Seplat Sells 10% NNPC JV Stake for $281m

Seplat Energy Plc has signed an agreement with the Nigerian National Petroleum Company (NNPC) Limited to sell a 10 per cent participating interest in the NNPCL-Seplat Energy Producing Nigeria Unlimited (SEPNU) Joint Venture for $281.6m, in a strategic move aimed at unlocking shareholder value, strengthening its balance sheet and supporting future growth.

The indigenous energy company disclosed the transaction on Thursday in a regulatory filing with the Nigerian Exchange (NGX), alongside its unaudited financial results for the six months ended June 30, 2026, which showed strong operational and financial performance driven by higher production, robust cash generation and continued debt reduction.

Seplat said the agreement, expected to be completed in the second half of 2026, forms part of its long-term portfolio optimisation strategy following the acquisition of Mobil Producing Nigeria Unlimited’s shallow-water assets. The transaction value represents about 25 per cent of Seplat’s acquisition costs in the offshore assets.

The company said proceeds from the sale would be split equally between additional shareholder distributions and further debt repayment, reinforcing its commitment to disciplined capital allocation while enhancing long-term shareholder returns.

Subject to completion of the transaction, Seplat expects total shareholder distributions for 2026 to rise to 68.3 US cents per share, equivalent to about $410 million, representing a significant increase over the previous year and advancing its target of distributing $1 billion to shareholders between 2026 and 2030.

The transaction announcement came as Seplat reported that cash generated from operations increased by 29 per cent to $985.9m during the first half of 2026, underlining the company’s strong cash-generating capacity amid a favourable commodity price environment and improved operational performance.

Average production during the period rose to 139,509 barrels of oil equivalent per day (boepd), representing a four per cent increase from 134,492 boepd recorded in the corresponding period of 2025 and remaining within the company’s full-year production guidance of 135,000 to 155,000 boepd.

Second-quarter production strengthened further to 149,070 boepd, up nine per cent from the corresponding period last year and 15 per cent higher than the first quarter of 2026, reflecting improved operational efficiency across the company’s producing assets.

The production growth was driven primarily by stronger onshore operations, where output increased by 11 per cent year-on-year to 60,690 boepd, supported by improved performance from the West, East and Elcrest assets.

Offshore production remained resilient at 78,819 boepd, while natural gas liquids production more than doubled to 8,459 barrels per day, demonstrating the company’s continued focus on maximising value across its diversified asset portfolio.

Seplat also said its idle well restoration programme continued to yield significant results, adding approximately 26,000 barrels per day of gross joint venture production capacity through the restoration of 24 wells during the review period.

The company’s financial performance reflected the benefits of stronger production and favourable crude oil prices.

Revenue increased by 30 per cent year-on-year to $1.82 billion, supported by an average realised oil price of $94.13 per barrel, representing a premium of $7.47 per barrel above Brent crude.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 28 per cent to $939m, while profit after tax surged to $164m, underscoring the company’s improved profitability and operational resilience.

Seplat also strengthened its balance sheet during the period by reducing net debt by 45 per cent to $370.7m, compared with $673.3m at the end of 2025.

The reduction followed the early repayment and cancellation of $200m under its Advanced Payment Facility, resulting in a significant improvement in its Net Debt-to-EBITDA ratio to 0.25x, down from 0.53x at the end of the previous financial year.

Cash balances also improved, with cash at bank increasing to $433.8m, excluding restricted cash of $130.8m, providing the company with greater financial flexibility to pursue investment opportunities and execute its capital allocation strategy.

Operationally, Seplat maintained a strong safety record, reporting 18.8 million man-hours without a Lost Time Injury (LTI) across its operated assets during the first half of the year.

The company also continued to advance its environmental sustainability agenda, reducing group carbon emissions intensity by 18 per cent year-on-year to 33.5 kilograms of carbon dioxide equivalent per barrel of oil equivalent, while onshore operated emissions intensity declined by 37 per cent, reflecting the impact of its End of Routine Flaring programme.

Despite increasing activity levels across its portfolio, Seplat retained its production guidance of 135,000 to 155,000 boepd for the full year, indicating that production remains on track toward the midpoint of the projected range.

Capital expenditure guidance was also maintained at between $360m and $440m, although the company noted that spending would be weighted towards the second half of the year.

However, Seplat revised its unit operating cost guidance upward to $14.50–$15.50 per barrel of oil equivalent, citing higher restoration costs associated with the Yoho asset.

The company’s improving financial profile also received external validation during the period, with S&P Global Ratings upgrading Seplat’s corporate credit rating to B+ in May 2026, reflecting stronger operational performance and a healthier balance sheet.

In addition to the strategic transaction, Seplat announced a quarterly dividend of 12 US cents per share, comprising a core dividend of five cents and a special dividend of seven cents, while reaffirming management’s confidence in the company’s medium-term outlook.

Commenting on the results, Seplat Energy Chief Executive Officer, Roger Brown, said the company enters the second half of 2026 from a position of considerable strength.

“As I hand over leadership of Seplat, the company is stronger than ever. Production improved from the first quarter and remains on track to grow further in the second half of 2026 as temporary restrictions are lifted and planned activities are completed,” Brown said.

He noted that while stronger commodity prices supported earnings during the period, management remained focused on preserving financial discipline through debt reduction and prudent capital allocation.

According to Brown, the planned sale of a 10 per cent stake in the offshore joint venture with NNPC Limited demonstrates Seplat’s commitment to unlocking value from its asset portfolio while creating additional returns for shareholders.

“Our declared quarterly dividend represents a new quarterly high-water mark. Combined with the announced offshore transaction, total shareholder returns for the current financial year are expected to reach unprecedented levels,” he added.

Brown, who will step down as Chief Executive Officer on August 1, 2026, said he was confident that incoming CEO Effiong Okon would build on the company’s operational momentum and drive the next phase of growth.

Seplat also confirmed that Tony O. Elumelu, CFR, will succeed Senator Udoma Udo Udoma as Chairman of the Board from January 1, 2027, while Independent Non-Executive Director Dr. Emma FitzGerald will retire from the board at the end of 2026.

With a strengthened balance sheet, improved production, a strategic portfolio optimisation programme and robust cash generation, Seplat said it remains well positioned to sustain growth, enhance shareholder value and consolidate its standing as one of Africa’s leading indigenous energy companies.