1.      Corporate Structure and business

Seplat Energy Plc (hereinafter referred to as 'Seplat' or the 'Company'), the parent of the Group, was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014, under the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The Company commenced operations on 1 August 2010. The Company is principally engaged in oil and gas exploration and production and gas processing activities. The Company's registered address is: 16a Temple Road (Olu Holloway), Ikoyi, Lagos, Nigeria.

The Company acquired, pursuant to an agreement for assignment dated 31 January 2010 between the Company, SPDC, TOTAL and AGIP, a 45% participating interest in OML 4, OML 38 and OML 41 located in Nigeria.

In 2013, Newton Energy Limited ('Newton Energy'), an entity previously beneficially owned by the same shareholders as Seplat, became a subsidiary of the Company. On 1 June 2013, Newton Energy acquired from Pillar Oil Limited ('Pillar Oil') a 40% Participant interest in producing assets: the Umuseti/Igbuku marginal field area located within OPL 283 (the 'Umuseti/Igbuku Fields').

On 21 August 2014, the Group incorporated a new subsidiary, Seplat Petroleum Development UK Limited. The subsidiary provides technical, liaison and administrative support services relating to oil and gas exploration activities.

On 12 December 2014, Seplat Gas Company Limited ('Seplat Gas') was incorporated as a private limited liability company to engage in oil and gas exploration and production and gas processing. On 12 December 2014, the Group also incorporated a new subsidiary, Seplat East Swamp Company Limited with the principal activity of oil and gas exploration and production.

In 2015, the Group purchased a 40% participating interest in OML 53, onshore north eastern Niger Delta (Seplat East Onshore Limited), from Chevron Nigeria Ltd for $259.4 million.

On 16 January 2018, the Group incorporated a subsidiary, Seplat West Limited ('Seplat West'). Seplat West was incorporated to manage the producing assets of Seplat Energy Plc.

In 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company Limited. The principal activity of the Company is the processing of gas from OML 53 using the ANOH gas processing plant. 

In order to fund the development of the ANOH gas processing plant, on 13 August 2018, the Group entered into a shareholder's agreement with Nigerian Gas Processing and Transportation Company (NGPTC). Funding is to be provided by both parties in equal proportion representing their ownership share and will be used to subscribe for the ordinary shares in ANOH. The agreement was effective on 18 April 2019, which was the date the Corporate Affairs Commission (CAC) approval was received. Given the change in ownership structure as at 31 December 2019, the Group no longer exercises control and has deconsolidated ANOH in the consolidated financial statements. However, its retained interest qualifies as a joint arrangement and has been recognised accordingly as investment in joint venture. 

On 31 December 2019, Seplat Energy Plc acquired 100% of Eland Oil and Gas Plc's issued and yet to be issued ordinary shares. Eland is an independent oil and gas company that holds interest in subsidiaries and joint ventures that are into production, development and exploration in West Africa, particularly the Niger Delta region of Nigeria.

On acquisition of Eland Oil and Gas Plc (Eland), the Group acquired indirect interest in existing subsidiaries of Eland.

Eland Oil & Gas (Nigeria) Limited, is a subsidiary acquired through the purchase of Eland and is into exploration and production of oil and gas.

Westport Oil Limited, which was also acquired through purchase of Eland is a financing company.

Elcrest Exploration and Production Company Limited (Elcrest) who became an indirect subsidiary of the Group purchased a 45 percent interest in OML 40 in 2012. Elcrest is a Joint Venture between Eland Oil and Gas (Nigeria) Limited (45%) and Starcrest Nigeria Energy Limited (55%). It has been consolidated because Eland is deemed to have power over the relevant activities of Elcrest to affect variable returns from Elcrest at the date of acquisition by the Group. The principal activity of Elcrest is exploration and production of oil and gas.

Wester Ord Oil & Gas (Nigeria) Limited, who also became an indirect subsidiary of the Group acquired a 40% stake in a licence, Ubima, in 2014 via a joint operations agreement. The principal activity of Wester Ord Oil & Gas (Nigeria) Limited is exploration and production of oil and gas.

Other entities acquired through the purchase of Eland are Tarland Oil Holdings Limited (a holding company), Brineland Petroleum Limited (dormant company) and Destination Natural Resources Limited (dormant company).

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 Companies and Allied Matters Act 2020.

On 7 February 2022, the Group incorporated a subsidiary, Seplat Energy Offshore Limited. The Company was incorporated for oil and gas exploration and production.

The Company together with its subsidiaries as shown below are collectively referred to as the Group.

Subsidiary	Date of incorporation	Country of incorporation and place of business	Percentage holding	Principal activities	Nature of holding
Newton Energy Limited	1 June 2013	Nigeria	99.9%	Oil & gas exploration and production	Direct
Seplat Energy UK Limited	21 August 2014	United Kingdom	100%	Corporate, technical, liaison and administrative support services relating to oil & gas exploration and production	Direct
Seplat Gas Company Limited	12 December 2014	Nigeria	99.9%	Oil & gas exploration and production and gas processing	Direct
Seplat East Onshore Limited	12 December 2014	Nigeria	99.9%	Oil & gas exploration and production	Direct
Seplat East Swamp Company Limited	12 December 2014	Nigeria	99.9%	Oil & gas exploration and production	Direct
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) Limited	11 August 2010	Nigeria	100%	Oil and Gas Exploration and Production	Indirect
Elcrest Exploration and Production Nigeria Limited	6 January 2011	Nigeria	45%	Oil and Gas Exploration and Production	Indirect
Westport Oil Limited	8 August 2011	Jersey	100%	Financing	Indirect
Tarland Oil Holdings Limited	16 July 2014	Jersey	100%	Holding Company	Indirect
Brineland Petroleum Limited	18 February 2013	Nigeria	49%	Dormant	Indirect
Elandale Nigeria Limited	17 January 2019	Nigeria	40%	Receive, store, handle, transport, deliver $ discharge petroleum and petroleum products	Indirect
Wester Ord Oil & Gas (Nigeria) Limited	18 July 2014	Nigeria	100%	Oil and Gas Exploration and Production	Indirect
Wester Ord Oil and Gas Limited	16 July 2014	Jersey	100%	Holding Company	Indirect
Destination Natural Resources Limited	-	Dubai	70%	Dormant	Indirect
Seplat Energy Offshore Limited	7 February 2022	Nigeria	100%	Oil and Gas exploration and production	Direct
MSP Energy Limited	27 March 2013	Nigeria	100%	Oil and Gas exploration and production	Direct

 

2.        Significant changes in the current reporting period

The following significant changes occurred during the reporting period ended 31 March 2022:

·   During the period, 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 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.

3.        Summary of significant accounting policies

3.1     Introduction to summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these interim condensed consolidated financial statements. These accounting policies have been applied to all the periods presented, unless otherwise stated. The interim financial statements are for the Group consisting of Seplat Energy Plc and its subsidiaries.

