commemorate the certificate presentation ceremony held on
March 17, 2022, Seplat Energy hosted The Seplat JV Education
Roundtable themed: Harnessing the Role of Technology In Nigeria’s
Education Sector.
The STEP Certificate Awards Ceremony took place in Benin City,
Edo State, alongside the Seplat Education Roundtable, which had
educational experts and professionals in a highly engaging panel
session. The keynote speaker for the day was Prof. Fabian Ajogwu,
SAN, OFR, an Independent Non-Executive Director at Seplat Energy.
The vision of this initiative is to create a world where young people/
minds are inspired, motivated and empowered to find their niche in
society and use their skills and talents in improving their societies/
countries and indeed their world.
Seplat ‘TREE4LIFE’ Initiative
As part of efforts to ensure reforestation, reduce biodiversity loss,
boost food security and support the global net-zero emission agenda,
Seplat Energy, Nigeria’s foremost indigenous energy company,
launched a unique sustainability campaign tagged “Seplat Tree 4Life”
last year.
On May 17th, 2022, Seplat Energy Plc formally launched its “Seplat
Tree4Life” initiative in a special event attended by critical stakeholders.
Seplat Energy had in 2021 October, at its Seplat Energy Summit,
unveiled its energy transition plan and its commitment to the tree
planting initiative.
“This event for us is a promise kept,” said ABC Orjiako, Chairman as at
18th May 2022, ‘Seplat Energy Plc, which is driving the country’s energy
transition towards cleaner, more reliable energy that is accessible.
Tree planting aims to encourage reforestation. Seplat thrives on
sustainability through environmental, social and governance (ESG),”
“For us in SEPLAT, we do believe that we must align with the Paris
Agreement of net-zero carbon. Net-zero carbon is not net zero fossil
fuel,” Orjiako added.
Roger Brown, CEO of Seplat Energy, affirmed that the Company
targets 1 million trees annually in the next five (5) years, which will
amount to 5 million trees. Initially, Seplat focuses on five states: Edo,
Imo, Delta and two other states in Northern Nigeria. Seventy-five
per cent would be economic trees.
11th Edition of Seplat Energy Pearls Quiz
Seplat Energy Plc successfully concluded the 11th edition of the Seplat
JV PEARLs Quiz, which is one of its signature educational Corporate
Social Responsibility initiatives. Green Park Academy, Edo State
emerged winner from among 130 participating schools and bagged
the coveted prize of Ten Million Naira (N10m) for a project and One
Hundred thousand Naira (N100,000) scholarship for each of its three
partaking students.
The grand finale of the programme, which was held in Benin City,
Edo State, had in attendance secondary schools from Edo and Delta
States, government officials, traditional rulers, various communities
from both States, media, management of the NNPC Exploration and
Production Limited (NEPL), staff, management and board members
of Seplat Energy, among others.
C4C Entrepreneurship Initiative Graduates 16 Fellows
On the 11th of February 2022, Seplat Energy Plc in partnership with
Conversations for Change (C4C) graduated 16 Fellows from the
duo’s entrepreneurship programme.
Deeper Life High School, Warri, Delta State; and The University of
Benin Demonstration Secondary School emerged the second and
third place winners respectively. A total of N18.675m was awarded
to the three winning schools and their participating students.
The 2021 batch of Fellows were equipped to begin their business
empires, which are expected to grow and flourish as well as provide
support to not just them and their families, but also for communities,
countries and indeed the world.
C4C is a non-profit organisation with a major objective
of empowering young people to participate more effectively
in all relevant areas of development.
Seplat Energy’s partnership with C4C is one of many steps taken
by the company towards realizing the United Nations’ Sustainable
Development Goal 1, which is poverty eradication.
Deeper Life High school was awarded a Five Million Naira (N5m)
project and Seventy-Five thousand Naira (N75,000) scholarship each
for its three partaking students. UNIBEN Demonstration Secondary
school was given a prize of Three Million Naira (N3m) project award
and fifty thousand naira (N50,000) scholarship for each of its three
partaking students.
Health & Safety: Covid-19 Monitoring
The COVID-19 protocol was de-escalated in Q4 2022 after successful
management resulted in zero deaths or disruption to Seplat’s operations,
and the positive rate dropped from 0.68% in Q3 to 0.00% in Q4 2022.
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The De-escalation protocol is as follows:
• The use of face masks and other facial coverings are no longer
mandatory on site, offices and living quarters
• Discontinuation of temperature monitoring at all locations
• Lateral flow test shall no longer to be used except when there
is a manifestation of COVID-19 symptoms
Corporate Governance Recertification and Conflict
Declarations
As part of Seplat’s continuous corporate governance awareness
campaign in 2022, the Company carried out its annual corporate
governance online recertification exercise for all employees including
contract staff. The Company also conducted its annual Conflict of
Interest/Affirmation of Independence declarations for Directors and
all Employees.
Board Corporate Governance Training
In October 2022, the Board held a Corporate Governance training
session on Share Dealing and Disclosure Obligations for Directors
and PDMRs as part of its continuing corporate governance knowledge
development. The refresher training was curated by the Nigerian
Exchange Limited (“NGX”) while the session was facilitated by the
Chief Executive Officer of NGX Regulation Limited in person of
Mrs Tinuade Awe.
Topics covered during the Session included – Understanding
Corporate Disclosures; Share Dealing Disclosure Regulatory
Requirements; Disclosure Obligation on Share Dealing and Ownership;
Restriction on Share Dealing Transactions; and Case studies.
Integrity Week/Code of Business Conduct Workshop
In line with the culture of paying close attention to ethical issues, the
Board was represented by the Chairman and the CEO at the Integrity
Week/Code of Business Conduct Workshop facilitated by the
Business Integrity, Legal and Company Secretariat teams. The Board
addressed employees on the need to desist from all forms of unethical
behaviour (including fraudulent activities) and to always speak up on
observed non-compliance with law, governance policies and unethical
behaviours. Thereafter all employees made their annual commitment
to abide by the tenants of the Code of Business Conduct by signing
their Personal Commitment Form.
Employees were also reminded that they may elect to make a report
anonymously by making use of the Seplat/KPMG Ethics Line which
includes dedicated whistleblowing hotlines – 0800 444 1234 (Toll Free)
or KPMG’s toll-free number: 0800 123 5762 / 0800 123 5276.
Employees could also report their concerns by sending an email to
speakup@seplatenergy.com or kpmgethicsline@ng.kpmg.com. The
facilitators also demonstrated to employees that all previously reported
cases were treated with utmost confidentiality. To further encourage
anonymity, the Company recently introduced the Vault App, which
grants employees real-time access to the Senior Leadership Team,
particularly the CEO to air their views, make valuable suggestions and
come up with innovative ideas that would move the Company forward.
Bullying and Harassment Training
The Company also held several Bullying and Harassment awareness
sessions with individual business units and directorates to underscore
the importance of maintaining a friendly workplace environment for
all employees.
Diversity & Inclusion: 1st Anniversary of the Seplat
Women Awesome Network (SWAN)
As part of its sustainable development strategy, Seplat Energy Plc
remains committed to the achievement of United Nations Sustainable
Development Goal 5 (UNSDG). This commitment has been actualized
by the 2021 launch of the Seplat Women Awesome Network (SWAN)
and appointment of Mrs. Edith Onwuchekwa (Director Legal/Company
Secretary) as the Gender Diversity Champion.
In its first year of existence, SWAN has become the gender equality
vehicle to help Seplat and its stakeholders to design, implement and
develop programs to promote gender equality, balance, and enhance
inclusivity in the company and the energy sector value chain.
During the year, SWAN spearheaded several initiatives and programs
to achieve the stated objectives. These include the deployment of a
Diversity and Inclusion Policy, launch of the Swan Mentoring program,
training and upskilling of members, update of facilities across
operational locations to be gender considerate, participation with,
and collaboration with like groups (such as the Women in Energy
Network, etc).
In the coming year, SWAN will continue to collaborate and focus on
initiatives that create an enabling environment for the engagement,
retention, and empowerment of talented female employees, and also
bridge the “women in energy” gap. SWAN will also benchmark against
global best practice and will collaborate with like groups to achieve its
objectives and the UNSDG 5.
Regulatory Engagements
The Board, during the year, had engagements with its industry
regulators to discuss and explain the steps taken by the Company
to ensure compliance with the relevant provisions of applicable laws,
codes, regulations, and sectorial guidelines.
Corporate Governance Rating System (CGRS)
Recertification
The Company participated in the Corporate Governance Rating
System (“CGRS”) recertification exercise in 2021. The CGRS is a joint
initiative between Nigerian Exchange Limited and the Convention on
Business Integrity (“CBi”) developed to rate the corporate governance
and integrity practices of all companies listed on The Exchange.
The Board is pleased to inform the Shareholders that following the
recertification exercise, Seplat obtained a score of 91.21% (valid for
3 years) from the recertification exercise after the aggregation of
scores across the three (3) stages of the CGRS which is above the
70% certification pass mark. The three (3) segment assessment
process included:
1) Board Charter.
2) Code of Business Conduct Policy.
3) Code of Business Conduct.
4) Board Succession Policy.
5) Board Representation Policy for IJVs & Other Arrangements.
6) Anti-Bribery and Corruption Policy.
7) Anti-Fraud Policy.
8) Gifts and Hospitality Policy.
9) Bullying & Harassment Policy.
10) Community Relations Policy.
11) Investors Complaint Management Policy.
12) Conflict of Interest Policy for Directors & Employees.
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Seplat Energy PlcAnnual Report and Accounts 2022 13) Corporate Communications Policy.
14) Electronic Information & Communication Systems Policy.
15) Inside Information Policy.
16) Political and Charitable Contributions Policy.
17) Related Party Transactions Policy and Guideline
18) Risk Management Policy.
19) Share Dealing Policy.
20) Whistleblowing Policy.
21) Market Sounding Policy.
22) Diversity & Inclusion Policy.
1) Board Charter
The Board has adopted a Board Charter which has been updated to
align its provisions with the requirements of the NCCG 2018, SEC Code
of Corporate Governance, UK Code of Corporate Governance 2018
as well as other applicable listing rules and international best practice.
The Board Charter sets out the responsibilities of the Board; the
establishment of the Board Committees with clear delegated
responsibilities; the matters reserved for the exclusive approval of
the Board; and the conduct of Board proceedings. The Board Charter
stipulates the following – the separate and distinct duties of the Board
Chairman and the CEO, appendage of Sample Appointment Letter
of the Board of Directors, inclusion of the role of the Non-Executive
Directors (“NEDs”) and the Independent Non-Executive Directors
(INEDs), the role of the Company Secretary; the respective Terms
of Reference for all the Board Committees and Matters Reserved
for the Board.
2) Code of Business Conduct Policy
The Code of Business Conduct Policy establishes that the Company
shall have a Code of Business Conduct that states the general
business principles and commitments of the Company to its
stakeholders, sets out the values that guide the Company’s conduct,
legitimate and strategic expectations of its employees in their everyday
decision making and with stakeholders. The Policy also requires the
Code to explain and give guidance on the behavioural, attitudinal, and
emulative roles of the Directors, Senior Management, and employees.
The Code is to provide guidance to questions or concerns, steps to
take and additional resources and support on other topics and
policies. The Policy also provides for the role of the Board, senior
managers, managers, and employees. It also requires suppliers,
contractors, consultants, business partners and third parties to apply
the standards equivalent to that of the Company towards their
employees, subcontractors, and suppliers.
3) Code of Business Conduct
The Board has adopted a Code of Business Conduct (CoBC), which
outlines the ethical framework under which Seplat conducts business
– with the highest standards of ethics, accountability, and transparency.
The CoBC has been designed into an easy-to-read format and is an
implied contract between the Company and its employees, contract
staff and business partners to conduct business with the highest
ethical standards. The Board has reviewed and restructured the COBC
to provide for the following – (i) The Code (which summarises the
principles and values by which the Company conducts its business);
(ii) The Charge (which requires directors, employees and contractors
to embrace the enshrined ethical values of the Code); (iii) Personal
Commitment Statement (which models a top-down commitment
to professional business and ethical standards from directors,
to employees and contractors and which everyone is expected to
subscribe to by appending their signatures); (iv) The Code of Business
Conduct Policy (which states the principles and values that the Code
should embody, including guidance notes) (v) The Code’s Practice
Guide; and (vi) Frequently Asked Questions (“FAQs”), which states
examples of dilemmas that could arise in the course of carrying out
work for and on behalf of Seplat. The reviews carried out are all in line
with the NCCG,UK principles and recommended practices.
4) Board Succession Policy
The Board has adopted a Board Succession Policy which sets out the
parameters for developing and implementing a succession planning
programme for Directors of SEPLAT and ensures that a framework is
in place for an effective and orderly succession of Directors that will
result in the collective knowledge, skills and experience in place for the
Board to effectively govern SEPLAT. The Policy stipulates criteria for
selection of succession candidates as well as competencies that such
candidate must possess. The Policy provides Guidelines for Implementing
the Succession Planning Programme as well as Procedure for Executing
a Board Succession Plan. The Policy which requires the Nominations
and Governance Committee (NOMGOVCO) to submit to the Board on
a yearly basis a succession plan identifying key and critical positions,
definitive designation of successors for such positions, articulation of
specific development plans for identified successors which is tied to the
Company’s overall performance management and career communication.
5) Board Representation Policy for Incorporated Joint
Ventures (IJVs) & Other Arrangements
The Board has adopted a Board Representation Policy which
stipulates principles and defines the parameters within which the
SEPLAT IJV Directors will execute their duties and represent SEPLAT on
the IJV Boards. The Policy states the qualities, competencies, and skill
which a candidate nominated to such IJV Boards must possess as well
as the roles and responsibilities of such IJV representative (including
responsibilities prior to, during and after IJV Board meetings).
6) Anti-Bribery and Corruption Policy
The Board has adopted an Anti-Bribery and Corruption Policy which is
updated from time to time. The Policy demonstrates Seplat’s zero
tolerance and commitment to the eradication of bribery and
corruption. It prohibits payment or receipt of facilitation payments,
misappropriation, ‘kickbacks and blackmail/extortion. It also sets the
parameters under which Directors and employees may give or receive
gifts and hospitality, deal with public officials, and make political and
charitable donations. The Policy includes reporting, documentation,
and whistleblowing provisions as well as provisions regarding the
Company’s zero tolerance and disciplinary action for any violation.
7) Anti-Fraud Policy
The Board has adopted an Anti-Fraud Policy which provides Seplat
stakeholders with relevant guidance on how to recognise and deal
with fraud, the responsibilities of employees, directors and third parties
in upholding Seplat’s position regarding fraud and misconduct,
mechanisms for prevention, detection and response to possible fraud
and misconduct in Seplat’s operations; and how to foster a culture
of integrity and transparency, thereby enhancing anti-fraud culture
within Seplat. The Policy covers transactions conducted by Seplat,
with Seplat or on behalf of Seplat and states the responsibilities of
each stakeholder. The Policy states potential indicators of fraud,
protection of whistleblowers, fraud risk management strategy,
reporting of fraud to law enforcement agency(-ies) and applicable
consequence management following investigation findings.
8) Gifts and Hospitality Policy
The Board has adopted a Gifts and Hospitality Policy which
establishes acceptable exchange of items of value, conditions under
which gifts, hospitality and associated expenses may be made,
received, offered, incurred, or reimbursed in compliance with Seplat’s
related policies and international best practices. The Policy, which
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serves as part of the implementation strategy for the Anti-Bribery and
Corruption Policy and other related corporate governance policies,
applies to all Seplat employees, directors, business partners and other
stakeholders. The Policy also sets out Guidelines on accepting or
offering gifts/hospitality as well as acceptable gifts to Host Communities.
9) Bullying and Harassment Policy
The Board has adopted a Bullying and Harassment Policy which sets
parameters within which the Company will deal with all forms of
bullying and harassment within the workplace, reinforces Company’s
commitment to diversity, inclusion and mutual respect, create a
platform for rewarding conduct that aligns with Company’s value for
diversity and outlines zero tolerance approach to addressing all acts
of bullying and harassment. The Policy applies to all employees as
well as third parties dealing with Seplat staff. The Policy stipulates
examples of behaviour that could amount to bullying and harassment,
implications of bullying and harassment, procedure for making
complaints and disciplinary action.
10) Community Relations Policy
The Board has adopted a Community Relations Policy which
demonstrates Seplat’s value for the communities in which it operates,
and the Company’s commitment to developing the communities through
capacity building, business opportunities, employment, academic
scholarships, charitable donations, awareness creation, etc. The details
of Seplat’s CSR activities are contained in the CSR section of this report.
11) Investors’ Complaint Management Policy
The Company established a Complaint Management Policy pursuant
to the Rules of the Nigerian SEC released on 16 February 2015 and the
subsequent directive of the NSE to all listed companies in Nigeria. The
Policy outlines the procedures established by Seplat to address the
complaints and other communications received by its shareholders
and the public in relation to specific matters. The Policy is available on
the “Corporate governance policies” page of the Company’s website.
12) Conflict of Interest Policy for Directors and Employees
The Board has adopted a Conflict of Interest policy for Directors and
employees. This Policy applies to Seplat Directors, shareholder
representatives on our statutory Audit Committee and employees.
The Policy clearly sets out the legally imposed duties of the Board,
its members, and employees, along with some ethical requirements
adopted by the Company. Particular attention is given to conflicts
involving Independent Directors to ensure compliance with both the
letter and spirit of corporate governance regulations on such Directors.
The Policy outlines a clear disclosure, review, and documentation
process for all conflicts of interest involving a Director, beginning with
a yearly declaration to the Company for the consideration of a dedicated
conflict of interest review panel. During the year under review, all
members of the Board and employees participated in the annual
declaration of conflict of interest or affirmation of independence as
applicable. This policy has been further reviewed to include special
requirements on Independent Directors as provided in the SEC code
of corporate governance, NCCG and UK Code of 2018.
13) Corporate Communications Policy
The Board has adopted a Corporate Communications Policy which
establishes guidelines for communication with current and potential
stakeholders, guarantees accurate and effective communication of
Company’s perspective on all issues, ensures compliance with all
relevant regulatory requirements and best practice standards and
guidelines governing corporate communication. The Policy sets out
modalities for both internal and external communications, Company’s
Authorised Media Spokespersons, preparation and release of
regulatory announcements, social media/internet communication.
84
14) Electronic Information & Communications
Systems Policy
The Board has adopted an Electronic Information & Communications
Systems Policy which demonstrates Seplat’s commitment to
responsible, secure, and efficient use of communication systems, such
as the internet, electronic mail, social media, intellectual property, etc.
15) Inside Information Policy
The Board has adopted an Inside Information Policy. The Policy clearly
defines what constitutes ‘inside information’ and sets a clear process
for the confidential preservation of such information. It also prohibits
Seplat Directors, employees, contract staff, business partners and their
connected persons from using inside information to deal in Seplat
shares or securities or those of another public company. The Policy
was updated in the financial year under review.
16) Political and Charitable Contributions Policy
The Board has adopted a Political and Charitable Contributions Policy.
The Policy prohibits Directors, employees, contract staff and business
partners from making political donations or engaging in other political
activities on behalf of Seplat. It also sets the standard and processes
for making charitable donations to lawfully constituted charitable
organisations, in line with the Corporate Social Responsibility (‘CSR’)
initiatives of the Company.
17) Related Party Transactions Policy and Guidelines
The Company has adopted a Related Party Transactions policy which
sets out the policy statement, stringent disclosure requirements as
well as the review and decision-making process for such transactions.
The policy also sets out the special requirements on Interested Person
Transaction as well as transfer pricing guidelines. The Related Party
Transactions Policy and Guidelines is a live document that is revised
from time to time to reflect changes in both the Nigerian and the UK
laws and regulations. The Policy was updated by the Board in the
financial year under review.
18) Risk Management Policy
The Board has adopted a Risk Management Policy which is updated
from time to time. Risk Management Policy demonstrates Seplat’s
commitment to the enterprise risk management and reporting system
that ensures efficient identification of operational, financial, health,
safety and environmental risks, and risk eradication and management.
This Policy was updated in the financial year under review.
19) Share Dealing Policy
The Board has adopted a Share Dealing Policy which is updated from
time to time. The Policy demonstrates Seplat’s commitment to trading
securities in compliance with the requirements of the NGX Amended
Listing Rules (‘ALR’), the Nigerian Code, the UK Listing Rules and UK
Market Abuse Regulation (‘UK MAR’). The Share Dealing Policy reflects
the Company’s dual participation in the Nigerian Exchange and London
Stock Exchange and highlights the Company’s respective obligations
under both Nigerian and UK listing regulations. The Share Dealing
Policy sets the parameters under which Directors and employees of
Seplat and its subsidiaries, and their connected persons, must deal
with the Company’s shares, securities and inside information. This
policy was reviewed by the Board in the financial year under review.
20) Whistleblowing Policy
The Board has adopted a Whistleblowing Policy which is updated
from time to time. In addition to this Policy, whistleblowing provisions
are entrenched in all Seplat corporate governance policies. The
Company has a dedicated whistleblowing hotline for employees and
other stakeholders to confidentially report unlawful and unethical
conduct involving the Company, its Directors, or employees. The
Company’s whistleblowing system comprises an internal and an
external channel, which are operated concurrently. The internal
Seplat Energy PlcAnnual Report and Accounts 2022 Statement of Compliance with Nigerian Exchange
Limited on Listing on the Premium Board
In Compliance with Section 12.4 of the Rules of the Nigerian
Exchange Limited on Listing on the Premium Board, we wish
to state that the SEC Code of Corporate Governance for Public
Companies in Nigeria, the Financial Reporting Council of
Nigeria’s Nigerian Code of Corporate Governance, 2018 and
the UK Corporate Governance Code govern the operations
of Seplat Energy Plc.
We hereby confirm that to the best of our knowledge, Seplat
is in compliance with the Codes.
Signed by:
Basil Omiyi, CON
Chairman
Edith Onwuchekwa
Director, Legal/Company
Secretary
whistleblowing channel is managed by the Company’s Business
Integrity Unit, reporting directly to the CEO, while the external
whistleblowing channel is managed by KPMG. The Business Integrity
Unit and KPMG ensure that all reports are kept confidential and
appropriately investigated and resolved.
21) Market Sounding Policy
The Board has adopted a Market Sounding Policy which sets out
guidelines that ensures that the Company and disclosing market
participant (“DMP”) acting on the Company’s behalf complies with the
provisions of UK MAR when conducting market soundings. The Policy
stipulates procedures to be followed before conducting market
soundings, procedure to be followed during market sounding process
and specific information to be provided and requested where a market
sounding involves or would not involve the disclosure of inside information.
22) Diversity & Inclusion Policy
The Board adopted a Diversity & Inclusion Policy on the 27th of
October 2021. This Policy which applies to all directors, employees
and business partners of the Company, prohibits the Company from
engaging in any form of discrimination based on gender, race, religion
or disability. The Policy also makes it mandatory for the Company to
ensure there is gender equality at all times and that gender gaps are
promptly closed. The Policy further mandates the Human Resource
Team to ensure diversity during recruitments without sacrificing the
criteria of aptitude and ability.
Declaration of Compliance
In compliance with Section 14.4(b) of the NGX ALR, following specific
enquiry, all Directors acted in compliance with the NGX ALR and
Seplat’s Share Dealing Policy in respect of their securities transactions
during the financial year ending 31 December 2022.
Directors’ declarations
None of the Directors have:
• ever been convicted of an offence resulting from dishonesty, fraud,
or embezzlement;
• ever been declared bankrupt or sequestrated in any jurisdiction;
• at any time been a party to a scheme of arrangement or made
any other form of compromise with their creditors;
• ever been found guilty in disciplinary proceedings by an employer
or regulatory body, due to dishonest activities;
• ever been involved in any receiverships, compulsory liquidations,
or creditors’ voluntary liquidations;
• ever been barred from entry into a profession or occupation; or
• ever been convicted in any jurisdiction of any criminal offence
or an offence under any Nigerian or UK legislation.
Signed by:
Basil Omiyi, CON
Chairman
Edith Onwuchekwa
Director, Legal/Company Secretary
85
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Board Committee reports
Remuneration Committee report
All members of the Remuneration Committee are Independent
Non-Executive Directors in order to preserve the transparency and
integrity of remuneration processes. The Remuneration Committee
meets at least four times a year, and, when required, the meetings are
attended by appropriate senior management of the Company (such
as the Chief Executive Officer and Director Corporate Services who is
in charge of Human Resources), and external advisers upon invitation.
When proposing remuneration to the Board, the Committee ensures that:
• The remuneration for Executive Directors is appropriately balanced
between fixed and variable pay elements, which may include annual
bonus and equity-based awards;
• Executive Directors do not receive any sitting allowances or fees that
may be payable to Non-Executive Directors;
• The remuneration of Non-Executive Directors is determined by the
Chairman and the Executive Directors; and
• No Director or manager is involved in any decisions as to his/her
own remuneration.
In accordance with its terms of reference, the Remuneration
Committee assists the Board in:
• Determining the framework for the remuneration of the Chairman,
Chief Executive Officer, Executive Directors and members of senior
management, including without limitation, the schemes of performance-
based incentives (including share incentive plans), awards, and
pension arrangements and benefits for the Executive Directors
and senior management.
• Ensuring that contractual terms and payments in respect of
dismissal, loss of office or termination (whether for misconduct
or otherwise) are fair and not excessive to the individual.
• Providing appropriate input on Directors’ remuneration for the
Company’s Annual Report and Accounts.
• Preparing necessary remuneration procedures and policies in
compliance with the Nigerian Code, UK Code and other applicable
laws and regulations, and in consideration of remuneration trends
in the oil and gas industry in the area where Seplat operates.
• Reviewing remuneration and related matters to ensure that they
are consistent with corporate governance best practice.
• Reviewing up-to-date information about remuneration
in other companies in the oil and gas sector with the aid
of qualified consultants.
• Overseeing any major changes in employee benefits
structures throughout Seplat.
• Designing the policy for authorising claims for expenses
from Executive and Non-Executive Directors.
• Regularly reviewing the ongoing appropriateness and
relevance of the Company’s remuneration policy.
Dr. Emma FitzGerald 3
Chairman of the Remuneration Committee
10
Remuneration Committee
meetings in 2022
2022
Members
Emma FitzGerald1,
Chairman
Basil Omiyi 2,
Member
Charles
Okeahalam (S.I.D.)3,
Member
Fabian Ajogwu1,
Member
Bello Rabiu4,
Member
21
Jan
23
Feb
5
Apr
8
Apr
18
Apr
20
Jul
8
Sep
18
Oct
22
Nov
16
Dec
10/10
–
–
–
–
– 5/5
–
–
–
–
–
10/10
10/10
5/5
1. Independent Non-Executive Director.
2. Basil Omiyi ceased to be a member of the Committee on 18 May 2022,
when he was appointed as an Independent Board Chairman.
He attended all five Committee meetings during his membership.
3. Charles Okeahalam became the Senior Independent Non-Executive Director
(S.I.D.) on 18 May 2022 following the appointment of former S.I.D. Basil Omiyi
as the Independent Board Chairman.
4. Bello Rabiu (independent Non-Executive Director), became a member
of the Committee on 20 July 2022. He attended all five Committee meetings
from the date of his membership of the Committee.
The Remuneration Committee is a standing committee of the
Board and is comprised wholly of Independent Non-Executive
Directors in compliance with the Nigerian Code and the UK
Code. Dr. Emma FitzGerald became the Chairman of the
Committee from 1 December 2021. You will see below details
of the terms of reference for the Remuneration Committee
and a summary of the activities carried out during the year.
The Remuneration Committee is established to ensure that
remuneration arrangements for Seplat’s Chairman, Executive
Directors, Non-Executive Directors and senior management
support the strategic aims of the business and enable the
recruitment, motivation and retention of relevant skilled
personnel while satisfying the expectations of shareholders.
Details of the Company’s remuneration policy are outlined
on pages 102 to 103 of this Annual Report and Accounts. In the
interest of transparency, no Director by reason of being a
member of the Committee is involved in any decisions relating
to his/her own remuneration.
86
Seplat Energy PlcAnnual Report and Accounts 2022 Highlights of business carried out by the Remuneration Committee
during the year include:
• Review of the bonus outturn against the corporate and individual
Performance targets (“scorecards”) for the 2021 financial year.
• Setting the 2022 Annual Bonus Performance targets (“scorecards”)
for the CEO; CFO; Board executives and senior management. These
targets are cascaded throughout the Company to ensure alignment.
• Review of treatment of Long Term Incentive Plans (LTIPS) for Persons
Discharging Managerial Responsibilities (PDMRS) and restricted
persons during restricted periods.
• Review of Dr. A.B.C. Orjiako’s Consultancy Services Agreement for the
period 1 January 2022-30 June 2022 and 1 July 2022-31 December 2022.
• Review of the 2019 LTIP outcomes to determine formulaic outcome,
consider if discretion applicable and approve vesting levels.
• Review and approval of the 2022 LTIP Schedule and Targets.
• Review of the implementation of the 2022 LTIP, including framework
for measuring LTIP underpin.
• Review of exit remuneration for Dr. A.B.C. Orjiako based on remuneration
policy for Directors.
• Setting of Performance targets for Executive Directors in relation to
performance related salary increases including personalized strategic
objectives to be applied for the new COO and other Executives
Directors to trigger the 2023 performance related salary increase.
• Review of Executive Directors compensation to determine preferred
approach to payment of benefits to Executive Directors in relation
to allowances.
• Determination of the preferred approach for Operationalisation of
the 2023 LTIP to reduce dilution, approve the qualification towards
LTIP awards for new joiners and new eligible persons (including
consideration of settling below Board LTIP awards in cash or shares.
• Review of the proposed changes to the redundancy/severance
framework based on industry standards.
• Consideration of the application of malus and clawback in relation
to LTIP in line with the Remuneration policy.
• Review of key executive remuneration trends in 2022 AGM season,
market trends from major industry peers, i.e., UK-listed Exploration
and Production (“E&P”) companies, and Company’s performance
against the LTIP performance conditions for in-flight awards.
• Review of 2023 pay levels proposed Cost of Living Adjustment
(COLA) and merit performance based increase for FY 23 to ensure
pay levels remain competitive.
• Consideration of proposal from remuneration consultant and CEO
on the currency of payment of Non-Executive Directors (NEDs)’ fees
from GB Pounds Sterling (GBP) to United States Dollars (USD), based
on Company’s functional currency is in USD, financial disclosures is
in USD, the Executive Directors as well as the Independent Board
Chairman are paid in USD.
• Review and approve the revised contract for the new Independent
Chairman and Senior Independent Non-Executive Director (S.I.D.).
The Committee will continue to be mindful of the concerns of
shareholders and other stakeholders and welcomes shareholder
feedback on any issue related to executive remuneration. In the
first instance, please contact our Director, Corporate Services.
Dr. Emma FitzGerald
Chairman of the Remuneration Committee
87
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Board Committee reports | continued
Board Finance & Audit Committee Report
I am pleased to make this report to Seplat shareholders on the
activities of the Board Finance & Audit Committee, which I trust
you will find to be of interest.
The Committee updated its nomenclature to the “Board Finance &
Audit Committee” to reflect its role of overseeing the Internal Audit
Function and External Audit. The Board Finance & Audit Committee
was constituted in 2013 in compliance with the UK Code’s requirement
for an audit committee and consists wholly of Independent Non-
Executive Directors as listed above. You will see below the details
of the terms of reference for the Board Finance & Audit Committee.
During the year, the Committee focused on strategies to bolster the
Company’s financial performance amidst an extremely challenging
operating environment. We remained steadfast in our resolve to
explore and execute viable solutions to each operational and financial
challenge. The details of our activities are contained below.
I shall be available at the AGM of the Company to be held on 10 May
2023 or I can be contacted via the Company Secretary.
The Board Finance & Audit Committee in the financial year ended
2022 consisted of five members, all of whom were Independent
Non-Executive Directors.
The Committee meets at least four times a year, and its meetings
are attended by appropriate senior management of the Company,
including the Chief Financial Officer, the Chief Operating Officer, the
Vice President, Finance, the Head of Internal Audit, and the Head
of Business Integrity.
The Board Finance and Audit Committee assists the Board in:
• monitoring the integrity of financial statements and any formal
announcements relating to its financial performance, reviewing
any significant financial reporting judgements contained in them;
• reviewing the Company’s financial controls and financial risk
management systems;
• overseeing financial strategy, policy and treasury matters;
• reviewing and approving major capital expenditures;
• making recommendations to the Board for presentation to the
shareholders for approval at the AGM in relation to the appointment,
reappointment and removal of the external auditor; and approving
the remuneration and terms of engagement of the external auditor;
• reviewing and monitoring the external auditor’s independence and
objectivity and the effectiveness of the audit process;
• developing and implementing policy on the engagement of the
external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit
services by the external audit firm; and reporting to the Board,
identifying any matters in respect of which it considers that action
or improvement is needed and making recommendations as to
the steps to be taken;
• monitoring and reviewing the effectiveness of the Company’s
internal audit function and its activities;
• providing advice on whether the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy; and
• overseeing and evaluating the effectiveness of (and compliance
with) the Company’s corporate governance policies (including
without limitation: share dealing, inside information disclosure,
conflicts of interest, related-party transactions and whistleblowing).
Dr. Charles Okeahalam1
Chairman of the Board Finance & Audit Committee
7
Board Finance & Audit Committee Report
meetings in 2022
2022 Members
Dr. Charles Okeahalam1,
Chairman
Ms. Arunma Oteh, OON1,
Member
Mr. Bello Rabiu1,2, Member
23
Feb
20
Apr
6
Jul
12
Jul
19
Jul
18
Oct
22
Nov
7/7
– 6/7
–
–
–
–
– 2/2
Fabian Ajogwu, SAN, OFR1,
Member
Dr. Emma FitzGerald 1, Member
Mrs. Bashirat Odunewu1.2,
Member
–
–
7/7
7/7
5/5
1. Independent Non-Executive Director.
2. Mrs. Bashirat Odunewu was appointed to the Board as an Independent Non-
Executive Director on 18 May 2022. Mrs. Odunewu joined the Board Finance &
Audit Committee on 18 May 2022 and replaced Mr. Bello Rabiu on the Committee.
Dr. Charles Okeahalam, Ms. Arunma Oteh, OON and
Mrs. Bashirat Odunewu have recent and relevant financial
experience, as highlighted in the profile of Directors on page 68.
In the financial year ended 31 December 2022, the Committee
held seven meetings, dates and attendance records for which
can be seen in the table above.
88
Seplat Energy PlcAnnual Report and Accounts 2022 The Committee’s activities during 2022
The Committee met seven times in 2022. In compliance with the
Committee’s terms of reference, it considered the following:
Financial statements: the Committee reviewed the report from the
external auditors and management on the interim and annual financial
statements and the accompanying public releases. In doing so, it
considered the following:
Budgets: the Committee reviewed the annual budget in detail to ensure
the assumptions were consistent with the business environment and
appropriate growth targets. Oil price sensitivities, alternative export
routes, cost reductions, impact of major acquisitions and impact of
Naira devaluation were considered as a part of the process.
Deferred tax: the Committee reviewed the appropriateness of deferred
tax charges in the year.
• the oil and gas reserve estimates;
• revenue recognition;
• fraud and management override of controls;
• impact of new accounting standards and regulations;
• impact of the fair value adjustments on oil hedges;
• impairments on the oil and gas assets;
• OML 55;
• areas that required significant estimation, judgement or uncertainty;
• compliance with financial reporting and governance standards;
• the basis for the going concern assessment;
• Company’s compliance with OPEC quotas and deferments across
all assets;
• NEPL and NUIMS receivables; and
• the impact of third-party deferments and losses on revenue.
Strengthening the Company’s statement of financial position:
the Committee worked closely with Management to explore the
immediate and long-term strategies for improving the Company’s
statement of financial position.
Seplat Revolving Credit Facility (“RCF”): The $350 million Seplat
RCF was refinanced on 30 September 2022 and is currently undrawn.
The refinancing brings the facility back to its original $350million amount,
extending its maturity to June 2025 with an automatic maturity extension
until December 2026 once the Bond (due April 2026) is successfully
refinanced. The structure and margins remain unchanged albeit with
the Secured Overnight Financing Rate (“SOFR”) replacing the discontinued
London Inter Bank Offer Rate (“LIBOR”) as the base rate. The facility is
provided by 11 lenders (8 international and 3 Nigerian banks).
The Company’s position of established financial strength ensures
the Company is properly positioned to fund acquisition and
growth opportunities.
Cash flow analyses: The minimum cash position was established
and reviewed as adequate during the period.
Alternative export routes: the Committee reviewed Management
updates on the evacuation challenges and noted the success in
operationalising the Amukpe-Escravos Pipeline which contributed
to production volumes and alleviated the downtime experienced
on the Forcados Terminal.
Cost management: the Committee reviewed the continuous efforts
by Management to efficiently manage costs. General and administrative
costs were higher than prior year and considered increases in staff
benefits and emoluments due to the impacts of inflation in 2022.
In addition, costs reflect the full return to pre-Covid levels activity.
Oil hedging: the Committee reviewed the implementation of the
existing oil hedging strategy and ensured that appropriate levels of
revenue protection were considered at the same time as ensuring
that the risk and costs of hedging were manageable.
Internal and external audit: the Committee reviewed and made
recommendations on the internal and external audit plans and
the underlying activities and monitored the extent and timing of
remediation by Management.
Internal controls and Risk Management: the Committee reviewed the
business risks including the management and mitigation of financial
risks and the timeline for remediation.
The Committee reviewed the effectiveness of the Corporate Business
Integrity Unit, as well as reports made through the whistleblowing
system and efforts to resolve them.
Interim and Final Dividend: the Committee considered and
recommended the interim and a final dividend payment of 2.5 cents.
Interim dividend payable post Q1, Q2, Q3 and final dividend payable
post AGM. Also, a Special dividend of 5 cents was recommended
as an addition to the final dividend in view of the Company’s strong
performance in 2022 and this will be payable alongside the final
dividend post AGM.
The Committee carefully monitored the Company’s liquidity position
and ensured Management’s compliance with the business plans.
The Committee as part of its efforts in strengthening the corporate
governance policies under its purview, reviewed, and recommended
the updated Share Dealing Policy and Inside Information Policy to the
Board for approval.
The significant issues considered by the Committee in relation to the
financial statements were:
Impairment: the Committee reviewed the impairment tests
performed by management which was also an area of focus for the
external auditor.
Update on Acquired rigs: Following the acquisition of four (4) drilling
rigs from Cardinal Drilling Services Limited, the Committee reviewed
and considered the additional benefit from the acquired rigs and
continues to monitor the value of the rigs to the business.
The Committee reviewed the investments made in the year which
include the deposit for the Mobil Producing Nigeria Unlimited (“MPNU”)
acquisition and consideration paid for the Abiala farm-in.
Eland:
Eland RBL and Subordinated Financing: The Eland RBL ($110million,
fully drawn from three banks) and the subordinated off taker financing
($50million, $11million drawn from an affiliate of Shell) remain in place.
The Committee continues to monitor these facilities.
Eland (Ubima JV Settlement): A settlement agreement was reached
with Wester Ord Oil and Gas Limited (a 100% subsidiary of Eland) and
the JV Partner All Grace Energy Limited (“AGEL”) on the Ubima field
to relinquish the rights of Wester Ord Oil and Gas Nigeria Limited at
a consideration and settlement sum of $55million. Following the
execution of the settlement agreements and transfer of rights to AGEL,
Wester Ord derecognised both assets and liabilities. The Committee
continues to monitor receipts in line with the settlement agreements.
89
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AGPC Financing: Due to the project delays on the construction of the
OB3 pipeline and connecting spur line, AGPC has sought and obtained
certain waivers to allow drawdowns to continue, including: (i) an extension
to the principal repayment moratorium period from March 2023 until
December 2023 for Naira loans and from March 2023 to March 2024
for USD loans; and (ii) an extension to the completion longstop date
from December 2022 to December 2023, while also agreeing to
completion milestones.
Investor Relations: The major announcement in the financial year was
the signing of the Share Sales and Purchase Agreement for the MPNU
acquisition. The completion of the MPNU acquisition remains a focus
for the Committee.
Internal Audit
In 2022, the Board Finance & Audit Committee on behalf of the Board
reviewed the audit plan drawn up with careful consideration of the risk
environment and the strategic objectives of the Group, changes in the
organisational structure, key management inputs, and past audits. The
execution of the audit plan was monitored by the Committee through
quarterly reports received from the Head of Internal Audit on the internal
audit activities. Ernst & Young (EY) supported the internal audit team
under a manpower call-off contract to provide resources as required
in delivering the Internal Audit plan.
The Head of Internal Audit reports directly to the Board through the
Chairman of the Committee with an administrative reporting line to the
CFO. The Internal Audit function, therefore, has direct access to the
Committee and its main responsibilities include:
• evaluating the adequacy, reliability, and effectiveness of governance,
risk management, and internal controls systems;
• evaluating the reliability and integrity of information and the means
used to identify, measure, classify and report on such information;
• evaluating the means of safeguarding assets and verifying the
existence of such assets, as appropriate;
• evaluating the systems established to ensure compliance with those
policies, plans, procedures, laws, and regulations which could have a
significant impact on the organisation; and
• performing consulting and advisory services on new initiatives and
matters related to governance, risk management and internal
controls as appropriate for the Company.
In 2022, the internal audit strategy emphasised greater focus on
operational areas of capital spend for assurance on the effectiveness
of operational controls and achievement of the strategic objectives
underpinning capital deployment. During the year, internal audit works
performed include the review of the following areas:
• IT and Cyber Security Posture of the Group
• Well Delivery Process Efficiency
• Joint Venture Compliance – Non-Operated Ventures
• Treasury Function Effectiveness
• Resourcing and Talent Management Practices
• Community Relations Management
• Asset Management System – ISO 55001:2014.
The results of the internal audit findings were considered by the
Committee at the majority of the meetings and the remedial plans
were discussed with Management. As a quarterly activity, internal
audit also conducted checkpoint remediation reviews to ensure that
Management was effectively closing out identified control gaps from
prior audit findings.
The Committee monitored the independence, objectivity, and
effectiveness of the internal audit team and also had interaction with
the Head of Internal Audit without Management present. An external
assessment of the internal audit function was completed in the year
under review by KPMG.
External Audit
The objectiveness and independence of the external auditor are taken
seriously by the Company, and this is reviewed each year prior to
commencement of the audit process. The Committee has a policy
of ensuring that the external auditor’s independence is maintained
by minimising the provision of non-audit services and this is monitored
closely throughout the year.
The statutory audit fees earned by the external auditor for the audit
services can be found in Note 10 to the financial statements.
Prior to commencement of the audit, the Committee meets with the
external auditor to review the audit plan and reports. This is to ensure
that the Committee has a thorough understanding of the higher risk
areas so as to ensure that there are no material misstatements in the
financial statements.
The Committee has reviewed the external auditor’s performance and
independence taking into account input from Management as well as
interaction with the external auditor without Management present. In
making its assessment, the Committee focused on the robustness of
the audit, the extent of investigation into the business and the quality
and objectiveness of the audit team. Based on this information, the
Committee concluded that the audit process is operating effectively
and has thus recommended to the Board that the current auditor, PwC
Nigeria, be reappointed as external auditor at the 2023 AGM. PwC was
first appointed on May 28 2020. The Company complies with the
Nigerian and United Kingdom corporate governance regulations. This
results in the audit partner being rotated every five years and the audit
firm being put out to tender at least every ten years.
Dr. Charles Okeahalam
Chairman of the Board Finance & Audit Committee
90
Seplat Energy PlcAnnual Report and Accounts 2022 Nominations and Governance
Committee report
Prof. Fabian Ajogwu, SAN, OFR
6
Nominations and Governance Committee
meetings in 2022
6/6
–
– 4/4
6/6
2/2
6/6
1
Jan
29
Mar
5
Apr
25
Apr
20
Jul
20
Oct
2022 Members
Ms. Arunma Oteh, Chairman*
Mr. Basil Omiyi, CON, Member**
Dr. Charles Okeahalam, Member**
Mrs. Bashirat Odunewu, Member
–
–
–
–
Fabian Ajogwu, SAN, OFR,
Member/Chairman*
* Ms. Arunma Oteh OON, retired from the Board on the 31 December 2022 and
Prof. Fabian Ajogwu, SAN, OFR became the Committee Chairman effective
1 January 2023.
** Mr. Basil Omiyi, CON left the Committee upon his appointment as the Board
Chairman on 18 May 2022 while Dr. Charles Okeahalam was appointed the Senior
Independent Non-Executive Director and Mrs. Bashirat Odunewu joined the
committee on the same day (18 May 2022).
In the financial year ended 31 December 2022, the Committee held
six meetings. The dates and attendance records for all the meetings
are reflected in the table above.
The Company went through significant changes both at the Board
and Committee levels. At the Board level, Dr. A. B. C. Orjiako retired as
Chairman from the Board on 18 May 2022 and was succeeded by
Mr. Basil Omiyi, CON as the new Independent Board Chairman of SEPLAT.
Mr. Austin Avuru also resigned from the Board as a Non-Executive
Director effective 1 March 2022.
On 18th May 2022, Dr. Orjiako and Mr. Avuru were both replaced on
the Board by the nominees of Shebah Petroleum and Platform Group
respectively, Mr. Ernest Ebi, MFR and Mr. Kazeem Raimi, as Non-Executive
Directors, while Mrs. Bashirat Odunewu joined the Board as an Independent
Non-Executive Director. These appointments were approved by the
shareholders at the Company’s Annual General Meeting (AGM) held
on 18 May 2022. Following the appointment of Mr. Omiyi as the Board
Chairman, Dr. Charles Okeahalam was appointed the Senior Independent
Non-Executive Director on the Board of the Company.
At the Committee level, Mr. Omiyi was replaced on by Mrs. Odunewu.
In the Financial Year under review, the Board received and accepted
the notice of Ms. Arunma Oteh, OON to step down from the Board
effective 31 December 2022. Prof. Fabian Ajogwu, SAN, OFR was
appointed as the new Committee Chairman effective 1 January 2023.
In the Financial Year under review, the Committee received the final
report on the Company’s Change Management Program with the
following major highlights: (a) Completion of Phase 1 of the Program
which focused on the effective operations and technical interfaces;
resulting in the empowerment of the Asset Team, embedding of the
Asset-Led organisational structure through workshops at Senior
Leadership Team (SLT) level and below; and (ii) Completion of Phase 2
of the Program which focused on the implementation of the Change
Management (including facilitation of engagement between SLT and
employees) resulting in key decisions and actions required for the
actualisation of the objectives of the Program; review of related
guidelines and policies to ensure adherence with the new organisational
structure, and documentation of decisions made by the Company;
and communication of the Change Management Project messaging
and milestone achievements within the Company.
In the discharge of its responsibility for the year, the Committee also
considered the Employment Policy which focused on the recruitment,
progression and promotion processes for Staff within the Company
and the Committee’s oversight role regarding hires and promotions of
staff from GL3 and above. In the discharge of its oversight role and
responsibilities under the Nigerian Code of Corporate Governance
(NCCG) provisions, the Committee received and considered the final
report from the 2021 Board Evaluation Performance exercise carried
out by Korn Ferry. The review was focused on the core effectiveness
of the Board premised on the following: (i) Board Size; (ii) Board
Composition (Skills, Expertise, Diversity)(iii) Board Independence;
(iv) Individual Director Contribution; (v) Company Purpose/Board Role;
(vi) Strategy setting; (vii) Risk Oversight; (viii) Sustainability/ESG;
(ix) Succession Planning; (x) Investor relations / Capital Markets;
(x) Board Charters; (xi) Corporate Governance framework; (xii) Committee
Structure; (xiii) Annual Board Calendar; (xiv) Meeting materials;
(xv) Secretariat Function; (xvi) Board Culture and Dynamics; (xvii) Board
Relationship with Management; (xviii) Broader Stakeholder Relations;
(xix) Onboarding and Offboarding; and (xx) Board learning.
The findings from the review were thereafter grouped across five core
areas: (i) People – who sits at the table; (ii) Purpose – what the Board
focuses on; (iii) Process & Structure – how the work gets done;
(iv) Partnership – culture and relationship; and (v) Board leadership.
A progressive improvement roadmap for the Seplat Board was also
presented with recommendations put forward based on the findings.
Other activities of the Committee for the financial year ending
31 December 2022 are outlined below. I shall be available at the
Annual General Meeting (“AGM”) of the Company to be held on
10 May 2023 for further clarifications or I can be contacted through
the Company Secretary.
Prof. Fabian Ajogwu, SAN, OFR
Chairman of the Nominations and Governance Committee
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Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board Committee reports | continued
All the members of the Nominations & Governance Committee are
Independent Non-Executive Directors. The Committee meets at least
four times a year. When required, the meetings of the Committee are
attended by other members of the Board such as the Chief Executive
Officer, members of the Senior Management Team including the
Director Legal/Company Secretary and Director Corporate Services.
External consultants also attend some of these meetings only upon
invitation by the Committee Chairman.
The Committee in performing its duties as enshrined in its Terms
of Reference, gives due consideration to all applicable laws and
regulations, including but not limited to the provisions of the Nigerian
Code of Corporate Governance (‘NCCG’), the Securities and Exchange
Commission’s Code of Corporate Governance, the Nigerian Exchange
Rules, the Listing Rules of the UK Listing Authority, the Disclosure Rules
and Transparency Rules issued by the Financial Conduct Authority, the
UK Corporate Governance Code (‘UK Code’), and any other applicable
rules, as appropriate. The Committee, in collaboration with the
Sustainability Committee, also ensures that Seplat complies with all
the requirements under the Nigerian and UK Codes of Corporate
Governance including environment, social and governance reporting.
The Committee assists the Board in fulfilling its responsibilities with
respect to the following:
• nomination of Board and/or Board Committee members and
oversight of governance matters of Seplat.
• Board and/or Board Committee composition, evaluating the
performance of Directors and making recommendations on the
addition or replacement of Executive and Non-Executive Directors
and the Chairman of the Board.
• oversight of Seplat management’s implementation of its human
capital development policies and procedures and Seplat
management’s recommendations for the recruitment, promotion,
training, development, succession planning or disciplinary measures
affecting the Chief Executive Officer, Executive Directors, General
Managers and above for Seplat and any of its subsidiaries.
• overseeing the implementation of Seplat’s Code of Business
Conduct, reporting any lapses and recommending appropriate
review to the Board from time to time.
• promoting, modelling, institutionalising, and maintaining sound
ethical culture and good corporate citizenship (Sections 24.1 & 24.2
of the NCCG).
• advising the Board on modalities of strengthening the Company’s
corporate governance and compliance ethos, to achieve Seplat’s
continued survival and prosperity (Section 11.2.1 of the NCCG); and
• achieving the corporate strategy of the Company.
Other responsibilities in corporate governance are:
• Review compliance with all applicable laws, corporate governance
codes, listing rules, and regulations (the ‘legislations’) and its
implementation by the Company.
• Review developments in corporate governance generally and advise
the Board periodically with respect to significant developments in
the law and practice of corporate governance and recommend the
approach to be taken by the Company in relation to such corporate
governance standards.
• At the request of the Board, review and approve material corporate
governance information of the Company to be made public or made
available to public entities.
• Periodically review all Board-related policies and recommend to the
Board such changes as it considers appropriate. The Committee
shall also monitor adherence to the Code of Business Conduct,
ensuring that breaches are appropriately dealt with.
• Review and approve items that should be published in the
Company’s Annual Report relating to the activities of the Committee.
• Assess whether the Board has access to all the information it
requires from management.
• Assess, from time to time, whether additional information, including
third-party evaluations, is desirable.
• Meet from time to time without management representatives to
consider ethical, governance and compliance issues or, at the request
of the Board, to consider other issues referred to it by the Board.
• Consider any other matter properly referred to the Committee by the
Board, a Director, or the management of the Company, for review or
recommendation to the Board.
• Meet separately with senior management, employees or
independent advisors, as deemed necessary by the Committee.
• Review or make recommendations to the Board in respect of the
adoption, administration or amendment of the Company’s policies
including the Code of Business Conduct or conflict of interest policies.
• At the request of the Board and/or the respective Board Committees,
provide guidance on the Company’s arrangements for its employees
to raise concerns in confidence about possible improprieties in
matters other than financial reporting.
• Advise the Board and the respective Board Committees on the
Company’s procedures for detecting and responding to fraud,
including bribery, as well as arrangements in place for regulatory
and statutory compliance.
• Periodically review the effectiveness of the Company’s governance
and compliance practices and any relevant governance and
compliance issues, such as ethics, culture, integrity, transparency,
including opportunities for improving the governance and
compliance framework, compliance with all applicable legislations
and make recommendations to the Board as appropriate with
respect to any changes to the Company’s governance and
compliance practices; and
• Coordinate with the Sustainability Committee in providing in the
corporate governance section of the Company’s Annual Report,
highlights of the Company’s activities, standards and compliance
in relation to matters of general environmental, social and
governance (ESG) initiatives (Section 28.2(l) of NCCG).
92
Seplat Energy PlcAnnual Report and Accounts 2022 Highlights of the business carried out by the Nominations and
Governance Committee during the year include:
• Finalisation of the 2021 Board Evaluation Performance exercise
carried out by Korn Ferry, a global organisational consulting firm,
reviewed the final report from the exercise and adopted the
recommendations from the report.
• Following the notice of retirement received from the past Board
Chairman, commenced, and completed the search for potential
candidate as an INED through an external consultant which led to
the appointment of Mrs. Bashirat Odunewu as an INED on the Board
in May 2022.
• Board succession was implemented with the retirement of two
Founding Directors and their replacement by their respective
nominees in the persons of Mr. Ernest Ebi, MFR (Non-Executive
Director) and Mr. Kazeem Raimi (Non-Executive Director).
• There was change in Board/Executive Management Team with
Mr. Effiong Okon stepping down from the Board as the Operations
Directors and taking up a new role as the Director, New Energy while
Mr. Samson Ezugworie joined the Board as the Chief Operations
Officers effective 1st July 2022.
• Received the final report on the Change Management Program
which was led by the CEO and supported by the Change
Management Consultant/Expert.
• Held an Executive Session with the Senior Leadership Team on
Talent Pool Management Framework across the organisation.
• Reviewed the implementation of confidentiality across the
organisation through several corporate governance policies.
• Quarterly review of the Company’s HR Dashboard which highlighted
the following key updates: (i) new hires and departures from the
organisation including resignations; (ii) total number of males & females
employees; (iii) maintenance of a healthy workforce; (iv) staff turnover
compared to the global average annual rate; (v) corporate activities
within the period were also highlighted.
• Held Executive Sessions to consider Management proposals
on promotions and recruitment from Grade 1 to grade 3 cadres.
• Considered the Employment Policy that covers recruitment,
progression, and promotion processes for all employees within
the organisation and the oversight role played by the Committee.
• Reviewed the outcome of the SEPLAT People’s Voice survey
across the entire organisation, the plan developed to close the
concerns highlighted in the survey and carry out special
interventions were necessary.
• Reviewed the updates to some Corporate Governance Policies such
as the Share Dealing Policy, Inside Information Policy, etc. which was
considered and approved at the Board level.
• In line with the recommendation from the Internal Audit, considered
the memo on the Directors’ compliance with the annual Conflict of
Interest Declaration forms which was 100% compliant for the year.
Diversity at Seplat
As an Organisation, Seplat recognises its Board and employees as
one of its greatest assets and key stakeholders. The Company is
therefore committed to promoting a diverse and inclusive workplace
that will maximise value for its stakeholders and ensure the sustainable
success of the Company. It is therefore the policy and practice of the
Company to attract, recruit and retain diverse and talented members
of the Board, management, and workforce. The Company during the
year under review, has embedded recruitment processes for increase
in the diversity segment for female employees, events such as the Break
the bias challenge and unconscious bias training sessions were held
across the organisation. The Diversity and Inclusion framework and
policy was adopted by the Board, and the Company marked the
completion and launch of the crèche. In the Financial Year under
review, a Companywide engagement on Diversity and Inclusion (D & I)
implantation strategies was carried out through a survey in various
diversity focus groups. The Diversity and Inclusion Policy applies to all
Directors, employees, and business partners, including their respective
recruitment, engagement, remuneration, evaluation, and promotion.
The Diversity ad Inclusion Policy applies in all countries and locations
in which Seplat operates, except in jurisdictions where the Company
has adopted a specific policy on Diversity & Inclusion.
As part of the Company’s sustainability approach to business, Seplat
launched the ‘Seplat Women Awesome Network’ (‘SWAN’) under
the Seplat Gender Diversity programme on the 18th of October 2021.
SWAN was created to spearhead the Company’s contribution towards
the achievement of UN Sustainable Development Goal 5, which is to
achieve gender equality and empower all women and girls. SWAN
has been pivotal to the design, implementation and development
of mainstream gender equality programs in the Company and the
energy sector value chain.
The current Board consists of nationals from a variety of cultures
within and outside Nigeria, who have diverse expertise in the local
and international oil and gas industry and other business sectors.
The Nominations and Governance Committee’s consideration of
candidates for directorship considers diversity of thought and gender.
Diversity among Directors enriches deliberations and ensures that
diverse views are leveraged in arriving at Board decisions. There
are currently four female Directors on the Board: (a) Madame Nathalie
Delapalme; (b) Dr. Emma FitzGerald (c) Mrs. Bashirat Odunewu; and
(d) Ms. Koosum Kalyan.
Seplat’s senior management team consists of men and women from
diverse cultural backgrounds in Nigeria, who have varying skills and
experience in the different sectors of the oil and gas industry. The
Board is committed to continuous investment in diversity programs
that will enrich its Board, Management, and employee composition.
The Company is proud of the increasing number of females within
the senior management team. Overall, females make up 25% of the
workforce within the Company while policies have been put in place
that will support the growth of this number over time at all levels in the
organisation without compromising competence and meritocracy in
any way. The Company will continue to drive this campaign progressively.
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Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board Committee reports | continued
Energy Transition Committee Report
I am pleased to present to you the Energy Transition Committee
Report for the 2022 financial year. In line with the new strategic
direction of the Company, as approved by the Board, the name of the
Committee was changed to the “Energy Transition Committee” in July
2021. Following this change, the Board revised the Committee’s Terms
of Reference to highlight the upstream, midstream spin-off, and gas
business growth plan to enable the Committee to incorporate the
gas business under the “Power & New Energy” portfolio in tandem
with the New Energy/Energy Transition Agenda and initiatives of the
Company. The revised Terms of Reference were approved by the
Board in April 2022. Accordingly, the Committee, in addition to helping
the Company successfully navigate the dynamic landscape of the
gas market and to position the gas business as a robust stand-alone
midstream business will also assist the Board in the oversight and
deployment of the Company’s Energy Transition Agenda and the
conceptual energy transition roadmap. I plan to be available at the
AGM of the Company to be held on 10 May 2023 to interact with
shareholders, or I can be contacted via the Company Secretary.
Fabian Ajogwu, SAN, OFR
Chairman of the Energy Transition Committee
Independent Non-Executive Director
Prof. Fabian Ajogwu, SAN, OFR
5
Energy Transition Committee
meetings in 2022
2022 Members
Basil Omiyi1, Chairman1
18
Jan
24
Feb*
13
Apr
14
July
12
Oct
–
– 3/3
Fabian Ajogwu, Chairman2
–
–
–
Charles Okeahalam, Member
Arunma Oteh3, Member
Bello Rabiu, Member
Emma Fitzgerald, Member
Kazeem Raimi4, Member
–
–
–
2/2
5/5
5/5
5/5
5/5
2/2
1. Mr Basil Omiyi, CON, was the former Senior Independent Non-Executive Director
on the Board and Chairman of the Committee; he resigned from the Committee
upon his appointment as Chairman of the Board in May 2022.
2. Prof. Fabian Ajogwu, SAN, OFR, was appointed as Chairman of the Committee
in May 2022.
3. Ms Arunma Oteh, OON resigned from the Board effective 31st December 2022.
4. Mr Kazeem Raimi joined the Board as a Non-Executive Director in May 2022.
* Combined meeting
The Committee held four meetings and one combined meeting
with the Risk Management and HSSE Committee in the financial
year ended 31 December 2022. The dates, attendance, and
new membership records are as shown in the table and Notes
1 to 4 above.
94
Seplat Energy PlcAnnual Report and Accounts 2022 The Energy Transition Committee, in the fiscal year under review,
was comprised of six Independent Non-Executive Directors who
have strong leadership experience in the Nigerian and International
Gas industry as well as in-depth knowledge of finance. Mr. Basil Omiyi
resigned as Chairman of the Committee in May 2022 upon his
appointment as the Chairman of the Board whilst Ms. Arunma Oteh
resigned from the Board effective 31 December 2022. Mr. Kazeem
Raimi joined the Committee as a Non-Executive Director in May 2022.
Details of the revised terms of reference for the Energy Transition
Committee and a summary of the activities carried out during the
financial year is shown below.
In accordance with its terms of reference, the Energy Transition
Committee is established to:
1. Assist the Board in the oversight of and the deployment
of the Company’s:
• Energy Transition Agenda based on step-by-step plans
using gas as a bridge towards clean energy;
• Decarbonisation pathway to achieving the Company’s
Greenhouse Gas (“GHG”) emissions reduction target;
• Energy transition roadmap providing guidance on the
implementation and assessment of the benefits, risks
and cost of the transition to the Company;
• Renewable Energy development and integration into the
overall energy management strategy of the Company; and
• Gas business growth plan which includes guidance on the
framework in the spin-off of the traditional upstream into
a sustainable midstream value chain.
2. Assist the Board in:
• The periodic review of the long-term strategic Gas Expansion
Master Plan for the Company that is consistent with the vision
of the Company and a framework for implementing the plan;
• The oversight of the Company’s successful transition from the
Upstream Gas into the Midstream value chain;
• Reviewing issues as they arise in major ongoing midstream
investments in the Assa-North Ohaji-South (“ANOH”) especially
given its non-operated status;
• The review of Seplat Energy investment portfolio and
opportunities in cleaner energy;
• The formulation and implementation of the New Energy
Business Model to amongst others:
• Define and develop the New Energy business model and
solutions to the Company’s decarbonisation challenge and
consolidate all initiatives aimed at reducing Seplat’s emissions
footprint into a Greenhouse Gas (‘GHG’) Energy Management
Plan (“GHG – EMP”);
• Implement the Seplat Energy Transition Agenda including the
GHG – EMP to achieve net zero emissions;
• Expand the gas business beyond the core E&P into different
gas-related business lines integrated with the New Energy
Business Model;
• Drive decarbonisation initiatives and assess the potential for
investments in renewable and other forms of New Energy;
• Collaborate on the Environment, Social & Governance (“ESG”)
initiatives undertaken by the Company to synergise activities
relating to GHG reduction targets;
• Transition to clean energy via a low-risk investment
in Renewable Energy projects;
• supervising the implementation of the energy transition roadmap
by maturing the strategic choices approved by the Board to
actualise the short-, mid- and long-term energy opportunities;
• developing and implementing action plans that outline a series of
concrete activities and actions that directly support the core goals
and functions of the energy transition and new energy initiatives;
• receiving and considering reports relating to the Midstream and
Energy Transition initiatives, including gas prospects, commercial
activities, and legislative updates; and
• overseeing other activities related to the Midstream Gas
processing and expansion business of Seplat as the Board
may approve from time to time.
Gas business lines:
Key Committee activities related to the Gas business lines include:
• Gas sales volume: In the course of the financial year, the
Committee paid close attention to gas sales volumes in the light
of ongoing challenges with critical infrastructure, such as low
pressure in the gas transmission network and outages on the
SPDC operated Forcados Oil Terminal. These challenges
notwithstanding, gas demand grew to 350 MMscfd with the
addition of new customers including Transcorp Power and Gas
Hub. Accordingly, the market maintains a positive outlook with
observed appetite for increased gas demand by identified
prospective customers, whilst the Company will evaluate options
for drilling more gas wells to meet the growing demand.
• Collection of outstanding debt: The Committee also monitored
the collection of outstanding debts from the Company’s customers.
Cash collection for the year under review amounts to $71 million
(gross) whilst the overdue receivables (after impairment) stands
at $16.079 million. The Company has made efforts to de-risk
receivables from gas sales by tightening the payment terms via the
implementation of a prepayment system for gas supply as a means
of resolving the liquidity challenges with power customers.
• Gas-to-power: The power sector is the major customer for gas
in Nigeria and therefore the Company will remain exposed to the
power sector. The “Partial Securitization of Gas Contracts” framework
pursuant to the Nigerian Electricity Regulatory Commission (“NERC”)
Order 319/2022 took effect in the course of the year for implementing
the payment waterfall framework for settling invoices for gas
supplied to power generation companies in the country. The
Committee observed positive reports of significant improvement in
payment of invoices within the period. The Company will continue
to monitor developments in this space along with the industry
perspective in order to form an opinion on the efficacy of the
framework or offer recommendations for improvement.
• Petroleum Industry Act (PIA). The Committee paid close attention
to the proposals for the conversion of the Company’s licences
to the new PIA terms and the implementation of the upstream –
midstream spin-off with formal recommendations in connection
therewith made to the Board in the course of the year. Analysis has
shown an incremental value addition to the Company’s business
overall from the conversion to the PIA regime. Further steps taken
to implement the Company’s compliance with the PIA include:
submission of Decommissioning and Environmental Management
Plans for the operated assets; (b) setting up the Host Community
Development Trust; and (c) completing the delineation of all of
the Company’s acreages in line with the conversion regulation
and relinquishment obligation pursuant to the regulations. The
Company will continue interfacing with the regulatory agencies
to achieve successful closure of this objective.
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Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board Committee reports | continued
• Sapele Integrated Gas Plant project. The Committee continued
to monitor progress on the project which remains on course to
achieve First Gas delivery by Q2 2024.
• Diversification of customer base and markets: The Committee
continued to pay attention to the drive for accelerating third-party
gas opportunities and will continue to oversee the efforts to
formalise the opportunities with the prospects that have been
identified to date to backfill some of the dwindling reserves.
The Committee took note of the commencement of gas supply
to certain customers within the off-grid market in line with the
Company’s strategy as well as other candidates that have been
identified and being evaluated for sign-off in the coming year.
The Committee considered updates on the persistent low-pressure
issues within the Gas Transportation Network which continues
to impede gas delivery to some customers and has increased
the inventory of unallocated gas to customers for invoicing.
The Committee continues to pay attention to the efforts underway
within the industry to investigate these issues and proffer
a sustainable solution.
• Development of gas growth opportunities: Liquefied Petroleum
Gas (“LPG”) projects: The Committee considered ongoing initiatives
being designed to position the Company for entry into the LPG
space vis-à-vis the projected capacity growth for the country
estimated to reach five million MT by 2030 in line with the
government’s gas expansion programme. The Committee will
continue to monitor efforts and initiatives being considered to
ensure that the Company is optimally positioned to harness the
market in line with the current projections.
• Opportunities in the Gas Downstream Sector: The Committee
observed reports highlighting persistent challenges of generation
and distribution within the power sector and noted the inherent
opportunities to underpin the transition of the Company from a
core E&P company into a fully integrated power company. The
Committee will continue to monitor the prospects already identified
for closing the gap which include farming into Marginal Fields,
acquiring Third Party Gas assets and closing M&A opportunities
when available.
• Transition to Renewable Energy: In line with the Company’s new
strategic direction, the Committee has maintained oversight of the
emerging framework for the Company’s energy transition agenda
and initiatives. The Committee will continue to monitor progress on
the Energy Transition initiatives/10-year Business Investment Plan
to accelerate the implementation of the Pillars 2 and 3 under the
energy transition agenda.
ANOH Project:
the Project remains on track to achieve mechanical completion by Q4
2022. Key highlights of deliberations and activities relating to the ANOH
Project (“Project”) carried out by the Energy Transition Committee
during the year include:
• Funding: engagements with the lending syndicate were
successfully completed to obtain waivers towards completing
the third drawdown on the debt facility in the course of the year.
ANOH Gas Processing Company Limited (“AGPC”) also finalised
documentation and submitted the application for the tax credit
under the Nigerian Road Investment Tax Credit Scheme (“RITC”)
for the cost of the 16km Assa-Ohoba-Obosima road project;
• Resourcing: Hands-on training/field attachments at the Oben Gas
Plant for the technical Graduate Trainees (GTs”) were completed in
December 2021; GTs were subsequently deployed to the project
site to participate in the installation and commissioning work.
• Stakeholder management/community relations: The implementation
of the ANOH Global Memorandum of Understanding (“GMOU”)
commenced in January 2022 and is ongoing. Funding to the host
and impacted communities provided under the GMOU was utilised
primarily to connect the communities to the national grid. The
Committee also continues to monitor the progress of work with
contractors engaged to undertake road construction projects to
the communities to ensure accelerated progress following the
initial setbacks due to heavy rains/escalating cost of diesel and
construction materials.
• Gas Evacuation Pipelines. The Committee continues to pay close
attention to the progress of the dry gas export pipelines, i.e. the
Obiafu-Obrikom-Oben (OB3) and spur line particularly on the River
Niger crossing. Timely completion of the Spur Line remains the
greatest risk to the achievement of the ANOH gas project schedule.
The AGPC Project team, Nigerian Gas Company Limited (‘‘NGC”)
and the Contractor continue to collaborate to ensure completion
of the spur line by end of Q1 2023 in accordance with the schedule.
• Contracts and commercial: The Committee also considered
progress made with the respective contract packages required
for the Project completion. All contracts relating to Gas process
modules, rotating equipment/compression and detailed
engineering design have been completed whilst significant
progress was recorded for the outstanding element of the civils,
shipping and MEIC contract packages. Progress on commercial
agreements was also recorded as follows:
•
•
•
•
Engagements with the SPDC progressing on the draft heads
of terms concerning possible gas supply to the NLNG;
Progressed discussions with Indorama for gas supply after the
completion of economic valuation on net back Urea pricing;
Successfully concluded review and obtained approval on the
second side letter to the Wet Gas SPA to extend the Conditions
Precedent Longstop Date to preserve the validity of the GSPA;
Collaborating with the Seplat team to review the Gas (Well
Production) Balancing Agreement to highlight and address
potential impact on AGPC operations and proffering solutions.
• Project Risks. The Committee continues to pay keen attention
to the security updates from the project site and environment due to
the “no-work” rule observed on Mondays, occasionally extended
to other days of the week, which negatively impact productivity.
The AGPC team continues to collaborate with government security
forces, other operators and community leaders on intelligence
gathering, monitoring the security situation, and adopting proactive
measures necessary for safe operations.
• The Project attained six million man-hours without Lost Time
Injury (LTI), as of September 2022. In order to further heighten focus
on safety, monthly review of minor HSE incidents commenced
alongside review of major incidents to ensure that lessons are widely
communicated where necessary to reduce the risk of minor
incidents snowballing into major incidents.
96
Seplat Energy PlcAnnual Report and Accounts 2022 Risk Management and
HSSE Committee report
Mr. Bello Rabiu
5
Risk Management and HSSE Committee
meetings in 2022
2022 Members
Basil Omiyi 3, Chairman*
Bello Rabiu3, Chairman (successor)*
Madame Nathalie Delapalme2, Member*
Ernest Ebi2, Member*
Bashirat Odunewu3, Member*
Effiong Okon1, Operations Director/Member*
Samson Ezugworie1, COO/Member*
1. Executive Director.
2. Non-Executive Director.
3. Independent Non-Executive Director.
18
Jan
24
Feb
13
Apr
13
July
12
Oct
–
– 3/3
5/5
5/5
2/2
2/2
– 4/4
2/2
–
–
–
–
–
–
–
–
–
* In 2022, the membership of the Committee was refreshed as follows: (i) Basil Omiyi
served as the Chairman of the Committee until 18 May 2022 when he was appointed
as the Independent Non-Executive Chairman of the Board. Following this appointment,
Basil Omiyi ceased to be a member of the Committee; (ii) On 18 May 2022, Bello Rabiu
assumed the role of Chairman of the Committee; (iii) On 18 May 2022, Ernest Ebi and
Bashirat Odunewu were appointed to the Board and the Committee as Non-Executive
Director and Independent Non-Executive Director, respectively; and (iii) On 1 July 2022,
Samson Ezugworie was appointed as the Chief Operating Officer (“COO”) and took
over from Effiong Okon as the Executive Director/Member of the Committee.
In the financial year ended 31 December 2022, the Committee held
five meetings. The dates and attendance records for all the meetings
can be seen in the table above.
The Board assigned its oversight responsibilities for risk management
to the Risk Management & HSSE Committee. In line with the Securities
& Exchange Commission (‘SEC’) Code of Corporate Governance, the
Nigerian Code of Corporate Governance 2018 and the UK Corporate
Governance Code 2018, the role of this Committee is to assist the
Board in overseeing and conducting a robust assessment of the
Company’s risk management processes and key business risks,
including the risk appetite, risk profile and risk-reward strategies for
the Company and other risk parameters determined by the Board.
It also reviews the adequacy and effectiveness of risk management
and controls, has the oversight of the Company’s process for the
identification of significant risks across its business operations and the
adequacy of prevention, detection and reporting mechanisms. The
Committee also carries out a periodic review of changes in the domestic
and global economic and business environment, including trends and
other factors which are relevant to the Company’s risk profile.
During 2022, the Board refreshed the membership of the Committee,
as reflected in the notes to the table above. I would like to thank
the members who exited for their invaluable contributions to the
achievements of the Committee and extend a warm welcome to
the new Committee members.
The Committee is pleased to report that in 2022, Seplat Energy was
awarded the ISO 55001:2014 AMS Certification covering OMLs 4, 38 and 41.
This Certification is another significant first for Seplat, as the first E&P
company in Africa to become ISO 55001 certified. This achievement is
a testament to the strong efforts of the Board and Management to ensure
a strong HSE culture and operational efficiency at Seplat. Plans are already
underway to extend the ISO Certification to other assets of the Company.
Another significant achievement for the Company was its successful
de-escalation of COVID-19 with no fatalities or disruption to operations.
This achievement is indicative of the strong Covid-19 management
system which the Company deployed from the start of the pandemic
to date, with diligent oversight by the Committee. After the Company
commenced full office resumption on 17 January 2022, its Covid-19
positivity rates progressively reduced throughout 2022 until achieving
the rate of 0.00% in October 2022.
During the year under review, a key strategic focus for the Committee
was to ensure that the Company sustained an optimal production
performance in the light of the crude evacuation challenges arising
from the downtime and crude losses/thefts on major export routes.
The Committee is pleased to report that the Amukpe-Escravos
Pipeline came onstream in July 2022, which served as an alternative
evacuation route for the Company and provided a significant uplift to
the Company’s 2022 production performance despite the challenging
operating environment and insecurity in Nigeria.
The strong HSE performance of Seplat and its subsidiaries is also
noteworthy. During the year, Seplat achieved over 30 million manhours
without LTI, while the Assa-North Ohaji-South (“ANOH”) Gas Project
and the OML 40 operations also recorded remarkable milestones in
terms of LTI-Free manhours. Since the unfortunate spill incidents in
2020, the OML 40 operations has maintained a strong HSE management
system and has continued to record successful operations without LTI.
The details of these achievements and other activities of the Risk
Management and HSSE Committee are summarised below.
I shall be available at the AGM of the Company to be held on
10 May 2023 to discuss with shareholders, or I can be contacted
via the Company Secretary.
Bello Rabiu
Chairman, Risk Management and HSSE Committee
(Independent Non-Executive Director).
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Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Board Committee reports | continued
• periodically review relevant changes in the economic and business
environment, including emerging trends, management procedures,
controls for risk associated with new business and other factors
relevant to Seplat’s risk profile and those trends which may threaten
Seplat’s business model, key strategies, future performance,
solvency and liquidity and make recommendations to the Boards
as appropriate;
• receive information from the Chief Executive Officer, Chief Operating
Officer, Technical Director, General Managers of Assets, Head of
Enterprise Risk Management, Director, Legal/ Company Secretary,
others from Senior Management, Seplat’s independent auditors,
regulators and outside experts as appropriate regarding matters
related to risk management;
• in consultation with the Audit Committee, review and discuss with
Senior Management, at least annually: (a) the key guidelines and
policies governing Seplat’s significant processes for risk assessment
and risk management; and (b) Seplat’s major financial risk exposures
and the steps Senior Management has taken to monitor and control
such exposures;
• review the Company’s policies and procedures for detecting fraud
and prevention of bribery including review of the Company’s
whistleblowing policy and procedures;
• evaluate the effectiveness of Seplat’s policies and systems for
identifying and managing environmental, health and safety risks
within its operations;
• assess the policies and systems within Seplat for ensuring
compliance with environmental, health and safety regulatory
requirements; and perform other activities related to these terms
of reference and as requested by the Board; and
• review and recommend for approval of the Board, at least annually,
the Company’s Information Technology (IT) data governance
framework to ensure that IT data risks are adequately mitigated, and
relevant assets are managed effectively. The framework may include:
(a) Development of IT strategy and policy; (b) Proactive monitoring
and management of cyber threats and attacks as well as adverse
social media incidents; (c) Management of risks relating to third-party
and outsourced IT service providers; (d) Assessment of value
delivered to the Company through investments in IT; and (e) Periodic
independent assurance on the effectiveness of the Company’s
IT arrangements.
During the year, the Committee welcomed three new appointees
to the Board and the Committee, namely: Mr. Ernest Ebi, Mrs. Bashirat
Odunewu and Mr. Samson Ezugworie. The introduction of the new
Directors was conducted in line with best practice and added new
insight and expertise to the oversight activities of the Committee.
The Risk Management and HSSE Committee meets at least four times
a year, but met five times in 2022, as indicated in the table above.
The Committee held an ad hoc meeting on 24 February 2022 together
with the Energy Transition Committee, in order to conduct a detailed
investment and progress review on the Sapele Integrated Gas
Plant Project.
