Seplat Energy PLC 2022 Audited Financial Statement
Seplat Energy PLC 2022 Audited Financial Statement
Seplat Energy PLC 2022 Audited Financial Statement
Reliable energy,
limitless potential
Special Dividend
▪ Board recommends special dividend of US5.0 cents per share in addition to final dividend of US2.5 cents per share
Operational highlights
▪ Working interest production averaged 44 kboepd, impacted by outages of key infrastructure predominantly in Q3
▪ Use of Amukpe-Escravos Pipeline (AEP) enables high uptime in December, exit rate of 53 kboepd
▪ Completed 13 wells including two wells for the ANOH gas processing plant
▪ ANOH Gas Processing Plant 95% mechanically complete, awaiting third-party infrastructure completion
▪ Safety culture maintained, one LTI recorded in October, LTIF for the full year is 0.12
Financial highlights
▪ Revenues of $951.8 million, up 29.8%
▪ Adjusted EBITDA $416.9 million, up 12.1%
▪ Strong full year cash generation of $571.2million against capex of $163.3million and $140.3million transaction deposits
▪ Strong balance sheet with $404.3 million cash at bank, net debt of $365.9 million
▪ Full year production cost of $10.3/boe
▪ 2022 Ubima divestment receipts were $18.6 million out of $55.0 million (additional $0.9million received in Jan 2023)
Corporate updates
▪ Continue to pursue approvals for acquisition of entire share capital of MPNU
▪ Finalised New Energy investment plan, identified near term opportunities for consideration and FID late 2023
▪ Commenced implementation of roadmap to achieving net zero by 2050
▪ Provisional applications for voluntary conversion of operated Oil Mining Leases under Petroleum Industry Act
▪ Work on-going to spin out Midstream Gas business in line with PIA provisions
▪ First Climate Risk and Resilience Report to be published at end of March 2023 under TCFD guidelines
▪ Carbon intensity of production figure published: 23.9Kg/boe
Signed:
Emeka Onwuka
Chief Financial Officer
Important notice
The information contained within this announcement is unaudited and deemed by the Company to constitute inside information as stipulated under
Market Abuse Regulations. Upon the publication of this announcement via Regulatory Information Services, this inside information is now considered to
be in the public domain.
Certain statements included in these results contain forward-looking information concerning Seplat Energy’s strategy, operations, financial performance
or condition, outlook, growth opportunities or circumstances in the countries, sectors, or markets in which Seplat Energy operates. By their nature,
forward-looking statements involve uncertainty because they depend on future circumstances and relate to events of which not all are within Seplat
Energy’s control or can be predicted by Seplat Energy. Although Seplat Energy believes that the expectations and opinions reflected in such forward-
looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. Actual results and
market conditions could differ materially from those set out in the forward-looking statements. No part of these results constitutes, or shall be taken to
constitute, an invitation or inducement to invest in Seplat Energy or any other entity and must not be relied upon in any way in connection with any
investment decision. Seplat Energy undertakes no obligation to update any forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
The presentation can be accessed remotely via a live webcast link and pre-registering details are below. After the meeting,
the webcast recording will be made available and access details of this recording are also set out below.
A copy of the presentation will be made available on the day of results on the Company’s website at
https://seplatenergy.com/ .
The Company requests that participants dial in 10 minutes ahead of the call. When dialling in, please follow the instructions
that will be emailed to you following your registration.
Enquiries:
Seplat Energy Plc
Emeka Onwuka, Chief Financial Officer +234 1 277 0400
Eleanor Adaralegbe, Vice President, Finance
Carl Franklin, Head of Investor Relations [email protected]
Ayeesha Aliyu, Investor Relations [email protected]
Chioma Nwachuku, Director External Affairs & Sustainability
FTI Consulting
+44 203 727 1000
Ben Brewerton / Christopher Laing
[email protected]
Seplat Energy PLC (Seplat) is Nigeria’s leading indigenous energy company. Listed on the Nigerian Exchange Limited
(NGX: SEPLAT) and the Main Market of the London Stock Exchange (LSE: SEPL), we are pursuing a Nigeria-focused
growth strategy in oil and gas, as well as developing a Power & New Energy business to lead Nigeria’s energy transition.
Seplat’s energy portfolio consists of seven oil and gas blocks in the prolific Niger Delta region of Nigeria, which we operate
with partners including the Nigerian Government and other oil producers. We also have a revenue interest in OML 55. We
operate a 465MMscfd gas processing plant at Oben, in OML4, and are building the 300MMscfd ANOH Gas Processing
Plant in OML53 and a new 85MMscfd gas processing plant at Sapele in OML41, to augment our position as a leading
supplier of gas to the domestic power generation market.
For further information please refer to our website, http://seplatenergy.com/
The 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).
2022 2021
Liquids Gas Total Liquids Gas Total
Seplat % bopd MMscfd boepd bopd MMscfd boepd
OMLs 4, 38 & 41 45% 15,422 112.3 34,791 18,243 107.9 36,844
OPL 283 40% 1,067 - 1,067 1,012 - 1,012
OML 53 40% 1,689 - 1,689 3,164 - 3,164
OML 40 45% 6,557 - 6,557 5,923 - 5,923
Ubima - - - 749 - 749
Total 24,735 112.3 44,104 33,714 107.9 47,693
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.
Gas conversion factor of 5.8 boe per scf.
Following the decision to exit from the Ubima asset in April 2022, volumes from the marginal field have not been reported in 2022
Volumes stated are subject to reconciliation and will differ from sales volumes within the period.
OMLs 4, 17.7 107.4 36.2 17.1 127.9 39.2 9.5 103.1 27.2 17.5 111.0 37.5
45%
38 & 41
OML 40 45% 7.4 - 7.4 10.1 10.1 1.6 - 1.6 7.3 7.4
OML 53 40% 2.7 - 2.7 1.6 1.6 1.1 - 1.1 1.3 1.4
OPL 283 40% 1.3 - 1.3 1.5 1.5 0.3 - 0.3 1.1 1.1
Total 29.1 107.4 47.6 30.3 127.9 52.4 12.5 103.1 30.3 27.2 111.0 46.4
rd MMbbls
3 party 0.7 0.5 2.2 1.3
deferment
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, & 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.
Drilling activities
The drilling programme for 2022 spudded thirteen wells and successfully delivered eleven wells below budgeted costs. An
additional two wells (ANOH-03 & 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 & 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 approximately 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.
Sustainability initiatives
First TCFD Report
Alongside our 2022 Annual Report we will publish a separate Sustainability Report and our 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 is tied to climate-related and other sustainability KPIs, which are
expressly linked to executive pay. ESG accounts for 15% of KPIs in 2022, and safety 10%.
HSE performance
Safe and responsible operations are critical to the delivery of Seplat Energy's strategy. 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.
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.
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.
Despite an increase in the number of Tier 2 incidents from three to five (>0.75bbl or equivalent to 1kg) because of sabotage
to facilitate theft from the pipelines, the volume of operational oil spills decreased by 50% in 2022, and all spills were
remediated with limited environmental impact. 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 MMtonnes CO2 equivalent, respectively.
The Scope 1 and 2 emissions recorded for 2022 were 0.7 MMtonnes 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 (Oil & Gas
Climate Initiative).
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 & 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.
Gross profit
Gross profit increased by 63.0% to $464.7 million (2021: $285.2 million) and benefitted from higher realised oil prices.