3.2     Basis of preparation  

The interim condensed consolidated financial statements of the Group for the first quarter ended 31 March 2022 have been prepared in accordance with the accounting standard IAS 34 Interim financial reporting. This interim condensed consolidated financial statement does not include all the notes normally included in an annual financial statement of the Group. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021 and any public announcements made by the Group during the interim reporting period.

The financial statements have been prepared under the going concern assumption and historical cost convention, except for financial instruments measured at fair value on initial recognition, 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 corresponding interim reporting period, except for the adoption of new and amended standard which is set out below.

3.3     New and amended standards adopted by the Group

The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

a)   Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

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.  

b)   Reference to the Conceptual Framework - Amendments to IFRS 3  

The amendments replace a reference to a previous version of the IASB's Conceptual Framework with a reference to the current version issued in March 2018 without significantly changing its requirements. 

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 interim condensed 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 interim condensed 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. 

d)   IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter 

The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported in the parent's consolidated financial statements, based on the parent's date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as it is not a first-time adopter. 

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 interim condensed consolidated financial statements of the Group as there were no modifications of the Group's financial instruments during the period. 

3.4     Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's interim financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. Details of these new standards and interpretations are set out below:

 

•	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 2023
•	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

 

3.5     Basis of consolidation          

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 March 2022.

This basis of consolidation is the same adopted for the last audited financial statements as at 31 December 2021.

3.6     Functional and presentation currency

Items included in the financial statements of each of the Group's subsidiaries are measured using the currency of the primary economic environment in which the subsidiaries operate ('the functional currency'), which is the US dollar except the UK subsidiary which is the Great Britain Pound. The interim condensed consolidated financial statements are presented in Nigerian Naira and the US Dollars.

The Group has chosen to show both presentation currencies and this is allowable by the regulator.

i.    Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end are generally recognised in profit or loss. They are deferred in equity if attributable to net investment in foreign operations.

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.

ii.   Group companies

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

•

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the reporting date.

•

income and expenses for statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not - a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and all resulting exchange differences are recognised in other comprehensive income.

 

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.

4.    Significant accounting judgements estimates and assumptions

4.1     Judgements

Management judgements at the end of the first quarter are consistent with those disclosed in the 2021 Annual financial statements. The following are some of the judgements which have the most significant effect on the amounts recognised in this interim consolidated financial statement.

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.

ii.       Deferred tax asset

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

iii.      Lease liabilities

In 2018, the Group entered into a lease agreement for its new head office building. The lease contract contains an option to purchase and right of first refusal upon an option of sales during the initial non-cancellable lease term of five (5) years.

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.

iv.      Foreign currency translation reserve

The Group has used the CBN rate to translate its Dollar currency to its Naira presentation currency. Management has determined that this rate is available for immediate delivery. If the rate used was 10% higher or lower, revenue in Naira would have increased/decreased by ₦10 billion, 2021: ₦5.8 billion.

v.       Consolidation of Elcrest

On acquisition of 100% shares of Eland Oil and Gas Plc, the Group acquired indirect holdings in Elcrest Exploration and Production (Nigeria) Limited. Although the Group has an indirect holding of 45% in Elcrest, Elcrest has been consolidated as a subsidiary for the following basis:

•	Eland Oil and Gas Plc has power over Elcrest through due representation of Eland in the board of Elcrest, and clauses contained in the Share Charge agreement and loan agreement which gives Eland the right to control 100% of the voting rights of shareholders.
•	Eland Oil and Gas Plc is exposed to variable returns from the activities of Elcrest through dividends and interests.
•	Eland Oil and Gas Plc has the power to affect the amount of returns from Elcrest through its right to direct the activities of Elcrest and its exposure to returns.

vi.      Revenue recognition

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 receives and consumes 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.

Significant financing component

The Group has entered into an advance payment contract with Mercuria for future crude oil to be delivered. The Group has considered whether the contract contains a financing component and whether that financing component is significant to the contract, including both of the following;

a)	The difference, if any, between the amount of promised consideration and cash selling price and;
b)	The combined effect of both the following:
•	The expected length of time between when the Group transfers the crude to Mercuria and when payment for the crude is received and;
•	The prevailing interest rate in the relevant market.

 

The advance period is greater than 12 months. In addition, the interest expense accrued on the advance is based on a comparable market rate. Interest expense has therefore been included as part of finance cost.

Transactions with Joint Operating arrangement (JOA) partners

The treatment of underlift and overlift transactions is judgmental and requires a consideration of all the facts and circumstances including the purpose of the arrangement and transaction. The transaction between the Group and its JOA partners involves sharing in the production of crude oil, and for which the settlement of the transaction is non-monetary. The JOA partners have been assessed to be partners not customers. Therefore, shortfalls or excesses below or above the Group's share of production are recognised in other income/ (expenses) - net.

Exploration and evaluation assets

The accounting for exploration and evaluation ('E&E') assets require management to make certain judgements and assumptions, including whether exploratory wells have discovered economically recoverable quantities of reserves. Designations are sometimes revised as new information becomes available. If an exploratory well encounters hydrocarbon, but further appraisal activity is required in order to conclude whether the hydrocarbons are economically recoverable, the well costs remain capitalised as long as sufficient progress is being made in assessing the economic and operating viability of the well. Criteria used in making this determination include evaluation of the reservoir characteristics and hydrocarbon properties, expected additional development activities, commercial evaluation and regulatory matters. The concept of 'sufficient progress' is an area of judgement, and it is possible to have exploratory costs remain capitalised for several years while additional drilling is performed or the Group seeks government, regulatory or partner approval of development plans.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

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.

4.2.      Estimates and assumptions

The key assumptions concerning the future and the other key source of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are disclosed in the most recent 2021 annual financial statements.

The following are some of the estimates and assumptions made.

i.  Defined benefit plans

The cost of the defined benefit retirement plan and the present value of the retirement obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and changes in inflation rates.

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.

ii.  Oil and gas reserves

Proved oil and gas reserves are used in the units of production calculation for depletion as well as the determination of the timing of well closure for estimating decommissioning liabilities and impairment analysis. There are numerous uncertainties inherent in estimating oil and gas reserves. Assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may ultimately result in the reserves being restated.

iii.   Share-based payment reserve

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant.

This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share award or appreciation right, volatility and dividend yield and making assumptions about them. The Group measures the fair value of equity-settled transactions with employees at the grant date.

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.

iv.  Provision for decommissioning obligations

Provisions for environmental clean-up and remediation costs associated with the Group's drilling operations are based on current constructions, technology, price levels and expected plans for remediation. Actual costs and cash outflows can differ from estimates because of changes in public expectations, prices, discovery and analysis of site conditions and changes in clean-up technology.

 

v.  Property, plant and equipment

The Group assesses its property, plant and equipment, including exploration and evaluation assets, for possible impairment if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least at every reporting date.

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.