The meetings of the Committee are attended by appropriate
members of the Senior Management, such as the Chief Executive
Officer, Technical Director, Director New Energy, Director Legal/
Company Secretary, General Manager HSE, Head of Enterprise Risk
Management, General Manager Internal Audit and Director of External
Affairs & Sustainability. As indicated in the attendance table (above)
and in line with the Nigerian Code of Corporate Governance, an
Executive Director (i.e., the Chief Operating Officer) is a member of the
Committee and therefore attends all Committee meetings. Specialists
with appropriate technical expertise are invited to attend and present
to meetings of the Committee, as and when required.
The terms of reference of the Risk Management and HSSE Committee
are to assist the Board to:
• review and recommend for approval of the Board, the risk
management policies and framework, as well as assist the Board
in its oversight of the risk management strategy;
• review the adequacy and effectiveness of risk management and
controls in the Company;
• receive reports from, review with, and provide feedback to, Senior
Management on the categories of risk that Seplat faces, including
credit, market and operational risk, the exposures in each category,
significant concentrations within those risk categories, the metrics
used to monitor the exposures and Management’s views on the
acceptable and appropriate levels of those risk exposures;
• evaluate the adequacy of the Risk Management function; and review
the adequacy and frequency of risk reporting to the Board;
• review Seplat’s credit, market, liquidity and operational risk
management frameworks, including significant policies, processes
and systems that Senior Management uses to manage risk
exposures, as well as risk measurement methodologies and
approaches to stress testing;
• exercise oversight over the processes for the identification and
assessment of significant and emerging risks across Seplat and the
adequacy of prevention, detection and reporting mechanisms;
• review the Company’s level of compliance with applicable laws and
regulatory requirements including those that may impact Seplat’s risk
profile; and the procedures and controls for any new businesses
acquired or developed by Seplat;
98
Seplat Energy PlcAnnual Report and Accounts 2022 • Review of the 2022 Corporate HSE Business Plan; quarterly updates
on the Company’s HSE performance with highlights on LTI-free
manhours achieved for the period, incident review panel sessions,
campaign to embed Seplat Energy’s mandatory safety rules
amongst personnel, etc. During the year, HSE activities focused on
the optimal management of Covid-19 and other infectious diseases
(including health awareness and the fitness-to-work process) as
well as strengthening the management system around road traffic
accidents, emergency and crisis management, and HSE core
processes (MS Manual, Confined Space and LOTO Audit). The
Company also focused on completing the clean-up of previously
impacted sites, and obtained the requisite environmental permits
and studies. The Committee is pleased to report that Seplat Energy
achieved 30.5 million manhours without LTI as at 30 September
2022. Unfortunately, due to an incident involving a third party that
occurred on 13 October 2022 during an anti-encroachment
campaign in Sapele, the Company’s LTI-free record has been reset
and stands at 1,891,928 manhours as at 31 December 2022. The
Company has thoroughly investigated the incident and integrated
the lessons learned across all levels of the business (including
strengthening the HSE management system involving third parties);
• Quarterly review of the HSE programme for OML 40 operations
was deployed by the incorporated joint venture company, Elcrest
Exploration and Production Company Limited (“Elcrest”), including
the clean-up activities for spill sites. These clean-up activities
progressed well in collaboration with the impacted host communities
and the relevant government agencies. There continues to be
improvement in the HSE management system of Elcrest, and the
Committee is pleased to report that Elcrest has achieved 5.3 million
manhours without LTI as at 31 December 2022. In 2023, Elcrest will
continue with the roadmap towards achieving the ISO 14001:2015
and ISO 45001:2018 Certifications;
• Quarterly review of the risk management and HSE performance on
the ANOH Gas Project. The ANOH project has continued to maintain
a strong HSE record and has achieved seven million manhours without
LTI as at 31 December 2022. The ANOH incorporated joint venture
company (ANOH Gas Processing Company Limited – “AGPC”) will
begin the ISO 45001 and 14001 Certification process in 2023; and
• Quarterly review of the legal risk dashboard and litigation matrix,
which highlight the movements in contingent liability, key legal risks,
and high-profile litigation within the Company.
Highlights of the business carried out by the Committee during the
year are as follows:
• Quarterly review of the Enterprise Risk Register which contained
identified risks across all assets and reflected the pre-mitigation
outlook (i.e., the position of risks before implementing mitigations);
the post-mitigation outlook (i.e., the position of risks after measuring
the impact of completed mitigations); and the residual risk outlook
(i.e., the lowest position of risks after all identified mitigations were
implemented). Close attention was paid to the proper classification
of risks, the recognition of national and globally emerging risks, and
the progress made in completing mitigation actions within the
Company. As part of staying abreast of globally emerging risks, the
Committee approved for the risks of Cyber-security to be added to
the Enterprise Risk Register for close monitoring and effective
mitigation. In addition, the Risk Management framework and Internal
Controls Policy was updated in line with improvement areas
identified during the ISO 55001 Certification exercise, and (following
the Committee’s recommendation) the updated Policy was
approved by the Board on 27 July 2022;
• Detailed review of the alternative crude evacuation solutions to
be deployed across all assets of the Company, in order to mitigate
against production challenges and crude losses occurring from the
major export terminals/lines. The first alternative crude evacuation
solution was the Amukpe-Escravos pipeline, which came onstream
in July 2022 and yielded significant uplift to the production
performance of the Company;
• Consideration of (and support for) the Company’s conditional
Application for the Voluntary Conversion of OMLs 4, 38, 51 and 53 to
the regime of the Petroleum Industry Act (“PIA”). This Application will
be reviewed on a quarterly basis in line with emerging PIA subsidiary
regulations (including the proposed Conversion Regulation), in order
to ensure alignment with the Company’s assumptions for opting for
voluntary conversion;
• Review of the 2022 Operations Plan and the quarterly review of the
Company’s performance against the plan; review of the Company’s
performance on new oil/gas wells and capital and brownfield projects;
updates on the outages from major evacuation pipelines and viable
options for mitigating against these outages through alternative
evacuation solutions from the Western and Eastern regions of the
Company’s operations; update on asset integrity and process safety
management, Midstream Gas business, non-operated ventures,
crude oil theft/losses, deployment of technology for proactive asset
integrity management; progress on the Roadmap for Ending Routine
Flares; review of the Company’s operating cost as benchmarked
against other operators in Nigeria; review of the Company’s strategy
and response plan to security threats around its operational areas;
• Quarterly review of the Covid-19 management system for operations
continuity, and the prevention and management of Covid-19 spread
in Seplat operations and locations, including updates on testing rates
and positivity rates. The Company successfully de-escalated Covid-19
positivity rates with no interruption to operations since the onset of
the pandemic. A Covid-19 Management/Vaccination Policy was
developed and integrated across the Company. Full office resumption
commenced on 17 January 2022 and was sustained throughout the
year with strong vaccination rates and progressively reducing positivity
rates. The Company achieved a positivity rate of 0.00% throughout
the last quarter of 2022;
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Sustainability Committee report
In order to ensure the sustainability of the environment and the
continuance of sustainable practices within the Company, the Board
through the Sustainability Committee continued to monitor the regulatory
space on ESG and Sustainability and ensured the implementation of
regulatory and recommended sustainability practices within the
Company. In 2022, the Company published its 2021 Sustainability
Report in compliance with the Rules of the Nigerian Exchange.
To further demonstrate its commitment to sustainability, the Company
completed in the past year its subscription to the UN Global Compact
Initiative, a voluntary initiative to implement and align strategies, carry
out business operations with universal sustainability principles on
human rights, environment, anti-corruption, labour, etc. and take decisive
steps that will progress shared objectives to support UN goals.
Seplat in 2022, continued to ensure the alignment of its CSR and
Community Relations strategies with the Global Sustainable
Development Goals. Being a Company committed to creating value
for its stakeholders, Seplat implemented various CSR programmes
that helped thousands of people achieve better living standards,
access quality education, healthier lives, and social and economic
opportunities while driving positive business outcomes.
The Committee was also committed to undertaking several social
investment activities within the host and neighbouring communities
which contributed greatly to enhance the lives these communities’
inhabitants. Aiming also to provide better access to clean energy
to the communities is a key component for the Committee.
The Committee continued to provide advisories to the Board on
broader societal related matters which may impact Seplat’s reputation,
brand management and successful business operations.
The Committee is proud to restate the Company’s commitment to
GHG emission reduction and monitors closely the road to gas flare
out. To further protect the environment, the Company successfully
launched the Tree for Life Project in May 2022, thus reiterating, and
effectively implementing, its commitment to protect its environment.
You will see below details of the activities carried out during the year.
Further details on the Company’s sustainability activities during 2022
are also contained in the sustainability report.
I shall be available at the AGM of the Company to be held on 10 May
2023 to engage with shareholders, or I can be contacted via the
Company Secretary.
Madame Nathalie Delapalme
Chairman of the Sustainability Committee
(Non-Executive Director)
Madame Nathalie Delapalme
4
Sustainability Committee
meetings in 2022
2022 Members
Madame Nathalie Delapalme, Chairman
Prof. Fabian Ajogwu, SAN, OFR1, Member
Mr. Bello Rabiu, Member
Ms. Arunma Oteh, OON2, Member
Mr. Kazeem Raimi3, Member
Mr. Ernest Ebi, MFR3, Member
21
Jan
19
Apr
19
July
18
Oct
4/4
–
– 2/2
–
–
–
–
–
4/4
3/4
2/2
2/2
1. On 18 May 2022, Prof. Fabian Ajogwu, SAN, OFR resigned from the Committee
upon appointment as Chairman of Energy Transition Committee.
2. Effective 31 December 2022, Ms. Arunma Oteh, OON resigned from the Board
and the Committee.
3. On 18 May 2022, Mr. Kazeem Raimi and Mr. Ernest Ebi, MFR were appointed
to the Board and joined the Committee immediately.
In the financial year ended 31 December 2022, the Committee held
four (4) meetings. The dates and attendance records for all the
meetings can be seen in the table above.
The Sustainability Committee maintains oversight of SEPLAT’s ESG
goals, the development and implementation of the Company’s
Community Relations Policy and CSR initiatives as well as the review
of key issues which impact community relations especially with the host
oil and gas producing communities. The Committee in the past year
continued to place a strategic focus on ESG and sustainability and on
the implementation of sustainable practices within the society such
as gas flare out, renewable energies, tree planting and also invested
its efforts in driving a culture of sustainability within the Company.
The committee is keen to ensure both a balanced commitment and
interaction between the three components of the ESG policy –
Environment, Social and Governance
100
Seplat Energy PlcAnnual Report and Accounts 2022 During the year under review, the Sustainability Committee comprised
of six (6) Non-Executive Directors, three (3) of whom are Independent,
though two members left the Committee before the end of the year.
The Committee met four times in 2022, and when required, the meetings
were attended by the Retired Chairman as well as appropriate Senior
Management of the Company (such as the Chief Executive Officer;
Chief Operations Officer; Director, Legal/Company Secretary; Director,
External Affairs & Sustainability and the Director, New Energy). External
advisers also attended upon invitation by the Committee Chairman
for specific matters.
• agree a programme of specific CSR activities and more ESG related
initiatives and focus for each financial year, supported by appropriate
targets and key performance indicators;
• develop a comprehensive ESG policy/strategy and monitor its total
compliance by all parties with respect to protecting the sanctity of
the environment;
• propose innovative approaches to tackling ESG issues including
developing a carbon offset initiative, etc;
• oversee and ensure compliance with the CSR Policies and review
The Sustainability Committee assists the Board to:
performance against agreed targets;
• develop policies/strategies that relate to ESG in the Company and
ensure compliance with these policies/strategies, in order to ensure
its operations remain efficient, socially responsible, and
environmentally compliant;
• have full responsibility for advising the Board on all ESG matters
in relation to the activities and operations of Seplat and ensure
that the Company reports on the basis of best practice including
impact reporting;
• review the draft Annual Sustainability Report prepared by Management
for submission to the Board for its approval and publication in the
Annual Reports and Accounts and subsequent filing with the
Nigerian Exchange Limited on or before 30 March each year;
• ensure the Company is socially responsible by monitoring
compliance with good labour practices, protection of human rights,
diversity and inclusion, gender equality and youth empowerment;
• develop and monitor the implementation of policies/strategies that
promote good and sustainable relationships between the Company
and its stakeholders including communities, investors, employees,
customers, etc.
• conduct periodic review of the Company’s system of operations
and its impact on the environment to ensure there is minimum, to the
extent possible, any adverse impact on the environment and that its
operations are in line with global best practices;
• ensure that there is recognition by all within the Group of the
impact of its activities upon all stakeholders including shareholders,
customers, suppliers, employees and the wider community and
environment and that those activities are regulated such that,
consistent with sustainable business and development, they are
conducted in a socially responsible manner and have a positive
impact on communities;
• oversee the development of strategy and implementation of Seplat’s
Community Relations Policy, CSR programmes, Corporate Branding
efforts and policies on all key areas of CSR including standards of
business conduct, ethics, charitable activities, community initiatives
while ensuring that Seplat maintains a co-operative relationship with
relevant environmental, health and safety agencies (public and
private) as well as with community representatives;
• ensure that the Company’s Code of Business Conduct provides
greater coverage on ESG issues (Environmental – waste & pollution,
resource depletion, greenhouse gas emission, etc.; Social – local
communities, health & safety, employee relations & diversity etc.;
and Governance – corruption & bribery, donations, etc.) and oversee
its implementation across the Company;
• oversee and monitor implementation of the Global Memorandum
of Understanding (GMoU) between Seplat and host communities
towards ensuring that equity and fairness is promoted in the
distribution of CSR related initiative amongst the various communities
and that the programmes/activities impact the lives of all host
community indigenes positively;
• ensure that other communities who are impacted by Seplat’s
operations though not necessarily designated “host communities”
are given due regard in allocation of CSR initiatives as may be
necessary;
• assess the performance of Seplat with regard to the impact of its
CSR decisions and actions upon employees, communities and other
third parties. It shall also assess the impact of such decisions and
actions on the reputation of the Group;
• assess the impact of Seplat’s operations on stakeholders particularly
the communities in which Seplat operates;
• evaluate and oversee on an ongoing basis, the quality and integrity
of any reporting to shareholders and external stakeholders
concerning community relations issues;
• review periodically the policies and practices that relate to the
relations between the Company and its employees to ensure that
such policies and practices promote business sustainability;
• review the results of any independent audits of the Group’s
performance in regard to community relations matters, review any
strategies and action plans developed by management in response
to issues raised and, where appropriate make recommendations to
the Board concerning the same; and
• review and oversee other related matters and topics in relation to
sustainability as may be assigned to it by the Board from time to time.
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Highlights of business carried out by the Sustainability Committee
during the year include:
1. Successfully completed Seplat’s subscription to the United Nations
Global Compact Initiative, a voluntary initiative based on CEO
commitments to implement universal sustainability principles and
to take steps to support United Nations’ goals.
2. Successfully deployed the Seplat WWG Eco-17 tracker pro
platform designed to monitor and report on ESG within the
Company in order to strengthen Seplat’s commitment to ESG.
3. Successfully submitted the 2021 Sustainability Report to the
Exchange in compliance with the NGX Directive to all listed
companies to submit and publish their sustainability reports before
March of every year.
4. Ensured the continuous effective monitoring and decrease in
the release of greenhouse gas emission due to the Company’s
operations in the community.
5. Successfully held the Seplat ESG Day which highlighted members
of the Board and senior Management enlightening staff on the
importance of ESG as well as ESG monitoring and reporting.
6. Successfully launched the Tree for Life Project in Abuja with many
notable personalities in Nigeria in attendance.
7. Ensured the maintenance of the Company’s social licence to
operate within the communities through series of effective
stakeholder engagements and successfully empowered members
of the communities through relevant skill acquisition and training.
8. Continued GMOU implementation and Partnership management
with the Community through sustainable community development
– infrastructure development projects, relationship management
and support of the operations of the Company.
9. Successfully commenced the implementation of the Petroleum
Industry Act 2021 in relation to the set-up of the Host Community
Trusts which include successfully obtaining the approval of the
NUPRC to set up the Trusts for the Assets and engaging
extensively community members in the selection of members
of the Board of Trustees.
10. Successfully deployed the Seplat Teachers Empowerment
Programme (STEP) with 214 teachers in participation and the
implementation of the 2022 edition of the Seplat Education Round
Table discussions.
11. Successfully awarded sixty (60) new scholarships and maintained
the 380 existing scholarships which is open to all Nigerian students.
12. Successfully commenced the SEPLAT JV Pearls Quiz which includes
cash prizes to the winning school, set-up of e-libraries for the
winning school and gifting of school buses to the winning schools.
13. Successfully deployed the Seplat Eye Can See programme for
community with about 2,908 persons being screened, 94 surgeries
performed, and 2,537 reading glasses issued to patients.
102
Seplat Energy PlcAnnual Report and Accounts 2022 Directors’ remuneration report
Remuneration Committee
Chairman’s Annual Statement
Dr. Emma FitzGerald
Remuneration Committee Chairman
The Remuneration Report sets out the work of the Committee during
the year and provides context for the decisions taken considering the
Company’s performance. It also sets out how we intend to implement
our Remuneration Policy in 2023. An advisory resolution to approve this
statement and the Annual Report on Remuneration will be put to
shareholders at the 2023 Annual General Meeting (AGM).
Corporate performance highlights
Based on Seplat’s strong financial performance in 2022, the Board
recommended a final dividend of US 2.5 cents per share for the financial
year 2022, and following a review of the Company’s operational,
liquidity and financial position post refinancing, an additional special
dividend of US 5.0 cents per share was declared, to be paid after
shareholders’ approval at the Annual General Meeting, which will be
held on 10 May 2023. This brings the full-year dividend to US15 cents,
despite the significant disrupted production experienced during the
year. Other financial highlights include:
• Revenue growth of 30% to $952 million
• Adjusted EBITDA growth of 12% to $417 million
• Strong full year cash generation of $571 million
• Strong balance sheet with $404 million cash at bank and net debt
of $366 million.
Despite the production challenges impacted by outages of key
infrastructure predominantly in Q3 total production for FY 22 was
16.2 MMboe. Other operational highlights include:
• Use of Amukpe-Escravos pipeline.
• Completed 13 wells including two wells for the ANOH Gas
processing plant.
• ANOH Gas processing Plan 95% complete.
• Impressive safety culture maintained – Lost Time Injury Frequency
Rate (LTIFR) for FY 22 is 0.12.
The Company continues to pursue the Ministerial consent received
on 08 August 2022 for the Mobil Producing Nigeria Unlimited (“MPNU”)
acquisition and we remain focused on concluding the transaction.
In addition, the Company is implementing its roadmap to net zero and
have made encouraging progress with a 35% reduction in emission
intensity last year. The major reduction target in carbon emissions
is routine flaring which we are on track to eliminate by the end of 2024.
Dear Shareholder,
On behalf of the Remuneration Committee
(“the Committee”), I am pleased to present the
Directors’ Remuneration Report for the year
ended 31 December 2022.”
The key areas of 2022 performance and 2021 comparative
performance are set out below:
Profit before tax ($ million)
Oil production volume (bopd)
Gas production (MMscfd)
2P Reserves (MMboe)
Lost time incident frequency
2022
204
24,735
112
438
0.12
2021
177
29,091
108
457
nil
Remuneration outcomes for the 2022 financial year
Our remuneration policy is closely aligned to our strategy, the market,
and shareholder interests. The Committee calibrated the 2022
corporate scorecard around targets linked to production, operational
efficiency, technical growth projects, financial, health and safety and
environmental, social and governance (“ESG”). The 2020 Long-Term
Incentive Plan (LTIP) award measured our success in maintaining
operational and technical excellence and delivering long-term relative
shareholder value.
The diagram below sets out the year end process taken by the
Committee to determine the final incentive outcomes.
1
2
3
4
Assess performance against targets
Review outcomes with management and other
committees to ensure holistic reflection of performance
Consider outcomes in the context of the wider
workforce and environment
Use judgement to reflect whether discretion is required,
considering the market and shareholder interests
The Committee reviewed the Company’s performance against the
bonus scorecard and established that the Company overall had
performed between on-target and maximum. The 2022 annual bonus
outcomes were 65% of maximum for the CEO, CFO and Operations
Director. The bonus levels are slightly lower than those for 2021, reflecting
the challenging environment we operated in 2022.
The determination of the corporate scorecard is cascaded through the
organisation, and is used not only for the Executive Directors, but also
for the bonuses of senior and middle management. The Committee
is cognisant of the impact on the wider workforce when determining
outcomes using the process laid out above.
The Committee considered the level of scorecard achievement
reflective of the Company’s underlying performance and therefore
no discretion was exercised in relation to the annual bonus outcome.
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The 2020 LTIP awards, for which the performance period ended on
31 December 2022, will vest on 30 April 2023. I am pleased to announce
that the Company performed between the median and upper quartile
of the Total Shareholder Return (TSR) comparator group, leading to a
vesting outcome of 45.4% prior to the application of the Operational
and Technical scorecard underpin. The Remuneration Committee
assessed the historical bonus outturns over the three financial years
in line with the underpin and determined that the percentage of operational
and technical measures that had achieved threshold level of performance
or above was in excess of 80% and as such, there would be no
downwards adjustment to the formulaic TSR outcome. Therefore, the
overall 2020 LTIP vesting level was 45.4%. The Committee felt that this
achievement combined with the annual bonus outturn is appropriate
considering the overall business performance and therefore no
discretion was exercised in relation to the LTIP.
Awards granted to Executive Directors are subject to a two-year post
vesting holding period, whereas for all other participants 60% of these
awards will be released immediately, with the remaining 40% being
released in equal instalments after a one and two-year holding period.
Main Remuneration Committee actions and decisions
in 2022
We set out below the key Remuneration Committee actions and
decisions in 2022:
• Review of the bonus outturn against the corporate and individual
performance targets “scorecards” for the 2021 financial year.
• Review the Total Shareholder Return (“TSR”) performance of the
Company relative to the constituents of its comparator group and
the Operational and Technical scorecard underpin to determine the
performance outcome for the 2019 LTIP Awards.
• Setting the 2022 Annual Bonus Performance targets “scorecards” for
the CEO, CFO, Operations Director, COO, and senior management. These
targets are cascaded throughout the Company to ensure alignment.
• Review of the implementation of the 2022 LTIP and approval of the
2022 LTIP Schedule and Targets, including review of the framework
for measuring the LTIP underpin.
• Review of Dr. A.B.C Orjiako’s contractual exit payment and Consultancy
Service Agreement fees.
• Set fees for a newly appointed independent Non-Executive Chairman
and recruitment remuneration for the COO. The Committee follows a
rigorous process when determining Director pay, considering market
levels of pay, remuneration practices within the Group, the nature of
operations and the contribution of the role and skills and experience
of the individual. On appointment, the Chair’s fee was set considerably
lower than that of his predecessor, and the COO’s salary was set at a
lower level than that of the Former Operations Director.
• Review and approve the revised contract for the new Independent
Chairman and Senior Independent Non-Executive Director (S.I.D.).
• Review of pay benchmark exercise for Directors, Executive
Management and the wider workforce.
• Review of key executive remuneration trends for the 2022 AGM
season as well as the trends from major industry peers.
• Considered and presented for Board approval, cost-of-living
adjustment (“COLA”) and increase on salary and fees for Directors,
executive management, and the wider workforce, to cater for inflation.
• Determination of the preferred approach for Operationalisation of the
2023 LTIP to reduce dilution, approve the qualification towards LTIP
awards for new joiners and new eligible persons (including
consideration of settling below Board LTIP awards in cash or shares).
• Consideration of Nigerian Pay and Governance Update which
considered changes in statutory laws and requirements.
• Review of the Remuneration Committee effectiveness in line with
best practice, compliance with the 2018 UK Corporate Governance
Code, the 2018 Nigerian Code of Corporate Governance and the
shareholder approved Remuneration Policy.
104
Non-Executive Director changes
During 2022, there were some changes in the Non-Executive Directors’
composition of the Board. Dr. A.B.C Orjiako, retired as Chairman from
the Board of the Company after the 2022 Annual General Meeting
(AGM) on 18 May 2022. Following the retirement of Dr. Orjiako from the
Board, Mr. Basil Omiyi was appointed as the Company’s new independent
Non-Executive Chairman, effective the same day, after thorough
assessment of internal and external candidates. The appointment
was approved after a unanimous vote by all Directors of Seplat Energy
at the 2022 AGM, in compliance with stipulated regulations.
Following stepping down as a Non-Executive Director, the Company
retained the services of Dr. Orjiako on a Consultancy Service Agreement,
through Amaze Limited (“the consultant company”), to take up alternative
responsibilities with specific and essential external stakeholder
engagements, particularly in respect of the acquisition of the entire
share capital of Mobil Producing Nigeria Unlimited (“MPNU”), which
continued beyond his Board retirement date. As announced on 23 March
2023, the Consultancy Service Agreement was suspended on 13 February
2023 as unanimously approved by the Board of Directors, following
repeated warnings about breaches of a material nature. The Contract
was then terminated with immediate effect on 23 March 2023. This course
of action was necessary to protect the Company and its Shareholders,
Directors, and Officers from potential and increasing liability arising
from the conduct of the Consultants, Dr. Orjiako and Amaze Limited.
Dr. Charles Okeahalam succeeded Mr. Basil Omiyi as the Senior
Independent Non-Executive Director of the Company’s Board from
18 May 2022, and Ms. Arunma Oteh, an Independent Non-Executive
Director of the Company’s Board, retired from the Board with effect
from 31 December 2022.
Non-Executive Director fees on appointment are set in line with the
shareholder approved Remuneration Policy, and any exit payments
were made in line with the respective letters of appointment. Full
details of remuneration for joining and departing Non-Executives are
disclosed later in this report.
Full details of any payments made in 2023, if any, to Directors who left
the Board will be set out in the Directors’ remuneration report for 2023.
Remuneration Policy
During 2020 and early 2021, the Remuneration Committee conducted
a full review of the current Remuneration Policy, which was subsequently
approved at our 2021 AGM with 100% support. The policy operated as
intended during 2022. The Committee is of the view that the current
remuneration framework remains fit for purpose, therefore there are
no proposed changes to the operation of the Policy for 2023.
In line with the three-year lifecycle, a new Policy will be put forward
to a binding shareholder vote at the 2024 AGM. The Committee,
alongside management, will be working on the design of this new
Policy in 2023 and we will consult with shareholders to gather
feedback on the proposals later this year.
Operation of the remuneration policy in 2023
• The Committee reviewed current salary and fees for the Executive
and Non-Executive Directors and determined that the CFO and
Non-Executive Directors should receive a 4% salary or fee increase
(which are below the UK and Nigerian wider workforce salary
increases of 10% and 15% respectively).
• On promotion to CEO in August 2020, Roger Brown’s salary was set
below the targeted policy level while he became established in the
role. Given the CEO’s strong performance over the year, the
Committee awarded the CEO a 15% salary increase, comprising
4% cost-of-living adjustment (COLA) and 11% performance-related
adjustment to move his salary closer to the Company’s targeted
market positioning. The total increase does not exceed that of a
strong performer in the wider Nigerian workforce. The Remuneration
Committee intends to provide an additional adjustment to the CEO’s
salary in FY24 in excess of US$ inflation to honour the commitment
to align to the salary level of the previous CEO subject to sustained
Seplat Energy PlcAnnual Report and Accounts 2022 individual and corporate performance over FY23. Furthermore, the
MPNU integration and the resultant change in the scope and scale of
the role may necessitate a further review of the remuneration of the
CEO to reflect this change in circumstances and ensure that
remuneration continues to support the evolving business strategy.
The Committee considers wider employee pay as context for the
decisions it makes, which has been particularly important in 2022
considering the challenging cost of living environment. The Committee
is aware of the wider macroeconomic environment in the territories
it operates, in particular the impact of high inflation.
• Similarly to the CEO, on appointment to the role, the salary of the
COO was set slightly below the targeted policy level, with the
intention to move the COO’s salary closer to the Company’s targeted
market positioning subject to his continued strong performance.
As such, the Committee determined that the COO would also receive
a 15% salary increase, comprising 4% cost-of-living adjustment (COLA)
and 11% performance-related adjustment to move his salary closer to
the Company’s targeted market positioning and reflect his strong
performance in his role to date, with the intention to provide an
additional adjustment to the COO’s salary in FY24 in excess of US$
inflation to honour the commitment to align to the salary level of the
previous Operations Director, subject to sustained individual and
corporate performance over FY23. The total increase does not
exceed that of a strong performer in the wider Nigerian workforce.
• Fees for the appointed Independent Chairman of the Board were
reviewed, and the Committee has determined that a 4% increase
to fees will apply, in line with Non-Executive Directors.
• The bonus will be operated in line with the remuneration policy.
Awards of up to 150% of salary for the CEO and 100% for the CFO
and the COO will be made. The performance conditions will reflect
the six pillars and safety element underpinning the Company’s
updated strategy.
• LTIP awards will be granted in 2023 which vest over three years
subject to relative and absolute TSR performance and a broad
underpin, operated as a qualitative review of Seplat’s operations.
This will ensure a close alignment of payouts for participants with
the long-term interests of shareholders. A summary of the award
levels, performance targets and weightings are set out in this report.
• Overall total remuneration opportunity will be kept under review,
alongside remuneration arrangements for the wider workforce.
Wider workforce
The robust performance of the Company would not have been
possible without developing all our people which includes significant
formal training, full support, and incentives to perform to the best of
their abilities. We recognise that it is also critical for our employees
to feel valued as well as to be paid fairly.
The Company operates an extensive range of mechanisms and
instruments for workforce engagement which cover all employee
populations, including a Joint Consulting Committee (JCC), workshops on
the Company’s remuneration philosophy, the HR quarterly dashboard,
visiting employees, Seplat’s Voice survey and the whistleblowing policy.
Please see page 118 for details of actions undertaken in 2022. In addition,
we run regular virtual town hall sessions where colleagues can raise
questions and discuss business issues, providing feedback on
subjects including remuneration.
We are committed to providing an inclusive workplace, encouraging,
and welcoming diversity with a zero tolerance of harassment and
discrimination. Although we don’t publish gender pay data, as we have
far fewer than 250 employees in the UK, our internal audits have shown
that there are no equal pay concerns, with no difference between the
pay of men and women doing the same job. Our colleague engagement
levels show that people enjoy working at Seplat, but high retention,
particularly in more senior roles, means the pace of change is slower
than we would like. As a result of this, we have initiatives to support the
development of all women at Seplat and ensure their development
into senior roles, particularly in the technical area.
I am therefore pleased that we have continued to invest in our reward
offering for the wider workforce through an average Nigerian workforce
salary increase of 15% with targeted above market increases for selected
roles. The Committee is proud that 78 of our colleagues received 2022
LTIP awards, which represents around 16% of our current workforce.
Engagement with shareholders
The Committee takes the views of shareholders seriously and these
views are considered in shaping remuneration policy and practice.
If any shareholders wish to discuss the Company’s remuneration
arrangements, the Remuneration Committee Chair would be happy
to meet with you. The Board and Investor Relations team manage and
develop Seplat’s external relationships with current and prospective
investors. The Company regularly monitors shareholder reaction and
commentary regarding its remuneration practices.
The Board and senior management team of the Company are also
available to discuss any issues with shareholders before the Annual
General Meeting. Details of the shareholder voting outcomes in
respect of the remuneration policy and Remuneration Report are
presented on page 102. Additionally, the Board maintains a dialogue
with investors outside the AGM to foster mutual understanding of
objectives and to gain a balanced view of key issues and concerns
of shareholders.
Summary
I hope that you find the information in this report helpful, and I look
forward to your support at the Company’s AGM. I am always happy
to hear from the Company’s shareholders and you can contact me
via the Director, Corporate Services, Charles Gbandi, if you have
any questions on this report or more generally in relation to the
Company’s remuneration.
Finally, I want to recognise that the Company’s performance would
not be possible without the continued commitment, resilience and
flexibility shown by our employees. To all colleagues – thank you for
your hard work and commitment to making Seplat Energy the robust
business it remains today.
Notes
This report has been prepared taking into account the principles
of Schedule 8 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 as amended, the provisions
of the UK Corporate Governance Code (the “Code”) and the Listing Rules.
As Seplat is a Nigerian registered company, this report has also been
prepared considering the disclosure requirements under Nigerian law,
and specifically the Companies and Allied Matters Act (“CAMA”).
These rules, consistent with the UK regulations, require the remuneration
of all Directors, other than the Chief Executive Officer, to be approved
by shareholders at the AGM.
The report consists of three sections:
• the Annual Statement by the Remuneration Committee Chair
(pages 101 to 103);
• the At a Glance section (pages 104 to 109);
• the Annual Report on Remuneration which sets out payments made
to the Directors and details the link between Company performance
and remuneration for the 2022 financial year (pages 110 to 118).
Dr. Emma FitzGerald
Remuneration Committee Chairman
(Independent Non-Executive Director)
105
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At a glance
Introduction
In this section, we highlight the performance and remuneration outcomes for the 2022 financial year, how the remuneration policy will be
implemented in 2023 and the wider employee context.
2022 single total figure of remuneration
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in respect of the 2022 financial year.
Executive Directors
Roger Brown (CEO)
Emeka Onwuka (CFO)
Samson Ezugworie (COO)6
Effiong Okon (Former OD)7
Salary1
$’000
Benefits2
$’000
Pension3
$’000
Total
fixed pay
$’000
Bonus4
$’000
Total
variable pay
$’000
LTIP5
$’000
918
850
719
705
312
n/a
367
719
322
192
201
68
114
n/a
94
81
156
145
122
120
53
n/a
62
122
1,396
1,187
1,042
893
479
n/a
523
922
895
918
467
508
203
n/a
238
518
753
941
n/a
n/a
n/a
n/a
663
1,031
1,648
1,859
467
508
203
n/a
901
1,549
Total
$’000
3,044
3,046
1,510
1,401
682
n/a
1,424
2,471
Period
2022
2021
2022
2021
2022
2021
2022
2021
1. Salaries for Executive Directors are set in USD – 2022 salaries were $918,000 for the CEO inclusive of residency allowance, $719,143 for the CFO, $623,321 for the COO and $733,319 for Effiong
Okon, all inclusive of housing and 13th month allowances. For the CEO’s service as CFO during 2020, the average 2020 USD: GBP exchange rate of $1.284 has been used where applicable.
2. The taxable benefits for each Executive Director comprise those which are quantifiable. Benefits in 2022 include insurance, which was to the value of $42,978.13, $26,935.67, $27,463.85 and
$22,355.50 are for the CEO, CFO, COO and Effiong Okon, respectively. Note that the insurance benefit is not taxable in Nigeria.
3. Pension contributions are provided as a cash supplement/contribution to retirement savings account.
4. Bonus relates to the year it was earned and includes the deferred proportion of the award.
5. The value of the 2020 LTIP awards vesting in May 2023 is shown in 2022 as the performance period ended on 31 December 2022. The estimated value of these awards uses a 2022 Q4
average share price of $1.15; the actual value will be updated in the 2023 Directors’ remuneration report when the awards vest on 1 May 2023. For 2019 LTIP that vested in 2022 and was
reported in 2021 report, amount has been trued up to reflect value as at actual vesting date.
6. The COO joined the Company on 1 July 2022 and all values stated here refer to his six-months’ period of employment in 2022.
7. Effiong Okon was an Executive Director until 30 June 2022 and values shown here are representative of all earnings and awards until 30 June 2022.
Further detail regarding the disclosures in the table above is presented in the Annual Report on Remuneration on page 110.
Variable pay outcomes for 2022
We set out below a summary of the 2022 annual bonus performance outcomes, together with details of the determination of the vesting of the
2020 LTIP, whose performance period ended on 31 December 2022. Further detail is set out in the Annual Report on Remuneration on page 104.
2022 annual bonus performance assessment
The Committee calibrated the Executive Directors’ bonus scorecard around targets linked to production, operational efficiency, technical growth
projects, financial, health and safety and environmental, social and governance (“ESG”). The Committee reviewed the Company’s performance
against the bonus scorecard and established that the Company overall had performed between on-target and maximum such that all Executive
Directors achieved 65% of maximum. The bonus levels represent a performance moderation from 2021, as in the scorecard.
2020 LTIP awards vesting
The 2020 LTIP awards vest on 1 May 2023. However, the performance period for these awards ended on 31 December 2022 and an estimate of
their value is therefore included in the single figure table above, which will be restated in next year’s Annual Report on Remuneration when the
share price at vesting is known.
The Company’s TSR was positioned between the median and upper quartile of the TSR comparator group, leading to a vesting outcome of
45.4% for the TSR element, prior to application of the underpin. The Remuneration Committee assessed the achievement of the Operational and
Technical objectives across 2020, 2021 and 2022 in line with the underpin. The percentage of operational and technical measures that had
achieved threshold level of performance or above was in excess of 80% and as such, no downwards adjustment was made to the level of
vesting from the relative TSR element. Therefore, the overall 2020 LTIP vesting level was 45.4%.
TSR performance (Seplat Vs Comparator Group)
Operational and technical scorecard underpin
Seplat TSR growth
15.0%
Median TSR
(25% vesting)
7.6%
Upper quartile TSR
(100% vesting)
Vesting under
TSR condition
Vesting reduction due
to the operational and
technical performance
34.9%
45.4%
0%
Overall
LTIP vesting
45.4%
Summary of application of discretion
In summary, the Committee is satisfied that the formulaic outcomes described above are a fair reflection of the performance of management
over the respective performance periods, and in the context of the wider business performance. Therefore, no discretion has been applied to
the variable pay outcomes.
106
Seplat Energy PlcAnnual Report and Accounts 2022 Executive Director shareholdings
We set out below how our Executive Directors’ shareholdings compare to the requirements of our policy as at the year end. A share price of
$1.23 as at 31 December 2022 has been used. In addition, we provide the pre-tax value of the Executive Directors’ unvested or unexercised
equity awards.
O
E
C
O
F
C
O
O
C
)
y
r
a
a
s
l
f
o
%
(
)
y
r
a
a
s
l
f
o
%
(
)
y
r
a
a
s
l
f
o
%
(
Shareholding requirement
Value of beneficially owned shares
Value of unvested and/or unexercised awards
200%
576%
736%
Shareholding requirement
Value of beneficially owned shares
0%
Value of unvested and/or unexercised awards
Shareholding requirement
Value of beneficially owned shares
0%
Value of unvested and/or unexercised awards
102%
150%
150%
459%
0%
200%
400%
600%
800%
1,000%
Remuneration alignment to performance
The following analysis compares the CEO’s pay against his
remuneration opportunity and Company performance.
Actual pay versus opportunity
The chart below illustrates how the 2022 total single figure of
remuneration for the CEO compares to minimum, on-target and
maximum opportunity in accordance with the remuneration policy
that applied in 2022. 2022 remuneration is broadly at the on-target
opportunity due to the annual bonus paying out between on-target
and maximum, whereas the value of the 2020 LTIP was below
on-target as a result of the vesting at 45.4%.
Actual CEO pay versus total shareholder return (“TSR”)
The Company feels it is critical that CEO pay reflects the returns
delivered to shareholders, where TSR is the core performance
measure chosen to reflect shareholder experience.
On promotion to CEO in August 2020, Roger Brown’s salary was set
below the targeted policy level while he became established in the
role. Given the CEO’s strong performance over the past 17 months,
the Committee awarded him an 8% salary increase in 2022, in line
with the Nigerian wider workforce to recognise this and begin to
move his salary closer to the Company’s targeted market positioning.
Annual bonus resulted in 65% of maximum payout, reflecting
corporate performance and industry conditions throughout 2022.
Seplat remains one of the sector’s stocks of choice by continuing to
perform between the median and upper quartile TSR. This is illustrated
in the chart below.
CEO (US$’000)
CEO pay vs. TSR performance
US$6,904
US$1,377
US$5,527
20%
US$2,754
50%
US$2,754
42%
US$3,519
US$1,434
40%
US$1,396
US$689
20%
US$1,377
25%
US$1,377
20%
)
m
u
m
x
a
m
i
f
o
%
(
t
u
o
y
a
p
s
u
n
o
b
l
a
u
n
n
A
US$3,044
US$753
25%
US$895
29%
US$1,396
100%
US$1,396
40%
US$1,396
25%
US$1,396
20%
US$1,396
46%
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Minimum
On-Target
Maximum
Maximum
including share
price appreciation
Actual
Fixed
Multiple Reporting Periods
Annual Variable
Share price appreciation
80%
60%
53%
40%
20%
68%
72%
46%
49%
45%
35%
31%
120
65%
100
)
4
1
0
2
o
t
d
e
s
a
b
e
r
(
R
S
T
80
60
40
15%
20
8%
0%
3%
0%
0%
0%
3%
0%
0%
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Salary increase (%)
Annual bonus payout (% of maximum)
Seplat TSR
107
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Directors’ remuneration report | continued
Implementation of remuneration policy for 2022
Our Directors’ remuneration policy applies for three years starting from 20 May 2021, when it was approved by shareholders with 100% of votes
in favour, and can be found in full in the 2020 Annual Report and Accounts on our website (www.seplatenergy.com/investors/results-centre).
Our principles of remuneration
The remuneration policy aims to align the interests of the Executive Directors, senior managers, and employees to the long-term interests
of shareholders and aims to support a high-performance culture with appropriate reward for superior performance without creating incentives
that will encourage excessive risk taking or unsustainable Company performance. The guiding principles behind the setting and implementation
of our remuneration policy are as follows:
Principle
Explanation
Balanced
Competitive
Equitable
Risk-weighted
Aligned
There should be an appropriate balance between fixed and performance-related elements of the remuneration package.
Remuneration packages should be competitive, considering the level of remuneration paid in respect of comparable
positions in similar companies within the industry.
There should be an appropriate level of gearing in the package to ensure that Executive Directors receive an appropriate
proportion of the value created for shareholders whilst reflecting pay and conditions throughout the remainder of the
Group, where the Company operates and where it is listed.
Remuneration should not raise environmental, social or governance risks by inadvertently motivating irresponsible
behaviour. More generally, the overall remuneration policy should not encourage inappropriate operational risk.
There should be suitable provision of equity awards over the longer term, focusing the Executive Directors on delivering
the business strategy, allowing them to build a meaningful holding in the Company to further align their interests with
those of shareholders.
We set out below a summary of the Directors’ remuneration policy, its operation in 2022 and planned implementation for 2023.
Element
2022 operation
2023 Implementation
Base salary
The Executive Director base salaries in 2022 were:
From 1 January 2023, Executive Director base salaries will be:
• CEO1: $918,000
• CFO: $719,143
• CEO: $1,055,700 (15% increase)
• CFO: $747,909 (4% increase)
• COO2: $623,321
1. The CEO’s base salary includes a residency allowance, whereas the CFO’s and COO’s base salaries include Housing and 13th month allowances, in line with
local market practice. On promotion to CEO in August 2020, Roger Brown’s salary was set below the targeted policy level while he became established in
the role. Given the CEO’s strong performance over the year, the Committee awarded the CEO a 15% salary increase in line with the Nigerian wider workforce
to recognise this and to move his salary closer to the Company’s targeted market positioning.
• COO: $716,820 (15% increase)
2. On appointment as COO in July 2022, Sam Ezugwuorie’s salary was set below the targeted policy level with the intention to keep it under review based on
key performance criteria. Given his strong performance, the Committee awarded the COO a 15% salary increase in line with the Nigerian wider workforce to
recognise this and align his salary closer to the Company’s targeted market positioning.
Benefits
On the basis that benefits are dependent on the working location and are either in the form of a cash allowance or the
actual benefit itself, no changes have been made to Executive Director benefits.
Pensions
Pensions contributions align with the wider Nigerian workforce, at 17%, and will remain unchanged.
Annual Bonus
No change to the maximum opportunity as % of base salary, as follows:
• CEO: 150%
• CFO: 100%
• COO: 100%
108
Seplat Energy PlcAnnual Report and Accounts 2022 Element
2022 operation
2023 Implementation
Long Term
Incentive Plan
No change to the LTIP maximum opportunity as % of base salary, as follows:
• CEO: 300% (250% of salary subject to relative TSR prior to Absolute TSR multiplier)
• CFO: 240% (200% of salary subject to relative TSR prior to Absolute TSR multiplier)
• Former Operations Director: 240% (200% of salary subject to relative TSR prior to Absolute TSR multiplier)
LTIP maximum opportunity in 2023 will be maintained for the CEO, CFO & COO.
All awards will vest subject to performance measures (and the Executive Director’s continued employment) at the date
of vesting after three years and are then subject to a two-year holding period. Malus and clawback will continue to apply
to LTIP awards.
The percentage of LTIP awards that will be subject to Relative TSR performance against a bespoke group of E&P
companies is shown in brackets above e.g. 250% of salary for the CEO. 25% of this element of the award will vest for
median performance rising on a straight-line basis to 100% vesting for upper quartile. The level of vesting achieved
under the relative TSR element may be increased by a further 20% if the Company’s Absolute TSR increases by 100%
or more and this TSR increase is at least 10% above the oil price increase over the performance period. The maximum
opportunity for the CEO is therefore 250% x (1 + 20%) = 300% of salary, as set out above.
The primary TSR measures will be moderated by a broad underpin, operated as a qualitative review of Seplat’s
operations by the Remuneration Committee at the end of the vesting period, with the application of downwards
discretion, where appropriate. In addition, to ensure that remuneration outcomes are not unreasonable the
Remuneration Committee will review any share price windfall gains at the end of the vesting period, and make
any discretionary adjustments, as required, in line with market best practice.
Shareholding
requirement
Executive Directors are given five years from the date of the policy implementation or date of appointment, if later,
to satisfy the following shareholding requirement:
Non-Executive
Director fees1
• CEO: 200% of base salary
• Other Executive Directors: 150% of base salary
The Committee determined that the shareholding requirement would continue to apply for one year post cessation
of employment for the Executive Directors and at 50% of the requirement between one and two years post-cessation.
From 1 January 2023, Non-Executive Director fees will be:
Non-Executive fees as at 1 January 2022 were:
• Chairman: $833,333
• Chairman: $866,667
• Non-Executive Director Fees: $165,405
• Non-Executive Director Fees: $172,022
• Senior Independent Director: $233,865
• Senior Independent Director: $243,220
• Committee Chairmanship: $45,856
• Committee Chairmanship: $47,690
• Finance Committee Chairmanship2: $61,141
• Finance Committee Chairmanship2: $63,586
• Committee membership: $30,570
• Committee membership: $31,793
1. Non-Executive Directors are paid a base fee and additional fees for Chairmanship/membership of Committees and Senior Independent Directorship. In special circumstances additional
Director fees can be paid for Board commissioned specific longer-term activities led by the Director. All fees are shown on a gross basis i.e. before withholding tax.
2. Only applicable if the Finance Committee Chairperson also holds additional responsibilities such as membership on other Board Committees.
It is the Committee’s intention that commitments made in line with its current remuneration policy and policies prior to Admission will be honoured.
109
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Directors’ remuneration report | continued
Our remuneration policy continues to support our updated business strategy
In line with our remuneration principles, the Committee continues to manage incentive plans for the Executive Directors such that they are closely
linked to the business success and execution of our strategy, as approved in 2021, as outlined below:
Safety
Build a sustainable
business:
• Drive social
development
• Focus on
environmental care
• Maximise returns
Deliver Energy
Transition:
• Upstream
• Midstream gas
• New Energy
Annual Bonus
LTIP
Seplat has a newly established business
strategy, with six key strategic priorities,
under the two categories: “build a
sustainable business” and “deliver energy
transition”, plus a key focus on safety.
These priorities are reflected in the
structure of the corporate scorecard, and
corporate objectives set within these
strategic priorities.
Each year the number of corporate
scorecard objectives against each priority
and their weighting may vary.
This scorecard is devolved down into the
management line with an increasing
emphasis on the quality and technical
component elements needed to sustain
corporate progress.
The consistent execution of the targets set
under the annual bonus should deliver
shareholder value, demonstrating that Seplat
is a high performing oil & gas company – a
shareholder stock of choice, within our sector
and region.
To align with this, we grant Executive Director
equity awards with the fortunes of the
shareholders through a relative TSR measure
– based on performance against comparable
oil & gas companies – seeking to attain
regular upper quartile results. If we achieve
median positioning or above over a three-year
cycle, management are well rewarded in that
year; if we fall below the median position,
management receive no payout.
Outcomes are further aligned to the
Shareholder experience through the
implementation of an Absolute TSR
performance measure.
This strategic three- to five-year reward
structure is further underpinned by the need
to sustain good quality operations.
In addition to supporting strategy, the policy also aligns with the six factors under provision 40 of the UK Corporate Governance Code, as set
out below:
Description
How the remuneration policy is aligned
Remuneration arrangements should
be transparent and promote effective
engagement with shareholders and
the workforce.
Remuneration structures should avoid
complexity and their rationale and
operation should be easy to understand.
Remuneration arrangements should
ensure reputational and other risks from
excessive rewards, and behavioural
risks that can arise from target-based
incentive plans, are identified and
mitigated.
The range of possible values of
rewards to individual Directors and any
other limits or discretions should be
identified and explained at the time
of approving the policy.
The link between individual awards, the
delivery of strategy and the long-term
performance of the Company should
be clear. Outcomes should not reward
poor performance.
Incentive schemes should drive
behaviours consistent with company
purpose, values, and strategy.
Our Directors’ remuneration policy is based on the remuneration principles
(see page 106). The policy is cascaded throughout the organisation as shown
in the wider workforce section opposite.
The Company promotes meaningful engagement with its key stakeholders,
including shareholders (via Annual Report / AGM / investor events where the
remuneration structure and main pay-related decisions made in the year are
communicated) and workforce (via annual engagement).
The remuneration structure is based on a simple principle of maximising the
long-term shareholder value. Key metrics are chosen to fulfil this objective by
encouraging strong operational and financial performance. We are constantly
seeking feedback on the remuneration structure and are reviewing ways in which
it could be simplified.
The Remuneration Committee constantly monitors potential risks arising from the
operation of the remuneration arrangements. We closely monitor compensation
arrangements provided to joiners and leavers, including senior management, to
ensure that any payments are appropriate and aligned with the remuneration policy.
The Committee also has discretion to override formulaic outcomes to ensure that
any payments are reflective of the underlying performance.
Post-vesting holding period and post-cessation shareholding requirement apply
to Executive Directors.
The Remuneration Committee actively manages expectations of its key
stakeholders in relation to the remuneration outcomes. The Company provides
an illustration of the potential levels of remuneration receivable by the Executive
Directors under several performance scenarios in this report. The Committee has
discretion to override formulaic outcomes of the incentives to ensure alignment
with the underlying performance.
The Committee annually reviews the continued appropriateness of the
remuneration policy to ensure that the structure and performance metrics remain
aligned to the strategic objectives and long-term value creation. The Committee
has discretion to override formulaic outcomes of the incentives to ensure alignment
with the underlying performance.
The Board reviewed culture in 2019 and the Committee is comfortable that
incentive schemes operate in line with the key values of the organisation. Alignment
of our incentives structure to strategy is illustrated in this report.
Factor
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
110
Seplat Energy PlcAnnual Report and Accounts 2022 The Wider Workforce
Employee value proposition
1. Competitive total reward
Our policy is to provide industry competitive benefits and various incentive schemes to retain and attract high performing employees, carrying
out market benchmarking annually to ensure this.
2. Employee engagement
Seplat holds regular meetings of the Employee Forum and conducts an annual online survey to gather employee views on a range of matters.
3. Workforce policies
Seplat operates a number of policies which apply to both our Directors and employees including diversity, conflict of interests and share dealing.
Detailed description is provided on pages 82.
4. Talent development
We support our employee development with individually tailored training programmes. We provide educational assistance and subscriptions
to various professional bodies.
Reward structure cascade
The table below illustrates the cascade of our reward structure from Executive Directors to the wider employee population. As shown below,
senior management and key employees participate in the LTIP and annual bonus schemes. Additionally, pension contribution levels are
consistent for all employee levels.
Number of participants
Element of pay
CEO
Executive Directors, Senior
Management, other key employees
Executive Directors
All employees
All employees
All employees
All employees
LTIP
300%
25%
75%
17%
Annual bonus
– Deferred shares
Annual bonus
– Cash
Pension
Benefits
Salary
Board
240%
25%
75%
17%
Employee level – % of salary
Senior management
(grades 1-4)
Other key employees
60-180%
30-42%
n/a
n/a
40-75%
Up to 30%
17% in Nigeria
17% in Nigeria
All employees
Employee engagement
The Remuneration Committee oversees the compensation of the Chairman, Executive Directors, and senior management, having regard to
remuneration trends across the Company. The Remuneration Committee and Management are committed to fair pay practices across the
organisation. The Company operates an extensive range of mechanisms and instruments for workforce engagement which cover all employee
populations, including a Joint Consulting Committee.
In addition, when setting the remuneration policy and making decisions on remuneration, the Committee references several factors including
the general workforce pay structure, workforce policies, talent development needs and wider stakeholder impact.
Gender pay gap and CEO pay ratio
The Committee considered disclosing the CEO pay ratio and the Company’s gender pay gap for 2022. However, given the Company’s
main operations are based in Nigeria whilst the UK workforce consists of significantly fewer than 50 employees, the results would not be
representative of our business, statistically significant and provide little or no insight to investors. We will reassess whether to include this
disclosure in future years.
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Annual report on remuneration
Single total figure of remuneration
Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in respect of the 2022 financial year, on a
receivable basis in accordance with the policy as approved by shareholders. Comparative figures for the 2021 financial year have also been provided.
Executive Directors
Roger Brown (CEO)
Emeka Onwuka (CFO)
Samson Ezugworie (COO)6
Effiong Okon (Former OD)7
Salary1
$’000
Benefits2
$’000
Pension3
$’000
Total
fixed pay
$’000
Bonus4
$’000
Total
variable pay
$’000
LTIP5
$’000
918
850
719
705
312
n/a
367
719
322
192
201
68
114
n/a
94
81
156
145
122
120
53
n/a
62
122
1,396
1,187
1,042
893
479
n/a
523
922
895
918
467
508
203
n/a
238
518
753
941
n/a
n/a
n/a
n/a
663
1,031
1,648
1,859
467
508
203
n/a
901
1,549
Total
$’000
3,044
3,046
1,510
1,401
682
n/a
1,424
2,471
Period
2022
2021
2022
2021
2022
2021
2022
2021
1. Salaries for Executive Directors are set in USD – 2022 salaries were $918,000 for the CEO inclusive of residency allowance, $719,143 for the CFO, $623,321 for the COO and $733,319 for Effiong
Okon, all inclusive of Housing and 13th month allowances.
2. The taxable benefits for each Executive Director comprise those which are quantifiable. Benefits in 2022 include insurance, which was to the value of $42,978.13, $26,935.67, $27,463.85 and
$22,355.50 are for the CEO, CFO, COO and Effiong Okon, respectively. Note that the insurance benefit is not taxable in Nigeria.
3. Pension contributions are provided as a cash supplement/contribution to retirement savings account.
4. Bonus relates to the year it was earned and includes the deferred proportion of the award.
5. The value of the 2020 LTIP awards vesting in May 2023 is shown in 2022 as the performance period ended on 31 December 2022. The estimated value of these awards uses a 2022 Q4
average share price of $1.15; the actual value will be updated in the 2023 Directors’ remuneration report when the awards vest on 1 May 2023.. For 2019 LTIP that vested in 2022 and was
reported in 2021 report, amount has been trued up to reflect value as at actual vesting date.
6. The COO joined the company on 1 July 2022 and all values stated here refer to his six-months’ period of employment in 2022.
7. Effiong Okon was an Executive Director until 30 June 2022 and values shown here are representative of all earnings and awards until 30 June 2022.
Non-Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director that served during 2022
on a paid basis in accordance with the policy as approved by shareholders.
Name
A.B.C. Orjiako3
Basil Omiyi, CON4
2022 Fees1
($’000)
2021 Fees2
($’000)
Role
467
734
1,099
525
Charles Okeahalam5
464
308
Nathalie Delapalme
242
232
Olivier de Langavant
165
Arunma Oteh, OON3
303
163
278
Prof. Fabian Ajogwu,
SAN, OFR6
297
119
Bello Rabiu6
297
142
Emma FitzGerald6
272
107
Kazeem Raimi7
Ernest Ebi, MFR7
143
143
Bashirat Odunewu7
162
–
–
–
Board Chairman until 18 May 2022
Independent Board Chairman; Senior Independent Non-Executive Director
Chairman, Energy Transition Committee and Risk Management & HSSE Committee
Member, Remuneration Committee member, Nominations & Governance Committee
Senior Independent Non-Executive Director
Chairman, Board Finance & Audit Committee
Member, Remuneration Committee, Nominations & Governance Committee and Energy
Transition Committee
Non-Executive Director
Chairman, Sustainability Committee
Member, Risk Management & HSSE Committee
Non-Executive Director
Member, Statutory Audit Committee
Independent Non-Executive Director
Chairman, Nominations & Governance Committee
Member, Board Finance & Audit Committee, Energy Transition Committee and Sustainability Committee
Independent Non-Executive Director
Chairman, Energy Transition Committee
Member, Remuneration Committee, Nominations & Governance Committee and Board Finance &
Audit Committee
Independent Non-Executive Director
Chairman, Risk Management & HSSE Committee
Member, Remuneration Committee, Energy Transition Committee and Sustainability Committee
Independent Non-Executive Director
Chairman, Remuneration Committee
Member, Board Finance & Audit Committee and Energy Transition Committee
Non-Executive Director
Member, Energy Transition Committee and Sustainability Committee
Non-Executive Director
Member, Risk Management & HSSE Committee and Sustainability Committee
Independent Non-Executive Director
Member, Risk Management & HSSE Committee, Board Finance & Audit Committee,
Statutory Audit Committee and Nominations & Governance Committee
1. The above capture the gross pay in line with the Director’s letter of appointment i.e. before withholding tax is withheld.
2. Fees receivable in GBP have been converted to USD, using the applicable conversion rate for the year ($1.376).
3. During 2022, A.B.C. Orjiako and Arunma Oteh retired from the Board with effect from 18 May 2022 and 31 December 2022, respectively.
4. Basil Omiyi was appointed as Board Chairman with effect from 18 May 2022; he was Senior Independent Director prior to this.
5. Charles Okeahalam was appointed Senior Independent Director with effect from 18 May 2022.
6. Fabian Ajogwu, SAN, Bello Rabiu and Emma FitzGerald were appointed to the Board with effect from 6 July 2021, 6 July 2021 and 1 August 2021, respectively.
7. During 2022, Ernest Ebi, Kazeem Raimi and Bashirat Odunewu all joined the Board as Non-Executive Directors on 18 May 2022.
112
Seplat Energy PlcAnnual Report and Accounts 2022 Additional information regarding single figure table
The Committee considers that the performance conditions for all incentives are suitably demanding, having regard to the business strategy,
shareholder expectations, the cyclical nature of the markets in which the Group operates and external advice. To the extent that any
performance condition is not met, the relevant part of the award will lapse. There is no retesting of performance.
Annual Performance Incentive
Seplat promotes a culture of high performance and uses a scorecard to assess the annual bonus outcome. The Company performance
scorecard is reviewed annually to ensure strong alignment with Company strategic priorities, prevailing market practice and the operating
environment. The Committee calibrated the Executive Directors’ scorecard around targets linked to production, operational efficiency, technical
growth projects, financial, health and safety and environmental, social and governance (“ESG”).
Achievement of corporate performance conditions
The achievement against the targets described above is set out in the table below, illustrating that overall, the annual bonus reward level for
Executive Directors was between on-target (50% maximum) and maximum:
Performance
measure
Total
weighting
Specific
Safety
ESG
10%
15%
LTIFR (Lost Time Injury
Frequency Rate)
Environment
Social
Governance
Financial
performance
20%
Profitability
Liquidity
Cash generation
Upstream
30%
Liquids production
Drilling capex
Operational efficiency
Strategic target
Midstream Gas
20%
Net gas sales
New Energy
5%
Total:
Gas plant completion
Renewables energy
road map
Below threshold
(30% of maximum)
Threshold to Target
(30%-50% of
maximum)
Target to Maximum
(50%-99% of
maximum)
Maximum
(100% of maximum)
Resulting level
of award
Performance achieved against targets
4.1%
(out of 10%)
15%
(out of 15%)
15%
(out of 20%)
19.1%
(out of 30%)
6.9%
(out of 20%)
5%
(out of 5%)
65.1%
(out of 100%)
In respect of the 2022 financial year, the bonus awards payable to Executive Directors were approved by the Committee having reviewed the
Company’s underlying performance, such that it was comfortable not to exercise discretion in relation to the formulaic outcomes set out below.
The resulting bonus figures are included in the single figure table.
Annual bonus pay-out
The table below sets out the annual bonus earned for the year:
Mr. Roger Brown (CEO)
Mr. Emeka Onwuka (CFO)
Mr. Samson Ezugworie (COO)*
Achieved (% of max)
Bonus earned
($’000)
Achieved (% of max)
Bonus earned
($’000)
Achieved (% of max)
Bonus earned
($’000)
65% out of 100%
$895
65% out of 100%
$467
65% out of 100%
$203
* Mr. Samson Ezugworie’s 2022 annual bonus earned disclosed in the table is based on his time as an Executive Director.
In line with policy, 25% of the Executive Directors’ bonus will be deferred into shares and will be released two years after the end of the
performance period, subject to continued employment.
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Directors’ remuneration report | continued
Long-term incentives vesting in 2023
The 2020 LTIP awards made to the CEO on 1 May 2020 vest on 1 May 2023; however, the performance period for these awards ended on
31 December 2022. The performance condition for these awards is relative TSR measured against a bespoke group of E&P companies,
underpinned by operational and technical bonus scorecard targets.
The Company’s TSR was positioned between the median and upper quartile of the TSR comparator group, leading to a vesting outcome of
45.4% for the TSR element. The Remuneration Committee assessed the historical bonus outturns over the three financial years in line with the
underpin and determined that the level of vesting from the relative TSR element should be retained. Therefore, the overall 2020 LTIP vesting level
was 45.4%.
TSR performance (Seplat vs. Comparator Group)
Seplat TSR growth
15.0%
Median TSR
(25% vesting)
7.6%
Upper quartile TSR
(100% vesting)
Vesting under
TSR condition
Operational and technical scorecard underpin
Vesting reduction due
to the operational and
technical performance
Overall LTIP vesting
34.9%
45.4%
0%
45.4%
The Committee felt that this achievement, combined with the downward adjustment resulting from the application of the underpin, warranted
the 45.4% vesting and therefore no discretion was exercised in relation to the 2020 LTIP.
The following table presents the number of 2020 LTIP awards that will vest in May 2023, based on the assessment of the performance
conditions and the resulting value of awards on vesting for each Executive Director.
Role
Roger Brown (CEO)
Number of 2020 LTIP awards
granted
Number of 2020 LTIP awards
vesting in May 2023
Value of vested awards ($)
Value attributable to
share price growth
1,275,885
579,251
753,026
nil
1. Based on Q4 2022 average share price of $1.15 and includes dividend equivalents.
The Committee was comfortable that the vesting value and value attributable to share price growth was commensurate with the underlying
performance and as such, did not exercise any discretion to change the outcomes of the 2020 LTIP.
Summary of application of discretion
In summary, the Committee is satisfied that the formulaic outcomes described above are a fair reflection of the performance of management
in the year in the context of the wider business performance. Therefore, no discretion has been applied to the variable pay outcomes.
2021 Long-term incentives
The table below sets out the details of the long-term incentive awards in respect of the 2021 financial year. Whilst these were disclosed in last year’s
DRR, given that they were granted in 2022, we have repeated this disclosure for completeness. The grant of these awards was delayed for Executive
Directors because of the Company having been subject to dealing restrictions until the recent announcement of the agreement to acquire the entire
share capital of Mobil Producing Nigeria Unlimited. The awards were granted on 10 March 2022. Vesting will be determined according to the
achievement of performance conditions that will be tested at the end of the three-year performance period on 31 December 2023.
Relative TSR measure
Absolute TSR measure
Role
Type of award
Basis on
which award
made
Face value
of award ($)
Number
of shares
awarded
Face value of
award subject
to Relative TSR
measure
Percentage of
Relative TSR
vesting at threshold
performance
(median
performance)
Maximum
percentage of face
value of Relative
TSR element
that could vest
(upper quartile
performance)
TSR growth of
100% or above
plus at least 10%
outperformance
of oil price
Roger Brown (CEO)
Effiong Okon
(former Operations
Director)
Emeka Onwuka
(CFO)
Nil–cost options
Annual
2,550,000
2,193,586
2,125,000
Conditional shares
Annual
1,725,456
1,484,288
1,437,880
25%
100%
Conditional shares
Annual
1,692,100
1,455,595
1,410,083
Relative
TSR vesting
increased by
20%
In line with the Company’s operation of policy, the share price used to calculate the number of shares awarded was the five-day average share
price prior to the grant date for non-restricted LTIP participants in November 2021.
114
Seplat Energy PlcAnnual Report and Accounts 2022 2022 long-term incentives
The table below sets out the details of the long-term incentive awards in respect of the 2022 financial year. The awards were granted on
30 May 2022. Vesting will be determined according to the achievement of performance conditions that will be tested at the end of the three-year
performance period on 31 December 2024.
Relative TSR measure
Absolute TSR measure
Role
Type of award
Basis on
which award
made
Face value
of award ($)
Number
of shares
awarded
Face value of
award subject
to Relative TSR
measure
Percentage of
Relative TSR
vesting at threshold
performance
(median
performance)
Maximum
percentage of face
value of Relative
TSR element
that could vest
(upper quartile
performance)
TSR growth of
100% or above
plus at least 10%
outperformance
of oil price
Roger Brown (CEO)
Effiong Okon
(former Operations
Director)
Emeka Onwuka
(CFO)
Nil–cost options
Annual
2,754,000
1,733,345
2,295,000
Conditional shares
Annual
1,725,943
1,086,294
1,438,286
25%
100%
Conditional shares
Annual
1,759,965
1,107,707
1,466,638
Relative
TSR vesting
increased by
20%
In line with the Company’s operation of policy, the share price used to calculate the number of shares awarded was the five-day average share
price prior to the date on which the LTIP Awards were granted.
There is straight-line vesting between the threshold and maximum in relation to the Relative TSR measure, whereas the Absolute TSR measure
uplift to award only vests if the target is met.
The comparator group used for assessing relative TSR for the 2022 awards consists of the following companies: Africa Oil, Capricorn Energy,
Centrica, Diversified Gas & Oil, DNO, Energean Oil & Gas, Enquest, Frontera Energy, Genel Energy, Gran Tierra Energy, Gulf Keystone Petroleum
Ltd, Harbour Energy, Indus Gas Ltd, Jadestone, Kosmos Energy, Pantheon Resources, Parex Resources, Phoenix Global Resources plc, Serica
Energy, Total Gabon and Tullow Oil.
2020 Deferred Annual Bonus shares awards
The table below sets out the details of the 2020 Deferred Annual Bonus share awards that were intended to be granted in the 2021 financial year.
Whilst these were disclosed in last year’s DRR, given that they were granted in 2022, we have repeated this disclosure for completeness.
The grant of these awards was delayed because of the Company having been subject to dealing restrictions until the recent announcement
of the agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited. The awards were granted on 10 March 2022.
No further performance conditions will apply, other than continued employment and the normal vesting date of the Award will be 31 December 2022
(two years following the end of the performance year in respect of which the Award is made).
Role
Type of award
Basis on which
award made
Deferred Bonus
Shares
Face value of award
($’000)
Performance
conditions
CEO
Former Operations Director Conditional shares
Conditional shares
CFO
Nil-cost options
Annual
Annual
Annual
83,182
62,522
26,864
74
56
24
Continued
employment
The share price used to calculate the face value of awards was 31 December 2020 of US$0.89.
2021 Deferred Annual Bonus shares awards
The table below sets out the details of the 2021 Deferred Annual Bonus share awards that were granted on 10 March 2022. No further
performance conditions will apply, other than continued employment and the normal vesting date of the Award will be 31 December 2023
(two years following the end of the performance year in respect of which the Award is made).
Role
Type of award
Basis on which
award made
Deferred Bonus
Shares
Face value of award
($’000)
Performance
conditions
Roger Brown (CEO)
Emeka Onwuka (CFO)
Effiong Okon (former OD)
Nil-cost options
Conditional shares
Conditional shares
Annual
Annual
Annual
207,813
114,915
117,180
229
127
129
Continued
employment
The share price used to calculate the face value of awards was 31 December 2021 of US$1.104.
Sign-on Share Award
Sign-on share award was granted to the Chief Operations Officer of the Company on 4 August 2022, as set out in his employment contract.
No performance conditions will apply, other than continued employment. The award would vest in two equal instalments on the COO’s first and
second anniversary in the Company’s employment (i.e. 1 July 2023 and 1 July 2024).
Role
Type of award
Basis on which award
made
Number of Shares
Awarded
Face value of award
($’000)
Samson Ezugwuorie
(Chief Operations Officer)
Nil-cost options
Sign-on
514,575
700
Vesting conditions
Continued
employment
115
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Payments to past Directors
In line with the 2020 LTIP vesting, 752,505 shares will vest to Austin Avuru (former CEO) on 1 May 2023. No other payments were made to past
Directors during the 2022 financial year.
Payments for loss of office
Dr. A.B.C. Orjiako and Ms. Arunma Oteh retired from the Board during the year and any exit payments were made in line with their letters of appointment.
Dr. Orjiako was entitled to a 12-month notice period upon stepping down from the Board prior to his contractual termination date of the 2023
AGM, in line with the remuneration policy. As such, he received a payment of $1.12m, the value of his gross annual fee. No further payments were
made to the Chairman in relation to the early termination of his contract in accordance with corporate governance best practice and the
shareholder approved remuneration policy.
Mr. Effiong Okon also stepped down from the Board, but retains employment as a Director in the Company.
Following stepping down from the Board, the Company retained the services of Dr. Orjiako, through Amaze Limited (“the consultant company”),
to take up alternative responsibilities with specific and essential external stakeholder engagements, particularly in respect of the acquisition of
the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”), which continued beyond his board retirement date. Under this Consultancy
Service Agreement, a monthly retainer of $330,000 per month, starting from the 01 July 2022 to 30 June 2023, was agreed for this support.
The Committee also determined that under the Consultancy Service Agreement, a performance-related sum, equivalent to up to 0.35% of the total
acquisition price, would be payable to the consultant company upon satisfaction of relevant performance targets on the MPNU transaction.
As set out in the Committee Chair’s letter, the Consultancy Service Agreement was subsequently suspended on 13 February 2023 and terminated
on 23 March 2023. Under the Consultancy Service Agreement, Dr. Orjiako received total payments of $2.64million, $1.98million of which were
in relation to services during 2022. All payments will be honoured to the date of termination but there will be no further payments or notice
payments made to Dr Orjiako. As such, the performance-related sum will not be awarded to Dr. Orjiako.
Full details of any payments made in 2023 to Directors who left the Board, if any, will be set out in the Directors’ remuneration report for 2023.
Fees retained for external Non-Executive Directorships
Executive Directors may hold positions in other companies as Non-Executive Directors and retain the fees.
Statement of Directors’ shareholdings
The table below sets out the number of shares of the Company in which current Directors had a beneficial interest and details of long-term
incentive interests as at 31 December 2022.
Shares required
to be held % of
salary
Beneficially
owned1
Share plan
interests
subject to
performance
conditions2
Share plan
interests not
subject to
performance
conditions3
200% 4,296,463
0
150%
0
150%
5,202,816
2,541,889
–
207,183
141,779
514,575
Vested but
unexercised
share plan
interests4
83,182
0
0
Actual
shareholding
(% of salary)
Shareholding
requirement
met5
Total interests
held as at
31/12/2022
1312%
459%
102%
Yes
Yes
No
9,789,644
2,683,668
514,575
150%
0
3,715,412
179,702
1,409,261
890%
Yes
5,304,375
Roger Brown (CEO)
Emeka Onwuka (CFO)
Samson Ezugworie (COO)
Effiong Okon
(Former Operations Director)
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. 2020, 2021 and 2022 LTIP awards.
3. 2020 and 2021 Deferred Bonus shares.
4. Shares held by Stanbic IBTC Trustee Limited/Seplat LTIP which vested but are unexercised.
5. Shareholding requirement has to be met by 21 May 2026 (five years post current policy approval). The total of beneficially owned shares, interests not subject to performance conditions and
vested but unexercised interests are included in the calculation and the share price of $1.23 on 31 December 2022 was used.
Details of the current Non-Executive Directors’ interests in shares as at 31 December 2022 are set out below:
Director
Basil Omiyi
Charles Okeahalam
Nathalie Delapalme
Olivier de Langavant
Arunma Oteh
Emma FitzGerald
Fabian Ajogwu
Bello Rabiu
Ernest Ebi
Kazeem Raimi
Bashirat Odunewu
Shared held as at
31 December 2022
495,238
699,990
0
0
0
0
0
20,000
50,000
0
0
1. Beneficial interests include shares held directly or indirectly by connected persons.
Between 31 December 2022 and 28 February 2023, vested shares for Roger Brown and Emeka Onwuka increased by vested 2020 DB shares
to 4,379,645 and 26,864 respectively.
116
Seplat Energy PlcAnnual Report and Accounts 2022 Comparison of overall performance and pay
The graph below shows the value of $100 invested in the Company’s shares since listing compared to the median of the FTSE All Share
Exploration & Production companies. The graph shows the Total Shareholder Return generated by both the movement in share value and the
reinvestment over the same period of dividend income.
The Committee considers that the FTSE All Share Exploration & Production companies are an appropriate comparator group as it contains a
number of the UK companies that are constituents of Seplat’s TSR comparator group. This graph has been calculated in accordance with the
Regulations. It should be noted that the Company began trading conditionally on the London Stock Exchange on 9 April 2014 and therefore only
has a listed share price for the period of 9 April 2014 to 31 December 2022.
TSR (rebased to 100 at 9 April 2014)1
120
100
80
60
40
20
0
31/0 3/14
3 0/0 6/14
3 0/0 9/14
31/12/14
31/0 3/15
3 0/0 6/15
3 0/0 9/15
31/12/15
31/0 3/16
3 0/0 6/16
3 0/0 9/16
31/12/16
31/0 3/17
3 0/0 6/17
3 0/0 9/17
31/12/17
31/0 3/18
3 0/0 6/18
3 0/0 9/18
31/12/18
31/0 3/19
3 0/0 6/19
3 0/0 9/19
31/12/19
31/0 3/20
3 0/0 6/20
3 0/0 9/20
31/2/20
31/0 3/21
3 0/0 6/21
3 0/0 9/21
31/12/21
31/0 3/22
3 0/0 6/22
3 0/0 9/22
31/12/22
Seplat
FTSE All Share Exploration & Production
Source: Datastream
1. In line with the methodology used for LTIP performance assessment, TSR was calculated using a three-month average.
CEO historical remuneration
The table below sets out the total remuneration delivered to the CEO between 2014 and 2022 valued using the methodology applied to the
single total figure of remuneration.
CEO
Total single figure ($’000)1
Annual bonus payment level achieved
(% of maximum opportunity)
LTIP vesting level achieved
(% of maximum opportunity)
Roger Brown
Austin Avuru
2022
2021
3,044
3,046
20203
836
20203
2,717
2019
3,954
2018
5,158
2017
4,987
2016
3,143
2015
2014
3,004
2,866
65%
72%
310%
31%
45%
68%
49%
35%
46%
53%
45%
69%
87%
87%
81%
75%
100%
97%
N/A2
N/A2
1. Includes vesting in relation to the one-off Global Offer Bonus award in 2014 and 2015.
2. No LTIP awards vested in 2014 and 2015 – vesting of the first LTIP awards (awarded in 2014) occurred in 2017 (however, the performance period for these awards ended on 31 December
2016 so it is included in the 2016 column). There were no equity-based arrangements operating prior to listing.
3. Mr. Austin Avuru retired as CEO on 31 July 2020. Mr. Roger Brown was appointed to the Board as his successor on 1 August 2020, transitioning from his role as CFO. The Single Figure details
above for Roger Brown include amounts paid in relation to his role as CEO only.
117
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Directors’ remuneration report | continued
Change in the Directors’ remuneration compared with employees
The table below shows the percentage change in the current Executive Director and Non-Executive Director total remuneration from 2021
to 2022, 2020 to 2021 and 2019 to 2020, alongside the change for the average of employees within the Company:
Roger Brown (CEO)
Emeka Onwuka (CFO)
Samson Ezugworie (COO)
A.B.C. Orjiako
Basil Omiyi
Charles Okeahalam
Nathalie Delapalme
Olivier de Langavant
Arunma Oteh
Fabian Ajogwu
Bello Rabiu
Emma FitzGerald
Kazeem Raimi
Ernest Ebi
Bashirat Odunewu
Average of Employees2
2021 to 2022
2020 to 2021
2019 to 2020
Salary / fees
Taxable
benefits
Short-term
variable pay
Salary / fees
Taxable
benefits
Short-term
variable pay
Salary/fees
Taxable
benefits
Short-term
variable pay
8%
2%
n/a
-58%
40%
51%
4%
2%
9%
149%
109%
155%
n/a
n/a
n/a
8%
10%
74%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
8%
-3%
-8%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-12%
16%
140%
n/a
0%
0%
0%
0%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
23%
-57%
-41%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-8%
230%
446%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
77%
14%
n/a
n/a
0%
0%
0%
0%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
8%
263%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
34%
-9%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-2%
1. The Directors’ year-on-year change has been expressed in a currency in which their pay has been set i.e. USD for the Executive Directors based on the single figure of remuneration, USD
for the Chairman and GBP for the other Non-Executive Directors where the increase is based on actual fees paid per annum even where individuals have joined the Company mid-year.
2. Average employee pay year-on-year change is expressed in Naira as a significant majority of employees are paid in Naira. The numbers are provided for all employees of Seplat. The large
change in average value of benefits provided to all employees is due to an increase in the eligibility of individuals for certain benefits at lower grades.
