Seplat Energy Plc (SEPL) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Seplat's Full Year Results 2020 Conference Call. My name is Sugi, and I will be the operator for your call this morning. I will now hand you over to Roger Brown, CEO.

Good morning, everyone, and welcome to our 2020 full year results presentation for Seplat Plc. Today, I will be joined by our Operations Director, Effiong Okon; and our Chief Financial Officer, Emeka Onwuka. So we go to Slide 3. We'll just kick off in terms of Seplat's first decade. Obviously, now we celebrated our 10 years in operations in 2020. So I would just lay out here some of the achievements we've done over those 10 years. And if you look at it in terms of the bottom of the slide, in terms of our working interest production in BOE per day, it's gone up almost 3.5x, similar story with the reserves. And so we have a full year 2020 of just slightly more than 51,000 barrels of oil equivalent a day and just slightly less than 500 million barrels of oil and gas, roughly 50-50. And you can see that in terms of investors' returns I guess, since our IPO in 2014, we've returned $344 million of shareholders in dividend -- returns and dividends. Can you turn to Slide 4, please. So Slide 4, we deal with the achievements in what effectively is a challenging year for all corporates, Seplat isn't different. But I think we have positioned ourselves through the 2020 and into a recovery in 2021. We put 5 items on this slide. The company has transitioned for success. So really at the company, there's some changes going through at the minute. Looking at trying to be a lot more streamlined and efficient, reducing any silos we have, but also it's actually we need to look at efficiency in our operations. And obviously, cost control is very, very critical part for that. And we've put in some new key hires into the business, really focusing at just taking Seplat to the next stage of its evolution. In terms of then the focus on improvement, HSE and asset integrity is #1 for us in terms of what we need to focus on and looking at increasing our oil and gas resources for future, diversifying production and export routes. In terms of our governance, we continue to evolve this and try to step up to the next level. So we have some new independent directors, have joined the Board. And that will continue through the next couple of years as the Board is refreshed over time. The Board also took the decision to eliminate all related party transactions and has tightened up that definition to follow Nigerian definition, which is much wider than the U.K. In terms of our prudent management, again, we continue on ensuring that our cash, certainly in our programs every year, is worst-case neutral. And you can see from our business at CVR, we are able to generate some strong cash flows and fund our development. And Emeka will cover a lot of that in his slides. Also big thing is ensuring that our community engagement model is right and ensuring that we empower our communities. And then in terms of Nigerian energy leadership, this is obviously expanding and we obviously completed the Eland acquisition. But to be a trusted partner for government, not just in oil, but actually importantly, also in our gas developments, to be a strategic player and growing out that domestic gas business, which is very much the future of Nigeria. And then obviously, it has the benefits of cleaner energy production. And we're looking at just the evolution of energy transition for the company and the country as renewables over time will make much more of the energy mix. Next slide, Slide 5. I'll just run through some highlights of our 2020 performance. Key one here is that we're within guidance at 51,000 barrels of oil equivalent a day. Cash from operations is $329 million. And therefore, what that means is we're able to fund all of our CapEx programs internally. And we still maintain a strong cash balance. In terms of then strong performance, despite a challenging market. And you can see that the liquids at 33,714 barrels of oil a day. And then the gas is slightly under, but we're obviously bringing on some gas wells, which will bring that back up. Our cost of operations is $8.90 per BOE, and we look to obviously drive through more cost savings. Balance sheet has remained strong. Oil prices starting to recover, and we are hedged through into Q3 of 2021. And CapEx, $150 million, and then we'll provide through the slide deck some updates on our major projects. So on Slide 6, in terms of some of the corporate updates, we just announced that we are no longer going to issue shares for our LTIPs that we're going to go out in the market and purchase those. And then we've set a $5 million budget to do that, and we'll launch that very soon. This is beneficial for existing shareholders because it won't dilute them any further. In terms of governance, I've talked about the related party transaction definitions, and we'll look to implement that over the course of this year. Then in terms of sustainability initiatives. We've launched the improvement now to capture the data in our carbon footprint. And those calculators are being put in place at the minute. And therefore, we'll be able to communicate that and also set some ESG targets. And then refinancing even on RBL. We're very close to doing that. And then that will mean that the Eland asset will be fully funded or OML 40 will be fully funded to develop out its 2021 program. Okay. So I'll hand it over now to Effiong Okon, who will run through our operational performance.