The Group uses 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.

vi.  Useful life of other property, plant and equipment

The Group 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 factors were to deteriorate materially, impairing the ability of the asset to generate future cash flow, the Group may accelerate depreciation charges to reflect the remaining useful life of the asset or record an impairment loss.

vii. Income taxes

The Group is subject to income taxes by the Nigerian tax authority, which does not require significant judgement in terms of provision for income taxes, but a certain level of judgement is required for recognition of deferred tax assets. Management is required to assess the ability of the Group to generate future taxable economic earnings that will be used to recover all deferred tax assets. Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. The estimates are based on the future cash flow from operations taking into consideration the oil and gas prices, volumes produced, operational and capital expenditure.

viii.      Impairment of financial assets

The loss allowances for financial assets are based on assumptions about risk of default, expected loss rates and maximum contractual period. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

ix.  Intangible asset

The contract based intangible assets were acquired as part of a business combination. They are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line bases over their estimated useful lives which is also the economic life of the asset.

The fair value of contract based intangible assets is estimated using the multi period excess earnings method. This requires a forecast of revenue and all cost projections throughout the useful life of the intangible assets. A contributory asset charge that reflects the return on assets is also determined and applied to the revenue but subtracted from the operating cash flows to derive the pre-tax cash flow. The post-tax cashflows are then obtained by deducting out the tax using the effective tax rate.

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.

5.    Financial risk management

5.1     Financial risk factors

The Group's activities expose it to a variety of financial risks such as market risk (including foreign exchange risk, interest rate risk and commodity price risk), credit risk and liquidity risk. The Group's risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

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.

 

Risk	Exposure arising from	Measurement	Management
Market risk - foreign exchange	Future commercial transactions Recognised financial assets and liabilities not denominated in US dollars.	Cash flow forecasting Sensitivity analysis	Match and settle foreign denominated cash inflows with foreign denominated cash outflows.
Market risk - interest rate	Interest bearing loans and borrowings at variable rate	Sensitivity analysis	Review refinancing opportunities
Market risk - commodity prices	Future sales transactions	Sensitivity analysis	Oil price hedges
Credit risk	Cash and bank balances, trade receivables and derivative financial instruments.	Aging analysis Credit ratings	Diversification of bank deposits.
Liquidity risk	Borrowings and other liabilities	Rolling cash flow forecasts	Availability of committed credit lines and borrowing facilities

5.1.1  Credit risk

Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Group. Credit risk arises from cash and bank balances as well as credit exposures to customers (i.e. Mercuria, Shell western, Pillar, Azura, Geregu Power, Sapele Power and Nigerian Gas Marketing Company (NGMC) receivables), and other parties (i.e. NAPIMS receivables, NPDC receivables and other receivables).

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 February 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 Petroleum Development Company (NPDC) and Nigerian National Petroleum Corporation (NNPC).

In addition, the Group is exposed to credit risk in relation to its sale of gas to its customers.

The credit risk on cash and cash 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. 

b)   Estimation uncertainty in measuring impairment loss

The table below shows information on the sensitivity of the carrying amounts of the Group's financial assets to the methods, assumptions and estimates used in calculating impairment losses on those financial assets at the end of the reporting period. These methods, assumptions and estimates have a significant risk of causing material adjustments to the carrying amounts of the Group's financial assets.

 

i.           Significant unobservable inputs

 

The table below demonstrates the sensitivity of the Group's profit before tax to movements in the loss given default (LGD) for financial assets, with all other variables held constant:

 

				Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022	Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022
				₦ million	₦ million	$'000	$'000
Increase/decrease in loss given default
+10%			(179)		-	(450)	-
-10%			179		-	450	-

 

				Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021	Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021
				₦ million	₦ million	$'000	$'000
Increase/decrease in loss given default
+10%			(717)		-	(1,800)	-
-10%			717		-	1,800	-

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:

				Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022	Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022
				₦ million	₦ million	$'000	$'000
Increase/decrease in probability of default
+10%			(170)		-	(426)	-
-10%			170		-	426	-

 

 

 

 

				Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021	Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021
				₦ million	₦ million	$'000	$'000
Increase/decrease in probability of default
+10%			(679)		-	(1,704)	-
-10%			679		-	1,704	-

 

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:

 

				Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022	Effect on profit before tax 31 March 2022	Effect on other components of equity before tax 31 March 2022
				₦ million	₦ million	$'000	$'000
Increase/decrease in forward looking macroeconomic indicators
+10%			(5)		-	(12)	-
-10%			5		-	12	-

 

				Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021	Effect on profit before tax 31 Dec 2021	Effect on other components of equity before tax 31 Dec 2021
				₦ million	₦ million	$'000	$'000
Increase/decrease in forward looking macroeconomic indicators
+10%			(19)		-	(48)	-
-10%			19		-	48	-

5.1.2  Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by ensuring that sufficient funds are available to meet its commitments as they fall due.

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.

	Effective interest rate	Less than 1 year	1 - 2 year	2 - 3 years	3 - 6 years	Total
	%	₦ million	₦ million	₦ million	₦ million	₦ million
31 March 2022
Non - derivatives
Fixed interest rate borrowings
Senior notes	7.75%	10,776	21,260	21,318	302,481	355,835
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd	8.00% + USD LIBOR	1,322	4,452	6,539	7,738	20,051
The Stanbic IBTC Bank Plc	8.00% + USD LIBOR	1,350	4,545	6,675	7,899	20,469
The Standard Bank of South Africa Limited	8.00% + USD LIBOR	771	2,597	3,814	4,514	11,696
First City Monument Bank Limited	8.00% + USD LIBOR	344	1,159	1,703	2,015	5,222
Shell Western Supply and Trading Limited	10.5% + USD LIBOR	495	940	892	4,479	6,806
Total variable interest borrowings		4,282	13,695	19,623	26,644	64,243
Other non - derivatives
Trade and other payables**		157,015	-	-	-	157,015
Lease liability		1,970	67	28	-	2,065
		158,985	67	28	-	159,081
Total		174,043	35,021	40,969	329,125	579,159

 

	Effective interest rate	Less than 1 year	1 - 2 year	2 - 3 years	3 - 5 years	Total
	%	₦ million	₦ million	₦ million	₦ million	₦ million
31 December 2021
Non - derivatives
Fixed interest rate borrowings
Senior notes	7.75%	20,751	20,751	20,751	298,881	361,134
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd	8.00% + USD LIBOR	1,298	4,390	6,456	7,650	19,794
The Stanbic IBTC Bank Plc	8.00% + USD LIBOR	1,324	4,481	6,590	7,810	20,205
The Standard Bank of South Africa Limited	8.00% + USD LIBOR	757	2,561	3,766	4,463	11,547
First City Monument Bank Limited	8.00% + USD LIBOR	338	1,143	1,681	1,992	5,154
Shell Western Supply and Trading Limited	10.5% + USD LIBOR	486	924	876	4,422	6,708
Total variable interest borrowings		4,203	13,499	19,369	26,337	63,408
Other non - derivatives
Trade and other payables**		151,204	-	-	-	151,204
Lease liability		1,950	66	28	-	2,044
		153,154	66	28	-	153,248
Total		178,108	34,316	40,148	325,218	577,790

