OML 4 Onitsha Strategic Report 01—77
OML 40 OML 41 Oben
Polobo Sibiri Abiala Sapele Okporhuru
Okwefe
Opuama Gbetiokun Mosogar
Ubaleme Amukpe Orogho
Ovhor
OML 38
Okoporo
Umuseti (Pillar)
Escravos Jisike
Warri OPL 283 Igbuku (Pillar) OML 53
Ohaji
South Owerri
Heoma
Forcados Odinma
Emeabiam
Alaoma
Omerelu Owu
Ubima
Port Harcourt
OML 55 Krakama
Soku Dama Governance Report 78—144
Nembe
Robert Kiri Akaso
Ke Bonny
Belema
Inda Bonny
Brass
ANOH Gas Processing Plant Working interest 2P reserves
(Bscf)
The ANOH Gas Processing Plant ANOH is one of Nigeria’s most The initial total project cost OPL 283 66
development at OML 53 (and strategic gas projects. It will was budgeted at $700 million. OMLs 4/38/41 693
adjacent OML 21 with which the help Nigeria to accelerate its Following a cost optimisation
upstream project is unitised) will transition away from small-scale programme, the AGPC Financial Statements 145—308
drive the next phase of growth diesel generators to cleaner, less construction cost is now
for Seplat’s expanding gas expensive fuels such as natural expected to be no more than
business. The project will gas for power generation. $650 million, inclusive of
comprise a Phase One financing costs and taxes,
300MMscfd midstream The upstream development, significantly lower than the
gas processing plant. including the drilling of six original projected cost at FID.
production wells, will be
The ANOH plant, is being built delivered by the upstream unit OML 53 742
by AGPC, which is an IJV owned operator SPDC, with four wells
equally between Seplat and the expected to be completed
Nigerian Gas Company (NGC), in 2021.
a wholly owned subsidiary of
Nigerian National Petroleum We have made excellent
Corporation (NNPC). In February progress on the project despite
2021, The IJV, AGPC, successfully the Covid-19 challenges and we
raised $260 million in debt to expect the major gas processing
fund completion of the ANOH units to arrive in Nigeria in Q3
project. The project is now fully 2021, to commence installation
funded following completion before the end of the year, with
of equity investments of mechanical completion and
$210 million by each partner pre-commissioning in Q1 2022
($420 million combined). and first gas flowing to
customers by the end of
H1 2022.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 49
Operational Review – Special report
DIVERSIFYING
EXPORT
ROUTES
Our strategy is to reduce over-reliance New export routes The minor completion works on the
on any operated asset or associated should significantly 160,000bopd pipeline are not within
third-party export route by diversifying improve sales volumes Seplat’s control and have been slower
our production base and exploring or by reducing downtime than anticipated due to a combination of
creating new export routes over which and reconciliation losses challenges associated with access to the
we have more control. currently experienced Escravos terminal owing to Covid-19 and
by using third-party issues relating to ownership of the pipeline.
At OMLs 4, 38 and 41, we have retained infrastructure. Our partner NPDC now owns a direct stake
access to two jetties at the Warri Refinery in the pipeline and we understand they are
that will enable sustained exports of working with the other pipeline owner and
30,000bopd (gross) if required, should their banks to enable the completion of the
there be problems with the primary export project. We have consequently adjusted our
route, the Trans Forcados Pipeline (TFP). plan and budgets to expect commencement
However, it was not necessary for us to of export of the initial permitted volume of
activate this alternative export route in 40,000bopd through the Escravos terminal
2020. Security initiatives undertaken by in the second half of 2021.
the Nigerian Government, as well as our
own continuity strategies, minimised
downtime experienced because of the TFP.
The Amukpe-Escravos Pipeline (AEP) is
set to provide a third and more secure
underground evacuation option for liquids
production from OMLs 4, 38 and 41. Once
completed, we believe it will significantly
improve the assets’ production uptime
(83% in 2020) and reduce losses from
crude theft and reconciliation (9.4%
in 2020).