3. Non-Executives leaving and joining in the year (Kazeem Raimi, Ernest Ebi and Bashirat Odunewu) have been excluded on the basis that their percentage increases are not representative.
Relative importance of the spend on pay
The table below sets out the overall spend on pay for all employees compared with the dividends distributed to shareholders:
Significant contributions
Overall spend on pay1
Distributions to shareholders (dividends)2
2022
($m)
59.8
58.8
2021
($m)
60
73
% change
(0.3%)
(19.5%)
1. Calculated by converting 2020 and 2021 figures (from Naira) at the relevant year’s average NGN: USD exchange rate and excludes LTIP.
2. For 2020 this includes an interim dividend paid in December 2020 and a final dividend paid in May 2021. For 2021 this includes quarterly dividends with the Q4 dividend due to be paid
in May 2022.
Statement of implementation of policy in following year – Please see at a glance section
118
Seplat Energy PlcAnnual Report and Accounts 2022 Service agreements and letters of appointment
The Committee’s policy is that a 12-month notice period will apply for Executive Directors unless the Committee determines otherwise.
The Non-Executive Directors of the Company do not have service contracts. The Non-Executive Directors are appointed by letters
of appointment, which are kept at Seplat’s registered office along with Executive Director service contracts.
As required by Nigerian law, the Company follows the provisions set out in its Memorandum and Articles of Association and annually
places one-third of its Independent Non-Executive Directors for re-election.
Executive Directors
Date of service
contract
Nature of contract
Roger Brown
20 May 2013
Rolling
Notice period
from Company
Notice period
from Director
12 months
12 months
Emeka Onwuka
3 August 2020
Rolling
12 months
12 months
Samson Ezugwuorie 1 July 2022
Rolling
12 months
12 months
Compensation provisions
for early termination
Payment in lieu of notice
equal to 12 months’
salary and benefits,
including any payments
accrued at the date of
termination.
Non-Executive Directors
Date of letter of
appointment
Basil Omiyi
1 June 2017
Charles Okeahalam 1 June 2017
Nathalie Delapalme
18 July 2019
6 months
Initial Fixed term to 2020
AGM
Initial Fixed term to 2020
AGM
Initial Fixed term to 2023 AGM 6 months
6 months
6 months
6 months
6 months
Nature of contract
Notice period
from Company
Notice period
from Director
Compensation provisions
for early termination
Olivier de Langavant
28 January 2020
Continuous Term
6 months
6 months
Emma FitzGerald
1 August 2021
Bello Rabiu
6 July 2021
Fabian Ajogwu
6 July 2021
Ernest Ebi
18 May 2022
Kazeem Raimi
18 May 2022
Bashirat Odunewuu
18 May 2022
Fixed Term of three years to
2025 AGM
Fixed Term of three years to
2025 AGM
Fixed Term of three years to
2025 AGM
Fixed Term of three years to
2025 AGM
Fixed Term of three years to
2025 AGM
Fixed Term of three years to
2025 AGM
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if
removed or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
6 months’ fees if not
re-elected or retired.
119
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Directors’ remuneration report | continued
Composition and terms of reference of the Remuneration Committee
The members of Seplat’s Remuneration Committee are as follows:
• Emma FitzGerald (Chairman)
• Basil Omiyi, CON (until 18 May 2022)
• Charles Okeahalam
• Fabian Ajogwu, SAN, OFR
• Bello Rabiu
On the basis that Mr. Basil Omiyi assumed the position as Board Chairman in May 2022, he was replaced on the Committee by Mr. Bello Rabiu.
The Board has delegated to the Committee, under agreed terms of reference, responsibility for the remuneration policy and for determining
specific packages for the Executive Directors, the Chairman and other members of the senior management team. The terms of reference for
the Committee are available on the Company’s website, www.seplatenergy.com, and from the Company Secretary at the registered office.
The Committee receives assistance from the GM Corporate Services, who attends meetings by invitation. The Executive Directors attend by
invitation on occasions, except when issues relating to their own remuneration are being discussed. The Committee met five times during the
financial year.
Advisers to the Remuneration Committee
The Committee continues to engage the services of PricewaterhouseCoopers LLP (“PwC”) as independent remuneration adviser. Other services
received by the Company from PwC during the financial year included those in relation to Audit services. During the financial year, PwC UK
supported the Committee on aspects of the remuneration policy for Executive Directors, Chairman and members of the Executive Team.
The Committee is satisfied that advice received from PwC UK during the year was objective and independent.
PwC UK is a member of the Remuneration Consultants Group and the voluntary code of conduct of that body is designed to ensure objective
and independent advice is given to remuneration committees.
Shareholder voting at general meeting
At the AGM held on 21 May 2021, the Company received a vote of 100% in favour of its remuneration policy and the remuneration report which
were part of the same resolution. At the following AGM on 19 May 2022, the Company received a 97.52% vote in favour of the remuneration report.
Dr Emma FitzGerald1
Chairman of the Remuneration Committee
1. Independent Non-Executive Director
120
Seplat Energy PlcAnnual Report and Accounts 2022
Statutory Audit Committee report
In the financial year ended 31 December 2022, the Committee held
four meetings, dates and attendance records for which can be seen
in the table below.
In compliance with Section 404(7) of the Companies and Allied
Matters Act 2020 (“CAMA”), we the members of the Statutory Audit
Committee have reviewed the financial statements of the Company
for the year ended 31 December 2022 and reports thereon, and
confirm as follows:
• the accounting and reporting policies of the Company are in
compliance with legal requirements and agreed ethical practices;
• the scope and planning of audit requirement were, in our opinion,
adequate and compliant with legal requirements and best practice;
• we have reviewed the findings on management matters, in conjunction
with the external auditor, and we are satisfied with the response of
management in dealing with such matters;
• the Company’s systems of accounting and internal controls
are in compliance with legal requirements and best practice; and
Chief Anthony Idigbe, SAN Ph.D (Osgoode)
4
Statutory Audit Committee
meetings in 2022
23
Feb
20
Apr
19
July
20
Oct
• we have, in response to these matters, made the required
recommendations to the auditors of the Company.
2022 Members
Chief Anthony Idigbe SAN Ph.D. (Osgoode),
Chairman and Shareholder member
Sir Sunday N. Nwosu, KSS Shareholder member
Mrs. Hauwa Umar, Shareholder member
Mr. Olivier De Langavant, Director member
4/4
4/4
4/4
4/4
Ms. Arunma Oteh, OON1&2, Director member
–
– 2/2
Mrs. Bashirat Odunewu1&2, Director Member
–
–
2/2
1. Independent Non-Executive Director.
2. Mrs. Bashirat Odunewu was appointed to the Board as an Independent Non-Executive
Director on 18 May, 2022. Mrs. Odunewu joined the Statutory Audit Committee on
18 May, 2022, and replaced Ms. Arunma Oteh on the Committee. Two of the Statutory
Audit Committee meetings took place before this change.
In addition to the foregoing, we the members of the Statutory Audit
Committee conducted the following business during the year:
• review of the implementation of the Company’s corporate
governance framework;
• review of the 2022 external audit plan and the 2023 internal audit
plan, including an assessment of the external auditors’
independence; and
• review of the proposed 2023 budget and work programme.
Chief Anthony Idigbe, SAN Ph.D. (Osgoode)
Chairman of the Statutory Audit Committee
FRC/2015/NBA/00000010414
121
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Report of the Directors
Report of the Directors
The Directors are pleased to present to the shareholders
of the Company their report with the audited financial
statements for the year ended 31 December 2022.
Principal activity
The Company is principally engaged in oil and gas exploration
and production.
Operating results
₦ million
2022
2021
2022
$’000
2021
Revenue
403,913
293,631
951,795
733,188
Operating profit(loss)
116,589
100,401
274,740 250,688
Profit before taxation (loss)
86,730
71,028 204,376
177,345
Profit for the year (loss)
44,433
46,931
104,706
117,176
Dividend
During the year, the Directors recommended and paid to members
quarterly interim dividends of US2.5 cents per share, declared in April,
July and October in line with our normal dividend distribution timetable.
In addition to this, the Board of Seplat is recommending a final dividend
of US2.5 cents per share and a special dividend of US5.0 cents per
share. The final dividend is subject to approval of shareholders, at the
AGM which will be held on 10 May 2023.
Unclaimed dividend
The total amount outstanding as at 31 December 2022 is
US$1,055,308.75 and ₦559,512,420.73. A list of shareholders and
corresponding unclaimed dividends is available on the Company’s
website: www.seplatenergy.com
Changes in property, plant and equipment
Movements in property, plant and equipment and significant additions
thereto are shown in Note 16 to the financial statements.
Shareholder engagement
At the Company’s 2022 Annual General Meeting held in May, resolutions
5(b)(i) and 5(b)(ii), concerning the re-election of Directors, were passed
with the necessary majorities (79.51% and 79.18%, respectively),
however, Resolution 5(b)(i) received 20.49% of votes against and
Resolution 5(b)(ii) received 20.82% of votes against the resolution.
Therefore, the Board is required by Provision 1.D.4 of the 2018 U.K. Code
of Corporate Governance, which Seplat Energy has voluntarily adopted,
to provide an update on the views received from shareholders.
In response, the Chairman proactively undertook a series of meetings
with leading shareholders to assure them of the Company’s ongoing
commitment to achieving high standards of corporate governance,
noting that recent developments included the transition to an independent
Chairman and the addition of new Board members, including an
independent Director, ensuring that half of the Board is independent.
Rotation of Directors
In accordance with the provisions of Section 285 of the Companies
and Allied Matters Act, 2020, one third of the Directors of the Company
shall retire from office every year. The Directors to retire every year shall
be those who have been longest in office since their last election.
However, in accordance with Article 131 of the Company’s Articles
of Association, the Executive Directors and any Director appointed
by a Founder Shareholder shall not be subject to retirement by rotation
or taken into consideration in determining the number of Directors
to retire each year. Apart from the Executive Directors and Directors
appointed by the Founder Shareholders, all other Directors are
appointed for fixed terms and are eligible for reappointment/retirement
by rotation.
The Directors who are eligible for reappointment this year are
Madame Nathalie Delapalme and Mr. Bello Rabiu.
Board changes
Dr. A.B.C Orjiako stepped down as Chairman and from the Board of
Directors of Seplat Energy Plc in May 2022. As Chairman of the Group
since 2009, Dr. Orjiako led the transformation of Seplat into a globally
respected energy company. Notable achievements include instilling
best practice corporate governance, and significant growth through
several successful acquisitions. He was also the driving force behind
Seplat Energy becoming the first and only Nigerian corporate to dual
list on the Nigerian Exchange and the Main Board of the London Stock
Exchange in 2014.
The Board of Seplat Energy Plc is pleased to announce that Mr. Basil
Omiyi, CON, was appointed Independent Non-Executive Chairman,
effective 18 May 2022. His appointment followed a thorough
assessment of internal and external candidates and was approved
after a unanimous vote by all the Directors of Seplat Energy, in compliance
with the Companies and Allied Matters Act in Nigeria (“CAMA”).
Mr. Basil Omiyi has been a member of Seplat Energy’s Board
of Directors since March 2013 and as the Senior Independent
Non-Executive Director from 1 February 2021. During this period,
he chaired the Company’s Energy Transition and Risk Management
& HSSE Committees and sat on the Remuneration, and Nomination
& Governance Committees.
Mr. Omiyi has extensive insight into and experience in the global oil
and gas industry and in particular brings a detailed knowledge and
understanding of the Nigerian oil and gas sector together with
senior management expertise gained in a large-scale multi-national
organisation. Further details of his biography and experience can be
found on page 66.
With Mr. Omiyi’s appointment as the new Board Chairman, Dr. Charles
Okeahalam was appointed the Senior Independent Non-Executive
Director effective 18 May 2022. Dr. Okeahalam joined the Board
in March 2013 as an Independent Non-Executive Director and is
Chairman of Seplat Energy’s Board Finance & Audit Committee,
a member of the Energy Transition, Remuneration, and Nomination
& Governance Committees. Further details of his biography and
experience can be found on page 68.
122
Seplat Energy PlcAnnual Report and Accounts 2022 The Board of Seplat Energy is also pleased to welcome Mrs. Bashirat
Odunewu (Independent Non-Executive Director), Mr. Ernest Ebi, MFR
(Non-Executive Director) and Mr. Kazeem Raimi (Non-Executive
Director) whose appointments became effective on 18 May 2022.
They bring vast knowledge of business in the energy sector, finance
and commercials. Seplat Energy looks forward to the immense
contribution they will make towards its continuing global success.
Further details of their biographies and experience can be found
on page 69.
The Board of Seplat Energy is also pleased to welcome Mr. Samson
Ezugworie, whose appointment as an Executive Director and Chief
Operating Officer was effective 1 July 2022. Mr. Ezugworie has more
than 30 years’ industry experience and a strong reputation as a
business, safety, ethical leader, and integrator. Prior to joining Seplat
Energy, Mr. Ezugworie was the General Manager Development and
Subsurface with Royal Dutch Shell where he worked in Nigeria and
Overseas for 25 years. He also served as a Director in Shell Exploration
& Production Africa Limited (SEPA), The Shell Petroleum Development
Company of Nigeria Limited (SPDC) and Shell Nigeria Business
Operations Limited (SNBO) whilst on this Job. Further details of his
biography and experience can be found on page 67.
The Co-founder and former Chief Executive Officer of Seplat Energy
Plc., Mr. Austin Avuru, resigned as a Non-Executive Director of Seplat
Energy on 1 March 2022.
Mr. Effiong Okon retired from the Board in July 2022. He assumed
a new position as the Director, New Energy to lead the New Energy
Directorate of the Company in July 2022, to significantly accelerate
the development of the New Energy business and advance the
Company’s agenda on energy transition.
Ms. Arunma Oteh, OON also retired from the Board in December
2022. Ms. Oteh joined the Board in October 2020 as an Independent
Non-Executive Director.
During their respective tenures on the Board of Seplat Energy,
the Directors diligently served the Board and made significant
contributions towards the growth of the Company.
The appointment and removal or reappointment of Directors is
governed by its Articles of Association and the Companies and
Allied Matters Act, 2020. It also sets out the powers of Directors.
Corporate Governance
The Board of Directors is committed to sound corporate governance
and ensures that the Company complies with Nigerian and UK
corporate governance regulations as well as international best
practice. The Board ensures compliance with the Code of Corporate
Governance issued by the Securities and Exchange Commission,
the Nigerian Code of Corporate Governance 2018, issued by the
Financial Reporting Council of Nigeria and the UK Corporate Governance
Code 2018, issued by the UK Financial Reporting Council.
The Board is responsible for keeping proper accounting records with
reasonable accuracy. It is also responsible for safeguarding the assets
of the Company through prevention and detection of fraud and other
irregularities. In order to carry out its responsibilities, the Board has
established six Board Committees and the Statutory Audit Committee
and has delegated aspects of its responsibilities to them. All seven
Committees have terms of reference that guide their members in the
execution of their duties, and these terms of reference are available for
review by the public. All the Committees present a report to the Board
with recommendations on the matters within their purview.
Directors’ interest in shares
In accordance with Section 301 of the Companies and Allied Matters Act, 2020, the interests of the Directors (and of persons connected
with them) in the share capital of the Company (all of which are beneficial unless otherwise stated) are as follows:
31 Dec 21
31 Dec 22
No. of Ordinary Shares
No. of Ordinary Shares
Ordinary Shares in issue No. of Ordinary Shares
As a percentage of
28 Feb 23
As a percentage of
Ordinary Shares in issue
Roger Brown
Samson Ezugworie
Bello Rabiu*
Emeka Onwuka
Oliver De Langavant
Charles Okeahalam
Basil Omiyi
Nathalie Delapalme
Arunma Oteh
Emma Fitzgerald
Kazeem Raimi
Bashirat Odunewu
Ernest Ebi
Fabian Ajogwu
Total
3,224,702
n/a
n/a
0
0
495,238
495,238
0
0
0
n/a
n/a
n/a
0
4,296,463
n/a
20,000
0
0
699,990
495,238
0
0
0
n/a
n/a
50,000
0
4,215,178
5,561,690
0.73%
0.00%
0.00%
0.00%
0.00%
0.12%
0.08%
0.00%
0.00%
0.00%
n/a
n/a
0.00%
0.00%
0.93%
4,379,645
0
20,000
26,864
0
699,990
495,238
0
0
0
0
0
50,000
0
5,671,737
*shares are indirectly held; no other director holds shares indirectly
0.74%
0.00%
0.00%
0.00%
0.00%
0.12%
0.08%
0.00%
0.00%
0.00%
0.00%
0.00%
0.01%
0.00%
0.96%
123
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Report of the Directors | continued
Directors’ interest in contracts
The Former Chairman and a Non-Executive Director have disclosable
indirect interest in contracts with which the Company was involved at
31 December 2022 for the purpose of section 303 of the Companies
and Allied Matters Act, 2020. These have been disclosed in Note 38.
Substantial interest in shares
At 31 December 2022, the following shareholders held more than
5.0% of the issued share capital of the Company:
Shareholder
M&P Group
Petrolin Group
Sustainable Capital
Professional Support Limited
Allan Gray Investment Management
Number of holdings
120,400,000
81,015,319
52,628,483
47,929,438
33,822,817
%
20.46
13.77
8.94
8.15
7.51
Shareholding analysis
The distribution of shareholders at 31 December 2022 is as stated below:
Free Float
With a free float of 30% as at 31 December 2022, Seplat Energy Plc
is compliant with the Nigerian Exchange’s free float requirements for
companies listed on the Premium Board.
Share dealing policy
We confirm that to the best of our knowledge that there has been
compliance with the Company’s share dealing policy during the period.
Compliance with regulations
For the 2022 financial year, the Group did not incur any penalties from
its regulators.
% of shareholders
Total shares
% of shareholding
Share range
1-10,000
10,001-50,000
50,001-100,000
100,001-500,000
500,001-1,000,000
1,000,001-5,000,000
5,000,001-10,000,000
100,000,001-500,000,0001*
Total
* Includes shares held by Computer Share on the London Stock Exchange
Share Capital History
Number of
shareholders
3,365
166
45
60
9
19
5
1
91.69
4.52
1.23
1.63
0.25
0.52
0.14
0.03
1,613,647
4,174,019
3,439,663
13,034,927
6,067,583
44,379,459
36,295,426
479,439,837
3,670
100.00
588,444,561
0.27
0.71
0.58
2.22
1.03
7.54
6.17
81.48
100.00
Year
Jun-09
Mar-13
Jul-13
Aug-13
Dec-14
Dec-15
Dec-16
Dec-17
Feb-18
Dec-19
Dec-20
Dec-21
Dec-22
Authorised increase
Cumulative
–
100,000,000
100,000,000
200,000,000
Issued increase/
cancelled
100,000,000
100,000,000
Cumulative
100,000,000
Consideration
cash
200,000,000 stock split from N1.00 to 50k
200,000,000
400,000,000
200,000,000
400,000,000
600,000,000
1,000,000,000
153,310,313
1,000,000,000
1,000,000,000
1,000,000,000
1,000,000,000
1,000,000,000
1,000,000,000
1,000,000,000
1,000,000,000
–
–
–
–
–
–
–
–
–
–
10,134,248
–
–
25,000,000
–
–
–
(411,555,439)
553,310,313
553,310,313
563,444,561
563,444,561
563,444,561
588,444,561
588,444,561
588,444,561
588,444,561
588,444,561
bonus (1 for 2)
cash
No change
staff share scheme
No change
No change
staff share scheme
No change
No change
No change
cancellation
By virtue of s.124, CAMA 2020 and Regulation 13, Companies Regulations 2021, CAC mandated companies with unissued shares to issue all
unissued/unallotted shares not later than 31 December 2022. The consequence of non-compliance is that any unissued share capital at the
relevant date will not be recognised as forming part of the share capital of the Company until it is issued or reduced through the share capital
reduction process. In compliance with the above directive and having obtained Shareholders’ approval at the AGM held on 18 May 2022, the
Company cancelled 411,555,439 unissued shares.
124
Seplat Energy PlcAnnual Report and Accounts 2022 Donations and sponsorships
The following donations were made by the Group during the year
(2021: N167,269,305.33, $432,861.12)
Beneficiary
Africa Oil Week
NG₦
$
10,480,738.03
24,697.17
Centre for Black African Arts and Civilisation
1,721,350.81
4,056.25
Auditor
The auditor, PricewaterhouseCoopers (“PwC”), has indicated its
willingness to continue in office in accordance with Section 401(2)
of the Companies and Allied Matters Act, 2020. A resolution will
be proposed at the AGM for the reappointment of PwC as the
Company’s auditor and for authorisation to the Board of Directors
to fix the auditor’s remuneration.
Conversations for Change
Energy Institute
16,711,735.80
39,380.11
1,909,665.00
4,500.00
By Order of the Board
Edith Onwuchekwa
FRC/2013/NBA/00000003660
Company Secretary
Seplat Energy Plc
16A Temple Road, Ikoyi, Lagos, Nigeria
28 February 2023
Falcon Golf Development Company
4,080,340.25
9,615.05
Lawyers in Oil and Gas
1,708,768.24
4,026.60
Nigeria Annual International Conference
and Exhibition
12,751,130.69
30,047.20
Nigerian Association of Petroleum
Explorationists
Nigerian Gas Association
11,494,125.11
27,085.15
11,457,990.00
27,000.00
Offshore Technology Conference
11,192,279.21
26,373.87
Others
12,797,677.08
30,156.88
Oxford Institute for Energy Studies
27,847,371.59
65,620.50
Pillar Oil
Scholarship recipients
The Energy 2050 Summit
448,329.93
1,056.46
14,441,656.11
34,030.81
3,242,611.17
7,641.00
The Wharton School of the University of
Pennsylvania
4,243,700.00
10,000.00
World Energy Capital Assembly
2,594,088.94
6,112.80
Total
149,123,557.95 351,399.86
Employment and employees
Employee involvement and training: The Company continues to
observe industrial relations practices such as the Joint Consultative
Committee and briefing employees on developments in the Company
during the year under review. Various incentive schemes for staff
were maintained during the year, while regular training courses were
carried out for employees. Educational assistance is also provided
to members of staff and different cadres of staff were assisted with
payment of subscriptions to various professional bodies.
Health, safety and welfare of employees: The Company continues
to enforce strict health and safety rules and practices at the work
environment which are reviewed and tested regularly. The Company
provides appropriate HSE training to all staff and Personal Protective
Equipment (“PPE”) where necessary. The Company also provides free
medical care for its employees and their families through designated
hospitals and clinics. Fire-prevention and fire-fighting equipment is
installed in strategic locations within the Company’s premises. The
Company operates Group life insurance cover for the benefit of its
employees. It also complies with the requirements of the Pension
Reform Act, 2004 regarding its employees.
Employment of disabled or physically challenged persons:
The Company has a policy of fair consideration of job applications
by disabled persons having regard to their abilities and aptitude.
The Company’s policy prohibits discrimination of disabled persons
in the recruitment, training and career development of its employees.
As at the end of the reporting period, the Group has no disabled
persons in employment.
125
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities
For the year ended 31 December 2022
The Companies and Allied Matters Act, 2020, requires the Directors
to prepare financial statements for each financial year that give a true
and fair view of the financial position of the Group at the end of the
year and of its profit or loss. The responsibilities include ensuring that
the Group:
1)
2)
3)
keeps proper accounting records that disclose, with reasonable
accuracy, the financial position of the Group and comply with the
requirements of the Companies and Allied Matters Act, 2020;
establishes adequate internal controls to safeguard its assets
and to prevent and detect fraud and other irregularities; and
prepares its financial statements using suitable accounting
policies supported by reasonable and prudent judgements
and estimates and are consistently applied.
The Directors accept responsibility for the annual financial statements,
which have been prepared using appropriate accounting policies
supported by reasonable and prudent judgements and estimates,
in conformity with International Financial Reporting Standards (IFRS),
the requirements of the Companies and Allied Matters Act, 2020
and Financial Reporting Council of Nigeria Act, No. 6, 2011.
The Directors are of the opinion that the financial statements give a
true and fair view of the state of the financial affairs of the Group and
of its financial performance and cash flows for the year. The Directors
further accept responsibility for the maintenance of accounting
records that may be relied upon in the preparation of financial
statements, as well as adequate systems of internal financial control.
Nothing has come to the attention of the Directors to indicate that
the Group will not remain a going concern for at least 12 months from the
date of this statement.
Signed on behalf of the Directors by:
B. Omiyi
Chairman
FRC/2016/IODN/00000014093
28 February 2023
R.T. Brown
Chief Executive Officer
FRC/2014/PRO/
DIR/003/00000017939
28 February 2023
126
Seplat Energy PlcAnnual Report and Accounts 2022 Audit Committee report
Statutory Audit Committee report
For the year ended 31 December 2022
To the members of Seplat Energy Plc:
In accordance with the provisions of Section 404 (7) of the Companies
and Allied Matters Act, 2020, members of the Audit Committee of
Seplat Energy Plc hereby report on the financial statements of the
Group for the year ended 31 December 2022 as follows:
• The scope and plan of the audit for the year ended 31 December
2022 were adequate;
• We have reviewed the financial statements and are satisfied with
the explanations and comments obtained;
• We have reviewed the external auditors’ management letter for the
year and are satisfied with the management’s responses and that
management has taken appropriate steps to address the issues
raised by the Auditors;
• We are of the opinion that the accounting and reporting policies
of the Company are in accordance with legal requirements and
ethical practices.
The external Auditors confirmed having received full co-operation
from the Company’s management during the statutory audit and
that the scope of their work was not restricted in any way.
Chief Anthony Idigbe, SAN Ph.D. (Osgoode)
Chairman, Statutory Audit Committee
FRC/2015/NBA/00000010414
28 February 2023
Shareholder Member
Statutory Audit Committee Members
Chief Anthony Idigbe SAN Ph.D.
(Osgoode)
Sir Sunday N. Nwosu, KSS
Mrs. Hauwa Umar
Mr. Olivier De Langavant
Mrs. Bashirat Odunewu
Shareholder Member
Shareholder Member
Non-Executive Director
Independent Non-Executive Director
127
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Statement of Corporate Responsibility
Statement of Corporate Responsibility
for financial reports
For the year ended 31 December 2022
In line with the provision of S.405 of CAMA 2020, we have reviewed
the audited financial statements of the Group for the year ended
31 December 2022 and based on our knowledge confirm as follows:
• The audited financial statements do not contain any untrue
statement of material fact or omit to state a material fact, which
would make the statements misleading.
• The audited financial statements and all other financial information
included in the statements fairly present, in all material respects, the
financial condition and results of operation of the Company as of
and for, the period ended 31 December 2022.
• The Company’s internal controls has been designed to ensure that
all material information included relating to the Company and its
subsidiaries is received and provided to the Auditor in the course
of the Audit.
• The Company’s internal controls were evaluated within ninety days of
the financial reporting date and are effective as of 31 December 2022.
• That we have disclosed to the Company’s Auditor and the Audit
Committee the following information:
• There are no significant deficiencies in the design or operation
of the Company’s internal control that could adversely affect the
Company’s ability to record, process, summarise and report
financial data, and have discussed with the auditors any
weaknesses in internal controls observed in the cause of the Audit.
• There is no fraud involving management or other employees that
could have any significant role in the Company’s internal controls.
• There are no significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent
to the date of this audit, including any corrective actions with regard to
any observed deficiencies and material weaknesses.
R.T. Brown
FRC/2014/PRO/
DIR/003/00000017939
Chief Executive Officer
28 February 2023
E. Onwuka
FRC/2020/PRO/
ICAN/006/00000020861
Chief Financial Officer
28 February 2023
128
Seplat Energy PlcAnnual Report and Accounts 2022 Financial
Statements
129
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Independent auditor’s report
To the Members of Seplat Energy Plc
Report on the audit of the consolidated and separate financial statements
Our opinion
In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position
of Seplat Energy Plc (“the company”) and its subsidiaries (together “the group”) as at 31 December 2022, and of their consolidated and separate
financial performance and their consolidated and separate cash flows for the year then ended in accordance with International Financial
Reporting Standards and the requirements of the Companies and Allied Matters Act and the Financial Reporting Council of Nigeria Act.
What we have audited
Seplat Energy Plc’s consolidated and separate financial statements comprise:
• the consolidated and separate statements of profit or loss and other comprehensive income for the year ended 31 December 2022;
• the consolidated and separate statements of financial position as at 31 December 2022;
• the consolidated and separate statements of changes in equity for the year then ended;
• the consolidated and separate statements of cash flows for the year then ended; and
• the notes to the consolidated and separate financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the group in accordance with the International Code of Ethics for Professional Accountants (including International
Independence Standards), i.e. the IESBA Code issued by the International Ethics Standards Board for Accountants. We have fulfilled our
other ethical responsibilities in accordance with the IESBA Code.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and
separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and the separate
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
The impact of crude oil and gas reserves on oil and gas
properties (Depletion, Depreciation, and Amortisation–
DD&A) and recognition of deferred tax assets
This is considered a key audit matter due to the significant judgement
made by management through the use of experts, when determining
the proved and probable oil and gas reserves contained in the
Competent Person’s Report (CPR). The oil and gas reserves are used
in determining the extent of depletion of oil and gas properties, and
in determining the expected future cash flows to assess the
realisability of the group’s deferred tax assets.
(a) Depletion of all capitalised costs of proved oil and gas properties
(included in DD&A) are expensed using the unit-of-production method
as the proved developed reserves estimated in the CPR are produced.
The group’s upstream oil and gas properties net balance was
NGN736 billion ($1.646 billion) as of 31 December 2022, and related
depletion expense was NGN51 billion ($119 million).
(b) The expected future cash flows of oil and gas properties are a
fundamental input in the group’s assessment of the probability that
taxable profits will be available against which deductible temporary
differences or unused tax losses or credits can be utilised. This
assessment is required for the recognition of deferred tax assets.
How our audit addressed the key audit matter
Our procedures were as follows:
• We evaluated the competence, independence, and objectivity
of management’s experts. We understood their methods and
evaluated the relevance and reasonableness of the assumptions
used by them in determining the proved and probable oil and gas
reserves. This includes evaluating the reasonableness of the
assumptions to current and past performance of the company.
• We recalculated the unit-of-production rate to determine the
depletion expense included in the DD&A of the group’s cash
generating units.
• We checked the inputs to the cash flow forecast and agreed this
to the Competent Person’s Report which shows the estimates of
reserves, future production, and income, from the independent
consultant. All significant assumptions relating to revenue (future
crude and gas prices, crude and gas volumes), royalty, operating
expenses and levies have been assessed for reasonableness by
comparing with publicly available information and benchmarking
against actual performance in the current year.
• We estimated the future taxable profits based on the cash flow
projections and used it to assess the recoverability of the deferred
tax asset recognised.
The group’s deferred tax asset balance was NGN205 billion
($459 million) as of 31 December 2022.
• We evaluated the adequacy of the disclosures in the group’s
financial statements.
The accounting policies, estimates, and disclosures
are set out in Notes 3.9, 4.1.ii, 14.4, and 16.1.
This was considered a key audit matter in the consolidated
financial statements only.
PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
130
Seplat Energy PlcAnnual Report and Accounts 2022
Other information
The directors are responsible for the other information. The other information comprises Operating review, Financial review, General
information, Report of the Directors, Statement of Director’s Responsibilities, Statutory Audit Committee Report, Statement of Corporate
Responsibility for Financial Reports, Statement of Value Added, Five-Year Financial Summary and Supplementary Financial Information but
does not include the consolidated and separate financial statements and our auditor’s report thereon, which we obtained prior to the date of this
auditor’s report, and the other sections of the Seplat Energy Plc 2022 Annual Report, which are expected to be made available to us after that date.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not and will not express an
audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
When we read the other sections of the Seplat Energy Plc 2022 Annual Report, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to those charged with governance.
Responsibilities of the directors and those charged with governance for the consolidated and separate financial statements
The directors are responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in
accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act, the Financial
Reporting Council of Nigeria Act, and for such internal control as the directors determine is necessary to enable the preparation of consolidated
and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
131
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Independent auditor’s report | continued
Auditor’s responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether
the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit
of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
132
Seplat Energy PlcAnnual Report and Accounts 2022 Report on other legal and regulatory requirements
The Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:
i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes
of our audit;
ii. the company has kept proper books of account, so far as appears from our examination of those books and returns adequate for our audit
have been received from branches not visited by us;
iii. the company’s statements of financial position and statement of profit or loss and other comprehensive income are in agreement with
the books of account and returns.
For: PricewaterhouseCoopers
Chartered Accountants
Lagos, Nigeria
Engagement Partner: Pedro Omontuemhen
FRC/2013/ICAN/00000000739
PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
133
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2022
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
General and administrative expenses
Impairment loss on financial assets
Impairment loss on non-financial assets
Impairment reversal on non-financial assets
Fair value loss
Operating profit/(loss)
Finance income
Finance cost
Finance cost-net
Share of profit from joint venture accounted for using the
equity method
Profit/(loss) before taxation
Income tax expense
Profit/(loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
₦ million
403,913
(206,696)
197,217
(15,302)
(58,299)
(2,730)
–
–
(4,297)
116,589
491
(28,916)
(28,425)
(1,434)
86,730
(42,297)
44,433
₦ million
293,631
(179,414)
114,217
8,056
(32,074)
(9,035)
(6,216)
29,900
(4,447)
$’000
$’000
951,795
(487,059)
464,736
(36,054)
(137,385)
(6,432)
–
–
(10,125)
733,188
(447,999)
285,189
20,118
(80,090)
(22,561)
(15,521)
74,659
(11,106)
100,401
274,740
250,688
126
(30,516)
(30,390)
1,017
71,028
(24,097)
46,931
1,157
(68,141)
(66,984)
(3,380)
204,376
(99,670)
104,706
314
(76,197)
(75,883)
2,540
177,345
(60,169)
117,176
Notes
7
8
9
10
11.1
11.2
11.2
12
13
13
21
14
26,483
17,950
44,433
56,786
(9,855)
46,931
62,407
42,299
104,706
141,784
(24,608)
117,176
Earnings/(loss) per share for the year
Basic earnings/(loss) per share ₦/$
Diluted earnings/(loss) per share ₦/$
36
36
45.00
45.00
97.63
97.16
0.11
0.11
0.24
0.24
Notes 1 to 41 on pages 145-217 are an integral part of these financial statements.
Profit/(loss) for the year
Other comprehensive income:
Items that may be reclassified to profit or loss:
Foreign currency translation difference
Items that will not be reclassified to
profit or loss:
Remeasurement gain on defined benefit obligations
Deferred tax credit on remeasurement gain
Other comprehensive income/(loss) for the year (net of tax)
Total comprehensive income/(loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Notes
₦ million
₦ million
$’000
$’000
44,433
46,931
104,706
117,176
61,666
54,059
689
941
825
(379)
62,112
106,545
88,595
17,950
106,545
157
(133)
54,083
101,014
110,869
(9,855)
101,014
1,944
(892)
1,741
106,447
64,148
42,299
106,447
391
(333)
999
118,175
142,783
(24,608)
118,175
The above year end consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
134
Seplat Energy Plc
Annual Report and Accounts 2022
Consolidated statement of financial position
As at 31 December 2022
Assets
Non-current assets
Oil & gas properties
Other property, plant and equipment
Right-of-use assets
Intangible assets
Other asset
Investment accounted for using equity accounting
Prepayments
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepayments
Derivative financial instruments
Contract assets
Restricted cash
Cash and cash equivalents
Total current assets
Total assets
Equity and Liabilities
Equity
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Foreign currency translation reserve
Non-controlling interest
Total shareholders’ equity
Non-current liabilities
Interest bearing loans and borrowings
Lease Liabilities
Provision for decommissioning obligation
Deferred tax liabilities
Defined benefit plan
Total non-current liabilities
Current liabilities
Interest bearing loans and borrowings
Lease Liabilities
Derivative financial instruments
Trade and other payables
Current tax liabilities
Total current liabilities
Total liabilities
Total shareholders’ equity and liabilities
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Notes
₦ million
₦ million
$’000
$’000
16
16
18
19
17
21
20
14
22
23
20
25
24
26.2
26
27
27
27
27
28
29
21
30
31
32
14
33
30
31
25
34
14
741,339
12,419
1,974
55,630
45,478
99,219
25,703
205,107
1,186,869
24,774
174,127
556
481
3,313
10,706
180,786
394,743
1,581,612
297
91,317
5,936
(2,025)
5,932
241,386
447,014
(2,963)
786,894
311,149
–
86,670
126,664
2,878
527,361
33,232
1,800
1,435
205,622
25,268
267,357
794,718
1,581,612
660,745
11,228
3,050
54,045
46,363
92,795
27,512
128,539
1,024,277
30,878
105,274
711
–
1,679
6,603
133,667
278,812
1,303,089
296
90,383
4,914
(2,025)
5,932
239,429
385,348
(20,913)
703,364
290,803
198
63,709
42,732
4,181
401,623
24,988
1,273
1,543
151,204
19,094
198,102
599,725
1,303,089
1,657,993
27,775
4,415
124,415
101,711
221,902
57,486
458,718
2,654,415
55,406
389,431
1,242
1,075
7,408
23,944
404,336
882,842
3,537,257
1,864
522,227
24,893
(4,915)
40,000
1,189,697
2,622
(16,505)
1,759,883
695,881
–
193,836
283,282
6,437
1,179,436
74,322
4,025
3,210
459,869
56,512
597,938
1,777,374
3,537,257
1,604,025
27,255
7,404
131,200
112,551
225,270
66,788
312,041
2,486,534
74,957
255,557
1,726
–
4,076
16,029
324,490
676,835
3,163,369
1,862
520,138
22,190
(4,915)
40,000
1,185,082
1,933
(58,804)
1,707,486
705,953
481
154,659
103,736
10,149
974,978
60,661
3,090
3,745
367,058
46,351
480,905
1,455,883
3,163,369
Notes 1 to 41 on pages 139-219 are an integral part of these financial statements.
The financial statements of Seplat Energy Plc and its subsidiaries (The Group) for the year ended 31 December 2022 were authorised for issue in
accordance with a resolution of the Directors on 28 February 2023 and were signed on its behalf by:
B. Omiyi
FRC/2016/IODN/00000014093
Chairman
28 February 2023
R.T. Brown
FRC/2014/PRO/DIR/003/00000017939
Chief Executive Officer
28 February 2023
E. Onwuka
FRC/2020/PRO/ICAN/006/00000020861
Chief Financial Officer
28 February 2023
135
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Consolidated statement of changes in equity
For the year ended 31 December 2022
At 1 January 2021
Profit/(loss) for the year
Other comprehensive income
Total comprehensive (loss)/profit
for the year
Transactions with owners in their
capacity as owners:
Unclaimed dividend forfeited
Dividends paid
Share based payments (Note 27)
Vested shares (Note 27)
Shares repurchased
Total
At 31 December 2021
At 1 January 2022
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income/
(loss) for the year
Transactions with owners in their
capacity as owners:
Unclaimed dividend forfeited
Dividend paid
Share based payments (Note 27)
Vested shares (Note 27)
Shares re-purchased (Note 27)
Total
At 31 December 2022
Issued
share
capital
₦ million
293
–
–
–
–
–
3
–
3
296
296
–
–
–
–
–
–
1
–
1
297
Share
based
payment
reserve
₦ million
7,174
–
–
–
–
1,209
(3,469)
–
(2,260)
4,914
4,914
–
–
Share
premium
₦ million
86,917
–
–
–
–
–
3,466
–
3,466
90,383
90,383
–
–
–
–
–
–
–
–
–
(2,025)
(2,025)
(2,025)
(2,025)
–
–
Treasury
shares
₦ million
Capital
contribution
₦ million
5,932
–
–
Foreign
currency
translation
reserve
₦ million
331,289
-
54,059
Non-
controlling
interest
₦ million
(11,058)
(9,855)
–
Retained
earnings
₦ million
211,790
56,786
24
Total
equity
₦ million
632,337
46,931
54,083
–
56,810
54,059
(9,855)
101,014
206
(29,377)
–
–
–
–
–
–
–
–
–
–
5,932
(29,171)
239,429
–
385,348
–
–
–
–
206
(29,377)
1,209
–
(2,025)
(29,987)
(20,913) 703,364
–
5,932
–
–
239,429
26,483
446
385,348
–
61,666
(20,913) 703,364
44,433
62,112
17,950
–
–
–
–
–
26,929
61,666
17,950
106,545
–
–
–
934
–
934
91,317
–
–
3,474
(2,452)
–
1,022
5,936
–
–
–
–
–
–
(2,025)
–
–
–
–
–
–
5,932
–
(24,972)
–
–
–
(24,972)
241,386
–
–
–
–
–
–
447,014
–
–
–
–
–
–
–
(24,972)
3,474
(1,517)
–
(23,015)
(2,963) 786,894
Notes 1 to 41 on pages 139-219 are an integral part of these financial statements.
136
Seplat Energy Plc
Annual Report and Accounts 2022
At 1 January 2021
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners:
Unclaimed dividend forfeited
Dividend paid
Share based payments
(Note 27)
Vested shares (Note 27)
Shares re-purchased (Note 27)
Total
At 31 December 2021
At 1 January 2022
Profit for the year
Other comprehensive income
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:
Unclaimed dividend forfeited
Dividend paid
Share based payments (Note 27)
Vested shares (Note 27)
Shares re-purchased (Note 27)
Total
At 31 December 2022
Treasury
shares
$’000
Capital
contribution
$’000
40,000
–
–
Foreign
currency
translation
reserve
$’000
Non-
controlling
interest
$’000
Total
equity
$’000
992
–
941
(34,196)
(24,608)
–
1,664,045
117,176
999
Retained
earnings
$’000
1,116,079
141,784
58
–
141,842
941
(24,608)
118,175
Issued
share
capital
$’000
1,855
–
–
Share
premium
$’000
511,723
–
–
Share
based
payment
reserve
$’000
27,592
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
515
(73,354)
–
7
–
7
1,862
1,862
–
–
–
8,415
–
8,415
520,138
520,138
–
–
3,020
(8,422)
–
(5,402)
22,190
22,190
–
–
–
–
(4,915)
(4,915)
(4,915)
(4,915)
–
–
–
–
–
–
–
–
– (72,839)
40,000 1,185,082
40,000 1,185,082
62,407
1,052
–
–
–
–
–
–
–
–
1,933
1,933
–
689
–
–
515
(73,354)
–
–
–
–
3,020
–
(4,915)
(74,734)
(58,804) 1,707,486
(58,804) 1,707,486
104,706
1,741
42,299
–
–
–
–
–
–
63,459
689
42,299
106,447
–
–
–
2
–
2
–
–
–
2,089
–
2,089
1,864 522,227
–
–
8,188
(5,485)
–
2,703
24,893
–
–
–
–
–
–
(4,915)
–
–
–
–
–
–
–
(58,844)
–
–
–
(58,844)
40,000 1,189,697
–
–
–
–
–
–
2,622
–
–
–
–
–
–
–
(58,844)
8,188
(3,394)
–
(54,050)
(16,505) 1,759,883
Notes 1 to 41 on pages 139-219 are an integral part of these financial statements.
137
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Consolidated statement of cash flows
For the year ended 31 December 2022
Cash flows from operating activities
Cash generated from operations
Tax paid
Defined benefits paid
Contribution to plan assets
Hedge premium paid
Net cash inflows from operating activities
Cash flows from investing activities
Payment for acquisition of oil and gas properties
Payment for acquisition of other property, plant and
equipment
Payment for Abiala investment
Deposit for investment
Proceeds from the disposal of oil and gas properties
Proceeds from disposal of other property plant and
equipment
Rent prepaid
Receipts from other asset
Interest received
Restricted cash
Net cash outflows from investing activities
Cash flows from financing activities
Repayments of loans and borrowings
Proceeds from loans and borrowings
Shares purchased for employees*
Dividends paid
Interest paid on lease liability
Lease payments – principal portion
Payments for other financing charges**
Interest paid on loans and borrowings
Net cash outflows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at end of the year
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Notes
₦ million
₦ million
$’000
$’000
15
14
33
33
12
16
16
19
23.6
16.3.2
16.3.1
17
13
26.3
30
30
27
37
31
31
30
30
26
242,400
(24,415)
–
(2,015)
(4,360)
211,610
150,901
(5,203)
–
(1,000)
(3,608)
141,090
571,206
(57,532)
–
(4,507)
(10,275)
498,892
376,787
(12,993)
–
(2,497)
(9,010)
352,287
(67,338)
(54,618)
(158,678)
(136,381)
(1,973)
(5,092)
(57,367)
7,884
8
–
4,600
491
(3,359)
(122,146)
–
–
–
(24,972)
(161)
(836)
(5,325)
(26,857)
(58,151)
31,313
133,667
15,806
180,786
(13,415)
–
–
–
–
(272)
1,961
126
7,029
(59,189)
(240,291)
268,725
(2,025)
(29,377)
(212)
(1,135)
(8,154)
(27,728)
(40,197)
41,704
85,554
6,409
133,667
(4,649)
(12,000)
(128,300)
18,578
19
–
10,840
1,157
(7,915)
(280,948)
–
–
–
(58,844)
(380)
(1,970)
(12,547)
(63,287)
(137,028)
80,914
324,490
(1,068)
404,336
(33,498)
–
–
–
–
(679)
4,897
314
17,552
(147,795)
(600,000)
671,000
(4,915)
(73,354)
(530)
(3,363)
(20,360)
(69,236)
(100,758)
103,734
225,137
(4,381)
324,490
Shares purchased for employees of $4.9 million, ₦2.03 billion represent shares purchased in the open market for employees of the Group.
**Other financing charges of $12.5 million, ₦5.3 billion relate to commitment fees and other transaction costs incurred on interest bearing loans
and borrowings ($350 million Revolving Credit Facility, $110 million Reserved Based Lending Facility and $50 million Junior Facility).
Notes 1 to 41 on pages 139-219 are an integral part of these financial statements.
138
Seplat Energy PlcAnnual Report and Accounts 2022 Notes to the consolidated financial statements
1. Corporate structure and business
Seplat Energy Plc (formerly called Seplat Petroleum Development Company Plc, hereinafter referred to as ‘Seplat’ or the ‘Company’), the parent
of the Group, was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014,
under the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The Company commenced operations on 1
August 2010. The Company is principally engaged in oil and gas exploration and production and gas processing activities. The Company’s
registered address is: 16a Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.
The Company acquired, pursuant to an agreement for assignment dated 31 January 2010 between the Company, SPDC, TOTAL and AGIP,
a 45% participating interest in OML 4, OML 38 and OML 41 located in Nigeria.
In 2013, Newton Energy Limited (‘Newton Energy’), an entity previously beneficially owned by the same shareholders as Seplat, became a
subsidiary of the Company. On 1 June 2013, Newton Energy acquired from Pillar Oil Limited (‘Pillar Oil’) a 40% Participant interest in producing
assets: the Umuseti/Igbuku marginal field area located within OPL 283 (the ‘Umuseti/Igbuku Fields’).
On 27 March 2013, the Group incorporated a subsidiary, MSP Energy Limited. The Company was incorporated for oil and gas exploration and
production.
On 21 August 2014, the Group incorporated a new subsidiary, Seplat Energy UK Limited (formerly called Seplat Petroleum Development UK
Limited). The subsidiary provides technical, liaison and administrative support services relating to oil and gas exploration activities.
On 12 December 2014, Seplat Gas Company Limited (‘Seplat Gas’) was incorporated as a private limited liability company to engage in oil and
gas exploration and production and gas processing. On 12 December 2014, the Group also incorporated a new subsidiary, Seplat East Swamp
Company Limited with the principal activity of oil and gas exploration and production.
In 2015, the Group purchased a 40% participating interest in OML 53, onshore northeastern Niger Delta (Seplat East Onshore Limited), from
Chevron Nigeria Ltd for $259.4 million.
On 16 January 2018, the Group incorporated a subsidiary, Seplat West Limited (‘Seplat West’). Seplat West was incorporated to manage the
producing assets of Seplat Energy Plc.
In 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company Limited. The principal activity of the Company is the
processing of gas from OML 53 using the ANOH gas processing plant.
In order to fund the development of the ANOH gas processing plant, on 13 August 2018, the Group entered into a shareholder’s agreement with
Nigerian Gas Processing and Transportation Company (NGPTC). Funding is to be provided by both parties in equal proportion representing their
ownership share and will be used to subscribe for the Ordinary Shares in ANOH. The agreement was effective on 18 April 2019, which was the
date the Corporate Affairs Commission (CAC) approval was received. Given the change in ownership structure as at 31 December 2019, the
Group no longer exercises control and has deconsolidated ANOH in the consolidated financial statements. However, its retained interest qualifies
as a joint arrangement and has been recognised accordingly as investment in joint venture.
On 31 December 2019, Seplat Energy Plc, acquired 100% of Eland Oil and Gas Plc’s issued and yet to be issued Ordinary Shares. Eland is an
independent oil and gas company that holds interest in subsidiaries and joint ventures that are into production, development and exploration
in West Africa, particularly the Niger Delta region of Nigeria.
On acquisition of Eland Oil and Gas Plc (Eland), the Group acquired indirect interest in existing subsidiaries of Eland.
Eland Oil & Gas (Nigeria) Limited, is a subsidiary acquired through the purchase of Eland and is into exploration and production of oil and gas.
Westport Oil Limited, which was also acquired through purchase of Eland is a financing company.
Elcrest Exploration and Production Company Limited (Elcrest) who became an indirect subsidiary of the Group purchased a 45% interest in OML
40 in 2012. Elcrest is a Joint Venture between Eland Oil and Gas (Nigeria) Limited (45%) and Starcrest Nigeria Energy Limited (55%). It has been
consolidated because Eland is deemed to have power over the relevant activities of Elcrest to affect variable returns from Elcrest at the date of
acquisition by the Group. (See details in Note 4.1.v) The principal activity of Elcrest is exploration and production of oil and gas.
Wester Ord Oil & Gas (Nigeria) Limited, who also became an indirect subsidiary of the Group acquired a 40% stake in a licence, Ubima, in 2014
via a joint operations agreement. The principal activity of Wester Ord Oil & Gas (Nigeria) Limited is exploration and production of oil and gas.
Other entities acquired through the purchase of Eland are Tarland Oil Holdings Limited (a holding company), Brineland Petroleum Limited
(dormant company) and Destination Natural Resources Limited (dormant company).
On 1 January 2020, Seplat Energy Plc transferred its 45% participating interest in OML 4, OML 38 and OML 41 (“transferred assets”) to Seplat
West Limited. As a result, Seplat ceased to be a party to the Joint Operating Agreement in respect of the transferred assets and became a
holding company. Seplat West Limited became a party to the Joint Operating Agreement in respect of the transferred assets and assumed
its rights and obligations.
139
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
1. Corporate structure and business continued
On 20 May 2021, following a special resolution by the Board in view of the Company’s strategy of transitioning into an energy Company
promoting renewable energy, sustainability, and new energy, the name of the Company was changed from Seplat Petroleum Development
Company Plc to Seplat Energy Plc under the Companies and Allied Matters Act 2020.
On 7 February 2022, the Group incorporated a subsidiary, Seplat Energy Offshore Limited. The Company was incorporated for oil and gas
exploration and production.
On 5 July 2022, the Group incorporated a subsidiary, Turnkey Drilling Services Limited. The Company was incorporated for the purpose of drilling
chemicals, material supply, directional drilling, drilling support services and exploration services.
The Company together with its subsidiaries as shown below are collectively referred to as the Group.
Subsidiary
Date of incorporation
Country of incorporation
and place of business
Percentage
holding
Principal activities
Newton Energy Limited
1 June 2013
Nigeria
99.9%
Oil and gas exploration
and production
Nature of
holding
Direct
Seplat Energy UK Limited
21 August 2014
United Kingdom
100%
Seplat Gas Company Limited
12 December 2014 Nigeria
Seplat East Onshore Limited
12 December 2014 Nigeria
Seplat East Swamp Company Limited
12 December 2014 Nigeria
Seplat West Limited
Eland Oil & Gas Limited
16 January 2018
Nigeria
28 August 2009
United Kingdom
Eland Oil & Gas (Nigeria) Limited
11 August 2010
Nigeria
Elcrest Exploration and Production Nigeria
Limited
Westport Oil Limited
Tarland Oil Holdings Limited
6 January 2011
8 August 2011
16 July 2014
Nigeria
Jersey
Jersey
Brineland Petroleum Limited
18 February 2013
Nigeria
Wester Ord Oil & Gas (Nigeria) Limited
18 July 2014
Wester Ord Oil and Gas Limited
16 July 2014
Destination Natural Resources Limited
–
Nigeria
Jersey
Dubai
Seplat Energy Offshore Limited
7 February 2022
Nigeria
MSP Energy Limited
27 March 2013
Turnkey Drilling Services Limited
5 July 2022
Nigeria
Nigeria
99.9%
99.9%
99.9%
99.9%
100%
100%
45%
100%
100%
49%
100%
100%
70%
100%
100%
100%
Technical, liaison and
administrative support services
relating to oil & gas exploration
and production
Direct
Oil and gas exploration and
production and gas processing Direct
Oil and gas exploration
and production
Oil and gas exploration
and production
Oil and gas exploration
and production
Holding company
Oil and gas exploration
and production
Oil and gas exploration
and production
Financing
Holding Company
Dormant
Oil and gas exploration
and production
Holding Company
Dormant
Oil and gas exploration
and production
Oil and gas exploration
and production
Drilling services
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
2. Significant changes in the current reporting period
The following significant changes occurred during the reporting period ended 31 December 2022:
• During the year, Seplat Energy Offshore Limited was incorporated on 7 February 2022. The percentage ownership of the Company is 100%.
• The Group made a deposit of $128.3 million, ₦57.4 billion to Exxon Mobil Corporation, Delaware as part of the consideration to acquire the entire
share capital of Mobil Producing Nigeria Unlimited. The completion of the transaction is subject to ministerial consent and other required
regulatory approvals.
• On 22 April 2022, the Company announced the appointment of three new Directors as Independent Non-Executive Directors of Seplat Energy
Plc, resumption took effect on 18 May 2022. The three new Directors are Mrs. Bashirat Odunewu, Mr. Kazeem Raimi and Mr. Ernest Ebi, MFR.
• The Group signed a contract with Solewant Nigeria Limited in 2013 for the provision of coating services on line pipes. Solewant proceeded to
subcontract the service to Adamac Pipes and Coating Services. Over the course of the contract between Solewant and Adamac, financial
discords arose. The line pipes are currently being held by Adamac pending ongoing litigations. Due to these pending litigations and rising
concerns over recoverability of the pipes, Seplat made a $3.6 million, ₦1.5 billion (30%) impairment on the Line pipes in 2020 and have decided
to impair the balance of $8.5 million, ₦3.6 billion in the current reporting period.
• On 5 July 2022, the Group incorporated a subsidiary, Turnkey Drilling Services Limited. The Company was incorporated for the purpose of
drilling chemicals, material supply, directional drilling, drilling support services and exploration services. The percentage ownership of the
Company is 100%.
140
Seplat Energy PlcAnnual Report and Accounts 2022 • On 1 August 2022, the Group announced the commercial launch of Amukpe-Escravos Pipeline. The pipeline will offer a more secured and
reliable export route for liquids from Seplat Energy’s major assets OML 4, 38 and 41.
• On 30 September 2022, the Group refinanced its existing $350 million revolving credit facility due in December 2023 with a new three-year
$350 million Revolving Credit Facility (RCF) due in June 2025. The RCF also includes an automatic maturity extension until December 2026
once a refinancing of the existing $650 million bond due in April 2026 is implemented.
3.
Summary of significant accounting policies
Introduction to summary of significant accounting policies
3.1
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements.
These accounting policies have been applied to all the periods presented, unless otherwise stated. The Consolidated financial statements
are for the Group consisting of Seplat Energy Plc and its subsidiaries.
3.2 Basis of preparation
The consolidated financial statements of the Group for the year ended 31 December 2022 have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”). The financial statements
comply with IFRS as issued by the International Accounting Standards Board (IASB). Additional information required by National regulations is
included where appropriate.
The financial statements comprise the statement of profit or loss and other comprehensive income, the statement of financial position,
the statement of changes in equity, the statement of cash flows and the notes to the financial statements.
The financial statements have been prepared under the going concern and historical cost convention, except for financial instruments measured
at fair value on initial recognition, derivative financial instruments, and defined benefit plans – plan assets measured at fair value. The financial
statements are presented in Nigerian Naira and United States Dollars, and all values are rounded to the nearest million (₦’million) and thousand
($’000) respectively, except when otherwise indicated.
Nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for at least 12 months from the
date of these financial statements.
The accounting policies adopted are consistent with those of the previous financial year end, except for the adoption of new and amended
standard which are set out below.
3.3 New and amended standards adopted by the Group
The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January
2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
a)
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract)
of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly
to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs
directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and
supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the
counterparty under the contract.
In accordance with the transitional provisions, the Group applies the amendments to contracts for which it has not yet fulfilled all its obligations
at the beginning of the annual reporting period in which it first applies the amendments (the date of initial application) and has not restated its
comparative information.
Reference to the Conceptual Framework – Amendments to IFRS 3
b)
The amendments replace a reference to a previous version of the IASB’s Conceptual Framework with a reference to the current version issued
in March 2018 without significantly changing its requirements.
The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to avoid the issue of potential ‘Day 2’ gains
or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent
Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead
of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. The amendments also add a new
paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.
These amendments had no impact on the consolidated financial statements of the Group as there were no contingent assets, liabilities
and contingent liabilities within the scope of these amendments arisen during the period.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
c)
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale
of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended
by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
These amendments had no impact on the consolidated financial statements of the Group as there were no sales of such items produced
by property, plant and equipment made available for use on or after the beginning of the earliest period presented.
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter
d)
The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the
amounts reported in the parent’s consolidated financial statements, based on the parent’s date of transition to IFRS, if no adjustments were
made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment
is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.
These amendments had no impact on the consolidated financial statements of the Group as it is not a first-time adopter.
141
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
3. Summary of significant accounting policies continued
IFRS 9 Financial Instruments – Fees in the ‘10 per cent’ test for derecognition of financial liabilities
3.3 New and amended standards adopted by the Group continued
e)
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are
substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and
the lender, including fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for
IAS 39 Financial Instruments: Recognition and Measurement.
These amendments had no impact on the consolidated financial statements of the Group.
3.4 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial
statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they
become effective. Details of these new standards and interpretations are set out below:
• IFRS 17 Insurance Contracts – Effective for annual periods beginning on or after 1 January 2023
• Amendments to IAS 1: Classification of Liabilities as Current or Non-current – Effective for annual periods beginning on or after 1 January 2024
• Amendments to IAS 8 Accounting Policies and Accounting Estimates: Definition of Accounting Estimates – Effective date for annual periods
beginning on or after 1 January 2023
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 – Effective date for annual periods beginning on or
after 1 January 2023
• Amendments regarding deferred tax on leases and decommissioning obligations – Effective date for annual periods beginning on or after
1 January 2023
• IFRS 16 amended for lease liability measurement in sale and leaseback – Effective date for annual periods beginning on or after January 2024.
3.5 Basis of consolidation
i.
Subsidiaries are all entities (including structured entities) over which the Group has control.
Subsidiaries
The consolidated financial information comprises the financial statements of the Company and its subsidiaries as at 31 December 2022.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
Subsidiaries are consolidated from the date on which control is obtained by the Group and are deconsolidated from the date control ceases.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less
than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether
it has power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
Change in the ownership interest of subsidiary
ii.
The acquisition method of accounting is used to account for business combinations by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of financial position respectively.
Intercompany transaction balances and unrealized gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Disposal of subsidiary
iii.
Where the Group disposes a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary;
• Derecognises the carrying amount of any non-controlling interests;
• Derecognises the cumulative translation differences recorded in equity;
• Recognises the fair value of the consideration received;
• Recognises the fair value of any investment retained;
• Recognises any surplus or deficit in profit or loss; and
• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would
be required if the Group had directly disposed of the related assets or liabilities.
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iv.
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification
depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
Interest in the joint venture is accounted for using the equity method, after initially being recognised at cost in the consolidated statement
of financial position. All other joint arrangements of the Group are joint operations.
Associates
v.
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the
group holds between 20% and 50% of the voting rights. Investment in associates is accounted for using the equity method of accounting
(see (vi) below) after initially being recognised at cost.
Equity method
vi.
Under the equity method of accounting, the Group’s investments are initially recognised at cost and adjusted thereafter to recognise the Group’s
share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive
income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised
as a reduction in the carrying amount of the investment.
Where the Group’s share of loss in an equity accounting investment equals or exceeds its interest in the entity, including any other unsecured
long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other party.
Unrealised gains on transactions between the Group and its associate and joint venture are eliminated to the extent of the Group’s interest in the
entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity accounted investees are changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity accounted investments is tested for impairment in accordance with the policy described in Note 3.14.
Changes in ownership interest
vii.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group.
A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect
their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration
paid or received is recognised in a separate reserve within equity attributable to owners of the Group.
When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence,
any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. This fair value
becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if
the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
viii. Accounting for loss of control
When the Group ceases to consolidate a subsidiary because of a joint control, it does the following:
• deconsolidates the assets (including goodwill), liabilities and non-controlling interest (including attributable other comprehensive income)
of the former subsidiary from the consolidated financial position;
• any retained interest (including amounts owed by and to the former subsidiary) in the entity is remeasured to its fair value, with the change in
carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting
for the retained interest as an associate or a joint venture;
• any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified
to profit or loss or transferred directly to retained earnings if required by other IFRSs;
• the resulting gain or loss, on loss of control, is recognised together with the profit or loss from the discontinued operation for the period before
the loss of control; and
• the gain or loss on disposal will comprise of the gain or loss attributable to the portion disposed of and the gain or loss on remeasurement
of the portion retained. The latter is disclosed separately in the notes to the financial statements.
If the ownership interest in a joint venture is reduced but joint control or significant influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
Non-controlling interests
ix.
The Group recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis.
Goodwill
x.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating
units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose.
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3. Summary of significant accounting policies continued
Functional and presentation currency
3.6
Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary economic
environment in which the subsidiaries operate (‘the functional currency’), which is the US dollar except the UK subsidiary which is the Great
Britain Pound. The consolidated financial statements are presented in Nigerian Naira and the US dollar.
The Group has chosen to show both presentation currencies and this is allowable by the regulator.
Transactions and balances
i.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end are generally recognised in profit or loss. They are deferred in equity if attributable to net
investment in foreign operations.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign
exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss or other
comprehensive income depending on where fair value gain or loss is reported.
Group companies
ii.
The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into
the presentation currency as follows:
• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the reporting date; and
• income and expenses for statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is
not – a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions), and all resulting exchange differences are recognised in other comprehensive income.
On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in
profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
3.7 Oil and gas accounting
i.
Pre-licensing costs
Pre-licence costs are expensed in the period in which they are incurred.
Exploration licence cost
ii.
Exploration licence costs are capitalised within intangible assets. Licence costs paid in connection with a right to explore in an existing
exploration area are capitalised and amortised on a straight-line basis over the life.
Licence costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable
amount. This review includes confirming that exploration drilling is still underway or firmly planned, or that it has been determined, or work is
under way to determine that the discovery is economically viable based on a range of technical and commercial considerations and sufficient
progress is being made to establish development plans and timing. If no future activity is planned or the licence has been relinquished or has
expired, the carrying value of the licence is written off through profit or loss. The exploration licence costs are initially recognised at cost and
subsequently amortised on a straight line based on the economic life. They are subsequently carried at cost less accumulated amortisation
and impairment losses.
Acquisition of producing assets
iii.
Upon acquisition of producing assets which do not constitute a business combination, the Group identifies and recognises the individual
identifiable assets acquired (including those assets that meet the definition of, and recognition criteria for, intangible assets in IAS 38 Intangible
Assets) and liabilities assumed. The purchase price paid for the group of assets is allocated to the individual identifiable assets and liabilities on
the basis of their relative fair values at the date of purchase.
Exploration and evaluation expenditures
iv.
Geological and geophysical exploration costs are charged to profit or loss as incurred.
Exploration and evaluation expenditures incurred by the entity are accumulated separately for each area of interest. Such expenditures comprise
net direct costs and an appropriate portion of related overhead expenditure, but do not include general overheads or administrative expenditure
that is not directly related to a particular area of interest. Each area of interest is limited to a size related to a known or probable hydrocarbon
resource capable of supporting an oil operation.
Costs directly associated with an exploration well, exploratory stratigraphic test well and delineation wells are temporarily suspended (capitalised)
until the drilling of the well is complete and the results have been evaluated. These costs include employee remuneration, materials and fuel
used, rig costs, delay rentals and payments made to contractors. If hydrocarbons (‘proved reserves’) are not found, the exploration expenditure
is written off as a dry hole and charged to profit or loss. If hydrocarbons are found, the costs continue to be capitalised.
Suspended exploration and evaluation expenditure in relation to each area of interest is carried forward as an asset provided that one of the
following conditions is met:
• the costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale;
• exploration and/or evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves; and
• active and significant operations in, or in relation to, the area of interest.
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area is subsequently abandoned or exploration activities do not lead to the discovery of proved or probable reserves, or if the Directors consider
the expenditure to be of no value, any accumulated costs carried forward relating to the specified areas of interest are written off in the year in
which the decision is made. While an area of interest is in the development phase, amortisation of development costs is not charged pending
the commencement of production. Exploration and evaluation costs are transferred from the exploration and/or evaluation phase to the
development phase upon commitment to a commercial development.
Development expenditures
v.
Development expenditure incurred by the Group is accumulated separately for each area of interest in which economically recoverable reserves
have been identified to the satisfaction of the Directors. Such expenditure comprises net direct costs and, in the same manner as for exploration
and evaluation expenditure, an appropriate portion of related overhead expenditure directly related to the development property. All expenditure
incurred prior to the commencement of commercial levels of production from each development property is carried forward to the extent to
which recoupment is expected to be derived from the sale of production from the relevant development property.
3.8 Revenue recognition (IFRS 15)
IFRS 15 uses a five-step model for recognising revenue to depict transfer of goods or services. The model distinguishes between promises
to a customer that are satisfied at a point in time and those that are satisfied over time.
It is the Group’s policy to recognise revenue from a contract when it has been approved by both parties, rights have been clearly identified,
payment terms have been defined, the contract has commercial substance, and collectability has been ascertained as probable. Collectability
of customer’s payments is ascertained based on the customer’s historical records, guarantees provided, the customer’s industry and advance
payments made if any.
Revenue is recognised when control of goods sold has been transferred. Control of an asset refers to the ability to direct the use of and obtain
substantially all of the remaining benefits (potential cash inflows or savings in cash outflows) associated with the asset. For crude oil, this occurs
when the crude products are lifted by the customer (buyer) Free on Board at the Group’s loading facility. Revenue from the sale of oil is recognised
at a point in time when performance obligation is satisfied. For gas sales, revenue is recognised when the product passes through the custody
transfer point to the customer. Revenue from the sale of gas is recognised over time using the practical expedient of the right to invoice.
The surplus or deficit of the product sold during the period over the Group’s share of production is termed as an overlift or underlift. With regard
to underlifts, if the overlifter does not meet the definition of a customer or the settlement of the transaction is non-monetary, a receivable and
other income is recognised. Initially, when an overlift occurs, cost of sale is debited, and a corresponding liability is accrued. Overlifts and
underlifts are initially measured at the market price of oil at the date of lifting, consistent with the measurement of the sale and purchase.
Subsequently, they are remeasured at the current market value. The change arising from this remeasurement is included in the profit or loss as
other income/expenses-net.
Definition of a customer
A customer is a party that has contracted with the Group to obtain crude oil or gas products in exchange for a consideration, rather than to share
in the risks and benefits that result from sale. The Group has entered into collaborative arrangements with its Joint arrangement partners to share
in the production of oil. Collaborative arrangements with its Joint arrangement partners to share in the production of oil are accounted for
differently from arrangements with customers as collaborators share in the risks and benefits of the transaction, and therefore, do not meet the
definition of customers. Revenue arising from these arrangements are recognised separately in other income.
Contract enforceability and termination clauses
It is the Group’s policy to assess that the defined criteria for establishing contracts that entail enforceable rights and obligations are met.
The criteria provide that the contract has been approved by both parties, rights have been clearly identified, payment terms have been defined,
the contract has commercial substance, and collectability has been ascertained as probable. Revenue is not recognised for contracts that do
not create enforceable rights and obligations to parties in a contract. The Group also does not recognise revenue for contracts that do not meet
the revenue recognition criteria. In such cases where consideration is received it recognises a contract liability and only recognises revenue when
the contract is terminated.
The Group may also have the unilateral rights to terminate an unperformed contract without compensating the other party. This could occur
where the Group has not yet transferred any promised goods or services to the customer and the Group has not yet received, and is not yet
entitled to receive, any consideration in exchange for promised goods or services.
Identification of performance obligation
At inception, the Group assesses the goods or services promised in the contract with a customer to identify as a performance obligation, each
promise to transfer to the customer either a distinct good or series of distinct goods. The number of identified performance obligations in a
contract will depend on the number of promises made to the customer. The delivery of barrels of crude oil or units of gas are usually the only
performance obligation included in oil and gas contract with no additional contractual promises. Additional performance obligations may arise
from future contracts with the Group and its customers.
The identification of performance obligations is a crucial part in determining the amount of consideration recognised as revenue. This is due
to the fact that revenue is only recognised at the point where the performance obligation is fulfilled. Management has therefore developed
adequate measures to ensure that all contractual promises are appropriately considered and accounted for accordingly.
Transaction price is the amount allocated to the performance obligations identified in the contract. It represents the amount of revenue
recognised as those performance obligations are satisfied. Complexities may arise where a contract includes variable consideration, significant
financing component or consideration payable to a customer.
Variable consideration not within the Group’s control is estimated at the point of revenue recognition and reassessed periodically. The estimated
amount is included in the transaction price to the extent that it is highly probable that a significant reversal of the amount of cumulative revenue
recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As a practical expedient,
where the Group has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the
Group’s performance completed to date, the Group may recognise revenue in the amount to which it has a right to invoice.
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3. Summary of significant accounting policies continued
3.8 Revenue recognition (IFRS 15) continued
Significant financing component (SFC) assessment is carried out (using a discount rate that reflects the amount charged in a separate financing
transaction with the customer and also considering the Group’s incremental borrowing rate) on contracts that have a repayment period of more
than 12 months.
As a practical expedient, the Group does not adjust the promised amount of consideration for the effects of a significant financing component
if it expects, at contract inception, that the period between when it transfers a promised good or service to a customer and when the customer
pays for that good or service will be one year or less.
Instances when SFC assessment may be carried out include where the Group receives advance payment for agreed volumes of crude oil or
receives take or pay deficiency payment on gas sales. Take or pay gas sales contract ideally provides that the customer must sometimes pay
for gas even when not delivered to the customer. The customer, in future contract years, takes delivery of the product without further payment.
The portion of advance payments that represents significant financing component will be recognised as interest expense.
Consideration payable to a customer is accounted for as a reduction of the transaction price unless the payment to the customer is in exchange
for a distinct goods or services that the customer transfers to the Group.
Breakage
The Group enters into take or pay contracts for sale of gas where the buyer may not ultimately exercise all of their rights to the gas. The take or
pay quantity not taken is paid for by buyer called take or pay deficiency payment. The Group assesses if there is a reasonable assurance that it
will be entitled to a breakage amount. Where it establishes that a reasonable assurance exists, it recognises the expected breakage amount as
revenue in proportion to the pattern of rights exercised by the customer. However, where the Group is not reasonably assured of a breakage
amount, it would only recognise the expected breakage amount as revenue when the likelihood of the customer exercising its remaining rights
becomes remote.
Contract modification and contract combination
Contract modifications relate to a change in the price and/or scope of an approved contract. Where there is a contract modification, the Group
assesses if the modification will create a new contract or change the existing enforceable rights and obligations of the parties to the original contract.
Contract modifications are treated as new contracts when the performance obligations are separately identifiable and transaction price reflects
the standalone selling price of the crude oil or the gas to be sold. Revenue is adjusted prospectively when the crude oil or gas transferred is
separately identifiable and the price does not reflect the standalone selling price. Conversely, if there are remaining performance obligations
which are not separately identifiable, revenue will be recognised on a cumulative catch-up basis when crude oil or gas is transferred.
The Group combines contracts entered into at near the same time (less than 12 months) as one contract if they are entered into with the same or
related party customer, the performance obligations are the same for the contracts and the price of one contract depends on the other contract.
Portfolio expedients
As a practical expedient, the Group may apply the requirements of IFRS 15 to a portfolio of contracts (or performance obligations) with similar
characteristics if it expects that the effect on the financial statements would not be materially different from applying IFRS to individual contracts
within that portfolio.
Contract assets and liabilities
The Group recognises contract assets for unbilled revenue from crude oil and gas sales. The Group recognises contract liability for consideration
received for which performance obligation has not been met.
Disaggregation of revenue from contract with customers
The Group derives revenue from two types of products, oil and gas. The Group has determined that the disaggregation of revenue based on the
criteria of type of products meets the disaggregation of revenue disclosure requirement of IFRS 15. It depicts how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors. See further details in Note 6.1.1.
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Oil and gas properties and other plant and equipment are stated at cost, less accumulated depreciation, and accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation,
the initial estimate of any decommissioning obligation and, for qualifying assets, borrowing costs. The purchase price or construction cost is the
aggregate amount paid and the fair value of any other consideration given to acquire the asset. Where parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets, inspection costs and overhaul
costs. Where an asset or part of an asset that was separately depreciated and is now written off is replaced and it is probable that future
economic benefits associated with the item will flow to the entity, the expenditure is capitalised. Inspection costs associated with major
maintenance programmes are capitalised and amortised over the period to the next inspection. Overhaul costs for major maintenance
programmes are capitalised as incurred as long as these costs increase the efficiency of the unit or extend the useful life of the asset.
All other maintenance costs are expensed as incurred.
Depreciation
Production and field facilities are depreciated on a unit-of-production basis over the estimated proved developed reserves. Gas plant is
depreciated on a straight-line basis over its useful lives. Assets under construction are not depreciated. Other property, plant and equipment
are depreciated on a straight-line basis over their estimated useful lives. Depreciation commences when an asset is available for use.
The depreciation rate for each class is as follows:
Plant and machinery
Gas plant
Motor vehicles
Office furniture and IT equipment
Buildings
Land
Leasehold improvements
10%-20%
4%
25%-30%
10%-33.33%
4%
–
Over the unexpired portion of the lease
The expected useful lives and residual values of property, plant and equipment are reviewed on an annual basis and, if necessary, changes
in useful lives are accounted for prospectively.
Gains or losses on disposal of property, plant and equipment are determined as the difference between disposal proceeds and carrying amount
of the disposed assets. These gains or losses are included in the statement of profit or loss.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient
obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or
loss when the asset is derecognised.
3.10 Right-of-use assets
The Group recognises right-of-use assets at the commencement date of a lease (i.e. the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets include the amount of lease liabilities recognised, initial direct costs incurred, decommissioning costs (if any), and
lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Short-term leases and leases of low value
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases that are considered of low value (i.e. low value assets). Low-value assets are assets with lease amount of less than $5,000 when new.
Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Lease liabilities
3.11
At the commencement date of a lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over
the lease term. The lease payments include the exercise price of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that
do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. The weighted average incremental borrowing rate for the Group is 7.56%. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance
fixed lease payments or a change in the assessment to purchase the underlying asset. The lease term refers to the contractual period of a lease.
The Group has elected to exclude non-lease components in calculating lease liabilities and instead treat the related costs as an expense in the
statement of profit or loss.
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3. Summary of significant accounting policies continued
3.12 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. These costs may arise from: specific
borrowings used for the purpose of financing the construction of a qualifying asset, and those that arise from general borrowings that would
have been avoided if the expenditure on the qualifying asset had not been made. The general borrowing costs attributable to an asset’s
construction is calculated by reference to the weighted average cost of general borrowings that are outstanding during the period.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on the qualifying assets is deducted
from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the statement of profit or loss in the period in
which they are incurred.
3.13 Finance income and costs
Finance income
Finance income is recognised in the statement of profit or loss as it accrues using the effective interest rate (EIR), which is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate,
to the amortised cost of the financial instrument. The determination of finance income takes into account all contractual terms of the financial
instrument as well as any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest
rate (EIR), but not future credit losses.
Finance cost
Finance costs includes borrowing costs, interest expense calculated using the effective interest rate method, finance charges in respect of lease
liabilities, the unwinding of the effect of discounting provisions, and the amortisation of discounts and premiums on debt instruments that are liabilities.
The Group applies the IBOR reform Phase 2 amendments which allows as a practical expedient for changes to the basis for determining
contractual cash flows to be treated as changes to a floating rate of interest, provided certain conditions are met. The conditions include that
the change is necessary as a direct consequence of IBOR reform and that the transition takes place on an economically equivalent basis.
Impairment of non-financial assets
3.14
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently. Other non –financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash
flows that are largely independent of the cash flows of other groups of assets. This should be at a level not higher than an operating segment.
If any such indication of impairment exists or when annual impairment testing for an asset group is required, the entity makes an estimate of
its recoverable amount. Such indicators include changes in the Group’s business plans, changes in commodity prices, evidence of physical
damage and, for oil and gas properties, significant downward revisions of estimated recoverable volumes or increases in estimated future
development expenditure.
The recoverable amount is the higher of an asset’s fair value less costs of disposal (‘FVLCD’) and value in use (‘VIU’). The recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or group of assets, in which case, the asset is tested as part of a larger cash generating unit to which it belongs. Where the carrying amount
of an asset group exceeds its recoverable amount, the asset group is considered impaired and is written down to its recoverable amount.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
In calculating VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset/CGU. In determining FVLCD, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Impairment – exploration and evaluation assets
Exploration and evaluation assets are tested for impairment once commercial reserves are found before they are transferred to oil and gas
assets, or whenever facts and circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration
and evaluation assets’ carrying amount exceeds their recoverable amount. The recoverable amount is the higher of the exploration and
evaluation assets’ fair value less costs to sell and their value in use.