Non-production costs consisted primarily of $180.8 million in royalties, which was higher compared to $129.8 million in
2021 because of higher oil prices, and DD&A of $128.7 million, which was lower compared to $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 $166.1 million in 2022, 3.1% lower than the $172.1 million incurred in 2021. However, on a cost-per-barrel equivalent
basis, production opex was $10.3/boe, 4.4% higher than the $9.9/boe incurred in 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 $274.7 million, an increase of 9.6%, compared to $250.7 million in 2021.
The Group recognised a financial asset charge of $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 $13.1 million loss on disposal for the
sale of the Ubima field. In addition, there was an over-lift charge of $27.2 million, representing 263 kbbl. and a $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 $137.4 million were 71.5% higher than the 2021 costs of $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 USD. 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 $416.9 million, equates
to a margin of 43.8% for the period (2021: $371.8 million; 50.7%).
Taxation
The income tax expense of $99.7 million includes a current tax charge (cash tax) of $67.7 million and a deferred tax charge
of $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.
Liquidity
The balance sheet remains healthy with a solid liquidity position.
Seplat Energy ended the year with gross debt of $770.2 million (with maturities in 2026 and 2027) and cash at bank of
$404.3 million, leaving net debt at $365.9 million. The restricted cash balance of $23.9 million includes $8.0 million and
$12.5 million set aside in the stamping reserve and debt service reserve accounts for the revolving credit facility; in addition
to $0.8 million and $1 million for rent deposit and unclaimed dividend, respectively. 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%).
Hedging
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 program consists of dated Brent put options
of 3.0 MMbbls at an average premium of $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.
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.
Principal activity
The Company is principally engaged in oil and gas exploration and production.
Operating results
₦ million $’000
2022 2021 2022 2021
Revenue 403,913 293,631 951,795 733,188
Dividend
During the year, the Directors recommended and paid to members quarterly interim dividends of US2.5cents 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 US5.0cents per share. The
dividends are subject to approval of shareholders, at the AGM which will be held on 10 May 2023 in Lagos, Nigeria.
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
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.
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. 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 re-appointment/retirement by rotation.
The Directors who are eligible for re-appointment this year are Madame Nathalie Delapalme and Mr. Bello Rabiu.
The Board of Seplat Energy PLC is pleased to announce that Mr. Basil Omiyi, CON, was appointed the Company's new
Independent Non-Executive Chairman, effective 18th 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 Nominations & Governance Committees.
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 appointment
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 he retirement in 2009. He 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. Mr. Omiyi 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. He
studied 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. 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.
With his appointment as the new Board Chairman, Dr. Charles Okeahalam was appointed the Senior Independent Non-
Executive Director effective 18th May 2022. Dr. Charles 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 Nominations & Governance committees. Dr. Okeahalam 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. Charles 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. He brings extensive corporate finance, banking and capital markets expertise
and experience to the Board.
The Board of Seplat Energy is also pleased to welcome Mrs. Bashirat Odunewu (Independent Non-Executive Director),
Mr. Ernest Ebi (Non-Executive Director) and Mr. Kazeem Raimi (Non-Executive Director) whose appointments were
effective on 18 May 2022. These Directors bring vast knowledge in important areas such as the energy sector, finance and
commercials. Seplat Energy looks forward to the immense contribution they will make towards its continuing global
success.
Mrs. Odunewu is a 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
Mr. Kazeem Raimi joined as a Non-Executive Director and is a nominee of Platform Petroleum Limited replacing Mr. Austin
Avuru who stepped down from the Board of Seplat Energy on March 01, 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 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.
Mr. Ernest Ebi joined as a Non-Executive Director, and is a nominee of Shebah Petroleum Development Company Limited
(BVI) replacing Dr. A.B.C Orjiako who will step down from the Board of Seplat Energy on 18th May 2022 after the Annual
General Meeting. Mr. Ebi is a seasoned professional whose vast experience in the banking and finance industry spans
over four (4) 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 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 Boards 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. 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 and Kennedy Schools, Oxford Said Business School and Columba 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.
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 1st July 2022.
Mr. Samson Ezugworie comes with over 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 is a Fellow and has been an active member of Nigerian Association of Petroleum Explorationists
(NAPE) for over 25 years and has 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. He is keen on
inspiring people and strong advocate for continuous improvement, work simplification to drive organisational efficiency and
productivity whilst leveraging digitalisation and technology.
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 9 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. Ms. Kalyan has a degree in
B. Com Law 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.
The Co-founder and former Chief Executive Officer of the Board of Seplat Energy Plc., Mr. Austin Avuru, resigned as a
Non-Executive Director ("NED") from the Board of Seplat Energy on 1st March 2022.
Mr. Effiong Okon retired from the Board in July 2022. Mr. Okon was appointed as the Operations Director and Executive
Director in February 2018 and has since then invested his time, experience and skills in the growth of the Company. Mr.
Okon 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 time on the Board of Sepat Energy, the Directors diligently served the Board and made significant contributions
towards the growth of the Company during their tenure.
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 the
Nigerian and UK corporate governance regulations as well as international best practice. The Board is aware of 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 and ensures that the Company complies with them. 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.
Board of Directors
No. of meetings in No. of times in
S/N Name the year attendance
Remuneration Committee
S/N Name No. of meetings in the year No. of times in attendance
Free Float
With a free float of 29.5% 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.
Shareholding Analysis
The distribution of shareholders at 31 December 2022 is as stated below:
Number of % of Number of % of
Share range shareholders shareholders shares held shareholding
Mar-13 100,000,000 200,000,000 100,000,000 200,000,000 stock split from N1.00 to 50k
Seplat Energy, in partnership with C4C (Conversations for Change), granted 22 Fellows ₦16.5 million in seed money
following their graduation from the entrepreneurship programme. The C4C Global Entrepreneurship Fellowship
Programme is a 12-month programme that trains and supports batches of young entrepreneurs and helps them significantly
increase their chances of starting and maintaining profitable businesses. Investing in the next generation of leaders is a
long-term effort to create a dynamic platform for continuing information provision, dialogue, and discussions.
Seplat Teachers Empowerment Programme (STEP)
To promote creative thinking and higher student engagement, Seplat has introduced the STEAM learning model to
secondary schools in Delta and Edo States, where Science, Technology, Engineering, Arts, and Mathematics (STEAM)
are equal contributors to the process of learning. The programme is three months online that provides leadership and self-
improvement training, training on STEAM modules and their application to teaching. In 2022, Seplat trained over 271
teachers following an initial testing phase to qualify for the activity.
NEPL/Seplat JV Undergraduate Scholarship Programme
The NEPL/Seplat joint venture recognises the importance of education as the backbone of Nigeria’s future. Therefore, it
aims to promote educational development by providing annual grants to undergraduate students. The programme is aimed
at students from disadvantaged backgrounds who are enrolled in any federal or state university. Prospects must maintain
a steady record of good performance and can qualify for our examination round. This year the JV provided 120 such grants
to help students realise their educational aspirations.
PEARL Quiz (Promoting Exceptional and Respectable Leaders)
The Seplat PEARL Quiz was created to buoy the spirit of academic competition in pursuit of excellence. The programme
provides tangible benefits to every participating candidate. This year’s winners, Green Park Academy from Edo, collected
a cash prize of ₦10Million, while the second and third-place teams took home ₦5Million and ₦3Million, respectively. In
addition, each student from the top 3 teams also received ₦100,000, ₦75,000, and ₦50,000 in descending order of
achievement. The impact of this programme has been exceptional, with 781 schools and 3,905 students participating this
year alone.
