Seplat Energy Plc, listed on both the Nigerian Exchange Limited and the London Stock Exchange, has been reclassified to “B” from “B-” by Fitch Ratings on its Long Term Issuer Default Rating (IDR).
Fitch also confirms that Seplat Energy’s outlook is “stable” and has raised the company’s senior unsecured rating for the $ 650 million senior bonds due 2026 to “B” instead of “B-”. “, With a recovery note of” RR4 “.
The rating agency said: “The upgrade reflects improved financial flexibility and a strong liquidity profile following the debt refinancing in 2021, which we believe will help Seplat Energy survive for more than two years. in the event of force majeure without access to the Trans Forcados pipeline (TFP). The Amukpe-Escravos (AEP) pipeline, an alternative oil export route, has been completed and is being commissioned, according to Seplat, but there is no certainty as to when it will ship its first oil.
The rating incorporates Seplat Energy’s small scale of cash flow, the concentration of the company’s asset base in Nigeria (B / Stable) and a historically unstable operating environment in the struggling Niger Delta, including recurring problems with the oil transport system. The rating also reflects moderate leverage, prudent financial policies, competitive unit profitability, a life of 2P reserves at the end of 2020 of 27 years and growing domestic gas activity.
Specifically, Fitch revalued Seplat Energy’s bonds of $ 650 million to B-. The upgrade reflects improved financial flexibility and a strong liquidity profile following the debt refinancing in 2021. Due to Seplat Energy’s cautious approach to financial management, Fitch believes the company has built a very solid balance sheet. Even though the Trans Forcados pipeline was in force majeure for two unprecedented years, Seplat Energy has sufficient strength to survive and service its debt.
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