Impairment – proved oil and gas production properties
Proven oil and gas properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows.
3.15 Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows comprise cash at banks and at hand and short-term deposits with an original maturity
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
Inventories
3.16
Inventories represent the value of tubulars, casings, spares and wellheads. These are stated at the lower of cost and net realisable value. Cost is
determined using the invoice value and all other directly attributable costs to bringing the inventory to the point of use determined on a first in first
out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated cost necessary to make the sale.
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The Group’s interest in the oil and gas reserves of OML 55 has been classified as other asset. On initial recognition, it is measured at the
fair value of future recoverable oil and gas reserves. Subsequently, the other asset is recognised at fair value through profit or loss.
3.18 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Board of directors has appointed a steering committee which assesses the financial performance and position of the Group and makes
strategic decisions. The steering committee, which has been identified as the chief operating decision maker, consists of the Chief Financial
Officer, the Vice President (Finance), the Director (New Energy) and the Financial Reporting Manager. See further details in Note 6.
3.19 Financial instruments
IFRS 9 provides guidance on the recognition, classification and measurement of financial assets and financial liabilities; derecognition of financial
instruments; impairment of financial assets and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial
instruments such as IFRS 7 Financial Instruments: Disclosures.
Classification and measurement
a)
Financial Assets
It is the Group’s policy to initially recognise financial asset at fair value plus transaction costs, except in the case of financial assets recorded
at fair value through profit or loss which are expensed in profit or loss.
Classification and subsequent measurement are dependent on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. On this basis, the Group may classify its financial instruments at amortised cost, fair value through profit or loss
and at fair value through other comprehensive income.
All the Group’s financial assets as at 31 December 2022 satisfy the conditions for classification at amortised cost under IFRS 9 except for
derivatives which are classified at fair value through profit or loss.
The Group’s financial assets include trade receivables, NEPL receivables, NNPC receivables, other receivables, cash and bank balances and
derivatives. They are included in current assets, except for maturities greater than 12 months after the reporting date. Interest income from these
assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in
profit or loss and presented in finance income/cost.
Financial liabilities
Financial liabilities of the Group are classified and measured at fair value on initial recognition and subsequently at amortised cost net of directly
attributable transaction costs, except for derivatives which are classified and subsequently recognised at fair value through profit or loss.
Fair value gains or losses for financial liabilities designated at fair value through profit or loss are accounted for in profit or loss except for the
amount of change that is attributable to changes in the Group’s own credit risk which is presented in other comprehensive income. The
remaining amount of change in the fair value of the liability is presented in profit or loss. The Group’s financial liabilities include trade and other
payables and interest-bearing loans and borrowings.
Impairment of financial assets
b)
Recognition of impairment provisions under IFRS 9 is based on the expected credit loss (ECL) model. The ECL model is applicable to financial
assets classified at amortised cost and contract assets under IFRS 15: Revenue from Contracts with Customers. The measurement of ECL
reflects an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, time value of money and
reasonable and supportable information that is available without undue cost or effort at the reporting date, about past events, current conditions
and forecasts of future economic conditions.
The Group applies the simplified approach or the three-stage general approach to determine impairment of receivables depending on their
respective nature. The simplified approach is applied for trade receivables and contract assets while the general approach is applied to NEPL
receivables, NNPC receivables, other receivables and cash and bank balances.
The simplified approach requires expected lifetime losses to be recognised from initial recognition of the receivables. This involves determining
the expected loss rates using a provision matrix that is based on the Group’s historical default rates observed over the expected life of the
receivable and adjusted forward-looking estimates. This is then applied to the gross carrying amount of the receivable to arrive at the loss
allowance for the period.
The three-stage approach assesses impairment based on changes in credit risk since initial recognition using the past due criterion and other
qualitative indicators such as increase in political concerns or other macroeconomic factors and the risk of legal action, sanction or other
regulatory penalties that may impair future financial performance.
Financial assets classified as stage 1 have their ECL measured as a proportion of their lifetime ECL that results from possible default events that
can occur within one year, while assets in Stage 2 or 3 have their ECL measured on a lifetime basis.
Under the three-stage approach, the ECL is determined by projecting the probability of default (PD), loss given default (LGD) and exposure at
default (EAD) for each ageing bucket and for each individual exposure. The PD is based on default rates determined by external rating agencies
for the counterparties. The LGD is determined based on management’s estimate of expected cash recoveries after considering the historical
pattern of the receivable, and it assesses the portion of the outstanding receivable that is deemed to be irrecoverable at the reporting period.
The EAD is the total amount of outstanding receivable at the reporting period. These three components are multiplied together and adjusted
for forward looking information, such as the gross domestic product (GDP) in Nigeria and crude oil prices, to arrive at an ECL which is then
discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an
approximation thereof.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the related financial assets
and the amount of the loss is recognised in profit or loss.
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Significant increase in credit risk and default definition
c)
The Group assesses the credit risk of its financial assets based on the information obtained during periodic review of publicly available
information, industry trends and payment records. Based on the analysis of the information provided, the Group identifies the assets that
require close monitoring.
Furthermore, financial assets that have been identified to be more than 30 days past due on contractual payments are assessed to have
experienced significant increase in credit risk. These assets are grouped as part of Stage 2 financial assets where the three-stage approach
is applied.
In line with the Group’s credit risk management practices, a financial asset is defined to be in default when contractual payments have not been
received at least 90 days after the contractual payment period. Subsequent to default, the Group carries out active recovery strategies to recover
all outstanding payments due on receivables. Where the Group determines that there are no realistic prospects of recovery, the financial asset
and any related loss allowance is written off either partially or in full.
d) Write off policy
The Group writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded that there
is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include;
• ceasing enforcement activity and;
• where the Group’s recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation
of recovering in full.
The Group may write-off financial assets that are still subject to enforcement activity. The outstanding contractual amounts of such assets
written off during the year ended 31 December 2022 was nil (2021: nil).
The Group seeks to recover amounts it legally owed in full, but which have been partially written off due to no reasonable expectation of full recovery.
Derecognition
e)
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when it transfers the
financial asset and the transfer qualifies for derecognition. Gains or losses on derecognition of financial assets are recognised as finance income/cost.
Financial liabilities
The Group derecognises a financial liability when it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is recognised immediately in the statement of profit or loss.
In the context of IBOR reform, the Group’s assessment of whether a change to an amortised cost financial instrument is substantial, is made
after applying the practical expedient introduced by IBOR reform Phase 2. This requires the transition from an IBOR to an RFR to be treated as a
change to a floating interest rate, as described in Note 3.13 above.
Modification
f)
When the contractual cash flows of a financial instrument are renegotiated or otherwise modified and the renegotiation or modification does
not result in the derecognition of that financial instrument, the Group recalculates the gross carrying amount of the financial instrument and
recognises a modification gain or loss immediately within finance income/(cost)-net at the date of the modification. The gross carrying amount
of the financial instrument is recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the
financial instrument’s original effective interest rate.
Offsetting of financial assets and financial liabilities
g)
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when and only when there is
legally enforceable right to offset the recognised amount, and there is an intention to settle on a net basis or realise the asset and settle the
liability simultaneously.
The legally enforceable right is not contingent on future events and is enforceable in the normal course of business, and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
Derivatives
h)
The Group uses derivative financial instruments such as forward exchange contracts to hedge its foreign exchange risks as well as put options
to hedge against its oil price risk. However, such contracts are not accounted for as designated hedges. Derivatives are initially recognised at fair
value on the date a derivative contract is entered and subsequently remeasured to their fair value at the end of each reporting period. Any gains
or losses arising from changes in the fair value of derivatives are recognised within operating profit in the statement of profit or loss for the period.
An analysis of the fair value of derivatives is provided in Note 5, Financial risk Management.
The Group accounts for financial assets with embedded derivatives (hybrid instruments) in their entirety on the basis of its contractual cash flow
features and the business model within which they are held, thereby eliminating the complexity of bifurcation for financial assets. For financial
liabilities, hybrid instruments are bifurcated into hosts and embedded features. In these cases, the Group measures the host contract at
amortised cost and the embedded features is measured at fair value through profit or loss.
For the purpose of the maturity analysis, embedded derivatives included in hybrid financial instruments are not separated. The hybrid instrument,
in its entirety, is included in the maturity analysis for non-derivative financial liabilities.
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i)
The Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When available, the Group measures the fair value of an instrument using quoted prices in an active
market for that instrument. A market is regarded as active if quoted prices are readily available and represent actual and regularly occurring
market transactions on an arm’s length basis.
If a market for a financial instrument is not active, the Group establishes fair value using valuation techniques. Valuation techniques include using
recent arm’s length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that
are substantially the same, and discounted cash flow analysis. The chosen valuation technique makes maximum use of market inputs, relies as
little as possible on estimates specific to the Group, incorporates all factors that market participants would consider in setting a price, and is
consistent with accepted economic methodologies for pricing financial instruments.
Inputs to valuation techniques reasonably represent market expectations and measure the risk-return factors inherent in the financial instrument.
The Group calibrates valuation techniques and tests them for validity using prices from observable current market transactions in the same
instrument or based on other available observable market data.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price – i.e., the fair value of the consideration
given or received. However, in some cases, the fair value of a financial instrument on initial recognition may be different to its transaction price.
If such fair value is evidenced by comparison with other observable current market transactions in the same instrument (without modification
or repackaging) or based on a valuation technique whose variables include only data from observable markets, then the difference is recognised
in the income statement on initial recognition of the instrument. In other cases, the difference is not recognised in the income statement
immediately but is recognised over the life of the instrument on an appropriate basis or when the instrument is redeemed, transferred,
or sold, or the fair value becomes observable.
3.20 Share capital
On issue of Ordinary Shares, any consideration received net of any directly attributable transaction costs is included in equity. Issued share
capital has been translated at the exchange rate prevailing at the date of the transaction and is not retranslated after initial recognition.
3.21 Earnings per share and dividends
Basic EPS
Basic earnings per share is calculated on the Group’s profit or loss after taxation attributable to the parent entity and on the basis of weighted
average of issued and fully paid Ordinary Shares at the end of the year.
Diluted EPS
Diluted EPS is calculated by dividing the profit or loss after taxation attributable to the parent entity by the weighted average number of Ordinary
Shares outstanding during the year plus the weighted average number of Ordinary Shares that would be issued on conversion of all the dilutive
potential Ordinary Shares (after adjusting for outstanding share awards arising from the share-based payment scheme) into Ordinary Shares.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the period in which they are approved.
3.22 Post-employment benefits
Defined contribution scheme
The Group contributes to a defined contribution scheme for its employees in compliance with the provisions of the Pension Reform Act 2014.
The scheme is fully funded and is managed by licensed Pension Fund Administrators. Membership of the scheme is automatic upon
commencement of duties at the Group. The Group’s contributions to the defined contribution scheme are charged to the statement of profit
and loss account in the year to which they relate.
The employer contributes 17% while the employee contributes 3% of the qualifying employee’s salary.
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination
of employment. The Group operates a defined contribution plan and it is accounted for based on IAS 19 Employee benefits.
Defined contribution plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and
will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits
relating to employee service in the current and prior periods. Under defined contribution plans the entity’s legal or constructive obligation is
limited to the amount that it agrees to contribute to the fund.
Thus, the amount of the post-employment benefits received by the employee is determined by the amount of contributions paid by an entity
(and perhaps also the employee) to a post-employment benefit plan or to an insurance company, together with investment returns arising from
the contributions. In consequence, actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be
insufficient to meet expected benefits) fall, in substance, on the employee.
Defined benefit scheme
The Group operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund. The Group also
provides certain additional post-employment benefits to employees. These benefits are unfunded.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method and calculated annually by
independent actuaries. The liability or asset recognised in the statement of financial position in respect of the defined benefit plan is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets (if any). The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows using government bonds.
Remeasurements gains and losses, arising from changes in financial and demographic assumptions and experience adjustments, are
recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through other
comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
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3. Summary of significant accounting policies continued
3.22 Post-employment benefits continued
Past service costs are recognised in profit or loss on the earlier of:
• The date of the plan amendment or curtailment; and
• The date that the Group recognises related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit obligation and the fair value of the plan assets.
The Group recognises the following changes in the net defined benefit obligation under employee benefit expenses in general and
administrative expenses:
• Service costs comprises current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
• Net interest cost.
3.23 Provisions
Provisions are recognised when:
i)
the Group has a present legal or constructive obligation as a result of past events;
ii)
it is probable that an outflow of economic resources will be required to settle the obligation as a whole; and
iii)
the amount can be reliably estimated.
Provisions are not recognised for future operating losses. In measuring the provision:
• risks and uncertainties are taken into account;
• the provisions are discounted (where the effects of the time value of money is considered to be material) using a pre-tax rate that is reflective
of current market assessments of the time value of money and the risk specific to the liability;
• when discounting is used, the increase of the provision over time is recognised as interest expense;
• future events such as changes in law and technology, are taken into account where there is subjective audit evidence that they will occur; and
• gains from expected disposal of assets are not taken into account, even if the expected disposal is closely linked to the event giving rise to the provision.
Decommissioning
Liabilities for decommissioning costs are recognised as a result of the constructive obligation of past practice in the oil and gas industry, when it
is probable that an outflow of economic resources will be required to settle the liability and a reliable estimate can be made. The estimated costs,
based on current requirements, technology, and price levels, prevailing at the reporting date, are computed based on the latest assumptions as
to the scope and method of abandonment.
Provisions are measured at the present value of management’s best estimates of the expenditure required to settle the present obligation at the
end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance
cost. The corresponding amount is capitalised as part of the oil and gas properties and is amortised on a unit-of-production basis as part of the
depreciation, depletion and amortisation.
If the change in estimate results in an increase in the decommissioning provision and, therefore, an addition to the carrying value of the asset, the
Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment in accordance with IAS 36. If,
for mature fields, the revised oil and gas assets net of decommissioning provisions exceed the recoverable value, that portion of the increase is
charged directly to expense.
3.24 Contingencies
A contingent asset or contingent liability is a possible asset or obligation that arises from past events and whose existence will be confirmed by
the occurrence or non-occurrence of uncertain future events. The assessment of the existence of the contingencies will involve management
judgement regarding the outcome of future events.
Income taxation
Current income tax
3.25
i.
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based on the applicable income tax
rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in
the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions,
where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
ii.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period
and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
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Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Uncertainty over income tax treatments
iii.
The Group examines where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets
and liabilities, tax losses and credits and tax rates. It considers each uncertain tax treatment separately or together as a group, depending on
which approach better predicts the resolution of the uncertainty. The factors it considers include:
• how it prepares and supports the tax treatment; and
• the approach that it expects the tax authority to take during an examination.
If the Group concludes that it is probable that the tax authority will accept an uncertain tax treatment that has been taken or is expected to be
taken on a tax return, it determines the accounting for income taxes consistently with that tax treatment. If it concludes that it is not probable that
the treatment will be accepted, it reflects the effect of the uncertainty in its income tax accounting in the period in which that determination is
made (for example, by recognising an additional tax liability or applying a higher tax rate).
The Group measures the impact of the uncertainty using methods that best predicts the resolution of the uncertainty. The Group uses the most
likely method where there are two possible outcomes, and the expected value method when there are a range of possible outcomes.
The Group assumes that the tax authority with the right to examine and challenge tax treatments will examine those treatments and have full
knowledge of all related information. As a result, it does not consider detection risk in the recognition and measurement of uncertain tax treatments.
The Group applies consistent judgements and estimates on current and deferred taxes. Changes in tax laws or the presence of new tax information
by the tax authority is treated as a change in estimate in line with IAS 8 – Accounting policies, changes in accounting estimates and errors.
Judgements and estimates made to recognise and measure the effect of uncertain tax treatments are reassessed whenever circumstances
change or when there is new information that affects those judgements. New information might include actions by the tax authority, evidence
that the tax authority has taken a particular position in connection with a similar item, or the expiry of the tax authority’s right to examine a
particular tax treatment. The absence of any comment from the tax authority is unlikely to be, in isolation, a change in circumstances or new
information that would lead to a change in estimate.
3.26 Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other
assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
• fair values of the assets transferred
• liabilities incurred to the former owners of the acquired business
• equity interests issued by the Group
• fair value of any asset or liability resulting from a contingent consideration arrangement, and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related
costs are expensed as incurred.
The excess of the:
• consideration transferred,
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is
recognised directly in profit or loss as a bargain purchase.
3.27 Share based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense together with a corresponding increase in equity (share-based payment reserve), over the
period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised
for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in profit or loss for a period represents
the movement in cumulative expense recognised as at the beginning and end of that period.
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3. Summary of significant accounting policies continued
3.27 Share based payments continued
Service and non-market performance conditions are not taken into account when determining the grant date and for fair value of awards, but
the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately
vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an
associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award
and lead to an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been
met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or
non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the terms of an equity-settled
award are modified, the minimum expense recognised is the grant date fair value of the unmodified award provided the original terms of the
award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the total fair
value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss. The dilutive effect of
outstanding awards is reflected as additional share dilution in the computation of diluted earnings per share.
4. Significant accounting judgements estimates and assumptions
The preparation of the Group’s consolidated historical financial information requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the
disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
4.1
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant
effect on the amounts recognised in the consolidated historical financial information:
OMLs 4, 38 and 41
i.
OMLs 4, 38 and 41 are grouped together as a cash generating unit for the purpose of impairment testing. These three OMLs are grouped together
because they each cannot independently generate cash flows. They currently operate as a single block sharing resources for generating cash
flows. Crude oil and gas sold to third parties from these OMLs are invoiced when the Group has an unconditional right to receive payment.
Deferred tax asset
ii.
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through
future taxable profits is probable.
Lease liabilities
iii.
In 2018, the Group entered into a lease agreement for its new head office building. The lease contract contains an option to purchase and right
of first refusal upon an option of sales during the initial non-cancellable lease term of five (5) years.
In determining the lease liability/right-of-use assets, management considered all fact and circumstances that create an economic incentive
to exercise the purchase option. Potential future cash outflow of $45 million, which represents the purchase price, has not been included in the
lease liability because the Group is not reasonably certain that the purchase option will be exercised. This assessment will be reviewed if a significant
event or a significant change in circumstances occurs which affects the initial assessment and that is within the control of the management.
Foreign currency translation reserve
iv.
The Group has used the CBN rate to translate its Dollar currency to its Naira presentation currency. Management has determined that this rate is
available for immediate delivery. If the rate was 10% higher or lower, revenue in Naira would have increased/decreased by ₦40.4 billion (2021: ₦29 billion).
See Note 47 for the applicable translation rates.
Consolidation of Elcrest
v.
On acquisition of 100% shares of Eland Oil and Gas Plc, the Group acquired indirect holdings in Elcrest Exploration and Production (Nigeria)
Limited. Although the Group has an indirect holding of 45% in Elcrest, Elcrest has been consolidated as a subsidiary for the following basis:
• Eland Oil and Gas Plc has controlling power over Elcrest due to its representation on the board of Elcrest, and clauses contained in the Share
Charge agreement and loan agreement which gives Eland the right to control 100% of the voting rights of shareholders.
• Eland Oil and Gas Plc is exposed to variable returns from the activities of Elcrest through dividends and interests.
• Eland Oil and Gas Plc has the power to affect the amount of returns from Elcrest through its right to direct the activities of Elcrest and its
exposure to returns.
vi.
Revenue recognition
Performance obligations
The judgements applied in determining what constitutes a performance obligation will impact when control is likely to pass and therefore when
revenue is recognised i.e. over time or at a point in time. The Group has determined that only one performance obligation exists in oil contracts
which is the delivery of crude oil to specified ports. Revenue is therefore recognised at a point in time.
For gas contracts, the performance obligation is satisfied through the delivery of a series of distinct goods. Revenue is recognised over time in
this situation as gas customers simultaneously receive and consume the benefits provided by the Group’s performance. The Group has elected
to apply the ‘right to invoice’ practical expedient in determining revenue from its gas contracts. The right to invoice is a measure of progress that
allows the Group to recognise revenue based on amounts invoiced to the customer. Judgement has been applied in evaluating that the Group’s
right to consideration corresponds directly with the value transferred to the customer and is therefore eligible to apply this practical expedient.
154
Seplat Energy PlcAnnual Report and Accounts 2022 Significant financing component
The Group has entered into an advance payment contract with Mercuria for future crude oil to be delivered. The Group has considered whether
the contract contains a financing component and whether that financing component is significant to the contract, including both of the following;
a) The difference, if any, between the amount of promised consideration and cash selling price and;
b) The combined effect of both the following:
• The expected length of time between when the Group transfers the crude to Mercuria and when payment for the crude is received and;
• The prevailing interest rate in the relevant market.
The advance period is greater than 12 months. In addition, the interest expense accrued on the advance is based on a comparable market rate.
Interest expense has therefore been included as part of finance cost.
Transactions with Joint Operating Arrangement (JOA) partners
The treatment of underlift and overlift transactions is judgemental and requires a consideration of all the facts and circumstances including the
purpose of the arrangement and transaction. The transaction between the Group and its JOA partners involves sharing in the production of
crude oil, and for which the settlement of the transaction is non-monetary. The JOA partners have been assessed to be partners not customers.
Therefore, shortfalls or excesses below or above the Group’s share of production are recognised in other income/(expenses) – net.
Exploration and evaluation assets
vii.
The accounting for exploration and evaluation (‘E&E’) assets require management to make certain judgements and assumptions, including
whether exploratory wells have discovered economically recoverable quantities of reserves. Designations are sometimes revised as new
information becomes available. If an exploratory well encounters hydrocarbon, but further appraisal activity is required in order to conclude
whether the hydrocarbons are economically recoverable, the well costs remain capitalised as long as sufficient progress is being made in
assessing the economic and operating viability of the well. Criteria used in making this determination include evaluation of the reservoir
characteristics and hydrocarbon properties, expected additional development activities, commercial evaluation and regulatory matters.
The concept of ‘sufficient progress’ is an area of judgement, and it is possible to have exploratory costs remain capitalised for several years
while additional drilling is performed or the Group seeks government, regulatory or partner approval of development plans.
Segment reporting
viii.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Board of Directors has appointed a steering committee which assesses the financial performance and position of the Group and makes
strategic decisions. The steering committee, which has been identified as being the chief operating decision maker, consists of the chief financial
officer, the Vice President (Finance), the Director (New Energy) and the financial reporting manager. See further details in Note 6.
4.2 Estimates and assumptions
The key assumptions concerning the future and the other key source of estimation uncertainty at the reporting date that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Group
based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments may change due to market changes or circumstances arising that are beyond the
control of the Group. Such changes are reflected in the assumptions when they occur.
The following are some of the estimates and assumptions made:
Defined benefit plans
i.
The cost of the defined benefit retirement plan and the present value of the retirement obligation are determined using actuarial valuations.
An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination
of the discount rate, future salary increases, mortality rates and changes in inflation rates.
Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers
market yield on federal government bonds in currencies consistent with the currencies of the post-employment benefit obligation and
extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation.
The rates of mortality assumed for employees are the rates published in 67/70 ultimate tables, published jointly by the Institute and Faculty
of Actuaries in the UK.
Oil and gas reserves
ii.
Proved oil and gas reserves are used in the units of production calculation for depletion as well as the determination of the timing of well closure
for estimating decommissioning liabilities and impairment analysis. There are numerous uncertainties inherent in estimating oil and gas reserves.
Assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast
prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may ultimately
result in the reserves being restated.
Share-based payment reserve
iii.
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on
the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including
the expected life of the share award or appreciation right, volatility and dividend yield and making assumptions about them. The Group measures
the fair value of equity-settled transactions with employees at the grant date. The assumptions and models used for estimating fair value for
share-based payment transactions are disclosed in Note 27.4.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. Such estimates and assumptions are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
155
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
4. Significant accounting judgements estimates and assumptions continued
4.2 Estimates and assumptions continued
iv.
Provisions for environmental clean-up and remediation costs associated with the Group’s drilling operations are based on current constructions,
technology, price levels and expected plans for remediation. Actual costs and cash outflows can differ from estimates because of changes in
public expectations, prices, discovery and analysis of site conditions and changes in clean-up technology.
Provision for decommissioning obligations
Property, plant and equipment
v.
The Group assesses its property, plant and equipment, including exploration and evaluation assets, for possible impairment if there are events
or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least at every reporting date.
If there are low oil prices or natural gas prices during an extended period, the Group may need to recognise significant impairment charges.
The assessment for impairment entails comparing the carrying value of the cash-generating unit with its recoverable amount, that is, higher
of fair value less cost to dispose and value in use. Value in use is usually determined on the basis of discounted estimated future net cash flows.
Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future
commodity prices, the effects of inflation on operating expenses, discount rates, production profiles and the outlook for regional market
supply-and-demand conditions for crude oil and natural gas.
During the year, the Group carried out an impairment assessment on OML 4, 38 and 41, OML 56, OML 53, OML 40 and OML 17. The Group used
the higher of the fair value less cost to dispose and the value in use in determining the recoverable amount of the cash-generating unit. In determining
the value, the Group uses a forecast of the annual net cash flows over the life of proved plus probable reserves, production rates, oil and gas
prices, future costs (excluding (a) future restructurings to which the entity is not yet committed; or (b) improving or enhancing the asset’s performance)
and other relevant assumptions based on the year-end Competent Persons Report (CPR). The pre-tax future cash flows are adjusted for risks
specific to the forecast and discounted using a pre-tax discount rate which reflects both current market assessment of the time value of
money and risks specific to the asset.
Management considers whether a reasonable possible change in one of the main assumptions will cause an impairment and believes otherwise
(see Note 16.1).
Useful life of other property, plant and equipment
vi.
The Group recognises depreciation on other property, plant and equipment on a straight-line basis in order to write-off the cost of the asset
over its expected useful life. The economic life of an asset is determined based on existing wear and tear, economic and technical ageing, legal
and other limits on the use of the asset, and obsolescence. If some of these factors were to deteriorate materially, impairing the ability of the
asset to generate future cash flow, the Group may accelerate depreciation charges to reflect the remaining useful life of the asset or record
an impairment loss.
Income taxes
vii.
The Group is subject to income taxes by the Nigerian tax authority, which does not require significant judgement in terms of provision for income
taxes, but a certain level of judgement is required for recognition of deferred tax assets. Management is required to assess the ability of the
Group to generate future taxable economic earnings that will be used to recover all deferred tax assets. Assumptions about the generation of
future taxable profits depend on management’s estimates of future cash flows. The estimates are based on the future cash flow from
operations taking into consideration the oil and gas prices, volumes produced, operational and capital expenditure.
Impairment of financial assets
viii.
The loss allowances for financial assets are based on assumptions about risk of default, expected loss rates and maximum contractual period.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past
history, existing market conditions as well as forward-looking estimates at the end of each reporting period. Details of the key assumptions and
inputs used are disclosed in Note 5.1.3.
Intangible assets
ix.
The contract based intangible assets (licence) were acquired as part of a business combination. They are recognised at their fair value at the
date of acquisition and are subsequently amortised on a straight-line basis over their estimated useful lives which is also the economic life of the
asset. The fair value of contract based intangible assets is estimated using the multi period excess earnings method. This requires a forecast of
revenue and all cost projections throughout the useful life of the intangible assets. A contributory asset charge that reflects the return on assets
is also determined and applied to the revenue but subtracted from the operating cash flows to derive the pre-tax cash flow. The post-tax cash
flows are then obtained by deducting out the tax using the effective tax rate.
Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money.
The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted
average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on
investment by the Group’s investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service.
156
Seplat Energy PlcAnnual Report and Accounts 2022 5.
Financial risk management
Financial risk factors
5.1
The Group’s activities expose it to a variety of financial risks such as market risk (including foreign exchange risk, interest rate risk and commodity
price risk), credit risk and liquidity risk. The Group’s risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written
principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit
risk and investment of excess liquidity.
Risk
Exposure arising from
Measurement
Management
Market risk – foreign exchange
Market risk – interest rate
Market risk – commodity prices
Credit risk
Liquidity risk
Future commercial transactions
Recognised financial assets and
liabilities not denominated in US
dollars.
Interest bearing loans and
borrowings at variable rate
Future sales transactions
Cash and bank balances, trade
receivables and derivative financial
instruments.
Borrowings and other liabilities
Cash flow forecasting
Sensitivity analysis
Sensitivity analysis
Sensitivity analysis
Ageing analysis
Credit ratings
Match and settle foreign
denominated cash inflows
with foreign denominated cash
outflows.
Review refinancing opportunities
Oil price hedges
Diversification of bank deposits.
Rolling cash flow forecasts
Availability of committed credit
lines and borrowing facilities
5.1.1 Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as foreign exchange rates, interest rates and commodity prices.
Commodity price risk
i.
The Group is exposed to the risk of fluctuations on crude oil prices. The uncertainty around the rate at which oil prices increase or decline led
to the Group’s decision to enter into an option contract to insure the Group’s revenue against adverse oil price movements.
Crude Hedge
During the last quarter of 2022, the Group entered into an economic crude oil hedge contract with an average strike price of ₦22,357 ($50/bbl.)
for three million barrels at an average premium price of ₦478 ($1.1 /bbl.) was agreed at the contract dates.
These contracts, which will commence on 1 January 2023, are expected to reduce the volatility attributable to price fluctuations of oil. The Group
did not pre-pay any premium in the current year but the premium for three million barrels will be settled on a deferred basis. An unrealised fair
value gain of ₦64 million, $150,000 have been recognised in 2022. The termination date is 31 March and 30 June 2023 respectively. Hedging the
price volatility of forecast oil sales is in accordance with the risk management strategy of the Group.
The maturity of the crude oil hedge contracts the Group holds is shown in the table below:
Less than 6
months
6 to 9
months
10 to 12
months
Above 12
months
Total
Fair value
₦ million
Fair value
$’000
As at 31 December 2022
Crude oil hedges volume
(bbl.)
As at 31 December 2021
Crude oil hedges volume
(bbl.)
2,000,000
1,000,000
–
–
3,000,000
1,435
1,435
3,210
3,210
Less than 6
months
6 to 9
months
10 to 12
months
Above 12
months
Total
Fair value
₦ million
Fair value
$’000
2,000,000
1,000,000
-
-
3,000,000
1,543
1,543
3,745
3,745
The following table summarises the impact of the commodity options on the Group’s profit before tax due to a 10 % change in market inputs,
with all other variables held constant:
Increase/decrease in market inputs
+10%
-10%
Increase/decrease in market inputs
+10%
-10%
Effect on
profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
144
(144)
–
–
154
(154)
–
–
Effect on
profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
321
(321)
–
–
375
(375)
–
–
157
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5. Financial risk management continued
5.1.1 Market Risk continued
The Group may be exposed to business risks from fluctuations in the future prices of crude oil and gas. The following table summarises
the impact on the Group’s profit before tax of a 10% change in crude oil prices, with all other variables held constant:
Increase/decrease in crude oil prices
+10%
-10%
Increase/decrease in crude oil prices
+10%
-10%
Effect on
profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
35,619
(35,619)
-
-
24,765
(24,765)
–
–
Effect on
profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
83,934
(83,934)
-
-
61,838
(61,838)
–
–
The following table summarises the impact on the Group’s profit before tax of a 10% change in gas prices, with all other variables held constant:
Increase/decrease in gas price
+10%
-10%
Increase/decrease in gas price
+10%
-10%
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
Effect on
profit
before tax
2020
₦ million
Effect on other
components of
equity before tax
2020
₦ million
4,772
(4,772)
–
–
4,598
(4,598)
–
–
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
Effect on
profit
before tax
2020
$’000
Effect on other
components of
equity before tax
2020
$’000
11,245
(11,245)
–
–
11,481
(11,481)
–
–
Cash flow and fair value interest rate risk
ii.
The Group’s exposure to interest rate risk relates primarily to interest bearing loans and borrowings. The Group has both variable and fixed
interest rate borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and
short-term fixed deposit held at variable rates. Fixed rate borrowings only give rise to interest rate risk if measured at fair value. The Group’s
borrowings are not measured at fair value and are denominated in US dollars. The Group is exposed to cash flow interest rate risk on short-term
deposits to the extent that the significant increases and reductions in market interest rates would result in a decrease in the interest earned by
the Group.
The contractual re-pricing date of the interest-bearing loans and borrowings is between 3-6 months. The exposure of the Group’s variable
interest-bearing loans and borrowings at the end of the reporting period is shown below.
Corporate loan
2022
₦ million
8,176
2021
₦ million
48,828
2022
$’000
3,655
2021
$’000
118,535
The following table demonstrates the sensitivity of the Group’s profit before tax to changes in SOFR rate, with all other variables held constant.
Effect on
profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on
profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
73
(73)
-
-
164
(164)
–
–
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
49
(49)
–
–
119
(119)
–
–
Increase/decrease in interest rate
+2%
-2%
Increase/decrease in interest rate
+1%
-1%
158
Seplat Energy PlcAnnual Report and Accounts 2022 Financial risk management continued
5.
5.1.2 Foreign exchange risk
The Group has transactional currency exposures that arise from sales or purchases in currencies other than the respective functional currency.
The Group is exposed to exchange rate risk to the extent that balances and transactions are denominated in a currency other than the US dollar.
The Group holds most of its cash and bank balances in US dollar. However, the Group maintains deposits in Naira in order to fund ongoing
general and administrative activities and other expenditure incurred in this currency. Other monetary assets and liabilities which give rise to
foreign exchange risk include trade and other receivables, trade and other payables. The following table demonstrates the carrying value of
monetary assets and liabilities exposed to foreign exchange risks for Naira exposures at the reporting date:
Financial assets
Cash and bank balances
Trade and other receivables
Contract assets
Financial liabilities
Trade and other payables
Net exposure to foreign exchange risk
2022
₦ million
154,907
692
3,312
158,911
2021
₦ million
114,773
580
1,669
117,022
2022
$’000
2021
$’000
346,447
1,547
7,408
355,402
278,622
1,408
4,050
284,080
(182,961)
(24,050)
(102,823)
14,199
(409,189)
(53,787)
(249,612)
34,468
The following table demonstrates the carrying value of monetary assets and liabilities exposed to foreign exchange risks for Pound exposures
at the reporting date:
Financial assets
Cash and bank balances
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure to foreign exchange risk
2022
₦ million
1,342
4,157
5,499
-
5,499
2021
₦ million
900
35,863
36,763
-
36,763
2022
$’000
3,001
9,297
12,298
-
12,298
2021
$’000
2,186
87,062
89,248
-
89,248
Sensitivity to foreign exchange risk is based on the Group’s net exposure to foreign exchange risk due to Naira and pound denominated
balances. If the Naira strengthens or weakens by the following thresholds, the impact is as shown in the table below:
Increase/decrease in foreign exchange risk
+10%
-10%
Increase/decrease in foreign exchange risk
+5%
-5%
Effect on
profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on
profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
2,186
(2,672)
–
–
4,890
(5,796)
–
–
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
(677)
748
–
–
(1,641)
1,814
–
–
If the Pound strengthens or weakens by the following thresholds, the impact is as shown in the table below:
Increase/decrease in foreign exchange risk
+10%
-10%
Increase/decrease in foreign exchange risk
+5%
-5%
Effect on
profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on
profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
(500)
611
–
–
(1,118)
1,366
–
–
Effect on
profit
before tax
2021
₦ million
Effect on other
components of
equity before tax
2021
₦ million
Effect on
profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
(1,751)
1,935
–
–
(4,250)
4,697
–
–
159
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
Financial risk management continued
Credit risk
5.
5.1.3
Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Group. Credit risk arises
from cash and bank balances as well as credit exposures to customers (i.e., Mercuria, Shell western, Pillar, Azura, Geregu Power, Sapele Power
and Nigerian Gas Marketing Company (NGMC) receivables), and other parties (i.e., NNPC receivables, NEPL receivables and other receivables).
Risk management
a)
The Group is exposed to credit risk from its sale of crude oil to Mercuria and Shell western. There is a 30-day payment term after Bill of Lading
date in the off-take agreement with Mercuria (OMLs 4, 38 and 41) which expired in December 2022. The Group also has an off-take agreement
with Shell Western Supply and Trading Limited which expires in September 2023. The Group is exposed to further credit risk from outstanding
cash calls from Nigerian National Petroleum Corporation Exploration Limited (NEPL) and Nigerian National Petroleum Corporation (NNPC).
In addition, the Group is exposed to credit risk in relation to the sale of gas to its customers.
The credit risk on cash and bank balances is managed through the diversification of banks in which the balances are held. The risk is limited
because the majority of deposits are with banks that have an acceptable credit rating assigned by an international credit agency. The Group’s
maximum exposure to credit risk due to default of the counterparty is equal to the carrying value of its financial assets.
Impairment of financial assets
b)
The Group has six types of financial assets that are subject to IFRS 9’s expected credit loss model. Contract assets are also subject to the
expected credit loss model, even though they are not financial assets, as they have substantially the same credit risk characteristics as trade
receivables. The impairment of receivables is disclosed in the table below:
• Nigerian National Petroleum Corporation Exploration Limited (NEPL) receivables
• Trade receivables
• Contract assets
• Other receivables
• Cash and bank balances
Reconciliation of impairment on financial assets
As at 1 January 2022
Decrease in provision for Nigerian National Petroleum Corporation Exploration
Limited (NEPL) receivables
Decrease in provision for Nigerian National Petroleum Corporation (NNPC)
receivables
Increase in provision for trade receivables
Increase in provision for cash and bank balances: short term fixed deposits
Increase in receivables from joint venture (ANOH)
Increase in provision of other receivables – Crestar
Increase in contract asset
Impairment charge to the profit or loss
Exchange difference
As at 31 December 2022
As at 1 January 2021
Increase in provision for Nigerian National Petroleum Corporation Exploration
Limited (NEPL) receivables
Increase in provision for Nigerian National Petroleum Corporation (NNPC)
receivables
Increase in provision for trade receivables
Increase in provision for cash and bank balances: short term fixed deposits
Increase in provision of other receivables
Increase in contract asset
Impairment charge to the profit or loss
Exchange difference
As at 31 December 2021
Notes
23.2
23.3
23.1
26
23.5
23.4
24
Notes
23.2
23.3
23.1
26
23.4
24
₦’million
30,908
$’000
75,032
(3,700)
(8,720)
(325)
1,383
–
126
5,076
170
2,730
(766)
3,259
–
296
11,961
402
6,432
33,638
81,464
₦’million
17,689
$’000
52,471
1,848
4,614
108
7,079
–
–
–
9,035
4,184
30,908
270
17,676
–
–
1
22,561
–
75,032
The parameters used to determine impairment for NEPL receivables, NNPC receivables, other receivables and short-term fixed deposits are
shown below. For all receivables presented in the table, the respective 12-month Probability of Default (PD) equate the lifetime PD for Stage 2
as the maximum contractual period over which the Group is exposed to credit risk arising from the receivables is less than 12 months.
160
Seplat Energy PlcAnnual Report and Accounts 2022 Probability of Default (PD)
Loss Given Default (LGD)
Nigerian National Petroleum
Corporation Exploration
Limited (NEPL) receivables
Nigerian National Petroleum
Corporation (NNPC)
receivables
Other
receivables
The 12-month sovereign
cumulative PD for base
case, downturn and upturn
respectively is 4.11%, 4.32%,
and 3.90%, for Stage 1 and
Stage 2. The PD for Stage 3
is 100%.
The 12-month sovereign
cumulative PD for base
case, downturn and upturn
respectively is 4.11%, 4.32%,
and 3.90%, for Stage 1 and
stage 2. The PD for Stage 3
is 100%.
The 12-month LGD
and lifetime LGD were
determined using Moody’s
recovery rate and mapped
based on the priority
rating of the receivable, for
emerging economies.
The 12-month LGD
and lifetime LGD were
determined using Moody’s
recovery rate and mapped
based on the priority
rating of the receivable, for
emerging economies.
The PD for Stage 3
is 100%.
The 12-month LGD
and lifetime LGD were
determined using
Management’s estimate of
expected cash recoveries.
Short term fixed deposits
The PD for base case,
downturn and upturn is
4.11%, 4.32% and 3.90%
respectively for Stage 1 and
stage 2. The PD for Stage 3
is 100%.
The 12-month LGD
and lifetime LGD were
determined using the
average recovery rate for
Moody’s senior unsecured
corporate bonds for
emerging economies.
Exposure at Default (EAD)
The EAD is the maximum
exposure of the receivable
to credit risk.
The EAD is the maximum
exposure of the receivable
to credit risk.
The EAD is the maximum
exposure of the receivable
to credit risk.
The EAD is the maximum
exposure of the short-term
fixed deposits to credit risk.
Macroeconomic indicators The historical inflation and
Brent oil price were used.
The historical inflation and
Brent oil price were used.
Probability weightings
20%, 50%, and 30%, was
used as the weights for the
base, upturn and downturn
ECL modelling scenarios
respectively.
20%, 50%, and 30%, was
used as the weights for the
base, upturn and downturn
ECL modelling scenarios
respectively.
The historical gross
domestic product (GDP)
growth rate in Nigeria and
crude oil price were used.
The historical gross
domestic product (GDP)
growth rate in Nigeria and
crude oil price were used.
20%, 50%, and 30%, of
historical GDP growth rate
observations fall within
acceptable bounds,
periods of boom and
periods of downturn
respectively.
20%, 50% and 30%, of
historical GDP growth rate
observations fall within
acceptable bounds,
periods of boom and
periods of downturn
respectively.
The Group considers both quantitative and qualitative indicators in classifying its receivables into the relevant stages for impairment calculation
as shown below:
• Stage 1: This stage includes financial assets that are less than 30 days past due (Performing).
• Stage 2: This stage includes financial assets that have been assessed to have experienced a significant increase in credit risk using the days
past due criteria (i.e. the outstanding receivables amounts are more than 30 days past due but less than 90 days past due) and other qualitative
indicators such as the increase in political risk concerns or other macroeconomic factors and the risk of legal action, sanction or other
regulatory penalties that may impair future financial performance.
• Stage 3: This stage includes financial assets that have been assessed as being in default (i.e., receivables that are more than 90 days past due)
or that have a clear indication that the imposition of financial or legal penalties and/or sanctions will make the full recovery of indebtedness
highly improbable.
Nigerian National Petroleum Corporation Exploration Limited (NEPL) receivables
i.
NEPL receivables represent the outstanding cash calls due to Seplat from its joint venture partner, Nigerian Petroleum Development Company.
The Group applies the IFRS 9 general model for measuring expected credit losses (ECL). This requires a three-stage approach in recognising
the expected loss allowance for NEPL receivables.
The ECL recognised for the period is a probability-weighted estimate of credit losses discounted at the effective interest rate of the financial
asset. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Group in
accordance with the contract and the cash flows that the Group expects to receive).
The ECL was calculated based on actual credit loss experience from 2014, which is the date the Group initially became a party to the contract.
The following analysis provides further detail about the calculation of ECLs related to these assets. The Group considers the model and the
assumptions used in calculating these ECLs as key sources of estimation uncertainty.
161
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
Financial risk management continued
5.
5.1.3 Credit risk continued
There was no write-off during the year (2021: Nil). (See details in Note 23.2).
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
41,853
(1,467)
40,386
–
–
–
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
39,514
(4,943)
34,571
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
93,602
(3,280)
90,322
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
95,924
(12,000)
83,924
–
–
–
Total
₦’million
41,853
(1,467)
40,386
Total
₦’million
39,514
(4,943)
34,571
Total
$’000
93,602
(3,280)
90,322
Total
$’000
95,924
(12,000)
83,924
Nigerian National Petroleum Corporation (NNPC) receivables
ii.
NNPC receivables represent the outstanding cash calls due to Seplat from its Joint Operating Arrangement (JOA) partner, Nigerian National
Petroleum Corporation. The Group applies the general model for measuring expected credit losses (ECL) which uses a three-stage approach
in recognising the expected loss allowance for NNPC receivables.
The ECL was calculated based on actual credit loss experience from 2016, which is the date the Group initially became a party to the contract.
The following analysis provides further detail about the calculation of ECLs related to these assets. The Group considers the model and the
assumptions used in calculating these ECLs as key sources of estimation uncertainty. The tables below show the expected credit losses for
the year ended 31 December 2022 and 31 December 2021.
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
15,791
(380)
15,411
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
35,316
(849)
34,467
–
–
–
Total
₦’million
15,791
(380)
15,411
Total
$’000
35,316
(849)
34,467
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
162
Seplat Energy PlcAnnual Report and Accounts 2022 31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
8,269
(80)
8,189
2,550
(585)
1,965
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
20,075
(195)
19,880
6,190
(1,420)
4,770
Total
₦’million
10,819
(665)
10,154
Total
$’000
26,265
(1,615)
24,650
Trade receivables (Gerugu Power, Sapele Power, Nigerian Gas Marketing Company, Pan ocean, Oghareki and Summit)
iii.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
The impairment of trade receivables (Gerugu Power, Sapele Power, NGMC, Pan Ocean, Oghareki and Summit) was estimated by applying the
provision matrix. The expected loss rate was calculated as the percentage of the receivable that is deemed uncollectible during a particular
period. The expected loss rates as at 31 December 2022 and 31 December 2021 are as follows:
31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
Current
₦’million
1-30 days
₦’million
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
112
12%
(14)
98
Current
₦’million
–
2%
–
–
1,030
12%
(128)
903
1-30 days
₦’million
20,206
2%
(326)
19,880
176
13%
(23)
153
488
29%
(143)
345
488
29%
(143)
345
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
386
39%
(167)
219
2,775
39%
(1,069)
1,706
2,264
70%
(1,578)
686
Current
$’000
1-30 days
$’000
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
250
12%
(31)
219
Current
$’000
–
2%
–
–
2,307
12%
(286)
2,021
1-30 days
$’000
49,052
2%
(792)
48,260
395
13%
(51)
344
1,092
29%
(319)
773
1,092
29%
(319)
773
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
936
39%
(405)
531
6,737
39%
(2,595)
4,142
5,496
70%
(3,831)
1,665
Above
120 days
₦’million
23,430
87%
(9,980)
13,450
Above
120 days
₦’million
8,665
70%
(5,244)
3,421
Above
120 days
$’000
52,400
87%
(22,318)
30,081
Above
120 days
$’000
21,035
70%
(12,729)
8,306
Total
₦’million
25,724
(10,430)
15,294
Total
₦’million
34,296
(8,384)
25,912
Total
$’000
57,536
(23,325)
34,211
Total
$’000
83,256
(20,352)
62,904
Trade receivables (Mercuria)
iv.
The impairment of trade receivables (Mercuria) was estimated by applying the provision matrix. The expected loss rate was calculated as the
percentage of the receivable that is deemed uncollectible during a particular period. The expected loss rates as at 31 December 2022 was nil.
163
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5.
Financial risk management continued
Trade receivables (Pillar)
5.1.3 Credit risk continued
v.
The impairment of trade receivables (Pillar) was estimated by applying the provision matrix. The expected loss rate was calculated as the
percentage of the receivable that is deemed uncollectible during a particular period. The expected loss rates as at 31 December 2021 and
31 December 2020 are as follows:
31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
Current
₦’million
1-30 days
₦’million
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
435
5%
(23)
412
3,912
5%
(202)
3,710
–
5%
–
–
34
6%
(2)
32
34
6%
(2)
32
Current
₦’million
1-30 days
₦’million
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
3%
–
–
–
4%
–
–
11
4%
–
11
–
17%
–
–
–
100%
–
–
Current
$’000
1-30 days
$’000
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
972
5%
(51)
921
8,750
5%
(453)
8,297
–
5%
–
–
76
6%
(4)
71
76
6%
(4)
71
Current
$’000
1-30 days
$’000
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
–
3%
–
–
–
4%
–
–
26
4%
(1)
25
–
17%
–
–
–
100%
–
–
Above
120 days
₦’million
323
100%
(323)
–
Above
120 days
₦’million
391
100%
(391)
–
Above
120 days
$’000
722
100%
(722)
–
Above
120 days
$’000
948
100%
(948)
–
Total
₦’million
4,738
(552)
4,186
Total
₦’million
402
(391)
11
Total
$’000
10,595
(1,235)
9,361
Total
$’000
974
(949)
25
Contract assets
vi.
The expected credit losses on contract assets was estimated by applying the provision matrix. The expected loss rate was calculated as the
percentage of the receivable that is deemed during a particular period. The expected loss rates as at 31 December 2022 and 2021 is shown below:
Current
₦’million
3,493
0.05%
(180)
3,313
Current
$’000
1,679
0.03%
–
1,679
1-30 days
₦’million
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
–
0.05%
–
–
–
0.1%
–
–
–
0.2%
–
–
–
0.2%
–
–
1-30 days
$’000
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
–
0.05%
–
–
–
0.1%
–
–
–
0.2%
–
–
–
0.2%
–
–
Above
120 days
₦’million
–
5.29%
–
–
Above
120 days
$’000
–
5.29%
–
–
Total
₦’million
3,493
(180)
3,313
Total
$’000
1,679
–
1,679
31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 24)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
164
Seplat Energy PlcAnnual Report and Accounts 2022 31 December 2022
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 24)
Total
31 December 2021
Gross carrying amount
Expected loss rate
Lifetime ECL (Note 23.1)
Total
Current
₦’million
7,811
0.05%
(403)
7,408
Current
$’000
4,077
0.03%
(1)
4,076
1-30 days
₦’million
31-60 days
₦’million
61-90 days
₦’million
91-120 days
₦’million
–
0.05%
–
–
–
0.1%
–
–
–
0.2%
–
–
–
0.2%
–
–
1-30 days
$’000
31-60 days
$’000n
61-90 days
$’000
91-120 days
$’000
–
0.05%
–
–
–
0.1%
–
–
–
0.2%
–
–
–
0.2%
–
–
Above
120 days
₦’million
–
5.29%
–
–
Above
120 days
$’000
–
5.29%
–
–
vii. Other receivables
Other receivables are amounts outside the usual operating activities of the Group. Included in other receivables is a receivable amount
on an investment that is no longer being pursued. The Group applied the general approach in estimating the expected credit loss.
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Exchange difference
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Exchange difference
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
–
–
–
–
–
47,364
(18,668)
(6,944)
21,752
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
–
–
–
–
–
–
–
–
23,473
(15,303)
(3,365)
4,805
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
–
–
–
105,924
(57,280)
48,644
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
–
–
–
53,208
(45,319)
7,889
Total
₦’million
7,811
(403)
7,408
Total
$’000
4,077
–
4,076
Total
₦’million
47,364
(18,668)
(6,944)
21,752
Total
₦’million
23,473
(15,303)
(3,365)
4,805
Total
$’000
105,924
(57,280)
48,644
Total
$’000
53,208
(45,319)
7,889
165
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5.
Financial risk management continued
5.1.3 Credit risk continued
viii. Cash and cash equivalent
Short-term fixed deposits
The Group applies the IFRS 9 general model for measuring expected credit losses (ECL) which uses a three-stage approach in recognising
the expected loss allowance for cash and cash equivalents. The ECL was calculated as the probability weighted estimate of the credit losses
expected to occur over the contractual period of the facility after considering macroeconomic indicators.
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
22,906
(110)
22,796
–
–
–
–
–
–
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
29,182
(101)
29,081
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
51,229
(246)
50,983
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
70,842
(246)
70,596
–
–
–
–
–
–
Total
₦’million
22,906
(110)
22,796
Total
₦’million
29,182
(101)
29,081
Total
$’000
51,229
(246)
50,983
Total
$’000
70,842
(246)
70,596
Other cash and bank balances
The group assessed the other cash and bank balances to determine their expected credit losses. Based on this assessment, they identified
the expected credit loss to be nil as at 31 December 2022 (2021: nil). The assets are assessed to be in Stage 1.
Credit quality of cash and bank balances (including restricted cash)
The credit quality of the Group’s cash and bank balances are assessed on the basis of external credit ratings (Fitch national long-term ratings)
as shown below cash and bank balances are all in Stage 1 based on the ECL assessment:
Non-rated
BBB-
A
A+
AA-
AA+
AAA-
AAA
Allowance for impairment recognised during the year (Note 26)
Net cash and cash bank balances
2022
₦ million
–
13,543
415
121,513
24,513
–
–
31,618
191,602
(110)
191,492
2021
₦ million
–
24,903
134
94,973
10,274
–
10,087
140,371
(101)
140,270
2022
$‘000
–
30,289
926
271,774
54,824
–
–
70,713
428,526
(246)
428,280
2021
$‘000
–
60,455
326
230,557
24,941
–
24,486
340,765
(246)
340,519
Maximum exposure to credit risk – financial instruments subject to impairment
c)
The Group estimated the expected credit loss on NEPL receivables, NNPC receivables and short-term fixed deposits by applying the general
model. The gross carrying amount of financial assets represents the Group’s maximum exposure to credit risks on these assets.
All financial assets impaired using the General model (NEPL, NNPC and short-term fixed deposits) are graded under the standard monitoring
credit grade (rated B- under Standard & Poor’s unmodified ratings) and are classified under Stage 1, except for the other receivables which are
graded under the investment grade (rated AA under Standard & Poor’s unmodified ratings) and classified in Stage 2 and Stage 3.
166
Seplat Energy PlcAnnual Report and Accounts 2022 Roll forward movement in loss allowance
d)
The loss allowance recognised in the period is impacted by a variety of factors, as described below:
• Transfers between Stage 1 and Stage 2 or Stage 3 due to financial instruments experiencing significant increases (or decreases) of credit risk
or becoming credit impaired in the period, and the consequent “step up” (or “step down”) between 12-month and lifetime ECL;
• Additional allowances for new financial instruments recognised during the period, as well as releases for financial instruments derecognised
in the period;
• Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing of inputs to models;
• Discount unwind within ECL due to passage of time, as ECL is measured on a present value basis;
• Foreign exchange retranslation for assets dominated in foreign currencies and other movements; and
• Financial assets derecognised during the period and write-off of receivables and allowances related to assets.
The following tables explain the changes in the loss allowance between the beginning and end of the annual period due to these factors:
Nigerian National Petroleum Corporation Exploration (NEPL) receivables
Nigerian Petroleum Development Company (NPDC) receivables
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Exchange difference
Loss allowance as at 31 December 2022
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Loss allowance as at 31 December 2022
Nigerian National Petroleum Corporation (NNPC) receivables
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Exchange difference
Loss allowance as at 31 December 2022
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Loss allowance as at 31 December 2022
Stage 1
12-month ECL
₦ million
–
(3,700)
–
(3,700)
3,700
–
Stage 1
12-month ECL
$’000
–
(8,720)
–
(8,720)
(8,720)
Stage 1
12-month ECL
₦ million
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
–
–
–
–
–
Stage 2
Lifetime
ECL
₦ million
4,943
–
–
–
(3,476)
1,467
Stage 2
Lifetime
ECL
$’000
12,000
–
–
–
12,000
Stage 2
Lifetime
ECL
₦ million
80
(325)
–
(325)
625
380
Stage 2
Lifetime
ECL
$’000
195
(766)
–
(766)
(571)
Stage 3
Lifetime
ECL
₦ million
Purchased
credit-impaired
₦ million
–
–
–
–
–
–
–
–
–
–
–
–
Stage 3
Lifetime
ECL
$’000
Purchased
credit-impaired
$’000
–
–
–
–
–
–
–
–
–
–
Stage 3
Lifetime
ECL
₦ million
Purchased
credit-impaired
₦ million
585
–
–
–
(585)
–
Stage 3
Lifetime
ECL
$’000
1,420
–
–
–
–
–
–
–
–
–
–
Purchased
credit-impaired
$’000
–
–
–
–
–
Total
₦ million
4,943
(3,700)
–
(3,700)
224
1,467
Total
$’000
12,000
(8,720)
–
(8,720)
3,280
Total
₦ million
665
(325)
–
(325)
40
380
Total
$’000
1,615
(766)
–
(766)
849
167
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5.
Financial risk management continued
5.1.3 Credit risk continued
Other receivables
Loss allowance as at 1 January 2022
Movements with profit or loss impact
Changes in PDs/LGDs/EADs
Transfer to Stage 3
Total net profit or loss charge during the period
Other movements with no profit or loss impact
Exchange difference
Loss allowance as at 31 December 2022
Loss allowance as at 1 January 2022
Movements with profit or loss impact
Changes in PDs/LGDs/EADs
Transfer to Stage 3
Total net profit or loss charge during the period
Loss allowance as at 31 December 2022
Short–term fixed deposit
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Other movements with no profit or loss impact
Exchange difference
Loss allowance as at 31 December 2022
Loss allowance as at 1 January 2022
Movements with profit or loss impact
New financial assets originated or purchased
Total net profit or loss charge during the period
Other movements with no profit or loss impact
Exchange difference
Loss allowance as at 31 December 2022
Stage 1
12-month ECL
₦ million
Stage 2
Lifetime
ECL
₦ million
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime
ECL
$’000
–
–
–
–
–
–
–
–
–
–
–
–
Stage 3
Lifetime
ECL
₦ million
18,668
5,076
–
–
5,076
6,944
25,612
Stage 3
Lifetime
ECL
$’000
45,319
11,961
–
–
11,961
57,280
Purchased
credit-impaired
₦ million
–
–
–
–
–
–
–
Purchased
credit-impaired
$’000
–
–
–
–
–
–
Stage 1
12-month ECL
₦ million
Stage 2
Lifetime
ECL
₦ million
Stage 3
Lifetime
ECL
₦ million
Purchased
credit-impaired
₦ million
101
–
–
101
9
110
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime
ECL
$’000
Stage 3
Lifetime
ECL
$’000
Purchased
credit-impaired
$’000
246
–
–
246
–
246
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
₦ million
18,668
5,076
–
–
5,076
6,944
25,612
Total
$’000
45,319
11,961
–
–
11,961
57,280
Total
₦ million
101
–
–
101
9
110
Total
$’000
246
–
–
246
–
246
Estimation uncertainty in measuring impairment loss
e)
The table below shows information on the sensitivity of the carrying amounts of the Group’s financial assets to the methods, assumptions
and estimates used in calculating impairment losses on those financial assets at the end of the reporting period. These methods, assumptions
and estimates have a significant risk of causing material adjustments to the carrying amounts of the Group’s financial assets.
Expected cashflows recoverable
i.
The table below demonstrates the sensitivity of the Group’s profit before tax to a 20% change in the expected cashflows from financial assets,
with all other variables held constant:
Increase/decrease in estimated cash flows
+20%
-20%
168
Effect on profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
334
(334)
–
–
747
(747)
–
–
Seplat Energy PlcAnnual Report and Accounts 2022 Increase/decrease in estimated cash flows
+20%
-20%
Effect on profit
before tax
2021
₦ million
Effect on other
components of
equity
before tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
148
(148)
–
–
371
(371)
–
–
Significant unobservable inputs
ii.
The table below demonstrates the sensitivity of the Group’s profit before tax to movements in the loss given default (LGD) for financial assets,
with all other variables held constant:
Increase/decrease in Loss Given Default
+10%
-10%
Increase/decrease in Loss Given Default
+10%
-10%
Effect on profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
(383)
383
–
–
(902)
902
–
–
Effect on profit
before tax
2021
₦ million
Effect on other
components of
equity
before tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
(717)
717
–
–
(1,800)
1,800
–
–
The table below demonstrates the sensitivity of the Group’s profit before tax to movements in probabilities of default, with all other variables held
constant:
Increase/decrease in probability of default
+10%
-10%
Increase/decrease in probability of default
+10%
-10%
Effect on profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
(361)
361
–
–
(852)
852
–
–
Effect on profit
before tax
2021
₦ million
Effect on other
components of
equity
before tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
(679)
679
–
–
(1,704)
1,704
–
–
The table below demonstrates the sensitivity of the Group’s profit before tax to movements in the forward-looking macroeconomic indicators,
with all other variables held constant:
Increase/decrease in forward looking macroeconomic indicators
+10%
-10%
Effect on profit
before tax
2022
₦ million
Effect on other
components of
equity before tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
(107)
107
–
–
(252)
252
–
–
Effect on profit
before tax
2021
₦ million
Effect on other
components of
equity
before tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
Increase/decrease in forward looking macroeconomic indicators
+10%
-10%
(19)
19
–
–
(48)
48
–
–
169
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5.
Financial risk management continued
5.1.4 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by
ensuring that sufficient funds are available to meet its commitments as they fall due.
The Group uses both long-term and short-term cash flow projections to monitor funding requirements for activities and to ensure there are
sufficient cash resources to meet operational needs. Cash flow projections take into consideration the Group’s debt financing plans and covenant
compliance. Surplus cash held is transferred to the treasury department which invests in interest bearing current accounts and time deposits.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed maturity periods.
The table has been drawn based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Group
can be required to pay.
Effective interest
rate
%
Less than
1 year
₦ million
1 – 2
year
₦ million
2 – 3
years
₦ million
3 – 5
years
₦ million
Total
₦ million
31 December 2022
Non-derivatives
Fixed interest rate borrowings
Senior notes
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd
The Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
First City Monument Bank Limited
Shell Western Supply and Trading Limited
Total variable interest borrowings
Other non-derivatives
Trade and other payables**
Lease liability
Total
31 December 2021
Non-derivatives
Fixed interest rate borrowings
Senior notes
Variable interest rate borrowings
Citibank, N.A., London Branch
Nedbank Limited London
Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
RMB International (Mauritius) Limited
Total variable interest borrowings
Other non-derivatives
Trade and other payables**
Lease liability
Total
7.75%
11,575
22,837
22,900
324,921
382,233
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
10.5% + SOFR
5,446
5,560
3,177
1,418
1,206
16,808
205,622
1,800
207,422
235,805
Effective interest
rate
%
Less than
1 year
₦ million
7,523
7,679
4,389
1,959
1,134
22,684
–
(30)
(30)
45,490
1 – 2
year
₦ million
6,777
6,918
3,953
1,765
1,058
20,471
–
30
30
43,401
1,823
1,860
1,063
475
4,082
9,303
–
–
–
334,224
2 – 3
years
₦ million
3 – 5
years
₦ million
21,569
22,017
12,582
5,617
7,481
69,266
205,622
1,800
207,422
658,920
Total
₦ million
7.75%
20,751
20,751
20,751
298,881
361,134
8.00% + USD
LIBOR
8.00% + USD
LIBOR
8.00% + USD
LIBOR
8.00% + USD
LIBOR
10.5% + USD
LIBOR
1,298
1,324
757
338
486
4,203
151,204
1,950
153,154
178,108
4,390
4,481
2,561
1,143
924
13,499
–
66
66
34,316
6,456
6,590
3,766
1,681
876
19,369
–
28
28
40,148
7,650
7,810
4,463
1,992
4,422
26,337
–
–
–
325,218
19,794
20,205
11,547
5,154
6,708
63,408
151,204
2,044
153,248
577,790
170
Seplat Energy PlcAnnual Report and Accounts 2022 31 December 2022
Non-derivatives
Fixed interest rate borrowings
Senior notes
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd
The Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
First City Monument Bank Limited
Shell Western Supply and Trading Limited
Total variable interest borrowings
Other non-derivatives
Trade and other payables**
Lease liability
Total
31 December 2021
Non-derivatives
Fixed interest rate borrowings
Senior notes
Variable interest rate borrowings
Citibank, N.A., London Branch
Nedbank Limited London
Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
RMB International (Mauritius) Limited
Total variable interest borrowings
Other non-derivatives
Trade and other payables**
Lease liability
Total
Effective interest
rate
%
Less than
1 year
₦ million
1 – 2
year
₦ million
2 – 3
years
₦ million
3 – 5
years
₦ million
Total
₦ million
7.75%
25,887
51,075
51,215
726,682
854,859
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
10.5% + SOFR
12,181
12,434
7,105
3,172
2,695
37,587
459,869
4,025
463,894
527,368
Effective interest
rate
%
Less than
1 year
₦ million
16,825
17,176
9,815
4,382
2,536
50,734
–
(67)
(67)
101,742
1 – 2
year
₦ million
15,156
15,472
8,841
3,947
2,368
45,784
–
67
67
97,066
4,076
4,161
2,378
1,062
9,130
20,807
–
–
–
747,489
48,238
49,243
28,139
12,563
16,729
154,912
459,869
4,025
463,894
1,473,665
2 – 3
years
₦ million
3 – 5
years
₦ million
Total
₦ million
7.75%
50,375
50,375
50,375
725,563
876,688
8.00% + USD
LIBOR
8.00% + USD
LIBOR
8.00% + USD
LIBOR
8.00% + USD
LIBOR
10.5% + USD
LIBOR
3,150
10,656
15,672
18,572
48,050
3,215
10,878
15,998
18,959
49,050
1,837
820
1,179
10,201
367,058
4,733
371,791
432,367
6,216
9,142
10,834
28,029
2,775
4,081
4,836
12,512
2,243
32,768
–
160
160
83,303
2,126
47,019
–
67
67
97,461
10,734
63,935
16,282
153,923
–
–
–
789,498
367,058
4,960
372,018
1,402,629
171
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
5.
Financial risk management continued
5.1.5
Set out below is a comparison by category of carrying amounts and fair value of all financial instruments:
Fair value measurements
Financial assets at amortised cost
Trade and other receivables*
Contract assets
Cash and cash equivalents
Financial liabilities at amortised cost
Interest bearing loans and borrowings
Trade and other payables
Financial liabilities at fair value
Derivative financial instruments (Note 25)
Financial assets at amortised cost
Trade and other receivables*
Contract assets
Cash and cash equivalents
Financial liabilities at amortised cost
Interest bearing loans and borrowings
Trade and other payables
Financial liabilities at fair value
Derivative financial instruments (Note 25)
Carrying amount
Fair value
2022
₦ million
102,085
3,313
180,786
286,184
2021
₦ million
78,869
1,679
133,667
214,215
344,381
178,128
522,509
315,791
136,619
452,410
(1,435)
(1,435)
(1,543)
(1,543)
Carrying amount
2022
$’000
2021
$’000
2022
₦ million
102,085
3,313
180,786
286,184
331,384
178,128
509,512
(1,435)
(1,435)
Fair value
2022
$’000
228,312
7,408
404,336
640,056
191,463
4,076
324,490
520,029
228,312
7,408
404,336
640,056
2021
₦ million
78,869
1,679
133,667
214,215
307,447
136,619
444,066
(1,543)
(1,543)
2021
$’000
191,463
4,076
324,490
520,029
770,203
398,380
1,168,583
766,614
331,655
1,098,269
741,137
398,380
1,139,517
746,358
331,655
1,078,013
(3,210)
(3,210)
(3,745)
(3,745)
(3,210)
(3,210)
(3,745)
(3,745)
*Trade and other receivables exclude Geregu Power, Sapele Power and NGMC VAT receivables, cash advances and advance payments.
In determining the fair value of the interest-bearing loans and borrowings, non-performance risks of the Group as at year-end were assessed to be insignificant.
**Trade and other payables (excluding non-financial liabilities such as provisions, taxes, pension and other non-contractual payables), trade and other receivables (excluding prepayments),
contract assets and cash and bank balances are financial instruments whose carrying amounts as per the financial statements approximate their fair values. This is mainly due to their
short-term nature.
Fair Value Hierarchy
5.1.6
As at the reporting period, the Group had classified its financial instruments into the three levels prescribed under the accounting standards.
There were no transfers of financial instruments between fair value hierarchy levels during the year.
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The fair value of the financial instruments is included at the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Recurring fair value measurements
Financial liability
31 Dec 2022
Financial liabilities:
Derivative financial instruments
31 Dec 2021
Financial liabilities:
Derivative financial instruments
172
Level 1
₦ million
Level 2
₦ million
Level 3
₦ million
–
1,435
–
Level 1
₦ million
Level 2
₦ million
Level 3
₦ million
Level 1
$’000
–
Level 1
$’000
Level 2
$’000
3,210
Level 2
$’000
Level 3
$’000
–
Level 3
$’000
–
1,543
–
–
3,735
–
Seplat Energy PlcAnnual Report and Accounts 2022
The fair value of the Group’s derivative financial instruments has been determined using a proprietary pricing model that uses marked to market
valuation. The valuation represents the mid-market value and the actual close-out costs of trades involved. The market inputs to the model are
derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models.
The derivative financial instruments are in Level 2.
31 Dec 2022
Financial liabilities:
Interest bearing loans and borrowings
31 Dec 2021
Financial liabilities:
Interest bearing loans and borrowings
Level 1
₦ million
Level 2
₦ million
Level 3
₦ million
Level 1
$’000
Level 2
$’000
–
331,384
–
–
741,137
Level 1
₦ million
Level 2
₦ million
Level 3
₦ million
Level 1
$’000
Level 2
$’000
Level 3
$’000
–
Level 3
$’000
–
307,447
–
–
746,358
–
The fair value of the Group’s interest-bearing loans and borrowings is determined by using discounted cash flow models that use market interest
rates as at the end of the period. The interest-bearing loans and borrowings are in Level 2.
The valuation process
The finance and planning team of the Group performs the valuations of financial and non-financial assets required for financial reporting
purposes, including level 3 fair values. This team reports directly to the General Manager (GM) Commercial who reports to the Chief Financial
Officer (CFO) and the Audit Committee (AC). Discussions of valuation processes and results are held between the GM and the valuation team
at least once every quarter, in line with the Group’s quarterly reporting periods.
5.1.7 Capital management
Risk management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders, to maintain optimal capital structure and reduce cost of capital. Consistent with others in the
industry, the Group monitors capital on the basis of the following gearing ratio, net debt divided by total capital. Net debt is calculated as total
borrowings less cash and bank balances.
Interest bearing loans and borrowings
Lease liabilities
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Net debt (net debt/total capital) ratio
2022
₦ million
344,381
1,800
(180,786)
165,395
786,894
952,289
17%
2021
₦ million
315,791
1,471
(133,667)
183,595
703,364
886,959
21%
2022
$’000
770,203
4,025
(404,336)
369,892
1,759,883
2,129,775
17%
2021
$’000
766,614
3,571
(324,490)
445,695
1,707,486
2,153,181
21%
During the year, the Group’s strategy which was unchanged from 2021, was to maintain a net debt gearing ratio of 20% to 40%.
Capital includes share capital, share premiums, capital contribution and all other equity reserves.
As the Group continuously reviews its funding and maturity profile, it continues to monitor the market in ensuring that its well positioned
for any refinancing and or buy back opportunities for the current debt facilities.
Loan covenants
Under the terms of the major borrowing facilities, the Group is required to comply with the following financial covenants:
• Total net financial indebtedness to annualised EBITDA is not to be greater than 3:1.
• The sources of funds exceed the relevant expenditures in each semi-annual period within the 18 months shown in the Group’s liquidity plan.
• The minimum production levels stipulated for each 6-month period must be achieved.
• The Cash Adjusted Debt Service Cover Ratio should equal to or greater than 1.20 to 1 for each Calculation Period through to the applicable
Termination Date.
The Group has complied with these covenants throughout the reporting periods.
173
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
6. Segment reporting
Business segments are based on the Group’s internal organisation and management reporting structure. The Group’s business segments
are the two core businesses: Oil and Gas. The Oil segment deals with the exploration, development and production of crude oil while the Gas
segment deals with the production and processing of gas. These two reportable segments make up the total operations of the Group.
For the year ended 31 December 2022, revenue from the gas segment of the business constituted 12% (2021: 16%) of the Group’s revenue.
Management is committed to continued growth of the gas segment of the business, including through increased investment to establish
additional offices, create a separate gas business operational management team and procure the required infrastructure for this segment of
the business. The gas business is positioned separately within the Group and reports directly to the (chief operating decision maker). As the
gas business segment’s revenues, results and cash flows are largely independent of other business units within the Group, it is regarded
as a separate segment.
The result is two reporting segments, Oil and Gas. There were no intersegment sales during the reporting periods under consideration,
therefore all revenue was from external customers.
Amounts relating to the gas segment are determined using the gas cost centres, with the exception of depreciation. Depreciation relating to the
gas segment is determined by applying a percentage which reflects the proportion of the Net Book Value of oil and gas properties that relates
to gas investment costs (i.e., cost for the gas processing facilities).
The Group accounting policies are also applied in the segment reports.
6.1
Segment profit disclosure
Oil
Gas
Total profit/(loss) for the year
Oil
Revenue from contracts with customers
Crude oil sales (Note 7)
Operating profit before depreciation, amortisation and impairment
Depreciation, amortisation and impairment
Operating profit/loss)
Finance income (Note 13)
Finance costs (Note 13)
Profit/(loss) before taxation
Income tax (expense)/credit (Note 14)
Profit/(loss) for the year
Gas
Revenue from contracts with customer
Gas sales
Operating profit before depreciation, amortisation and impairment
Depreciation and amortisation
Operating profit
Share of profit from joint venture accounted for using equity accounting
Profit before taxation
Taxation
Profit for the year
2022
₦’million
31,204
13,229
44,433
2021
₦’million
26,251
20,680
46,931
2022
$’000
73,524
31,182
104,706
2021
$’000
65,539
51,637
117,176
2022
₦’million
2021
₦’million
2022
$’000
2021
$’000
356,192
145,014
(54,610)
90,404
491
(28,916)
61,979
(30,775)
31,204
247,651
146,036
(68,388)
77,648
126
(30,516)
47,258
(21,007)
26,251
2022
₦’million
2021
₦’million
47,721
27,269
(1,084)
26,185
(1,434)
24,751
(11,522)
13,229
45,980
23,776
(1,023)
22,753
1,017
23,770
(3,090)
20,680
839,344
341,719
(128,684)
213,035
1,157
(68,141)
146,051
(72,527)
73,524
2022
$’000
112,451
64,258
(2,553)
61,705
(3,380)
58,325
(27,143)
31,182
618,377
364,637
(170,762)
193,875
314
(76,197)
117,992
(52,453)
65,539
2021
$’000
114,811
59,368
(2,555)
56,813
2,540
59,353
(7,716)
51,637
During the reporting period, impairment losses recognised in the oil segment relate to trade receivables (Pillar, Pan Ocean, Oghareki and Summit)
NEPL, NNPC and other receivables. Impairment losses recognised in the gas segment relates to Geregu Power, Sapele Power and NGMC. See
Note 11 for further details.
174
Seplat Energy PlcAnnual Report and Accounts 2022
6.1.1 Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of commodities at a point in time or over time and from different geographical regions.
Geographical markets
The Bahamas
Nigeria
Italy
Switzerland
Barbados
Revenue from contracts with customers
Timing of revenue recognition
At a point in time
Over time
Revenue from contracts with customers
Geographical markets
The Bahamas
Nigeria
Italy
Switzerland
Barbados
Revenue from contracts with customers
Timing of revenue recognition
At a point in time
Over time
Revenue from contracts with customers
2022
Oil
₦’million
69,128
45,067
791
229,119
12,087
356,192
356,192
–
356,192
2021
Oil
₦’million
68,425
5,499
7,798
157,128
8,801
247,651
247,651
–
247,651
2022
Gas
₦’million
–
47,721
–
–
–
47,721
–
47,721
47,721
2021
Gas
₦’million
–
45,980
–
–
–
45,980
–
45,980
45,980
2022
Total
₦’million
69,128
92,788
791
229,119
12,087
403,913
356,192
47,721
403,913
2021
Total
₦’million
68,425
51,479
7,798
157,128
8,801
293,631
247,651
45,980
293,631
2022
Oil
$’000
162,897
106,197
1,863
539,903
28,484
839,344
839,344
–
839,344
2021
Oil
$’000
170,855
13,730
19,471
392,345
21,976
618,377
618,377
–
618,377
2022
Gas
$’000
–
112,451
–
–
–
112,451
–
112,451
112,451
2021
Gas
$’000
–
114,811
–
–
–
114,811
–
114,811
114,811
2022
Total
$’000
162,897
218,648
1,863
539,903
28,484
951,795
839,344
112,451
951,795
2021
Total
$’000
134,307
128,541
19,471
392,345
21,976
733,188
618,377
114,811
733,188
The Group’s transactions with its major customer, Mercuria, constitutes more than 60% ($539.9 million, ₦229.1 billion) of the total revenue from
the oil segment and the Group as a whole. Also, the Group’s transactions with Geregu Power, Sapele Power, NGMC and Azura ($112 million, ₦47.7 billion)
accounted for the total revenue from the gas segment.
6.1.2
Impairment (losses)/reversal on financial assets by reportable segments
Impairment losses recognised during the year
Impairment losses recognised during the year
2022
Oil
₦’million
(2,727)
(2,727)
2022
Oil
$’000
(6,425)
(6,425)
2022
Gas
₦’million
(3)
(3)
2022
Gas
$’000
(7)
(7)
2022
Total
₦’million
(2,730)
(2,730)
2022
Total
$’000
(6,432)
(6,432)
6.1.3
Impairment / (reversal of) losses on non-financial assets by reportable segments
Impairment losses recognised during the year
Impairment losses recognised during the year
2022
Oil
₦’million
–
–
2022
Oil
$’000
–
–
2022
Gas
₦’million
–
–
2022
Gas
$’000
–
–
2022
Total
₦’million
–
–
2022
Total
$’000
–
–
2021
Oil
₦’million
5,960
5,960
2021
Oil
$’000
14,883
14,883
2021
Oil
₦’million
(23,684)
(23,684)
2021
Oil
$’000
(59,138)
(59,138)
2021
Gas
₦’million
3,075
3,075
2021
Gas
$’000
7,678
7,678
2021
Gas
₦’million
–
–
2021
Gas
$’000
–
–
2021
Total
₦’million
9,035
9,035
2021
Total
$’000
22,561
22,561
2021
Total
₦’million
(23,684)
(23,684)
2021
Total
$’000
(59,138)
(59,138)
175
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
6. Segment reporting continued
6.2 Segment assets
Segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations
of the reporting segment and the physical location of the asset. The Group had no non-current assets domiciled outside Nigeria.