Eye Can See
Eye Can See is one of our flagship CSR initiatives where community members can receive free eye surgery, treatment,
and even reading glasses funded by Seplat. The programme has gone from strength to strength, and this year, we provided
eye consultation services to 10,185 individuals, funded 461 surgeries and 6,519 reading glasses.
Donations
The following donations were made by the Group during the year (2021: N167,269,305.33, $432,861.12)
Beneficiary NG₦ $
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 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.
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 re-appointment of
PwC as the Company’s auditor and for authorisation to the Board of Directors to fix the auditors’ remuneration.
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
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent judgments 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 cashflows 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
twelve months from the date of this statement.
Signed on behalf of the Directors by:
28 February 2023
• 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 Auditors 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’s and the Audit Committee the following information:
o There are no significant deficiencies in the design or operation of the Company’s internal control which
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
o There is no fraud involving management or other employ needs which could have any significant role
in the Company’s internal control
• 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
Reliable energy,
limitless potential
Attributable to:
Equity holders of the parent 26,483 56,786 62,407 141,784
Non-controlling interests 17,950 (9,855) 42,299 (24,608)
44,433 46,931 104,706 117,176
Attributable to:
Equity holders of the parent 88,595 110,869 64,148 142,783
Non-controlling interests 17,950 (9,855) 42,299 (24,608)
106,545 101,014 106,447 118,175
The above year end consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
Current assets
Inventories 22 24,774 30,878 55,406 74,957
Trade and other receivables 23 174,127 105,274 389,431 255,557
Prepayments 20 556 711 1,242 1,726
Derivative financial instruments 25 481 - 1,075 -
Contract assets 24 3,313 1,679 7,408 4,076
Restricted cash 26.2 10,706 6,603 23,944 16,029
Cash and cash equivalents 26 180,786 133,667 404,336 324,490
Total current assets 394,743 278,812 882,842 676,835
Total assets 1,581,612 1,303,089 3,537,257 3,163,369
Equity and Liabilities
Equity
Issued share capital 27 297 296 1,864 1,862
Share premium 27 91,317 90,383 522,227 520,138
Share based payment reserve 27 5,936 4,914 24,893 22,190
Treasury shares 27 (2,025) (2,025) (4,915) (4,915)
Capital contribution 28 5,932 5,932 40,000 40,000
Retained earnings 241,386 239,429 1,189,697 1,185,082
Foreign currency translation reserve 29 447,014 385,348 2,622 1,933
Non-controlling interest 21 (2,963) (20,913) (16,505) (58,804)
Total shareholders’ equity 786,894 703,364 1,759,883 1,707,486
Non-current liabilities
Interest bearing loans and borrowings 30 311,149 290,803 695,881 705,953
Lease Liabilities 31 - 198 - 481
Provision for decommissioning obligation 32 86,670 63,709 193,836 154,659
Deferred tax liabilities 14 126,664 42,732 283,282 103,736
Defined benefit plan 33 2,878 4,181 6,437 10,149
Total non-current liabilities 527,361 401,623 1,179,436 974,978
Current liabilities
Interest bearing loans and borrowings 30 33,232 24,988 74,322 60,661
Lease Liabilities 31 1,800 1,273 4,025 3,090
Derivative financial instruments 25 1,435 1,543 3,210 3,745
Trade and other payables 34 205,622 151,204 459,869 367,058
Current tax liabilities 14 25,268 19,094 56,512 46,351
Total current liabilities 267,357 198,102 597,938 480,905
Total liabilities 794,718 599,725 1,777,374 1,455,883
Total shareholders’ equity and liabilities 1,581,612 1,303,089 3,537,257 3,163,369
Notes 1 to 41 on pages 44 to 136 are an integral part of these financial statements.
Share Foreign
Issued based currency Non-
share Share payment Treasury Capital Retained translation controlling Total
capital premium reserve shares contribution Earnings reserve interest Equity
₦ million ₦ million ₦ million ₦ million ₦ million ₦ million ₦ million ₦ million ₦ million
At 1 January 2021 293 86,917 7,174 - 5,932 211,790 331,289 (11,058) 632,337
Profit/(loss) for the year - - - - - 56,786 - (9,855) 46,931
Other comprehensive
income - - - - - 24 54,059 - 54,083
Total comprehensive
income/(loss) for the
year - - - - - 56,810 54,059 (9,855) 101,014
At 1 January 2022 296 90,383 4,914 (2,025) 5,932 239,429 385,348 (20,913) 703,364
Profit for the year - - - - - 26,483 - 17,950 44,433
Other comprehensive
income - - - - - 446 61,666 - 62,112
Total comprehensive
income for the year - - - - - 26,929 61,666 17,950 106,545
At 1 January 2022 1,862 520,138 22,190 (4,915) 40,000 1,185,082 1,933 (58,804) 1,707,486
Profit for the year - - - - - 62,407 - 42,299 104,706
Other comprehensive
- - - - - 1,052 689 - 1,741
income
Total comprehensive
- - - - - 63,459 689 42,299 106,447
income for the year
Transactions with owners in their capacity as owners:
Unclaimed dividend
- - - - - - - - -
forfeited
Dividend paid - - - - - (58,844) - - (58,844)
Share based payments
- - 8,188 - - - - - 8,188
(Note 27)
Vested shares (Note
2 2,089 (5,485) - - - - - (3,394)
27)
Shares re-purchased
- - - - - - - - -
(Note 27)
Total 2 2,089 2,703 - - (58,844) - - (54,050)
At 31 December 2022 1,864 522,227 24,893 (4,915) 40,000 1,189,697 2,622 (16,505) 1,759,883
Country of
Date of incorporation and Percentage Nature of
Subsidiary incorporation place of business holding Principal activities holding
Seplat West Limited 16 January 2018 Nigeria 99.9% Oil & gas exploration and production Direct
Eland Oil & Gas Limited 28 August 2009 United Kingdom 100% Holding company Direct
Eland Oil & Gas (Nigeria) Oil and Gas Exploration and
11 August 2010 Nigeria 100% Indirect
Limited Production
Brineland Petroleum
18 February 2013 Nigeria 49% Dormant Indirect
Limited
Destination Natural
- Dubai 70% Dormant Indirect
Resources Limited
▪ 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.
▪ 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%.
▪ 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 3-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 US$650million bond due in April 2026 is
implemented.
The financial statements comprise the statement of profit or loss and other comprehensive income, the statement of
financial position, the statement of changes in equity, the statement of cash flows and the notes to the financial statements.
The financial statements have been prepared under the going concern and historical cost convention, except for financial
instruments measured at fair value on initial recognition, derivative financial instruments, and defined benefit plans – plan
assets measured at fair value. The financial statements are presented in Nigerian Naira and United States Dollars, and all
values are rounded to the nearest million (₦’million) and thousand ($’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
twelve 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.
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.
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.
c) Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
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.
e) IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
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.
▪ 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
i. Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control.
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
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.
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.
v. Associates
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.
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.
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.
x. Goodwill
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.
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.
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.
i. Pre-licensing costs
Pre-license costs are expensed in the period in which they are incurred.
License 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 under way 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 license has been relinquished or has expired, the carrying value of the license is
written off through profit or loss. The exploration license 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.
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.
Exploration and/or evaluation expenditures which fail to meet at least one of the conditions outlined above are written off.
In the event that an 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.
v. Development expenditures
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.
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
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 over-lifter 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.
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.
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.
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.
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.
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:
Gas plant 4%
Buildings 4%
Land -
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.
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.
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.
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.
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.
3.16 Inventories
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.
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.
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.
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.
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.
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.
e) Derecognition
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.
f) Modification
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.