All right. Thank you, Roger. Good morning, everyone, one more time. This is Effiong Okon from Lagos. I'm just going to run through the ops performance like Roger mentioned. So I'm on Slide 8. On Slide 8, you'll see how we've been able to basically manage the impact of the pandemic last year, which was a very challenging year, like Roger did say. But the good news is we -- the strategy adopted, which has actually worked always. The Board played out very well. We -- people went into quarantine, and we did PCR testing. And thank God, we did not have any major shutdown across our production site or project sites or well, delivery site. So there was no major breakout of pandemic based on how it was managed. And I think it's been highly commended, and I've seen all the best example of an operator here with all the challenges in the Niger Delta could be quite successful. So that's the first good news. So overall, production came within guidance. We had initially guided 47,000 to 57,000. We then narrowed out a little bit to 48,000 to 52,000. And we came very, very close to the high end of the revised guidance. And that's delivered through working on our NSE portfolio, short-term oil generation, well and reservoir management to manage the decline, and then production from the new wells, we brought on production during the course of the year. OML 40 also did contribute to our production, you can see that jump from '18 to '19 to '20 after begin to basically deliver our performance on that asset. Overall, we still have an impact on the demand collapse. Last year, the government of Nigeria did impose the OPEC quota restriction on every operator. So Seplat got a fair share of that. And we're able to manage the impact by relationships and working with NNPC organization. They've been quite supportive. And then finally, on the gas side as well, we saw quite a number of customers that had to shut down to might -- amid the pandemic and therefore, you then see that play out in our gas production. On the second part on the slide, you'll see, I think, for us, the impact of OPEC was more on the eastern assets, where Jisike and Ohaji South, less of an impact on the western asset. And the reason is we do have a lot of condensates in the western asset, and with a lot of engagement with the government, they were able to basically exempt light oil production and condensate from the quota allocated to Seplat, and that was quite a successful outcome as well. And finally, we keep working that space to get more quota as we walk through the course of 2021 because that quota is still there, but reduced now from a risk point of view. I'll move on to Slide 9. Slide 9 just shows our CapEx. In spite of all the challenges, we managed our liquidity and preserving cash. It shows that Seplat was one of very few companies that went on to invest $150 million in about 9 wells, so 6 or 7 oil wells and then we did 2 gas wells. You then see the breakdown. I'm not going to go through each of them, but you can see that the biggest share of our CapEx that goes into the western asset, which is where we get the bulk of, I would say, 89% of our value. While we're growing the western -- the eastern asset and also the Eland portfolio. So part from the wells drilled in Oben, Ovhor, Ohaji South, we also did the Gbetiokun 5. I also continue to work on the HSE culture following the incident we had last year in Gbetiokun. The other CapEx, we also spent on facilities. We did an upgrade around the Eland facility. And also, there's a pipeline work we're looking out to basically reduce the exposure on the badging around Gbetiokun asset. And that's -- we're making really good progress in that. And then the last 2 items there is Sapele gas plant, we're working on that project, hoping to bring that project onstream next year. That project will take out all the flags in Sapele asset, which is our biggest life center, and also help us improve on the gas quality to our customers. The ANOH, which is Assa North upstream site. Also, we spent quite some money there in terms of getting ready for the drilling phase, look at long lead items, location preparation. And the good news is we just spotted the first gas well in ANOH. So I move on to Slide 10. Oil business review. Overall, I think the key message here is we've learnt a lot from the BRVS incident last year that impact production. We're not driving major cultural change in terms of bringing that asset up to same standard like Seplat, and we've made lots and lots of progress. We hope never to have that sort of an incident again. For downtime, downtime came in line with professionals we met in the plant. If you look at the reconciliation of losses and downtime on the TFP, very much around the 25%, 30% sort of estimate was all made in the plant. So it was pretty much in line with plan. It was -- I talked about the wells earlier on, we're also driving cost to become competitive, like Roger mentioned, to drive our cost in the single-digit unit operations caused a lot of progress as we made. The example on Gbetiokun has moved from a lot of smaller budgets to bigger budgets, and that will reduce even HSE exposure and also reduce your spread cost around the logistics supporting good transportation