Total segment assets
31 December 2022
31 December 2021
Oil
₦’million
1,279,802
1,393,987
Gas
₦’million
301,810
209,549
Total
₦’million
1,581,612
1,603,536
Oil
$’000
2,862,263
3,384,033
Gas
$’000
674,994
508,701
Total
$’000
3,537,257
3,892,734
6.3 Segment liabilities
Segment liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the
operations of the segment.
Total segment liabilities
31 December 2022
31 December 2021
Oil
₦’million
654,939
690,623
Gas
₦’million
139,779
209,549
Total
₦’million
794,718
900,172
Oil
$’000
1,464,761
1,676,547
Gas
$’000
312,613
508,701
Total
$’000
1,777,374
2,185,248
7.
Revenue from contracts with customers
Crude oil sales
Gas sales
2022
₦ million
356,192
47,721
403,913
2021
₦ million
247,651
45,980
293,631
2022
$’000
839,344
112,451
951,795
2021
$’000
618,377
114,811
733,188
The major off-takers for crude oil are Mercuria and Shell West. The major off-takers for gas are Geregu Power, Sapele Power, Nigerian Gas
Marketing Company and Azura.
8. Cost of sales
Royalties
Depletion, depreciation and amortisation (Note 16.4)
Crude handling fees
Nigeria Export Supervision Scheme (NESS) fee
Barging and Trucking
Niger Delta Development Commission Levy
Operational & maintenance expenses
2022
₦ million
76,712
54,610
20,984
419
5,203
4,561
44,207
206,696
2021
₦ million
51,997
56,503
21,009
250
4,702
1,741
43,212
179,414
2022
$’000
180,765
128,684
49,447
987
12,262
10,748
104,166
487,059
2021
$’000
129,836
141,086
52,457
624
11,741
4,346
107,909
447,999
Operational & maintenance expenses relates mainly to maintenance costs, warehouse operations expenses, security expenses, community
expenses, clean-up costs, fuel supplies and catering services. Also included in operational and maintenance expenses is gas flare penalty of
$5.2 million, ₦2.2 billion (2021: $14.1 million ₦5.6 billion) and inventory write down of $8.5 million, ₦3.6 billion on Solewant line pipes (2021: nil).
Barging and Trucking costs relates to costs on the OML 40 Gbetiokun field and OML 17 Ubima field respectively under Eland Group.
9. Other (loss)/income
Underlift
Loss on foreign exchange
Gains on disposal of property, plant & equipment
Crude hedging income
Provision no longer required
Tariffs
Tariffs
2022
₦ million
(11,547)
(454)
(5,548)
(8)
–
1,638
617
(15,302)
2021
₦’million
5,587
(1,755)
–
–
2,147
2,077
–
8,056
2022
$’000
(27,209)
(1,068)
(13,073)
(18)
–
3,861
1,453
(36,054)
2021
$’000
13,950
(4,381)
–
–
5,362
5,187
–
20,118
Overlifts/Underlifts are surplus/shortfalls of crude lifted above/below the share of production. It may exist when the crude oil lifted by the Group
during the period is more/less than its ownership share of production. The surplus/shortfall is initially measured at the market price of oil at the
date of lifting and recognised as other loss/income. At each reporting period, the surplus/shortfall is remeasured at the current market value.
The resulting change, as a result of the remeasurement, is also recognised in profit or loss as other loss/income.
Loss on foreign exchange are principally due to the translation of Naira, Pounds and Euro denominated monetary assets and liabilities.
Loss on disposal of oil and gas asset relates to the loss on the sale of Ubima field.
Provision no longer required in the prior year relates to the reversal of decommissioning obligation no longer required for Eland operations.
Tariffs which is a form of crude handling fee, relate to income generated from the use of the Group’s pipeline.
Others represents other income, joint venture billing interest and joint venture billing finance fees.
176
Seplat Energy PlcAnnual Report and Accounts 2022
10. General and administrative expenses
Depreciation (Note 16.2)
Depreciation of right-of-use assets (Note 18)
Auditor’s remuneration
Professional and consulting fees
Directors’ emoluments (executive)
Directors’ emoluments (non-executive)
Loss on disposal of other property, plant and equipment – (Note 16.3.1)
Donations
Employee benefits (Note 10.1)
Flights and other travel costs
Rentals and other general expenses
2022
₦ million
2021
₦’million
2022
$’000
2021
$’000
1,735
2,297
424
14,305
875
2,677
–
13
23,192
4,256
8,525
58,299
2,003
1,870
392
4,915
897
1,844
89
173
17,268
1,992
631
32,074
4,092
5,413
999
33,708
2,062
6,308
–
30
54,654
10,031
20,088
137,385
5,000
4,670
980
12,274
2,240
4,604
222
433
43,116
4,977
1,574
80,090
Directors’ emoluments have been split between Executive and Non-Executive Directors.
Flights and other travel costs increases were driven by higher travel and training costs following the relaxation of travel restrictions.
Rentals and other general expenses consist of training fees, software license and maintenance fees.
10.1 Employee benefits – Salaries and employee related costs include the following:
Short term employee benefits:
Basic salary
Housing allowances
Other allowances
Post-employment benefits:
Defined contribution expenses
Defined benefit expenses (Note 34.2)
Other employee benefits:
Share based payment expenses (Note 28.2)
2022
₦ million
2021
₦’million
2022
$’000
2021
$’000
12,317
1,441
3,931
1,329
700
3,474
23,192
10,262
1,763
2,652
943
439
1,209
17,268
29,025
3,394
9,265
3,132
1,650
8,188
54,654
25,623
4,403
6,621
2,354
1,095
3,020
43,116
Other allowances relate to staff bonus, car allowances and relocation expenses.
10.2 Below are details of non-audit services provided by the auditors:
Entity
Service
PwC office
Fees ($)
Seplat Energy Plc
Seplat Energy Plc
Remuneration Committee advice
Project Apollo (Reporting accountant)
PwC UK
PwC Nigeria
414,000
394,555
Year
2022
2022
10.3 Below are details of assurance service providers to the Group during the year:
S/N
Name of Signer
Name of firm
Ryder Scott Petroleum Consultants
Logic Professional Service
(FRC/2020/00000013617)
Service rendered
Reserve valuation
Actuarial valuation service
1
2
3
Tosin Famurewa*, Stephen.T. Philips*
Chidiebere Orji
(FRC/2021/004/00000022718)
Reuben Temerigha*,
(FRC/2023/PRO/DIR/003/866111)
Westend Diamond Nigeria Limited
Drilling rigs valuation
177
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
11.
Impairment loss
Impairment losses on financial assets-net (Note 11.1)
Impairment loss on non-financial assets (Note 11.2)
Reversal of impairment on non-financial asset (Note 11.2)
11.1
Impairment losses/(reversal) on financial assets – net
Impairment losses/(reversal) on:
NNPC receivables
NEPL receivables
Trade receivables (Geregu Power, Sapele Power and NGMC)
Receivables from joint venture (ANOH)
Contract asset
Other trade receivables
Exchange difference
Total impairment loss allowance
11.2
Impairment loss/(reversal) on non-financial assets:
Impairment loss on non-financial assets (Plant & Machinery)
Impairment loss on non-financial assets (OML 17)
Reversal of impairment on non-financial asset (OML 40)
2022
₦ million
2,730
–
–
2,730
2021
₦’million
9,035
6,216
(29,900)
(14,649)
2022
₦ million
2021
₦ million
(325)
(3,700)
1,383
126
170
5,076
2,730
–
2,730
2022
₦ million
–
–
–
–
108
1,848
7,006
–
–
73
9,035
–
9,035
2021
₦ million
6,027
189
(29,900)
(23,684)
2022
$’000
6,432
–
–
6,432
2022
$’000
(766)
(8,720)
3,259
296
402
11,961
6,432
–
6,432
2022
$’000
–
–
–
–
2021
$’000
22,561
15,521
(74,659)
(36,577)
2021
$’000
270
4,614
17,493
–
1
183
22,561
–
22,561
2021
$’000
15,049
472
(74,659)
(59,138)
During the period, the Group recognised no impairment loss on non-financial assets (2021: ₦6.03 million, ($15.05 million).
12. Fair value gain/(loss)
Realised fair value losses on crude oil hedges
Unrealised fair value gain/(loss)
2022
₦ million
(4,360)
63
(4,297)
2021
₦ million
(3,608)
(839)
(4,447)
2022
$’000
(10,275)
150
(10,125)
2021
$’000
(9,010)
(2,096)
(11,106)
Fair value loss on derivatives represents changes in the fair value of hedging receivables charged to profit or loss
13. Finance income/(cost)
Finance income
Interest income
Finance cost
Interest on bank loans (Note 30)
Interest on lease liabilities (Note 31)
Unwinding of discount on provision for decommissioning (Note 32)
Finance (cost) – net
Finance income represents interest on short-term fixed deposits.
2022
₦ million
2021
₦ million
491
126
(27,761)
(161)
(994)
(28,916)
(28,425)
(29,765)
(212)
(539)
(30,516)
(30,390)
2022
$’000
1,157
(65,418)
(380)
(2,343)
(68,141)
(66,984)
2021
$’000
314
(74,322)
(530)
(1,345)
(76,197)
(75,883)
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to
the Group’s general borrowings denominated in dollars during the year, in this case 7.52% (2021: 7.72%). The amount capitalised during the year
is ₦5.9 billion ($14 million), (2021: ₦5 billion, $12.5 million).
178
Seplat Energy PlcAnnual Report and Accounts 2022 14. Taxation
The major components of income tax expense for the years ended 31 December 2022 and 2021 are:
Income tax expense
Current tax:
Current tax expense on profit for the year
Education tax
NASENI Levy
Police Levy
Total current tax
Deferred tax:
Deferred tax expense in profit or loss (Note 14.3)
Total tax expense in statement of profit or loss
Deferred tax recognised in other comprehensive income (Note 14.3)
Total tax charge for the period
Effective tax rate
2022
₦ million
24,481
4,022
221
3
28,727
13,570
42,297
379
42,676
49%
2021
₦ million
12,317
2,603
139
2
15,061
9,036
24,097
133
24,230
34%
2022
$’000
57,689
9,478
518
8
67,693
31,977
99,670
892
100,562
49%
2021
$’000
30,755
6,500
346
5
37,606
22,563
60,169
333
60,502
34%
14.1 Reconciliation of effective tax rate
The Income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected
for the full financial year. The estimated annual tax rate used for the year ended 31 December 2022 is 85% for crude oil activities and 30% for gas
activities. As at 31 December 2022, the applicable tax rate was 85% and 30% respectively. The effective tax rate for the period was 49% (2021: 34%).
A reconciliation between income tax expense and accounting profit before income tax multiplied by the applicable statutory tax rate is as follows:
Profit before taxation
Tax rate of 85% and 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Income not subject to tax
Expenses not deductible for tax purposes
Impact of unutilised tax losses
Education tax
NASENI levy
Police levy
Total tax charge in statement of profit or loss
14.2 Current tax liabilities
The movement in the current tax liabilities is as follows:
As at 1 January
Tax charge
Tax paid
Exchange difference
As at 31 December
14.3 Deferred tax
The analysis of deferred tax assets and deferred tax liabilities is as follows:
2022
₦ million
86,730
73,721
(25,349)
(76,309)
65,989
4,022
220
3
42,297
2022
₦ million
19,094
28,727
(24,415)
1,862
25,268
2021
₦ million
71,028
60,374
(14,649)
100,349
(124,721)
2,603
139
2
24,097
2021
₦ million
8,261
15,061
(5,203)
975
19,094
2022
$’000
204,376
173,720
(59,733)
(179,817)
155,496
9,478
518
8
99,670
2022
$’000
46,351
67,693
(57,532)
–
56,512
Deferred tax assets (Note 14.4)
Deferred tax liabilities (Note 14.5)
Deferred tax assets (Note 14.4)
Deferred tax liabilities (Note 14.5)
Balance as at
1 January 2022
₦ million
128,539
(42,732)
85,807
(Charged)/
credited to profit
or loss
₦ million
62,624
(76,194)
(13,570)
Charged to other
comprehensive
income
₦ million
(379)
–
(379)
Exchange
difference
₦ million
14,323
(7,738)
6,585
Balance at
1 January 2022
$’000
(Charged)/
credited to profit
or loss
$’000
Charged to other
comprehensive
income
$’000
312,041
(103,736)
208,305
147,569
(179,546)
(31,977)
(892)
–
(892)
2021
$’000
177,345
150,743
(36,579)
250,570
(311,416)
6,500
346
5
60,169
2021
$’000
21,739
37,606
(12,994)
–
46,351
Balance as at
31 Dec 2022
₦ million
205,107
(126,664)
78,443
Balance at
31 December
2022
$’000
458,718
(283,282)
175,436
In line with IAS 12, the Group elected to offset the deferred tax assets against the deferred tax liabilities arising from similar transactions.
179
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
14. Taxation continued
14.4 Deferred tax assets
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through
future taxable profits is probable.
Tax losses
Other cumulative timing differences:
Accelerated capital deduction
Other temporary differences:
Provision for abandonment
Provision for gratuity
Provision for defined benefit
Unrealised foreign exchange loss
Overlift
Impairment provision on trade and other receivables
Leases
Tax losses
Other cumulative timing differences:
Accelerated capital deduction
Other temporary differences:
Provision for abandonment
Provision for gratuity
Provision for defined benefit
Unrealised foreign exchange loss
Overlift
Impairment provision on trade and other receivables
Leases
Balance at
1 January 2022
₦ million
(Charged)/
credited to
profit or loss
₦ million
Credited to other
comprehensive
income
₦ million
Exchange
difference
₦ million
Balance at
31 December
2022
₦ million
12,686
(3,634)
50,421
39,281
8,216
7,629
3,554
7,056
8,432
30,547
–
128,539
3,525
2,730
(703)
3,759
13,493
4,017
155
62,244
–
–
–
–
(379)
–
–
–
–
(379)
889
6,416
891
799
245
804
1,445
2,825
8
14,322
Balance at
1 January 2022
$’000
(Charged)/
credited to profit
or loss
$’000
Credited to other
comprehensive
income
$’000
30,797
(8,563)
122,401
92,564
19,944
18,519
8,627
17,128
20,470
74,155
–
312,041
8,307
6,434
(1,657)
8,857
31,796
9,466
365
147,569
–
–
–
–
(892)
–
–
–
–
(892)
9,941
96,118
12,632
11,158
2,717
11,619
23,370
37,389
163
205,107
Balance at
31 December
2022
$’000
22,234
214,965
28,251
24,953
6,078
25,985
52,266
83,621
365
458,718
*Other temporary differences include provision for defined benefit, provision for Abandonment, share equity reserve.
During the year, the Group elected to offset the deferred tax assets against the deferred tax liabilities arising from similar transactions in line
with IAS 12. This led to a deferred tax reclassification of $729 million, ₦300 billion from the deferred tax liabilities to the deferred tax assets
as at 1 January 2022.
14.5 Deferred tax liabilities
Deferred tax liabilities are recognised for amounts of income taxes payable in future periods in respect of taxable temporary differences.
Other cumulative timing differences:
Property, plant & equipment
Leases
Underlift
Unrealised foreign exchange loss
Effect of exchange difference
Other cumulative timing differences:
Property, plant and equipment
Leases
Underlift
Unrealised foreign exchange gain
Effect of exchange differences
180
Balance at
1 January 2022
₦ million
Charged/
(credited)
to profit or loss
₦ million
Exchange
difference
₦ million
Balance at
31 December
2022
₦ million
(35,570)
(1,408)
(5,753)
–
(42,732)
(42,732)
(71,365)
1,305
1,548
(7,682)
(76,194)
(76,194)
(6,866)
(50)
(410)
(412)
(7,738)
(7,738)
(113,801)
(154)
(4,615)
(8,094)
(126,664)
(126,664)
Balance at
1 January 2022
$’000
Charged/
(credited)
to profit or loss
$’000
Balance at
31 December
2022
$’000
(86,350)
(3,419)
(13,967)
–
(103,736)
(103,736)
(168,165)
3,075
3,647
(18,103)
(179,546)
(179,546)
(254,515)
(344)
(10,320)
(18,103)
(283,282)
(283,282)
Seplat Energy PlcAnnual Report and Accounts 2022 During the period, the Group elected to offset $729 million, ₦300 billion from the deferred tax liabilities to the deferred tax assets as at 1 January
2022 in line with IAS 12. The net impact of the reclassification remains unchanged in the consolidated statement of financial position.
14.6 Unrecognised deferred tax assets
There were no temporary differences associated with investments in the Group’s subsidiaries for which a deferred tax asset would have been
recognised in the periods presented.
14.7 Unrecognised deferred tax liabilities
There were no temporary differences associated with investments in the Group’s subsidiaries for which a deferred tax liability would have
been recognised in the periods presented.
15. Computation of cash generated from operations
Profit before tax
Adjusted for:
Depletion, depreciation and amortisation
Depreciation of right-of-use asset
Impairment losses on financial assets
Impairment losses on non-financial assets
Reversal of impairment loss on non-financial assets
Loss on disposal of oil and gas asset
Loss on disposal of other property, plant & equipment
Interest income
Interest expense on bank loans
Interest on lease liabilities
Unwinding of discount on provision for decommissioning
Unrealised fair value (gain)/loss on derivatives financial
instrument
Realised fair value loss on derivatives
Unrealised foreign exchange (gain)/loss
Share based payment expenses
Defined benefit expenses
Share of loss/(profit) in joint venture
Changes in working capital:
(excluding the effects of exchange differences)
Trade and other receivables
Inventories
Prepayments
Contract assets
Trade and other payables
Contract liabilities
Net cash from operating activities
Notes
16.4
18
11.1
11.2
11.2
16.3
16.3
13
30
31
32
12
12
9
27.4
21.3
2022
₦ million
86,730
56,345
2,297
2,730
–
–
5,548
8
(491)
27,761
161
994
(63)
4,360
454
3,474
700
1,434
(293)
8,297
4,153
(1,585)
39,386
–
242,400
2021
₦ million
71,028
58,506
1,870
9,035
6,216
(29,900)
–
89
(126)
29,765
212
539
839
3,608
1,755
1,209
439
(1,017)
(8,302)
(155)
(1,252)
837
9,499
(3,793)
150,901
2022
$’000
2021
$’000
204,376
177,345
132,776
5,413
6,432
–
–
13,073
18
(1,157)
65,418
380
2,343
(150)
10,275
1,068
8,188
1,650
3,380
(691)
19,551
9,786
(3,734)
91,187
–
571,206
146,086
4,670
22,561
15,521
(74,659)
–
222
(314)
74,322
530
1,345
2,096
9,010
4,381
3,020
1,095
(2,540)
(20,729)
(387)
(3,126)
2,090
23,718
(9,470)
376,787
181
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
Production and
field facilities
₦ million
855,944
28,386
11,127
15,631
–
29,993
(23,457)
76,451
994,075
Assets under
construction
₦ million
121,337
38,952
(11,127)
–
5,943
9,232
–
12,675
177,013
Exploration and
evaluation assets
₦ million
24,901
–
–
–
–
–
–
2,128
27,029
341,437
50,421
–
34,136
(2,778)
33,562
456,778
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
₦ million
1,002,182
67,338
–
15,631
5,943
39,225
(23,457)
91,254
1,198,117
341,437
50,421
–
34,136
(2,778)
33,562
456,778
537,297
177,013
27,029
741,339
741,974
25,028
28,888
(3,727)
–
63,781
855,944
261,995
55,832
23,610
341,437
107,129
28,955
(28,888)
–
4,995
9,146
121,337
–
–
–
–
22,367
635
–
–
–
1,899
24,901
–
–
–
–
871,470
54,618
–
(3,727)
4,995
74,826
1,002,182
261,995
55,832
23,610
341,437
514,507
121,337
24,901
660,745
16. Property, plant and equipment
16.1 Oil and gas properties
Cost
At 1 January 2022
Additions
Transfer
Changes in decommissioning obligation (Note 32)
Interest capitalised (Note 30.1)
Reclassification
Disposals
Exchange differences
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Impairment loss
Reclassification
Disposals
Exchange differences
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
Transfer
Changes in decommissioning obligation (Note 32)
Interest capitalised (Note 30.1)
Exchange differences
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Exchange difference
At 31 December 2021
NBV
At 31 December 2021
182
Seplat Energy PlcAnnual Report and Accounts 2022 Cost
At 1 January 2022
Additions
Transfer
Changes in decommissioning obligation (Note 32)
Interest capitalised (Note 30.1)
Reclassification
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Impairment loss
Reclassification
Disposals
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
Transfer
Changes in decommissioning obligation (Note 32)
Interest capitalised (Note 30.1)
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Exchange difference
At 31 December 2021
NBV
At 31 December 2021
Production and
field facilities
$’000
2,077,889
66,890
26,220
36,834
–
70,677
(55,274)
2,223,236
Assets under
construction
$’000
294,558
91,788
(26,220)
–
14,005
21,755
–
395,886
Exploration and
evaluation assets
$’000
60,450
–
–
–
–
–
–
60,450
828,872
118,813
–
80,440
(6,546)
1,021,579
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’000
2,432,897
158,678
–
36,834
14,005
92,432
(55,274)
2,679,572
–
118,813
–
80,440
(6,546)
1,021,579
1,201,657
395,886
60,450
1,657,993
1,952,564
62,497
72,133
(9,305)
–
2,077,889
689,460
139,412
828,872
281,919
72,299
(72,133)
–
12,473
294,558
–
–
–
58,865
1,585
–
–
–
60,450
–
–
–
2,293,348
136,381
–
(9,305)
12,473
2,432,897
689,460
139,412
828,872
1,249,017
294,558
60,450
1,604,025
Assets under construction represent costs capitalised in connection with the development of the Group’s oil fields and other property, plant and
equipment not yet ready for their intended use. Some of which are qualifying assets that take a substantial period to get ready for its intended
use. A capitalisation rate of 7.52% (2021: 7.72%) has been determined and applied to the Group’s general borrowing to determine the borrowing
cost capitalised as part of the qualifying assets. Borrowing costs capitalised during the year amounted to ₦5.9 billion, 2021: ₦14.01 billion (2022: $14.3 million,
2021: $12.5 million). There was no oil and gas property pledged as security during the reporting period.
Impairment testing
There was no impairment loss recorded for OML 4, 38, 41, OML 53 and OML 56 during the year ended. (2021: nil).
183
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
16. Property, plant and equipment continued
16.2 Other property, plant and equipment
Cost
At 1 January 2022
Additions
Disposals
Exchange differences
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Disposals
Exchange differences
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
Disposals
Exchange differences
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Impairment loss
Disposals
Exchange differences
At 31 December 2021
NBV
At 31 December 2021
Cost
At 1 January 2022
Additions
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
Disposals
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Impairment loss
Disposals
At 31 December 2021
NBV
At 31 December 2021
184
Plant &
machinery
₦ million
Motor
vehicles
₦ million
Office furniture
& IT equipment
₦ million
Leasehold
improvements
₦ million
Land
₦ million
15,531
413
–
1,350
17,294
8,293
57
–
712
9,062
3,831
634
(477)
336
4,324
2,616
794
(462)
242
3,189
9,038
723
(6)
812
10,567
8,180
617
(4)
732
9,524
2,355
203
–
213
2,771
1,912
201
–
175
2,288
28
–
–
2
30
–
–
–
–
–
Building
₦ million
1,603
–
–
137
1,740
157
66
–
19
242
Total
₦ million
32,386
1,973
(483)
2,850
36,726
21,158
1,735
(466)
1,880
24,307
8,232
1,135
1,043
483
30
1,498
12,419
1,950
13,045
–
536
15,531
1,861
74
6,199
–
159
8,293
5,150
135
(1,838)
384
3,831
3,414
694
–
(1,749)
257
2,616
8,413
204
–
691
9,038
6,605
991
–
–
584
8,180
2,142
32
–
181
2,355
1,592
181
–
–
139
1,912
25
–
–
3
28
–
–
–
–
–
–
1,478
–
–
125
1,603
86
63
–
–
8
157
18,888
13,416
(1,838)
1,920
32,386
13,558
2,003
6,199
(1,749)
1,147
21,158
7,238
1,215
858
443
28
1,446
11,228
Plant &
machinery
$’000
Motor
vehicles
$’000
Office furniture
& IT equipment
$’000
Leasehold
improvements
$’000
37,704
974
–
38,678
20,132
136
–
20,268
9,299
1,493
(1,123)
9,669
6,351
1,871
(1,089)
7,133
21,941
1,704
(13)
23,632
19,858
1,453
(10)
21,301
5,717
478
–
6,196
4,642
473
–
5,116
Land
$’000
68
–
–
68
–
–
–
–
Building
$’000
3,891
–
–
3,891
382
159
–
541
Total
$’000
78,620
4,649
(1,136)
82,133
51,365
4,092
(1,099)
54,358
18,410
2,536
2,331
1,080
68
3,350
27,775
5,131
32,573
–
37,704
4,899
184
15,049
–
20,132
13,552
336
(4,589)
9,299
8,986
1,732
–
(4,367)
6,351
21,431
510
–
21,941
17,384
2,474
–
–
19,858
5,638
79
–
5,717
4,190
452
–
–
4,642
68
–
–
68
–
–
–
–
–
3,891
–
–
3,891
224
158
–
–
382
49,711
33,498
(4,589)
78,620
35,683
5,000
15,049
(4,367)
51,365
17,572
2,948
2,083
1,075
68
3,509
27,255
Seplat Energy PlcAnnual Report and Accounts 2022 During the year, the Group performed a valuation on the drilling rigs acquired in 2021.
The recoverable amount of $47 million as at 31 December 2022 has been determined based on the fair value less cost to dispose using the
services of Westend Diamond Nigeria Limited, an independent valuer.
The fair value was determined using the current asset value of the rigs. This was based on inspection of the components, recent sales of similar
assets and price adjustment for damaged components based on industry knowledge and the Valuer’s experience in rig acceptance services
and testing rig condition surveys.
The recoverable amount ($47 million) was higher than the carrying value ($18.35 million). Hence, there was no impairment loss recorded
in profit or loss.
It is categorised under level 2 of the fair value hierarchy.
16.3 Loss on disposal
16.3.1 Loss on disposal of other property, plant and equipment
Proceeds from disposal of assets
Less net book value of disposed assets
16.3.2 Loss on disposal of oil and gas assets
Proceeds from disposal of assets
Less net book value of disposed assets
16.3.2 Loss on disposal of oil and gas assets
Oil and gas properties (Note 16.1)
Amortisation of intangible asset (Note 19)
Charged to cost of sales
Other property, plant and equipment charged to general and administrative
expense (Note 16.2)
Right of use assets (Note 18)
Total depletion, depreciation and amortisation
17. Other asset
Fair value at the beginning of the year
Receipts from crude oil lifted
Exchange differences
Fair value at the end of the year
2022
₦ million
2021
₦ million
8
(16)
(8)
2022
₦ million
7,884
(13,432)
(5,548)
2022
₦ million
46,997
7,613
54,610
1,735
2,297
58,642
2022
₦ million
46,363
(4,600)
3,715
45,478
–
(89)
(89)
2021
₦ million
–
–
–
2021
₦ million
55,832
671
56,503
2,003
1,870
60,376
2021
₦ million
44,630
(1,961)
3,694
46,363
2022
$’000
19
(37)
(18)
2022
$’000
18,578
(31,651)
(13,073)
2022
$’000
118,812
9,872
128,684
4,092
5,413
138,189
2022
$’000
112,551
(10,840)
–
101,711
2021
$’000
–
(222)
(222)
2021
$’000
–
–
–
2021
$’000
139,412
1,674
141,086
5,000
4,670
150,756
2021
$’000
117,448
(4,897)
–
112,551
Other assets represents the Group’s rights to receive the discharge sum of ₦85 billion, 2021: ₦61 billion ($190 million, 2021: $199 million) from the
crude oil reserves of OML 55. The asset is measured at fair value through profit or loss (FVTPL) and receipts from crude oil lifted reduce the value
of the asset. At each reporting date, the fair value of the discharge sum is determined using the income approach in line with IFRS 13: Fair Value
Measurement (discounted cash flow). This asset is categorised within Level 3 of the fair value hierarchy amounting to $142.4 million (2021: $112.6 million).
A further increase/(decrease) in the discount rate of 15% would result in the following:
Percentage
+2%
-2%
Fair value
$’000
137,823
147,327
Impact on
profit or loss
$’000
(4,589)
4,916
185
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
18. Right of use asset
As at 1 January
Additions during the year
Less: depreciation for the period
Exchange difference
As at 31 December
2022
₦ million
3,050
1,084
(2,297)
137
1,974
2021
₦ million
3,965
656
(1,870)
299
3,050
2022
$’000
7,404
2,424
(5,413)
–
4,415
2021
$’000
10,435
1,639
(4,670)
–
7,404
In 2018, the Group entered into a lease agreement for an office building in Lagos. The non-cancellable period of the lease is five years commencing
on 1 January 2019 and ending on 31 December 2023. However, the Group has an option of either extending the lease period on terms to be
mutually agreed by parties to the lease on the expiration of the current term or purchase the property.
The addition during the year relates to Elcrest – Office rent, barges and leases of vessels and UK ledger balance transfers.
19.
Intangible assets
Cost
At 1 January 2022
Additions
Reclassification
Exchange difference
At 31 December 2022
Amortisation
At 1 January 2022
Charge for the year
Reclassification
Amortisation
Exchange difference
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Exchange difference
At 31 December 2021
Amortisation and impairment
At 1 January 2021
– Impairment
– Impairment reversal
– Amortisation
Exchange difference
At 31 December 2021
NBV
At 31 December 2021
Licence
₦ million
60,435
5,092
(359)
5,420
70,588
Total
₦ million
60,435
5,093
(359)
5,420
70,588
Licence
$’000
146,713
12,000
(845)
–
157,868
Total
$’000
146,713
12,000
(845)
–
157,868
6,390
6,390
15,513
15,513
3,424
4,189
955
14,958
3,424
4,189
955
14,958
8,068
9,872
–
33,453
8,068
9,872
–
33,453
55,630
55,630
124,415
124,415
55,751
4,684
60,435
33,450
189
(29,900)
671
1,980
6,390
55,751
4,684
60,435
33,450
189
(29,900)
671
1,980
6,390
146,713
–
146,713
88,026
472
(74,659)
1,674
–
15,513
146,713
–
146,713
88,026
472
(74,659)
1,674
–
15,513
54,045
54,045
131,200
131,200
License relates to costs paid in connection with the renewal of a right for exploration of an oil mining lease field.
There was no impairment loss recorded for OML 40 and OML 17 during the year ended 2022 (2021: nil and $0.5 million).
As at 31 December 2022, the market capitalisation of the Group was above the book value of its intangible assets. In addition, there has been
a slight increase in oil price and development activities around the world, as well as the subtle adjustment to current economic activities compared
to the prior year which has led to an increase in the value of oil and gas assets.
186
Seplat Energy PlcAnnual Report and Accounts 2022 20. Prepayments
Non-current
Advances to suppliers
Current
Rent
Other prepayments
2022
₦ million
25,703
25,703
184
372
556
26,259
2021
₦ million
27,512
27,512
84
627
711
28,223
2022
$’000
57,486
57,486
412
830
1,242
58,728
2021
$’000
66,788
66,788
204
1,522
1,726
68,514
20.1 Rent
Rent relates to short-term leases of residential buildings, car parks and office buildings with contractual lease term of less than or equal to
12 months. At the end of the reporting period, rental expense of ₦0.45 billion, $1.06 million (2021: ₦631 million ($1.6 million)) was recognised within
general and administrative expenses for these leases. The Group’s future cash outflows from short-term lease commitments at the end of the
reporting period are ₦184 million, $412 thousand (2021: ₦184 million, $449 thousand).
20.2 Advances to suppliers
Advances to suppliers relate to a milestone payment made to finance the construction of the Amukpe Escravos Pipeline Project and other
related facilities. Recoveries would be made after the completion of the pipeline. At the end of the reporting period, the total prepaid amount
is ₦25.7 billion, $57.5million, (2021: ₦27.5 billion, $66.8 million).
20.3 Other prepayments
Included in other prepayments are prepaid service charge expenses for office buildings, health insurance, software licence maintenance,
motor insurance premium and crude oil handling fees.
Interest in other entities
21.
21.1 Material subsidiaries
The Group’s principal subsidiaries as at 31 December 2022 are set in Note 1. Unless otherwise stated, their share capital consists solely of
Ordinary Shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group.
The country of incorporation or registration is also their principal place of business. The Group exercised significant judgement in consolidating
Elcrest. Please see Note 4.1 for details. Also, there were no significant restrictions on any of the entities.
21.2 Non-controlling interest (NCI)
Summarised financial information in respect of Elcrest Exploration and Production Nigeria Limited which has a material non-controlling interest
is set out below.
The information disclosed reflects amounts presented in the financial statements of the subsidiary amended to reflect fair value adjustments
made by the Group, and modifications for differences in accounting policy during the business combination.
21.2.1 Statement of financial position
Current assets
Current liabilities
Current net liabilities
Non-current assets
Non-current liabilities
Non-current net assets
Net liabilities
Accumulated NCI at 55%
21.2.2 Statement of profit or loss and other comprehensive income
As at 31 Dec 2022
₦’million
As at 31 Dec 2022
$’000
As at 31 Dec 2021
₦’million
As at 31 Dec 2021
$’000
65,158
(320,653)
(255,495)
145,722
(735,104)
(589,382)
271,432
(21,324)
250,108
(5,387)
(2,963)
607,062
(47,689)
559,373
(30,009)
(16,505)
11,600
(289,360)
(277,760)
246,878
(7,142)
239,736
28,161
(717,060)
(688,899)
599,320
(17,338)
581,982
(38,024)
(20,913)
(106,917)
(58,804)
As at 31 Dec 2022
₦’million
As at 31 Dec 2022
$’000
As at 31 Dec 2021
₦’million
As at 31 Dec 2021
$’000
Revenue
Cost of sales
Operating expenses
Finance income/(cost)
Profit/(loss) before Tax
Tax credit
Profit/(loss) for the year
Total comprehensive income/(loss)
69,128
(65,680)
(471)
(2,289)
688
31,949
32,637
19,216
162,897
(154,772)
(1,109)
(2,378)
1,622
75,286
76,908
76,908
53,788
(52,828)
(6,450)
(12,428)
(17,918)
–
(17,918)
(17,918)
134,307
(131,911)
(16,105)
(31,032)
(44,741)
–
(44,741)
(44,741)
187
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
21.
Interest in other entities continued
21.2.3 Statement of cash flows
Operating activities
Investing activities
Financing activities
21.3
Investment accounted for using equity accounting method
Investment in joint venture (note 21.3.1)
As at 31 Dec 2022
₦’million
As at 31 Dec 2022
$’000
As at 31 Dec 2021
₦’million
As at 31 Dec 2021
$’000
283,728
(31,105)
(250,780)
668,587
(69,565)
(560,867)
26,267
(25,834)
4,152
65,589
(64,507)
10,367
As at 31 Dec 2022
₦ million
As at 31 Dec 2021
₦ million
As at 31 Dec 2022
$’000
As at 31 Dec 2021
$’000
99,219
99,219
92,795
92,795
221,902
221,902
225,270
225,270
21.3.1 Interest in joint ventures
The revised shareholders agreement between the Group and Nigerian Gas Processing and Transportation Company (NGPTC) requires both
parties to have equal shareholding in ANOH. With the change in the ownership structure, the Group has reassessed its retained interest in ANOH
and determined that it has joint control. The Group’s interest in ANOH is accounted for in the consolidated financial statements using the equity
method because the Group interest in ANOH (Joint venture) is assessed to be a joint venture.
Set below is the information on the material joint venture of the Group, ANOH. The Company has share capital consisting solely of Ordinary
Shares, which are held directly by the Group. The country of incorporation or registration is also its principal place of business, and the proportion
of ownership interest is the same as the proportion of voting rights held. The Company is a private entity hence no quoted price is available.
As at the reporting period, the Group had no capital commitment neither had it incurred any contingent liabilities jointly with its joint venture partner.
Name of entity
Country of
incorporation and
place of business
As at
31 Dec 2022
%
As at
31 Dec 2021
%
As at
31 Dec 2022
₦’million
As at
31 Dec 2021
₦’million
As at
31 Dec 2022
$’000
As at
30 Dec 2021
$’000
Percentage of ownership interest
Carrying amount
ANOH Gas Processing
Company Limited
Nigeria
50
50
99,219
92,795
221,902
225,270
21.3.1.1
Summarised statement of financial position of ANOH
As at 31 Dec 2022
₦’million
As at 31 Dec 2022
$’000
As at 31 Dec 2021
₦’million
As at 31 Dec 2021
$’000
4,260
6,240
10,500
263,935
274,435
(72,046)
(3,951)
(75,997)
198,438
176,280
(2,869)
10,118
14,909
198,438
50%
99,219
–
99,219
9,528
13,955
23,483
590,286
613,769
(161,128)
(8,837)
(169,965)
443,804
427,936
(6,760)
22,628
–
443,804
50%
221,902
–
221,902
15,980
48,662
64,642
221,976
286,618
(37,492)
(72,846)
(110,338)
176,280
160,624
2,035
–
13,621
176,280
50%
88,140
4,655
92,795
38,793
118,131
156,924
538,869
695,793
(91,017)
(176,840)
(267,857)
427,936
422,856
5,080
–
–
427,936
50%
213,968
11,302
225,270
Current assets:
Cash and bank balances
Other current assets
Total current assets
Non-current assets
Total assets
Current liabilities:
Financial liabilities (excluding trade payables)
Other current liabilities
Total liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets
(Loss)/profit for the period
Additional contribution
Exchange difference
Closing net assets
Group’s share (%)
Group’s share of net asset
Remeasurement of retained interest
Carrying amount
198
Seplat Energy PlcAnnual Report and Accounts 2022 21.3.1.2 Summarised statement of profit or loss and other comprehensive income of ANOH
General and administrative expenses
Depreciation and amortisation
Other income
Finance income
Finance cost
(Loss)/profit before taxation
Taxation
(Loss)/profit for the period
Group’s share (%)
Group’s share of (loss)/profit for the period
21.3.1.3
Investment in joint venture
Opening balance
Movement during the year
Exchange difference
Share of (loss)/profit from joint venture accounted for using the equity method
As at 31 Dec
2022
₦’million
(3,193)
(315)
2
640
–
(2,866)
(2)
(2,868)
50%
(1,434)
As at 31 Dec
2022
₦’million
92,795
5
7,853
(1,434)
99,219
As at 31 Dec
2022
$’000
(7,525)
(743)
5
1,509
–
(6,754)
(6)
(6,760)
50%
(3,380)
As at 31 Dec
2022
$’000
225,270
12
–
(3,380)
221,902
As at 31 Dec
2021
₦’million
(56)
(193)
916
911
(28)
1,550
485
2,035
50%
1,017
As at 31 Dec
2021
₦’million
84,639
–
7,139
1,017
92,795
As at 31 Dec
2021
$’000
(141)
(483)
2,287
2,275
(70)
3,868
1,212
5,080
50%
2,540
As at 31 Dec
2021
$’000
222,730
–
–
2,540
225,270
21.3.2 Investment in associate
Elandale Nigeria Limited is an associate acquired on the business combination. Elandale was incorporated in Nigeria on 17 January 2019. Elandale
is an unquoted investment and valued based on fixed asset investment. The Group indirectly owns 40% ownership interest and voting rights in
Elandale. The investment was written-off during the year because Elandale is not trading, does not have sufficient funds to repay the investment
and have no discardable future income stream. The associate is deemed to be immaterial, as a result, financial information is not provided.
22.
Inventories
Tubulars, casings and wellheads
2022
₦ million
24,774
2021
₦ million
30,878
2022
$’000
55,406
2021
$’000
74,957
Inventory represents the value of tubulars, casings and wellheads. The inventory is carried at the lower of cost and net realisable value. Inventory
charged to profit or loss and included in cost of sales during the year is ₦3.5 billion, $7.9 million (2021: ₦1.7 billion, $4.1 million). There was an
inventory write down of $8.5 million, ₦3.6 billion on Solewant line pipes (2021: nil).
199
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
23. Trade and other receivables
Trade receivables (Note 23.1)
Nigerian National Petroleum Corporation Exploration Limited
(NEPL) (Note 23.2)
Nigerian National Petroleum Corporation Limited (NNPC) receivables
(Note 23.3)
Underlift
Other receivables (Note 23.4)
Advances to suppliers
Receivables from ANOH (Note 23.5)
Advances for new business (Note 23.6)
2022
₦ million
19,480
2021
₦ million
25,923
2022
$’000
43,571
2021
$’000
62,929
40,386
34,571
90,322
83,924
15,411
7,018
21,752
7,657
5,056
57,367
10,154
20,657
2,964
5,746
5,259
–
34,467
15,696
48,644
17,123
11,308
128,300
24,650
50,147
7,194
13,947
12,766
–
174,127
105,274
389,431
255,557
23.1 Trade receivables
Included in trade receivables is an amount due from Geregu Power of $19.5 million, ₦8.7 billion (2021: $17.1 million, ₦7 billion), Waltersmith $12.8
million, ₦5.7 billion (Dec 2021: nil) Sapele Power $6.1 million, ₦2.7 billion (2021: $5.9million, ₦2.4 billion) and Nigerian Gas Marketing Company $0.4
million, ₦0.2 billion (2021: $7.3 million, ₦3 billion) totalling $38.7 million, ₦17.3 billion (Dec 2021: $30.3 million, ₦12.5 billion) with respect to the sale of
gas. Also included in trade receivables is nil (Dec 2021: $7.4 million, ₦3.1 billion), nil (Dec 2021: $28.1 million, ₦11.6 billion), and $3.8 million, ₦1.7 billion
(Dec 2021: nil) due from Mercuria, Shell Western, and MSN Energy respectively for sale of crude and $26 million, ₦11.4 billion, (Dec 2021: $18.4
million, ₦7.6 billion) for crude injectors.
Reconciliation of trade receivables
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
Reconciliation of impairment allowance trade receivables
Loss allowance as at 1 January
Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
2022
₦ million
34,698
368,983
(357,032)
(16,187)
30,462
(10,982)
19,480
2022
₦ million
8,775
1,383
824
10,982
2021
₦ million
22,358
234,149
(223,645)
1,836
34,698
(8,775)
25,923
2021
₦ million
1,195
7,079
501
8,775
2022
$’000
84,230
825,226
(841,325)
–
68,131
(24,560)
43,571
2022
$’000
21,301
3,259
–
24,560
2021
$’000
58,000
584,666
(558,436)
–
84,230
(21,301)
62,929
2021
$’000
3,625
17,676
–
21,301
23.2 NEPL receivables
The outstanding cash calls due to Seplat from its JOA partner, NEPL is ₦40.4 billion (Dec 2021: ₦34.6 billion) $90.3 million (Dec 2021: $83.9million).
Reconciliation of NEPL receivables
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
Reconciliation of impairment allowance on NEPL receivables
Loss allowance as at 1 January
Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
200
2022
₦ million
39,514
115,181
(110,303)
(2,539)
41,853
(1,467)
40,386
2022
₦ million
4,943
(3,700)
224
1,467
2021
₦ million
43,776
86,732
(94,147)
3,153
39,514
(4,943)
34,571
2021
₦ million
619
1,848
2,476
4,943
2022
$’000
95,924
257,600
(259,922)
–
93,602
(3,280)
90,322
2022
$’000
12,000
(8,720)
–
3,280
2021
$’000
114,439
216,567
(235,082)
–
95,924
(12,000)
83,924
2021
$’000
7,386
4,614
–
12,000
Seplat Energy PlcAnnual Report and Accounts 2022 23.3 NNPC receivables
Reconciliation of NNPC receivables
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
Reconciliation of impairment allowance on NNPC receivables
Loss allowance as at 1 January
(Decrease)/increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
23.4 Other receivables
Reconciliation of other receivables
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
Reconciliation of impairment allowance on other receivables
Loss allowance as at 1 January
Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
23.5 Receivables from Joint Venture (ANOH)
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
Reconciliation of impairment allowance on receivables from joint venture (ANOH)
Loss allowance as at 1 January
Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
2022
₦ million
10,819
29,249
(23,920)
(357)
15,791
(380)
15,411
2021
₦ million
11,910
10,793
(12,778)
894
10,819
(665)
10,154
2022
₦ million
2021
₦ million
665
(325)
40
380
2022
₦ million
21,632
43,326
(18,454)
861
47,364
(25,612)
21,752
2022
₦ million
18,668
5,076
1,868
25,612
2022
₦ million
5,259
610
(1,072)
391
5,188
(132)
5,056
479
108
78
665
2021
₦ million
19,713
21,708
(19,929)
140
21,632
(18,668)
2,964
2021
₦ million
15,303
–
3,365
18,668
2021
₦ million
4,926
134
(215)
414
5,259
–
5,259
2022
₦ million
2021
₦ million
–
126
7
132
–
–
–
–
2022
$’000
26,265
65,416
(56,365)
–
35,316
(849)
34,467
2022
$’000
1,615
(766)
–
849
2022
$’000
52,513
96,897
(43,486)
–
105,924
(57,280)
48,644
2022
$’000
45,319
11,961
–
57,280
2022
$’000
12,766
1,364
(2,526)
–
11,604
(296)
11,308
2022
$’000
–
296
–
296
2021
$’000
31,221
26,950
(31,906)
–
26,265
(1,615)
24,650
2021
$’000
1,345
270
–
1,615
2021
$’000
48,070
54,205
(49,762)
–
52,513
(45,319)
7,194
2021
$’000
45,319
–
–
45,319
2021
$’000
12,963
326
(523)
–
12,766
–
12,766
2021
$’000
–
–
–
–
23.6 Advances for New Business
Advances for new business include deposit for investment of $128.3 million, ₦57.4 billion towards the acquisition of the entire share capital
of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware.
201
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
24. Contract assets
Reconciliation of impairment allowance on receivables from joint venture (ANOH)
Revenue on gas sales (Note 24.1)
Impairment loss on contract asset
2022
₦ million
3,493
(180)
3,313
2021
₦ million
1,679
–
1,679
2022
$’000
7,811
(403)
7,408
2021
$’000
4,076
–
4,076
A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer. The Group
has recognised an asset in relation to a contract with Geregu Power, Sapele Power, Azura and NGMC for the delivery of gas supplies which the
three companies has received but which has not been invoiced as at the end of the reporting period.
The terms of payments relating to the contract is between 30-45 days from the invoice date. However, invoices are raised after delivery between
14-21 days when the receivable amount has been established and the right to the receivables crystallises. The right to the unbilled receivables is
recognised as a contract asset. At the point where the final billing certificate is obtained from Geregu Power, Sapele Power, Azura and NGMC
authorising the quantities, this will be reclassified from contract assets to trade receivables.
24.1 Reconciliation of contract assets
The movement in the Group’s contract assets is as detailed below:
Balance as at 1 January
Addition during the year
Receipts for the year
Price adjustments
Exchange difference
Impairment
Balance as at 31 December
2022
₦ million
1,679
38,216
(36,631)
–
229
(180)
3,313
2021
₦ million
2,343
44,849
(45,662)
(24)
173
–
1,679
2022
$’000
4,076
90,054
(86,319)
–
–
(403)
7,408
2021
$’000
6,167
111,987
(114,017)
(60)
–
(1)
4,076
25. Derivative financial instruments
The Group uses its derivatives for economic hedging purposes and not as speculative investments. Derivatives are measured at fair value
through profit or loss. They are presented as current liability to the extent they are expected to be settled within 12 months after the reporting
period.
The fair value has been determined using a proprietary pricing model which generates results from inputs. The market inputs to the model are
derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models..
Crude oil options
Additions
2022
₦ million
(1,435)
481
(954)
2021
₦ million
1,543
–
1,543
2022
$’000
(3,210)
1,075
(2,135)
2021
$’000
3,745
–
3,745
In 2021, the Group entered an economic crude oil hedge contracts with an average strike price of ₦22,141, $54/bbl (2020: ₦12,903, $34/bbl)
for 3 million barrels (2020: 5 million barrels) at a cost of ₦1.8 billion, $4.3 million (2020: ₦2.9 billion, $7.65 million).
26. Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise of cash at bank, cash on hand and short-term deposits with a
maturity of three months or less.
2022
₦ million
30
22,906
157,960
180,896
(110)
180,786
2021
₦ million
5,916
29,040
98,812
133,768
(101)
133,667
2022
$’000
66
51,229
353,287
404,582
(246)
404,336
2021
$’000
14,361
70,498
239,877
324,736
(246)
324,490
Cash on hand
Short-term fixed deposits
Cash at bank
Gross cash and cash equivalent
Loss allowance
Net cash and cash equivalents
202
Seplat Energy PlcAnnual Report and Accounts 2022 26.1 Reconciliation of impairment allowance on cash and cash equivalents
Loss allowance as at 1 January
Loss allowance as at 31 December
26.2 Restricted cash
Restricted cash
26.3 Movement in restricted cash
(Decrease)/Increase in restricted cash
2022
₦ million
2021
₦ million
101
9
110
2022
₦ million
10,706
10,706
2022
₦ million
(3,359)
(3,359)
93
8
101
2021
₦ million
6,603
6,603
2021
₦ million
7,029
7,029
2022
$’000
246
–
246
2022
$’000
23,944
23,944
2022
$’000
(7,915)
(7,915)
2021
$’000
246
–
246
2021
$’000
16,029
16,029
2021
$’000
17,552
17,552
Included in the restricted cash balance is $8 million, ₦3.6 billion and $12.5 million, ₦5.6 billion set aside in the stamping reserve account and debt
service reserve account respectively for the revolving credit facility. The amount is to be used for the settlement of all fees and costs payable for
the purposes of stamping and registering the Security Documents at the stamp duties office and at the Corporate Affairs Commission (CAC).
Also included in the restricted cash balance is $0.8 million, ₦0.3 billion, and $1 million, ₦0.5 billion for rent deposit, and unclaimed dividend
respectively.
A garnishee order of $1.6 million, ₦0.7 billion is included in the restricted cash balance as at the end of the reporting period.
These amounts are subject to legal restrictions and are therefore not available for general use by the Group.
27. Share capital
27.1 Authorised and issued share capital
Authorised Ordinary Share capital
588,444,561 issued shares denominated in
Naira of 50 kobo per share
Issued and fully paid
588,444,561 (2021: 584,035,845) issued shares
denominated in Naira of 50 kobo per share
2022
₦ million
2021
₦ million
2022
$’000
2021
$’000
500
500
3,335
3,335
297
296
1,864
1,862
Fully paid Ordinary Shares carry one vote per share and the right to dividends. There were no restrictions on the Group’s share capital.
27.2 Movement in share capital and other reserves
Opening balance as at 1 January 2021
Share based payments
Vested shares
PAYE tax withheld on vested shares
Closing balance as at 31 December 2022
Opening balance as at 1 January 2022
Share based payments
Vested shares
Shares re-purchased
Closing balance as at 31 December 2022
Number
of shares
584,035,845
–
4,719,809
(311,093)
588,444,561
Number
of shares
584,035,845
–
4,719,809
(311,093)
588,444,561
Issued share
capital
₦’million
Share premium
₦’million
Share based
payment reserve
₦’million
296
–
2
(1)
297
90,383
–
2,450
(1,516)
91,317
4,914
3,474
(2,452)
–
5,936
Issued share
capital
$’000
Share premium
$’000
Share based
payment reserve
$’000
1,862
–
5
(3)
1,864
520,138
–
5,480
(3,391)
522,227
22,190
8,188
(5,485)
–
24,893
Treasury
shares
₦’million
(2,025)
–
–
–
(2,025)
Treasury
shares
$’000
(4,915)
–
–
–
(4,915)
Total
₦’million
93,568
3,474
–
(1,517)
95,525
Total
$’000
539,275
8,188
–
(3,394)
544,069
203
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
27. Share capital continued
27.3 Share Premium
Share premium
2022
₦ million
91,317
2021
₦ million
90,383
2022
$’000
2021
$’000
522,227
520,138
Section 120.2 of Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 requires that where a Company issue
shares at premium (i.e., above the par value), the value of the premium should be transferred to share premium.
During the year, an additional 4,719,809 shares vested with a fair value of $5.49 million. The excess of $5.48 million above the nominal value
of Ordinary Shares have been recognised in share premium.
27.4 Employee share-based payment scheme
As at 31 December 2022, the Group had awarded 94,038,312 shares (2021: 73,966,540 shares) to certain employees and senior executives in line
with its share-based incentive scheme. Included in the share-based incentive schemes is two additional schemes (2021 LTIP Scheme and 2022
LTIP Scheme) awarded during the reporting period. During the reporting period, 7,821,418 shares had vested out of which 3,101,609 shares were
forfeited in relation to participants whose employment was terminated during the vesting period. The average forfeiture rate due to failure to meet
non-market vesting condition is 16.19% while the average due to staff exit is 24.36%. The impact of applying the forfeiture rate of 25% on existing
LTIP awards which are yet to vest will result in a reduction of share-based compensation expense for the year by $3,531,176. The number of
shares that eventually vested during the year after the forfeiture and conditions above is 4,719,809 (Dec 2021: 5,736,761 shares were vested).
Description of the awards valued
i.
The Group has made a number of share-based awards under incentive plans since its IPO in 2014: IPO-related grants to Executive and
Non-Executive Directors, 2018/2020 deferred bonus awards and 2020 Long-term Incentive plan (‘LTIP’) awards. Shares under these incentive
plans were awarded at the IPO in April 2014, 2015, 2016, 2017,2018 and 2020 conditional on the Nigerian Stock Exchange (‘NSE’) approving the
share delivery mechanism proposed by the Group. A number of these awards have fully vested.
Seplat Deferred Bonus Award
25% of each Executive Director’s 2019 bonus (paid in 2020) has been deferred into shares and would be released in 2022 subject to continued
employment over the vesting period. 2020 deferred bonus was approved by the Board and vested in 2022. No performance criteria are attached
to this award. As a result, the fair value of these awards is calculated using a Black-Scholes model.
Long Term Incentive Plan (LTIP) awards
Under the LTIP Plan, shares are granted to management staff of the organisation at the end of every year. The shares were granted to the
employees at no cost. The shares vest (after three years) based on the following conditions.
• 25% vesting for median relative TSR performance rising to 100% for upper quartile performance on a straight-line basis.
• Relative TSR vesting reduced by 75% if 60% and below of operational and technical bonus metrics are achieved, with 35% reduction
if 70% of operational and technical bonus metrics are achieved and no reduction for 80% or above achievement.
• the Group outperforms the median TSR performance level with the LTIP exploration and production comparator group.
The LTIP awards have been approved by the NSE.
Share based payment expenses
ii.
The expense recognised for employee services received during the year is shown in the following table:
Expense arising from equity-settled share-based payment transactions
2022
₦ million
3,474
2021
₦ million
1,209
2022
$’000
8,188
2021
$’000
3,020
204
Seplat Energy PlcAnnual Report and Accounts 2022 There were no cancellations to the awards in 2022. The share awards granted to Executive Directors and confirmed employees are summarised below:
Scheme
Deemed grant date
Start of service period
End of service period
Vesting status
Global Bonus Offer
Non-Executive Shares
2014 Deferred Bonus
2014 Long term incentive Plan
2015 Long term incentive Plan
2015 Deferred Bonus
2016 Long term incentive Plan
2016 Deferred Bonus
2017 Long term incentive Plan
2017 Deferred Bonus
2018 Long term incentive Plan
2018 Deferred Bonus
2019 Long term incentive Plan
2019 Deferred Bonus
2020 Long term incentive Plan
2020 Long term incentive Plan
2021 Long term incentive Plan
2021 Long term incentive Plan –
Executives
2020 Deferred Bonus
2022 Long term incentive Plan
2021 Deferred Bonus
COO Sign on Bonus
4 November 2015
4 November 2015
14 December 2015
14 December 2015
31 December 2015
21 April 2016
22 December 2016
24 November 2017
24 November 2017
2 May 2018
2 May 2018
2 May 2019
2 May 2019
30 Apr 2020
30 Apr 2020
2 Dec 2020
2 November 2021
10 March 2022
10 March 2022
30 May 2022
10 March 2022
4 August 2022
9 April 2014
9 April 2014
14 December 2015
14 December 2015
14 December 2015
21 April 2016
22 December 2016
24 November 2017
24 November 2017
2 May 2018
2 May 2018
2 May 2019
2 May 2019
30 Apr 2020
30 Apr 2020
2 Dec 2020
2 November 2021
10 March 2022
10 March 2022
30 May 2022
10 March 2022
4 August 2022
9 April 2015
9 April 2015
21 April 2017
9 April 2017
21 April 2018
20 April 2018
21 December 2019
20 April 2019
20 April 2020
31 December 2019
2 May 2021
31 December 2020
2 May 2022
31 Dec 2021
1 May 2023
2 Dec 2023
2 November 2024
2 November 2024
31 December 2022
30 May 2025
31 December 2023
1 July 2024
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Partially
Fully
Partially
Partially
Partially
Partially
Fully
Partially
Partially
Partially
Number of
awards
6,472,138
793,650
212,701
2,173,259
5,287,354
247,610
10,294,300
278,191
7,938,589
193,830
6,936,599
341,069
7,648,850
214,499
10,828,156
1,110,057
12,995,688
5,133,469
172,586
13,811,252
439,908
514,575
94,038,312
Determination of share awards outstanding
iii.
Share awards used in the calculation of diluted earnings per shares are based on the outstanding shares granted as at 31 December 2022.
Share award scheme (all awards)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
Share award scheme (all awards)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2022
Number
2,800,942
25,036,212
(4,719,809)
(3,101,609)
20,015,736
2022
Number
2,800,942
25,036,212
(4,719,809)
(3,101,609)
20,015,736
2022
WAEP ₦
442
442
259
2022
WAEP $
1.10
1.10
0.58
2021
Number
8,806,987
1,145,053
(5,736,761)
(1,414,337)
2,800,942
2021
Number
8,806,987
1,145,053
(5,736,761)
(1,414,337)
2,800,942
2021
WAEP ₦
843
415
442
2021
WAEP $
2.22
1.04
1.10
The following table illustrates the number and weighted average exercise prices (‘WAEP’) of and movements in deferred bonus scheme and
long-term incentive plan during the year for each available scheme.
Deferred Bonus Scheme
Outstanding at 1 January
Granted during the year
Exercised during the year
Outstanding at 31 December
2022
Number
–
479,564
(172,568)
306,996
2022
WAEP ₦
–
541
483
2021
Number
86,151
128,348
(214,499)
–
2021
WAEP ₦
509
415
–
205
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
27. Share capital continued
27.4 Employee share-based payment scheme continued
Deferred Bonus Scheme
Outstanding at 1 January
Granted during the year
Exercised during the year
Outstanding at 31 December
2022
Number
–
479,564
(172,568)
306,996
2022
WAEP $
–
1.21
1.08
2021
Number
86,151
128,348
(214,499)
–
2021
WAEP $
0.62
1.04
–
The fair value of the modified options was determined using the same models and principles as described in the table below on the inputs to the
models used for the scheme.
Long-Term Incentive Plan (LTIP)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
Long-Term Incentive Plan (LTIP)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2022
Number
2,800,942
24,556,648
(4,547,241)
(3,101,740)
19,708,740
2022
Number
2,800,942
24,556,648
(4,547,241)
(3,101,740)
19,708,740
2022
WAEP ₦
492
–
322
2022
WAEP $
1.10
–
0.72
2021
Number
8,720,836
1,016,705
(5,522,262)
(1,414,337)
2,800,942
2021
Number
8,720,836
1,016,705
(5,522,262)
(1,414,337)
2,800,942
2021
WAEP ₦
509
415
442
2021
WAEP $
1.34
1.04
1.10
The shares are granted to the employees at no cost. The weighted average remaining contractual life for the share awards outstanding as at
31 December 2022 range from 0.8 to 2.3 years (2021: 0.2 to 2.7 years).
The weighted average fair value of awards granted during the year range from ₦170 to ₦581 (2021: ₦415 to ₦442.32), $0.38 to $1.30 (2021: $1.04 to $1.10).
The fair value at grant date is independently determined using the Monte Carlo valuation method which takes into account, the term of the
award, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate
for the term of the award and the correlations and volatilities of peer group companies.
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes
to future volatility due to publicly available information.
Inputs to the models
iv.
The following table lists the inputs to the models used for the share awards outstanding in the respective plans for the year ended 31 December 2022:
Dividend yield (%)
Expected volatility (%)
Risk–free interest rate (%)
Expected life of share options
Share price at grant date ($)
Share price at grant date (₦)
Model used
Model used
2020
LTIP
2020
LTIP
2021
LTIP
2021
LTIP execs
2022
LTIP
0.00%
43%
0.44%
3.00
0.38
135.38
Monte Carlo
0.00%
43%
0.44%
3.00
0.51
193.48
Monte Carlo
0.00%
51.68%
0.31%
3.00
0.66
264.32
Monte Carlo
0.00%
59.29%
2.17%
2.64%
1.12
465.74
Monte Carlo
0.00%
59.86%
2.53%
3.00
1.18
489.76
Monte Carlo
27.5 Treasury shares
This relates to Share buy-back programme for Group’s Long-Term Incentive Plan. The programme commenced from 1 March 2021 and are held
by the Trustees under the Trust for the benefit of the Group’s employee beneficiaries covered under the Trust.
206
Seplat Energy PlcAnnual Report and Accounts 2022
28. Capital contribution
This represents M&P additional cash contribution to the Group. In accordance with the Shareholders’ Agreement, the amount was used by the
Group for working capital as was required at the commencement of operations.
Capital contribution
2022
₦ million
5,932
2021
₦ million
5,932
2022
$’000
2021
$’000
40,000
40,000
29. Foreign currency translation reserve
Cumulative foreign exchange differences arising from translation of the Group’s results and financial position into the presentation currency
and from the translation of foreign subsidiary is recognised in foreign currency translation reserve.
30.
Interest bearing loans and borrowings
30.1 Reconciliation of interest bearings loans and borrowings
Below is the reconciliation of interest bearing loans and borrowings for 2022:
Balance as at 1 January 2022
Interest accrued
Interest capitalised
Interest repayment
Other financing charges
Transfers
Exchange differences
Carrying amount as at 31 December 2022
Borrowings
due within
1 year
₦ million
24,988
27,761
5,943
(26,857)
(5,325)
4,274
2,448
33,232
Borrowings
due above
1 year
₦ million
290,803
–
–
–
–
(4,274)
24,620
311,149
Below is the reconciliation of interest bearing loans and borrowings for 2021:
Balance as at 1 January 2021
Addition
Interest accrued
Interest capitalised
Principal repayment
Interest repayment
Other financing charges
Transfers
Exchange differences
Carrying amount as at 31 December 2021
Borrowings
due within
1 year
₦ million
Borrowings
due above
1 year
₦ million
35,518
268,725
29,765
4,995
(240,291)
(27,728)
(8,154)
(40,451)
2,609
24,988
229,880
–
–
–
–
–
–
40,451
20,472
290,803
Total
₦ million
315,791
27,761
5,943
(26,857)
(5,325)
–
27,068
344,381
Total
₦ million
265,398
268,725
29,765
4,995
(240,291)
(27,728)
(8,154)
–
23,081
315,791
Borrowings
due within
1 year
$’000
Borrowings
due above
1 year
$’000
60,661
65,418
14,005
(63,287)
(12,547)
10,072
–
74,322
Borrowings
due within
1 year
$’000
93,468
671,000
74,322
12,473
(600,000)
(69,236)
(20,360)
(101,006)
–
60,661
705,953
–
–
–
–
(10,072)
–
695,881
Borrowings
due above
1 year
$’000
604,947
–
–
–
–
–
–
101,006
–
705,953
Total
$’000
766,614
65,418
14,005
(63,287)
(12,547)
–
–
770,203
Total
$’000
698,415
671,000
74,322
12,473
(600,000)
(69,236)
(20,360)
–
–
766,614
Other financing charges include term loan arrangement and commitment fees, annual bank charges, technical bank fee, agency fee and
analytical services in connection with annual service charge. These costs do not form an integral part of the effective interest rate. As a result,
they are not included in the measurement of the interest-bearing loan.
30.2 Amortised cost of borrowings
Senior loan notes
Revolving loan facilities
Reserve based lending (RBL) facility
2022
₦’million
298,133
3,655
42,593
344,381
2021
₦’million
266,963
–
48,828
315,791
2022
$’000
666,768
8,176
95,259
770,203
2021
$’000
648,079
–
118,535
766,614
$650 million Senior notes – April 2021
In March 2021, the Group offered 7.75% senior notes with an aggregate principal of $650 million due in April 2026. The notes, which were priced
on 25 March and closed on 1 April 2021, were issued by the Group in March 2021 and guaranteed by certain of its subsidiaries.
The gross proceeds of the Notes were used to redeem the existing $350 million 9.25% senior notes due in 2023, to repay in full drawings of $250 million
under the existing $350 million revolving credit facility for general corporate purposes, and to pay transaction fees and expenses. The amortised
cost for the senior notes as at the reporting period is $666.77 million, ₦298.13 billion although the principal is $650 million.
$110 million Senior reserve-based lending (RBL) facility – March 2021
The Group through its subsidiary Westport on 28 November 2018 entered into a five-year loan agreement with interest payable semi-annually.
The RBL facility has an initial contractual interest rate of 8% + USD LIBOR as at half year (8.30%) and a final settlement date of April 2026.
The RBL is secured against the Group’s producing assets in OML 40 via the Group’s shares in Elcrest, and by way of a debenture which creates
a charge over certain assets of the Group, including its bank accounts.
207
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
30.
Interest bearing loans and borrowings continued
30.2 Amortised cost of borrowings continued
The available facility is capped at the lower of the available commitments and the borrowing base. The current borrowing base is more than $100 million,
with the available commitments at $100 million. The commitments were scheduled to reduce to $87.5 million on 31 March 2021. The first reduction
in the commitments occurred on 31st December 2019 in line with the commitment reduction schedule contained within the Facility Agreement.
This resulted in the available commitments reducing from $125.0 million to $122.5 million, with a further reduction to $100.0 million as at December 2020.
The RBL has a maturity of five years, the repayments of principal are due on a semi-annual basis so that the outstanding balance of the RBL will
not exceed the lower of (a) the borrowing base amount and (b) the total commitments. Interest rate payable under the RBL is USD SOFR plus 8%,
as long as more than 50% of the available facility is drawn. This has been amended over time.
On 4th February 2020 Westport drew down a further $10 million increasing the debt utilised under the RBL from $90 million to $100 million.
The interest rate of the facility is variable. The interest accrued at the reporting period is $11 million, ₦4.7 billion using an effective interest rate
of 12.17%. The interest paid was determined using SOFR rate + 8 % on the last business day of the reporting period.
On 17th March 2021, Westport signed an amendment and restatement agreement regarding the RBL. As part of the new agreement, the debt
utilised and interest rate remain unchanged at $100 million and 8% + USD LIBOR respectively, however, the maturity date was extended by either
five years after the effective date of the loan (March 2026) or by the reserves tail date (expected to be March 2025). Due to the modification of the
original agreement and based on the facts and circumstances, it was determined that the loan modifications were substantial. Therefore, the
existing facility was derecognised, and a new liability was recognised, and the present value of the loan commitment was moved to long-term
liabilities (Borrowings due above 1 year).
On 24 May 2021 Westport drew down a further $10 million increasing the debt utilised under the RBL from $100 million to $110 million.
The amortised cost for this as at the reporting period is $95.3 million, ₦42.6 billion (Dec 2021: $108.8 million), although the principal is $110 million.
$50 million Reserved based lending (RBL) facility – July 2021
In July 2021, the Group raised a $50 million offtake line to the Reserved Based Lending Facility. The Facility has a 6-year tenor, maturing in 2027.
As of the period under review, $11 million has been drawn on this facility. The amortised cost for this as at the reporting period is $8.2 million,
₦3.7 billion although the principal is $11 million.
$350 million Revolving credit facility – September 2022
Seplat Energy Plc successfully refinanced its existing $350million revolving credit facility due in December 2023 with a new three-year $350 million
revolving credit facility due in June 2025 (the “RCF”). The RCF includes an automatic maturity extension until December 2026 once a refinancing
of the existing $650 million bond due in April 2026 is implemented. The RCF is scheduled to reduce from July 2024, with such date automatically
extended to July 2025 once the refinancing of the existing $650 million bond is implemented. The RCF carries initial interest of 6% over the base
rate (SOFR plus applicable credit adjustment spread) with the margin reducing to 5% after production flowing through the Amukpe-to-Escravos
pipeline is stabilized at an average working interest production of at least 15,000 bpd over a 45 consecutive day period. The pricing is in line with
the existing RCF pricing, although it reflects a change in the base rate from LIBOR to SOFR plus the applicable credit adjustment spread.
30.3 Outstanding principal exposures
The table below provides an overview of IBOR related exposure by currency and nature of financial instruments as at December 2022.
2022
USD SOFR
₦ million
344,381
344,381
2021
USD LIBOR
₦ million
315,791
315,791
2022
USD SOFR
$’000
770,203
770,203
2021
USD LIBOR
$’000
766,614
766,614
Interest
Current
₦ million
Non-current
₦ million
Total
₦ million
Current
$’000
Non-current
$’000
Total
$’000
7.75%
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
8.00% + SOFR
10.5% + SOFR
Interest
7.75%
8.00% + USD LIBOR
8.00% + USD LIBOR
8.00% + USD LIBOR
8.00% + USD LIBOR
10.5% + USD LIBOR
–
–
–
–
–
–
–
290,635
290,635
17,170
17,527
10,016
4,471
4,918
344,737
17,170
17,527
10,016
4,471
4,918
344,737
–
–
–
–
–
–
–
650,000
650,000
38,400
39,200
22,400
10,000
11,000
771,000
38,400
39,200
22,400
10,000
11,000
771,000
Current
₦ million
Non-current
₦ million
Total
₦ million
Current
$’000
Non-current
$’000
Total
$’000
–
–
–
–
–
–
–
267,755
267,755
15,818
16,148
9,227
4,119
4,531
317,598
15,818
16,148
9,227
4,119
4,531
317,598
–
–
–
–
–
–
–
650,000
650,000
38,400
39,200
22,400
10,000
11,000
771,000
38,400
39,200
22,400
10,000
11,000
771,000
31 December 2022
Non-derivative financial liabilities
Interest bearing loans and borrowings
31 December 2022
Fixed interest rate
Fixed interest rate borrowings
Senior notes
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd
The Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
First City Monument Bank Limited
Shell Western Supply and Trading Limited
Total variable interest borrowings
31 December 2021
Fixed interest rate
Senior notes:
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd
The Stanbic IBTC Bank Plc
The Standard Bank of South Africa Limited
First City Monument Bank Limited
Shell Western Supply and Trading Limited
208
Seplat Energy PlcAnnual Report and Accounts 2022 31. Lease liabilities
As at 1 January
Additions during the year
Payments during the year
Interest on lease liabilities
Exchange difference
As at 31 December
2022
₦ million
2021
₦ million
1,084
(997)
161
81
1,800
384
(1,347)
212
(48)
1,471
2022
$’000
2,424
(2,350)
380
–
4,025
2021
$’000
960
(3,893)
530
–
3,571
In 2018, the Group entered into a lease agreement for an office building in Lagos. The non-cancellable period of the lease is 5 years commencing
on 1 January 2019 and ending on 31 December 2023. However, the Group has an option of either extending the lease period on terms to be
mutually agreed by parties to the lease on the expiration of the current term or purchase the property.
The Group’s lease liability as at 31 December 2022 is split into current and non-current portions as follows::
Current
Non-current
The following amounts are recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
The following shows the impact of the lease on cash flow:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Net cash flows from operating activities
Lease payments
Net cash flows from financing activities
2022
₦ million
1,800
–
1,800
2022
₦ million
2,297
161
2,458
2022
₦ million
2,297
161
2,458
(997)
(997)
2021
₦ million
1,273
198
1,471
2021
₦ million
1,870
212
2,082
2021
₦ million
1,870
212
2,082
(1,347)
(1,347)
2022
$’000
4,025
–
4,025
2022
$’000
5,413
380
5,793
2022
$’000
5,413
380
5,793
(2,350)
(2,350)
2021
$’000
3,090
481
3,571
2021
$’000
4,670
530
5,200
2021
$’000
4,670
530
5,200
(3,893)
(3,893)
The Group’s lease payments for drilling rigs are classified as variable lease payments. The variability arises because the lease payments are
linked to the use of the underlying assets. These variable lease payments are therefore excluded from the measurement of the lease liabilities.
At the end of the reporting period, there was no rental expense recognised within cost of sales for these leases. The expected future cash
outflows arising from variable lease payments is estimated at ₦1 billion, $2.4 million, (2021: ₦1.14 billion, $3.4 million,).
The following tables summarise the impact that exercising the purchase option would have had on the profit before tax and net assets of the Group:
Effect on profit before tax
Effect on profit before tax
Depreciation
Interest payment
Depreciation
Interest payment
2022
₦ million
885
(1,156)
(271)
2022
$’000
2,086
(2,723)
(637)
2021
₦ million
725
(946)
(221)
Effect on net assets
Effect on net assets
2022
₦ million
12,885
(13,440)
(555)
2022
$’000
30,268
(31,671)
(1,403)
2021
₦ million
10,463
(10,939)
(476)
2021
$’000
1,810
(2,363)
(553)
2021
$’000
27,631
(28,912)
(1,281)
209
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
32. Provision for decommissioning obligation
At 1 January 2022
Unwinding of discount due to passage of time
Change in estimate
Exchange difference
At 31 December 2022
At 1 January 2021
Unwinding of discount due to passage of time
Change in estimate
Exchange difference
At 31 December 2021
₦ million
63,709
994
15,631
6,336
86,670
61,795
539
(3,727)
5,102
63,709
$’000
154,659
2,343
36,834
–
193,836
162,619
1,345
(9,305)
–
154,659
The Group makes full provision for the future cost of decommissioning oil production facilities on a discounted basis at the commencement of
production. This relates to the removal of assets as well as their associated restoration costs. This obligation is recorded in the period in which the
liability meets the definition of a “probable future sacrifice of economic benefits arising from a present obligation”, and in which it can be
reasonably measured.
The provision represents the present value of estimated future expenditure to be incurred as highlighted in the table below which is the current
expectation as to when the producing facilities are expected to cease operations. Management engaged a third party to assist with an estimate
of the expenditure to be incurred. The estimate for 2022 were done by Ryder Scott for all the OMLs based on current assumptions of the economic
environment which management believes to be a reasonable basis upon which to estimate the future liability. These estimates are reviewed
regularly to consider any material changes to the assumptions. However, actual decommissioning costs will ultimately depend upon future
market prices for necessary decommissioning works required that will reflect market conditions at the relevant time.
Furthermore, the timing of decommissioning is likely to depend on when the fields cease to produce at economically viable rates.
Seplat West Limited:
OML 4
OML 38
OML 41
Newton Energy Limited (OPL 283)
Seplat East Onshore Ltd (OML 53)
Elcrest (OML 40)
Ubima (OML 17)
Current estimated life span
of reserves
2022
2021
2027 – 2037
2027 – 2034
2037
2037 – 2044
2028 – 2054
2031
–
2027 – 2037
2027 – 2034
2037
2037 – 2044
2028 – 2054
2031
2032
210
Seplat Energy PlcAnnual Report and Accounts 2022 33. Employee benefit obligation
33.1 Defined contribution plan
The Group contributes to a funded defined contribution retirement benefit scheme for its employees in compliance with the provisions of the
Pension Reform Act 2014. A defined contribution plan is a pension plan under which the Group pays fixed contributions to an approved Pension
Fund Administrator (‘PFA’) – a separate entity. The assets of the scheme are managed by various Pension Fund Administrators patronised by
employees of the Group. The Group’s contributions are charged to the profit and loss account in the year to which they relate.
Investment management strategy and policy
33.2 Defined benefit plan
i.
The Group operates a funded defined benefit pension plan in Nigeria under the regulation of National Pension Commission. The plan provides
benefits to all the employees (excluding Directors holding salaried employment in the Group) who have been employed by the Group for a
continuous period of five years and whose employment have been confirmed. The employee’s entitlement to the accrued benefits occurs on
retirement from the Group. The level of benefits provided on severance depends on members’ length of service and salary at retirement age.
The overall investment philosophy of the defined benefit plan fund is to ensure safety, optimum returns and liquidity in line with the regulation
and guidelines of the Pension Reform Act 2014 or guidelines that may be issued from time to time by National Pension Commission.
Plan assets are held in trust. Responsibility for supervision of the plan assets (including investment decisions and contributions schedules) lies
jointly with the trustees and the pension fund managers. The trustees are made up of members of the Group’s senior management appointed
by the Chief Executive Officer. The Group does not have an investment strategy of matching match plan assets with the defined obligations as
they fall due, however, the Group has an obligation to settle shortfalls in the plan asset upon annual actuarial valuations.
The provision for the defined benefit plan is based on an independent actuarial valuation performed by Logic Professional Services (“LPS”)
using the projected unit credit method. The provision is adjusted for inflation, interest rate risks, changes in salary and changes in the life
expectancy for the beneficiaries.
The amount payable as at 31 December 2022 was ₦2.9 billion ($6.4 million), (2021: ₦4.2 billion, $10.1 million).
The following tables summarise the components of net defined benefit expense recognised in the statement of profit or loss and other
comprehensive income and in the statement of financial position for the respective plans:
ii.
Liability recognised in the statement of financial position
Defined benefit obligation
Fair value of plan assets
iii.
Amount recognised in profit or loss
Current service cost
Interest cost on defined benefit obligation
Plan amendment
Return on plan assets
2022
₦ million
7,011
(4,133)
2,878
2021
₦ million
6,442
(2,261)
4,181
2022
₦ million
2021
₦ million
964
864
26
1,854
(298)
1,556
838
421
–
1,259
(128)
1,131
2022
$’000
15,680
(9,243)
6,437
2022
$’000
2,158
1,932
58
4,148
(666)
3,482
The Group recognises a part of its defined benefit expenses in profit or loss and recharges the other part to its joint operations partners,
this is recognised as a receivable from the partners. Below is the breakdown:
Charged to profit or loss
Charged to receivables
Balance as at 31 December
iv.