50 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
Governance Report 78—144
OML 40’s production is evacuated through Financial Statements 145—308
the Trans Escravos Pipeline (TEP), which has
lower reconciliation losses and better uptime
than the Trans Forcados Pipeline (TFP). There
is an option being explored to connect the
AEP line to the TEP through a short 8km spur
providing an additional route for OML 4, 38
and 41 production. In addition, an option
exists to combine the production and secure
an offshore Floating Production Storage and
Offloading (FPSO) facility and use it as a
crude oil export terminal. This should
significantly improve sales volumes by
reducing downtime and reconciliation losses
currently experienced by using third-party
infrastructure, which are budgeted to
average an aggregate of 30% per annum. A
dedicated team is developing these export
options and we will communicate the details
in due course.
At OML 53, Seplat plans to construct a crude
export line to convey production from Ohaji
South field into Ebocha-Brass Trunkline
via Ebocha manifold. This will provide an
alternate evacuation route to Brass Terminal
and thereby help alleviate production
deferment from the field.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 51
Financial review
ENSURING Our approach to financial sustainability
FINANCIAL Our robust financial performance in 2020
SUSTAINABILITY demonstrated the importance of a prudent
approach to managing our finances,
Seplat’s prudent financial management has focusing on capital allocation, revenue
enabled us to maintain dividends, increase diversification, cost control, hedging and
capital investment and voluntarily repay $100m debt management. Despite a challenging
debt, despite the challenging conditions of 2020. year in which revenues fell 24% we repaid
$100 million debt, invested $150 million
Emeka Onwuka for growth and maintained our dividend
Chief Financial Officer at $0.10 per share for the year.
Our approach to financial sustainability
is outlined below.
Capital allocation
Financial sustainability begins with the
decisions we make about capital allocation
and the priorities we consider when using
cash. Our aim has always been to maintain
a healthy balance sheet, focusing on cash
generation first and foremost so we can build
up a large reserve for future deployment
and protect ourselves against the kind of
downturns the world experienced in 2020.
Our priorities for the allocation of capital
are shown in the chart opposite. We focus
on uses that offer the best possible returns
for the lowest risk. In our capital investment
programme, we are investing heavily in our
gas business in order to serve a potentially
huge market in which we are already a
leader. Investing in gas will also help us
to diversify our revenues against oil price
volatility as well as provide the kind of
long-term, highly visible contracts that
are simply not possible with oil.
When we consider investments in oil, we
look at which fields will offer the highest
returns at a range of different price levels.
We prioritise those that will have the lowest
operating costs and are capable of
profitability even at the low prices we
experienced in 2020. As price scenarios
increase, more expensive fields will naturally
come into consideration and this determines
our drilling priorities for the future. We will
also consider supporting infrastructure
investments that will assure our flow of
oil more securely, for example through
dedicated pipelines, to ensure higher
revenues through the reduction of losses.
Overall, we invested $150 million in capital
projects in 2020, compared to $125 million
in 2019, thereby demonstrating our continuing
commitment to growth despite the crises
of 2020. However, referring to the chart
on page 9, it is clear that we have used
reductions in capital investment as a
strategy to conserve cash when necessary,
and this is an option that remains open to
us in the future.