from Gbetiokun into the BRVS injection point. Amukpe-Escravos pipeline, another good project, which has been impacted with all kinds of delays. We're almost at the finish line now. The line has been laid, hydro-tested. The only scope remaining is with same, the Chevron terminal. And COVID also impacted progress on that project. We're now in a position where we want to go back and complete remaining work. It will take about 2 months of work to finish the remaining scope, and then we'll bring that pipeline on stream hopefully by midyear. On the right-hand side of that Slide 10, it just summarizes all of what we've done so far. I think we gave an update last year around the learnings, around driving major cultural change across -- remember, this asset, we only got into last year, we use operated by NPDC. So we're trying to do a lot of change within our control, at the same time, influencing the bigger NPDC organization in terms of broader, bigger safety reforms, and we're making a lot of progress, putting people from Seplat into that organization to help drive a number of change there as well. So a lot of recommendations have been worked out. And hopefully, this year, we'll start seeing the results from that. I'll move on to Slide 11, which talks about Eland development. So it's our first major acquisition. And you can see in our total bottom line production, it now accounts for about 26% of our group liquids production in 2020. That asset still has a huge potential in the exploration prospect called Sibiri, which we're looking at testing this year, later this year. That prospect currently holds somewhere between 50 million to 140 million barrels of oil recovery. You see the most likely case of some 8 million barrels. And that's hopefully will unlock the potential later in the year when we drill the exploration well. On the integration side, I think we've been working the integration since last year, looking at both sides. What's best in Seplat, what's best on the Eland side. And that's what we call the best of both worlds approach. And that has gone very well. We have external expert support launched through that process. Roger just talked about the operational regime. He just made a comment on Board in August. So put all that together, we're really driving really, really major transmission of this company towards world-class. And that's going to be in 3 phases. First and foremost, quick wins, diagnostics to look at where the longer-term needs are, and then define proposal for integration and then go into the execution part. Aberdeen office remain a center of excellence. We know very well, there are 2, 3 big hubs in the world today, Sedan, Louisiana, Houston or the North Sea centers around Aberdeen. So recognition is leveraging on that large center of excellence to also drive -- bring in a lot of capability in terms of new energy network, to also help us recruit very high-quality staff and also help us with capability development. And also we'll be hosting our exploration team as well with very, very good capability in there. Finally, on this Slide 11, we continue to drive our CSR activities to be led by JV partners. While we do integrate and collaborate across the Seplat organization where possible. I move on to the gas business, it's one we still keep driving. Slide 12. So last year, we delivered just over 100 million scf of gas per day. It's a working interest. Remember, I did talk about the impact of COVID where customers did some bit of cut back. Otherwise, we have capacity available to even deliver more. So that was driven more by demand. The 2 new wells added about some 5 million scf. And the good news is the last well, Oben-50, is now on stream and producing pretty much, even our bore business potential. So that's very good news for us. We also made a lot of progress towards the commissioning the Old Sapele gas plant, and hopefully get that ready now to start. We'll begin to import the new equipment for the new gas plant later this year and start installation commissioning. And hopefully, next year, we bring that plant on stream. On the ANOH side, ANOH has also made a lot of progress. We -- across all the production sites in Florence, Italy, where Baker is manufacturing all the rotating equipment. That's going well. We had a bit of a COVID impact there. In Dubai, where we're doing all the process vessels. But overall, we have looked at that project again. So we're looking at bringing all the equipment this year, target mechanical completion early next year, and then we would then start the commissioning start-up with first gas coming on, hopefully, Q2 next year. And then finally, another good news from ANOH, you probably will have seen this. We finally went through the whole debt financing. So ANOH is now fully sorted, both on the equity and debt side. And we had all this ceremonies signed off. And we've raised $260 million. I'm sure Emeka will cover that a little bit. It was highly, highly oversubscribed. And then commitment, which is the coming of $450 million. So I think we're good to go on ANOH. And hopefully, we'll keep driving efficiency, cost reduction to get our projects to the finish line next year. I'll hand over to Emeka now, our CFO. Over to you Emeka.

