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NNPC subsidiary, Seplat seek N59bn loan

By on July 31, 2015

The Nigerian Petroleum Development Company Limited, a subsidiary of the Nigerian National Petroleum Corporation, and Seplat Petroleum Development Company Plc are looking to secure loan facilities up to a limit of $300m (N59bn) to fund joint venture cash calls.

Apart from having 100 per cent ownership of some assets, the NPDC, which is the exploration and production arm of the NNPC, is also in a joint venture with other oil companies, with operatorship in some of the assets and participatory interest in others.

But over the years, funding of its cash-call obligations has been a major challenge. The company recently entered into strategic alliance agreements with Septa Energy and Atlantic Energy for the funding of some of the divested assets assigned to it by the NNPC in 2011.

With the sustained fall in global oil prices, the revenues of oil companies have continued to take a hit, with many slashing their capital expenditure budgets.

Seplat, while announcing its half-year results, said, “The NPDC and Seplat have agreed to jointly source loan facilities, up to a limit of $300m, to fund joint venture cash calls with effect from January 2015.”

Under the agreed structure, once such facilities are in place, the NPDC and Seplat would each contribute an allocation of crude oil production proportionate to their working interest in order to repay such loan facilities, it said.

“Consequently, the company (Seplat) has engaged with potential lenders to implement this arrangement,” it stated.

Seplat, which saw its half-year revenue slumped by 36 per cent to $247.58m and pretax profit down by 73.5 per cent to $41.26m, said it had continued to fund the NPDC/Seplat JV despite being owed substantial sums in unpaid cash-calls from the NPDC.

“The outstanding net NPDC receivable as of June 30 was $504m. On July 14, the company entered into a signed agreement with the NPDC on terms for the payment of arrears due to Seplat and for the future structure of joint venture funding to mitigate the risk of the receivable.

Pursuant to the agreement, the outstanding sums owed to Seplat in relations to joint venture expenditures up to December 31, 2014 would be settled by offsetting gas revenues attributable to the NPDC’s 55 per cent share of contracted gas sales, Seplat said.

It explained that the headline outstanding NPDC receivable at the period end was $561.3m (N111.8bn), consisting of both current period performances and outstanding payments brought forward from prior period performances.

Seplat said, “A total of $242m (N48.2bn) has been approved as cash calls for 2015 while a total of $320m (N63.7bn) is still undergoing various approval levels within the NPDC. Receipts from the NPDC during the period amounted to $68.4m and payments amounted to $166.6m. Having agreed with the NPDC to offset the NPDC’s gas revenues against the receivable balance in respect of sums owed to Seplat in relations to the period prior to December 31, 2014, the group has withheld gas revenues of $22.7m in the first six months that are attributable to the NPDC’s 55 per cent interest.

“An additional sum of $34.5m payable to the NPDC in respect of crude handling charges for use of the TFS has also been withheld by the group to be offset against sums owed. Consequently, the adjusted net receivable as of June 30, 2015 stood at $504.2m.”

 

[Punch]