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.
h) Derivatives
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
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.
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.
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.
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.
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.
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.
▪ 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;
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.
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 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.
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.
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.
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.
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.
4.1 Judgements
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:
i. OMLs 4, 38 and 41
OMLs 4, 38, 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.
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.
Performance obligations
The judgments 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.
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.
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.
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.
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).
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.
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.
Market risk –
Sensitivity analysis Oil price hedges
commodity prices Future sales transactions
Cash and bank balances, trade receivables Aging analysis Diversification of bank
Credit risk
and derivative financial instruments. Credit ratings deposits.
Availability of committed
Rolling cash flow
Liquidity risk Borrowings and other liabilities credit lines and borrowing
forecasts
facilities
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 3 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 3 million barrels will be
settled on a deferred basis. An unrealized fair value gain of ₦64 million, $150 thousand have been recognized 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:
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:
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:
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:
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.
The following table demonstrates the sensitivity of the Group’s profit before tax to changes in SOFR rate, with all other
variables held constant.
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 154,907 114,773 346,447 278,622
Trade and other receivables 692 580 1,547 1,408
Contract assets 3,312 1,669 7,408 4,050
158,911 117,022 355,402 284,080
Financial liabilities
Trade and other payables (182,961) (102,823) (409,189) (249,612)
Net exposure to foreign exchange risk (24,050) 14,199 (53,787) 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 1,342 900 3,001 2,186
Trade and other receivables 4,157 35,863 9,297 87,062
5,499 36,763 12,298 89,248
Financial liabilities
Trade and other payables - - - -
Net exposure to foreign exchange risk 5,499 36,763 12,298 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:
a) Risk management
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 &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.
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.
Nigerian National
Petroleum Corporation Nigerian National
Exploration Limited Petroleum Corporation Other Short term fixed
(NEPL) receivables (NNPC) receivables receivables deposits
Probability of The 12-month sovereign The 12-month The PD for stage 3 is The PD for base
Default (PD) cumulative PD for base sovereign 100%. case, downturn and
case, downturn and cumulative PD for base upturn is 4.11%,
upturn respectively is 4.1 case, downturn and 4.32% and 3.90%
1%, 4.32%, and upturn respectively is 4. respectively for
3.90%, for stage 1 and 11% ,4.32%, and stage 1 and stage
stage 2. The PD for 3.90%, for stage 1 and 2. The PD for stage
stage 3 is 100%. stage 2. The PD for 3 is 100%.
stage 3 is 100%.
Exposure at The EAD is the The EAD is the The EAD is the The EAD is the
default (EAD) maximum exposure of maximum exposure of maximum exposure maximum exposure
the receivable to credit the receivable to credit of the receivable to of the short-term
risk. risk. credit risk. fixed deposits to
credit risk.
Macroeconomi The historical The historical The historical gross The historical gross
c indicators inflation and Brent oil inflation and Brent oil domestic product domestic product
price were used. price were used. (GDP) growth rate in (GDP) growth rate
Nigeria and crude oil in Nigeria and crude
price were used. oil price were used.
Probability 20%, 50%, and 30%, 20%, 50%, and 30%, 20%, 50%, and 30%, 20%, 50%, and
weightings was used as the weights was used as the of historical GDP 30%, of historical
for the base, upturn and weights for the base, growth rate GDP growth rate
downturn ECL modelling upturn and downturn observations fall observations fall
scenarios respectively. ECL modelling within acceptable within acceptable
scenarios respectively. bounds, periods of bounds, periods of
boom and periods of boom and periods
downturn of downturn
respectively. 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
macro-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.
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.
There was no write-off during the year (2021: Nil). (See details in Note 23.2).
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.
iii. Trade receivables (Gerugu Power, Sapele Power, Nigerian Gas Marketing Company, Pan ocean,
Oghareki and Summit)
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:
Lifetime ECL (Note 23.1) (14) (128) (23) (143) (143) (9,980) (10,430)
Allowance for impairment recognised during the year (Note 26) (110) (101) (246) (246)
Net cash and cash bank balances 191,492 140,270 428,280 340,519
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 and 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 and Poor’s
unmodified ratings) and classified in Stage 2 and Stage 3.
The following tables explain the changes in the loss allowance between the beginning and end of the annual period due to
these factors:
Other receivables
Stage 1 Stage 2 Stage 3
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:
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:
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.
31 December 2022
Non – derivatives
The Mauritius Commercial Bank Ltd 8.00% + SOFR 5,446 7,523 6,777 1,823 21,569
The Stanbic IBTC Bank Plc 8.00% + SOFR 5,560 7,679 6,918 1,860 22,017
The Standard Bank of South Africa Limited 8.00% + SOFR 3,177 4,389 3,953 1,063 12,582
First City Monument Bank Limited 8.00% + SOFR 1,418 1,959 1,765 475 5,617
Shell Western Supply and Trading Limited 10.5% + SOFR 1,206 1,134 1,058 4,082 7,481
31 December 2021
Non – derivatives
Citibank, N.A., London Branch 8.00% + USD LIBOR 1,298 4,390 6,456 7,650 19,794
Nedbank Limited London 8.00% + USD LIBOR 1,324 4,481 6,590 7,810 20,205
Stanbic IBTC Bank Plc 8.00% + USD LIBOR 757 2,561 3,766 4,463 11,547
RMB International (Mauritius) Limited 10.5% + USD LIBOR 486 924 876 4,422 6,708
153,154 66 28 - 153,248
31 December 2022
Non – derivatives
The Mauritius Commercial Bank Ltd 8.00% + SOFR 12,181 16,825 15,156 4,076 48,238
The Stanbic IBTC Bank Plc 8.00% + SOFR 12,434 17,176 15,472 4,161 49,243
The Standard Bank of South Africa Limited 8.00% + SOFR 7,105 9,815 8,841 2,378 28,139
First City Monument Bank Limited 8.00% + SOFR 3,172 4,382 3,947 1,062 12,563
Shell Western Supply and Trading Limited 10.5% + SOFR 2,695 2,536 2,368 9,130 16,729
31 December 2021
Non – derivatives
Senior notes
7.75% 50,375 50,375 50,375 725,563 876,688
Citibank, N.A., London Branch 8.00% + USD LIBOR 3,150 10,656 15,672 18,572 48,050
Nedbank Limited London 8.00% + USD LIBOR 3,215 10,878 15,998 18,959 49,050
Stanbic IBTC Bank Plc 8.00% + USD LIBOR 1,837 6,216 9,142 10,834 28,029
The Standard Bank of South Africa Limited 8.00% + USD LIBOR 820 2,775 4,081 4,836 12,512
RMB International (Mauritius) Limited 10.5% + USD LIBOR 1,179 2,243 2,126 10,734 16,282
*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.
Financial liabilities:
Derivative financial instruments - 1,543 - - 3,735 -
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.
Financial liabilities:
Interest bearing loans and
- 331,384 - - 741,137 -
borrowings
Financial liabilities:
Interest bearing loans and
- 307,447 - - 746,358 -
borrowings
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.
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.
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.
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.
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.