Thank you, Effi and Roger. I will now speak to the financial performance for 2020, and I'll take you to Slide 14. Year 2020 was a challenging year for the global economy and for oil and gas, in particular. As we experienced twin shocks for the Saudi-Russia price war and of course, the pandemic hitting earlier in the year. That led to wide fluctuation in crude oil prices, it all started with about $8 per barrel. And by April, it was $19 and we waited a year at $51. However, the crude oil price recorded nicely this year at about $60 or -- above $60 currently. We'll continue to keep an eye on the discussions with Iran, believing that it could impact the supply decision on Iran. Also, the policy response of the Biden administration on shale oil and climate change may also affect the U.S. supply in 2021. Due to the issues around the stabilizing of oil price last year, OPEC imposed a quota on Nigeria, particularly for the second half of last year, and this impacted our own output. The impact of about 410,000 barrels. I'll take you to Slide 15. We continue to show a very robust balance sheet, ending the year with a cash of $259 million on our balance sheet. This is after CapEx of about $150 million and voluntary repayment of $100 million for the RCF and the dividend payments of 2020. Our net debt is stable at $440 million. We're able to fund our operations from the cash generated from business, also generated about $209 million from the business last year. We'll continue to have good relationship with our JV partners, and that has driven down our receivable for our JV partner last year. We've received about $340 million in terms of JV funding. And the outstanding on our bigger JV partner had dropped from $222 million to $107 million. I take you to Slide 16 here, I speak to some details about our P&L. The revenue last year was impacted by lower oil prices, like we talked about, despite the increase in production of about 40% on liquids. So we arrived at revenue of $530 million. And if you adjust for an underlift of $50 million that is reflected in other income, our revenue lies at around $580 million. On the gas revenue for 2019, there was a one-off, $67 million. So when looking at the comparables, these are to take into account. Also, I'd say that this is the first year of consolidating the Eland business into Seplat and to the comparable for 2020 -- in 2020, we forgot to include Eland, especially. This reflected in the cost of sales, where the royalties of crude oil handling had gone up due to inclusion of Eland costs as well. And also the increased volume for last year. We have an adjusted EBITDA of $265 million after adjusting for impairments, noncash impairment last year, arising from application of IAS36, on impairment of asset due to the COVID pandemic. Overall, the P&L also, as shown, in terms of the tax as well. Our tax rate this year, we benefited from a deferred tax rate of $8.5 million and a tax charge just above $5 million net. I take you to Slide 17, which is where we continue to show our strong cash position, generated about $329 million of cash last year, which are applied to CapEx of $150 million, dividend of $58 million, AGPC funding in terms of equity of about $60 million, debt refinancing, debt servicing and other expenses. Altogether, we ended with about $225 million on the balance sheet, if we exclude the restricted cash on the balance sheet. I'll now hand it over to Roger to continue with the outlook.

