When Seplat chairman Ambrosie Bryant Chukwueloka 'ABC' Orjiako rang the closing bell on the London Stock Exchange in April 2014, the Nigerian oil and gas business was riding high. The benchmark Brent crude oil price was a healthy $107 per barrel and Nigeria's economic rebasing had doubled the size of its official GDP, thrusting the country onto the radar of global investors.
Seplat's $50om initial public offering--a dual listing on the LSE and Nigerian Stock Exchange--was the first of its kind, and was heavily oversubscribed.
Today, Seplat CEO Austin Avuru is blunt about the industry's prospects, as a collapse in global oil prices which have slumped to below $60 per barrel--combined with the political uncertainty caused by a controversial delay to Nigeria's general election weighs heavily on cashflow and investor sentiment.
"Generally, it's about survival in 2015," he says. "We think that whoever survives in 2015 will be there for the long run."
The company, which began producing in 2010, is one of the larger and better capitalised of the new wave of domestic Nigerian oil and gas businesses, but Avuru is battening down the hatches for a difficult ride. Capital expenditure will have to halve, and the company will boil down its operational costs.
At the end of last year, as prices began to slide, Seplat went on a roadshow to reassure investors that it was stable. When its full-year results come out at the end of March it will do so again "to let everybody understand that we can ride these waves," Avuru says.
As one of the few Nigerian domestic oil and gas companies listed overseas on a major exchange, Seplat shares are a bellwether for international confidence in the industry. From their peak of 266.9P ($4.1) in June 2013, they bottomed out at 102.3P in December. They have since recovered slightly, to 155P by mid-February 2015.
Avuru is philosophical. "In this part of the world, it doesn't matter what happens, we will have uncertainty," he says. "There will always be natural gas for use by industries and power. There will always be crude oil for refining. Whatever the case, we will be here to navigate through the difficulties."
Since the start of the decade, Nigeria's oil and gas sector has being undergoing a fundamental shift in its structure and ownership. In part driven by the government's stated aim to indigenise the industry and in part by the changing strategy of international oil companies (IOCs), Nigerian onshore oil and gas assets have been moving into the hands of a cohort of new players--such as Seplat.
Many have bought into so-called 'marginal' fields; assets that were already producing, or had a history of production. These have been made available by departing IOCs, who almost universally are looking to move away from difficult onshore assets and towards the deep offshore deposits where they have a competitive advantage.
In Nigeria this move has been hastened by regulation...