Geographical markets
The Bahamas 69,128 - 69,128 162,897 - 162,897
Nigeria 45,067 47,721 92,788 106,197 112,451 218,648
Italy 791 - 791 1,863 - 1,863
Switzerland 229,119 - 229,119 539,903 - 539,903
Barbados 12,087 - 12,087 28,484 - 28,484
Geographical markets
The Bahamas 68,425 - 68,425 170,855 - 134,307
Nigeria 5,499 45,980 51,479 13,730 114,811 128,541
Italy 7,798 - 7,798 19,471 - 19,471
Switzerland 157,128 - 157,128 392,345 - 392,345
Barbados 8,801 - 8,801 21,976 - 21,976
Revenue from contract 247,651 45,980 293,631 618,377 114,811 733,188
with customers
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
2022 2021 2022 2021
₦ million ₦’million $’000 $’000
(Overlift)/Underlift (11,547) 5,587 (27,209) 13,950
Loss on foreign exchange (454) (1,755) (1,068) (4,381)
Loss on disposal of oil and gas asset – Note 16.3.2 (5,548) - (13,073) -
Loss on disposal of property, plant and equipment –
(Note 16.3.1) (8) - (18) -
Provision no longer required - 2,147 - 5,362
Tariffs 1,638 2,077 3,861 5,187
Others 617 - 1,453 -
(15,302) 8,056 (36,054) 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.
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:
2022 2021 2022 2021
₦ million ₦ million $’000 $’000
Post-employment benefits:
Defined contribution expenses 1,329 943 3,132 2,354
Defined benefit expenses (Note 33.2) 700 439 1,650 1,095
Seplat Energy Plc Project Apollo (Reporting accountant) PwC Nigeria 394,555 2022
10.3 Below are details of assurance service providers to the Group during the year:
During the period, the Group recognized no impairment loss on non-financial assets (2021: ₦ 6.03 million, ($15.05 million).
Fair value loss on derivatives represents changes in the fair value of hedging receivables charged to profit or loss.
Finance cost
Interest on bank loans (Note 30) (27,761) (29,765) (65,418) (74,322)
Interest on lease liabilities (Note 31) (161) (212) (380) (530)
Unwinding of discount on provision for decommissioning
(994) (539) (2,343) (1,345)
(Note 32)
(28,916) (30,516) (68,141) (76,197)
Finance (cost) – net (28,425) (30,390) (66,984) (75,883)
Finance income represents interest on short-term fixed deposits.
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).
14. Taxation
The major components of income tax expense for the years ended 31 December 2022 and 2021 are:
Deferred tax:
Deferred tax expense in profit or loss (Note 14.3) 13,570 9,036 31,977 22,563
Total tax expense in statement of profit or loss 42,297 24,097 99,670 60,169
Deferred tax recognised in other comprehensive income
(Note 14.3) 379 133 892 333
Total tax charge for the period 42,676 24,230 100,562 60,502
Effective tax rate 49% 34% 49% 34%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Income not subject to tax (25,349) (14,649) (59,733) (36,579)
Expenses not deductible for tax purposes (76,309) 100,349 (179,817) 250,570
Impact of unutilised tax losses 65,989 (124,721) 155,496 (311,416)
Education tax 4,022 2,603 9,478 6,500
NASENI levy 220 139 518 346
Police levy 3 2 8 5
Total tax charge in statement of profit or loss 42,297 24,097 99,670 60,169
(Charged)/ Charged to
Balance as credited to other
at 31 Dec profit or comprehensive Exchange Balance as at
2021 loss income difference 31 Dec 2022
₦ million ₦ million ₦ million ₦ million ₦ million
Deferred tax assets (Note 14.4) 128,539 62,624 (379) 14,323 205,107
Deferred tax liabilities (Note 14.5) (42,732) (76,194) - (7,738) (126,664)
85,807 (13,570) (379) 6,585 78,443
Charged to
other Balance as
Balance as at 31 (Charged)/credited comprehensive at 31 Dec
Dec 2021 to profit or loss income 2022
$’000 $’000 $’000 $’000
Deferred tax assets (Note 14.4) 312,041 147,569 (892) 458,718
In line with IAS 12, the Group elected to offset the deferred tax assets against the deferred tax liabilities arising from similar
transactions.
Charged to Balance
Balance at (Charged)/ other Exchange at 31
1 January credited to comprehensive difference December
2022 profit or loss income 2022
₦ million ₦ million ₦ million N million ₦ million
Tax losses 12,686 (3,634) - 889 9,941
Other cumulative timing differences:
Accelerated capital deduction 50,421 39,281 - 6,416 96,118
Other temporary differences:
Provision for abandonment 8,216 3,525 - 891 12,632
Provision for gratuity 7,629 2,730 - 799 11,158
Provision for defined benefit 3,554 (703) (379) 245 2,717
Unrealised foreign exchange loss 7,056 3,759 - 804 11,619
Overlift 8,432 13,493 - 1,445 23,370
Impairment provision on trade and other
30,547 4,017 - 2,825 37,389
receivables
Leases - 155 - 8 163
Charged
(Charged)/ to other Balance at
Balance at credited to profit comprehensive 31 December
1 January 2022 or loss income 2022
$’000 $’000 $’000 $’000
Tax losses 30,797 (8,563) - 22,234
Other cumulative timing differences:
Accelerated capital deduction 122,401 92,564 - 214,965
Other temporary differences:
Provision for abandonment 19,944 8,307 - 28,251
Provision for gratuity 18,519 6,434 - 24,953
Provision for defined benefit 8,627 (1,657) (892) 6,078
Unrealised foreign exchange loss 17,128 8,857 - 25,985
Overlift 20,470 31,796 - 52,266
Impairment provision on trade and other
receivables 74,155 9,466 - 83,621
Leases - 365 - 365
312,041 147,569 (892) 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.
Charged Balance at
Balance as at /(credited) Exchange 31 December
1 January 2022 to profit or loss difference 2022
₦ million ₦ million ₦ million ₦ million
Other cumulative timing differences:
Property, plant & equipment (35,570) (71,365) (6,866) (113,801)
Leases (1,408) 1,305 (50) (154)
Underlift (5,753) 1,548 (410) (4,615)
Unrealised foreign exchange loss - (7,682) (412) (8,094)
(42,732) (76,194) (7,738) (126,664)
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.
Adjusted for:
Depletion, depreciation and amortization 16.4 56,345 58,506 132,776 146,086
Depreciation of right-of-use asset 18 2,297 1,870 5,413 4,670
Impairment losses on financial assets 11.1 2,730 9,035 6,432 22,561
Impairment losses on non-financial assets 11.2 - 6,216 - 15,521
Reversal of impairment loss on non-financial assets 11.2 - (29,900) - (74,659)
Loss on disposal of oil and gas asset 16.3 5,548 - 13,073 -
Loss on disposal of other property,
8 89 18 222
plant & equipment 16.3
Interest income 13 (491) (126) (1,157) (314)
Interest expense on bank loans 30 27,761 29,765 65,418 74,322
Interest on lease liabilities 31 161 212 380 530
Unwinding of discount on provision for 32
994 539 2,343 1,345
decommissioning
Unrealised fair value (gain)/loss on derivatives
(63) 839 (150) 2,096
financial instrument 12
Realised fair value loss on derivatives 12 4,360 3,608 10,275 9,010
Unrealised foreign exchange (gain)/loss 9 454 1,755 1,068 4,381
Share based payment expenses 27.4 3,474 1,209 8,188 3,020
Defined benefit expenses 700 439 1,650 1,095
Share of loss/(profit) in joint venture 21.3 1,434 (1,017) 3,380 (2,540)
Depreciation
At 1 January 2022 341,437 - - 341,437
Charge for the year 50,421 - - 50,421
Impairment loss - - - -
Reclassification 34,136 - - 34,136
Disposals (2,778) - - (2,778)
Exchange differences 33,562 - - 33,562
At 31 December 2022 456,778 - - 456,778
NBV
At 31 December 2022 537,297 177,013 27,029 741,339
Cost
2
Depreciation
At 1 January 2021 261,995 - - 261,995
Charge for the year 55,832 - - 55,832
Exchange difference 23,610 - - 23,610
NBV
At 31 December 2021 514,507 121,337 24,901 660,745
Depreciation
At 1 January 2022 828,872 - - 828,872
Impairment loss - - - -
NBV
Cost
Depreciation
At 1 January 2021 689,460 - - 689,460
Impairment testing
There was no impairment loss recorded for OML 4, 38, 41, OML 53 and OML 56 during the year ended. (2021: nil).