Yes. Thanks, Emeka. Okay. So we turn to Slide 19. Let's lay out some of our strategic events for this year. We lay 6 here. So obviously, ANOH being fully funded is quite a critical one. We've achieved that in Q1. Eland RBL refinancing, we're just going to push out the maturity in the RBL and bring in some additional funding to really drill out those 3 oil production wells at Gbetiokun, and obviously looking at Sibiri exploration towards the end of this year. Amukpe-Escravos pipeline, we hold that guidance at the end of H1, the operational, and therefore, operation into H2 2021. ANOH first gas, we've looked quite heavily on the time lines for this. And what we're looking to do is obviously, the equipments but to be shipped. We're looking to have this in commissioning early next year in Q1. And then first gas to flow in H1 2022. So it's slightly slipped that. But I think this is a quite a prudent time line here. In terms of new Sapele gas plant, again, we're looking to bring that on stream, H2 2022. And that obviously will have the LPG modules, which should take out the flares as we have a policy to flare out as a company. And then new explorations, looking at the Sibiri opportunity, second half of this year and bringing that, hopefully opening up that whole development in terms of developing at Sibiri and the surrounding areas. Next slide, Slide 20. This layout our CapEx guidance. Our CapEx guidance for the year is $150 million, and this is really where it was last year. It's -- I think it's our steady-state CapEx levels. You can see that in terms of the sort of chart there on the right-hand side, CapEx allocation. Obviously, most of it is being spent in our western assets, so OMLs 4, 38, 41. And Eland and OML 53, similarly, $36 million each. And then in terms of by activity on the bottom right there, majority will be on drilling wells. But then obviously, $35 million is maintaining existing infrastructure and $43 million on new projects. If I look then on the left-hand side there, you can see that we're drilling 3 gas wells at Oben. And that should bring on board around 100 million scfs of gas volume. OML 40 is 3 Gbetiokun wells, and they fill at a quite prolific rate. And Sibiri, OML 53 is to drill the Ohaji South well there at 2,000 barrels a day, and looking at the Owu appraisal. And then OPL 283, our pillar asset, we're looking to drill the Umuseti-7 well. And then obviously, gas development. Some money has been spent in Sapele gas plant and Ohaji Flares out project commencing -- commencement. On to the next slide, on Slide 21. Just we do -- we've done this before, which is obviously our longer-term outlook and future value. Just recap our guidance for 2021 is 48,000 to 55,000, and it's an impact of OPEC quotas, et cetera. We're hedged site and through Q3 2021. And our CapEx, as obviously, I said, we're just guiding at $150 million. Some of the short-term value drivers, obviously, as you can sense or focus on gas, particularly in the western assets, getting Eland or Elcrest up and running and OML 40, getting the production up there. We're supplying oil to the Waltersmith refinery, and we expect going forward, there will be other in-country refineries that we would be selling our oil in dollars to. Looking at more reliable output in terms of our main assets and getting these Amukpe-Escravos pipeline up and running. And then look at -- we're looking at long-term export routes where we can control end-to-end, particularly in the western assets of -- and OML 40. ANOH coming onstream into 2022. It's a material project. And we're also looking at, as a company, as developing out the gas business in the east of the country, which is going to see a lot of development in business parts, et cetera, and then obviously Sapele gas plant. And then longer-term value drivers looking at the opportunity for basic diesel generated electricity by bringing on more and more gas to spacing that, which will also will have greenhouse gas emission reductions immediately. And then looking at what the transition looks like for our company, from midstream gas and looking at LPG opportunities and then seeing what the long-term renewable solution would be for the country. Obviously, there will be further opportunities, we believe, in IOCs continue to divest what is very good quality, top ranking assets, and Seplat's well positioned for that. Getting back a lot of our investment on Eland and then obviously looking at exploration opportunities. And we have a dedicated team now in looking at exploration. I'd just say on the slide deck, our Capital Markets Day, we mentioned this before, we're going to have this just pushed into Q2. There's a number of things that we're working on the minute that we want to then lay out in that Capital Markets Day. So that will be confirmed in due course. So that ends the slide deck presentation. So I'm going to hand it back now, and we'll go to Q&A. Thank you.