52 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
The reduction of debt is another priority for Clearly focused capital allocation priorities Strategic Report 01—77
the allocation of our capital. During the year We are focused on low-risk strategies to generate and deploy cash
we voluntarily repaid $100 million of our to grow the business and improve stakeholder returns
Revolving Credit Facility, thereby reducing
our debt but maintaining the headroom to Low-risk Returns to Repayment Value-creating
use it, if necessary, in the future. In addition, capital investment shareholders of debt M&A
we constantly seek to optimise the terms
under which we take on debt. We continue • I nvest in growing • 10c for 2020 • Successful $650m • Seek low-risk
to look at refinancing opportunities as the gas business bond offer in opportunities
appropriate, including in the debt to fuel Nigeria’s • S ince raising March 2021 to for growth that
capital markets. increasing demand $535m at listing redeem existing enhance NAV
we have returned $350m Senior and FCF
Dividends are another priority for capital • Develop ANOH for $344m (by end notes and repay
allocation. Our aim is to maintain a core long-term growth of 2020) $250m drawn on • Opportunity to
dividend of $0.05 per share and top it up with $350m Revolving consolidate
a further $0.05 per share whenever we feel it • Offset expected • M aintain core Credit Facility Nigerian market Governance Report 78—144
is appropriate. As other companies were decline in oil wells by dividend of $0.05 though acquisition
cutting back their dividend payments for the developing low-risk per share at 9M • Refinanced Eland’s of assets divested
2019 financial year and looking to keep them wells / prospects results, top up $100m Reserve- by IOCs and
low in 2020, we honoured our commitments $0.05 at full-year Based Loan on distressed
for 2019 and again declared a total dividend • Sustain and results as 18th March 2021 small-scale
of $0.10 per share in 2020. optimise production appropriate with new five-year operators
$100m RBL facility
In addition to organic growth we continue due March 2026
to look for low-risk, value-enhancing
opportunities to growth through • Maintain optimal
acquisitions, either of operating assets balance of cash
or in the case of Eland, other energy and debt
companies. It should be remembered that
our acquisition of Eland not only brought us
its operating assets but also the right to be
repaid a loan of more than $400 million in
cash over the coming years.
Our robust financial Cost control Revenue, production and commodity prices Financial Statements 145—308
performance in 2020 We maintain a relentless focus on cost The Brent oil price averaged $43.21/bbl over
demonstrated the control at all times but in 2020 we were able 2020 (2019: $64.04/bbl). Brent remained
importance of a prudent to achieve even deeper cuts as the pandemic volatile throughout the year, following the
approach to managing took hold and demand for oil was reduced. twin shocks of the Saudi Arabia – Russia
our finances, focusing We renegotiated key supply contracts to price war and the Covid-19 pandemic,
on capital allocation, achieve cuts of more than 30% in some trading between a high of $68.91/bbl in
revenue diversification, cases, thereby enabling us to remain January and a low of $19.33/bbl in April,
cost control, hedging profitable at the lower prices experienced before exiting the year at $51.80/bbl.
and debt management. during the year. A notable example was the
saving we achieved in barging costs at OML Total revenue in 2020 was $530.5 million,
Revenue diversification 40, where we were able to reduce these from down 24.0% from the $697.7 million achieved
Given the volatility of oil revenues, our $14/bbl to around $5/bbl during the second in 2019. Crude oil revenue was $417.9 million
expansion into gas represents another half of the year. In addition, a natural (2019: $495.1 million) a 15.6% reduction
strategy to ensure long-term financial (and consequence of the pandemic was a compared to 2019, largely reflecting lower
environmental) sustainability. As outlined reduction in travel and office costs. realised oil prices of $39.95/bbl for the period
in pages 64-67, gas has huge potential to (2019: $64.4/bbl) offset by added production
power Nigeria’s future economic and societal Hedging primarily from the Eland assets. Following
growth. Gas has the benefits of long-term, Our approach to hedging oil revenues is the completion of its acquisition, Eland’s
more visible contracts with lower royalties based upon the desire to protect from revenues and costs are included in the
and taxes that enable higher drop-through excessive downside shocks at the best full-year 2020 accounts but not reflected
of cash. We will continue to increase the achievable cost. In 2020, this strategy proved in 2019. A $50.0 million oil underlift was
contribution of gas to our revenue mix and its worth as oil prices collapsed in the recorded under other income in the period,
expect a significant boost from dividends we second quarter. The details of our hedging compared to an overlift of $6.8 million in 2019.
receive when our joint-venture ANOH Gas strategy are shown in the table below.