 

	Effective interest rate	Less than 1 year			1 - 2 year			2 - 3 years				3 - 6 years			Total
	%	$'000			$'000			$'000				$'000			$'000
31 March 2022
Non - derivatives
Fixed interest rate borrowings
Senior notes	7.75%	25,887			51,075			51,215				726,682			854,858
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd	8.00% + USD LIBOR	3,176			10,697			15,709				18,589			48,170
The Stanbic IBTC Bank Plc	8.00% + USD LIBOR	3,242			10,919			16,036				18,976			49,174
The Standard Bank of South Africa Limited	8.00% + USD LIBOR	1,853			6,240			9,164				10,843			28,099
First City Monument Bank Limited	8.00% + USD LIBOR	827			2,786			4,091				4,841			12,544
Shell Western Supply and Trading Limited	10.5% + USD LIBOR	1,189			2,259			2,143				10,760			16,350
Total variable interest borrowings		10,286			32,900			47,142				64,009			154,338
Other non - derivatives
Trade and other payables**		377,217		-				-			-			377,217
Lease liability		4,733		160				67			-			4,960
		381,950		160				67			-			382,177
Total		418,123		84,135				98,424			790,691			1,391,373

 

	Effective interest rate	Less than 1 year			1 - 2 year			2 - 3 years				3 - 5 years		Total
	%	$'000			$'000			$'000				$'000		$'000
31 December 2021
Non - derivatives
Fixed interest rate borrowings
Senior notes	7.75%	50,375			50,375			50,375				725,563		876,688
Variable interest rate borrowings
The Mauritius Commercial Bank Ltd	8.00% + USD LIBOR	3,150			10,656			15,672				18,572		48,050
The Stanbic IBTC Bank Plc	8.00% + USD LIBOR	3,215			10,878			15,998				18,959		49,050
The Standard Bank of South Africa Limited	8.00% + USD LIBOR	1,837			6,216			9,142				10,834		28,029
First City Monument Bank Limited	8.00% + USD LIBOR	820			2,775			4,081				4,836		12,512
Shell Western Supply and Trading Limited	10.5% + USD LIBOR	1,179			2,243			2,126				10,734		16,282
Total variable interest borrowings		10,201			32,768			47,019				63,935		153,923
Other non - derivatives
Trade and other payables**		367,058		-					-			-		367,058
Lease liability		4,733		160					67			-		4,960
		371,791		160					67			-		372,018
Total		432,367		83,303					97,461			789,498		1,402,629

** Trade and other payables (exclude non-financial liabilities such as provisions, taxes, pension and other non-contractual payables).

5.1.3  Fair value measurements

Set out below is a comparison by category of carrying amounts and fair value of all financial instruments:

	Carrying amount		Fair value
	As at 31 March 2022	As at 31 Dec 2021	As at 31 March 2022	As at 31 Dec 2021
	₦ million	₦ million	₦ million	₦ million
Financial assets at amortised cost
Trade and other receivables*	71,449	78,869	71,449	78,869
Contract assets	3,298	1,679	3,298	1,679
Cash and bank balances	129,973	133,667	129,973	133,667
	204,720	214,215	204,720	214,215
Financial liabilities at amortised cost
Interest bearing loans and borrowings	314,200	315,791	318,143	307,447
Trade and other payables**	142,464	136,619	142,464	136,619
	456,664	452,410	460,607	444,066
Financial liabilities at fair value
Derivative financial instruments (Note 20)	1,848	1,543	1,848	1,543
	1,848	1,543	1,848	1,543

 

		Carrying amount			Fair value
	As at 31 March 2022		As at 31 Dec 2021	As at 31 March 2022		As at 31 Dec 2021
	$'000		$'000	$'000		$'000
Financial assets at amortised cost
Trade and other receivables*	171,651		191,463	171,651		191,463
Contract assets	7,922		4,076	7,922		4,076
Cash and bank balances	312,242		324,490	312,242		324,490
	491,815		520,029	491,815		520,029
Financial liabilities at amortised cost
Interest bearing loans and borrowings	754,835		766,614	764,308		746,358
Trade and other payables**	342,260		331,655	342,260		331,655
	1,097,095		1,098,269	1,106,568		1,078,013
Financial liabilities at fair value
Derivative financial instruments (Note 20)	4,439		3,745	4,439		3,745
	4,439		3,745	4,439		3,745

*  Trade and other receivables exclude Geregu power, Sapele power, NGMC VAT receivables, cash advances and advance payments.

** Trade and other payables (exclude non-financial liabilities such as provisions, taxes, pension and other non-contractual payables), trade and other receivables (excluding non-financial assets), 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.

5.1.4  Fair Value Hierarchy

As at the reporting period, the Group had classified its financial instruments into the three levels prescribed under the accounting standards. There were no transfers of financial instruments between fair value hierarchy levels during the year.

•	Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
•	Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
•	Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

 

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 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.

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.

The fair value of the Group's contingent consideration is determined using the discounted cash flow model. The cash flows were determined based on probable future oil prices. The estimated future cash flow was discounted to present value using a discount rate.

The valuation process

The finance & planning team of the Group performs the valuations of financial and non-financial assets required for financial reporting purposes. This team reports directly to the General Manager (GM) Commercial who reports to the Chief Financial Officer (CFO) and the Audit Committee (AC). Discussions of valuation processes and results are held between the GM and the valuation team at least once every quarter, in line with the Group's quarterly 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 period ended 31 March 2022, revenue from the gas segment of the business constituted 11% 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.

6.1     Segment profit disclosure

	3 Months ended 31 March 2022	3 Months ended 31 March 2021	3 Months ended 31 March 2022	3 Months ended 31 March 2021
	₦'million	₦'million	$'000	$'000
Oil	2,400	3,895	5,746	10,240
Gas	5,890	5,554	14,156	14,616
Total profit from continued operations for the period	8,290	9,449	19,902	24,856

 

Oil                                                                   

	3 Months ended 31 March 2022	3 Months ended 31 March 2021	3 Months ended 31 March 2022	3 Months ended 31 March 2021
	₦'million	₦'million	$'000	$'000
Revenue from contract with customers
Crude oil sales	89,955	47,152	216,209	124,084
Operating profit before depreciation, depletion and amortisation	49,051	20,092	117,865	52,862
Depreciation and impairment	(15,172)	(12,311)	(36,460)	(32,398)
Operating profit	33,879	7,781	81,405	20,464
Finance income	13	3	32	7
Finance costs	(7,731)	(6,391)	(18,582)	(16,817)
Profit before taxation	26,161	1,393	62,855	3,654
Income tax (expense)/credit	(23,761)	2,502	(57,109)	6,586
Profit for the period	2,400	3,895	5,746	10,240

 

Gas

	3 Months ended 31 March 2022	3 Months ended 31 March 2021	3 Months ended 31 March 2022	3 Months ended 31 March 2021
	₦'million	₦'million	$'000	$'000
Revenue from contract with customer
Gas sales	10,663	10,778	25,628	28,364
Operating profit before depreciation, depletion and amortisation	8,868	9,112	21,314	23,980
Depreciation, amortization and impairment	(265)	(17)	(638)	(44)
Operating profit	8,603	9,095	20,676	23,936
Share of (loss)/profit from joint venture accounted for using equity accounting	(52)	159	(124)	418
Profit before taxation	8,551	9,254	20,552	24,354
Income tax expense	(2,661)	(3,700)	(6,396)	(9,738)
Profit for the period	5,890	5,554	14,156	14,616

 

6.1.1  Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of commodities at a point in time or over time and from different geographical regions.