[Operator Instructions] Your first telephone caller is Alex Smith from Investec.

A couple of questions from me, please. Firstly, on ANOH. It would be good to maybe have an update on progress? Or maybe you can potentially give a percentage of completion or how much of the $650 million of planned spend has been spent already? And what are the key spend items going forward this year and next? And then secondly, just on production, it looks like it will be H2-weighted, given some of the gas flows coming on stream in the last half of next year. Maybe you -- could you touch on what kind of exit rate you're expecting at the end of this year?

Thanks, Alex. I'll start with ANOH and then I'll ask Effi to comment on the actual production itself. So a large amount of money on the $650 million, I won't give you exact numbers, but a lot of it's been committed already. Quite a lot of the critical things is the other skins and the generating equipment, which is about to come on the oceans and come into Nigeria. I think the last sort of main item is the MEI installation contract. That's awarded. It's underway. The site works are making some good progress, et cetera. And so whilst, not all the money has been spent, it's being committed. In terms of then laying out really is one of the risks around delivery around this. We've looked very heavily on this. And set what we believe is a time line, which is -- which is post-COVID achievable around that. So we're pushing hard to get the equipment installed, which will start in Q3. And we're pushing them into a -- started commissioning. We've slipped that into Q1 next year, but obviously, we're pushing hard around that, and then first gas in Q2. So a lot of the money is being committed already, with the vast bulk of that spent. But you'll start to see the actual money go out the door in Q3, Q4 this year. Effi, do you want to answer the production?

All right. Thanks, Roger. So Alex, in terms of exit rate for the year, I think, first, let me start with our entry rate. So we started 2021 at roughly around 57,000 barrels of oil equivalent per day across those assets. We see ending the year somewhere around 60,000 to 70,000 barrels per day oil equivalent. And a lot of the build-up will come from the new wells we're doing in the western asset. We talked about 2 gas wells. So those 2 gas wells -- sorry, 3 gas wells will bring in, like Roger mentioned, 100 million scf of gas per day or roughly almost like 3,000 barrels of condensate. Then we're doing the 3 Gbetiokun wells, which also brings in quite material production towards the end of the year. And the Oben-1 well in OML 56. And if you gross all that up, we then were looking at a base case of something around 68,000 and the spread of somewhere between 60,000 and 70,000. Normally, that's sort of where we tend to give guidance in terms of all the uncertainties. So we're pretty excited about really pushing volumes all by end of the year, Alex.

The next question is from the line of Michael Alsford from Citi.

I just got a couple, please. On the production, could you maybe isolate what you're assuming in terms of the impact of OPEC+ quotas, just on the production guide, just get a sense as to what is implied there in case you see obviously a lifting of those quotas in the next few months? And then just secondly, tax, both P&L and, I guess, cash tax was particularly low in 2020. So I'm just wondering if you can help provide some guidance as to what we should expect the cash tax and P&L tax for 2021, please? That would be great.

Okay. I'll deal with the OPEC impact, and then Emeka can deal with the taxes. So in terms of the production impact, it was about 10% of production in the western assets. As Effi highlighted, it's the eastern assets, which were impacted the most and up to about half of the production that was coming predominantly due to the new wells we brought on stream. And we think we solved that for the eastern assets for the minute. But of course, there's uncertainty around it. And so we've had to factor in impact of OPEC. But it would be closer to the 10% impact, we believe, and not up to sort of almost half of our production from the east. Emeka, on the tax?

Yes. But on the tax, estimate one, is that we know that our tax holiday on gas has ended last year. So we're going to see an uptick in taxation on the gas business. But our own estimate, our 2021 cash tax will be about $12 million.

And just to confirm, that's $12 million all-in -- that's oil and gas or just on the gas assets?

Yes. No, it's all-in, all-in.

[Operator Instructions] The next question is from the line of Nikolas Stefanou from Ren Capital.