Processing Plant begins operation next year.
Details of hedging 2020
Period Barrels hedged Strike price Cost Payment received
Q1 (Mbbls) ($) (bbl) (gross)
Q2 1.5 $0.83 –
Q3 1.5 $45 $0.75
Q4 1.5 $45 $0.99 $23.16m
1.5 $45 $1.49 $3.08m
0.5 $30 $1.04
$35 –
–
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 53
Financial review |continued
Average working-interest liquids production As other companies Operating results
was 33,714bopd, up 40.9% from 23,935bopd were cutting back their After adjusting for non-cash impairments
in 2019, whilst the total volume of crude lifted dividend payments for and fair value losses, the operating profit
in the year was 10.5 MMbbls compared to 7.7 the 2019 financial year was $121.4 million. Including all
MMbbls in 2019. The higher volume was due and looking to keep them adjustments, the operating loss for the year
to a maiden contribution from OML40 and low in 2020, we honoured was $31.7 million (operating profit 2019:
Ubima, and higher production from OML 53, our commitments for $311.9 million). The loss reflects lower oil
though constrained by OPEC+ cuts of 2019 and again declared prices realised and an impairment provision
410,000bbls (on a gross basis) allotted to a total dividend of $0.10 of $144.3 million booked in the period, which
the Group. The Company experienced TFP per share in 2020. includes a non-financial asset charge of
reconciliation losses of 9.4% for the period, $114.4 million (IAS 36 as detailed above) and
but we expect these to fall when the Gross profit financial asset charges of $29.9 million
Amukpe-Escravos underground pipeline Gross profit decreased to $124.6 million (IFRS 9). The financial asset charge includes
comes onstream. (2019: $395.7 million) due to lower oil prices charges against a deposit made for a
and higher non-production costs primarily potential investment that the Company
Gas sales revenue decreased by 17.1% to consisting of royalties and DD&A, which were will no longer pursue. Other income of
$112.5 million (2019: $135.8 million), due $228.8 million compared to $187.7 million in $83.9 million includes an adjustment for a
to lower gas sales volumes of 37.1 Bscf the prior year. The DD&A charge for oil and $50.0 million underlift position (shortfalls
compared to 47.8 Bscf in 2019. The lower gas gas assets increased to $127.5 million during of crude lifted below Seplat’s share of
sales volumes reflect lower-than-expected 2020 (2019: $91.1 million), reflecting higher production, which is priced at the date of
gas production owing to constrained depletion of reserves because of increased lifting and recognised as other income) and
demand due to the impact of the pandemic production compared to the prior year. the $2.2 million tariff income generated from
and delays in completing the Oben-50 gas the use of the Company’s pipeline. Hedging
well, following a restoration in demand. Direct operating costs, which include income of $26.4 million was received in
There were no gas-processing revenues crude-handling fees, rig-related costs the period; $8.3 million hedging costs are
in the period, compared with the one-off and operations and maintenance costs recognised as fair value charges. The stated
gas-processing revenue of $66.9 million in amounted to $151.8 million in 2020, $7.2 million provision no longer required
2019, which was the Oben gas plant tolling 44.2% higher than $105.3 million in 2019. relates to a contingent liability initially
payment by NPDC. Production evacuation from the Gbetiokun recognised on acquisition of Eland.
and Ubima fields resulted in barging and
The average realised gas price was slightly trucking costs of $15.9 million. These An EBITDA of $265.8 million adjusts for
higher, at $2.87/Mscf (2019: $2.84/Mscf). increased costs reflect the additional impairment and other non-cash items,
Gas sales contributed 21.2% of total Group production volumes from the Eland assets equating to a margin of 50.1% for the year.
revenue in 2020 (2019: 19.5%). and resultant increase in royalties and crude
handling fees. On a cost-per-barrel basis, Tax
Cost-saving initiatives production opex was higher at $8.90/boe The Group’s tax charge for 2020 was
During the year, a comprehensive cost- (2019: $6.20/boe) because of the effect of $5.1 million, compared to $29.1 million
saving programme was developed to adapt OPEC+ restrictions that curtailed production for 2019.
