The Chief Executive Officer of Seplat Petroleum, Austin Avuru, will exit the indigenous oil and gas amidst collapsed revenue and significant decline in profit. AllNews confirmed that the company has had a disappointing first half of 2020, as its gross profit fell by 81.8% when compared to the corresponding period of 2019.
Avuru will be leaving the company he had been a part of for 10 years on July 31, 2020, and replaced by Seplat's Chief Financial Officer, Roger Brown, a statement seen by AllNews disclosed. Avuru made this known while addressing the company's financial result, "This is my final set of results as Chief Executive of the Company I helped to found ten years ago.
"I thank all my staff, past and present, for working to make Seplat a major force in Nigerian energy production. I hand a robust and successful company over to Roger Brown in the confidence that he and everyone at Seplat will make its second decade even more successful than its first.”
In the financial statements of Seplat seen by AllNews, the oil and gas company's revenue dropped from N108.9 billion recorded in the first half of 2019 to N80.1 billion in the first six months of this year; this represents a decline of 34.2% between January to June 2020. According to the company, crude oil revenue declined by 16.6% when compared to 2019.
Seplat pegged its 2020 first half crude oil revenue at US$180.1 million, failing to surpassing the US$216 million of the first half of last year. Meanwhile, gas sales revenue for Seplat decreased to US$53.5 million in this year's first half, falling short of the US$72.2million generated in the corresponding period of 2019; this represent a revenue decline of 25.9%.
The gross profit was same story, as Seplat reported that it significantly crashed by 81.8% to N12.9 billion in the first half of 2020, from the N63.5 billion recording in the corresponding period of last year. The company's operating profit also plummeted by 181%, moving from the N42.7 billion generated in first half of 2019 to N38.7 billion in 2020 first half.
Note that the decline in Seplat's total revenue was due to reduced demand, while the gross profit had dropped due to lower revenue and increase in cost of production. AllNews had reported that the oil market was negatively impacted by the COVID-19 pandemic and the lockdown that was adopted by countries to curb the coronavirus from spreading further.
Key sector clients of the oil and gas market were shutdown for about two months in Nigeria, affecting the earnings of oil companies. Low demand affected the oil price as the market was saturated with oil nobody wanted to buy due to restriction of movements. Also, Russia and Saudi Arabia's oil price war crashed the oil price, thereby, affecting oil companies' revenue.
Avuru is positive about the financial strength of Seplat. In his statement about the financials, he said, "Seplat has delivered a robust performance despite the unprecedented crises we have experienced since March. Our continued resilience is possible as a result of our financial strength, our careful management of risk and our prudent approach to capital allocation. Unlike many in our industry, we were able to protect our 2019 dividend and increase our capital investment to ensure continued growth.
"Our oil hedging strategy and gas revenues continue to protect the business from price volatility, we are achieving substantial cost reductions from our suppliers and are managing our own costs even more carefully in this challenging period. Thanks to the excellent relationships we have with our Government partners and supply chain, our NPDC receivables have fallen and we are managing our payments equitably. The cash position is also robust because our careful management of debt has ensured that the majority of obligations mature in 2022 and 2023. We are operating within our covenants on all our lines of debt."