Office
Plant & Motor furniture & IT Leasehold
machinery vehicles equipment improvements Land Building Total
Cost ₦ million ₦ million ₦ million ₦ million ₦ million ₦ million ₦ million
At 1 January 2022 15,531 3,831 9,038 2,355 28 1,603 32,386
Additions 413 634 723 203 - - 1,973
Disposals - (477) (6) - - - (483)
Exchange differences 1,350 336 812 213 2 137 2,850
At 31 December 2022 17,294 4,324 10,567 2,771 30 1,740 36,726
Depreciation
At 1 January 2022 8,293 2,616 8,180 1,912 - 157 21,158
Charge for the year 57 794 617 201 - 66 1,735
Disposals - (462) (4) - - - (466)
Exchange differences 712 242 732 175 - 19 1,880
At 31 December 2022 9,062 3,189 9,524 2,288 - 242 24,307
NBV
At 31 December 2022 8,232 1,135 1,043 483 30 1,498 12,419
Cost
At 1 January 2021 1,950 5,150 8,413 2,142 25 1,478 18,888
Additions 13,045 135 204 32 - - 13,416
Disposals - (1,838) - - - - (1,838)
Exchange differences 536 384 691 181 3 125 1,920
At 31 December 2021 15,531 3,831 9,038 2,355 28 1,603 32,386
Depreciation
At 1 January 2021 1,861 3,414 6,605 1,592 - 86 13,558
Charge for the year 74 694 991 181 - 63 2,003
Impairment loss 6,199 - - - - - 6,199
Disposals - (1,749) - - - - (1,749)
NBV
At 31 December 2021 7,238 1,215 858 443 28 1,446 11,228
Depreciation
At 1 January 2022 20,132 6,351 19,858 4,642 - 382 51,365
Charge for the year 136 1,871 1,453 473 - 159 4,092
Disposal - (1,089) (10) - - - (1,099)
NBV
At 31 December 2022 18,410 2,536 2,331 1,080 68 3,350 27,775
Depreciation
At 1 January 2021 4,899 8,986 17,384 4,190 - 224 35,683
Charge for the year 184 1,732 2,474 452 - 158 5,000
Impairment loss 15,049 - - - - - 15,049
Disposal - (4,367) - - - - (4,367)
At 31 December 2021 20,132 6,351 19,858 4,642 - 382 51,365
NBV
At 31 December 2021 17,572 2,948 2,083 1,075 68 3,509 27,255
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.
Amortisation
At 1 January 2022 6,390 6,390 15,513 15,513
Charge for the year
Reclassification 3,424 3,424 8,068 8,068
Amortisation 4,189 4,189 9,872 9,872
Exchange difference 955 955 - -
At 31 December 2022 14,958 14,958 33,453 33,453
NBV
At 31 December 2022 55,630 55,630 124,415 124,415
Cost
At 1 January 2021 55,751 55,751 146,713 146,713
Exchange difference 4,684 4,684 - -
At 31 December 2021 60,435 60,435 146,713 146,713
NBV
At 31 December 2021 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.
20. Prepayments
2022 2021 2022 2021
Non-current ₦ million ₦ million $’000 $’000
Advances to suppliers 25,703 27,512 57,486 66,788
25,703 27,512 57,486 66,788
Current
Rent 184 84 412 204
Other prepayments 372 627 830 1,522
556 711 1,242 1,726
26,259 28,223 58,728 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).
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.
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.
Percentage of
ownership interest Carrying amount
Country of
incorporation As at As at As at As at As at As at
and place of 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 30 Dec
Name of entity business 2022 2021 2022 2021 2022 2021
ANOH Gas
Processing Nigeria 50 50 99,219 92,795 221,902 225,270
Company Limited
As at As at As at As at
31 Dec 2022 31 Dec 2022 31 Dec 2021 31 Dec 2021
₦’million $’000 ₦’million $’000
Current assets:
Cash and bank balances 4,260 9,528 15,980 38,793
Current liabilities:
Financial liabilities (excluding trade payables) (72,046) (161,128) (37,492) (91,017)
21.3.1.2 Summarised statement of profit or loss and other comprehensive income of ANOH
22. Inventories
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
crystalises. 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.
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.
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.
Fully paid ordinary shares carry one vote per share and the right to dividends. There were no restrictions on the Group’s
share capital.
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.
There were no cancellations to the awards in 2022. The share awards granted to Executive Directors and confirmed
employees are summarised below:
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.
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.
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.
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.
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.
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.
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 $122.5million, 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 utilized under the RBL from $100 million to
$110 million. The amortized 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.
The table below shows the analysis of the principal outstanding showing the lenders of the facility as at the year-end:
Non-
Current Non-Current Total Current Current Total
31 December 2022 Interest ₦ million ₦ million ₦ million $’000 $’000 $’000
Fixed interest rate
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:
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:
₦ million $’000
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 East Onshore Ltd (OML 53) 2028 – 2054 2028 – 2054
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:
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:
The Group recognises a part of the remeasurement losses in other comprehensive income and recharges the other part
to its joint operations partners. Below is the breakdown:
vi. Changes in the present value of the defined benefit obligation are as follows:
2022 2022
Quoted Not quoted Total Quoted Not quoted Total
₦ million ₦ million ₦ million $’000 $’000 $’000
Equity Instrument 97 - 97 217 - 217
Treasury bills and money market 1,519 - 1,519 3,397 - 3,397
Infrastructure Fund 72 - 72 161 - 161
Bonds 356 - 356 796 - 796
Cash at bank - 2,095 2,095 - 4,685 4,685
Payables - (6) (6) - (13) (13)
Receivables - - - - - -
Total plan asset as at 31 December 2,044 2,089 4,133 4,571 4,672 9,243
2021 2021
Quoted Not quoted Total Quoted Not quoted Total
₦ million ₦ million ₦ million $’000 $’000 $’000
Equity Instrument 73 - 73 177 - 177
Treasury bills and Money market 1,164 - 1,164 2,816 - 2,816
Bonds 440 - 440 1,068 - 1,068
Cash at bank - 589 589 - 1,431 1,431
Payables - (5) (5) - (12) (12)
Receivables - - - - 9 9
Total plan asset as at 31 December 1,677 584 2,261 4,061 1,428 5,489
viii. The principal assumptions used in determining defined benefit obligations for the Group’s plans
are shown below:
2022 2021
% %
Discount rate 15 13.5
Average future pay increase 13 12
Average future rate of inflation 13 12
a) Mortality in service
Number of deaths in year out of 10,000 lives
Sample age 2022 2021
25 1 1
30 29 29
35 60 60
40 99 99
45 90 90
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.
The expected maturity analysis of the undiscounted defined benefit plan obligation is as follows:
a) Risk exposure
b) Liquidity risk
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.
c) Inflation risk
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.
d) Life expectancy
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.
e) Asset volatility
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:
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.
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.
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.
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.
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).