Remeasurement (gains)/losses in other comprehensive income
Remeasurement losses/(gains) due to changes in financial and
demographic assumptions
Remeasurement (gains)/losses due to experience adjustment
Remeasurement gain on plan assets
Deferred tax credit/(expense) on remeasurement losses
Balance as at 31 December
2022
₦ million
660
896
1,556
2021
₦ million
439
692
1,131
2022
₦ million
2021
₦ million
(299)
(629)
104
(824)
379
(445)
(953)
503
103
(347)
296
(51)
2022
$’000
1,556
1,926
3,482
2022
$’000
(705)
(1,483)
244
(1,944)
892
(1,052)
2021
$’000
15,638
(5,489)
10,149
2021
$’000
2,092
1,051
–
3,143
(319)
2,824
2021
$’000
1,095
1,729
2,824
2021
$’000
(2,380)
1,255
256
(869)
739
(130)
211
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
33. Employee benefit obligation continued
Deferred tax (expense)/credit on remeasurement (gains)/losses
33.2 Defined benefit plan continued
v.
The Group recognises deferred tax (credit on a part of the remeasurement (gain)/ losses in other comprehensive income/(loss).
Below is the breakdown:
Charged to other comprehensive income
Charged to receivables
Deferred tax on remeasurement losses
vi.
Changes in the present value of the defined benefit obligation are as follows:
Defined benefit obligation as at 1 January
Current service cost
Interest cost on benefit obligation
Remeasurement losses due to changes in financial and demographic
assumptions
Remeasurement gains due to experience adjustment
Benefits paid by the employer
Benefits from the fund
Exchange differences
Defined benefit obligation at 31 December
vii.
The changes in the fair value of plan assets is as follows:
Balance as at 1 January
Employer contribution
Return on plan assets
Benefits paid from fund
Remeasurement loss on plan assets
Exchange differences
Balance as at 31 December
The net liability disclosed above relates to funded plans as follows:
Present value of funded obligations
Fair value of plan assets
Deficit of funded plans
2022
₦ million
379
–
379
2022
₦ million
6,442
965
864
(299)
(629)
–
(357)
25
7,011
2022
₦ million
(2,261)
(2,015)
(298)
357
104
(20)
(4,133)
2022
₦ million
7,011
(4,133)
2,878
2021
₦ million
133
163
296
2021
₦ million
5,304
838
421
(953)
503
–
(135)
464
6,442
2021
₦ million
(1,241)
(1,000)
(128)
135
103
(130)
(2,261)
2021
₦ million
6,442
(2,261)
4,181
2022
$’000
892
–
892
2022
$’000
15,638
1,571
1,345
(669)
(1,407)
–
(798)
–
15,680
2022
$’000
(5,489)
(4,507)
(666)
992
427
–
2021
$’000
333
406
739
2021
$’000
13,958
2,092
1,051
(2,380)
1,255
–
(338)
–
15,638
2021
$’000
(3,267)
(2,497)
(319)
338
256
–
(9,243)
(5,489)
2022
$’000
15,680
(9,243)
6,437
2021
$’000
15,638
(5,489)
10,149
The fair value of the plan asset of the Group at the end of the reporting period was determined using the market values of the comprising assets
as shown below:
Equity Instrument
Treasury bills and money market
Infrastructure Fund
Bonds
Cash at bank
Payables
Receivables
Total plan asset as at 31 December
Quoted
₦ million
Not quoted
₦ million
97
1,519
72
356
–
–
–
2,044
–
–
–
–
2,095
(6)
–
2,089
2022
Total
₦ million
97
1,519
72
356
2,095
(6)
–
4,133
Quoted
$’000
Not quoted
$’000
217
3,397
161
796
–
–
–
4,571
–
–
–
–
4,685
(13)
–
4,672
2022
Total
$’000
217
3,397
161
796
4,685
(13)
–
9,243
212
Seplat Energy PlcAnnual Report and Accounts 2022 Equity Instrument
Treasury bills and money market
Bonds
Cash at bank
Payables
Receivables
Total plan asset as at 31 December
Quoted
₦ million
Not quoted
₦ million
73
1,164
440
–
–
–
1,677
–
–
–
589
(5)
–
584
2021
Total
₦ million
73
1,164
440
589
(5)
–
2,261
Quoted
$’000
177
2,816
1,068
–
–
–
4,061
Not quoted
$’000
–
–
–
1,431
(12)
9
1,428
2021
Total
$’000
177
2,816
1,068
1,431
(12)
9
5,489
viii.
The principal assumptions used in determining defined benefit obligations for the Group’s plans are shown below:
Discount rate
Average future pay increase
Average future rate of inflation
a. Mortality in service
Sample age
25
30
35
40
45
Withdrawal from service
Age band
Less than or equal to 30
31 – 39
40 – 44
45 – 55
56 – 60
2022
%
15
13
13
Number of deaths in year
out of 10,000 lives
2022
1
29
60
99
90
Rates
2022
1.0%
1.5%
1.5%
1.0%
0.0%
2021
%
13.5
12
12
2021
1
29
60
99
90
2021
1.0%
1.5%
1.5%
1.0%
0.0%
A quantitative sensitivity analysis for significant assumption is as shown below:
Assumptions
Sensitivity Level:
Impact on the net defined
benefit obligation
31 December 2022
31 December 2021
Assumptions
Sensitivity Level:
Impact on the net defined
benefit obligation
31 December 2022
31 December 2021
Discount rate
Salary increases
Mortality
Base
1% increase
₦ million
1% decrease
₦ million
1% increase
₦ million
1% decrease
₦ million
1% increase
₦ million
1% decrease
₦ million
7,011
6,442
(6,395)
(603)
7,719
698
7,759
733
(6,351)
(642)
7,016
3
(7,006)
(4)
Discount rate
Salary increases
Mortality
Base
1% increase
$’000
1% decrease
$’000
1% increase
$’000
1% decrease
$’000
1% increase
$’000
1% decrease
$’000
15,680
16,086
(15,069)
(1,506)
18,189
1,743
18,284
1,830
(14,966)
(1,603)
16,533
7
(16,509)
(10)
The sensitivity analyses above have been determined based on a method that extrapolates the impact on net defined benefit obligation as a
result of reasonable changes in key assumptions occurring at the end of the reporting period. The methods and assumptions used in preparing
the sensitivity analysis did not change compared to prior period.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur and changes in some of the assumptions may be correlated.
213
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
33. Employee benefit obligation continued
33.2 Defined benefit plan continued
The expected maturity analysis of the undiscounted defined benefit plan obligation is as follows:
Within the next 12 months (next annual reporting period)
Between 2 and 5 years
Between 6 and 10 years
Beyond 10 years
2022
₦ million
421
3,202
11,423
178,775
193,821
2021
₦ million
368
2,015
8,400
143,328
154,111
2022
$’000
942
7,161
25.547
399,828
433,478
2021
$’000
919
5,031
20,975
357,891
384,816
The weighted average liability duration for the Plan is 12.17 years (2021: 13.96 years). The longest weighted duration for Nigerian Government
bond as at 31 December 2022 was about 6.65 years (2021: 7.11 years) with a gross redemption yield of about 15% (2021: 13.28%).
Risk exposure
a)
Through its defined benefit pension plans, the Group is exposed to several risks. The most significant of which are detailed below:
Liquidity risk
b)
The plan liabilities are not fully funded and as a result, there is a risk that the Group may not have the required cash flow to fund future defined
benefit obligations as they fall due.
Inflation risk
c)
This is the risk of an unexpected significant rise/fall of market interest rates. A rise leads to a fall in long-term asset values and a rise in liability
values.
Life expectancy
d)
The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase
in the plans’ liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy.
Asset volatility
e)
The Group holds a significant proportion of its plan assets in equities, which are expected to outperform corporate bonds in the long term
while providing volatility and risk in the short term.
Details of the Actuary is shown below:
Name of signer
Ganiu Shefiu
Name of firm
FRC number
Services rendered
Logic Professional Services
FRC/2017/NAS/0000001754
Actuary valuation services
34. Trade and other payables
Trade payable
Accruals and other payables
NDDC levy
Royalties payable
Overlift payable
2022
₦ million
48,582
96,112
2,685
30,749
27,494
205,622
2021
₦ million
49,607
67,630
5,283
14,100
14,584
151,204
2022
$’000
108,654
214,953
6,004
68,769
61,489
459,869
2021
$’000
120,426
164,175
12,826
34,228
35,403
367,058
Included in accruals and other payables are field accruals of $106.1 million, ₦38 billion (2021: $83.5 million, ₦ 34.4 billion) and other vendor
payables of $38.1 million, ₦26.5 billion (Dec 2021: $15.6 million, ₦6.4 billion). Royalties payable include accruals in respect of crude oil and gas
production for which payment is outstanding at the end of the period.
Overlifts are excess crude lifted above the share of production. It may exist when the crude oil lifted by the Group during the period is above
its ownership share of production. Overlifts are initially measured at the market price of oil at the date of lifting and recognised in profit or loss.
At each reporting period, overlifts are remeasured at the current market value. The resulting change, as a result of the remeasurement, is also
recognised in profit or loss and any amount unpaid at the end of the year is recognised in overlift payable.
35. Contract liabilities
2022
₦ million
–
2021
₦ million
–
2022
$’000
–
2021
$’000
–
214
Seplat Energy PlcAnnual Report and Accounts 2022 35.1 Reconciliation of contract liabilities
Opening balance
Recognised as revenue during the year
Exchange difference
2022
₦ million
–
–
–
–
2021
₦ million
3,599
(3,599)
–
–
2022
$’000
–
–
–
–
2021
$’000
9,470
(9,470)
–
–
Contract liabilities represents take or pay volumes contracted with Azura for 2022 which has been utilized. In line with the contract, Azura can
make a demand on the makeup gas but only after they have taken and paid for the take or pay quantity for the respective year. The contract
liability is accrued for two years after which the ability to take the makeup gas expires and any outstanding balances are recognised as revenue
from contracts with customers..
36.
Earnings/(Loss) per share EPS/(LPS)
Basic
Basic EPS/(LPS) is calculated on the Group’s profit after taxation attributable to the parent entity, which is based on the weighted average
number of issued and fully paid Ordinary Shares at the end of the year.
Diluted
Diluted EPS/(LPS) is calculated by dividing the profit after taxation attributable to the parent entity by the weighted average number of Ordinary
Shares outstanding during the year plus all the dilutive potential Ordinary Shares (arising from outstanding share awards in the share-based
payment scheme) into Ordinary Shares.
Profit/(loss) attributable to Equity holders of the parent
Loss attributable to non-controlling interests
Profit/(loss) for the year
Weighted average number of Ordinary Shares in issue
Outstanding share-based payments (shares)
Weighted average number of Ordinary Shares adjusted for the effect of dilution
Basic (loss)/earnings per share for the period
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Profit/(loss) used in determining basic/diluted earnings per share
2022
₦ million
26,483
17,950
44,433
Shares ‘000
1
588,446
588,447
₦
45.00
45.00
26,483
2021
₦ million
56,786
(9,855)
46,931
Shares ‘000
2,801
581,646
584,447
₦
97.63
97.16
56,786
2022
$’000
62,407
42,299
104,706
Shares ‘000
1
588,446
588,447
$
0.11
0.11
62,407
2021
$’000
141,784
(24,608)
117,176
Shares ‘000
2,801
581,646
584,447
$
0.24
0.24
141,784
The weighted average number of issued shares was calculated as a proportion of the number of months in which they were in issue during
the reporting period.
37. Dividends paid and proposed
As at 31 December 2022, the final proposed dividend for the Group is ₦11.18, $0.025 (2021: ₦10.3, $0.025) per share and the proposed Special
Dividend is ₦22.36, $0.05 per share (2021: nil).
Cash dividends on Ordinary Shares declared and paid:
Dividend for 2022: ₦42.60 ($0.10) per share 588,444,561 shares in issue
(2021: ₦50 ($0.13)) per share, 584,035,845 shares in issue)
Proposed dividend on Ordinary Shares:
Final proposed dividend for the year 2022:
₦11.18 ($0.025) (2021: ₦10.3 ($0.025)) per share
Special proposed dividend for the year 2022:
₦22.36 ($0.05) (2021: nil) per share
2022
₦ million
2021
₦ million
2022
$’000
2021
$’000
24,972
29,377
58,844
73,354
6,553
13,106
6,016
14,655
14,601
0
29,270
0
During the year, ₦32.2 billion, $44.1 million of dividend was paid at ₦54.70, $0.070 per share as final dividend for 2022. As at 31 March 2022,
₦10.47 billion, $14.7 million was paid at ₦17.79, $0.02 per share for 2022 Q1; As at 30 June 2022, ₦10.62 billion, $14.7 million was paid at ₦18.05,
$0.02 per share for 2022 Q2; As at 30 September 2022, ₦11.10 billion, $ 14.7 million was paid at ₦18.86, $0.02 per share for 2022 Q3. Final and
Special Naira dividend payments will be based on the Naira/Dollar rates on the date for determining the exchange rate. The payment is subject
to shareholders’ approval at the 2022 Annual General Meeting. The tax effect of dividend paid during the year was $4.3 million (₦5.6 billion).
215
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Notes to the consolidated financial statements | continued
38. Related party relationships and transactions
The Group is controlled by Seplat Energy Plc (the parent Company). The parent Company is owned 6.43% either directly or by entities
controlled by A.B.C Orjiako (SPDCL(BVI)) and members of his family. The remaining shares in the parent Company are widely held.
The goods and services provided by the related parties are disclosed below.
Shareholders of the parent company
i.
Shebah Petroleum Development Company Limited SPDCL (‘BVI’): Dr. A.B.C. Orjiako is a director and shareholder of SPDCL (BVI). The company
provided consulting services to Seplat. Services provided to the Group during the period amounted to $916.5 thousand, ₦409.8 million (2021: $1.1 million,
₦0.45 billion). Payables amounted to nil in the current period.
Amaze Limited: Dr. A.B.C. Orjiako is a director and shareholder of Amaze Ltd. The company provided consulting services to Seplat. Services
provided to the Group during the period amounted to $1,457 thousand, ₦651.3 million.
Entities controlled by key management personnel (Contracts <$1 million in 2022)
ii.
Abbeycourt Trading Company Limited: Dr. A.B.C. Orjiako is a director and shareholder. The Company provides diesel supplies to Seplat in respect
of Seplat’s rig operations. This amounted to nil during the period (2021: $222 thousand, ₦88.9 million). Receivables amounted to nil (2021: $6, ₦2,649).
Stage leasing (Ndosumili Ventures Limited): A subsidiary of Platform Petroleum Limited. The company provides transportation services to Seplat.
This amounted to nil (2021: $278 thousand, ₦111.3 million). Payables amounted to nil in the current period (2021: $3.2 thousand, ₦1.3 million).
Entities controlled by Directors of the Company
iii.
Ubosi Eleh and Company (controlled by Director Ernest Ebi): The company provided a leasehold property to Seplat. The amount during the
period amounted to $53.7 thousand, ₦24 million.
39.
Information relating to employees
39.1 Key management compensation
Key management includes executive and members of the leadership team. The compensation paid or payable to key management for
employee services is shown below:
Salaries and other short-term employee benefits
Post-employment benefits
Share based payment expenses
39.2 Chairman and Directors’ emoluments
Chairman (Non-Executive)
Chief Executive Officer
Executive Directors
Non-Executive Directors
Total
39.3 Highest paid Director
Highest paid Director
Emoluments are inclusive of income taxes.
2022
₦ million
1,943
190
692
2,825
2022
₦ million
412
500
508
1,006
2,426
2022
₦ million
500
2021
₦ million
1,560
179
483
2,222
2021
₦ million
403
475
727
1,346
2,951
2021
₦ million
475
39.4 Number of Directors
The number of Directors (excluding the Chairman) whose emoluments fell within the following ranges was:
Zero – ₦19,896,500
₦19,896,501 – ₦115,705,800
₦115,705,801 – ₦157,947,600
Above ₦157,947,600
Zero – $65,000
$65,001 – $378,000
$378,001 – $516,000
Above $516,000
216
2022
$’000
4,579
448
1,632
6,659
2022
$’000
971
1,177
1,196
2,371
5,715
2022
$’000
1,177
2021
$’000
3,895
447
1,207
5,549
2021
$’000
1,007
1,186
1,815
3,361
7,369
2021
$’000
1,186
2022
Number
2021
Number
–
–
–
3
3
–
–
–
3
3
2022
Number
2021
Number
–
–
–
3
3
–
–
–
3
3
Seplat Energy PlcAnnual Report and Accounts 2022 39.5 Employees
The number of employees (other than the Directors) whose duties were wholly or mainly discharged within Nigeria, and who earned
over ₦1,989,500 ($6,500), received remuneration (excluding pension contributions) in the following ranges:
₦1,989,650 – ₦4,897,600
₦4,897,601– ₦9,795,200
₦9,795,201 – ₦14,692,800
Above ₦14,692,800
$6,500 – $16,000
$16,001 – $32,000
$32,001 – $48,000
Above $48,000
39.6 Number of persons employed during the year
The average number of persons (excluding Directors) in employment during the year was as follows:
Senior management
Managers
Senior staff
Junior staff
2022
Number
2021
Number
25
115
197
259
596
16
134
180
202
532
2022
Number
2021
Number
25
115
197
259
596
16
134
180
202
532
2022
Number
2021
Number
36
163
312
85
596
31
136
245
120
532
39.7 Employee cost
Seplat’s staff costs (excluding pension contribution) in respect of the above employees amounted to the following:
Salaries & wages
40. Commitments and contingencies
2022
₦ million
12.686
12,686
2021
₦ million
13,021
13,021
2022
$’000
29,894
29,894
2021
$’000
32,512
32,512
40.1 Contingent liabilities
The Group is involved in a number of legal suits as defendant. The estimated value of the contingent liabilities for the year ended 31 December 2022
is ₦5.1 billion, $11.45 million (2021: ₦7.9 billion, $19.2 million). The contingent liability for the year is determined based on possible occurrences, though
unlikely to occur. No provision has been made for this potential liability in these financial statements. Management and the Group’s solicitors are
of the opinion that the Group will suffer no loss from these claims.
Under the OML 40 Joint Operating Agreement (‘JOA’), the Group is responsible for its share of expenditures incurred on OML 40 in respect of its
participating interest, on the basis that the operator’s estimated expenditures are reasonably incurred based on the approved work programme
and budget. From time to time, management disputes such expenditures on the basis that they do not meet these criteria, and when this occurs
management accrues at the period end for its best estimate of the amounts payable to the operator. Consequently, the amounts recognised as
accruals as of 31 December 2022 reflect management’s best estimate of amounts that have been incurred in accordance with the JOA and that
will ultimately be paid to settle its obligations in this regard.
However, management recognises there are a range of possible outcomes, which may be higher or lower than the management’s estimate
of accrued expenditure. It is estimated that around $10,233,128 (2021: $10,810,495) of possible expenditure currently remains under dispute..
41. Events after the reporting period
There was no event after the reporting period which could have a material effect on the disclosures and the financial position of the Group
as at 31 December 2022 and on its profit or loss and other comprehensive income for the period ended.
217
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Statement of value added
For the year ended 31 December 2022
Revenue from contracts with customers
Other income (net)
Finance income
Cost of goods and other services:
Local
Foreign
Valued added
Applied as follows:
To employees:
– as salaries and labour related expenses
To external providers of capital:
– as interest
To government:
– as Group taxes
Retained for the Group’s future:
– for asset replacement, depreciation,
depletion and amortisation
Deferred tax (charges)/credit
Profit/(loss) for the year
Valued added
2022
₦ million
403,913
(15,302)
491
(116,351)
(77,568)
195,183
%
100%
2021
₦ million
293,631
8,056
126
(74,697)
(49,798)
177,318
%
2022
$’000
951,795
(36,054)
1,157
%
(274,171)
(182,780)
100% 459,947
100%
2021
$’000
733,188
20,118
314
(186,526)
(124,350)
442,744
2022
₦ million
%
2021
₦ million
%
2022
₦ million
%
2021
₦ million
23,192
12%
17,268
10%
54,654
12%
43,116
28,916
15%
30,516
17%
68,141
15%
76,197
28,727
15%
15,061
8%
67,693
15%
37,606
%
100%
%
10%
17%
8%
56,345
29%
58,506
33%
132,776
29%
146,086
33%
13,570
44,433
195,183
7%
23%
100%
9,036
46,931
177,318
5%
27%
31,977
104,706
100% 459,947
7%
23%
22,563
117,176
100% 442,744
5%
27%
100%
The value added represents the additional wealth which the Group has been able to create by its own and its employees’ efforts.
This statement shows the allocation of that wealth to employees, providers of finance, shareholders, government and that retained
for the creation of future wealth.
218
Seplat Energy PlcAnnual Report and Accounts 2022 Five-year financial summary
As at 31 December 2022
Revenue from contracts with customers
Profit/(loss) before tax
Income tax (expense)/credit
Profit/(loss) for the year
Capital employed:
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Foreign currency translation reserve
Non-controlling interest
Total equity
Represented by:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Revenue from contracts with customers
Profit/(loss) before tax
Income tax (expense)/credit
Profit/(loss) for the year
Capital employed:
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Foreign currency translation reserve
Non-controlling interest
Total equity
Represented by:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
2022
₦ million
403,913
86,730
(42,297)
44,433
2021
₦ million
293,631
71,028
(24,097)
46,931
2020
₦ million
190,922
(28,872)
(1,840)
(30,712)
2019
₦ million
214,157
93,955
(8,939)
85,016
2018
₦ million
228,391
80,615
(35,748)
44,867
2022
₦ million
2021
₦ million
2020
₦ million
2019
₦ million
2018
₦ million
297
91,317
5,936
(2,025)
5,932
241,386
447,014
(2,963)
786,894
1,186,869
394,743
(527,361)
(267,357)
786,894
2022
$’000
951,795
204,376
(99,670)
104,706
296
90,383
4,914
(2,025)
5,932
239,429
385,348
(20,913)
703,364
1,324,724
278,812
(702,070)
(198,102)
703,364
2021
$’000
733,188
177,345
(60,169)
117,176
293
86,917
7,174
–
5,932
211,790
331,289
(11,058)
632,337
1,083,683
227,154
(499,349)
(179,151)
632,337
2020
$’000
530,467
(80,209)
(5,113)
(85,322)
289
84,045
8,194
–
5,932
259,690
202,910
(7,252)
553,808
717,664
286,569
(258,903)
(191,522)
553,808
2019
$’000
697,777
306,133
(29,125)
277,008
286
82,080
7,298
–
5,932
192,723
203,153
–
491,472
502,512
264,159
(184,808)
(90,391)
491,472
2018
$’000
746,140
263,364
(116,788)
146,576
2022
$’000
2021
$’000
2020
$’000
2019
$’000
2018
$’000
1,864
522,227
24,893
(4,915)
40,000
1,189,697
2,622
(16,505)
1,759,883
2,654,415
882,842
(1,179,436)
(597,938)
1,759,883
1,862
520,138
22,190
(4,915)
40,000
1,185,082
1,933
(58,804)
1,707,486
3,215,899
676,835
(1,704,343)
(480,905)
1,707,486
1,855
511,723
27,592
–
40,000
1,116,079
992
(34,196)
1,664,045
2,851,803
597,770
(1,314,076)
(471,452)
1,664,045
1,845
503,742
30,426
–
40,000
1,249,156
2,391
(23,621)
1,803,939
2,337,670
933,440
(843,322)
(623,849)
1,803,939
1,834
497,457
27,499
–
40,000
1,030,954
3,141
–
1,600,885
1,639,843
860,455
(601,976)
(294,437)
1,600,885
219
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Supplementary financial information (unaudited)
For the year ended 31 December 2022
42. Estimated quantities of proved plus probable reserves
At 31 December 2021
Revisions of previous estimates
Discoveries and extensions
Production
At 31 December 2022
Oil & NGLs
MMbbls
Natural Gas
Bscf
Oil Equivalent
MMboe
219.25
(3.5)
0.0
(9.3)
206.4
1,379.44
4.3
0.0
(40.4)
1,343.3
457.07
(2.8)
0.0
(16.2)
438.07
Reserves are those quantities of crude oil, natural gas and natural gas liquid that, upon analysis of geological and engineering data, appear
with reasonable certainty to be recoverable in the future from known reservoirs under existing economic and operating conditions.
Elcrest holds a 45% participating interest in OML40. Eland holds a 45% interest in Elcrest although has control until such point as Westport
loan is fully repaid.
As additional information becomes available or conditions change, estimates are revised.
43. Capitalised costs related to oil producing activities
Capitalised costs:
Unproved properties
Proved properties
Total capitalised costs
Accumulated depreciation
Net capitalised costs
2022
₦ million
2021
₦ million
2022
₦ million
2021
₦ million
–
1,199,570
1,199,570
(458,231)
741,339
24,901
977,281
1,002,182
(341,437)
660,745
–
2,682,821
2,682,821
(1,024,828)
1,657,993
60,450
2,372,447
2,432,897
(828,872)
1,604,025
Capitalised costs include the cost of equipment and facilities for oil producing activities. Unproved properties include capitalised costs for oil
leaseholds under exploration, and uncompleted exploratory well costs, including exploratory wells under evaluation. Proved properties include
capitalised costs for oil leaseholds holding proved reserves, development wells and related equipment and facilities (including uncompleted
development well costs) and support equipment.
44. Concessions
The original, expired and unexpired terms of concessions granted to the Group as at 31 December 2022 are:
Seplat West Limited
Newton
Seplat East Swamp
Seplat Swamp
Elcrest
OML 4, 38 and 41
OML 56
OML 53
OML 55
OML 40
45. Results of operations for oil producing activities
Revenue from contracts with customers
Other income – net
Production and administrative expenses
Impairment (losses)/reversal
Depreciation and amortisation
Profit before taxation
Taxation
Profit for the year
Original
Term in years
expired
Unexpired
38
16
30
30
18.8
2021
₦ million
247,651
8,056
(167,313)
13,626
(54,762)
47,258
(21,007)
26,251
22
12
24
24
3
2022
$’000
839,344
(36,054)
(522,123)
(6,432)
(128,684)
146,051
(72,527)
73,524
16
4
6
6
15.8
2021
$’000
618,377
20,118
(417,789)
34,024
(136,738)
117,992
(52,453)
65,539
2022
₦ million
356,192
(15,302)
(221,571)
(2,730)
(54,610)
61,979
(30,775)
31,204
220
Seplat Energy PlcAnnual Report and Accounts 2022 46. Reclassification
Certain comparative figures have been reclassified in line with the current year’s presentation.
47. Exchange rates used in translating the accounts to Naira
The table below shows the exchange rates used in translating the accounts into Naira
Property, plant & equipment – opening balances
Property, plant & equipment – additions
Property, plant & equipment – closing balances
Current assets
Current liabilities
Equity
Income and Expenses:
Basis
31 December 2022
₦/$
31 December 2021
₦/$
Historical rate
Average rate
Closing rate
Closing rate
Closing rate
Historical rate
Overall Average rate
Historical
424.37
447.13
447.13
447.13
Historical
424.37
Historical
400.48
411.93
411.93
411.93
Historical
400.48
221
Seplat Energy PlcAnnual Report and Accounts 2022Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59 Separate
financial
statements
222
Seplat Energy Plc
Annual Report and Accounts 2022
Separate financial statements
Separate Statement of financial position
For the year ended 31 December 2022
Other loss
General and administrative expenses
Impairment losses on financial assets
Operating loss
Finance income
Loss before taxation
Income tax expense
Loss for the year
Other comprehensive income/(loss):
Items that may be reclassified to profit or loss:
Foreign currency translation difference
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Basic loss per share ₦ / ($)
Diluted loss per share ₦ / ($)
Notes
31 Dec 2022
₦ million
31 Dec 2021
₦ million
31 Dec 2022
$’000
31 Dec 2021
$’000
8
9
10
11
14
24
24
(1,273)
(18,606)
360
(19,519)
412
(19,107)
–
(19,107)
58,412
58,412
39,305
(32.47)
(32.47)
(4)
(6,228)
(372)
(6,604)
131
(6,473)
–
(6,473)
197,801
197,801
191,328
(12.98)
(12.92)
(2,998)
(43,853)
878
(45,973)
971
(45,002)
–
(45,002)
–
–
(45,002)
(0.08)
(0.08)
(10)
(15,538)
(930)
(16,478)
327
(16,151)
–
(16,151)
–
–
(16,151)
(0.03)
(0.03)
See note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 228-254 are an integral part of these financial statements.
223
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Separate financial statements
Separate statement of financial position
As at 31 December 2022
ASSETS
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Investment in Joint ventures
Total non-current assets
Current assets
Trade and other receivables
Prepayments
Cash and cash equivalents
Restricted cash
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Foreign currency translation reserve
Total shareholders’ equity
Current liabilities
Trade and other payables
Total liabilities
Total shareholders’ equity and
liabilities
Notes
31 Dec 2022
₦ million
Restated
31 Dec 2021
₦ million
Restated
1 Jan 2021
₦ million
31 Dec 2022
$’000
Restated
31 Dec 2021
$’000
Restated
1 Jan 2021
$’000
14
16
17
18
15
19
19
20
20
20
20
21
22
23
680
871,000
93,904
965,584
722,340
97
64,913
4,321
791,671
1,757,255
297
91,317
6,108
(2,025)
5,932
176,136
447,429
725,194
274
798,795
86,512
885,581
520,040
54
75,450
3,307
598,851
1,484,432
296
90,383
4,914
(2,025)
5,932
220,215
388,690
708,405
1,032,061
1,032,061
776,027
776,027
304
797,685
79,806
877,795
501
2
61,950
10,671
73,124
950,919
293
86,917
7,174
–
5,932
255,859
393,687
749,862
201,057
201,057
1,519
1,947,980
210,016
2,159,515
1,615,501
218
145,185
9,664
1,770,568
3,930,083
1,864
522,227
24,893
(4,915)
40,000
1,037,830
–
1,621,899
664
1,940,388
210,016
2,151,068
1,262,448
131
183,162
8,028
1,453,769
3,604,837
1,862
520,138
22,190
(4,915)
40,000
1,141,676
–
1,720,951
799
1,937,691
210,016
2,148,506
1,320
5
163,024
28,081
192,430
2,340,936
1,855
511,723
27,592
–
40,000
1,230,666
–
1,811,836
2,308,184
2,308,184
1,883,885
1,883,885
529,100
529,100
1,757,255
1,484,432
950,919
3,930,083
3,604,836
2,340,936
See Note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 228-254 are an integral part of these financial statements.
The financial statements of Seplat Energy Plc for the year ended 31 December 2022 were authorised for issue in accordance with a resolution of
the Directors on 28 February 2023 and were signed on its behalf by:
B. Omiyi
FRC/2016/IODN/00000014093
Chairman
28 February 2023
R.T. Brown
FRC/2014/PRO/DIR/003/00000017939
Chief Executive Officer
28 February 2023
E. Onwuka
FRC/2020/PRO/ICAN/006/00000020861
Chief Financial Officer
28 February 2023
224
Seplat Energy PlcAnnual Report and Accounts 2022 Separate financial statements
Statement of changes in equity
As at 31 December 2022
At 1 January 2021
Correction of prior period error
Balance at 1 January (Restated)
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners:
Unclaimed dividend forfeited
Dividends paid
Share-based payments (Note 20)
Vested shares (Note 20)
Shares repurchased (Note 20)
Total
At 31 December 2021 (Restated)
At 1 January 2022
Loss for the year
Other comprehensive income
Total comprehensive (loss)/income for
the year
Dividend paid
Share-based payments (Note 21)
Additional investment in subsidiaries –
Share-based payment (Note 20)
Vested shares (Note 20)
Total
At 31 December 2022 (Restated)
Issued
share
capital
₦ million
293
–
293
–
–
–
–
–
–
3
–
3
296
296
–
–
–
–
–
–
1
1
297
Share
premium
₦ million
86,917
–
86,917
–
–
–
–
–
–
3,466
–
3,466
90,383
90,383
–
–
–
–
–
–
934
934
91,317
Share-
based
payment
reserve
₦ million
7,174
–
7,174
–
–
–
–
–
1,209
(3,469)
–
(2,260)
4,914
4,914
–
–
–
–
263
3,384
(2,453)
1,194
6,108
Treasury
shares
₦ million
Capital
contribution
₦ million
–
–
–
–
–
–
–
–
–
–
(2,025)
(2,025)
(2,025)
(2,025)
–
–
–
–
–
–
–
–
(2,025)
5,932
–
5,932
–
–
–
–
–
–
–
–
–
5,932
5,932
–
–
–
–
–
–
–
–
5,932
Foreign
currency
translation
reserve
₦ million
191,216
–
191,216
–
197,801
197,801
–
–
–
–
–
–
389,017
Retained
earnings
₦ million
254,070
1,789
255,859
(6,473)
–
(6,473)
206
(29,377)
–
–
–
(29,171)
220,215
Total
Equity
₦ million
545,602
1,789
547,391
(6,473)
197,801
191,328
206
(29,377)
1,209
–
(2,025)
(29,987)
708,732
220,215
(19,017)
–
389,017
–
58,412
708,732
(19,017)
58,412
(19,017)
(24,972)
–
–
–
(24,972)
176,136
58,412
–
–
–
–
–
447,429
39,305
(24,972)
263
3,384
(1,518)
(22,843)
725,194
See Note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 228-254 are an integral part of these financial statements.
225
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Separate financial statements
Statement of changes in equity | continued
As at 31 December 2021
At 1 January 2021
Correction of prior period error
Balance at 1 January 2021 (Restated)
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Unclaimed dividend forfeited
Dividends paid
Share-based payments (Note 20)
Vested shares (Note 20)
Shares repurchased (Note 20)
Total
At 31 December 2021 (Restated)
Issued
share
capital
$’000
1,855
–
1,855
–
–
–
–
–
–
7
–
7
1,862
Share
premium
$’000
511,723
–
511,723
–
–
–
–
–
–
8,415
–
8,415
520,138
Share-
based
payment
reserve
$’000
27,592
–
27,592
–
–
–
–
–
3,020
(8,422)
–
(5,402)
22,190
Treasury
shares
$’000
Capital
contribution
$’000
Retained
earnings
$’000
–
–
–
–
–
–
40,000
–
1,225,958
4,708
40,000 1,230,666
(16,151)
–
(16,151)
–
–
–
–
–
–
–
(4,915)
(4,915)
(4,915)
–
–
–
–
–
–
40,000
515
(73,354)
–
–
–
(72,839)
1,141,676
Total
Equity
$’000
1,807,128
4,708
1,811,836
(16,151)
–
(16,151)
515
(73,354)
3,020
–
(4,915)
(74,734)
1,720,951
At 1 January 2022
Loss for the year
Other comprehensive income
Total comprehensive loss
for the year
Transactions with owners in their
capacity as owners:
Dividend paid
Share-based payments (Note 20)
Additional investment in subsidiaries – Share-based
payment (Note 20)
Vested shares (Note 20)
Total
At 31 December 2022
1,862
520,138
22,190
(4,915)
40,000
1,141,676
1,720,951
–
–
–
–
–
–
–
–
–
–
–
–
–
–
619
–
–
–
–
–
–
–
–
–
–
(45,002)
–
(45,002)
(45,002)
–
(45,002)
(58,844)
–
(58,844)
619
–
2
2
1,864
–
2,089
2,089
522,227
7,569
(5,485)
2,703
24,893
–
–
–
(4,915)
–
–
–
–
7,569
–
(3,394)
(54,050)
(58,844)
40,000 1,037,830 1,621,899
See Note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 228-254 are an integral part of these financial statements.
226
Seplat Energy PlcAnnual Report and Accounts 2022 Separate financial statements
Statement of cash flows
For the year ended 31 December 2022
Cash flows from operating activities
Cash generated from operations
Net cash inflows from operating activities
Cash flows from investing activities
Deposit for investment
Payment for acquisition of other property, plant and
equipment
Interest received
Investment in subsidiary
Restricted cash
Net cash (outflows)/inflows from investing activities
Cash flows from financing activities
Shares purchased for employees*
Dividends paid
Net cash outflows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at end of the year
Notes
31 Dec 2022
₦ million
31 Dec 2021
₦ million
31 Dec 2022
$’000
31 Dec 2021
$’000
13
18
14
11
16
19.2
20
25
68,557
68,557
(57,367)
(475)
412
(3,222)
(694)
(61,346)
–
(24,972)
(24,972)
(17,761)
77,728
4,946
64,913
32,310
32,310
161,544
161,544
78,122
78,122
–
(128,300)
–
(34)
131
–
8,260
8,357
(2,025)
(29,377)
(31,402)
9,265
61,950
4,235
75,450
(1,122)
971
(7,592)
(1,636)
(137,679)
–
(58,844)
(58,844)
(34,979)
183,162
(2,998)
145,185
(85)
327
–
20,053
20,295
(4,915)
(73,354)
(78,269)
20,148
163,024
(10)
183,162
* Included in restricted cash, is a balance of $8 million (N3.6 billion) set aside in the Stamping Reserve account for the revolving credit facility (RCF). The amount is to be used for the settlement
of all fees and costs payable for the purposes of stamping and registering the Security Documents at the stamp duties office and at the Corporate Affairs Commission (CAC).
A garnishee order of $1.6 million, ₦0.7 billion is included in the restricted cash balance as at the end of the reporting period.
*Shares purchased for employees of nil (2021: $4.9 million, ₦2.02 billion) represent shares purchased in the open market for employees of the Company.
Notes 1 to 30 on pages 228-254 are an integral part of these financial statements.
227
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Notes to the separate financial statements
1.
Corporate information and business
Seplat Energy Plc (formerly called Seplat Petroleum Development Company Plc, hereafter referred to as ‘Seplat’ or the ‘Company’) was
incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014, under the
Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The Company commenced operations on 1 August 2010.
The Company is principally engaged in oil and gas exploration.
The Company’s registered address is: 16a Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.
The Company acquired, pursuant to an agreement for assignment dated 31 January 2010 between the Company, Shell Petroleum Development
Company, TOTAL and AGIP, a 45% participating interest in the following producing assets:
OML 4, OML 38 and OML 41 located in Nigeria. The total purchase price for these assets was ₦104 billion ($340 million) paid at the completion
of the acquisition on 31 July 2010 and a contingent payment of ₦10 billion ($33 million) payable 30 days after the second anniversary, 31 July 2012,
if the average price per barrel of Brent Crude oil over the period from acquisition up to 31 July 2012 exceeds ₦24,560 ($80) per barrel. ₦110 billion
($358.6 million) was allocated to the producing assets including ₦5.7 billion ($18.6 million) as the fair value of the contingent consideration as
calculated on acquisition date. The contingent consideration of ₦10 billion ($33 million) was paid on 22 October 2012.
On 1 January 2020, Seplat Energy Plc transferred its 45% participating interest in OML 4, OML 38 and OML 41 (“transferred assets”) to Seplat West
Limited. As a result, Seplat ceased to be a party to the Joint Operating Agreement in respect of the transferred assets and became a holding company.
Seplat West Limited became a party to the Joint Operating Agreement in respect of the transferred assets and assumed its rights and obligations.
On 20 May 2021, following a special resolution by the Board in view of the Company’s strategy of transitioning into an energy Company
promoting renewable energy, sustainability, and new energy, the name of the Company was changed from Seplat Petroleum Development
Company Plc to Seplat Energy Plc under the Companies and Allied Matters Act 2020.
2. Significant changes in the current accounting period
The following significant changes occurred during the reporting year ended 31 December 2022:
• During the period, Seplat Energy Offshore Limited was incorporated on 7 February 2022. The percentage ownership of the Company is 100%.
• On 22 April 2022, the Company announced the appointment of three new Directors as Independent Non-Executive Directors of Seplat Energy
Plc, resumption took effect on 18 May 2022. The three new Directors are Mrs. Bashirat Odunewu, Mr. Kazeem Raimi and Ernest Ebi, MFR.
• On 7 July 2022, the Company incorporated a subsidiary, Turnkey Drilling Services Limited. The Company was incorporated for the purpose
of drilling chemicals, material supply, directional drilling, drilling support services and exploration services. The percentage ownership of the
Company is 100%.
3. Summary of significant accounting policies
Introduction to summary of significant accounting policies
3.1
This Note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These accounting policies
have been applied to all the years presented, unless otherwise stated.
3.2 Basis of preparation
The financial statements for the year ended 31 December 2022 have been prepared in accordance with International Financial Reporting
Standards ("IFRS") and interpretations issued by the IFRS Interpretations Committee (IFRS IC). The financial statements comply with IFRS as
issued by the International Accounting Standards Board (IASB). Additional information required by National regulations is included where
appropriate.
The financial statements comprise the statement of profit or loss and other comprehensive income, the statement of financial position,
the statement of changes in equity, the statement of cash flows and the notes to the financial statements.
The financial statements have been prepared under the going concern assumption and historical cost convention, except for contingent liability and
consideration, and defined benefit plans – plan assets measured at fair value. The financial statements are presented in Nigerian Naira and United States
dollars, and all values are rounded to the nearest million (₦’million) and thousand ($’000) respectively, except when otherwise indicated.
Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern for at least 12 months from the
date of this statement.
3.3 New and amended standards adopted by the Company
The following standards and amendments became effective for annual periods beginning on or after 1 January 2022. The Company has not early
adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
c)
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract)
of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate
directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation
of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management
and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to
the counterparty under the contract.
228
Seplat Energy PlcAnnual Report and Accounts 2022 In accordance with the transitional provisions, the Company applies the amendments to contracts for which it has not yet fulfilled all its
obligations at the beginning of the annual reporting period in which it first applies the amendments (the date of initial application) and has
not restated its comparative information.
Reference to the Conceptual Framework – Amendments to IFRS 3
d)
The amendments replace a reference to a previous version of the IASB’s Conceptual Framework with a reference to the current version issued
in March 2018 without significantly changing its requirements.
The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to avoid the issue of potential ‘Day 2’ gains
or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent
Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead
of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. The amendments also add a new
paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.
These amendments had no impact on the separate financial statements of the Company as there were no contingent assets, liabilities and
contingent liabilities within the scope of these amendments arisen during the period.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
e)
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale
of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended
by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
These amendments had no impact on the separate financial statements of the Company as there were no sales of such items produced
by property, plant and equipment made available for use on or after the beginning of the earliest period presented.
IFRS 9 Financial Instruments – Fees in the ‘10 per cent’ test for derecognition of financial liabilities
f)
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are
substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and
the lender, including fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for
IAS 39 Financial Instruments: Recognition and Measurement.
These amendments had no impact on separate financial statements of the Company as there were no modifications of the Company’s
financial instruments during the period.
3.4 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s interim
financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable,
when they become effective. Details of these new standards and interpretations are set out below:
• IFRS 17 Insurance Contracts – Effective for annual periods beginning on or after 1 January 2023
• Amendments to IAS 1: Classification of Liabilities as Current or Non-current – Effective for annual periods beginning on or after 1 January 2024
• Amendments to IAS 8 Accounting Policies and Accounting Estimates: Definition of Accounting Estimates – Effective date for annual periods
beginning on or after 1 January 2023
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 – Effective date for annual periods beginning on
or after 1 January 2023
• Amendments regarding deferred tax on leases and decommissioning obligations – Effective date for annual periods beginning on or after
1 January 2023.
• IFRS 16 amended for lease liability measurement in sale and leaseback – Effective date for annual periods beginning on or after January 2024.
Functional and presentation currency
3.5
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company
operates (‘the functional currency’), which is the US dollar. The financial statements are presented in Nigerian Naira and US dollars.
The Company has chosen to show both presentation currencies and this is allowable by the regulator.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end are generally recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other
foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss
or other comprehensive income depending on where fair value gain or loss is reported.
229
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Joint arrangements
3.6
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification
depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Company accounts
for Interest in the joint venture at cost.
Property, plant and equipment
3.7
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation,
the initial estimate of any decommissioning obligation and, for qualifying assets, borrowing costs. The purchase price or construction cost is the
aggregate amount paid and the fair value of any other consideration given to acquire the asset. Where parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets, inspection costs and overhaul
costs. Where an asset or part of an asset that was separately depreciated and is now written off is replaced and it is probable that future economic
benefits associated with the item will flow to the entity, the expenditure is capitalised. Inspection costs associated with major maintenance
programmes are capitalised and amortised over the period to the next inspection. Overhaul costs for major maintenance programmes are
capitalised as incurred as long as these costs increase the efficiency of the unit or extend the useful life of the asset. All other maintenance
costs are expensed as incurred.
Depreciation
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Depreciation commences when an asset
is available for use. The depreciation rate for each class is as follows:
Plant and machinery
Motor vehicles
Office furniture and IT equipment
Building
Land
Intangible assets
Leasehold improvements
20%
25%-30%
10%-33.33%
4%
–
5%
Over the unexpired portion of the lease
The expected useful lives and residual values of property, plant and equipment are reviewed on an annual basis and, if necessary, changes
in useful lives are accounted for prospectively.
Gains or losses on disposal of property, plant and equipment are determined as the difference between disposal proceeds and carrying amount
of the disposed assets. These gains or losses are included in profit or loss.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient
obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or
loss when the asset is derecognised.
3.8 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. These costs may arise from: specific
borrowings used for the purpose of financing the construction of a qualifying asset, and those that arise from general borrowings that would
have been avoided if the expenditure on the qualifying asset had not been made. The general borrowing costs attributable to an asset’s
construction is calculated by reference to the weighted average cost of general borrowings that are outstanding during the period.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on the qualifying assets is deducted
from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Finance income and costs
3.9
Finance income
Finance income is recognised in the statement of profit or loss as it accrues using the effective interest rate (EIR), which is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate,
to the amortised cost of the financial instrument. The determination of finance income considers all contractual terms of the financial instrument
as well as any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest rate (EIR),
but not future credit losses.
Finance cost
Finance costs includes borrowing costs, interest expense calculated using the effective interest rate method, finance charges in respect of lease
liabilities, the unwinding of the effect of discounting provisions, and the amortisation of discounts and premiums on debt instruments that are liabilities.
230
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 Impairment of non-financial assets
3.10
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently.
Other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash flows
that are largely independent of the cash flows of other groups of assets. This should be at a level not higher than an operating segment.
If any such indication of impairment exists or when annual impairment testing for an asset group is required, the entity makes an estimate of
its recoverable amount. Such indicators include changes in the Company’s business plans, changes in commodity prices, evidence of physical
damage and, for oil and gas properties, significant downward revisions of estimated recoverable volumes or increases in estimated future
development expenditure.
The recoverable amount is the higher of an asset’s fair value less costs of disposal (‘FVLCD’) and value in use (‘VIU’). The recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or group of assets, in which case, the asset is tested as part of a larger cash generating unit to which it belongs. Where the carrying amount
of an asset group exceeds its recoverable amount, the asset group is considered impaired and is written down to its recoverable amount.
Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
In calculating VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset/CGU. In determining FVLCD, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other available fair value indicators.
3.11 Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows comprise cash at banks and at hand and short-term deposits with an original maturity
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.12 Financial instruments
IFRS 9 provides guidance on the recognition, classification and measurement of financial assets and financial liabilities; derecognition of financial
instruments; impairment of financial assets and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial
instruments such as IFRS 7 Financial Instruments: Disclosures.
Classification and measurement
a)
Financial assets
It is the Company’s policy to initially recognise financial assets at fair value plus transaction costs, except in the case of financial assets recorded
at fair value through profit or loss which are expensed in profit or loss.
Classification and subsequent measurement are dependent on the Company’s business model for managing the asset and the cash flow
characteristics of the asset. On this basis, the Company may classify its financial instruments at amortised cost, fair value through profit or loss
and at fair value through other comprehensive income.
All the Company’s financial assets as at 31 December 2022 satisfy the conditions for classification at amortised cost under IFRS 9 except for
derivatives which are reclassified at fair value through profit or loss.
The Company’s financial assets include intercompany receivables, other receivables, cash and cash equivalents. They are included in current
assets, except for maturities greater than 12 months after the reporting date. Interest income from these assets is included in finance income
using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in finance
income/cost.
Financial liabilities
Financial liabilities of the Company are classified and measured at fair value on initial recognition and subsequently at amortised cost net of
directly attributable transaction costs, except for derivatives which are classified and subsequently recognised at fair value through profit or loss.
Fair value gains or losses for financial liabilities designated at fair value through profit or loss are accounted for in profit or loss except for the amount
of change that is attributable to changes in the Company’s own credit risk which is presented in other comprehensive income. The remaining
amount of change in the fair value of the liability is presented in profit or loss. The Company’s financial liabilities include trade and other payables.
Impairment of financial assets
b)
Recognition of impairment provisions under IFRS 9 is based on the expected credit loss (ECL) model. The ECL model is applicable to financial
assets classified at amortised cost and contract assets under IFRS 15: Revenue from Contracts with Customers. The measurement of ECL reflects
an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, time value of money and reasonable
and supportable information that is available without undue cost or effort at the reporting date, about past events, current conditions and
forecasts of future economic conditions.
The Company applies the simplified approach or the three-stage general approach to determine impairment of receivables depending on
their respective nature.
The simplified approach requires expected lifetime losses to be recognised from initial recognition of the receivables. This involves determining
the expected loss rates using a provision matrix that is based on the Company’s historical default rates observed over the expected life of the
receivable and adjusted forward-looking estimates. This is then applied to the gross carrying amount of the receivable to arrive at the loss
allowance for the period.
231
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 The three-stage approach assesses impairment based on changes in credit risk since initial recognition using the past due criterion and other
qualitative indicators such as increase in political concerns or other macroeconomic factors and the risk of legal action, sanction or other
regulatory penalties that may impair future financial performance. Financial assets classified as stage 1 have their ECL measured as a proportion
of their lifetime ECL that results from possible default events that can occur within one year, while assets in Stage 2 or 3 have their ECL measured
on a lifetime basis.
Under the three-stage approach, the ECL is determined by projecting the probability of default (PD), loss given default (LGD) and exposure at
default (EAD) for each ageing bucket and for each individual exposure. The PD is based on default rates determined by external rating agencies
for the counterparties. The LGD is determined based on management’s estimate of expected cash recoveries after considering the historical
pattern of the receivable, and it assesses the portion of the outstanding receivable that is deemed to be irrecoverable at the reporting period.
The EAD is the total amount of outstanding receivable at the reporting period. These three components are multiplied together and adjusted
for forward looking information, such as the gross domestic product (GDP) in Nigeria and crude oil prices, to arrive at an ECL which is then
discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or
an approximation thereof.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the related financial assets
and the amount of the loss is recognised in profit or loss.
Significant increase in credit risk and default definition
c)
The Company assesses the credit risk of its financial assets based on the information obtained during periodic review of publicly available
information, industry trends and payment records. Based on the analysis of the information provided, the Company identifies the assets that
require close monitoring.
Furthermore, financial assets that have been identified to be more than 30 days past due on contractual payments are assessed to have experienced
significant increase in credit risk. These assets are grouped as part of Stage 2 financial assets where the three-stage approach is applied.
In line with the Company’s credit risk management practices, a financial asset is defined to be in default when contractual payments have not
been received at least 90 days after the contractual payment period. Subsequent to default, the Company carries out active recovery strategies
to recover all outstanding payments due on receivables. Where the Company determines that there are no realistic prospects of recovery, the
financial asset and any related loss allowance is written off either partially or in full.
d) Write off policy
The Company writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded that there
is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include:
• ceasing enforcement activity and;
• where the Company's recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation
of recovering in full.
The Company may write-off financial assets that are still subject to enforcement activity. The outstanding contractual amounts of such assets
written off during the year ended 31 December 2022 was nil, (2021: nil). The Company seeks to recover amounts it its legally owed in full but which
have been partially written off due to no reasonable expectation of full recovery.
Derecognition
e)
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when it transfers
the financial asset and the transfer qualifies for derecognition. Gains or losses on derecognition of financial assets are recognised as finance
income/cost.
Financial liabilities
The Company derecognises a financial liability when it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised immediately in the statement of profit or loss.
Modification
f)
When the contractual cash flows of a financial instrument are renegotiated or otherwise modified and the renegotiation or modification does
not result in the derecognition of that financial instrument, the Company recalculates the gross carrying amount of the financial instrument and
recognises a modification gain or loss immediately within finance income/(cost)-net at the date of the modification. The gross carrying amount
of the financial instrument is recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the
financial instrument’s original effective interest rate.
Offsetting of financial assets and financial liabilities
g)
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when and only when there is legally
enforceable right to offset the recognised amount, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
The legally enforceable right is not contingent on future events and is enforceable in the normal course of business, and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
Fair value of financial instruments
h)
The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When available, the Company measures the fair value of an instrument using quoted prices in an active market for that
instrument. A market is regarded as active if quoted prices are readily available and represent actual and regularly occurring market transactions
on an arm’s length basis.
232
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 If a market for a financial instrument is not active, the Company establishes fair value using valuation techniques. Valuation techniques include
using recent arm’s length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments
that are substantially the same, and discounted cash flow analysis. The chosen valuation technique makes maximum use of market inputs, relies
as little as possible on estimates specific to the Company, incorporates all factors that market participants would consider in setting a price, and
is consistent with accepted economic methodologies for pricing financial instruments.
Inputs to valuation techniques reasonably represent market expectations and measure the risk-return factors inherent in the financial instrument.
The Company calibrates valuation techniques and tests them for validity using prices from observable current market transactions in the same
instrument or based on other available observable market data.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price – i.e. the fair value of the consideration
given or received. However, in some cases, the fair value of a financial instrument on initial recognition may be different to its transaction price.
If such fair value is evidenced by comparison with other observable current market transactions in the same instrument (without modification
or repackaging) or based on a valuation technique whose variables include only data from observable markets, then the difference is recognised
in the income statement on initial recognition of the instrument. In other cases, the difference is not recognised in the income statement
immediately but is recognised over the life of the instrument on an appropriate basis or when the instrument is redeemed, transferred or sold,
or the fair value becomes observable.
3.13 Share capital
On issue of Ordinary Shares any consideration received net of any directly attributable transaction costs is included in equity. Issued share capital
has been translated at the exchange rate prevailing at the date of the transaction and is not retranslated subsequent to initial recognition.
3.14 Earnings per share and dividends
Basic EPS
Basic earnings per share is calculated on the Company’s profit or loss after taxation and based on the weighted average of issued and fully paid
Ordinary Shares at the end of the year.
Diluted EPS
Diluted EPS is calculated by dividing the profit or loss after taxation by the weighted average number of Ordinary Shares outstanding during the
year plus the weighted average number of Ordinary Shares that would be issued on conversion of all the dilutive potential Ordinary Shares (after
adjusting for ordinary share options arising from the share-based payment scheme) into Ordinary Shares.
Dividend
Dividends on Ordinary Shares are recognised as a liability in the period in which they are approved.
3.15 Post-employment benefits
Defined contribution scheme
The Company contributes to a defined contribution scheme for its employees in compliance with the provisions of the Pension Reform Act 2014.
The scheme is fully funded and is managed by licensed Pension Fund Administrators. Membership of the scheme is automatic upon commencement
of duties at the Company. The Company’s contributions to the defined contribution scheme are charged to the profit and loss account in the
year to which they relate.
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination
of employment. The Company operates a defined contribution plan, and it is accounted for based on IAS 19 Employee benefits.
Defined contribution plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund)
and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits
relating to employee service in the current and prior periods. Under defined contribution plans the entity’s legal or constructive obligation is
limited to the amount that it agrees to contribute to the fund.
Thus, the amount of the post-employment benefits received by the employee is determined by the amount of contributions paid by an entity
(and perhaps also the employee) to a post-employment benefit plan or to an insurance company, together with investment returns arising from
the contributions. In consequence, actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be
insufficient to meet expected benefits) fall, in substance, on the employee.
3.16 Provisions
Provisions are recognised when (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is probable that
an outflow of economic resources will be required to settle the obligation as a whole; and (iii) the amount can be reliably estimated. Provisions
are not recognised for future operating losses.
In measuring the provision:
• risks and uncertainties are taken into account;
• the provisions are discounted (where the effects of the time value of money is considered to be material) using a pre-tax rate that is reflective
of current market assessments of the time value of money and the risk specific to the liability;
• when discounting is used, the increase of the provision over time is recognised as interest expense;
• future events such as changes in law and technology, are taken into account where there is subjective audit evidence that they will occur; and
• gains from expected disposal of assets are not taken into account, even if the expected disposal is closely linked to the event giving rise to the provision.
Decommissioning
Liabilities for decommissioning costs are recognised as a result of the constructive obligation of past practice in the oil and gas industry, when it
is probable that an outflow of economic resources will be required to settle the liability and a reliable estimate can be made. The estimated costs,
based on current requirements, technology and price levels, prevailing at the reporting date, are computed based on the latest assumptions as
to the scope and method of abandonment.
233
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Provisions are measured at the present value of management’s best estimates of the expenditure required to settle the present obligation at the
end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance
cost. The corresponding amount is capitalised as part of the oil and gas properties and is amortised on a unit-of-production basis as part of the
depreciation, depletion and amortisation charge. Any adjustment arising from the estimated cost of the restoration and abandonment cost is capitalised,
while the charge arising from the accretion of the discount applied to the expected expenditure is treated as a component of finance costs.
If the change in estimate results in an increase in the decommissioning provision and, therefore, an addition to the carrying value of the asset, the
Company considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment in accordance with IAS 36.
If, for mature fields, the revised oil and gas assets net of decommissioning provisions exceed the recoverable value, that portion of the increase is
charged directly to expense.
Income taxation
Current income tax
3.17
iv.
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based on the applicable income tax
rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the end of the reporting period in the
countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions,
where appropriate, based on amounts expected to be paid to the tax authorities.
Deferred tax
v.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and
losses. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where
the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Uncertainty over income tax treatments
vi.
The Company examines where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets
and liabilities, tax losses and credits and tax rates. It considers each uncertain tax treatment separately, depending on which approach better
predicts the resolution of the uncertainty. The factors it considers include:
• how it prepares and supports the tax treatment; and
• the approach that it expects the tax authority to take during an examination.
If the Company concludes that it is probable that the tax authority will accept an uncertain tax treatment that has been taken or is expected to
be taken on a tax return, it determines the accounting for income taxes consistently with that tax treatment. If it concludes that it is not probable
that the treatment will be accepted, it reflects the effect of the uncertainty in its income tax accounting in the period in which that determination
is made (for example, by recognising an additional tax liability or applying a higher tax rate).
The Company measures the impact of the uncertainty using methods that best predicts the resolution of the uncertainty. The Company uses
the most likely method where there are two possible outcomes, and the expected value method when there are a range of possible outcomes.
The Company assumes that the tax authority with the right to examine and challenge tax treatments will examine those treatments and have
full knowledge of all related information. As a result, it does not consider detection risk in the recognition and measurement of uncertain tax
treatments. The Company applies consistent judgements and estimates on current and deferred taxes. Changes in tax laws or the presence
of new tax information by the tax authority is treated as a change in estimate in line with IAS 8 Accounting policies, changes in accounting
estimates and errors.
Judgements and estimates made to recognise and measure the effect of uncertain tax treatments are reassessed whenever circumstances
change or when there is new information that affects those judgements. New information might include actions by the tax authority, evidence
that the tax authority has taken a particular position in connection with a similar item, or the expiry of the tax authority’s right to examine a
particular tax treatment. The absence of any comment from the tax authority is unlikely to be, in isolation, a change in circumstances or new
information that would lead to a change in estimate.
3.18 Share based payments
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees
render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
vii.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense together with a corresponding increase in equity (share-based payment reserve), over the
period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised
for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Company’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
234
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 Service and non-market performance conditions are not taken into account when determining the grant date and for fair value of awards,
but the likelihood of the conditions being met is assessed as part of the Company’s best estimate of the number of equity instruments that
will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award,
but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair
value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been
met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or
non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the terms of an equity-
settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award, provided the original terms
of the award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the
total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity
or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss. The dilutive effect
of outstanding awards is reflected as additional share dilution in the computation of diluted earnings per share.
4. Significant accounting judgements, estimates and assumptions
The preparation of the Company’s historical financial information requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount
of assets or liabilities affected in future periods.
Estimates and assumptions
4.1
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Company
based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and
assumptions about future developments may change due to market changes or circumstances arising that are beyond the control of the
Company. Such changes are reflected in the assumptions when they occur.
Share-based payment reserve
viii.
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on
the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including
the expected life of the share award or appreciation right, volatility and dividend yield and making assumptions about them. The Company
measures the fair value of equity-settled transactions with employees at the grant date. The assumptions and models used for estimating fair
value for share-based payment transactions are disclosed in Note 21.4.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results. Such estimates and assumptions are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Useful life of other property, plant and equipment
ix.
The Company recognises depreciation on other property, plant and equipment on a straight-line basis in order to write-off the cost of the asset
over its expected useful life. The economic life of an asset is determined based on existing wear and tear, economic and technical ageing, legal
and other limits on the use of the asset, and obsolescence. If some of these factors were to deteriorate materially, impairing the ability of the
asset to generate future cash flow, the Company may accelerate depreciation charges to reflect the remaining useful life of the asset or record
an impairment loss.
5.
IAS 8 – Accounting policies, changes in accounting estimates and errors
Certain comparative amounts in the statement of profit and loss and other comprehensive income have been restated, as a result of the
correction of a prior period error.
Correction of errors
5.1
The Company has made a number of share-based awards under incentive plans since its IPO in 2014. The shares are granted to the employees
of both the parent and subsidiary companies. During the prior periods, share-based payments relating to employees in other subsidiaries were
previously recognised in the books of the parent company as share-based expenses rather than investment in subsidiaries. The error has been
corrected by restating each of the affected financial statement line items for the period 2020 and 2021 by reclassifying share-based payments
for the prior period from retained earnings to investment in subsidiaries.
Impact on equity (increase/(decrease) in equity)
Investment in subsidiaries
Total assets
Impact on equity
Impact on statement of profit or loss (increase/(decrease) in profit)
General and administrative expenses
Impact on equity
Restated
31 Dec 2021
₦ million
1,110
1,110
1,110
Restated
1 Jan 2021
₦ million
1,938
1,938
1,938
Restated
31 Dec 2021
$’000
2,697
2,697
2,697
Restated
Jan 2021
$’000
4,708
4,708
4,708
Restated
31 Dec 2021
₦ million
Restated
31 Dec 2021
$’000
1,110
1,110
2,697
2,697
235
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 6.
Financial risk management
Financial risk factors
6.1
The Company’s activities expose it to a variety of financial risks such as market risk (foreign exchange risk), credit risk and liquidity risk.
The Company’s risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the Company’s financial performance.
Risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides
written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, credit risk
and investment of excess liquidity.
Risk
Exposure arising from
Measurement
Management
Market risk – foreign exchange
Credit risk
Liquidity risk
Future commercial transactions.
Recognised financial assets and
liabilities not denominated in US
dollars.
Intercompany receivables, cash
and cash equivalents.
Trade and other payables.
Cash flow forecasting.
Sensitivity analysis.
Ageing analysis.
Credit ratings.
Rolling cash flow forecasts.
Match and settle foreign
denominated cash inflows with
foreign denominated cash outflows.
Diversification of bank deposits
and credit limits.
Availability of committed credit lines
and borrowing facilities.
6.1.1 Foreign exchange risk
The Company has transactional currency exposures that arise from sales or purchases in currencies other than the respective functional
currency. The Company is exposed to exchange rate risk to the extent that balances and transactions are denominated in a currency other
than the US dollar.
The Company holds the majority of its bank balances equivalents in US dollar. However, the Company does maintain deposits in Naira in order
to fund ongoing general and administrative activities and other expenditure incurred in this currency. Other monetary assets and liabilities which
give rise to foreign exchange risk include trade and other receivables, trade and other payables.
The following table demonstrates the carrying value of monetary assets and liabilities (denominated in Naira) exposed to foreign exchange risks
at the reporting date:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure to foreign exchange risk
2022
₦ million
48,121
710
48,831
(12,066)
36,765
2021
₦ million
63,146
415
63,561
(96)
63,465
2022
$’000
2021
$’000
107,622
1,587
109,209
153,294
1,009
154,303
(26,986)
82,223
(234)
154,069
The following table demonstrates the carrying value of monetary assets and liabilities exposed to foreign exchange risks for pound exposures at
the reporting date:
Financial assets
Cash and cash equivalents
Trade and other receivables
2022
₦ million
2021
₦ million
628
2,685
3,313
270
–
270
2022
$’000
1,404
6,006
7,410
2021
$’000
656
–
656
Sensitivity to foreign exchange risk is based on the Company’s net exposure to foreign exchange risk due to Naira and pound denominated
balances. If the Naira strengthens or weakens by the following thresholds, the impact is as shown in the table below:
Increase/decrease in foreign exchange risk
+10%
-10%
Increase/decrease in foreign exchange risk
+5%
-5%
236
Effect on profit
before tax
2022
₦ million
(3,342)
4,085
Effect on profit
before tax
2021
₦ million
(3,022)
3,340
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
(7,475)
9,136
–
–
Effect on other
components of
equity before
tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
–
–
(7,337)
8,109
–
–
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 Increase/decrease in foreign exchange risk
+10%
-10%
Increase/decrease in foreign exchange risk
+5%
-5%
Effect on profit
before tax
2022
₦ million
(301)
368
Effect on profit
before tax
2021
₦ million
(13)
14
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
(674)
823
–
–
Effect on other
components of
equity before
tax
2021
₦ million
Effect on profit
before tax
2021
$’000
Effect on other
components of
equity before tax
2021
$’000
–
–
(31)
35
–
–
6.1.2 Credit risk
Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Company. Credit risk
arises from cash and intercompany receivables.
Risk management
f)
The credit risk on cash and cash equivalents is managed through the diversification of banks in which cash and cash equivalents are held. This
risk on cash is limited because the majority of deposits are with banks that have an acceptable credit rating assigned by an international credit
agency. The Company’s maximum exposure to credit risk due to default of the counterparty is equal to the carrying value of its financial assets.
The maximum exposure to credit risk as at the reporting date is:
Trade and other receivables (Gross)
Cash and cash equivalent (Gross)
Gross amount
Impairment reversal /(charge) of receivables
Net amount
2022
₦ million
722,339
69,312
791,651
23
791,674
2021
₦ million
520,423
75,450
595,873
(383)
595,490
2022
$‘000
1,615,501
155,016
1,770,517
52
1,770,569
2021
$‘000
1,263,378
183,162
1,446,540
(930)
1,445,610
Impairment of financial assets
g)
The Company has two types of financial assets that are subject to IFRS 9’s expected credit loss model. The impairment of receivables
is disclosed in the table below.
• Cash and cash equivalents
• Intercompany receivables
Reconciliation of impairment on financial assets:
As at 1 January 2022
Decrease in provision for Intercompany receivables
Increase in provision for ANOH receivables
Exchange difference
Impairment charge to the profit or loss
As at 31 December 2022
As at 1 January 2021
Increase in provision for Intercompany receivables
Exchange difference
As at 31 December 2021
Notes
₦’million
18.2
18.4
383
(395)
22
13
(360)
23
$’000
930
(930)
52
–
(878)
52
Notes
₦’million
$’000
19.2
–
372
11
383
–
930
–
930
237
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 6.
Financial risk management continued
6.1.2 Credit risk continued
The parameters used to determine impairment for intercompany receivables are shown below. For all receivables presented in the table, the
respective 12-month Probability of Default (PD) equate the Lifetime PD for Stage 2 as the maximum contractual period over which the Company
is exposed to credit risk arising from the receivables is less than 12 months.
Intercompany receivables
Short-term fixed deposits
Probability of
Default (PD)
The 12-month LGD and lifetime LGD were determined using
Moody’s recovery rate and mapped based on the priority
rating of the receivable, for emerging economies.
The PD for base case, downturn and upturn is 4.11%, 4.32%
and 3.90% respectively for Stage 1 and Stage 2. The PD for
Stage 3 is 100%.
Loss Given Default
(LGD)
The EAD is the maximum exposure of the receivable
to credit risk.
Exposure at
Default (EAD)
Macroeconomic
indicators
Probability
weightings
The historical inflation and Brent oil price were used.
20%, 50%, and 30%, was used as the weights for the base,
upturn and downturn ECL modelling scenarios respectively.
43%, 26% and 31% of historical GDP growth rate
observations fall within acceptable bounds, periods
of boom and periods of downturn respectively.
The 12-month LGD and lifetime LGD were determined using
the average recovery rate for Moody’s senior unsecured
corporate bonds for emerging economies.
The EAD is the maximum exposure of the short-term fixed
deposits to credit risk.
The historical gross domestic product (GDP) growth rate
in Nigeria and crude oil price were used.
20%, 50% and 30% of historical GDP growth rate
observations fall within acceptable bounds, periods
of boom and periods of downturn respectively.
The Company considers both quantitative and qualitative indicators in classifying its receivables into the relevant stages for impairment
calculation.
Impairment of financial assets are recognised in three stages on an individual or collective basis as shown below:
• Stage 1: This stage includes financial assets that are less than 30 days past due (Performing).
• Stage 2: This stage includes financial assets that have been assessed to have experienced a significant increase in credit risk using the days
past due criteria (i.e. the outstanding receivables amounts are more than 30 days past due but less than 90 days past due) and other qualitative
indicators such as the increase in political risk concerns or other micro-economic factors and the risk of legal action, sanction or other
regulatory penalties that may impair future financial performance.
• Stage 3: This stage includes financial assets that have been assessed as being in default (i.e. receivables that are more than 90 days past due)
or that have a clear indication that the imposition of financial or legal penalties and/or sanctions will make the full recovery of indebtedness
highly improbable.
Cash and cash equivalent
x.
Short term fixed deposits
The Company applies the IFRS 9 general model for measuring expected credit losses (ECL) which uses a three-stage approach in
recognising the expected loss allowance for cash and cash equivalents. The ECL was calculated as the probability weighted estimate of the
credit losses expected to occur over the contractual period of the facility after considering macroeconomic indicators. Based on this
assessment, they identified the expected credit loss to be nil as at 31 December 2022.
Other cash and cash equivalents
xi.
The company assessed the other cash and cash equivalents to determine their expected credit losses. Based on this assessment,
they identified the expected credit loss to be nil as at 31 December 2022 (2021: nil). The assets are assessed to be in Stage 1.
Credit quality of cash and cash equivalents (including restricted cash)
The credit quality of the Company’s cash and cash equivalents is assessed based on external credit ratings (Fitch national long-term ratings)
as shown below:
2022
₦ million
–
13,543
233
40,554
11,787
–
–
3,192
69,309
(75)
69,234
2021
₦ million
–
24,802
47
46,241
4,053
–
3,614
–
78,757
–
78,757
2022
$‘000
–
30,289
522
90,704
26,362
–
–
7,139
155,016
(167)
154,849
2021
$‘000
–
60,210
113
112,255
9,839
–
8,773
–
191,190
–
191,190
Non-rated
BBB-
A
A+
AA-
AA+
AAA-
AAA
Net cash and cash equivalents
Allowance for impairment during the year
Net cash and cash equivalents
238
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 Intercompany receivables
xii.
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2021
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Receivables from ANOH
xiii.
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
31 December 2022
Gross Exposure at Default (EAD)
Loss allowance
Net Exposure at Default (EAD)
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
658,639
–
658,639
–
–
–
–
–
–
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
519,017
(383)
518,634
Stage 1
12-month ECL
$’000
1,473,033
–
1,473,033
Stage 1
12-month ECL
$’000
1,259,963
(930)
1,259,033
–
–
–
–
–
–
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
–
–
–
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
–
–
–
–
–
–
Stage 1
12-month ECL
₦’million
Stage 2
Lifetime ECL
₦’million
Stage 3
Lifetime ECL
₦’million
894
(23)
871
–
–
–
–
–
–
Stage 1
12-month ECL
$’000
Stage 2
Lifetime ECL
$’000
Stage 3
Lifetime ECL
$’000
1,999
(52)
1,947
–
–
–
–
–
–
Total
₦’million
658,639
–
658,639
Total
₦’million
519,017
(383)
518,634
Total
$’000
1,473,033
–
1,473,033
Total
$’000
1,259,963
(930)
1,259,033
Total
₦’million
894
(23)
871
Total
$’000
1,999
(52)
1,947
Maximum exposure to credit risk – financial instruments subject to impairment
h)
The Company estimated the expected credit loss on Intercompany receivables and fixed deposits by applying the general model.
The gross carrying amount of financial assets represents the Company’s maximum exposure to credit risks on these assets.
All financial assets impaired using the General model (Intercompany and Fixed deposits) are graded under the standard monitoring credit
grade (rated B under Standard and Poor’s unmodified ratings) and are classified under Stage 1.
Roll forward movement in loss allowance
i)
The loss allowance recognised in the period is impacted by a variety of factors, as described below:
• Additional allowances for new financial instruments recognised during the period, as well as releases for financial instruments derecognised
in the period;
• Discount unwind within ECL due to passage of time, as ECL is measured on a present value basis;
• Foreign exchange retranslation for assets dominated in foreign currencies and other movements; and Financial assets derecognised during
the period and write-off of receivables and allowances related to assets.
Estimation uncertainty in measuring impairment loss
j)
The table below shows information on the sensitivity of the carrying amounts of the Company’s financial assets to the methods, assumptions
and estimates used in calculating impairment losses on those financial assets at the end of the reporting period. These methods, assumptions
and estimates have a significant risk of causing material adjustments to the carrying amounts of the Company’s financial assets.
239
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 6.
Financial risk management continued
6.1.2 Credit risk continued
Expected cash flow recoverable
xiv.
The table below demonstrates the sensitivity of the Company’s profit before tax to a 20% change in the expected cash flows from financial
assets, with all other variables held constant:
Increase/decrease in estimated cash flows
+20%
-20%
Effect on profit
before tax
2022
₦ million
38
(38)
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
85
(85)
–
–
Significant unobservable inputs
xv.
The table below demonstrates the sensitivity of the Company’s profit before tax to movements in the probability of default (PD) and loss given
default (LGD) for financial assets, with all other variables held constant:
Increase/decrease in loss given default
+10%
-10%
Effect on profit
before tax
2022
₦ million
(56)
56
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
(132)
132
–
–
The table below demonstrates the sensitivity of the Company’s profit before tax to movements in probabilities of default, with all other variables
held constant
Increase/decrease in probability of default
+10%
-10%
Effect on profit
before tax
2022
₦ million
(35)
35
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
(82)
82
–
–
The table below demonstrates the sensitivity of the Company’s profit before tax to movements in the forward-looking macroeconomic
indicators, with all other variables held constant:
Increase/decrease in forward looking macroeconomic indicators
+10%
-10%
Effect on profit
before tax
2022
₦ million
(41)
41
Effect on other
components of
equity before
tax
2022
₦ million
Effect on profit
before tax
2022
$’000
Effect on other
components of
equity before tax
2022
$’000
–
–
(97)
97
–
–
6.1.3 Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk
by ensuring that enough funds are available to meet its commitments as they fall due.
The Company uses both long-term and short-term cash flow projections to monitor funding requirements for activities and to ensure there
are enough cash resources to meet operational needs. Cash flow projections take into consideration the Company’s debt financing plans and
covenant compliance. Surplus cash held is transferred to the treasury department which invests in interest bearing current accounts and time
deposits.
The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed maturity periods.
The table has been drawn based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Company
can be required to pay.
The table below represents the trade and other payable for 2022.
Effective interest
rate
%
Less than
1 year
₦ million
1,032,061
1,032,061
1 – 2
year
₦ million
2 – 3
years
₦ million
3 – 5
years
₦ million
Total
₦ million
–
–
–
–
–
–
1,032,061
1,032,061
31 December 2022
Trade and other payables
Total
240
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 31 December 2022
Trade and other payables
Total
Effective interest
rate
%
Less than
1 year
$’000
2,308,184
2,308,184
1 – 2
year
$’000
–
–
2 – 3
years
$’000
–
–
3 – 5
years
$’000
Total
$’000
–
–
2,308,184
2,308,184
6.1.4 Fair value measurements
Set out below is a comparison by category of carrying amounts and fair value of all financial instruments:
Name of entity
Financial assets at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Trade and other payables
Name of entity
Financial assets at amortised cost
Financial assets at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Trade and other payables
Carrying amount
Fair value
2022
₦ million
2021
₦ million
2022
₦ million
2021
₦ million
722,340
64,913
787,253
1,032,061
1,032,061
520,040
75,450
595,490
776,027
776,027
722,340
64,913
787,253
1,032,061
1,032,061
520,040
75,450
595,490
776,027
776,027
Carrying amount
2022
$’000
2021
$’000
Fair value
2022
$’000
2021
$’000
1,615,501
145,185
1,760,686
1,262,448
183,162
1,445,610
1,615,501
145,185
1,760,686
1,262,448
183,162
1,445,610
2,308,184
2,308,184
1,883,885
1,883,885
2,308,184
2,308,184
1,883,885
1,883,885
Trade and other payables (exclude non-financial liabilities such as provisions, taxes, pension and other non-contractual payables), trade and
other receivables (excluding prepayments) and cash and cash equivalents are financial instruments whose carrying amounts as per the financial
statements approximate their fair values. This is mainly due to their short-term nature.
6.1.5 Fair Value Hierarchy
As at the reporting period, the Company had classified its financial instruments into the three levels prescribed under the accounting standards.
These are all recurring fair value measurements. There were no transfers of financial instruments between fair value hierarchy levels during the year.
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The fair value of the financial instruments is included at the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The carrying amounts of the financial instruments are the same as their fair values.
