Announcement of Periodic Review: Moody’s announces completion of a periodic review of ratings of Seplat Petroleum Development Company PlcGlobal Credit Research — Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Seplat Petroleum Development Company Plc and other ratings that are associated with the same analytical unit.
The review was conducted through a portfolio review discussion held on 28 April 2021 in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.Seplat Petroleum Development Company Plc’s (Seplat) B2 ratings reflect its leading exploration and production (E&P) position in Nigeria with long-term oil and gas field licensing agreements and ability to withstand low oil prices in the near term.
This is supported by short term oil hedges and contracted gas revenue representing 21% of 2020 revenue.
Seplat’s moderately positioned credit metrics and sizable unrestricted cash balances, provide a buffer against a decline in its operating cash flow from potential low oil prices over the next 18 months.
The ratings are constrained by the company’s exposure to volatile oil prices; small scale of production; and concentration to a single asset block, Oil Mining Licences (OML) 4, 38 and 41 which account for 76% of the company’s working interest production.
The rating is further constrained given the operational concentration to a single country, Nigeria with reliance on Nigerian government-owned entities for the timely payment of capital cash calls.