It's Nick from Ren Cap here. Sorry, I think I might have mishear, but did you say that the production, the current production is 57,000 barrels per day, and you expect it to be at around 60,000 to 70,000 towards the end of the year because the guidance for the year is 48,000 to 55,000. So I'm just trying to reconcile what the delta is here? That's my first question. And the second one is, this one is for Roger, maybe. Roger, the statement says that there has been some uplifts in the ownership of the Amukpe-Escravos pipeline. Could you maybe talk a bit around that? And how is that going to impact then, I mean, the likelihood of the project coming onstream in the second half of this year?

I'll take the...

Effi, go ahead. The first one.

Roger, yes. I'll take the -- so basically, the number I gave you is the instantaneous production. So you have the instantaneous production, which is based on the IPSC, Integrated Production System Capacity, is what you can deliver. And that's what I said is about 57,000 at the beginning of the year. And end of the year, we're looking at a base case of about 68,000 on a spread of between 60,000 to 70,000. Now to get the guidance, you didn't have to put all the plant maintenance activities called scheduled deferments. Also, you don't have the unplanned deferments and also the third-party deferments. If you put all those deferments on board, then of course, you have to then basically bring down the production to get a haircut to what you have as the guidance. So to summarize again, guidance clearly is between 48,000 and 55,000. And that is when you take all our planned activities that will impact production. But in terms of instantaneous production tied to IPSC, that's the number I gave earlier on. And Nick, 57,000 entry rate for 2021. 68,000 base exit rate for 2021 and all the spread of somewhere between 60,000 and 70,000 in that exit rate because of the uncertainty. I hope that answers your question.

On the AEP peak?

Okay. So let me just answer that one.

Okay. Go ahead.

Just -- so in terms of the AEP, effectively, this is a pipeline that was a joint venture between Pan Ocean and the government, NNPC. What's happened is that Pan Ocean, its debt has been taken over by AMCON or some of the bank debt has been taken over AMCON. And AMCON is not involved here. From the ownership from government, NPDC, our partner, owns their stake in this pipeline. But there's been some uncertainty around -- just around the Pan Ocean side of things. I think that's now under control. And it has been a bit of a barrier to us to be able to engage with Chevron, just to get into the pipeline -- into the terminal to complete the pipeline. Also COVID had an impact because there's a couple of incidences of COVID-19 cases in the Amukpe-Escravos terminal. So I think we've got now that under control, the team clearing quarantine, and they'll start work on it. As Effi said, it's a couple of months of work. And so therefore, we hold on to then H1 this year as a delivery time to...

Okay. So the debt issue, that was in effect delaying the completion of this pipeline is not -- is not so much of punishment anymore, if I understand correctly?

Yes. I mean it's now resolved. So we're now making some progress.

Okay. Okay. Understood. And just a quick follow-up. I just want to go back to that production number. Okay. So I think the exit rate for the gas was about 300 to 350 scf per day, about almost the previous guidance for 2020. I mean you mentioned that production was a bit lower because of potential demand. Then I'm just trying to understand what's the reason behind drilling 3 more wells that open right now? I mean, is it -- I don't think it's related to decline rates there, like especially 3 of them. But is -- like -- I mean, are you anticipating a material uptick in demand to basically make up for that increase production supply?

Yes. So Nick, is that Nick, right?

Yes, sure.

Yes. So if you look at the way we drive the gas business, we've got firm contracts. We have the interruptibles. And we'll have new GSAs we're pursuing. So yes, indeed, there is newer demand centers, which we're working on, new GSAs around industrial pack, around new customers, and that's why we're driving additional gas IPSC. So it's not to address the decline in the field there, Nick.

The next question comes from Janet from Tellimer.