	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2021		3 Months ended March 2021		3 Months ended March 2021
	Oil	Gas	Total	Oil		Gas		Total
	₦'million	₦'million	₦'million	₦'million		₦'million		₦'million
Geographical markets
Bahamas	10,022	-	10,022	-		-		-
Nigeria	-	10,663	10,663		11,587		10,778		22,365
Switzerland	69,564	-	69,564		35,565		-		35,565
United Kingdom	10,369	-	10,369		-		-		-
Revenue from contract with customers	89,955	10,663	100,618	47,152		10,778		57,930
Timing of revenue recognition
At a point in time	89,955	-	89,955	47,152		-		47,152
Over time	-	10,663	10,663	-		10,778		10,778
Revenue from contract with customers	89,955	10,663	100,618	47,152		10,778		57,930
	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2022		3 Months ended March 2021		3 Months ended March 2021		3 Months ended March 2021
	Oil	Gas	Total		Oil		Gas		Total
	$'000	$'000	$'000		$'000		$'000		$'000
Geographical markets
Bahamas	24,088	-	24,088		-		-		-
Nigeria	-	25,628	25,628		30,492		28,364			58,856
Switzerland	167,199	-	167,199		93,592		-			93,592
United Kingdom	24,922	-	24,922		-		-			-
Revenue from contract with customers	216,209	25,628	241,837		124,084		28,364		152,448
Timing of revenue recognition
At a point in time	216,209	-	216,209		124,084		-		124,084
Over time	-	25,628	25,628		-		28,364		28,364
Revenue from contract with customers	216,209	25,628	241,837		124,084		28,364		152,448

The Group's transactions with its major customer, Mercuria, constitutes more than 69% (₦69.6 billion, $167 million) of the total revenue from the oil segment and the Group as a whole. Also, the Group's transactions with Geregu Power, Sapele Power, NGMC and Azura (₦10.7 billion, $25.6 million) accounted for the total revenue from the gas segment.

6.1.2  Impairment loss on financial assets by reportable segments

	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2021	3 Months ended March 2021	3 Months ended March 2021
	Oil	Gas	Total	Oil	Gas	Total
	₦'million	₦'million	₦'million	₦'million	₦'million	₦'million
Impairment loss	82	427	509	252	17	269

 

	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2022	3 Months ended March 2021	3 Months ended March 2021	3 Months ended March 2021
	Oil	Gas	Total	Oil	Gas	Total
	$'000	$'000	$'000	$'000	$'000	$'000
Impairment loss	196	1,027	1,223	663	44	707

6.2     Segment assets

Segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the reporting segment and the physical location of the asset. The Group had no non-current assets domiciled outside Nigeria.

	Oil	Gas	Total	Oil	Gas	Total
Total segment assets	₦'million	₦'million	₦'million	$'000	$'000	$'000
31 March 2022	1,417,916	229,271	1,647,187	3,406,408	550,800	3,957,208
31 December 2021	1,393,987	209,549	1,603,536	3,384,033	508,701	3,892,734

6.3     Segment liabilities

Segment liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment.

	Oil	Gas	Total	Oil	Gas	Total
Total segment liabilities	₦'million	₦'million	₦'million	$'000	$'000	$'000
31 March 2022	786,267	141,279	927,546	1,888,937	339,410	2,228,347
31 December 2021	775,644	124,528	900,172	1,882,945	302,203	2,185,248

7.      Revenue from contracts with customers

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Crude oil sales	89,955	47,152	216,209	124,084
Gas sales	10,663	10,778	25,628	28,364
	100,618	57,930	241,837	152,448

The major off takers for crude oil are Mercuria and Shell West. The major off takers for gas are Geregu Power, Sapele Power, Nigerian Gas Marketing Company and Azura.

8.      Cost of sales 

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Royalties	20,883	10,793	50,195	28,404
Depletion, depreciation and amortisation	14,083	11,748	33,848	30,915
Crude handling fees	5,370	4,749	12,908	12,498
Nigeria Export Supervision Scheme (NESS) fee	90	55	217	145
Niger Delta Development Commission Levy	1,193	977	2,867	2,571
Barging/Trucking	1,230	824	2,957	2,167
Operational & maintenance expenses	8,936	8,725	21,498	22,959
	51,785	37,871	124,490	99,659

Operational & maintenance expenses mainly relates 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 ₦686 million, $1.7 million.

Barging and Trucking costs relates to costs on the OML 40 Gbetiokun field and OML 17 Ubima field respectively under Eland Group.

9.      Other income.

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦'million	$'000	$'000
Underlift	5,666	3,115	13,618	8,198
(Loss)/gains on foreign exchange	(2,517)	114	(6,048)	301
Others	375	25	900	66
Tariffs	186	2,527	446	6,649
	3,710	5,781	8,916	15,214

Underlifts are shortfalls of crude lifted below the share of production. It may exist when the crude oil lifted by the Group during the period is less than its ownership share of production. The shortfall is initially measured at the market price of oil at the date of lifting and recognised as other income. At each reporting period, the 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 income.

(Loss)/gains on foreign exchange are principally as a result of translation of Naira, Pounds and Euro denominated monetary assets and liabilities.

Tariffs which is a form of crude handling fee, relate to income generated from the use of the Group's pipeline.

10.    General and administrative expenses  

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦'million	$'000	$'000
Depreciation	435	532	1,042	1,404
Depreciation of right-of-use assets	410	315	985	830
Professional and consulting fees	972	1,082	2,336	2,848
Directors' emoluments (executive)	319	263	766	692
Directors' emoluments (non-executive)	561	548	1,348	1,441
Employee benefits	4,432	3,975	10,657	10,467
Loss on disposal of property, plant & equipment	5	-	12	-
Donation	11	-	26	-
Flights and other travel costs	702	198	1,687	522
Rentals	66	6	159	16
	7,913	6,919	19,018	18,220

Directors' emoluments have been split between executive and non-executive directors.

