Seven Energy Loses $42 Million to Militant Attack

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Seven Energy Finance Limited, an integrated gas company in Nigeria with operations in the upstream, has raised alarm over the continued attacks of facilities by militants, adding that such illicit acts had impacted on its operations, resulting to a loss in output valued at $42 million in first half of 2016, H1’16.

According to the company’s operational and financial results for H1’16, value of output dropped to $41 in H1’16 as against $83 million in the corresponding period of 2015. The report further stated that no liftings were received from OMLs 4, 38 and 41 located in the North West Niger Delta due to the prolonged, and ongoing, shutdown of the Forcados terminal. As a result the company recorded zero revenue on these leases.

The only oil revenue received was $7 million from locations in the South East Niger Delta, which was an improvement against $5 million from interests in same locations in the corresponding period of 2015. The report further stated that the company average net entitlement from the OMLs for H1’16 was down to 15,100 bopd as against15,400bopd in 2015.

The fall in gross production, lower development activity and drop in expenditure levels on the blocks led to a drop in net entitlement. The report also noted that, the company in H1’16, recorded about 66.7 percent increase of gas deliveries in the South East Niger Delta with average deliveries at 95 million cubic feet per day (mmcfpd) as against H1’15 delivery record of 57mmcfpd. The company also stated that due to delays in the ramp-up of demand from its key customers, deliveries in the second quarter 2016, Q2’16, averaged 89 mmcfpd, down from Q1’16 average deliveries of 101 mmcfpd.

Commenting on the results, the Chief Executive Officer, Seven Energy, Mr. Phillip Ihenacho, said: “The macro-environment in Nigeria and the ongoing issues within our industry present our company with an extremely challenging environment. So far during 2016 we have received no revenue from our interests in OML 4, 38 and 41 as a result of the shutdown of the Forcados terminal.

“Whilst our flagship gas business, located in the south east Niger delta, continues to increase delivery volumes, we have experienced some setbacks. The rate at which our customers are able to bring their demand to full contractual quantities is behind schedule. “Although, our gas sales are priced in US dollars we receive payment in Naira due to foreign currency exchange controls, which is difficult to convert to service our US dollar loans. These factors are putting intense pressure on the Group’s liquidity.

“Despite this, Seven Energy continues to operate its gas business to the highest international standards, and remains totally committed to delivering gas for domestic electricity generation and industrial use, a key growth area in Nigeria’s developing economy with its rapidly urbanising population,” he said.

Source : Vanguard

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