6.2 Capital management
The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders, to maintain optimal capital structure and reduce cost of capital. Consistent with
others in the industry, the Company monitors capital based on the following gearing ratio, net debt divided by total capital. Net debt is calculated
as trade and other payables less cash and cash equivalents.
Trade and other payables
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Net debt (net debt/total capital) ratio
2022
₦ million
1,032,061
(64,913)
967,148
725,194
1,692,342
57%
2021
₦’million
776,027
(75,450)
700,577
705,864
1,406,441
50%
2022
$’000
2,308,184
(145,185)
2,162,999
1,621,899
3,784,898
57%
2021
$’000
1,883,885
(183,162)
1,700,723
1,713,547
3,414,270
50%
Capital includes share capital, share premium, capital contribution and all other equity reserves.
241
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 7.
Segment reporting
The Company have no operating or reportable segment.
8. Other loss
Unrealised foreign exchange loss
9. General and administrative expenses
Depreciation (Note 15)
Professional and consulting fees
Directors’ emoluments (non-executive)
Employee benefits (Note 10.1)
Flights and other travel costs
Other general expenses
2022
₦ million
(1,273)
(1,273)
2021
₦’million
(4)
(4)
2022
$’000
(2,998)
(2,998)
2021
$’000
(10)
(10)
2022
₦ million
112
11,558
2,054
821
1,015
3,046
18,606
Restated
2021
₦’million
88
1,733
1,844
130
421
2,012
6,228
2022
$’000
266
27,236
4,842
1,934
2,392
7,183
43,853
Restated
2021
$’000
220
4,326
4,604
324
1,046
5,018
15,538
Seplat Energy Plc Executive Directors’ emoluments for are borne by the other subsidiaries. Other general expenses relate to costs such as office
maintenance costs, telecommunication costs, logistics costs and others. Professional and consulting fees increase is as a result of strategy
related consultancy services and legal fees.
9.1
Salaries and employee related costs include the following:
Basic salary
Other allowances
Share-based payment expenses (Note 21.4)
10.
Impairment reversal/(losses) on financial assets
Impairment (reversal)/loss on financial assets – net (Note 10.1)
Total impairment loss allowance
10.1
Impairment reversal/(losses) on financial assets – net
Impairment reversal/(losses) on:
Receivables from ANOH
Intercompany receivables
Exchange differences
11. Finance income
Interest income
Finance income
Finance income represents interest on short-term fixed deposits.
2022
₦ million
377
181
263
821
2022
₦ million
(360)
(360)
Restated
2021
₦’million
–
–
130
130
2021
₦’million
372
372
2022
₦ million
2021
₦’million
22
(395)
13
(360)
–
372
372
2022
₦ million
412
412
2021
₦’million
131
131
2022
$’000
889
426
619
1,934
2022
$’000
(878)
(878)
2022
$’000
52
(930)
–
(878)
2022
$’000
971
971
Restated
2021
$’000
–
–
324
324
2021
$’000
930
930
2021
$’000
–
930
–
930
2021
$’000
327
327
242
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 12. Taxation
Deferred tax assets have not been recognised in respect of the following items because of the uncertainty around the availability of future
taxable profits against which the Company can use the benefits therefrom.
Unutilised capital allowance
Unrealised foreign exchange
Share-based payment
Tax losses
Impairment loss of intercompany receivables
Unrecognised deferred tax asset
13. Computation of cash generated from operations
Notes
9
11
10
8
9.1
Loss before tax
Adjusted for:
Depreciation on property, plant and equipment
Interest income
Impairment (loss)/gain on financial assets
Unrealised foreign exchange loss
Share based payment expenses
Changes in working capital: (excluding the effects of
exchange differences)
Trade and other receivables
Prepayments
Trade and other payables
Net cash from operating activities
14. Property, plant and equipment
2022
₦ million
523
1,438
–
–
–
1,961
2022
₦ million
(19,107)
112
(412)
(360)
1,273
263
(93,234)
(37)
180,059
68,557
2021
₦’million
29
684
1,010
2,827
115
4,665
Restated
2021
₦’million
(6,473)
88
(131)
372
4
130
(519,705)
(52)
558,077
32,310
2022
$’000
1,170
3,215
–
–
–
4,385
2022
$’000
(45,002)
266
(971)
(878)
2,998
619
2021
$’000
70
1,661
2,453
6,862
279
11,325
Restated
2021
$’000
(16,151)
220
(327)
930
10
324
(219,700)
(87)
424,299
161,544
(1,261,543)
(126)
1,354,785
78,122
Cost
At 1 January 2022
Additions
Exchange difference
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Exchange difference
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
Exchange difference
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Exchange difference
At 31 December 2021
NBV
At 31 December 2021
Plant &
machinery
₦ million
Motor
vehicle
₦ million
Office
Furniture
& IT
equipment
₦ million
Leasehold
improvements
₦ million
Total
₦ million
17
–
1
18
5
3
1
9
9
16
–
1
17
1
3
1
5
12
349
211
41
601
87
95
12
194
407
289
34
26
349
–
85
2
87
262
–
78
5
83
–
13
1
14
69
–
–
–
–
–
–
–
–
–
–
186
10
196
–
1
–
1
195
–
–
–
–
–
–
–
–
–
366
475
57
898
92
112
14
218
680
305
34
27
366
1
88
3
92
274
243
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022
14. Property, plant and equipment continued
Cost
At 1 January 2022
Additions
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
At 31 December 2022
NBV
At 31 December 2022
Cost
At 1 January 2021
Additions
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
NBV
At 31 December 2021
15. Prepayments
Current
Short-term prepayments
436
1,519
Plant &
machinery
$’000
41
–
41
11
8
19
22
41
–
41
3
8
11
30
Motor
vehicle
$’000
845
498
1,343
212
225
437
906
761
85
846
–
212
212
634
Office
Furniture
& IT
equipment
$’000
Leasehold
improvements
$’000
–
185
185
–
30
30
155
–
–
–
–
–
–
–
–
439
439
–
3
3
–
–
–
–
–
–
–
2022
₦ million
97
97
2021
₦ million
54
54
2022
$’000
218
218
Total
$’000
886
1,122
2,008
223
266
489
802
85
887
3
220
223
664
2021
$’000
131
131
15.1 Short term prepayments
Included in short term prepayment are prepaid service charge expenses for health insurance and motor insurance premium.
16.
Investment in subsidiaries
Newton Energy Limited
Seplat Energy UK Limited
Seplat East Onshore Limited
Seplat East Swamp Company Limited
Seplat Gas Company Limited
Eland Oil and Gas Limited
Seplat West Limited
Turnkey Drilling Limited
2022
₦ million
425
23
470
14
14
218,058
651,986
10
871,000
Restated
31 Dec 2021
₦ million
391
21
247
13
13
200,891
597,219
–
798,795
Restated
1 Jan 2021
₦ million
391
21
145
13
13
200,891
596,211
–
797,685
2022
$’000
950
50
1,052
32
32
487,683
1,458,157
23
1,947,980
Restated
31 Dec 2021
$’000
950
50
600
32
32
487,683
1,451,041
–
1,940,388
Restated
1 Jan 2021
$’000
950
50
353
32
32
487,683
1,448,591
–
1,937,691
244
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 As at
31 Dec
2022
Restated
As at 31 Dec
2021
As at
31 Dec
2022
Restated
As at 31 Dec
2021
Restated
1 Jan 2021
As at
31 Dec
2022
Restated
As at 31 Dec
2021
Restated
1 Jan 2021
Percentage of
ownership interest
Carrying
amount
%
₦’million
₦’million
₦’million
16.1
Interest in other entities
Name of entity
Newton Energy Limited
Seplat Energy UK Limited
Country of
incorporation
& place of
business
Nigeria
United
Kingdom
Seplat East Onshore Limited Nigeria
Seplat East Swamp Company
Limited
Nigeria
Seplat Gas Company Limited Nigeria
United
Kingdom
Eland Oil and Gas Limited
Seplat West Limited
Turnkey Drilling Limited
Nigeria
Nigeria
%
99.9
100
99.9
99.9
99.9
100
99.9
100
99.9
100
99.9
99.9
99.9
100
99.9
–
16.2 Reconciliation of investment in subsidiary
At 1 January 2022
Additional investment in subsidiaries – Share-based payment
Additional investment in subsidiary (Turnkey)
Exchange difference
At 31 December 2022
At 1 January 2021
Correction of prior period error
Additional investment in subsidiary
Exchange difference
At 31 December 2021
17.
Investment in Joint ventures
Cost
17.1 Reconciliation of investment in joint venture
As 1 January
Exchange difference
At 31 December
425
22
470
14
14
391
21
247
13
13
391
21
145
13
13
$’000
950
50
1,052
32
32
$’000
950
50
600
32
32
$’000
950
50
353
32
32
218,058
200,891
200,891
487,683
487,683
487,683
651,986
597,219
596,211
1,458,157
1,444,204
1,448,591
10
–
–
23
–
–
20221
₦ million
798,795
3,385
10
68,810
871,000
Restated
31 Dec 2021
$’000
1,937,691
2,697
–
–
1,940,388
2022
$’000
1,940,388
7,569
23
–
1,947,980
Restated
1 Jan 2021
$’000
1,932,983
4,708
–
–
1,937,691
Restated
31 Dec 2021
₦ million
797,685
1,110
–
–
798,795
Restated
1 Jan 2021
₦ million
593,425
1,938
–
202,322
797,685
31 December
2022
₦ million
31 December
2021
₦ million
31 December
2022
$’000
31 December
2021
$’000
93,904
86,512
210,016
210,016
31 December
2022
₦ million
31 December
2021
₦ million
31 December
2022
$’000
31 December
2021
$’000
86,512
7,392
93,904
79,806
6,706
86,512
210,016
–
210,016
210,016
–
210,016
Name of entity
ANOH Gas Processing
Company Limited
Country of
incorporation and
place of business
Nigeria
Percentage of ownership interest
Carrying amount
As at 31 Dec
2022
As at 31 Dec
2021
As at 31 Dec
2022
As at 31 Dec
2021
As at 31 Dec
2022
As at 31 Dec
2021
%
50
%
50
₦’million
₦’million
$’000
$’000
93,904
86,512
210,016
210,016
245
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 18. Trade and other receivables
Advances to suppliers
Advance for New Business
Intercompany receivables
Receivables from Joint Venture (ANOH)
Other receivables
2022
₦ million
4,995
57,367
658,639
871
468
722,340
2021
₦ million
–
–
518,634
974
432
520,040
2022
$’000
11,172
128,300
1,473,033
1,947
1,049
1,615,501
2021
$’000
–
–
1,259,033
2,365
1,050
1,262,448
Advances for new business include deposits of $128.3 million, ₦57.2 billion towards the acquisition of the entire share capital of Mobil Producing
Nigeria Unlimited from Exxon Mobil Corporation, Delaware.
18.1 Reconciliation of intercompany receivables
2022
₦ million
519,017
95,270
–
44,352
658,639
–
658,639
2021
₦ million
313
546,838
(42,578)
14,444
519,017
(383)
518,634
2022
$’000
1,259,963
213,070
–
–
1,473,033
–
1,473,033
2021
$’000
824
1,365,457
(106,318)
–
1,259,963
(930)
1,259,033
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
18.2 Reconciliation of impairment allowance on intercompany receivables
Loss allowance as at 1 January
(Decrease)/Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
18.3 Reconciliation of receivables from joint venture (ANOH)
Balance as at 1 January
Additions during the year
Receipts for the year
Exchange difference
Gross carrying amount
Less: impairment allowance
Balance as at 31 December
2022
₦ million
2021
₦ million
383
(395)
12
–
–
372
11
383
2022
₦ million
2021
₦ million
974
–
(164)
84
894
(23)
871
178
781
–
15
974
–
974
18.4 Reconciliation of impairment allowance on receivables from joint venture (ANOH)
Loss allowance as at 1 January
Increase in loss allowance during the period
Exchange difference
Loss allowance as at 31 December
19. Cash and cash equivalents
2022
₦ million
2021
₦ million
–
22
1
23
–
–
–
–
2022
$’000
930
(930)
–
–
2022
$’000
2,365
–
(366)
–
1,999
(52)
1,947
2022
$’000
–
52
–
52
2021
$’000
–
930
–
930
2021
$’000
469
1,896
–
–
2,365
–
2,365
2021
$’000
–
–
–
–
Cash and cash equivalents in the statement of financial position comprise of cash at bank, cash on hand and short-term deposits with
a maturity of three months or less.
Short-term fixed deposits
Cash at bank
Gross cash and cash equivalent
Loss allowance
Net Cash and cash equivalents
246
2022
₦ million
22,637
42,350
64,987
(74)
64,913
2021
₦ million
29,041
46,409
75,450
–
75,450
2022
$’000
50,628
94,724
145,352
(167)
145,185
2021
$’000
70,499
112,663
183,162
–
183,162
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 19.1 Restricted cash
Restricted cash
19.2 Movement in restricted cash
Increase/(decrease) in restricted cash
2022
₦ million
4,321
4,321
2022
₦ million
694
694
2021
₦ million
3,307
3,307
2021
₦ million
(8,260)
(8,260)
2022
$’000
9,664
9,664
2022
$’000
1,636
1,636
2021
$’000
8,028
8,028
2021
$’000
(20,053)
(20,053)
Included in restricted cash, is a balance of $8 million (N3.6 billion) set aside in the Stamping Reserve account for the revolving credit facility (RCF).
The amount is to be used for the settlement of all fees and costs payable for the purposes of stamping and registering the Security Documents
at the stamp duties office and at the Corporate Affairs Commission (CAC).
A garnishee order of $1.6 million, ₦0.7 billion is included in the restricted cash balance as at the end of the reporting period.
These amounts are subject to legal restrictions and are therefore not available for general use by the Company.
20. Share capital
20.1 Authorised and issued share capital
Authorised Ordinary Share capital
588,444,561 Ordinary Shares denominated in Naira of 50 kobo per share
Issued and fully paid
588,444,561 (2021: 584,035,845) issued shares denominated in Naira
of 50 kobo per share
2022
₦ million
2021
₦ million
2022
$’000
2021
$’000
500
297
500
3,335
3,335
296
1,864
1,862
Fully paid Ordinary Shares carry one vote per share and the right to dividends. There were no restrictions on the Company’s share capital.
20.2 Movement in share capital and other reserves
Opening balance as at 1 January 2022
Share based payments
Additional investment in subsidiary
– Share-based payment
Vested shares
PAYE tax withheld on vested shares
Closing balance as at 31 December 2022
Opening balance as at 1 January 2022
Share based payments
Additional investment in subsidiary
– Share-based payment
Vested shares
PAYE tax withheld on vested shares
Closing balance as at 31 December 2022
Number
of shares
584,035,845
–
–
4,719,809
(311,093)
588,444,561
Number
of shares
584,035,845
–
–
4,719,809
(311,093)
588,444,561
Issued share
capital
₦’million
Share premium
₦’million
Share-based
payment reserve
₦’million
296
–
–
2
(1)
297
90,383
–
–
2,450
(1,516)
91,317
4,914
263
3,384
(2,452)
–
6,108
Issued share
capital
$’000
Share premium
$’000
Share-based
payment reserve
$’000
1,862
–
–
5
(3)
1,864
520,138
–
–
5,480
(3,391)
522,227
22,190
619
7,569
(5,485)
–
24,893
Treasury
shares
₦’million
(2,025)
–
–
–
–
(2,025)
Treasury
shares
$’000
(4,915)
–
–
–
–
(4,915)
Total
₦’million
93,568
263
3,384
–
(1,517)
95,697
Total
$’000
539,275
619
7,569
–
(3,394)
544,069
Shares repurchased for employees during the year of nil (2021: $4.9 million) relates to share buy-back programme for Company’s Long-Term
Incentive Plan. The programme commenced from 1 March 2021 and are held by the Trustees under the Trust for the benefit of the Company’s
employee beneficiaries covered under the Trust.
247
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 20. Share capital continued
20.3 Share Premium
Share premium
2022
₦ million
91,317
2021
₦ million
90,383
2022
$’000
2021
$’000
522,227
520,138
Section 120.2 of Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 requires that where a Company issues
shares at premium (i.e., above the par value), the value of the premium should be transferred to share premium.
During the year, an additional 4,719,809 shares vested with a fair value of $5.49 million. The excess of $5.48 million above the nominal value
of Ordinary Shares have been recognised in share premium.
20.4 Employee share-based payment scheme
As at 31 December 2022, the company had awarded 94,038,312 shares (2021: 73,966,540 shares) to certain employees and senior executives
in line with its share-based incentive scheme. Included in the share-based incentive schemes is one additional scheme (2022 LTIP Scheme)
awarded during the reporting period. During the reporting period, 7,821,418 shares had vested out of which 3,101,609 shares were forfeited in
relation to participants whose employment was terminated during the vesting period. The average forfeiture rate due to failure to meet non-market
vesting condition is 16.19% while the average due to staff exit is 24.36%. The impact of applying the forfeiture rate of 25% on existing LTIP awards
which are yet to vest will result in a reduction of share-based compensation expense for the year by $3,531,176. The number of shares that
eventually vested during the year after the forfeiture and conditions above is 4,719,809 (Dec 2021: 5,736,761) shares were vested.
xvi. Description of the awards valued
The Company has made a number of share-based awards under incentive plans since its IPO in 2014: IPO-related grants to Executive and
Non-Executive Directors, 2018/2020 deferred bonus awards and 2020 Long-term Incentive plan (‘LTIP’) awards. Shares under these incentive
plans were awarded at the IPO in April 2014, 2015, 2016, 2017,2018 and 2020 conditional on the Nigerian Stock Exchange (‘NSE’) approving the
share delivery mechanism proposed by the Company. A number of these awards have fully vested.
Seplat Deferred Bonus Award
25% of each Executive Director’s 2019 bonus (paid in 2020) has been deferred into shares and would be released in 2022 subject to continued
employment over the vesting period. 2020 deferred bonus was approved by the Board and vested in 2022. No performance criteria are attached
to this award. As a result, the fair value of these awards is calculated using a Black Scholes model.
Long Term Incentive Plan (LTIP) awards
Under the LTIP Plan, shares are granted to management staff of the organisation at the end of every year. The shares were granted
to the employees at no cost. The shares vest (after 3 years) based on the following conditions.
• 25% vesting for median relative TSR performance rising to 100% for upper quartile performance on a straight-line basis.
• Relative TSR vesting reduced by 75% if 60% and below of operational and technical bonus metrics are achieved, with 35% reduction
if 70% of operational and technical bonus metrics are achieved and no reduction for 80% or above achievement.
• If the Company outperforms the median TSR performance level with the LTIP exploration and production comparator group.
The LTIP awards have been approved by the NSE.
xvii. Share-based payment expenses
The expense recognised for employee services received during the year is shown in the following table:
Expense arising from equity-settled share-based payment transactions
2022
₦ million
263
Restated
2021
₦’million
130
2022
$’000
619
Restated
2021
$’000
324
The asset arising as a result of share-based payment expenses incurred on employees of subsidiaries during the year is shown in the following table:
Additional investment in subsidiaries – Share-based payment (Note 16.2)
2022
₦ million
3,385
Restated
2021
₦’million
1,110
2022
$’000
7,569
Restated
2021
$’000
2,696
248
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 There were no cancellations to the awards in 2022. The share awards granted to Executive Directors and confirmed employees are summarised below:
Scheme
Global Bonus Offer
Non-Executive Shares
2014 Deferred Bonus
2014 Long Term Incentive Plan
2015 Long Term Incentive Plan
2015 Deferred Bonus
2016 Long Term Incentive Plan
2016 Deferred Bonus
2017 Long Term Incentive Plan
2017 Deferred Bonus
2018 Long Term Incentive Plan
2018 Deferred Bonus
2019 Long Term Incentive Plan
2019 Deferred Bonus
2020 Long Term Incentive Plan
2020 Long Term Incentive Plan
2021 Long Term Incentive Plan
2021 Long Term Incentive Plan –
Executives
2020 Deferred Bonus
2022 Long Term Incentive Plan
2021 Deferred Bonus
COO Sign on Bonus
Deemed
grant date
4 November 2015
4 November 2015
14 December 2015
14 December 2015
31 December 2015
21 April 2016
22 December 2016
24 November 2017
24 November 2017
2 May 2018
2 May 2018
2 May 2019
2 May 2019
30 Apr 2020
30 Apr 2020
2 Dec 2020
2 November 2021
10 March 2022
10 March 2022
30 May 2022
10 March 2022
4 August 2022
Start of
service period
9 April 2014
9 April 2014
14 December 2015
14 December 2015
14 December 2015
21 April 2016
22 December 2016
24 November 2017
24 November 2017
2 May 2018
2 May 2018
2 May 2019
2 May 2019
30 Apr 2020
30 Apr 2020
2 Dec 2020
2 November 2021
10 March 2022
10 March 2022
30 May 2022
10 March 2022
4 August 2022
End of
service period
9 April 2015
9 April 2015
21 April 2017
09 April 2017
21 April 2018
20 April 2018
21 December 2019
20 April 2019
20 April 2020
31 December 2019
2 May 2021
31 December 2020
2 May 2022
31 Dec 2021
1 May 2023
2 Dec 2023
2 November 2024
2 November 2024
31 December 2022
30 May 2025
31 December 2023
1 July 2024
Vesting
status
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Partially
Fully
Partially
Partially
Partially
Partially
Fully
Partially
Partially
Partially
xviii. Determination of Share awards outstanding
Share awards used in the calculation of diluted earnings per shares are based on the outstanding shares as at 31 December 2022.
Share award scheme (all awards)
Outstanding at 1 January
Granted during the year
Exercise during the year
Forfeited during the year
Outstanding at 31 December
Share award scheme (all awards)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2022
Number
2,800,942
25,036,212
(4,719,809)
(3,101,609)
20,015,736
2022
Number
2,800,942
25,036,212
(4,719,809)
(3,101,609)
20,015,736
2022
WAEP ₦
442
442
259
2022
WAEP $
1.10
1.10
0.58
2021
Number
8,806,987
1,145,053
(5,736,761)
(1,414,337)
2,800,942
2021
Number
8,806,987
1,145,053
(5,736,761)
(1,414,337)
2,800,942
Number of
awards
6,472,138
793,650
212,701
2,173,259
5,287,354
247,610
10,294,300
278,191
7,938,589
193,830
6,936,599
341,069
7,648,850
214,499
10,828,156
1,110,057
12,995,688
5,133,469
172,586
13,811,252
439,908
514,575
94,038,312
2021
WAEP ₦
843
415
442
2021
WAEP $
2.22
1.04
1.10
The following table illustrates the number and weighted average exercise prices (‘WAEP’) of and movements in deferred bonus scheme and
long-term incentive plan during the year for each available scheme.
Deferred Bonus Scheme
Outstanding at 1 January
Granted during the year
Exercised during the year
Outstanding at 31 December
Deferred Bonus Scheme
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2022
Number
–
479,564
(172,568)
306,996
2022
Number
–
479,564
(172,568)
–
306,996
2022
WAEP ₦
–
541
483
2022
WAEP $
–
1.21
1.08
2021
Number
86,151
128,348
(214,499)
–
2021
Number
86,151
128,348
(214,499)
–
–
2021
WAEP ₦
509
415
–
–
2021
WAEP $
0.62
1.04
–
–
–
249
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 20. Share capital continued
20.4 Employee share-based payment scheme continued
xviii. Determination of Share awards outstanding continued
The fair value of the modified options was determined using the same models and principles as described in the table below on the inputs to the
models used for the scheme.
Long term incentive Plan (LTIP)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
Long term incentive Plan (LTIP)
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2022
Number
2,800,942
24,556,648
(4,547,241)
(3,101,740)
19,708,740
2022
Number
2,800,942
24,556,648
(4,547,241)
(3,101,740)
19,708,740
2022
WAEP ₦
492
–
322
2022
WAEP $
1.10
0.72
2021
Number
8,720,836
1,016,705
(5,522,262)
(1,414,337)
2,800,942
2021
Number
8,720,836
1,016,705
(5,522,262)
(1,414,337)
2,800,942
2021
WAEP ₦
509
415
442
2021
WAEP $
1.34
1.04
1.10
The shares are granted to the employees at no cost. The weighted average remaining contractual life for the share awards outstanding
as at 31 December 2022 range from 0.8 to 2.3 years (2021: 0.2 to 2.7 years).
The weighted average fair value of awards granted during the year range from ₦170 to ₦581 (2021: ₦415 to ₦442.32), $0.38 to $1.30 (2021: $1.04 to $1.10).
The fair value at grant date is independently determined using the Monte Carlo Model which takes into account the exercise price, the term
of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free
interest rate for the term of the option and the correlations and volatilities of the peer companies.
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes
to future volatility due to publicly available information.
Inputs to the models
xix.
The following table lists the inputs to the models used for the share awards outstanding in the respective plans for the year ended 31 December 2022:
Weighted average fair values at the measurement date
Dividend yield (%)
Expected volatility (%)
Risk–free interest rate (%)
Expected life of share options
Share price at grant date ($)
Share price at grant date (₦)
Model used
2019
LTIP
2020
LTIP
2021
LTIP
2021
LTIP-
Execs
2022
LTIP
0.00%
35%
0.76%
3.00
1.7
521.9
Monte Carlo
0.00%
43%
0.44%
3.00
0.51
193.48
Monte Carlo
0.00%
51.68%
0.31%
3.00
0.66
264.32
Monte Carlo
0.00%
59.29%
2.17%
2.64%
1.12
465.74
Monte Carlo
0.00%
59.86%
2.53%
3.00
1.18
489.76
Monte Carlo
20.5 Treasury shares
This relates to Share buy-back programme for Company’s Long-Term Incentive Plan. The programme commenced from 1 March 2021 and are
held by the Trustees under the Trust for the benefit of the Company’s employee beneficiaries covered under the Trust.
21. Capital contribution
In accordance with the Shareholders’ Agreement, the amount was used by the Company for working capital as was required at the
commencement of operations.
Capital contribution
22. Foreign currency translation reserve
2022
₦ million
5,932
2021
₦ million
5,932
2022
$’000
2021
$’000
40,000
40,000
Cumulative exchange difference arising from translation of the Company’s results and financial position into the presentation currency and from
translation of foreign subsidiary is taken to foreign currency translation reserve through other comprehensive income.
250
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 23. Trade and other payables
Trade payable
Accruals and other payables
Intercompany payable
24. Loss per share (LPS)
2022
₦ million
13,103
246
1,018,712
1,032,061
2021
₦ million
–
756
775,271
776,027
2022
$’000
29,304
545
2,278,335
2,308,184
2021
$’000
–
1,838
1,882,047
1,883,885
Basic
Basic LPS is calculated on the Company’s profit after taxation attributable to the company and based on weighted average number of issued
and fully paid Ordinary Shares at the end of the year.
Diluted
Diluted LPS is calculated by dividing the profit after taxation attributable to the company by the weighted average number of Ordinary Shares
outstanding during the year plus the weighted average number of Ordinary Shares that would be issued on conversion of all the dilutive potential
Ordinary Shares (arising from outstanding share awards in the share-based payment scheme) into Ordinary Shares.
Loss for the year
Weighted average number of Ordinary Shares in issue
Outstanding share-based payment (shares)
Weighted average number of Ordinary Shares adjusted for the effect of dilution
Basic loss per share
Diluted loss per share
2022
₦ million
2021
₦ million
2022
$’000
2021
$’000
(19,107)
Shares ‘000
588,446
1
588,447
(7,552)
Shares ‘000
581,646
2,801
584,447
(45,002)
Shares ‘000
588,446
1
588,447
(18,847)
Shares ‘000
581,646
2,801
584,447
₦
(32.47)
(32.47)
₦
(12.98)
(12.92)
$
(0.08)
(0.08)
$
(0.03)
(0.03)
The shares were weighted for the proportion of the number of months they were in issue during the reporting period.
25. Dividends paid and proposed
As at 31 December 2022, the final proposed dividend for the Company is ₦11.18, $0.025 (2021: ₦10.3, $0.025) per share and the proposed Special
Dividend is ₦22.36, $0.05 per share (2021: nil).
Cash dividends on Ordinary Shares declared and paid:
Dividend for 2022: ₦42.60 ($0.10) per share 588,444,561 shares in issue
(2021: ₦50 ($0.13) per share, 584,035,845 shares in issue)
Proposed dividend on Ordinary Shares:
Final proposed dividend for the year 2022:
₦11.18 ($0.025) (2021: ₦10.3 ($0.025) per share
Special proposed dividend for the year 2022:
₦22.36 ($0.05) (2021: nil) per share
2022
₦ million
2021
₦ million
2022
$’000
2021
$’000
24,972
29,377
58,844
73,354
6,553
13,106
6,016
14,655
14,601
0
29,270
0
During the year, ₦32.2 billion, $44.1 million of dividend was paid at ₦54.70, $0.070 per share as final dividend for 2022. As at 31 March 2022,
₦10.47 billion, $ 14.7 million was paid at ₦17.79, $0.02 per share for 2022 Q1; As at 30 June 2022, ₦ 10.62 billion, $ 14.7 million was paid at ₦18.05,
$0.02 per share for 2022 Q2; As at 30 September 2022, ₦ 11.10 billion, $ 14.7 million was paid at ₦18.86, $0.02 per share for 2022 Q3. Final and
Special Naira dividend payments will be based on the Naira/Dollar rates on the date for determining the exchange rate. The payment is subject
to shareholders’ approval at the 2022 Annual General Meeting. The tax effect of dividend paid during the year was $4.3 million (₦5.6 billion).
26. Related party relationships and transactions
The Company is owned 6.43% either directly or by entities controlled by A.B.C Orjiako (SPDCL(BVI)) and members of his family and 8.20% either
directly or by entities controlled by Austin Avuru (Professional Support Limited and Platform Petroleum Limited). The remaining shares in the
parent Company are widely held.
The goods and services provided by the related parties are disclosed below. The outstanding balances payable to/receivable from related
parties are unsecured and are payable/receivable in cash.
26.1 Shareholders of the parent company
Shebah Petroleum Development Company Limited SPDCL (‘BVI’):
Dr. A.B.C. Orjiako is a director and shareholder of SPDCL (BVI). The company provided consulting services to Seplat. Services provided to the Company
during the period amounted to $916.5 thousand, ₦409.8 million (2021: $1.1 million, ₦0.45 billion). Payables amounted to nil in the current period.
251
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 27.
Information relating to employees
27.1 Number of directors
The number of Directors whose emoluments fell within the following ranges was:
Zero – ₦19,896,500
₦19,896,501 – ₦115,705,800
₦115,705,801 – ₦157,947,600
Above ₦157,947,600
Zero – $65,000
$65,001 – $378,000
$378,001 – $516,000
Above $516,000
2022
Number
2021
Number
–
–
–
3
3
–
–
–
3
3
2022
Number
2021
Number
–
–
–
3
3
–
–
–
3
3
27.2 Employees
The number of employees (other than the Directors) whose duties were wholly or mainly discharged within Nigeria, and who earned over
₦1,989,500 ($6,500), received remuneration (excluding pension contributions) in the following ranges:
₦1,989,650 – ₦4,897,600
₦4,897,601– ₦9,795,200
₦9,795,201 – ₦14,692,800
Above ₦14,692,800
$6,500 – $16,000
$16,001 – $32,000
$32,001 – $48,000
Above $48,000
27.3 Number of persons employed during the year
The average number of persons (excluding Directors) in employment during the year was as follows:
Senior management
Managers
Senior staff
Junior staff
2022
Number
2021
Number
25
101
153
252
531
16
118
140
201
475
2022
Number
2021
Number
25
101
153
252
531
16
118
140
201
475
2022
Number
2021
Number
35
155
297
44
531
30
128
237
80
475
28. Commitments and contingencies
28.1 Contingent liabilities
The Company is involved in a number of legal suits as defendant. The estimated value of the contingent liabilities for the year ended 31 December
2022 is ₦5.5 billion, $1.22 million (2021: ₦7.9 billion, $19.2 million). The contingent liability for the year is determined based on possible occurrences,
though unlikely to occur. No provision has been made for this potential liability in these financial statements. Management and the Company’s
solicitors are of the opinion that the Company will suffer no loss from these claims.
29. Events after the reporting period
There was no event after the reporting period which could have a material effect on the disclosures and the financial position of the Company
as at 31 December 2022 and on its profit or loss and other comprehensive income for the period ended.
252
Notes to the separate financial statements | continuedSeplat Energy PlcAnnual Report and Accounts 2022 Statement of value added
For the year ended 31 December 2022
Other loss
Finance income
Cost of goods and other services:
Local
Foreign
Valued added
Applied as follows:
To employees: –
as salaries and labour related expenses
To government: – as company taxes
Retained for the Company’s future: –
For asset replacement, depreciation,
depletion & amortisation
Loss for the year
Valued added
2022
₦ million
(1,273)
412
(9,212)
(6,141)
(16,214)
2022
₦ million
821
1,961
Restated
2021
₦ million
%
%
(4)
131
(6,382)
–
(6,225)
100%
20221
$’000
(2,998)
971
Restated
2021
$’000
%
%
(10)
327
(21,834)
(14,556)
(38,417)
(15,924)
–
100% (15,607)
100%
100%
Restated
2021
₦ million
1,209
–
%
(5%)
(12%)
%
(19%)
–
2022
$’000
1,934
4,385
Restated
2021
$’000
3,020
–
%
(5%)
(11%)
%
(19%)
–
112
(19,107)
(16,214)
(1%)
118%
100%
88
(7,552)
(6,255)
(1%)
120%
100%
266
(45,002)
(38,417)
(1%)
117%
220
(18,847)
100% (15,607)
(1%)
120%
100%
The value added represents the additional wealth which the Company has been able to create by its own and its employees’ efforts.
This statement shows the allocation of that wealth to employees, providers of finance, shareholders, government and that retained for
the creation of future wealth.
253
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Supplementary financial information (unaudited)
For the year ended 31 December 2022
Revenue from contracts with customers
(Loss)/profit before taxation
Income tax expense
(Loss)/profit for the year
Capital employed:
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Foreign translation reserve
Total equity
Represented by:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Revenue from contracts with customers
(Loss)/profit before taxation
Income tax expense
(Loss)/profit for the year
Capital employed:
Issued share capital
Share premium
Share based payment reserve
Treasury shares
Capital contribution
Retained earnings
Total equity
Represented by:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
2022
₦ million
–
(19,107)
–
(19,107)
Restated
2021
₦ million
–
(6,473)
–
(6,473)
Restated
2020
₦ million
–
(7,160)
–
(7,160)
2019
₦ million
200,733
79,613
(13,484)
66,129
2018
₦ million
217,174
85,429
(35,748)
49,681
2022
₦ million
2021
₦ million
2020
₦ million
2019
₦ million
2018
₦ million
297
91,317
6,108
(2,025)
5,932
176,136
447,429
725,194
965,584
791,671
–
(1,032,061)
725,194
2022
$’000
–
(45,002)
–
(45,002)
2022
$’000
1,864
522,227
24,893
(4,915)
40,000
1,037,830
1,621,899
2,159,515
1,770,568
–
(2,308,184)
1,621,899
296
90,383
4,914
(2,025)
5,932
220,215
388,690
708,405
885,581
598,851
–
(776,027)
708,405
Restated
2021
$’000
–
(16,151)
–
(16,151)
Restated
2021
$’000
1,862
520,138
22,190
(4,915)
40,000
1,141,677
1,720,952
2,151,068
1,453,769
–
(1,883,885)
1,720,952
293
86,917
7,174
–
5,932
255,859
393,687
749,862
877,795
73,124
–
(201,057)
749,862
2020
$’000
–
(19,897)
–
(19,897)
289
84,045
8,194
–
5,932
282,228
196,535
577,223
518,366
539,423
(233,715)
(246,851)
577,223
2019
$’000
654,037
259,411
(43,934)
215,477
286
82,080
7,298
–
5,932
234,148
196,552
526,296
328,870
514,131
(173,276)
(143,429)
526,296
2018
$’000
709,493
279,093
(116,788)
162,305
2020
$’000
2019
$’000
2018
$’000
1,855
511,723
27,592
1,845
503,742
30,426
40,000
1,230,666
1,811,836
40,000
1,304,197
1,880,210
2,148,506
192,430
–
(529,100)
1,811,836
1,688,491
1,757,082
(761,285)
(804,078)
1,880,210
1,834
497,457
27,499
40,000
1,147,526
1,714,316
1,071,233
1,674,694
(564,416)
(467,195)
1,714,316
30. Exchange rates used in translating the accounts to Naira
The table below shows the exchange rates used in translating the accounts into Naira
Property, plant & equipment – opening balances
Property, plant & equipment – additions
Property, plant & equipment – closing balances
Current assets
Current liabilities
Equity
Income and Expenses:
Basis
Historical rate
Average rate
Closing rate
Closing rate
Closing rate
Historical rate
Overall Average rate
31 December 2022
₦/$
31 December 2021
₦/$
Historical
424.37
447.13
447.13
447.13
Historical
424.37
Historical
400.48
411.93
411.93
411.93
Historical
400.48
254
Seplat Energy PlcAnnual Report and Accounts 2022 Additional
information
255
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Report on Payments to Governments for the Year 2022
Introduction
The following information is included to comply with the Disclosure
and Transparency Rules of the Financial Conduct Authority in the
United Kingdom and it is prepared in accordance with Directive
2013/34/EU (the EU Accounting Directive (2013)).
BASIS FOR PREPARATION – REPORT ON PAYMENTS TO
GOVERNMENTS FOR THE YEAR 2022
Reporting entities
This Report includes payments to governments made by Seplat
Energy Plc and its subsidiaries (Seplat). All payments to governments
arise from operations within Nigeria.
Activities
Payments made by Seplat to governments arising from activities
involving the exploration, prospection, discovery, development and
extraction of minerals, gas processing, oil and natural gas deposits
or other materials (extractive activities) are disclosed in this Report.
It excludes payments related to refining, natural gas liquefaction or
gas-to-liquids activities. When payments cover both extractive and
processing activities and cannot be split, the payments have been
disclosed in full.
Government
Government includes any national, regional or local authority of
a country to which Seplat has made payment related to these
regulations, and includes any department, agency or entity that
is controlled by such authority.
Project
Payments are reported at project level except for payments that are
not attributable to a specific project, these are reported at entity level.
A project is defined as operational activities which are governed by a
single contract, license, lease, concession or similar legal agreement,
and form the basis for payment to government. However, if multiple
agreements are substantially interconnected, this shall be considered
as a project. Indicators of integration include, but are not limited to,
geographic proximity, the use of shared infrastructure and common
operational management.
Payments
The information is reported under the following payment types.
Production entitlements
These represent the government’s share of production in the reporting
period arising from projects operated by Seplat. It comprises crude
oil and gas attributable to the Nigerian government by virtue of its
participation as an equity holder in projects within its sovereign
jurisdiction (Nigeria).
Production entitlements to the government are lifted independently
by the relevant government agency.
Royalties
These are payments for the rights to extract oil and gas resources,
typically at a set percentage of revenue less any deductions that may
be taken.
Licence fees, rental fees, entry fees and other considerations
for licences and/or concessions
These are fees and other sums paid as consideration for acquiring
a license for gaining access to an area where extractive activities are
performed. Administrative government fees that are not specifically
related to the extractive sector, or to obtaining access to extractive
resources, are excluded. Also excluded are payments made in return
for services provided by a government.
Corporate taxes
Corporate taxes are charges based on taxable profit which are
payable to the government. Examples of corporate taxes in Nigeria
include Petroleum Profit Tax (PPT), company income tax (CIT) and
education tax.
Other transaction taxes such as Withholding taxes (WHT), Value-
added taxes (VAT), Personal income taxes (PIT), etc. are not included
in this report.
Company income tax (CIT) is a tax imposed on profit of a company
from all sources. Gas operations are liable to CIT.
Petroleum profit tax (PPT) is a tax applicable to upstream operations
in the oil industry in lieu of company income tax. Oil operations such as
oil mining, prospecting and exploration leases are liable to PPT.
Education tax is tax applicable to both oil and gas operations based
on assessable profit. Assessable profit is the profit derived after
deducting all the allowable expenses.
Other types of payments
Other types of payments that are required to be disclosed
in accordance with the Regulations are the following:
• Dividends
• Signature, discovery and production bonuses
• Infrastructure improvements
However, for the year ended 31 December 2022, there were no such
reportable payments made by Seplat to government that were above
the materiality threshold as determined below.
Materiality
For each payment type, total payments below £87,649 (€100,000,
$106,099) whether made as a single payment or as a series of related
payments, to a government agency are excluded from this Report.
Reporting currency
Payments in this report have been disclosed in US dollars. Where actual
payments have been recorded in a currency other than US dollars,
they have been translated using the annual average exchange rate.
256
Seplat Energy PlcAnnual Report and Accounts 2022 Government and expense report (in USD)
GOVERNMENTS
Nigerian National Petroleum Corporation Limited
Nigerian National Petroleum Corporation Exploration and
Production Limited
Department of Petroleum Resources
Nigeria Export Supervision Scheme
Niger Delta Development Commission
Nigerian Content Development and Monitoring Board
Federal Inland Revenue Service
Total
Project and expense report (in USD)
PROJECTS
Gas revenue
OML 4, 38 and 41
OML 40
OML 53
OML 56
Total
Production
Entitlement
Royalties
Fees
Taxes
Total
8,845,730
–
–
–
8,845,730
913,551,182
–
–
–
–
–
922,396,912
–
176,985,383
–
–
–
–
176,985,383
–
8,040,626
225,634
12,210,276
5,978,001
–
26,454,537
913,551,182
185,026,009
–
225,634
–
12,210,276
–
5,978,001
–
57,114,068
57,114,068
57,114,068 1,182,950,900
Production
Entitlement
Royalties
Fees
Taxes
Total
137,440,433
532,678,221
243,432,528
8,845,730
–
922,396,912
–
110,236,401
47,328,688
18,562,911
857,383
176,985,383
–
22,723,600
210,179
3,520,653
105
26,454,537
–
46,491,837
–
5,676,128
4,946,103
137,440,433
712,130,059
290,971,395
36,605,422
5,803,591
57,114,068 1,182,950,900
257
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022
Notice of 10th Annual General Meeting
of Seplat Energy Plc
NOTICE IS HEREBY GIVEN that the 10th Annual General Meeting
of SEPLAT Energy Plc (the ‘‘Company’’) will be held virtually via
https://www.seplatenergy.com/agm-2023/ on Wednesday, 10 May
2023 at 11:00am to transact the following business:
Ordinary business:
1.
2.
3.
To receive the Audited Financial Statements of the Company for
the year ended 31 December 2022, together with the Reports of
the Directors, Auditors and the Statutory Audit Committee thereon.
To declare a final dividend recommended by the Board of
Directors of the Company in respect of the financial year ended
31 December 2022.
To re-appoint PriceWaterhouseCoopers (“PWC”) as Auditors
of the Company from the conclusion of this meeting until the
conclusion of the next general meeting of the Company at which
the Company’s Annual Accounts are laid.
4.
To authorise the Board of Directors of the Company to determine
the Auditors’ remuneration.
5. To elect/re-elect the following Directors1:
a. To approve the appointment of the following Directors:
i.
ii.
Mr. Samson Ezugworie as an Executive Director of the
Company; and
Ms. Koosum Kalyan as an Independent Non-Executive
Director of the Company.
b. To re-elect the following Directors who are eligible for
retirement by rotation:
i.
Madame Nathalie Delapalme (Non-Executive Director); and
ii. Mr. Bello Rabiu (Independent Non-Executive Director).
6. To disclose the remuneration of managers of the Company2.
7.
To elect the shareholder representatives of the Statutory
Audit Committee.
Special business:
To consider and, if thought fit, to transact the following Special Business,
which will be proposed and passed as an Ordinary Resolution:
8.
To approve the Remuneration Section of the Directors’
Remuneration Report set out in the Annual Report and Accounts
for the year ended 31 December 20223.
That, the Board be and is hereby authorised to take all necessary
steps to give effect to the above resolutions.
Copies of the Annual Report and Accounts for Seplat Energy Plc
for the financial year ended 31 December 2022 will be mailed to
the shareholders and will be available on the Company’s website:
www.seplatenergy.com. Printed versions can also be obtained by
contacting DataMax Registrars in Nigeria at 2C Gbagada Expressway,
by Beko Ransom Kuti Park, Gbagada, Lagos/+ 234 1 7120012; or
Computershare in the UK on +44 (0) 370 703 6101.
BY ORDER OF THE BOARD.
Mrs. Edith Onwuchekwa
FRC/2013/NBA/00000003660
Company Secretary
Dated 31 March 2023
1 The profiles of the Directors are set out on pages 66 to 71.
2 The remuneration of the managers of the Company is set out on page 104.
3 The Remuneration section of the Directors’ Remuneration Report is set out on page 110.
258
Seplat Energy PlcAnnual Report and Accounts 2022
7. NOMINATION FOR THE STATUTORY AUDIT COMMITTEE:
In accordance with section 404(3) of the Companies and Allied
Matters Act 2020, the Statutory Audit Committee shall consist of five
(5) members comprising two (2) Non-Executive Directors and three (3)
representatives of the shareholders of the Company. Any shareholder
may nominate a shareholder as a member of the Statutory Audit
Committee. In accordance with 404(6) of the Companies and Allied
Matters Act 2020, such nomination should be in writing and should
reach the Company Secretary at least twenty-one (21) days before the
Annual General Meeting and any nomination not received prior to the
meeting as stipulated is invalid. The Companies and Allied Matters Act
2020 and the Nigerian Code of Corporate Governance 2018 stipulate
that, members of the Audit Committee should be financially literate and
at least one member must be a member of a professional accounting
body in Nigeria established by the Act of the National Assembly and
be knowledgeable in internal control processes. Thus, a detailed
Curriculum Vitae confirming the nominee’s qualification should be
submitted with each nomination to the Statutory Audit Committee.
8. ELECTRONIC ANNUAL REPORT:
In order to improve efficiency and delivery of the Annual Reports,
shareholders who wish to receive the Annual Report of Seplat Energy
Plc in an electronic format should kindly provide their email addresses
to the Registrars for processing. In addition, Annual Reports are
available online for viewing and download from the Company’s
website at www.seplatenergy.com.
9. RIGHT OF MEMBERS TO ASK QUESTIONS:
In line with Rule 19.12(c) of the Listing Rules of the Nigerian Exchange
Limited, shareholders have a right to ask questions not only at the
Annual General Meeting, but also in writing prior to the Meeting.
Questions submitted prior to the Meeting should be addressed to the
Company Secretary and must reach the head office of the Company
no later than seven (7) days before the date of the Meeting (being
3 May 2023) or by email at AGMQuestions@seplatenergy.com.
10. LIVE STREAMING OF THE AGM:
The Meeting will be streamed live online to enable shareholders and
other stakeholders who may not be able to attend physically to follow
the proceedings. The link for the live streaming of the Meeting will be
made available on the Company’s website at www.seplatenergy.com
and will be streamed live on the YouTube social media channel.
Notes:
1. PROXY:
A member of the Company entitled to attend and vote at the above
meeting is entitled to appoint a proxy to attend and vote in his/her/its
place. A proxy need not be a member of the Company. For the
appointment to be valid for the purposes of the meeting, the Company
has made arrangements at its cost for the stamping of the duly
completed proxy forms which must be deposited at the office of the
Registrar, DataMax Registrars Limited, 2C Gbagada Express Way, by
Beko Ransom Kuti Park, Gbagada, Lagos or at the head office of the
Company, marked for the attention of the “Company Secretary” or by
email to proxy@seplatenergy.com, not less than 48 hours before the
time fixed for the meeting. For convenience purposes, a blank proxy
form is attached to the 2022 Annual Report and Accounts, both of
which are available at the Company’s website: www.seplatenergy.com
and at the Company’s head office: 16a Temple Road (Olu Holloway),
Ikoyi, Lagos.
2. VIRTUAL MEETING LINK:
Further to the signing into law of the Business Facilitation
(Miscellaneous Provisions) Act 2022, which allows public companies to
hold meetings electronically, this AGM will be held virtually. The virtual
meeting link for the AGM ishttps://www.seplatenergy.com/agm-2023/
The virtual meeting link will also be available on the Company’s
website at “www.seplatenergy.com”.
3. CLOSURE OF REGISTER:
The Register of Members and Transfer Books of the Company (Nigeria
& UK) will be closed on 18th April 2023 in accordance with the provisions
of section 114 of the Companies and Allied Matters Act, 2020, to enable
the Registrars to prepare for the Annual General Meeting.
4. PAYMENT OF DIVIDENDS:
If the dividend recommended by the Directors is approved by members
at the Annual General Meeting, the dividend will be paid on or around
16 May 2023, to shareholders whose names appear in the Company’s
Register of Members at the close of business on 18 April 2023.
5. E-DIVIDEND MANDATE:
Shareholders are kindly requested to advise DataMax Registrars
Limited of their updated records and relevant bank accounts, by
completing the e-mandate form. The e-mandate form can be
downloaded from DataMax Registrars Limited’s website at
http://www.datamaxregistrars.com. The duly completed form(s)
should be returned to DataMax Registrars Limited, at No. 2c Gbagada
Expressway, by Beko Ransom Kuti Park, Gbagada Phase 1, Lagos.
6. UNCLAIMED DIVIDEND:
Shareholders are hereby informed that a number of dividends still
remain unclaimed. The list of all unclaimed dividends will be circulated
with the Annual Report and Financial Statements. Any member
affected by this notice is advised to write to or call the office of the
Company’s Registrar, DataMax Registrars Limited, at No. 2c Gbagada
Expressway, by Beko Ransom Kuti Park, Gbagada Phase 1, Lagos or
through any of these numbers: 07064000751, 07064000752,
07064000758, 0700DATAMAX. The list of unclaimed dividends can
be accessed at the Registrars’ office or via the Company’s website:
www.seplatenergy.com.
259
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Unclaimed dividend list
S/No Beneficiary
1
2
FORTUNE PROPERTIES LTD
MAJARO AKINWALE, &
ADEBUKUNOLA
ANYABUIKE NKECHI
ANYANWU CHINEDU
UMEGE CHUKWUKA
EZIKE VINCENT
AKPOTOBOR GODSPOWER
AGHAHON OTASOWE
JEGBEFUME RUFUS
ONAIWU MATTHEW
TEDEYE OMAJUWA
ABOMAH SAMUEL
AKINOLA KAYODE
TIEMI PETER
IKPADE ANSELEM
OGBEIDE AUGUSTINE
UBUANE EHIMUAN
OLLEY JOSEPH
ODIA ALICE
OKONORHO AUGUSTINE
OBUKOHWO VICTOR
AKANDE MUSTAPHA
EGWARE EMMANUEL
OLOKOR SUNDAY
IDAMADUDU RANDOL
ESIRI JOHN
OGHOR BRYTE
OJO MOYOSORE
AKHIGBE CHARLES
ADEOSUN OLAYINKA
CONNAL STUART
JONATHAN STEVEN
ODUNGIDE IMA
CHKUKWUWIKE IBINI
EDUM HARRISON
EYEWUOMA TAIYE
DAODU ADEOLA
AGBASIERE JAMES
OLAYIWOLA WASIU
AIGBOKHAI EMMANUEL
ODIGIE ANTHONY
EMENIKE ADA
OKOLI NWAMAKA
AMCON/ORJIAKO AMBROISE,
EFAPOKIRE ROSE
OLAOFE TOLANI
SKENE EDWARD
ALAKWE FAUSTINUS
AGWUIBE ANTHONY
EBINUM JOSEPH
LAWSON EDOMWONYI
EDEWOR OMONEFE
IWEZE ENUOMA
UKARIWO NKPA
IRORO OROBOSA
OSAWE OSAYANDE
NWULU DANIEL
AGUSIOBO IKECHUKWU
UKPAKA ADANNA
NDUBUEZE MADUABUCHI,
NWANWENE EMMANUEL
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
260
S/No Beneficiary
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
MUJAPERUO SANDRA
OKO PATRICK
OZOEMENA ESEROGHENE
AMADI TERRY
OGBUIYI ONYEBUCHI
IBI-ADE ITOTOI
UMOH UDEMEOBONG
IBRAHIM HAKEEM
OKOYE CHIKAODILI
IKUENOBE ONOMEN
ONODJE VICTOR
KOSUOWEI EREBEBE
OKEYODE OLUSEGUN
ENYENDU CHIGOZIE
CHUKA-UMEH OBIAGELI
AKAMADU MATTHEW
TAIWO YETUNDE
OVRAITI OGHRNOVO
MACAULAY EDUJIE
UZOKWE CHUKA
ADERIBIGBE ADELEKE
NWOSEH EMMNAUEL
OKAFOR UCHENNA
EZEOKE FRANCIS
KPOHRAROR HOPE,
OKABEKWA FABIAN
OBIOR PETER
AKPERE SAMSON
ONUBOGU ADAEZE
ICHA ESTHER
MOLUNO VIVIAN
AKINJARE EMMANUEL
BAMISHILE-RICHARDS BEATRICE
OBOMINURU OGHENEOVO
ODU KENNETH
BAKARE EMMANUEL
IDIAGHE SUNDAY
OGODO ONORIODE
EDIKE BRIGHT
OKPARANTA SAMUEL
IMONITIE CHRISTOPHER
OKOGBE BOLAJI
OSUNKWO EBERE
AGBAZA CHURCHILL
UDI ERNEST
ORJI MADUABUCHI
AITIEMWEN OSAGIARO
FASHIKU ADEMOLA
OMOROGA ADENIKE
AIBANGBEE ROLAND
IBEAWUCHI CHIOMA
AGBASIERE IZUU
AKEH MICHAEL
OKWAGBE HARRISON
JOBI-STEVENS AKIN
OSULALA PRINCE
OYELAKIN MOTUNRAYO
OKHOMINA SUNDAY
YEGBEBURU MATTHEW
OJEWVE PETER
ETHUAKHOR FIDELIS
ALOHAN CAMILLA
OTOKHAGUA VERONICA
SULEIMAN TIJANI
IGBERAESE OKORUWA
ALAKWE OBINNA
ONI OMOTAYO
AZIA MONDAY
OFURHIE ERHOMU
ATARE SUNDAY
AMAECHI NGOZI
OMOROGBE OSAZUWA
MASOJE ANTHONY
OBODOZIE ONYEKA
ANYANWU CHIBUEZE
OLUYOH GODWIN
ASUELIME KIKE
EWHRUDJAKPOR OBIKU
UZOMA KELECHI
IGWE EZIJE
NWAMBA OLIVE
GOB-AGUNDU UCHE
OKORO DANIEL
OTOKHINE EMMANUEL
ONWUNYI LOTANNA
OZUMBA FRANK
ENEDUWE ONYEKA
SAM KINANEE
ADEMOLA ENIOLA
AKPURU CHIDINMA
ODELEYE MICHAEL
HARRY RACHEL
LAWAL FATAI
OVUAKPORAYE REUBEN
S/No Beneficiary
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156 WANOGHO-ONUNKETE ENI
OGOLO LANCASTER
157
IBENEGBU CHINELO
158
IGBOKEI STEPHANIE
159
ANIRAH ONOME
160
OHALETE CHIAMAKA
161
KONYEBAGU CHIKEZE
162
OKOLIE CHIZOBA
163
COLLINS TEMISA
164
EJIEJI EMENIKE
165
EBELEDIKE ODERA
166
UGOCHUKWU ONYEKACHI
167
OROGUN OROMENA
168
BROWN, ROGER
169
CHINDA JEFF
170
LOTUS CAPITAL LIMITED -
171
SANGUDI GENEVIEVE
172
OBIAGELI OKEREKE
173
ODUSOTE OKUNOLA
174
SEPLAT STAFF COOP
175
KASIM FAUZIYYAH KIKELOMO
176
OLANREWAJU FILANI OLADAPO
177
AJUMOGOBIA AWUNEBA SOTONYE
178
INSURANCE INVESTMENTS FUND
179
SANKORE SECURITIES LIMITED
180
ROBERT MBONU
181
NISL INVESTMENT NOMINEE
182
VISTA INVESTMENT PROPERTY
183
LIMITED -
MOURAD BASSEL
184
Seplat Energy PlcAnnual Report and Accounts 2022 S/No Beneficiary
185
186
187
188
189
190
191
192
193
194
195
196
197
198
PASADENA ENERGY CORPORATION
(FUTUREVIEW) -
BALOGUN TOLULOPE,
OGBECHIE GABRIEL, IFEANYI
ADAMS BODE, THOMAS
ONWUKA COLLINS, CHIKA
STERLING REGISTRARS LTD
CSL NOMINEE ACCOUNT 'CX'
SARUMI TUNDE, KABIR
ONUOHA CHUKWUEMEKA, (ENGR.)
EZENMA CHUKWUKA, COSMAS
OHUABUNWA NNAMDI, GODFREY
ITAUMA MERCY, ETEAKAMBA
JINADU WASIU, OLABISI
KRAGHA CHRISTOPHER,
OGHENERUME
OKELEYE ISRAEL, AYODAMOPE
199
200 OKELEYE ENOCH, ANJOLA-OLUWA
201
202
203
204
205
206
207
OKELEYE RACHAEL, OREOLUWA
SMITH BUKOLA,
OLUGBOSUN ARIYO, AYO
SHODEKE OMOLARA, DORCAS
OMOGIAFO OWEN, DIANA
BISAMI NIGERIA LTD - ACCOUNT 2
ABIRU HABEEB, ADEWALE (HON.
JUSTICE)
OTSEMOBOR ENETOMHE,
ADEBAYO RAHEEM, ADEWALE
BANKOLE OLUMUYIWA, JACOB
BANKOLE JOSEPH, OLUMAYOKUN
ADEFOLARIN
OYEDELE NURAT, ADENIKE EJIDE
OYEDELE ABDULAZEEZ, ADEMOLA
TAIWO
LAWAL MORUF, OLANREWAJU
LAWAL TIMILEHIN, ANU-OLUWAPO
EZEOCHA CHISOMAGA,
IHEDIOHANMA
MAKANJUOLA OLADAYO, ABDUL
YEKINI
AKINTUNDE MARY, ADEOLA
SANNI ABIODUN, CHRISTIANA
CHUKWU JULIET, NNENNA
AJANI TUNDE, OLUWOLE
SHITTU SULAIMON, AYINLA
RUFAI ADEMOLA, ELIAS
218
219
220
221
222
223
224 MR & MRS IKPONMWOSA, JAMES
208
209
210
211
212
213
214
215
216
217
225
229
230
226
227
228
ODIASE
ORIVOH VICTOR (ALLEGED
DECEASED PHC/2052/2022),
OGINNI JOSHUA, OLUWOLE
AGWUNCHA IFEYINWA, EVELYN
FOLAYAN OLUWAROTIMI,
CHRISTOPHER
YUSUF NURUDEEN,
AKINSANYA LATEEF, AYINDE
(ALLEGED DECEASED)
NZEJI AHAMEFULE, DOMINC
231
OKOH PETER, KNIGHT
232
233 MULTRACTS INVESTMENT LTD
OKELEYE ADENIKE, ELIZABETH
234
ADESINA OLALEKAN, OLADEPO
235
NORTH WEST PETROLEUM & GAS
236
LTD
EKANEM SAMPSON, EKANEM
237
ADEOYE OLUBUNMI, BABATUNDE
ADEYEMI ADEKUNLE,
EDDO MARK,
OGUNTOYE OLUWATOPE, LAWRENCE
AZEEZ SULAIMAN, AKINADE
OLUGBOSUN BANJI,
OFOHA IKENNA, KENNETH
S/No Beneficiary
AKINJIDE ABAYOMI,
238
239
OMOTOYE ADEWALE,
240 MADUKO FIDELIS, OGBOGU
241
242
243
244
245
246
247
248 MORADEYO DAVID, ADEMOLA
249
250
251
252
253
254
255
256 MOT OLAYIWOLA, TOBUN
257
258
259
260
FRANCIS OLAMIDE, LOLA ABOSEDE
NGWUOCHA CHIKE, CHARLES
DAWODU OMOLARA, ADIAT
AIYEBIWO OLUBUNMI, MOTUNRAYO
LAWAL NOJEEM, OLAWALE
AUGUSTINE ESTHER, FUNKE
OLAGUNJU GABRIEL ADEWALE
HAMZA RIDHWAN, BOLADALE
ADEAKIN FOLAYEMI, DIDANLOLA
AKINOLA OLUWASEUN,
ERINOLA MATTHEW, KOLAWOLE
AKEEM
MOTOLATOB NIG. LIMITED
OFFOR KINGSLEY, ONYEMAENCHI
D-BEST ACHIEVERS SHAREHOLDERS
ASS
EDEVBIE DAVID,
ALABI DAMILARE,
IHEANACHO STEPHEN, CHINONSO
SOYE BRIGGS,
AHMAD SALIHIJO, BILIKISU
AJAO ADEFUNSHO, ADEYI
OBADEMI JOSHUA, OLUYEMI
OGUNDEJI MOSES, AYODELE
SAKA KOLAWOLE, ADAMS
OPATOLA JOSEPH, OGUNDEYI
AJAO JOHNNY, ADELAKUN
OBAYOMI IDOWU,
ADEGBITE ISAAC, ADEREMI
FAWOLE TAIWO, GANIYU
ABIMBOLA OLUBUNMI, EUNICE
SALAMI OLASUNKANMI, TIRIMISIYO
ADEDOYIN ADEKIITE, OLUTOYIN
NNAMDI JOHN, OKONKWO
ODUSOTE OLATUNBOSUN, ANIKE
OBARINDE ISAAC, OBATOSHO
KUMOEI LIMITED
NJOKU CHRISTIAN, CHINONYEREM
OBATAYO JOHN, OLUWAFEMI
ODUNUGA SAMIAT, ADEBANKE
EKE CHIBUZOR, EMMANUEL
AKHIGBE OKHIRIA, TOM
UMEH IFY,
BELLO ADISA, SULE
ADEYEMO TITI, LATIFAT
OKOH EMMANUEL, ODE
SALAU MOHAMMED, ADEBANJO
OMOLE DEBORAH, MORADEKE
EVBOTA HARRIET, ADEKUNBI
OVIAWE NOSAMUDIANA, ABIGAIL
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
S/No Beneficiary
298
299
300
301
302
303
304
305
306
OKAFOR RUTH, ESOHE
CORNERSTONE STAFF COOPERATIVE
SOCIETY
AWOBIMPE KAYODE, CAMALDEEN K
EKWELI EMMANUEL,
CHUKWUNYEAKA
IMEH GODWIN, GBOTA
AROLEOWO GANIAT, ABIODUN
DARA ADEOLUWA, EMMANUEL
CHIKEKA VIVIAN, ADANMA
HARMONY SECURITIES LIMITED - A/C
1
AKINOLA OLUDOTUN, OLUFEMI
ADETIBA ADEREMI, AKABA
307
308
309 OSILEYEOLUGBENGA AFOLABI,
310
311
312
313
314
315
316
317
318
319
SOWEMIMO BASIRU, SOLA
EMORDI NJIDEKA, YVONNE
BELLO KOKO, MOHAMMED ATP
UDEAGWU FIDELIS, CHUKWUETALU
EZEANI IGNATIUS, MAJESTY
OLUWASEUN OMOTOSHO,
ARIGBABOWO ENIOLA,
ARIGBABOWO OLUWATOSIN,
OLATUNDUN RASHEED, OLABISI
OGUNSOLA ADEDAYO,
OLUWASEGUN
OKOYE NNENNA, CHIOMA
EKPEKI OMOWHARE, WILLIAM
NNAMNO C, NWOSU
OKON EMMANUEL, E.
320
321
322
323
324 MUNADAS MULTI CONCEPT LIMITED
325
326
327
OYEWOLE ISAIAH, OLUWATOSIN
OLAJIDE OLUKAYODE,
OLOYEDE OLADAPO,
OLUWAMAYOWA
ABOLUDE OLANIKE, OMOYIOLA
IKOTUN OLALEKAN, KAYODE
328
329
330 ODU CYRIL,
331
332
333
334
OLIVE COURT CHARITY FOUNDATION
EGBUCHELEM NNAMDI, JACOB
ODUGBEMI REGINA, AITUAJE
JIMOH AUGUSTINE, A & JIMOH IYABO
O
OLAOFE ABAYOMI, OLADIPO
340
341
342
335
336 OMOLE ABRAHAM, OLAMILEKAN
337
OWOPETU OLUFEMI,
338 OLAYEYE RAOLAT, TOLANI
339 OKAFOR EMMANUEL,
NKWACHUKWU
NWANKWO NELSON,
IFEANYICHUKWU
ECOMARK INVESTMENT LIMITED
ALLISON-OGURU EDMUND,
ANIENKEDIGIRI
343
ADEPOJU IBITOMI, MOWANUOLA
344 MPAMAUGO SAMUEL, CHINENYE
345 ONOKURHEFE BENSON, IRHIKEVWIE
346 OSUOHA A, CHIMA
347
348
349
350 ONOKURHEFE BENSON, IRHIKEVWIE
351
BATULA ADISA, BOONYAMIN ALHAJI
SAGOE KWEKU-MENSAH, OLAKUNLE
SHOFOLAHAN SUNDAY, O.
OHIFUEMEH OLAYINKA,
ANUOLUWAPO
261
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Unclaimed dividend list | continued
S/No Beneficiary
UKPONG UKPONG, S.
352
SIMAN LARAI,
353
EKE CHIKAMSO, NWAYINMA
354
IJOMA FIDELIS.OPIA.ODILI,
355
EKE CHIDIUTO, CHIDERA
356
357
ERUVBETINE PREM, ENAEME
358 ONYIA UCHENNA, CHINYERE
DUROJAIYE ANTHONIA, OLAIDE
359
SULEIMAN ABDULLAHI,
360
SALAMI YUSUFU, BISI
361
AJAERO KINGSLEY, UCHECHUKWU
362
ANYA EUGENE, UCHECHUKWU
363
AMADI CHIMA, EMEKA
364
ATURAMU TOLULOPE,
365
ARTHUR STEVEN ASSET MGT LTD
366
AFINJU TAIWO, ANUOLUWA
367
368 MADUFORO GOLDEN, CLEMENT
369
370
371
372
373
374
375
376
377
378
379
AKINJOBI TEMITOPE, ANUOLUWAPO
JOHNSON ADEOLA,
AKINSANYA FOLASHADE, OMOLAYO
PROF CHRIS EKONG FOUNDATION
ONWUJI JOHN, CHUKWUEMEKA
EKE KELECHI, PASCHAL
AIBONI SAM, AMAIZE
KASIM JOTHAM, TIWATOPE
KASIM JOSHUA, TIWATAYO
ABOD-REUBENS NIG LTD
ABIODUN-JOHNSON ISEOLUWA,
OMOLAJA
380 MADUFORO GOLDEN, C.
OKPARA CHUKWUMAIHE, G.
381
THOMAS AKINBAYO, OLAWALE
382
THOMAS AKINBAYO, OLAWALE
383
NWABUEZE KINSLEY, KENECHUKWU
384
385
DOKUBO IGONIBO, WILFRED
386 OREFUWA OLUWAGBENGA, GABRIEL
UCHENYI UZOAMAKA, UCHECHI
387
388
EKONG EBONG, UDO
389 OHERI ELLOHO, FORTUNE
390
391
AREMU JOSEPHINE, MOJISOLA
OKUNRIBIDO OLADIPUPO,
OLUFOLARANMI
ISAIAH ROSELINE, NGOZI
OREFUWA TEMITOPE, M
392
393
394 ONAKPOVHIE ONAGITE, EMMANUEL
395
AFOLABI OLORODE TRUST (FBN
TRUSTEES)
TWO EDGE PARTNERS GLOBAL
LIMITED
OLOWU ABIODUN, ABODUNRIN
DAYO-OLAGUNJU OLUBUNMI,
ONAJITE
UMOH OTOBONG, ISAIAH
DREAMBEAUTY VENTURES LIMITED
ODUME FESTUS, AZUBUIKE
ADUBA JUDE, AND SAMAILA
SULEIMAN
EGBAGBE AUGUSTINE, SUNDAY
ADIO ADEMOLA, ALEXANDER
DOYINSOLA AFOLAYAN,
LAYADE OLUWABUSAYOMI,
GBADAMOSI MUDASHIRU, ATANDA
396
397
398
399
400
401
402
403
404
405
406
407
262
S/No Beneficiary
408
UBOGU FELIX, NKWAONYE &
OLUFUNMILAYO ITUN
409 OGUNLEYE AFOLARIN, AFOLABI
OLADOKE SUNDAY, ISAAC
410
SHOPEJU EFUNBOSEDE, AYOTUNDE
411
ONEKUTU EMMANUEL, AKAGU
412
ADEBAYO ADEDAYO, OLUWASEUN
413
ADELEKE ADEBAYO, ADETUNJI
414
OGUNMODEDE GABRIEL,
415
ONUOHA CHIDI, CHIKWENDU
416
OSAMO DARE, OLUWASEGUN
417
ROSGATE NIGERIA LIMITED
418
RIMDAP ABDUL, BIN
419
SALAMI ZACHAEUS, OTITOJU
420
SALIU FAUSAT, REMILEKUN
421
AKINSANYA,O.ADEYEMI &,
422
BALOGUN,O.OLUFUNMI
423 MUSA SHITTU, ABOKI
ILESANMI OLUDOLAPO,
424
ISAIAH EMEKA, PHILIP
425
ISAIAH PRINCE, JOSHUA
426
OGUNLEYE OLABODE,
427
UBOSI CHRISTOPHER,
428
AWODERO MICHAEL, OLUSEGUN
429
ELEKEDE BABATUNDE, SULAY ENIOLA
430
ALUKWU CHIBUIKE,
431
432
QUADRI SULAIMON,
433 MOROCCO-CLARKE SUSAN,
TURTON GABRIEL, ADEWUNMI
IHEGBU CHIDIEBERE, MACLAWRENCE
EYETSEMITAN TOJU, PHILIP
LUKMON OLADAYO, BULIAMEEN
AYODELE
BALOGUN RAFIU, AND BEATRICE
434
FAGBAYIDE OLUKAYODE, OLUWOLE
435
AZEEZ RASAKI, KOLAWOLE
436
OKOLIE HUMPHREY, EZE
437
438
IZ-UDEANI MILLICENT, OGOR
439 MBC SECURITIES, NOMINEE OBUM
440
441
442
443
444 OLUKOJU AYODEJI, ABAYOMI
445
NWABUIHE OLIVER, SIL
446 GARUBA SAIDU, KEWUYEMI
447
448
449
450
451
452
453
454
455
456
457
458 MOSURO YAKUBU, TITILAYO
459
460 OBAYEMI FEYISARA, JANET
OSHIN ADESEGUN,
461
AREMU RASHIDAT, KEHINDE
462
JINADU LAMIDI, OLANIRAN
463
TUEDOR FRANCIS,
464
ABDUL OLUWASOLA, HAMMED
465
UMEZE NZE, INNOCENT
466
ORAH CHINEDU, JEROME
467
OHAEGBULAM NESHMET, CHIKE
AKANBI MOSES, ADENIYI
VICTOR EFFIOM, OROK
DENNI-FIBERESIMA DAMIEBI,
BANKOLE MOTUNRAYO,
PHILIP IKECHUKWU,
ONYIA EMEKA, JUDE
AZEEZ JIMOH, OGUNBANWO
EKEBI KENNETH, IDO
IBRAHIM DIKKO,
SHOKUNBI KHADIJAT, OLASUMBO
EZEOKE GODSON, NEBECHI ODILI
EKE THELMA, IJEOMA
IDRIS MUSA, ISA
ONU BERNARD, OKECHUKWU
OKWARA FRED, IKECHI
PATRICK AKINWUNTAN, MR & MRS
AGWUIBE NNEKA, ROSEYMARY D
RAIMI RAMONI, ADEMOLA
ABIODUN SYLVESTER, OLUSANMI
ONWELUZO UZOAMAKA, SOPHIA
AMADI CHARITY, CHIKWADOM
ASEDEKO HENRY, ABIODUN
OREFUWA BABATUNDE, ADEMOLA
S/No Beneficiary
468
469
470
471
472
473
474
475
476
477
478
479
480 OREFUWA OLUWASEYIFUNMI, D
481
482
483 OJUKOTOLA RAHAMON, OLUWOLE
484
ALAGBE ADEYINKA, (PRINCE)
AYODELE OLUSHOLA, OMOTAYO
LANIYAN JONATHAN, OLADEJO
SUNDAY
JINADU MUSTAPHA, ISHOLA
AWE BABALOLA, BABAJIDE
ONYEBUAGU IJEOYIBO, JENNIFER
EHINMOWO AFOLABI, OLUSEGUN
SADA VICTOR, OGHOGHO MR
ADEOGUN ODUNLAMI, ABIODUN
ATRUISM VENTURES NIG. LTD
USMAN HAMMED, OLUWASHOLA
485
486
487
488
489
490
491
492
493 OSABUOHIEN KINGSLEY, OSARODION
494
495
496 WASIU ADEWALE, AZEEZ
497
498
499
500
501
502 MPAMAUGO EDITH,
ODOZI UCHE,
ANIGIORO AMOS, OLADAPO
LAWAL MUFUTAU, ASHERU
UKONGA FLORENTINA, ADENIKE
ONI OMOTAYO, BASIRAT
ABRAHAM KEHINDE, P
ADESINA OLUWADARE, BABATUNDE
NWANWEREUCHE
CHUKWUDI PASCHAL, ONYEBUCHI
CHUKWUDI FRANCIS, CHIDERA
SHITTA-BEY OMOWUNMI,
AYANDA TITILAYO,
ERINFOLAMI SALEMSON, ADEMOLA
TEMILOLUWA
ADU AYODELE,
SALAMI SULAIMON, ABIODUN
FATOLA JOSEPH, OLUFUNMILADE
DURU P., NGOZI
AKINBO OLAYIWOLA, ADIO
OMOLE JOSEPH, ADEDEJO
FAJOYE OGUNYEMI,
IGBASANMI BUKOLA, AKINRINBIDO
ILUFOYE OYELOLA, ALLI
AJUMOBI OLUYEMI, JOSEPH (EST OF)
FOWOWE MICHAEL, OLASUPO
ABIOLA (ALLEGED DECEASED
PHC/742L/2020)
ODUNSI TOLULOPE, JOSHUA
OLOWOOKERE ENIOLA, ABOSEDE
ADEFUYE MICHAEL, OLORUNTELE
NWAGBOM CONSTANTINA,
ONYEKACHI
ERUVBETINE OBOR, ENAEME
IFEANYI OKEY, FESTUS
503
504
505
506
507
508
509
510
511
512
513
514
515
516
517
518
519
520
521
522
523
524
Seplat Energy PlcAnnual Report and Accounts 2022 S/No Beneficiary
525
526
527
528
529
530
531
532
533
534
AKWIWU ADANNAYA, CHINEMEREM
NWACHUKWU OGBONNAYA, OBI
ONYEKWELU NNAEMEKA, CHIJINDU
AKINWUNMI OMOLAJA, ADISA
IFEOBU MMELICHUKWU,
OKAFOR EMMANUEL,
NKWACHUKWU MR & MRS
ASUELIME KIKELOMO,
JEGBEFUME OKOH, RUFUS
AKPOTOBOR GOD, SPOWER
OMONIGHO
AKINOLA KAYODE, ADEFEMI
EWHRUDJAKPOR OBIKU,
NWOKOLO CHRISTOPHER, O. EZEKIEL
OWUMI ANTHONY, AGHOGHO
STERLING ASSURANCE NIGERIA
LIMITED
OBISESAN OLUGBENGA,
535
KEYSTONE GLOBAL SYNERGY LTD
536
TEDEYE OMAJUWA, J.
537
ZAMBLERA MAURO,
538
ADEGBULUGBE OLUFEMI, ADELEYE
539
ADEBAYO RAMONI, AKANO
540
ONYENOBI IJEOMA,
541
VETIVA NOMINEES A/C OGE PETERS
542
543
ADEGOROYE MONISADE, OLUKEMI
544 ONITIRI ADESUNBO, ADENIJI DAVID
545
546
547
548
549 OBIERI CHUKWUEBUKA, OBIORA
550 OLOKPA FIDELIA,
OKELEYE DAMILOLA,
551
552 MR & MRS CHRISTOPHER, &
ROSALIND OYENEKAN
AKANNI PIUS, KAYODE
EDE MODINAT, ADEDOYIN
OKPARA CHUKWUMAIHE,
ONYECHI IKECHUKWU, TAGBO
LATEEF YAHAYA, FUNSHO
NWOSU PEACE, CHIDI
ADESANYA OLUKAYODE, PATRICK
FOLAMI & ASSOCIATES
YINUSA RIDWAN, ADESHINA
OLAJOSAGBE JOHN, OLUBUNMI
INENEMO ABDULWAHAB, USMAN
ERINFOLAMI BOSERECALEB,
IJAODOLATIOLUWA
565
RASAQ OLALEKAN, MUMUNI
566 ONYIA ISRAEL, CHUKWUKA
567
568
569
570
571
572
573
574
575
576
577
578
579
580
581
582
OBISESAN AKINWALE, TAIWO & JOY
AJADI YEKINNI, OLANREWAJU
JIMOH MOHAMMED, OLUWAFEMI
ENLIL INVESTMENT LTD
ODUNTAN OMOTAYO, MORENIKE
AYODEJI NURUDEEN,
CHUKWU EUCHARIA, NWAKAEGO
ADEBISI ADENIYI, ARAUNSI
AKANMI PIUS, KAYODE
AKINRINWALE OLUSEGUN, AMOBI
ANYANWU CHRISTOPHER, CHIBUZOR
OKOROAFOR IGNATIUS, EJILUGWU
ETIM EMMANUEL, EDET
EZENDIOKWERE BENJAMIN, J.E.