So my question really would be around Niger Delta. We've been hearing a lot of threats in the media recently. I wanted to get your take on how -- I mean, we've heard the threats almost from mid last year. So how serious you think this is? And I mean hopefully, as COVID should help by hedge, like you said, well, maybe you could just shed some light on this. And then I was also hoping to get an update on the whole Lagos case with Cardinal Drilling. I don't know what the update has been on that from that end? And then lastly, I was also going to -- also ask further on that statement that Effi mentioned about the delay or the setback in gas demand. I don't know which sector exactly are you seeing that from because my understanding previously was we had that overwhelming demand from the power sector. And I'm just really curious to know -- sorry, my puppy. I'm really curious to know what -- where we're having that setback from?

Okay. Thanks for that. Let me just deal with the first 2 and then Effi can deal with the gas demand. So in terms of the Niger Delta, we've not seen a material change in risk profile there. In terms of managing that, it's a dynamic -- it's a 24/7 dynamic process, and community engagement is very, very critical to it. So we've been okay in terms of that. I mean, there's always a risk but it's how you manage that risk going forward. So we don't see any uptick in it. And obviously, this -- in terms of communities, obviously, with impact to COVID as it impacted those communities, but we continue to operate very effectively in our operations. In terms of the Cardinal Drilling case with Access Bank, we've obviously put out a couple of announcements on the back of this. Seplat is being joined into this case, which Access Bank is taking against Cardinal. We've made all those statements in terms of the fact that Seplat is not a party to this loan agreement, nor is it guaranteed this loan agreement. And we continue to manage that through the courts. So I don't want to say too much more than that at this stage. It's obviously -- we went through an appeal court. And we actually were successful in getting our office released. We will still maintain and go through the legal systems within Nigeria. We'll put out announcements as and when they become clear and relevant. Effi, the gas demand, do you want to deal with that?

All right. So if you look at the way our gas business is set up, we have a fair commitment. We've got the DSO obligations and then you didn't have where we're looking at new markets. So we're very specific around the new markets. We look at our new demand centers. We're looking at new GSA around the gas hub, which delivers gas to [ Ebara ] industrial estate. Then we're looking at Benin Enterprise Park Limited for supply of gas to a new industrial park in Benin over great commercial terms here. Then the CCETC-Ossiomo Power Plant Limited, which is a 55-megawatt power plant in Benin, that one is located in Benin as well. Also, we've been in negotiating with them. So we do have quite a number of new GSA demand we're working on. And that's what's driving our investment and growing the gas in the West going forward.

The next question is from the line of Dragan Trajkov from ARC.

A very quick one. I'm hearing you're spending about $150 million last year and now again $150 million this year. Any thoughts on -- this is on CapEx? Any thoughts on the dividend. Clearly, you get oil pressures recovered a bit. What's your plan going forward? It's been steady so far. But I'm assuming with the exit rate of capacity exit rate of $68 barrels per day -- BOEs per day, there will be some room for increasing the dividend going forward?

Yes. Dragan, just on the dividend, I mean, look, the important thing is that to be consistent. So we said that we would continue to pay this, and we have done this year. So we're paying $0.10 a share. Ultimately, we'd like to grow that dividend, but must be -- you need to grow it on the back of sustainable long-term growing revenue streams and growing profitability. And that's something we're working at. We always saw the gas business as being that sort of growth area. So that's still in our plans. But the key thing here is that we actually were able to maintain the $0.10 a share to the investors. And so in terms of where the current share price is, I think the yield is very strong in the market.

This concludes our question-and-answer session. I would like to turn the conference back over to Roger Brown for any closing remarks.

Okay. Thank you very much. Well, thanks very much for coming on the call today, and thanks for the questions, very insightful. 2020 is a difficult year. We can see Seplat now positioning for the 2021 and future growth. I think there's a number of things that we're working on, which we're obviously disclosing due course. It's quite exciting. So direction of the company is in good shape. It's been able to get through 2020 and continue to fund its CapEx through operating cash flow and retiring debt. So thank you very much for listening. We look forward to coming out with the Q1 results, which will be towards the end of April. Thank you very much, and have a good day, everyone. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect. Goodbye.