The goods and services provided by the related parties are disclosed below.
Amaze Limited: The former Chairman of Seplat 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.
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).
2022 2021
Number Number
Zero – ₦19,896,500 - -
₦19,896,501 – ₦115,705,800 - -
₦115,705,801 – ₦157,947,600 - -
Above ₦157,947,600 3 3
3 3
2022 2021
Number Number
Zero – $65,000 - -
$65,001 – $378,000 - -
$378,001 – $516,000 - -
Above $516,000 3 3
3 3
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:
2022 2021
Number Number
2022 2021
Number Number
$6,500 – $16,000 25 16
2022 2021
Number Number
Senior management 36 31
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.
Applied as follows:
2022 2021 2022 2021
₦ million % ₦ million % $’000 % $’000 %
To employees:
– as salaries and labour related 23,192 12% 17,268 10% 54,654 12% 43,116 10%
expenses
To external providers of capital:
28,916 15% 30,516 17% 68,141 15% 76,197 17%
– as interest
To Government: 15%
28,727 15,061 8% 67,693 15% 37,606 8%
– as Group taxes
Retained for the Group’s future:
– For asset replacement,
56,345 29% 58,506 33% 132,776 29% 146,086 33%
depreciation,
depletion & amortization
Deferred tax (charges)/credit 13,570 7% 9,036 5% 31,977 7% 22,563 5%
Profit for the year 44,433 23% 46,931 27% 104,706 23% 117,176 27%
Valued added 195,183 100% 177,318 100% 459,947 100% 442,744 100%
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.
Represented by:
Non-current assets 1,186,869 1,324,724 1,083,683 717,664 502,512
Current assets 394,743 278,812 227,154 286,569 264,159
Non-current liabilities (527,361) (702,070) (499,349) (258,903) (184,808)
Current liabilities (267,357) (198,102) (179,151) (191,522) (90,391)
Net assets 786,894 703,364 632,337 553,808 491,472
Represented by:
Non-current assets 2,654,415 3,215,899 2,851,803 2,337,670 1,639,843
Current assets 882,842 676,835 597,770 933,440 860,455
Non-current liabilities (1,179,436) (1,704,343) (1,314,076) (843,322) (601,976)
Current liabilities (597,938) (480,905) (471,452) (623,849) (294,437)
Net assets 1,759,883 1,707,486 1,664,045 1,803,939 1,600,885
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.
Capitalised costs:
Unproved properties - 24,901 - 60,450
Proved properties 1,199,570 977,281 2,682,821 2,372,447
Total capitalised costs 1,199,570 1,002,182 2,682,821 2,432,897
Accumulated depreciation (458,231) (341,437) (1,024,828) (828,872)
Net capitalised costs 741,339 660,745 1,657,993 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.
46. Reclassification
Certain comparative figures have been reclassified in line with the current year’s presentation.
Reliable energy,
limitless potential
Restated Restated
31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
Notes ₦ million ₦ million $’000 $’000
Other loss 8 (1,273) (4) (2,998) (10)
General and administrative expenses 9 (18,606) (6,228) (43,853) (15,538)
Impairment reversal/(charge) on financial
10 360 (372) 878 (930)
assets
Operating loss (19,519) (6,604) (45,973) (16,478)
Finance income 11 412 131 971 327
Loss before taxation (19,107) (6,473) (45,002) (16,151)
Income tax expense 14 - - - -
Loss for the year (19,107) (6,473) (45,002) (16,151)
See note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 29 on pages 148 to 185 are an integral part of these financial statements.
See note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 148 to 185 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:
At 1 January 2022 296 90,383 4,914 (2,025) 5,932 220,215 389,017 708,732
See note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 148 to 185 are an integral part of these financial statements.
See note 5.1 for details regarding the restatement as a result of an error.
Notes 1 to 30 on pages 148 to 185 are an integral part of these financial statements.
Net cash (outflows)/inflows from investing activities (61,346) 8,357 (137,679) 20,295
Net (decrease) / increase in cash and cash equivalents (17,761) 9,265 (34,979) 20,148
Cash and cash equivalents at beginning of the year 77,728 61,950 183,162 163,024
Effects of exchange rate changes on cash and cash equivalents 4,946 4,235 (2,998) (10)
Cash and cash equivalents at end of the year 64,913 75,450 145,185 183,162
*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 148 to 185 are an integral part of these financial statements.
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 ($33 million) was paid on 22 October 2012.
On 1 January 2020, Seplat Energy Plc transferred its 45% participating interest in OML 4, OML 38 and OML 41 (“transferred
assets”) to Seplat West Limited. As a result, Seplat ceased to be a party to the Joint Operating Agreement in respect of
the transferred assets and became a holding company. Seplat West Limited became a party to the Joint Operating
Agreement in respect of the transferred assets and assumed its rights and obligations.
On 20 May 2021, following a special resolution by the Board in view of the Company’s strategy of transitioning into an
energy Company promoting renewable energy, sustainability, and new energy, the name of the Company was changed
from Seplat Petroleum Development Company Plc to Seplat Energy Plc under the Companies and Allied Matters Act 2020.
▪ During the period, Seplat Energy Offshore Limited was incorporated on 7 February 2022. The percentage ownership
of the Company is 100%.
▪ On 22 April 2022, the Company announced the appointment of three new directors as Independent Non-Executive
Directors of Seplat Energy Plc, resumption took effect on 18 May 2022. The three new directors are Mrs. Bashirat
Odunewu, Mr. Kazeem Raimi and Mr. Ernest Ebi.
▪ On 7 July 2022, the Company incorporated a subsidiary, Turnkey Drilling Services Limited. The company was
incorporated for the purpose of drilling chemicals, material supply, directional drilling, drilling support services and
exploration services. The percentage ownership of the Company is 100%.
The financial statements have been prepared under the going concern assumption and historical cost convention, except
for contingent liability and consideration, and defined benefit plans – plan assets measured at fair value. The financial
statements are presented in Nigerian Naira and United States Dollars, and all values are rounded to the nearest million
(₦’million) and thousand ($’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
twelve months from the date of this statement.
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 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.
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.
e) Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
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.
f) IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
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.
▪ 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.
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.
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 programs 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
Building 4%
Land -
Intangible assets 5%
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 derecognized.
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
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.
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.
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 cashflow 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.
b) Impairment of financial assets
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
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.
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.
c) Significant increase in credit risk and default definition
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.
e) Derecognition
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.
f) Modification
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.
g) Offsetting of financial assets and financial liabilities
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.
h) Fair value of financial instruments
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.
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.
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
Dividend
Dividends on ordinary shares are recognised as a liability in the period in which they are approved.
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.
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,
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.
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.
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.
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.
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.
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
Restated Restated
31 Dec 2021 31 Dec 2021
₦ million ₦’000
General and administrative expenses (1,110) (2,697)
(1,110) (2,697)
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.
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 48,121 63,146 107,622 153,294
Trade and other receivables 710 415 1,587 1,009
48,831 63,561 109,209 154,303
Financial liabilities
Trade and other payables (12,066) (96) (26,986) (234)
Net exposure to foreign exchange risk 36,765 63,465 82,223 154,069
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 628 270 1,404 656
Trade and other receivables 2,685 - 6,006 -
3,313 270 7,410 656
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:
Effect on other
components Effect on other
Effect on profit of equity Effect on profit components of
before tax before tax before tax equity before tax
2022 2022 2022 2022
₦ million ₦ million $’000 $’000
Effect on other
components Effect on other
Effect on profit of equity Effect on profit components of
before tax before tax before tax equity before tax
2022 2022 2022 2022
₦ million ₦ million $’000 $’000
Effect on other
components Effect on other
Effect on profit of equity Effect on profit components of
before tax before tax before tax equity before tax
2021 2021 2021 2021
₦ million ₦ million $’000 $’000
f) Risk management
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:
As at 31 December 2022 23 52
As at 1 January 2021 - -
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.
