Seplat finds oil it was not looking for, and pays its biggest dividend of the year

Seplat Energy drilled a well for gas and found oil as well. The find came after the end of September, so it sits outside the nine-month results the company published on 29 October, but it was the line in that announcement that caught the most attention.

The Aku-01 well

The well was drilled on Petroleum Prospecting Licence 2A25, where Seplat holds a 40 per cent operated interest. The company's preliminary mid-case estimate is 157 billion cubic feet of gas and 19 million barrels of oil in place. Those are volumes in the ground, not volumes that will be produced; more evaluation is needed before Seplat can say how much is recoverable.

The company said an oil discovery "was not part of the original well plan." It is now completing the well for possible production and plans to tie it into existing facilities for early development. A second Aku well is planned for 2027, and Seplat says the result reduces uncertainty across four nearby prospects on the same licence.

The results

For the nine months to 30 September, revenue rose 12.5 per cent to ₦3.78 trillion. Pre-tax profit was ₦1.34 trillion, up 52.75 per cent from ₦878.99 billion. Profit after tax more than doubled to ₦355.55 billion, from ₦146.64 billion, even with an effective tax rate of 74 per cent.

Production averaged 144,999 barrels of oil equivalent a day, 7 per cent more than a year earlier. Onshore output rose 22 per cent to 67,445 boepd; offshore output fell 3 per cent to 77,554. In the third quarter alone the company averaged more than 155,000 boepd.

Seplat realised $100.4 a barrel for its crude in the quarter, which it said was $10.2 above average Brent. Unit operating costs rose 14 per cent to $16 a barrel of oil equivalent. Borrowings fell 27 per cent to ₦1.05 trillion, and net debt is now 0.14 times EBITDA, from 0.53 at the end of last year.

Chief Executive Effiong Okon, presenting his first results in the job, said the company was on track for the upper half of its full-year guidance.

What shareholders get

The board declared a third-quarter dividend of 19 US cents a share: 5 cents core and 14 cents special. That takes dividends declared this year to 40 cents. The qualification date is 12 November and the register closes on 13 November.

Seplat has guided to $270 million of underlying dividends for the year, or 45 cents a share. On top of that it plans a further distribution of about $140 million once the sale of a 10 per cent interest in the NNPC-SEPNU joint venture to NNPC Ltd completes, which would bring 2026 payouts to about $410 million.

The shares closed at ₦16,000.10 on 28 October, an all-time high and about 175 per cent above where they started the year, Nairametrics reported.

What it means for you

For anyone holding Seplat shares, the dividend is paid in dollars, so the naira you receive depends on the exchange rate on the payment date. Check that your shareholding details with your registrar are current before 12 November.

For the country, a new oil find is good news but a modest one. Nineteen million barrels in place is small next to Nigeria's output of around 1.5 million barrels a day, and only a share of it will ever be produced. The gas matters more: it is close to existing plants, and gas close to the grid is what Nigeria's power stations are short of.