Seplat Energy Posts Strong 9 Months Result With $2.18 billion revenue on Robust Output Growth

Seplat Energy Plc (Seplat) has released its unaudited financial results for the first nine months of 2025, showcasing a remarkable surge in performance across its key business segments. The company reported a 204.3% year-on-year (y/y) growth in revenue, reaching $2.18 billion, and a 32.4% quarter-on-quarter (q/q) increase—driven by a substantial rise in oil liftings (+272.0% y/y), as well as higher gas and natural gas liquid (NGL) production. The impressive top-line growth reflects the successful integration of the Mobil Producing Nigeria Unlimited (MPNU) assets—now operating under Seplat Energy Producing Nigeria Unlimited—alongside sustained output expansion from its onshore operations.

Operational and Financial Performance

The company’s Cost of Sales (CoS) rose sharply by 260.0% y/y, but moderated 15.9% q/q, reflecting the expanded operational scale and the impact of MPNU consolidation. Production costs surged by 295.1% y/y, while non-production costs climbed 239.8% y/y, with Royalties and Depletion, Depreciation & Amortisation (DD&A) accounting for 49% and 46% of total CoS respectively. Operational and maintenance expenses jumped 513.0% y/y, remaining the single largest component of production costs as the company scaled offshore operations.

Despite cost pressures, Seplat’s Gross Profit grew by 147.7% y/y and 200.0% q/q, supported by lower DD&A charges on the offshore assets—following an upward revision of reserves in the latest Competent Persons Report (CPR)—and higher realized crude and gas prices. The company’s crude traded at a premium to Brent, while NGL and gas prices rose 46% q/q and 3% q/q, respectively. However, the Gross Profit Margin declined by 18.6% y/y, reflecting the impact of rising operational expenses on profitability.

Cost Discipline and Profitability

Operating expenses rose in tandem with Seplat’s expanding scale, with General & Administrative (G&A) costs increasing 77.1% y/y, though down 50.5% q/q following the reclassification of offshore-related expenditures. Other income grew 23.9% y/y, helping to lift Operating Profit by 158.8% y/y and 115.9% q/q.

However, higher leverage and financing activities weighed on bottom-line performance. Net finance costs increased 172.7% y/y, driven by a 119.9% y/y rise in loan interest expenses and a steep 590.9% increase in the unwinding of decommissioning provisions. Income tax expenses also climbed 105.8% y/y, with an effective tax rate (ETR) of 83.3% (9M 2024: 85.6%), reflecting applicable rates of 85% for crude oil operations and 30% for gas. Consequently, Profit After Tax (PAT) declined 45.1% y/y and 82.4% q/q, despite robust underlying cash flows.

Cash Flow Strength and Production Growth

Seplat generated a strong $830.7 million in free cash flow (FCF), up significantly from $200.7 million in 9M 2024. The third quarter alone saw a 106.0% q/q rise to $440.3 million, underscoring the company’s enhanced operational efficiency and solid liquidity position.

From an operational standpoint, total oil production averaged 135,636 barrels of oil equivalent per day (boepd)—a 185.4% y/y increase and within the upper end of Seplat’s full-year guidance of 120,000–140,000 boepd. Onshore output grew 16.4% y/y and 5.3% q/q, supported by successful new well tie-ins, sustained gas production from Western assets, and volume gains from OML 53.

Production deferments improved to 21% onshore (9M 2024: 24%) and 20% offshore, aided by better export route availability and the resumption of the Trans Escravos Pipeline (TEP) after Q2 downtime. Offshore deferments were primarily tied to the East Area Project (EAP) maintenance shutdown and a brief three-day downtime at the Yoho platform following a fire incident. Nevertheless, the company’s proactive well restoration program mitigated production losses, restoring 26 out of 33 idle wells this year, adding approximately 7.5 kbopd of incremental gross production capacity.

Dividend and Shareholder Value

Seplat’s strong operational execution and cash generation capacity continue to support attractive shareholder returns. The Board approved a 7.5 US cents per share dividend (subject to withholding tax), comprising a 5.0 US cents base and 2.5 US cents special dividend. This payout represents a 108% y/y and 63% q/q increase, underscoring management’s confidence in sustainable earnings and cash flow generation.

Outlook and Strategic Direction

Seplat’s 9M 2025 results reaffirm its position as one of Nigeria’s leading integrated energy players, underpinned by strong production growth, successful offshore integration, and disciplined capital management. The company’s performance provides a solid foundation as it advances its 2026–2030 strategic roadmap, unveiled during its Capital Markets Day last month. The new plan focuses on scaling oil and gas production, maximizing gas monetization potential, and driving enhanced shareholder value.

The substantial revenue boost from the MPNU consolidation, coupled with stronger cash generation and prudent cost management, sets Seplat on a firm path toward long-term growth. The balance sheet remains robust, providing flexibility to fund upcoming development projects while maintaining its progressive dividend framework.

In our assessment, Seplat Energy’s strong fundamentals, increasing free cash flow, and resilient production capacity position it well to capture growth opportunities across Nigeria’s evolving energy landscape. We therefore maintain a BUY recommendation, reflecting confidence in the company’s sustained earnings trajectory and long-term value creation potential.

As of the latest trading data, Seplat’s stock price has appreciated from ₦5,700.0 to ₦5,917.2, representing a 3.81% year-to-date increase, supported by strong investor confidence in its growth outlook and integration success. SOURCE: Coronation Asset Management Limited