HAMILTON RACHAEL, OLUFUNKE
IGBRUDE MOSES, OKE
553
554
555
556
557
558
559
560
561
562
563
564
S/No Beneficiary
583
NWAGURU CHRISTOPHER,
OKECHUKWU
584 OPARA CLEMENT, ANAELE
585
586
587
588
589
590
591
592
593
594
595
596
597
598
599
600
601
602
603
604
CHUKWUDI
OPURUM EMMANUEL, THOMAS
RABIU SULE, ADEYEMO
SHOFOLAHAN ANTHONIA,
OLUWATOYIN
SHOFOLAHAN CHARLES, OLUSEGUN
SHOFOLAHAN FRANCISCA,
BOLATITO
SHOFOLAHAN ELIZABETH,
OLUBUKONLA
OGUNYEMI OLUSEGUN,
SANUSI ISMAIL, OLASUKANMI
OCHEI DENNIS, OSADEBAY
IHUOMA BENJAMIN, TOCHUKWU
ODUSOLA BABAJIDE,
ADEBAYO ADEBOLA, ADEREMI
EMMANUEL OLU, OMOLE
SALEMSON SHAREHOLDERS
ASSOCIATION OF NIGERIA
TAJUDEEN TAIWO, JAMIU
ADENUGA OLUSOLA, ESTHER
NWOSU SUNDAY, NNAMDI
BALOGUN SIKIRU, BOLARINWA
ABDULAZEEZ AYOMIDE,
ABDUSSALAAM
NWOKO EDWIN, ONUWA
CHIKWEKWEM
FABUDAH SEGUN, RAPHAELS
605
606 ORAGWU ALUBA, I. & PETER O.
607
OGUNEKUN ADEBOYE, LAPEKUN O
608 OSOTA OBAFUNMILAYO, OLABOYE
609
610
611
612
613
DANJUMA KAMORUDEEN, AJAO
IOU INVESTMENT, ADVISERS LTD
ADENUGA OLUSOLA, ESTHER
ONIKOYI BABATUNDE, YEKEEN
GBADAMOSI MOJISOLA, MULIKAT
ADEOLA
NWANKPA EJIKE, C.
ADEGBITE -, AYODELE SAMSON
GBADEBO
OGUIKE-OLERU FABIAN, NNAMDI
LAIYENBI KASSIM, ADEWALE
NWACHUKWU JOHN, IFESINACHI
BUKO ADESHOLA, AKINLOLU
PEREIRA THEODORE, SHOBOWALE
ONWUKA LAZARUS, NNADOZIE
FALESE TEMITOPE,
VINSTAR CONSULTING
OJO STEPHEN, ADETUNJI
AJAYI RAMOTA, TOWOBOLA
AWONIYI OLUFEMI,
ADELANWA KUBURAT, AYOKA
AJAYI LATIFAT, DAMILOLA
ONYEBUCHI HYCIENTH,
ONYEAHIALAM
DIKE EVA, CHIJIOKE
EKANEM EMA-EKOP, SAMPSON
OKODO IFEANYI, CORNELIUS
KUKU ABIMBOLA, ALAMI
630
631
632
633
634 OJIAKO CHIDINMA,
635
614
615
616
617
618
619
620
621
622
623
624
625
626
627
628
629
RIBIAX INVESTEMENT SERVICES
LIMITED
653
654
655
656
657
658
659
660
661
662
666
667
S/No Beneficiary
636 ONWULIRI CHUKWUEMEKA,
ONYEMAUCHE
AYO-VAUGHAN DANIEL,
EJEMBI PATRICK, OKO
637
638
639 MUKAILA-LAWAL KENECHUKWU,
LAURA
640 OLABODE OLUSEGUN, VICTOR
641
642
643
644
MBAEGBU INNOCENT, CHUKWUDI
ABURIME SYLVANUS, STEPHEN
BALOGUN MUSA, (ALHAJI)
ADEBAMIRO OLUWATOYIN,
OLUBUNMI
NWOSU SYLVESTER, ETEKWUTE
ADENIRAN ADEKUNLE, AMOS
ADENIRAN ADEKUNLE, AMOS
645 OBIANYOR EMEKA, TOBENNA
646
647
648
649 OYEOKA JOY, NJIDEKA
650
651
652
ADEKUNLE MIKAIL, ODUNAYO
MBAEGBU INNOCENT, CHUKWUDI
RENCAP SECURITIES, NIG LTD-MM
TRADING
NURUDEEN OLUSEGUN, OYELEYE
IWU GABRIEL, CHINEYE
OBIDIKE ANTHONY, IKECHUKWU
DENG ANDREW, JADEN
ADENRELE PHARID, ADEJUWON
BENEDICT ALBERT, AJIBOLA
ISIAKA MARZUQ, OLADIPUPO
SHOMORIN OLUWAKEMI, SEUN
ADENRELE AL-CUDUZ, ADEFOWOPE
ABIODUN
EZECHUKWU AUGUSTINE,
NNAEMEKA
ADENRELE SHERIFAT, ADEBOLA
663
664 OLABODE JEREMIAH,
665
CHRIS-ASOLUKA SOMACHI,
CHIDUMEBI
BABATUNDE SAHEED-OLADIMEJI,
UCHENYI KESANDU, CHUKWUBUEZE
E
670
671
672
668 WILLIAMS GRACE, NWAKEGO
669
TIJANI, ADIJATU-KUBURA,
OLUWATOSIN
USIAPHRE PATRICK,
PATRICK UGOCHUKWU, NNAMDI
UGBALA CHIGOZIE, CHRISTIAN
MONDALE
EZIKE RAPHAEL, EMEKA
OTOROLEHI-OKEZIE VICTORIA,
OBI OKEZIE, PRINCE
ASOBARA IFEYINWA, M.
KWAKPOVWE VERONICA,
AJUMOBI GRACE, OMONIYI
ORIOWO MARGARET, MAYOWA
673
674
675
676
677
678
679
680 OBIERI CHUKWUEBUKA, OBIORA
ADEBIYI BABAJIDE, ADESOLA
681
682
ADESOGAN SAMUEL, ADEDAYO
683 OLAJOSAGBE JOHN, OLUBUNMI
684
685
686
687
688
689 OSIKALU LUCIA, FUNMILAYO
SALAMI JUSTIINA, SOBALOJU
ADEBAYO OLUWAFEMI, ABAYOMI
ADEBAYO ABOSEDE, JOSEPHINE
PATRICK CHINELO, FAVOUR
ISSA NIMOTA, BOLANLE
263
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Unclaimed dividend list | continued
707
708
709
710
711
712
713
714
715
716
717
718
719
720
721
LAIYENBI KARIMO, MOPELOLA O
ADEFARASIN EMMANUEL, ADEMOLA
SHOBANDE COMFORT, OLUSHOLA
S/No Beneficiary
690
691
692
693 OYEBANJI GRACE, ABIMBOLA
ADEBIYI ADEOLA, KATE
694
695
USIAPHRE PATRICK, ONOME
696 OMONIYI KIKEYEMI, ELIZABET
SONIBARE WAHEED, AKANNI
697
698
ALAGA KOLAWOLE, MUFTAU
699 OTENIYA THERESA, OMOPONMILE
700
701
702
703
704
705
706
IYEIMO ILAMINA,
ABEJIDE KEHINDE, DAVID
ADESOLA SELIMOT, NIYIOLA
CHIALIKA FESTUS, SUNDAY
TIAMIYU MUSTAPHA, OLADELE
JIMOH-KUKU ISMAIL, OLANIRAN
BALOGUN OLUWATOYIN,
OLUWABUNMI
AYALOGU OBIANUJU, JENNIFER
DUROJAIYE ADEDOYIN,
AKPORE GOODLUCK,
OLUSANYA OLUREMI, OLUKUNLE
NWAKANMA N, KINGSLEY
UMUKORO EMMANUEL, FRANKLIN
OJISUA MOYO,
IFABUA AHMED, OHIORENUWAN
AKIODE OLATUNJI,
SHODA ISIWAT, IYABODE
ABIOLA VICTORIA, ABOSEDE
OHADOMERE OSINACHI, EMMANUEL
DARAMOLA KOLAWOLE, DANIEL
ELF COOP OMESURU UMEJURU AKE
AREMU JOSHUA, O & JOSEPHINE REV
& MRS
ABODERIN OLAJUMOKE,
OJOLOWO HAMMED, OLAYIWOLA
IBRAHIM ISSA, LEKAN
MACAULAY KAREEM, ABIODUN
TIJANI, SUKURAT, EBUDOLA
OLANIYAN RAMOTA, OLUWABUNMI
SAKARIYAHU SHUAIB, TOYIN
SAKA NUSIRAT, OMOBOLANLE
SURAKAT KAZEEM-IDOWU,
OKAFOR BLESSING, NKEONYERE
722
723
724
725
726
727
728
729
730
731
732 MACAULAY AYOKUNLE, OMOTOLA
AJAYI IBUKU, OLUWASEUN
733
IGWEZE FELIX, NNAEMEKA
734
ORENIYI TEMITOPE, LEKE
735
ADEBIYI OLUDARE, EMMANUEL
736
ABIDOYE TAOFIK, OWOLABI
737
AJIBOYE ADETAYO, OKUNOLA
738
BELLO ITOPA, PAUL
739
OLEKA JOHNBOSCO, CHIGOZIE
740
OLAJIGA OLUFEMI, AYODEJI
741
ANYIBUOFU CHRISTOPHER,
742
AKINOLA AKINMAYOWA, OLUWASEYI
743
OGINNI SUNDAY, PATRICK
744
ADEDOYIN ADEKIITE, OLUTOYIN
745
ADEGBITE CHRISTIANAH,
746
ADEBUKOLA
AKANMU OLUWASEYI, OYEYEMI
OLALEYE OLAKUNLE, MICHAEL
OLASEHINDE FESTUS, OLUWASEUN
747
748
749
264
S/No Beneficiary
750
NYONG OKON, ABRAHAM
751
OLEKA SIXTUS, UCHE
MUHAMMED IBRAHIM,
752
753 MBA OKECHUKWU, MBANEFO
TAYO MOJISOLA, OLUFUNSO
754
755
ODEYEMI JOSHUA, OLALEKAN
756 MARAYESA OLUWADUROTIMI,
757
758
759
760
761
762
763
764
765
766
767
768
769
770
771
772
773
774
OLUWASEUN
AMEGUNU VICTOR, RAYMOND
ARUM IFEANYICHUKWU, IGNATIUS
PREYE JERRY, NYENYE
ABIMBOLA ATINUKE, DEBORAH
ADEDOYIN ADENIKE, FLORENCE
ADEDOYIN PAUL, TIMILEHIN
AKANMU MARY, TEMILADE
ADEEKO RACHAEL, OLULAYO
AKENDE CLARA, TEMILADE
KAYODE OLUWASEUN, MARY
OLASEHINDE ADENIKE, KEMI
ADEDOYIN BUSOLA, ELIZABETH
BATHANNA STEPHEN, JALVA
BAKARE OLAYEMI, KAFILU
RAHMAN ADAM, TOLULOPE
SALAMI RASHEEDAT, ABOSEDE
LATINWO TOLANI,
AKINYERA OLUWASANMI,
AKINTOYINBO
ALLI OLALEKAN, JAMIU
SHODEINDE OLUWATOBI, EMMANUEL
OKOAHABA INNOCENT, BOLUM
EZULIKE CHIKA, VICTORIA
NJEMANZE JULIET, CHINYERENGOZI
UMEOKORO IFEANYICHUKWU, JUDE
OKUNOLA IKEOLA, OLUWASEUN
IHEJIENE NGOZI, AUGUSTINA
JOWOSIMI ADEMOLU, MATTEW
JOWOSIMI OLUBUNMI, TEMITOPE
CHIDUME NWANNEAMAKA, JACINTA
ADENIRAN BABATUNDE, VICTOR (DR)
OPEGBUYI OKANLAWON, TAJUDEEN
IBRAHIM MURITALA, IYANDA
OGBE TASHEGBONE, KOKOGHO
ALPHA VC PREMIER PARTNERS
CELLCORE LTD
OSHINFADE BOLA, TAYO
OLUTOLA JOSHUA, OLUMIDE
DELANO OLUFISOYE,
OKPO UNO, EDET
ADEBOWALE ISLAMIAH, IDOWU
ADEJARE ABIDEEN, ABIODUN
ADEPOJU JAMIU, ALADE
BABATUNDE MOSES, SUNDAY
AJAYI ADENIYI, MUHIDEEN
ISIJOLA AYOKA, OLUWARANTI
OLADAPO LATIFAT, KEMI
775
776
777
778
779
780
781
782
783
784
785
786
787
788
789
790
791
792
793
794
795
796
797
798
799
800
801
802
803 OLASUPO SHITTU, KAZEEM
YUSUF RIDWAN, OLALEKAN
804
SANUSI ISMAIL, FOLAWIYO
805
EHUWA SUNDAY, VICTOR
806
IGHODARO KUDI, YEMI
807
NAJEEM SALAWA, OLUWAKEMI
808
ADEYEYE ADESHINA, TOSIN
809
S/No Beneficiary
810
811
812
813
814
815
816
817
818
819
820
821
822
823
824
825
826
827
LAWANSON GANIAT, OLAYEMI
TAJUDEEN KABIR, BANKOLE
MORGAN CAPITAL SEC-TRADED-
STCK-AC
OGUNDARE AKINNIYI, MOSES
JOSEPH OLUWASEGUFUNMI,
ELIZABETH
AMUDA FUNKE, IYABO
ADELEKE JUSTUS, ADEBANJO
TIJANI AJIMOTU, MONYENI
ALAYAKI FAKHTAH, OLAOLUWA
AGBOOLA FATIMAT, BINTU
AYODELE OLAJIDE, ABAYOMI
ALAYAKI FATIMAH, OLAMIDE
HASSAN FEYISAYO, AISHAT
TRUSTHOUSE INV. LTD.-TRADED-
STOCK-A/C
BELLO AUGUSTINE, OLUSANYA
HASSAN TITILAYO, AZEEZAT
IBITOYE EMMANUEL, KOLAWOLE
OWOLABI ALONWONLE, NURUDEED
ADEKUNLE
NURUDEEN ABOLORE, MODINAT
SARKI -, UMAR ALIA FEYISAYO ASAKE
ALATIRON NIGERIA LIMITED
OLAGBAJU NIMOTA, ADEPEJU
ADEUSI ILUYOMADE, STEPHEN
ALAYAKI IDOWU, MOSIDAT
ALAYAKI FAROUQ, OLAWALE
ALAYAKI FAHEEM, OLADIPUPO
DOAF GLOBAL SERVICES
EZULIKE CHIJIOKE, DENNIS
ALLI-BALOGUN AMINAT,
ADEDAPO FOLASHADE, AKINTOLA
SIMPSON ADETUNDE, OPEYEMI
AKINYEMI ABIOLA, ADEYINKA
OPE SAMUEL, ADENIYI
828
829
830
831
832
833
834
835
836
837
838
839
840
841
842
843 ONYEJI UCHE, LILIAN
844 OYESOLA FIYINFOLUWA, OYEBISI
ADEYEMI MOTUNRAYO, RAMOTA
845
AJANI RASHEED, OLALEKAN
846
NWOGU PRECIOUS, ONYEDIKACHI
847
848
EKWERIKE KENNEDY, OGBONNA
849 ODUSANYA OPE, ANIKE
850
EZEOKEKE AUGUSTUS, AMECHI
CHUKWUDUM
AJAYI OLUSOJI,
UMEH MAXIMUS, IFESINACHI
BAMGBOSE ADERINOLA, ELIZABETH
851
852
853
854 ODELEYE OLUWASESAN, JAMES
OLUWAJEMISIN FAVOUR,
855
OLUWASEUN
RUNSEWE OLAOLUWA, OLUWOLE
BANJOKO ABIODUN, OLUBUSOLA
856 OLIYIDE TITILOLA,
857
858
859 MORDI ANTHONIA, EKENE
860 MAJEKODUNMI ADEWUNMI, EDMUND
ONADEKO SAMUEL, IMOLEAYO
861
OJO ADELEKE, ISEOLUWA
862
IBRAHEEM MOSES, GBOLAHAN
863
864
ADELUOLA OLOYEDE, RILWAN
865 OGUNNIYI TUNBOSUN, OLUFEMI
HOUNTON CHRISTIANA,
866
Seplat Energy PlcAnnual Report and Accounts 2022 JIWUMETO ADEBISI, AJOKE
S/No Beneficiary
867
868 MUFUTAU OMOLOLA, BUKOLA
869 MAKINDE TOMIWA, MATTHEW
870 MAKINDE OLABISI, AINA
OLALEYE ADEYEMI, ELIJAH
871
ADISA GANIYU, DAMILARE
872
LAMINA SIKIRU, TAIWO
873
SIMPSON ADETUNDE, OPEYEMI
874
TAIRU TAIWO, KAMALIDEEN
875
876
OBAFEMI ADENIYI, ESURUOSO
877 MAKINDE ADEMOLA, STEPHEN
YUSSUF ZAINAB, ADESHINA
KAYODE
DUROWAIYE IYABO, YETUNDE
OKUNROBO MARY, ABIEYUWA
878
879
880 WILLIAMS SERAH, QUEEN
881 WILLIAMS ESTHER, FOLASHADE
882
883 WILLIAMS RUTH, OLAMIDE
884
885
886 OLADOSU ISLAMIYAT, ADETUTU
887
TAJUDEEN TINUBU, TEMILOLUWA
888 OMOTOLANI ADETOUN, LAIYENBI
ISHAKU ISRAEL, MALLAM
KOLAWOLE YEKINNI, ALABI
889
890
891
892
893
894
895
896
897
MUTIAT
ADESERI TOLUWANI, OLUFEMI
IYANIWURA MODINAT, KOFOWOROLA
BAKARE SHERIFAT,
AKINYEMI MONSURAT, MOPELOLA
ADENOLA BAMIDELE, ABAYOMI
ALIU GABRIEL, TOBA
BAYOKO EBI, REGINALD
LAWAL WAHAB, OLATUNJI
ODUMADE PETER, AFOLABI
OLAREWAJU
898 GBADEGESIN SUNDAY, AJIBOLA
AIYEDENU EBUNOLUWA, OMOTAYO
899
AKINSANYA OLABISI, TOLU
900
ADEBOWALE AYISAT, ADEDOLAPO
901
ADELEKE IDRIS, OLAWUNMI
902
ADEYEMI KAFAYAT, TEMITOPE
903
AJAYI OMOLARA, SHOLA
904
AJIROBA TOFUNMI, BUSAYO
905
AKINYOMI JANET, OLA
906
LAWAL RISIKAT, JOKE
907
908
NOJEEM ISMAILA, SEGUN
909 OLATONA REBECCA, OPEYEMI
910
911
912
913
914
915
916
917
918
919
920
921
922
923
924
925
VICTOR &, BRIDGET DANIA
NWABUGHOGU BRIGHT,
JAIYE-GBENLE BOLUWATIFE,
OGUNNAIKE OLUBUKOLA, OMOLARA
REUBEN VICTORIA, KEHINDE
AKINLOTAN AYINDE, BABATUNDE
AJAYI OLATUNDE, ADEWUYI
BALOGUN SEKINAT, MOPELOLA
FALADE OLUMUYIWA, TEMITOPE
MARTINS TOYIN, TOLULOPE
NWOKEH OMENUKOR-AKU,
BANKOLE OLUWAKEMI, EKUNDAYO
IWU ELIZABETH, ADA
FOSUG NIG LTD
LAWAL LATEEFU, ATANDA
ODOI-OLUDEMILADE PAUL, NII
PRINCE
OGUJIUBA GRACE, IFEYINWA
DUROWAIYE ADEWUNMI, AFUSAT
OWOLABI TAWAKALITU,
ADENIYI OLATUNDE, OLADEJI
AJAO AJIBADE, OLADAPO
ONYEMAEKE CHINWENDU, MATILDA
CHUKWU NWAKAEGO, CHRISTANA
BELLO MUIBAT, AINA
S/No Beneficiary
926
927
928
929
930
931
932
933
934 ODUNTAN GANIYU, ADE
935
936
937
938
939
940
941
942
943
944
945
946
947
948
949
950
951
ONABANJO OLUROTIMI, OLUGBUYI
GBADERO MICHAEL, KAYODE
ADEFEHINTI OLUWAFOLAKEMI,
EKERE CHUKWUEMEKA, IHEANACHO
JOHNSON FRANCIS, IKWUE
KUYORO DANIEL, AYODEJI
SALAMI SILIFAT, ADEBOLA
ONUIGWE JOHNSON, CHIMA
NJOKU REMIGIUS, NWACHUKWU
DEKE OGENAGWE, VICTOR
ARUM JOHN, YMAR .C.M
ADEKOLA ABOSEDE, ADERONKE
OKWUADA SAMUEL, KESSINGTON
IDOWU BOLAJI, AFOLABI
EZEIGBO OBINALI, G
AKINBOLA PHILLIP, OLADIRAN
AKPOVBOVBO HELEN,
OGHENEYOUWE
ODUNAIYA ABIOLA, OLUBUNMI
LAWAL FALILAT, OLAWUNMI
LAWAL BOSE, ADENIKE
LAWAL RASHEED, OLASUNKANMI
LAWAL RASAQ, OLANREWAJU
OYAKHILOME MOMODU, KABIR
AWONAIKE ESTHER, OLADUNNI
EFUWAPE JOSHUA, AFOLABI
AWONAIKE RACHAEL,
MOSEBOLATAN
ADEBANJO ADENIKE, ADERONKE
OGUNKENU OLUSOLA, (MRS)
FASASI ADEOLA, SARIYU
JAMES DANIEL, ONUCHE
ENIAFE MUJIDAT, TEMITOPE
ELLA VINCENT,
SALISU SHUIBU, RAKIYA
961
962
963 MOMOH DOYINSOLA,
ABDULQUAYUM
TAIWO ADEMOLA, SIMEON
964
965
TITUS UCHE,
966 OKAFOR ANWULI,
967
968
969
970
971
972 MUHAMMED ABDULLAHI, ADESHINA
SAVAGE ADEBUKOLA, ARIKE
973
OYELUDE BABATUNDE., S.
974
PESACH CAPITALS LIMITED
975
ADEDEJI NOSIRU, ADIGUN
976
ADEOYE DANIEL,
977
OYETIMEIN OLUWAPELUMI, MICHAEL
978
IMORU CLEMENT, AYODELE
979
ADELEKE ADEBISI, SHOLA
980
YUSUF BASHIR, AHMED
981
TAIWO ATINUKE, ADUKE
982
983
KAZEEM MUSINO, IYABO
984 MUKAILA KAFILAT, AJOKE
985
952
953
954
955
956
957
958
959
960
BENSON AYODELE, BABATUNDE
S/No Beneficiary
986
987
BALOGUN ALAKE, LOLA
VINCENT CHRISTIE,
OTUOSOROCHUKWU
990
988 OGUNDELE ADETUTU, OLUREMI
989
LAWAL ADEREMI, KOKUMO
DUROJAIYE
EZEOKE ROSEMARY,
AMARACHUKWU
PETERS ADENIKE, MODUPE
ADEYEGBE OLUWOLE,
UKPONG CHRISTIANA, LUCKY
ANTHONY EBERE, MERCYMERIT
991
992
993
994
995 OBA KAFILAT, MOJISOLA
POPOOLA FUNKE, ANIKE
996
ADEDUNMOLA ANDREW,
997
ADEGBEMIRO
IGBINOVIA MARYANN, HUNONYEMESI
998
999
YARROW ALIMOT, SHADIAT
1000 AKINTUNDE MOHAMMED, SABITU
1001
AKOREDE MOROUNMUBO,
1002 DONNA OBASEKI-OGUNNAIKE,
OLOHI
ERETAN OLUWOLE, RICHMOND
1003 OLADIJI OLAYIMIKA, OLUWAFEMI
1004 PETER TAIWO, RACHEAL
1005
FATUNBI RUTH, BOSEDE
1006 SHOTUNDE BABATUNDE, SUNDAY
1007
1008 OGBE DAVID,
1009 ADEGBITE WAHEED, BABATUNDE
KAZEEM ABIBOLA, MUSILI
1010
OGUNBIYI YUSUF, GBENGA
1011
EZENWAJIAKU THEOPHILUS,
1012
1013
FAJUSIGBE SONIA, ONOVUGHAKPO
1014 OCHOGU EMMANUEL, CHIBUEZE
HAFSATU NASIRU, ABOKI
1015
ISIAKA YUSUFF, ORIYOMI
1016
ADENUGA OLUFEMI, S. TRUST
1017
ACCOUNT
1018 ONOKA NNENNA,
LIASU TOYIN, RACHEAL
1019
1020 OLUWOLE GABRIEL, AKANBI
1021 OMIPITAN OMOTAYO, JONAH
1022 OJUMU ROLAND,
1023 AJOSE-ADEOGUN OLUREMI,
MAJEOLAGBE
1024 OLABISI ADEDAYO,
1025 ADELEYE ADEREMI,
1026 OKONORHO LIZ, OGHENEKEVWE
1027 ODUNGIDE IMA,
1028 NNAETO ONYINYE, UZOAMAKA
1029 ONWUNYI LOTANNA,
1030 OKOLI NWAMAKA, EBELECHUKWU
1031
1032
1033 OBODOZIE CONSTANCE, ONYEKA
1034
JAMES EMMANUEL, EDET
1035 ADUNMO KEHINDE, MOSES
JINADU RASAK, ADISA (ALHAJI)
1036
1037 OYENUGA FOLASHADE, MARY
1038 ALIYU KAYAUKI, SGT ABBA
ENI CHUKWUEMEKE, JOHNNIE
IKUENOBE ONOMEN, ANASTASIA
ABUBAKAR
1039 KADIRI ABAYOMI, SHEWU
1040 FAMOUS AKEEM,
265
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Unclaimed dividend list | continued
S/No Beneficiary
1041 OGBUMMAH WOGWUGWU,
THEOPHILUS U.
EHUWA OLUWATOBI, BLESSING
1042 OLABODE SHADIAT, OLABISI
1043 OLAYIWOLA MARIAM, OLAIDE
1044 SHITTA-BEY DHIKRULLAHI, OLAWALE
1045 YUSUFF FEMI, LATEEF
1046 OLABODE FELICIA, OLURANTI
1047 AJAYI ABAYOMI, BIMBOLA
1048 AINA BABATUNDE, OLASOJI
1049 FALORE OLUWASIKEMI, AYONITEMI
1050 AWEDA FELICIA, OLUWAKEMI
GANIYU WASIU, AYINDE
1051
1052 AKINYODE RAFIAT,
1053
1054 MURITALA IDAYAT, TEMITOPE
1055 AKINYODE OLAYINKA, SHAKIRAT
1056 OLANREWAJU KAZEEM, ADIO
1057
SAADU FALILAT, BOLANLE
1058 WASIU ADEWALE, AZEEZ
1059 OFFOZOR MATTHEW,
1060 AAYINDE RAHMON, ISIAKA
JOSHUA SEUN, OSHUNOLALE
1061
LAWAL OLAYINKA, ISMAIL
1062
1063
IGE YUSUF, AMUDA
1064 POPOOLA SHERIFAT, BOLA
1065 ADEDIRAN OKIKIADE, ISAAC
1066 SOFOWORA SHAMSONDEEN, AINA
1067 ABILAWON VICTORIA, IYANUOLUWA
1068 PAUL SUNDAY, KINGSLEY
1069 ETIKO ASIMIU, MONINUOLA
1070 WEWE MARY, IMADE
1071
1072
1073 OKETE PETER, OSUBU
1074
1075
1076
1077
1078
1079 AIKHOMU ANITA, OTIBHOR
1080 AIKHOMU EKANEM, BASSEY
1081
KAREEM OLADIMEJI, OLOLADE
1082 VETIVA TRUSTEES LIMITED-CLIENTS
BABATUNDE ADEWUNMI, TAIBAT
ADEYEYE SHAKIRAT, KIKELOMO
RAMON ADIJAT, KUBURA
ATOBATELE TAOREED, ABIODUN
AIKHOMU WILLIAMS, EHIZOGIE
IDUMA JOHN, JENNIFER
AMANFO LILIAN, UGONNA
CSCS
1083 ONASANYA BAKIU, ADENIYI
1084 ADENIJI LATEEF, ADEJARE
1085 ONIWINDE OMOLARA, ADEBISI
1086 OJO JOSHUA, AKINDELE
1087 OWO FAUSAT, ABIODUN
1088 OLOTU OLUSOJI, OLABODE
1089 BARANGO KENNEDY, S.
1090 ADELE-AKINTAYO ADEROJU, WASILAT
SHITTA MORUFAT, ABIOLA
1091
1092 OKAFOR AUGUSTINE, AZUBUIKE
1093
1094
1095 AYIDA OMATSEYIN, AKENE
1096 ESTHER OMIKUNLE,
1097 ONYEBUCHI NNAEMEKA, CALEB
1098 OMOYA OLANREWAJU, AYOBAMI
1099 WOODGREEN GLOBAL RESOURCES
LUFADEJU OLUGBENGA, ADERINOLA
IBRAHIM IYANUOLUWA, DAVID
LIMITED
1100 OTUONYE MERCY, NKECHI
266
BABALOLA ADEWALE,
IKEKPOLOR GIBBS,
FIDELIS EJIMAMU, OKEHIE
IBRAHIM NANA, HAUWA
AYODEJI OLAWALE, T
HUSSAINI IBRAHIM,
OKORIE RICHARD,
YUSUF IBRAHEEM, MUHAMMAD
S/No Beneficiary
1101
1102
1103
1104
1105
1106
1107
1108
1109 ODE COMFORT, OLUWASEYI
1110
1111
1112
1113
1114
1115
1116
1117
1118
1119
1120
EKPE CYRIL, EZIEFULE & KARIN
CHINYERE
DIEKOLOLA LATEEF, KUNLE
AJANI MUSA, ADEKOLA
MEGGISON TITILOLA,
YINUSA NOIMOT, OMOLOLA
DAODU OLUGBENGA, ADEYEMI
OGIDI ANTHONIA, OMOLOLA
ATUWO DAVID, HYELHIRRA
AGBEDE OLAYINKA, FOLAYEMI
AHARANWA IKECHUKWU, BRIGHT
ERUKAKPOMREN CHRISTOPHER,
OKOTETE
FAROMBI OLUSHOLA, ABIOLA
1121
1122
OLOAPUPO RAHMAT, ADEOLA
1123 MUSTAPHA WASILAT, AYOBAMI
KAREEM TAWA, JUMOKE
1124
ATTAH EMMANUEL, OGEBE
1125
OKORO IBEKWE, APOLLOS
1126
OGUNBESAN SHOLA, JAMIU
1127
OGHENERUKEVWE AKPORE,
1128
1129
AREMU OLUSEGUN, ABIDEEN
1130 QADIR LATEEF, OLAMILEKAN
ARM SECURITIES LTD/TROVE
1131
TECHNOLOGIES
CHUKWUMA OFEBI,
ADEYEMI FUNSHO, ADEDIRAN
OLUSOLA OLUSEYI, OLABIYI
ZARMUNEN ANFISA, GOFWEN
1132
1133 OTTIH CHIMAMANDA, CLAIRE
KOLAWOLE IBRAHIM, INUMIDUN
1134
ORUADE OGHENEKOME,
1135
EZUGWU EMILIA, CHISOM
1136
EBELECHUKWU UBAKA,
1137
ARIKAWE OLUTAYO, MORADEKE
1138
1139
KALU-ANYA CHRISTIAN,
1140 OBI EJIOFOR, ANTHONY
1141
1142
1143
1144 GOFWEN NENGAK,
1145
1146
1147
1148
1149
1150
1151
1152
GOFWEN NENPINMWA,
BAIYEWU OLUSEGUN (DR),
ADEYINKA AJAYI,
KRUKRUBO AYEBADOMO, IKIOMOYE
ZARMUNEN ANFISA, GOFWEN
EKANEM JOE, & CAROLINE
SANYAOLU JONATHAN, AYO
SOLID-ROCK SEC. & INV.- DEPOSIT
ACCOUNT
UCHENYI KESANDU, CHUKWUBUEZE
1153
1154 OBISESAN AKINWALE, TAIWO
1155
OLADIPO ADEKOLA,
1156 MBAH ABRAHAM, CHIMA
1157
1158
1159
CHIKELU UGOADA, IFEYINWA
ALAGBADA AYOMIKUN, SAMUEL
IGUMBOR ISIOMA,
OLAYINKA OKE,
SHARON INEM,
AKANNI NURUDEEN, OLALEKA
BALOGUN TAIBAT, ADENIKE
TOMORI OLANREWAJU, AKINWALE
AWUJOOLA ADEDEJI, SAMUEL
ERHIEYOVWE UGOCHI, GLORIA
S/No Beneficiary
1160 OLUWANISHOLA IBIRONKE, YETUNDE
1161
1162
1163
1164
1165
1166
1167
1168 MUNDADEN GEO, MATHEW
1169
1170
1171
1172
1173
1174
1175
1176
AKINKUNMI AKINYINKA, OLUGBENGA
OLOPADE KHADIJAT, TOLULOPE
ABRAHAM-MEZIE SABINA, UGOCHI
IMIERE EDWIN, OLATUNJI
GOFWEN BLESSING, RITJI
FALUTA KEHINDE, FLORENCE
AGBARA OKEZIE,
G-TERA GLORIOUS INVESTMENT NIG
LTD
1177
ADEYEMI BENJAMIN, OLAMIDE
1178
ONABULE OLATAYO,
DIAMOND OMAAMENE,
1179
1180 OGUNKOYA JANET, YETUNDE
1181
MAINSTREET TRUST./UNITED CAP.
WFW FUND-T
OHANEKE INNOCENT,
DIAMOND SECURITIES, LIMITED
LAYONU ABIODUN,
ADENIJI JAMES, ADEKUNLE
JOSEPH OPUFOU,
EMMANUEL ATAMAKO,
HASSAN UMAR,
ADEOYE COMFORT, OYEYEMI
ADEOYE SOLOMON, ABIOLA
ADEWOLA OYENIKE, ABEKE
AKINSOTO OLUWATAYO, OLAWALE
KOLAWOLE OMOWUMI, MARY
LANA OLUSEYI, JOHN
1182
1183
1184 MENSA JOHN, KWAME
1185 OLOYEDE BABATUNDE, OLUYEMI
1186 OLOYEDE ADEBOLA, OLUWAKEMI
1187
1188
1189
1190
1191
1192
1193
1194
1195
1196
1197
1198 OGUNBIYI ESTHER,
1199 OLAYIWOLA PAUL, GBEMIGA
1200 OLOWONIYI ADE-DAVID,
1201
1202
1203 ADEYEMO COMFORT, MORAWO
1204
1205 DARAMOLA MICHAEL, AYODEJI
1206 OYEBAMIJI TOLA, ELIZABETH
1207
1208 ADESINA MORENIKE, ADETUTU
1209 AYOADE ADESOLA, EMMANUEL
IBIYEMI ESTHER, OMOYENI
1210
IBIYEMI SAMUEL, OLUWOLE
1211
KOLAWOLE
OGUNRINDE RUTH, FOLASADE
OLADAPO MONI, ABIODUN
OLUJIMI AJENIKE, BILIKISU
TELLA DORCAS, ADENIKE
1212
1213
1214
1215
1216 OLUMUYIWA SAMSON, OLUSEGUN
1217
OLADOYIN OLUMIDE, OLAMILEKAN
1218 ONIFADE KEHINDE, BOLANLE
1219 ONIFADE TAIWO, OLUFEMI
OLUMUYIWA BUKOLA, ABOSEDE
ADELAKUN JOSEPH, ADEGBILE
ADEBOLU OLUDAPO, DADA
SANYAOLU JONATHAN, AYOMITUNDE
Seplat Energy PlcAnnual Report and Accounts 2022 RAHEEM ADEBAYO, ADEWALE
UBIAGBA DICKSON, ISAH
ADELAKUN DAMILOLA, EMMANUEL
KOLADE YETUNDE,
ADEGBOLA VICTORIA, OMORINSOLA
ADENIYI TITILOPE, FATIMO
AKANDE JANET, OLATUNDUN
ATAKENU ABIMBOLA, ABOSEDE
IBIYEMI EMMANUEL, TAIWO
IJAYEKUNLE TOBI, EMMANUEL
IYIOLA ISAAC, AKINYODE
LAWAL OLATUNDE,
S/No Beneficiary
1220
1221
1222
1223
1224
1225
1226
1227
1228
1229
1230
1231
1232 ODUNIYI TEMITOPE, KAMORU
1233 OGUNJINMI ALICE, IYABO
1234 OLADAPO TINUOLA, DOLAPO
1235 AWOS YETUNDE, STELLA
1236 ODEYEMI VICTOR, OYEBOWALE
1237 OROLEYE NAJEEM, TAIWO
1238
ILESANMI FRANCIS, A.O
1239 OLADAPO AKINOLA, OLADOTUN
1240 AJAGBE CHRISTIANAH,
OLUFUNMILOLA
1241
ADEGBOLA OLUWATOSIN,
1242 OLAOPA ADEOLA, ABIGAEL
1243 OGUNRINDE OLUWASEYI,
1244 ALAGBE OLANREWAJU, SEYI
1245 ONASANYA BENNETT, ADESINA
1246 DARAMOLA BAMIDELE, OLUYEMISI
1247 OGUNLOLA AGBOOLA, DAVID
1248 AKINTAYO RUTH, ADUKE
1249 OLADAPO MODUPE, LOVE
1250 OLOWONIYI CECILIA, AINA
1251
1252
1253
1254
1255
1256 OKOH APARI,
1257 ONANUBI KEHINDE, SAMSON
1258 MARGARET OLAGUNJU,
1259 AJUONU JOLLY, EZIDINMA
1260 CHIDERA OBIDEJE,
1261
1262
1263 OMOBOLANLE ADEKANYE,
1264
YUSUFF MUSTAPHA,
1265 UCHEMEFUNA RAPULUCHUKWU,
INEH-DUMBI, MICHAEL, IKECHUKWU
1266
1267
BANJOKO ABIMBOLA, MARTINS
1268 OLUWADARAFUNMI EGBEYEMI,
KEMAKOLAM CHIMEZIE,
1269
VICTORIA OLAREWAJU,
1270
1271
GBIRI KIKELOMO, WURAOLA
1272 OTUBANJO VICTOR, OLUWASEUN
1273 OKENIYI OLAMIDE, DANIEL
1274
NWACHUKWU JESSICA, JENNIFER
UJU ADAKU, UGOCHI
FEESE MEMBER HEMBADOON
JAIYE-GBENLE AKOREDE, NASIR
BABAFEMI AKINLADE,
IMOLEOLU OLUSOLA,
SOLAR OLAYEMI,
ANDERSON EDOM, CHUKWUDAALU
BRIGHT
1275 OKENIYI OMOBOLANLE, RACHEL
ARABA AZEEZ, OLUWAGBENGA
1276
IRAWO IDRIS, ALANI
1277
1278
UCHE CHINYERE, NNEDINMA
1279 MORDI OHUNENE, HASSANAT
JUDITH ADEWOYE,
AFOLAYAN OLUWATOSIN, AYOTUNDE
EKELE OBASI,
S/No Beneficiary
1280
1281
1282 OPEOLUWA ADEKUNLE,
1283 OGBUAGU CHINASA, JOY
1284
EZEANI UCHENNA, PAUL
1285 OKWOLI PETER, IDOKO
1286
1287 OLUKAYODE &, TEMITOPE EDUN
1288 OLAIYA SAMUEL, B.
1289
1290 AYODEJI ADEWOYE,
1291
1292 NIMI JACK,
1293 NWANDEI CHUKWUEMEKE,
1294
1295
CONFIDENCE ANTHONY,
FARIYIKE OLUGBENGA, BABAFEMI
IRO SAMUEL, CHUKWUEBUKA
TOPMOST SECURITIES LTD.TRADED-
STOCK-A/C
SALAMI OYENMWEN,
BALOGUN SALIU, ADEJUMOBI
1296
1297
1298 OGUNDARE JUMOKE,
1299
STEWARD ASSET MANAGEMENT
LIMITD
ESTATE OF, JONES OBAFEMI OBADIAH
SOEZE RITA, OGECHI
OYENEYE KUNLE,
FATOSIN OLUWAMAYOKUN, SAMUEL
BABATUNDE ISAAC, ADEOYE
1300 AYANFE MIRACLE,
1301
JIMOH SAMUEL, ADEMOLA
1302 ORASO TIMOTHY, ENOHO
1303
1304 AKINWANDE LANRE, OBALOWO
1305 ORINGO ADESOLA, MICHAEL
1306 SAMUEL OPARA,
1307 OGEDEGBE SOLOMON,
1308 MODIBBO HUSEINA, TUKUR
1309 CHUKWUEMEKA OKECHUKWU,
BAMIDELE OBADEMOWO,
1310
NURUDEEN OLUFEMI, SHERIFF
1311
ALUKO ADETOKUNBO, AYODEJI
1312
I-ONE E-PORTFOLIO A/C - 007
1313
1314
TOMAYO IRETI, BERIDA
1315 MAKINDE JOEL, TAIWO
1316
1317
1318
1319
1320 GWOM PETER, KANANG
1321
1322 MONDAY ODJODU,
1323
1324 MOJISOLA JAIYE-GBENLE,
1325 OLANIYAN OLUWAFIKAYO, DEBORAH
1326
1327
1328
1329 COKER BARNABAS,
1330 OLUGBABI DOTUN, ISAAC
SHEDRACK AYARO,
1331
1332
IBE EVELYN, DOGWA
1333 OLAYIWOLA MUHAMMED, OLAJIDE
JUBRIL FAUSAT, OLAJUMOKE
1334
1335
EZE AMAKA, BLESSING
1336 ONUKWUSI EMEKA, KERRY
1337 OSENI RASHIDAT,
1338 OSINAIKE KEHINDE, SIDIKAT
1339 AKANDE OLUWATOBI, SUNDAY
LEGUNSEN TOLULOPE,
LASISI OLUWASEYI, SADIQ
SONUBI ABIOLA,
OTULANA KOLADE, ADETAYO
LIJADU EBUNOLUWA, DAVID
S/No Beneficiary
1340 KOLADE OLUFEMI, TAIWO
1341
SHITTU AHMID, ADEMOLA
1342 USMAN SADIQ,
1343
1344 AKANDE ELIZABETH,
SHITTU BOLANLE, KAFAYAT
OLUWATIMILEHIN
1345 OGBONNIA CHINWE, GIDEON
1346 AKINTUNDE OLUWASINA, IMOLE
1347
SOYEMI IBIJOKE, IDAYAT
1348 YEWANDE UTOH,
1349
IKPE ESURU, RUTH
1350 MMENI ONYEKACHI, ANTHONY
1351
OLD SHOREHAM INVESTMENT MGT
LTD
AKINDE NAHEEMOT, ENIOLA
1352
1353
ISHOLA BABATUNDE, AYINLA
1354 OMOTOSHO SULAIMON, AKINADE
1355 ADEBANJO MUSIBAU, OLALEKAN
1356 ADEBAYO MICHEAL, ADELEKE
1357
LATO FAITH, OGHOGHO
1358 UKUSTEMUYA VERONICA, OVOKE
1359 ADEOLA WAHAB, OLAWUYIN
1360 OLAFADEHAN OLULEKE, MOFOLAJU
AKINPELU PRINCE, AKINBIYI
1361
1362
SEGUN ADEWALE, OLADELE
1363 AKINBODE TOBILOBA, DERICK
1364 AKINBODE UYODHUKA, PRECIOUS
1365 AKINBODE FOLAJIMI, DERICK
1366 ADENOLA LANRE, SEGUN
1367 OMOLE RACHAEL, FUNMILAYO
1368 NOFIU SANNI, OLUWAROTIMI
1369 KIEREAMA MARY, OBIEKORTOMA
1370 NOFIU MAYOWA, EMMANUEL
OLATUNJI GRACE, FUNMILADE
1371
UGORJI ONYEMA, EHIME
1372
1373 OYEWO ESTHER, OLUYEMISI
1374
1375 OROIBI ERIBUSAYO, ADESOLA
IREIN BENJAMIN, OLUFEMI
1376
AKINLEYE TUNDE, ADENIRAN
1377
1378
SAMUEL DAMILOLA, ADEOTI
1379 OLATUNJI BAMIDELE, MUSA
1380 SODEINDE LAWRENCE, TEMILOLUWA
1381
1382
1383 UMAR HAUWA, SULE
1384 NWOKEDI QUEEN, ESEOGHENE
1385 OLUWAROTIMI AKINTOMIDE,
1386 GLADYS ONATU,
1387
1388 ADESINA AKIN,
1389 NWOSU-IHEME NJIDEKA,
ATUEYI CHIBUIKEM,
JESUMUYIWA BENJAMIN, YOMI
ABAH KINGSLEY, ADEJOH
TEMITAYO ARATUNDE,
KENECHUKWU
1390 EFOSA ERHABOR,
1391 OBI-UCHENDU UGO, AUSTIN
1392 AKINLUA MODUPE, TEMITAYO
1393 ARM SECURITIES, LTD/TROVE
TECHNOLOGIES
1394 OGBONNAYA NDUKA, EKEGHE
1395
1396
1397 ODUNMORAYO OLALEKAN,
JAGUN OLANIKE,
IBIRONKE OLUMUYIWA,
MATTHEW
267
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Unclaimed dividend list | continued
S/No Beneficiary
1398 OSARUMWENSE DENNIS, KEHINDE
1399 ABALUNAM GABRIEL, CHIBUZOR
1400 ONYEJI LAURA, NNEKA
1401 MUHAMMED GARBA,
1402 ATILOLUWA OLAJIDE,
1403 ARM SECURITIES, LTD/TROVE
TECHNOLOGIES
1404 DIAMOND SECURITIES, LIMITED
1405 VICTOR EDEM,
1406 MICHAEL OLUSEGUN,
1407
ABAYOMI OYEWUMI,
1408 MUSA RABE,
1409 OLADAPO OLUWADARE,
1410 ORISADAHUNSI EKUNDAYO,
MOROUNDUPE
ORISADAHUNSI TEMITOPE, ATINUKE
ORISADAHUNSI OLUSEYI, OLAYENI
OSUNRINDE MARGARET, OMOTOLA
OLUKANMI OLUFOLAKE, OLUBANKE
EMMANUEL OBI,
1411
1412
1413
1414
1415
1416 OLOLOPETER LTD
1417
1418
1419
1420 OBINNA ANYANWU,
1421
1422 OSEGBE XAVIER,
1423
OYETAYO OLADAYO,
OYEDIRAN OLANIPEKUN,
AJAYI KEHINDE, A
OBAROGHEDO GEORGE, EWEMADE
BAMIGBOYE OLUWADARE,
OLAYIWOLA
EZIKE VINCENT, CHIDI
1424 OZOEMENA ESEROGHENE, TEMITOMI
1425
BOBADE EDWARD, OLADAPO
1426 NNABUIFE OBIABUCHI, ALISIGWE
1427
1428 AKUBUE BENEDICTH, NGANWUCHU
1429 DELANO OLAJUMOKE, OLABISI
1430 DELANO MOFETOLUWA, ERINAYO
DELANO BOLUWADURO,
1431
TOLUWALEKE
1432 DELANO MOBOLURIN,
OLUWABUSOLA
ISIJOLA SAMUEL, OLUSAYO
1433
1434 UDOH DAVID, UDEMEOBONG
1435 OLAITAN OLUWAFEMI, S
1436 SEGUN AFOLABI,
1437
1438 OGUNLADE ADESOJI, OLUJIMI
1439 MADUEGBUNA SAMUEL, OKWUDILI
1440 UBA TRUSTEES/ACAP
ADIMMADU MARIUS, EMEKA (DR)
1441
1442
CANARYGROWTH FUND TRAD
AGBE PAUL, DADA
EZENWEINYINYA CHUKWUEMEKA,
NZUBECHUK
TALABI TOLULOPE, OLUKAYODE
1443
1444 OLUWASHINA ADENIHUN,
1445 CHIDIEBUBE AMAECHI,
1446 NNADOZIE EDMUND, CHIBUEZE
1447 OSAKUNI CHIDIMMA, ANASTASIA
1448 MICHAEL BANJOKO,
1449
EGWUATU JENNIFER, UZOMA
1450 NWAGHODOH UGOCHUKWU, ALEX
1451
VICTOR ESAN,
1452 UMAR BASHIR,
1453
BRAIBI HORSFALL,
268
EKWUNIFE CHIKA, MENAD
SAMAILA ISHAQ, ALHAJI
IBEKWE OSITA, CHIMEZIE
S/No Beneficiary
1454
1455
1456 AMOO AKINKUNMI, ADESINA
1457
Rufai Abubakar, Ahmed
1458 ODUNAIYA OLUWATOSIN, OBATUNDE
1459 AL-UMARU OIL AND GAS LIMITED
1460 OREYE ALPHONSUS, JEGBEFUME
1461
IME ASANGANSI,
1462 OJO SAMUEL, ADEDAYO
1463 OGUNLEYE-JOHNSON BABATUNDE,
1464 OBULE EMMANUEL, EKENE
SULAIMAN ADEEYO,
1465
1466 OLUWAKEMI RACHEL, OLUSINA
1467
1468 DAVID GBINDA, KHOBE
1469 UKPA AJAUKPA,
1470
TUOYO TEMISANREN,
AKHIGBE OSAGIE, SAMUEL
ESSIEN PETER,
KENNEDY-ECHETEBU CHINNY,
EUGENIA
1471
IKEKPOLOR GIBBS, ALUYA
1472 OSIBERU ABIODUN, OLADIPUPO
1473 OMUOJINE EMMANUEL, NDUDI
1474 OLUSOLA AINA,
1475
1476
1477
1478 ODUNAYE OYEWALE, SUNDAY
1479
ALIU TOSIN, SULAIMON
1480 SAMUEL AKOSILE,
1481 OGUNSOLA DAVID, ADEGBOYEGA
1482 OGENE ESHOKHENAME, TEMITOPE
1483 UCHENDU JAMES, CHIMEREMEZE
1484 ABURIME JOAN, PRECIOUS
1485 DAUDA RAHEEM, ADEKUNLE
1486 MAKINDE ABIODUN, JOSEPH
1487
SMART BENICE, EFE
1488 URHUDE ERNEST, OGAGA OGHENE
1489 OLAFUSI MICHAEL, OLALEKAN
1490 LINUS NDINEZE,
1491 WILLIAMS ADEBAYO, JOHN
1492
ENILOLOBO DAVID, ABAYOMI
1493 OLUWAGBENGA ADEWALE, PEDRO
1494 AYOADE HAMMED, ADEKOLA
1495
1496 MARYANN AMORIGHOYE, ATSEYINKU
1497 OLABODE RAHMON, KOLAWOLE
1498 WARHE EJUKONEMU,
1499 NATHANIEL IBIFURO,
1500 UGWUODO EMENIKE, DIKENNAYA
1501
PAULINE UBONG,
IGBASANMI JOHN, OLATOMIDE
ESTATE OF
FATIMA AJI,
TUKUR AMINU, MUHAMMAD
1502
1503
1504 OYEKOLAWA FATUSIN,
1505 CHUKWUEMEKA FRIDAY, DENNIS
1506 UCHECHUKWU ARIOLU,
1507 OKI PAUL, A
1508 GODSEND ADAGHA,
1509 OKUSIPE OLUTOMISIN, OMOLOLU
BARIBOR KENNETH, DUUKORI
1510
AKINWUSI ABIODUN, ABISOLA
1511
1512
CHUKWUMA IROZURU,
1513 MAKINDE ADESOYE, EMMANUEL
DIBIA FELIX, ACHULIKE
KOMBOL DAMIAN, DOOYUM
EBE MICHAEL, ETOK
ZAWIYA SAMINU, RABIU
OSAZEMEN OLUWATOYIN, AGHATISE
S/No Beneficiary
1514
1515
1516
1517
1518
1519 MONICA IRENOSEN, UDUKU
1520 HANAFI YUSUF,
1521
AKIOSI-OJOH ESTHER,
OLASUNKANMI
1522 OKONKWO JULIANA, NWEGO (MRS)
1523
INUWA ABBAS, YAHAYA
1524 OLOGUN OLUWADAMILOLA,
OLAKUNLE
1525 NNOAHAM LINDA, UZOMA
1526
YAKUBU SULEIMAN,
1527 OKEGBOLA OLUWOLE, GABRIEL
FOLUSHO OYEYEMI, AJALA
1528
1529 CHIDI IHUOMA, KELECHI
1530 ABDULLAHI SALISU,
EKPO EBEREANIE, ABRAHAM
1531
TANIMOWO TAIWO, OLADIPUPO
1532
1533 AWOLOLA OLUWAFUNMILOLA,
ABIDEMI
1534 OLUWATOSIN OSANYINTUYI,
1535 ONYEGBADO CYNTHIA, NNEKA
1536 OJEMAKINDE OLUWATOMI,
1537
BOBBOI RABIATU, AHMED
1538 MOJUETAN EYITEMI, NED
1539 OLANREWAJU OLUWATOYIN,
OMOLADE
ABASS AHMED, ABIOLA IDOWU
1540 CHAPEL HILL NOMINEES
1541
1542 OKPARA EMEKA, INNOCENT
1543 KHALED BAZ,
1544
1545
1546
1547
IKWUAGWU IKEMEFULA,
IMRANA LABARAN, ABDULLAHI
LUKMAN OLORUNTOYIN, GIWA
BOLLARD HOMES & PROPERTIES
INTL LTD
OLANIYAN OLUWAFEMI, SAMUEL
1548 MOMODU OSIRIAME,
1549 OBI JOY, NNEKA
1550 UCHECHUKWU MKPUMA,
1551
1552 OLUMIDE UTHMAN, AWONIRAN
1553 OLALEKAN AJAJA,
1554
1555
1556 AYODEJI ADETUNJI,
1557 NWOSU MICHAEL, OBINNA
STANLEY CHIDOZIE, UBA
BUSUYI JOSHUA, AKINDELE
OMOTAYO
1558 AFOLABI ABIMBOLA, OYINDAMOLA
1559
KELVIN OBIOMA, ONYEBUEKE
1560 ADEYINKA TAYO, ANTHONY
1561
RISKHEDGE ANALYTICS LIMITED
MARGIN
1562 HENRY ADETUNJI,
1563 OLOTU EMMANUEL, AYODEJI
1564 YUSUFF ABDULRAHMAN, ADEBISI
1565 OLANIYI ODERINDE,
1566
1567 GODWIN WAYIMA, STEPHEN
1568 OGWUMIKE ONYEMAECHI, JOHN
1569 ABANEME CHINYERE, KEYNA
ISRAEL NWAJI, NWAFOR
Seplat Energy PlcAnnual Report and Accounts 2022 S/No Beneficiary
1570 CHINOSA MISHAEL,
1571
IFEANYI KELVIN, ONUOHA
SEUN ADELAJA, OKUDE
1572
1573 MGBEAHURIKE CHIDIEBERE,
MODESTUS
ADEDUGBE MOJISOLA, OLUSOLA
1574
1575 NNIL COMMERCIAL COY LTD
1576 OLALEKE OLUWASEGUN, FOLARANMI
1577
1578
UZOMA HARRY, DUNKWU
AMOLEGBE OLUWADAMILOLA,
FATIMA
IKHIONOTSE HARRIET, IZUAGIE
ABBA KYARI, BULAMA
1579
1580 UMEONISO OSAH,
1581
1582 ONOTASA SHADRACH, UCHOHWO
1583 ADEBOYEJO ADEYEMI, MICHAEL
1584 GEORGE ACHIKANU,
1585
SAMUEL ONWUMECHIRI,
1586 MAYOKUN ADEMOLA, ADEKOLA
AROGUNDADE KOLAPO, SEHINDEMI
1587
INFOWARE LIMITED
1588
1589
IGBINOSA COLLINS, MARK
1590 MARY ULOMA, ONYEKACHI
1591
ASHIMI OMOSHALEWA,
OLUWADAMILOLA
PRINCE NYABIS, BITRUS
REBACABIM GLOBAL INVESTMENTS
LTD
1592
1593
1594 BIALA ADEMOLA, ABAYOMI
1595 OBIUWEVBI LUCKY, IGHO
1596 ADEDOYIN MOBOLUWADURO,
DANIEL
1597
KELECHI ROY, OHAEGBULAM
1598 OVIRORO GOLD, IGHOGHENE
1599 MANUCHIMSO CHARLES,
AKANINWOR
1600 IMHANGUEZEJIE JOHN, EHIS
1601 OVEDHE ISAIAH, ARUE
1602 OKECHUKWU JONNWAKALO,
1603 CHIBUEZE KENECHUKWU,
1604
NNABUEZE
ELUE CHUKWUFUMNANYA,
ASSUMPTA
NNEWUIHE CHIDOZIE, NELSON
SEDENU MAX, OYAKHILOMEN
FRANCA IKO, ANDREW
CHISOM VICTOR, NWISU
BABALOLA OLUSOLA, AKEEB
1605 CHIMA IGNATIUS, EBERE
1606 DANIEL EFIOK, DANIEL
1607 DAVID YAKUBU, LAI
1608 GBOLAHAN SUNDAY, KOLAWOLE
1609 SOLEBO ABIODUN, ABOLAJI
1610 WAHAB ADEMOLA, SULU
1611
1612
1613
1614
1615
1616 MUKAILA ADISA, BALOGUN
1617
1618
1619
1620 OKPAKO OGBA,
1621
NWOSU EUGENE, AZUBIKE
1622 ODOCHA EZE, CHINWOKE
1623 OSHIOKHAI ADOLPHUS,
AKANDE OLUSOLA, BABATUNDE
UMAR SHERIFF, ADEKUNLE
ALI ADAM, MUHAMMED
OMONOKHUA
1624 CHUKWUEBUKA OBINNA, ONYEJE
NONSO IFEKA,
FADIPE OPE, OLUWA OLAITAN
TOYE DELE, OLAWOYE
ADEBISI JOHNSON, AWONUGBA
S/No Beneficiary
1625
BERNARD IKECHUKWU, OSAMOR
1626 AWONAYA EMMANUEL, ABIODUN
1627
1628 AHMED PATIENCE, MERCY
1629 AKANEME KALANENE, JUDITH
1630 Oni Omoniyi,
1631
1632 MBAKWE MARCUS, NNAMA
1633 MARY AKINYEDE, ADERONKE
1634 BLESSING CHIOMA, EZEUDU
1635 KUBA JULIUS, EBO
1636
1637
1638 ADEKANYE NOAH, ADEGBOYEGA
1639 MAMMAN ANGBASHIM, JATAU
1640 OLADIPO SMITH,
1641
1642 NGUTOR ANYAM,
1643 YUSSUF WAHAB, SHOLA
1644 BABALOLA ADEBUKOLA,
1645 OLADAPO ALAGBE,
1646 SHUAIBU HAUWAU, KULU
1647
1648 SAMUEL UADE,
1649 TINA UREGWU, UPAH
1650 OTUNBA GAFAR, OLAREWAJU
1651
OLAMIDE CLEMENT, AKINYEMI
1652 AKINOSO HALIMAH, OYEBOLA
1653 MADUKA MICHAEL, KENEYAHWEH
1654 OLUNLOYO ISMAIL, OLADIMEJI
1655
1656 OGUNNAIKE OLASUNKANMI,
EKEOGU PRECIOUS, HABIBA
SANUSI SAMUEL, ADESOLA
BUSOLA BAYO, OJO
ADEWALE
VICTOR OVIE, LAWAL
1657
1658 OLUYEMI MOREMI, LAWALDAKI
1659 OLISA NNADILI,
1660 EMMANUEL PEREKEME,
1661
1662 AGBOJO ANTHONY,
1663 DANIELS AICHEMS,
1664
AYOMIDE FATAI, AKANDE
EMELA-JACOBS OLUWABUNMI,
OLATEJU
1665 OGBODO VICTORIA, ONYINYE
1666 AKHIGBE ITUA,
1667
SAKA ABDULGANIYU, A
1668 ADEBOYE BENSON-ATP
1669 ADETUYIBI ATINUKE, OLABISI
1670
1671
1672 GIDEON SOROCHI, NWUZI
1673
1674
1675 DE-BENTLY INVESTMENT
CO-OPERATIVE SOCIETY
FOM ZAKKA,
UKASHA HASHIM, MUSA
KENNETH EZUGU,
IGE OLAOLUWA, TOSIN
1676 NJONMIH ANTHONY, JATONG
1677
1678 OKOROFOR CHINONYEREM,
SUCCESS EZIUZO,
DEBORAH
1679 OWEN ONOHOMHEN, RAYHAMEN
1680 TAWAKALITU BISOLA, ODUBIYI
1681
ALUMUKU PATRICK, TOR
1682 ADELAJA TEMITAYO, SUNKANMI
1683 VICTOR AJUA,
IKEBELI LOUIS, AREKHAME
S/No Beneficiary
1684 DELANO OLADEINDE, OLADAPO
1685
ECHOJONES FARM LTD
1686 MICHAEL SUNDAY, ABITOGUN
1687
1688 DELA ANIWA,
1689 EZIKE VICTOR, ELOCHUKWU
1690 OLAPO OLADEJI, KOLAWOLE
1691
ITHUNOKHA DANIEL,
1692 OLUWABUKUNMI FOLARIN,
VICTOR IFEANYI, UDEOGU
EKPU SANDRA, ESEOSE
RUKAYAT OLATANWA, BUSARI
ABDUL ADENIYI, AFOLABI
BASSEY OTU, ESSIEN
EQUAK ODUDU, SAMSON
LAWRENCE SUNDAY, IBOK
OGUNJINMI
1693 ABUBAKAR HARUNA,
1694 OSOSANYA OLUYOMI, TOLULOPE
1695 ABDULAHMEED OLADIMEJI, AJIBOLA
1696 IKUFORIJI ADEYOOYE, TAHHIR
1697
1698 ALAYE OGAN, EVELYN OMARIOGHAE
1699 OLUWASEGUN ABRAHAM, ATOYEBI
1700
1701
1702
1703
1704
1705
1706 ADEGBAYIKE EMAMNUEL, OLUSEGUN
IDORENYIN EDEM-NSE,
1707
1708 AKWUE TOCHUKWU, ANTHONY
1709 ONWUDIWE CHIKE, TERRENCE
1710
1711
1712
1713
1714
1715
1716
1717
1718
ONYEKWERE OKPO,
AKINLOYE AYORINDE, BANKOLE
CHIOMA SYLVIA, INYAMA
TOMIDE TEMIDAYO, OLORUNTOBA
NNENNA EMMANUELLA, KINGSLEY
SHADRACH PROMISE, OJEMIRE
PAUL OLUWAKAYODE, ERINLE
ABDUMALIK NB, YUNUSA
COMPASS INVESTMENT &
SECURITIES LTD
PETER OLAJIDE, OLOLUO
1719
PACIFIC TRUST LIMITED
1720
DULKEBE AMALE, DIMAS
1721
1722
IDIONG ASUQUO, ESSIEN
1723 OYEDEJI OLUWASEGUN, ABIODUN
1724
ALIYU ABDULLAHI, MUSTAFA
1725 GYANG SELE, LAWRENCE
1726
1727
1728 MOLTEN TRUST LTD
1729 OKORO JAMES, NCHONWA
1730
1731
1732
1733
JULIET KANENG, GYANG
ROSEMARY CHIDIMMA, OGBONNA
IMAOBONG NNAH, ETUKUDO
ANCHORIA ASSET MGT LTD
RESEARCH
AKOREDE TAOFEEK, AKANFE
DORATHY NKECHI, OBAH
ABDULMAJEED ABDULLAHI,
JAMES BURA, MAMZA
ETIMBUK THOMPSON, UDOM
FALAYAJO ABIOLA,
1734 QUARRATULAYN O, ZAFARAN
1735 OLUWATOBI JOSHUA, KEHINDE
1736
1737
1738
1739
1740 MUHAMMAD GBODOTI, USMAN
1741
OLUWASEKUN SONIA, AKINBIYI
1742 OLAYINKA SIKIRULAHI, ADEGOKE
269
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 TOSIN FEMI, MAKINDE
IBRAHIM OLAITAN, KAZEEM
BARAKAT MOTUNRAYO, ABIOYE
S/No Beneficiary
1862 ORIOLA MOBOLAJI,
1863
1864 ALLI ADEDAYO, ADEKUNLE
1865 ABDUS-SHAKUR UMORU,
1866 AMAKA NDUKWU,
1867
TIMOTHY ORASO,
1868 OKON TIMOTHY, EFFIONG
1869 ARIYO AYODELE, AKOLADELE
1870
1871
1872 OKUNOLA OLANREWAJU, ABIMBOLA
1873
1874
1875
1876 MAGAJI MOHAMMED,
HAFSAT UMAR,
1877
1878 OLUWAKEMI LATIFAT, ADEKANMI
1879
1880 NWOBODO IKECHUKWU, CHINEDU
1881 OLARENWAJU -, OLADEJI
OLUWADAMILARE
PRECIOUS KENNEDY,
ROFIU KOLAWOLE, SHAKIRU
ZIGWAI AUGUSTINE, FANDA
BIYUNGBO AKINTUNDE, JAMES
1882 NURUDEEN BADRU,
1883
ISHOLA SIMON, ADEWUYI & MARIAN
ADEWEMIMO
1884 OGUNLEWE OLAYIWOLA, OLUGBOSI
1885 KAYODE TEMITAYO, OLUFEMI
1886 KAYODE SEUN,
1887 OLADIPO OLUYEMISI, GBEMISOLA
1888 OLUSOLA AKANJI, KAYODE
1889 OLADEINDE OLUBUKOLA, OMOLARA
1890 OKPAGBA ZION,
1891 ONAGHISE PAUL, O
1892 OBED EBIYE, STANLEY
Unclaimed dividend list | continued
S/No Beneficiary
1743 OLOLADE QUADRI, OWOLABI
1744
1745
1746
1747
1748
1749
1750
1751
1752
1753
IBRAHIM ADAMU,
FAFIOLU OLUWATOYIN, REGINA
TAIWO UZOAMAKA, TAIWO
ADUNREKE SAMUEL, ROTIMI
KOLA OSHALUSI,
TOCHUKWU JAMES, UZODIMMA
BABATUNDE ADEMOLA, ADEBISI
OLUWATOYIN OSOGU,
PETER OLAMIDE, FOLAGBADE
BOLUWATIFE OPEOLUWA,
AREBISOLA
ALIYU BELLO, MUHAMMAD
STEPHEN UWAGBAE, IZOSE
ANTHONY GODWIN, ANYASO
KEVIN NWAUDO, OGARANYAMARC
SOREMI EMMANUEL, OLUSEGUN
IKECHUKWU VICTOR, MADUBUIKE
IDRIS BALA,
THEOPHILUS MADUABUCHI, EMEM
SANI ABDULLAHI, KONTONGS
IBUKUNOLUWA DEBORAH, AMOS
STEPHEN OLANREWAJU, OLAPADE
1754
1755
1756
1757
1758
1759
1760
1761
1762
1763
1764
1765 QUEEN ESTHER, EBERE OKEREKE
1766 OLATUNDE JEREMIAH, ODEDIRAN
1767
1768 NTIA OKOKON, IME
1769 CHIKA PETER, WICHE
1770 MUHAMMAD NAGUTO, IBRAHIM
1771
BASHIR MUHAMMAD, SALIHU
ERIFEVIEME OGHES, SAMUEL
WELLINGTON
PETER CHINONSO, EZE
TAMUNO-OPUBO DANIEL, DICK
1772 OKAFOR HENRY, NKEAKAMAKONAM
KOLAWOLE OLUGBENGA, G
1773
SUCCESS IBINYE, SOKARI
1774
AJAYI SUNDAY, JOSEPH
1775
AGBELUSI JUMOKE, ENIOLUWAFE
1776
1777
AKINLOLU MICHAEL, FANIRAN
1778 MARVELLOUS GLADYS, AYANSIJI
IVIE ODION, OKOKPUJIE
1779
YAHKAT BARSHEP,
1780
HOMTO ZAIDA, DOKPESI
1781
1782
ROLAND OKERE,
1783 GODWILL EMERIKE, CHIKE
1784
1785
1786 CLINTON CHIBUZOR, AGOH
1787
1788 NNABUK NNABUK, AKPAN
1789 OLAJESU FAVOUR, ADESHINA
1790 ABUBAKAR SHOLADOYE, BELLO
1791
1792 OSAGIE OMOTEKHALE,
1793
1794
1795
1796 CASIMIR AIDELOJE, IDELE
1797
1798 ADEDAMOLA ADEDAPO, KIKIOWO
1799 HUSSEINI ABDULRAHMAN, DAUDA
1800 JAJI BABATUNDE, RAHMAN
1801 OLAREWAJU AUGUSTINA, YEMI
1802 OLUCHI OLIVIA, NJOKU
ENIOLA OLAITAN, MORONFOLU
IKE OGBONNA, OSMOND
EMMANUEL ANTHONY, OGAR
DEBORAH MORENIKEJI, AMIDA
ANYANWU VICTOR, OSONDU
AMARACHI BENEDICT, ONWUSUKWU
270
EFETURI JUNIOR, ANUKPEYIBO
S/No Beneficiary
1803
1804 MAJOROH OGHENERUGBA,
1805
JESUMUYIWA HANNAH,
MOSEBOLATAN
1806 ENYAMUKE UFUOMA,
1807
1808 OLUWASEUN OLABAMIDELE,
LAWRENCE ILOABUCHI, ATTAH
FADUMIYE
HASSAN ABDULKARIM, TIJANI
EMMANUEL IJENAMAKA, OYIYE OGBE
LOIS OGOCHUKWU, ALEXANDER
KELECHI AKUNNA, ALOGBA
1809 AKINLOSOTU OMOLARA, IBUKUN
KAYODE RICHARD, AFOLABI
1810
JANEFRANCES OBIAJULU,
1811
ADEDAYO ADETUNJI,
1812
1813
PATIENCE ADAORA, OBILOR
1814 GARBA SALIHU, JIBRIN
1815
1816 OKONKWO EUGENE, IKE
1817
1818
1819
1820 MOHAMMED MUHAMMAD,
1821
1822 OLADIJO OLUWATOSIN, PATRICK
1823 NWAGBO CHINENYE,
1824 GREGORY OSHIOBUGHIE, IRUE
1825
1826 MEDANI NGOZI, OBIAGELI
1827 OLUSEYI AJALA,
1828
VITUS CHISOM, ANYIKWA
1829 ALFA GRACE, OJOCHOGU
1830 OBOMANU FELIX, GAMALIEL
1831 MOSES ENAJEWE,
1832 NEW NIGERIA DEVELOPMENT
SOTUBO BOLA, OLU ABAYOMI
PAUL BENEDICTA, CHIKA MAUREEN
EVERISTUS ALIOBAJI, UGOCHUKWU
IYO ALALI,
COMPANY LTD
1833 ARMIM/IKIMC - MAIN
1834 ARMIM/OKOROC MAIN
1835 AGBAJE HAKEEM, OLATUNDE
1836 OGOCHUKWU NOBLE, OBASI
1837
1838
1839 MODUPE MARILYN, OLATAYO
1840 WISDOM CHIJIOKE, AKAZUA
1841
CHIDERA ESTHER, UKAEGBU
1842 ABODUNRIN OLANIYI, MICHAEL
1843 ABDULAZIZ HAUWAKULU, JOY
1844 OMOBUDE ERIC, OZIEGBE
1845 WOFIKAH ADAVIRUKU,
1846 AGBAI FRANCIS, TOUNDIDE
KUKU GBADE, SIKIRU
1847
1848 UBAS NOMINEE
1849 COMMELIN VALERIE, KHAZALA
1850 AWIYA CYNTHIA, OLUWATOYIN
1851
1852 ODEYEMI TOLUTOPE, BENJAMIN
1853 ANGI TITUS, GIDEON
1854 OKEKE NGOZI, ANITA
1855 KOUASSI DASILVEIRA,
1856 ALUKO OLAOLUWA, ADEDAYO
1857 CHIAGOZIEM JOY, ANURIKA
1858 BANKOLE KEMI, BOSE
1859
PRINCESS FAVOURED, ADEBE
1860 KARZEEM CAPITAL MANAGEMENT
AMEH DANIEL, OCHE
LIMITED
AGHAGBON FRANCA, EBERECHI
1861
Seplat Energy PlcAnnual Report and Accounts 2022 General information
Board of Directors
Basil Omiyi, CON
Roger Brown
Emeka Onwuka
Samuel Ezugworie
Kazeem Raimi
Olivier De Langavant
Nathalie Delapalme
Ernest Ebi, MFR
Charles Okeahalam
Bashirat Odunewu
Chairman
Chief Executive Officer
Chief Financial Officer/ Executive Director
Chief Operating Officer/ Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Senior Independent Non-Executive Director
Independent Non-Executive Director
Fabian Ajogwu, SAN, OFR
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Bello Rabiu
Koosam Kalyan
Emma Fitzgerald
Company Secretary
Edith Onwuchekwa
Nigerian
British
Nigerian
Nigerian
Nigerian
French
French
Nigerian
Nigerian
Nigerian
Nigerian
Nigerian
South African
British
Registered office and business address of Directors
16A Temple road (Olu Holloway)
Ikoyi
Lagos
Nigeria
Registered number
RC No. 824838
FRC number
FRC/2013/NBA/00000003660
Auditor
PricewaterhouseCoopers
Landmark Towers,
5b Water Corporation Road
Victoria Island,
Lagos
Nigeria
Registrar
DataMax Registrars Limited
2c Gbagada Expressway
Gbagada Phase 1
Lagos
Nigeria
Solicitors
Aelex
Allen & Overy LLP
Anaka Ezeoke & Co
Ashurt LLP
Bracewell (UK) LLP
Fidelis Oditah & Co.
Mas Tax & Legal
Olaniwun Ajayi LP
Streamsowers & Kohn
Templars
Udo Udoma & Belo-Osagie
White & Case LLP
Wole Olanipekun
Bankers
Citibank, N.A.
Nedbank Limited
The Standard Bank of South Africa Limited
Stanbic IBTC Capital Limited
FirstRand Bank Limited
The Mauritius Commercial Bank Ltd.
J.P. Morgan Securities PLC
Standard Chartered Bank
Natixis
Zenith Bank PLC
United Bank for Africa PLC
First City Monument Bank
271
Financial Statements 129 — 254Additional Information 255 — 272Governance Report 60 — 128Strategic Report 1 — 59Seplat Energy PlcAnnual Report and Accounts 2022 Glossary of terms
AEPS
Amukpe Escravos Pipeline System
GSA
Gas Supply Agreement
AG
Associated Gas
AGPC
ANOH Gas Processing Company
GTL
Gas To Liquids
GW
Giga Watt
NGPTC
Nigerian Gas Processing and Transportation
Company
NIIMP
Nigerian Integrated Infrastructure Master Plan
NNPC
Nigerian National Petroleum Company
NOGICD
Nigeria Oil and Gas Industry Content
Development
NPC
National Population Commission
NPDC
Nigerian Petroleum Development Company
O&G
Oil & Gas
IEFX
Investors, Exporters Foreign Exchange
window
IOC
International Oil Company
IOGP
International Association of Oil
& Gas Producers
IPP
Independent Power Plants
ISO
International Standards Organisation
OB3
Obiafu-Obrikom-Oben gas pipeline
KPI
Key Performance Indicator
KWH
KiloWatt Hour
LNG
Liquefied Natural Gas
LPS
Loss Per Share
LTF
Liquid Treatment Facility
LTIF
Lost Time Incident Frequency
LTIP
Long Term Incentive Plan
MCP
Multiple Currency Practices
MOPU
Mobile Offshore Production Unit
NAPIMS
National Petroleum Investment
Management Service
NBS
National Bureau of Statistics
NED
Non Executive Director
NGC
Nigerian Gas Company
NGMC
Nigerian Gas Marketing Company
NGMP
Nigeria Gas Master Plan
NGO
Non Governmental Organisation
OPEC
Organisation of Petroleum
Exporting Countries
PIB
Petroleum Industry Bill
PIFB
Petroleum Industry Fiscal Bill
PIGB
Petroleum Industry Governance Bill
PPP
Public Private Partnership
PSC
Production Sharing Contracts
RCF
Revolving Credit Facility
SDG
Sustainable Development Goals
SEC
Securities Exchange Commission
SID
Senior Independent Director
SPDC
Shell Petroleum Development Company
TRIR
Total Recordable Incident Rate
TSR
Total Shareholder Return
WEF
World Economic Forum
WRPC
Warri Refinery Petrochemical Company
ALR
Amended Listing Rules
ANOH
Assa North Ohaji South
BTU
British Thermal Unit
CAMA
Companies and Allied Matters Act
CBI
Convention on Business Integrity
CBN
Central Bank of Nigeria
CGRS
Corporate Governance Rating System
DD&A
Depreciation, Depletion & Amortization
DSO
Domestic Supply Obligation
E&A
Exploration and Appraisal
EBIT
Earnings Before Interest Tax
EPF
Early Production Facility
EPS
Earnings Per Share
ERGP
Economic Recovery & Growth Plan
ERM
Enterprise Risk Management
ESIA
Environmental Social Impact Assessment
FID
Final Investment Decision
FTSE
Financial Times Stock Exchange Index
GDP
Gross Domestic Product
GGFR
Global Gas Flaring Reduction
GHDI
Global Human Development Initiative
GMOU
Global Memorandum of Understanding
GMP
Gas Master Plan
272
Seplat Energy PlcAnnual Report and Accounts 2022 Forward-looking statements
This document may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements
involve known and unknown risks and uncertainties, many of which are beyond the Company’s control and all of which are based on the Company’s
current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward looking terminology,
including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or
other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results.
Any forward-looking statements reflect the Company’s current view with respect to future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the Company’s business, results of operations, financial position, liquidity, prospects,
growth, strategies and the oil and gas business. Forward-looking statements speak only as of the date they are made and cannot be relied
upon as a guide to future performance.
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Seplat Energy Plc
Head Office
16a Temple Road
Ikoyi
Lagos
Nigeria
seplatenergy.com
London Office
Fourth Floor
50 Pall Mall
London SW1Y 5JH
United Kingdom
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