11.    Impairment loss

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Impairment loss on financial assets	509	269	1,223	707
	509	269	1,223	707

 

12.    Fair value loss

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Realised fair value loss on derivatives	743	562	1,787	1,480
Unrealised fair value loss on derivatives	896	1,214	2,154	3,196
	1,639	1,776	3,941	4,676

Fair value loss on derivatives represents changes arising from the valuation of the crude oil economic hedge contracts charged to profit or loss.

13.    Finance income/(cost)

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Finance income
Interest income	13	3	32	7
Finance cost
Interest on bank loans	(7,468)	(6,222)	(17,950)	(16,373)
Interest on lease liabilities	(20)	(57)	(47)	(149)
Unwinding of discount on provision for decommissioning	(243)	(112)	(585)	(295)
	(7,731)	(6,391)	(18,582)	(16,817)
Finance (cost) - net	(7,718)	(6,388)	(18,550)	(16,810)

Finance income represents interest on short-term fixed deposits.

14.    Taxation

Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the period to 31 March 2022 is 85% for crude oil activities and 30% for gas activities.

The effective tax rate for the period was 76% (2021: 11.25%)

The major components of income tax expense in the interim condensed consolidated statement

 

	3 months ended 31 March 2022	3 months ended 31 March 2021	3 months ended 31 March 2022	3 months ended 31 March 2021
	₦ million	₦ million	$'000	$'000
Current tax:
Current tax expense on profit for the period	(6,347)	(2,565)	(15,255)	(6,750)
Education tax	(1,106)	(456)	(2,658)	(1,199)
Total current tax	(7,453)	(3,021)	(17,913)	(7,949)
Deferred tax:
Deferred tax (expense)/credit in profit or loss	(18,969)	1,823	(45,592)	4,797
Total tax expense in statement of profit	(26,422)	(1,198)	(63,505)	(3,152)

 

 

14.1   Deferred tax

The analysis of deferred tax assets and deferred tax liabilities is as follows:

	As at 31 March 2022	As at 31 Dec 2021	As at 31 March 2022	As at 31 Dec 2021
	₦'million	₦'million	$'000	$'000
Deferred tax assets
Deferred tax asset to be recovered in less than 12 months	40,703	40,280	97,785	97,785
Deferred tax asset to be recovered after more than 12 months	392,782	388,706	943,621	943,621
	433,485	428,986	1,041,406	1,041,406

 

	As at 31 March 2022	As at 31 Dec 2021	As at 31 March 2022	As at 31 Dec 2021
	₦'million	₦'million	$'000	$'000
Deferred tax liabilities
Deferred tax liabilities to be settled in less than 12 months	(117,085)	(121,995)	(281,286)	(296,156)
Deferred tax liabilities to be settled after more than 12 months	(248,670)	(221,184)	(597,406)	(536,945)
	(365,755)	(343,179)	(878,693)	(833,101)
Net deferred tax asset	67,730	85,807	162,713	208,305

15.  Oil & Gas properties

During the three months ended 31 March 2022, the Group acquired assets amounting to ₦10.7 billion, $25.8 million (Dec 2021: ₦54.6 billion, $136.4 million).

16.      Intangible Asset

	License	Total	License	Total
Cost	₦ million	₦ million	$'000	$'000
At 1 January 2022	60,435	60,435	146,713	146,713
Additions	-	-	-	-
Exchange difference	634	634	-	-
At 31 March 2022	61,069	61,069	146,713	146,713
Amortisation
At 1 January 2022	6,390	6,390	15,513	15,513
Charge for the period	320	320	770	770
Exchange difference	68	68	-	-
At 31 March 2022	6,778	6,778	16,283	16,283
Net Book Value (NBV)
At 31 March 2022	54,291	54,291	130,430	130,430
At 31 December 2021	54,045	54,045	131,200	131,200

 

17.      Investment accounted for using equity method

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Investment in Joint venture (ANOH)	93,722	92,795	225,158	225,270
Total	93,722	92,795	225,158	225,270

18.      Trade and other receivables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Trade receivables	15,860	25,923	38,101	62,929
Nigerian Petroleum Development Company (NPDC) receivables	21,247	34,571	51,046	83,924
Nigerian National Petroleum Corporation (NNPC) receivables	12,637	10,154	30,359	24,650
Underlift	24,018	20,657	57,702	50,147
Advances to suppliers	6,312	5,746	15,163	13,947
Receivables from ANOH	5,154	5,259	12,382	12,766
Other receivables	55,236	2,964	132,702	7,194
Total	140,464	105,274	337,455	255,557

18.1   Trade receivables

Included in trade receivables is an amount due from Geregu Power ₦8.17 billion, $19.6 million (Dec 2021: ₦7.1 billion, $17.1 million), Sapele Power ₦2.25 billion, $5.40 million (Dec 2021: ₦ 2.4 billion, $5.9 million) and Nigerian Gas Marketing Company (NGMC) ₦4.23 billion, $10.2 million (Dec 2021: ₦3 billion, $7.3 million) totalling ₦14.65 billion, $35.17 million (Dec 2021: ₦12.5 billion, $30.3 million) with respect to the sale of gas. Also included in trade receivables is an amount of ₦1.67 million (Dec 2021: ₦3.04 billion) $4 thousand (Dec 2021: $7.4 million) and nil (Dec 2021: ₦11.6 billion) nil (Dec 2021: $28.1 million) million due from Mercuria and Shell Western for sale of crude respectively.

18.2   NPDC receivables

The outstanding cash calls due to Seplat from its JOA partner, NPDC is ₦21.2 billion (Dec 2021: ₦ 34.6 billion) $51 million (Dec 2021: $83.9 million).

18.3   Other receivables

Other receivables include a deposit of $128.3 million transferred to Exxon Mobil Corporation, Delaware as part of the consideration to acquire the entire share capital of Mobil Producing Nigeria Unlimited. All other receivables are amounts outside the usual operating activities of the Group.

18.4   Reconciliation of trade receivables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Gross carrying amount	24,616	34,698	59,136	84,230
Less: Impairment allowance	(8,756)	(8,775)	(21,035)	(21,301)
Balance as at 31 March 2022	15,860	25,923	38,101	62,929

 

18.5   Reconciliation of NPDC receivables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Gross carrying amount	26,255	39,514	63,077	95,924
Less: Impairment allowance	(5,008)	(4,943)	(12,031)	(12,000)
Balance as at 31 March 2022	21,247	34,571	51,046	83,924

 

18.6   Reconciliation of NNPC receivables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Gross carrying amount	13,465	10,819	32,348	26,265
Less: Impairment allowance	(828)	(665)	(1,989)	(1,615)
Balance as at 31 March 2022	12,637	10,154	30,359	24,650

 

18.7   Reconciliation of other receivables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Gross carrying amount	74,100	21,632	178,021	52,513
Less: Impairment allowance	(18,864)	(18,668)	(45,319)	(45,319)
Balance as at 31 March 2022	55,236	2,964	132,702	7,194

19.  Contract assets

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Revenue on gas sales	3,298	1,679	7,923	4,077
Impairment on contract assets	-	-	(1)	(1)
	3,298	1,679	7,922	4,076

A contract asset is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer. The Group has recognised an asset in relation to a contract with Geregu power, Sapele power and NGMC for the delivery of gas supplies which the three Companies has received but which has not been invoiced as at the end of the reporting period.