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.
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.
31 December 2022
Trade and other payables 1,032,061 - - - 1,032,061
Total 1,032,061 - - - 1,032,061
31 December 2022
Trade and other payables 2,308,184 - - - 2,308,184
Total 2,308,184 - - - 2,308,184
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.
Capital includes share capital, share premium, capital contribution and all other equity reserves.
7. Segment reporting
The Company have no operating or reportable segment.
8. Other loss
2022 2021 2022 2021
₦ million ₦’million $’000 $’000
Unrealised foreign exchange loss (1,273) (4) (2,998) (10)
(1,273) (4) (2,998) (10)
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.
Restated Restated
2022 2022
2021 2021
₦ million ₦’million $’000 $’000
Basic salary 377 - 889 -
Other allowances 181 - 426 -
Share-based payment expenses (Note 21.4) 263 130 619 324
821 130 1,934 324
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.
Depreciation
At 1 January 2022 5 87 - - 92
Charge for the year 3 95 13 1 112
Exchange difference 1 12 1 - 14
At 31 December 2022 9 194 14 1 218
NBV
At 31 December 2022 9 407 69 195 680
Cost
Depreciation
At 1 January 2021 1 - - - 1
Charge for the year 3 85 - - 88
Exchange difference 1 2 - - 3
At 31 December 2021 5 87 - - 92
NBV
At 31 December 2021 12 262 - - 274
Depreciation
At 1 January 2022 11 212 - - 223
Charge for the year 8 225 30 3 266
At 31 December 2022 19 437 30 3 489
NBV
At 31 December 2022 22 906 155 436 1,519
Cost
Depreciation
At 1 January 2021 3 - - - 3
Charge for the year 8 212 - - 220
At 31 December 2021 11 212 - - 223
NBV
At 31 December 2021 30 634 - - 664
15. Prepayments
2022 2022
₦ million $’000
At 1 January 2022 798,795 1,940,388
Additional investment in subsidiaries – Share-based payment 3,385 7,569
Additional investment in subsidiary (Turnkey) 10 23
Exchange difference 68,810 -
At 31 December 2022 871,000 1,947,980
Percentage of
Country of
ownership interest Carrying amount
incorporation
and place of As at 31 As at 31 As at 31 As at 31 As at 31 As at 31
Name of entity business Dec 2022 Dec 2021 Dec 2022 Dec 2021 Dec 2022 Dec 2021
% % ₦’million ₦’million $’000 $’000
ANOH Gas
Processing Nigeria 50 50 93,904 86,512 210,016 210,016
Company Limited
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.
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.
Fully paid ordinary shares carry one vote per share and the right to dividends. There were no restrictions on the Company’s
share capital.
Issued
Number of share Share Share based Treasury
shares capital premium payment reserve shares Total
Shares ₦’million ₦’million ₦’million ₦’million ₦’million
Opening balance as at 1 January 2022 584,035,845 296 90,383 4,914 (2,025) 93,568
Share based payments - - - 263 - 263
Additional investment in subsidiary – Share -
- - 3,384 - 3,384
based payment
Vested shares 4,719,809 2 2,450 (2,452) - -
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.
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.
The expense recognised for employee services received during the year is shown in the following table:
Restated Restated
2022 2021 2022 2021
₦’million ₦’million $’000 $’000
Expense arising from equity-settled share-based payment transactions 263 130 619 324
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:
Restated Restated
2022 2021 2022 2021
₦’million ₦’million $’000 $’000
Additional investment in subsidiaries – Share-based payment (Note 16.2) 3,385 1,110 7,569 2,696
There were no cancellations to the awards in 2022. The share awards granted to Executive Directors and confirmed
employees are summarised below:
Share awards used in the calculation of diluted earnings per shares are based on the outstanding shares as at 31
December 2022.
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.
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.
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 $1.10).
The fair value at grant date is independently determined using the Monte Carlo Model which takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield, the risk-free interest rate for the term of the option and the correlations and volatilities of the peer companies.
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available information.
The following table lists the inputs to the models used for the share awards outstanding in the respective plans for the year
ended 31 December 2022:
2021
2019 2020 2021 LTIP- 2022
LTIP LTIP LTIP Execs LTIP
Weighted average fair values at the measurement date
Share price at grant date ($) 1.7 0.51 0.66 1.12 1.18
Share price at grant date (₦) 521.9 193.48 264.32 465.74 489.76
Model used Monte Carlo Monte Carlo Monte Carlo Monte Carlo Monte Carlo
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.
₦ ₦ $ $
Basic loss per share (32.47) (12.98) (0.08) (0.03)
Diluted loss per share (32.47) (12.92) (0.08) (0.03)
The shares were weighted for the proportion of the number of months they were in issue during the reporting period.
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).
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.
2022 2021
Number Number
Zero – ₦19,896,500 - -
₦19,896,501 – ₦115,705,800 - -
₦115,705,801 – ₦157,947,600 - -
Above ₦157,947,600 3 3
3 3
2022 2021
Number Number
Zero – $65,000 - -
$65,001 – $378,000 - -
$378,001 – $516,000 - -
Above $516,000 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:
2022 2021
Number Number
₦1,989,650 – ₦4,897,600 25 16
₦4,897,601– ₦9,795,200 101 118
₦9,795,201 – ₦14,692,800 153 140
Above ₦14,692,800 252 201
531 475
2022 2021
Number Number
$6,500 – $16,000 25 16
$16,001 – $32,000 101 118
$32,001 – $48,000 153 140
Above $48,000 252 201
531 475
2022 2021
Applied as follows:
Restated Restated
2022 2021 2022 2021
₦ million % ₦ million % $’000 % $’000 %
To employees: – as salaries and
821 (5%) 1,209 (19%) 1,934 (5%) 3,020 (19%)
labour related expenses
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.
Capital employed:
Represented by:
Non-current assets 965,584 885,581 877,795 518,366 328,870
Current assets 791,671 598,851 73,124 539,423 514,131
Non-current liabilities - - - (233,715) (173,276)
Current liabilities (1,032,061) (776,027) (201,057) (246,851) (143,429)
Net assets 725,194 708,405 749,862 577,223 526,296
Restated
2022 2021 2020 2019 2018
$’000 $’000 $’000 $’000 $’000
Capital employed:
Issued share capital 1,864 1,862 1,855 1,845 1,834
Share premium 522,227 520,138 511,723 503,742 497,457
Share based payment reserve 24,893 22,190 27,592 30,426 27,499
Treasury shares (4,915) (4,915)
Capital contribution 40,000 40,000 40,000 40,000 40,000
Retained earnings 1,037,830 1,141,677 1,230,666 1,304,197 1,147,526
Total equity 1,621,899 1,720,952 1,811,836 1,880,210 1,714,316
Represented by:
Non-current assets 2,159,515 2,151,068 2,148,506 1,688,491 1,071,233
Current assets 1,770,568 1,453,769 192,430 1,757,082 1,674,694
Non-current liabilities - - - (761,285) (564,416)
Current liabilities (2,308,184) (1,883,885) (529,100) (804,078) (467,195)
Net assets 1,621,899 1,720,952 1,811,836 1,880,210 1,714,316