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 crystallizes. 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 and NGMC authorising the quantities, this will be reclassified from contract assets to trade receivables.

19.1   Reconciliation of contract assets

The movement in the Group's contract assets is as detailed below:

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Balance as at 1 January	1,679	2,343	4,076	6,167
Addition during the period	3,296	44,849	7,923	111,987
Receipts for the period	(1,696)	(45,662)	(4,077)	(114,017)
Price Adjustments	-	(24)	-	(60)
Impairment	-	-	-	(1)
Exchange difference	19	173	-	-
Balance as at 31 December	3,298	1,679	7,922	4,076

 

20.  Derivative financial instruments

The Group uses its derivatives for economic hedging purposes and not as speculative investments. Derivatives are measured at fair value through profit or loss. They are presented as current liability to the extent they are expected to be settled within 12 months after the reporting period.

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.

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Foreign currency options-crude oil hedges	1,848	1,543	4,439	3,745
	1,848	1,543	4,439	3,745

21.  Cash and bank equivalents

Cash and bank balances in the statement of financial position comprise of cash at bank and on hand, short-term deposits with a maturity of three months or less.

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Cash on hand	12,583	5,916	30,233	14,361
Short-term fixed deposits	203	29,040	488	70,498
Cash at bank	117,289	98,812	281,767	239,877
Gross cash and cash equivalent	130,075	133,768	312,488	324,736
Loss allowance	(102)	(101)	(246)	(246)
Net Cash and cash equivalents	129,973	133,667	312,242	324,490

 

21.1 Restricted cash

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Restricted cash (Current)	6,732	6,603	16,172	16,029
	6,732	6,603	16,172	16,029

 

Included in the restricted cash balance is $8 million, ₦3.3 billion and $6.2 million, ₦2.6 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 $0.9 million, ₦0.4 billion and $1.1 million, ₦0.4 billion for rent deposit and unclaimed dividend respectively.

These amounts are subject to legal restrictions and are therefore not available for general use by the Group.

22.  Share Capital

22.1   Authorised and issued share capital

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦'million	₦'million	$'000	$'000
Authorised ordinary share capital
1,000,000,000 ordinary shares denominated in Naira of 50 kobo per share	500	500	3,335	3,335
Issued and fully paid
584,035,845 (2021: 584,035,845) issued shares denominated in Naira of 50 kobo per share	296	296	1,862	1,862

Fully paid ordinary shares carry one vote per share and the right to dividends. There were no restrictions on the Group's share capital.

22.2   Movement in share capital and other reserves

		Number of shares	Issued share capital	Share Premium	Share based payment reserve	Treasury 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		-	-	-	540	-	540
Share re-purchased		-	-	-	-	(2)	(2)
Closing balance as at 31 March 2022		584,035,845	296	90,383	5,454	(2,027)	94,106

 

		Number of shares	Issued share capital	Share Premium	Share based payment reserve	Treasury shares	Total
		Shares	$'000	$'000	$'000	$'000	$'000
Opening balance as at 1 January 2022		584,035,845	1,862	520,138	22,190	(4,915)	539,275
Share based payments		-	-	-	1,297	-	1,297
Share re-purchased		-	-	-	-	(5)	(5)
Closing balance as at 31 March 2022		584,035,845	1,862	520,138	23,487	(4,920)	540,567

22.3   Employee share-based payment scheme

As at 31 March 2022, the Group had awarded 79,272,577 shares (Dec 2021: 73,966,540 shares) to certain employees and senior executives in line with its share-based incentive scheme. During the three months ended 31 March 2022, no new shares were vested (Dec 2021: 7,151,098 shares).

22.4   Treasury shares

This relates to Share buy-back programme for Group'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 Group's employee beneficiaries covered under the Trust.

23.  Interest bearing loans and borrowings

23.1   Net debt reconciliation

Below is the net debt reconciliation on interest bearing loans and borrowings for 31 March 2022:

	Borrowings due within 1 year	Borrowings due above 1 year	Total	Borrowings due within 1 year	Borrowings due above 1 year	Total
	₦ million	₦ million	₦ million	$'000	$'000	$'000
Balance as at 1 January 2022	24,988	290,803	315,791	60,661	705,953	766,614
Addition	-	-	-	-	-	-
Interest accrued	7,468	-	7,468	17,950	-	17,950
Interest capitalized	326	-	326	783	-	783
Principal repayment	-	-	-	-	-	-
Interest repayment	(11,821)	-	(11,821)	(28,412)	-	(28,412)
Other financing charges	(874)	-	(874)	(2,100)	-	(2,100)
Transfers	4,901	(4,901)	-	11,779	(11,779)	-
Exchange differences	262	3,048	3,310	-	-	-
Carrying amount as at 31 March 2022	25,250	288,950	314,200	60,661	694,174	754,835

Below is the net debt reconciliation on interest bearing loans and borrowings for 31 December 2021:

	Borrowings due within 1 year	Borrowings due above 1 year	Total	Borrowings due within 1 year	Borrowings due above 1 year	Total
	₦ million	₦ million	₦ million	$'000	$'000	$'000
Balance as at 1 January 2021	35,518	229,880	265,398	93,468	604,947	698,415
Additions	268,725	-	268,725	671,000	-	671,000
Interest accrued	29,765	-	29,765	74,322	-	74,322
Interest capitalized	4,995	-	4,995	12,473	-	12,473
Principal repayment	(240,291)	-	(240,291)	(600,000)	-	(600,000)
Interest repayment	(27,728)	-	(27,728)	(69,236)	-	(69,236)
Other financing charges	(8,154)	-	(8,154)	(20,360	-	(20,360)
Transfers	(40,451)	40,451	-	(101,006)	101,006	-
Exchange differences	2,609	20,472	23,081	-	-	-
Carrying amount as at 31 December 2021	24,988	290,803	315,791	60,661	705,953	766,614

650 million Senior notes - April 2021

In March 2021, the Group offered 7.75% senior notes with an aggregate principal of $650 million due in April 2026. The notes, which were priced on 25 March and closed on 1 April 2021, were issued by the Group in March 2021 and guaranteed by certain of its subsidiaries.

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 $636.1 million, although the principal is $650 million.

 

$110 million Reserved based lending (RBL) facility - March 2021 

The Group through its subsidiary Westport on 5th December 2019 entered into a five-year loan agreement with interest payable semi-annually. The RBL facility has an initial contractual interest rate of 8% + USD LIBOR as at March 2022 (8.2%) and a settlement date of 29 November 2023. 

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 31^st 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 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 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 LIBOR plus 8%, as long as more than 50% of the available facility is drawn. 

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 $2.2 million using an effective interest rate of 8.2%. The interest paid was determined using 6-month USD LIBOR 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 $108.4 million (Dec 2021: $108.8 million), although the principal is $110 million.

 

$50 million Reserved based lending (RBL) facility - July 2021 

In July 2021, the Group raised a $50 million offtake line to the Reserved Based Lending Facility. The Facility has a 6-year tenor, maturing in 2027. The amortised cost for this as at the reporting period is $10.3 million, although the principal is $11 million.

24.      Trade and other payables

	31 March 2022	31 Dec 2021	31 March 2022	31 Dec 2021
	₦ million	₦ million	$'000	$'000
Trade payable	27,933	49,607	67,107	120,426
Accruals and other payables	76,878	67,630	184,694	164,175
NDDC levy	6,133	5,283	14,734	12,826
Royalties payable	25,005	14,100	60,073	34,228
Overlift	12,213	14,584	29,341	35,403
	148,162	151,204	355,949	367,058

Included in accruals and other payables are field accruals of ₦17.1 billion (Dec 2021: ₦34.4 billion) $41.2 million (Dec 2021: $83.5 million), and other vendor payables of ₦33.33 billion (Dec 2021: ₦6.4 billion) $80.07 million (Dec 2021: $15.6 million). 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.

25.  Computation of cash generated from operations

		3 months ended	3 months ended	3 months ended	3 months ended
		31-Mar-22	31-Mar-21	31-Mar-22	31-Mar-21
		₦ million	₦ million	$'000	$'000
Profit before tax		34,712	10,647	83,407	28,008
Adjusted for:
Depletion, depreciation and amortization		14,518	12,281	34,890	32,319
Depreciation of right-of-use asset		410	315	985	830
Impairment losses on financial assets		509	269	1,223	707
Interest income		(13)	(3)	(32)	(7)
Interest expense on bank loans		7,468	6,222	17,950	16,373
Interest on lease liabilities		20	57	47	149
Unwinding of discount on provision for decommissioning		243	112	585	295
Unrealised fair value loss on derivatives		896	1,214	2,154	3,196
Realised fair value loss on derivatives		743	562	1,787	1,480
Unrealised foreign exchange loss/(gain)		2,517	(114)	6,048	(301)
Loss on disposal of property, plant & equipment		5	-	12	-
Share based payment expenses		540	544	1,297	1,431
Share of loss/(profit) in joint venture		52	(159)	124	(418)
Defined benefit expenses		675	-	1,623	-
Changes in working capital:
Trade and other receivables		18,308	(11,844)	44,004	(31,169)
Prepayments		(358)	(1,148)	(860)	(3,022)
Contract assets		(1,601)	(919)	(3,847)	(2,419)
Trade and other payables		(4,622)	(7,647)	(11,109)	(20,124)
Restricted Cash		(59)	(7,955)	(143)	(20,935)
Inventories		317	(307)	761	(807)
Net cash inflow from operating activities		75,280	2,127	180,906	5,586

 

26.  Earnings per share (EPS)

Basic

Basic EPS is calculated on the Group's profit after taxation attributable to the parent entity and on the basis of weighted average number of issued and fully paid ordinary shares at the end of the year.

Diluted

Diluted EPS 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.

	31 March 2022	31 March 2021	31 March 2022	31 March 2021
	₦ million	₦ million	$'000	$'000
Profit attributable to Equity holders of the parent	6,868	13,550	16,484	35,647
(Loss) attributable to Non-controlling interests	1,422	(4,101)	3,418	(10,791)
Profit for the year	8,290	9,449	19,902	24,856
	Shares '000	Shares '000	Shares '000	Shares '000
Weighted average number of ordinary shares in issue	584,036	581,841	584,036	581,841
Outstanding share-based payments (shares)	2,801	6,604	2,801	6,604
Weighted average number of ordinary shares adjusted for the effect of dilution	586,837	588,445	586,837	588,445
Basic earnings per shares	₦	₦	$	$
Total basic earnings per share attributable to the ordinary equity holders of the Group	11.76	23.29	0.03	0.06
Diluted earnings per shares	₦	₦	$	$
Total diluted earnings per share attributable to the ordinary equity holders of the Group	11.70	23.03	0.03	0.06

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.

The decrease in the weighted average number of ordinary shares adjusted for the effect of dilution was due to the shares forfeited (share award scheme) in 2021.

27.  Proposed dividend

The Group's directors proposed an interim dividend of 2.5 cents per share for the reporting period (2021: 2.5 cents).

28.  Related party relationships and transactions

The Group is controlled by Seplat Energy Plc (the parent Company). The parent Company is owned 6.43% either directly or by entities controlled by A.B.C Orjiako (SPDCL(BVI)) and members of his family and 12.19% either directly or by entities controlled by Austin Avuru (Professional Support Limited and Platform Petroleum Limited). The remaining shares in the parent Company are widely held.

The goods and services provided by the related party is disclosed below. The outstanding balances payable to/receivable from related parties are unsecured and are payable/receivable in cash.

Shebah Petroleum Development Company Limited SPDCL ('BVI'): The Chairman of Seplat is a director and shareholder of SPDCL (BVI). The company provided consulting services to Seplat. Services provided to the Group during the period amounted to $430,206, ₦179 million (2021: $203,661, ₦77.3 million). Payables amounted to $532,037, ₦221 million (2021: $101.8 thousand, ₦41.9 million).

29.  Commitments and contingencies

29.1   Contingent liabilities

The Group is involved in a number of legal suits as defendant. The estimated value of the contingent liabilities is ₦11.5 billion, $27.6 million (Dec 2021: ₦7.9 billion, $19.2 million). The contingent liability for the year is determined based on possible occurrences, though unlikely to occur. No provision has been made for this potential liability in these financial statements. Management and the Company's solicitors are of the opinion that the Company will suffer no loss from these claims.

30.  Events after the reporting period

During the period, the Group agreed a $55 million settlement with the operator (All Grace Energy Limited) of Ubima asset which was acquired in 2019 during the acquisition of Eland, the agreed settlement will be paid in due course. The board approved an exit from the asset's operations in April 2022. The current reserve of the asset stands at circa 2mmbbls. However, the Group did not report any production under Ubima in the interim financial statements.

31.  Exchange rates used in translating the accounts to Naira

The table below shows the exchange rates used in translating the accounts into Naira.

 

	Basis	31 March 2022	31 March 2021	31 Dec 2021
		₦/$	₦/$	₦/$
Fixed assets - opening balances	Historical rate	Historical	Historical	Historical
Fixed assets - additions	Average rate	416.06	380.00	400.48
Fixed assets - closing balances	Closing rate	416.25	380.00	411.93
Current assets	Closing rate	416.25	380.00	411.93
Current liabilities	Closing rate	416.25	380.00	411.93
Equity	Historical rate	Historical	Historical	Historical
Income and Expenses:	Overall Average rate	416.06	380.00	400.48