to current market conditions. Through the volumes and the trucking and barging costs
implementation of these actions, the Group at Gbetiokun. However, benefits of the The tax charge is made up of a deferred
aims to reduce costs by at least 30% across successful streamlining of the Gbetiokun tax credit of $8.5 million and a current tax
the business by the end of 2021. Across operations have driven barging costs down charge of $13.6 million. The deferred tax
2020, we achieved $17 million in cost savings from $14/bbl to $5/bbl. credit is mainly driven by the unutilised
through these various initiatives. Towards capital allowances and unutilised tax losses
opex and G&A reduction, IT, administrative Non-cash IAS 36 impairments for the period. The estimated effective tax
and travel costs have been reduced to the As previously reported, under IAS 36 the rate used for the year ended 31 December
essentials and all third-party and service Company identified the need to revalue 2020 was 6% (2019: 10%). The reduction in
contracts were renegotiated downwards. its assets due to the significant economic the effective tax rate was principally due to
This is reflected in General and uncertainty of the Covid-19 crisis. the recognition of tax losses available for
Administrative expenses holding relatively Following a reassessment of the business utilisation against future profit.
stable at $76.0 million despite a higher models and assumptions to establish their
depreciation charge and the consolidation reasonableness and practicality, particularly In May 2015, in line with sections of the
of Eland (2019: $70.6 million). in the current and expected oil price Companies Income Tax Act, which provides
environment, we decided to book a incentives to companies that deliver gas
The capital investment programme was non-cash provision of $114.4 million utilisation projects, Seplat was granted
revised to conserve cash and manage across non-financial assets in the period. a three-year tax holiday with a possible
liquidity. In terms of efficiency, we significantly extension of two years. In 2018, upon review
improved our technologies to support secure of the performance of the business, the
and reliable virtual collaboration, which Group provided a notification to the Federal
increased employee productivity in a work Inland Revenue Service (FIRS) for the
from home environment. Additionally, extension of claim for the additional
Wells, Reservoir and Facilities Management two-year tax holiday. Effective May 2020,
recommendations and learnings from the five-year tax holiday benefit for the
the Oben Gas Plant maintenance were gas business ended and the financial
implemented. The Group intends to statements have been prepared on
continue to simplify activities and this basis.
increase their efficiency.
54 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Net result Revenue breakdown by oil and gas ($m) 2020 Strategic Report 01—77
Loss before tax was $80.2 million, compared 2019
to a profit before tax of $292.9 million in 112.5
2019. The higher net finance charge of 202.4 495.1
$50.2 million in 2020 includes interest on 417.9
the $350 million RCF in December and the Gas Oil Governance Report 78—144
consolidation of Eland finance (2019: Gas Oil
$20.1 million). Loss for the year was -24.0% Financial Statements 145—308
$85.3 million (2019: $277.0 million profit). -52.0% Revenue $530.5 million
-8.6% Oil revenue was 15.6% down at
The resultant basic loss per share was +20.3% $417.9 million, largely reflecting lower
$0.13 in 2020, compared to an EPS of -3.7% realised oil prices of $39.95/bbl for the
$0.49 in 2019. The reduction was mainly due period (2019: $64.4/bbl) offset by added
to lower oil prices and impairment charges production primarily from the Eland assets.
described above.
Major JV receivable reduced
Dividend The major JV receivable balance now stands
In line with the dividend policy, the Board has at $107.0 million, down from $222.3 million at
recommended a final dividend of $0.05 per the end of 2019.
share. This will bring the total dividend to
$0.10 per share (2019: $0.10 per share). Net cash flow from operations $309 million
Net cash flows from operating activities,
Subject to approval of shareholders, the after movements in working capital, were
dividend will be paid shortly after the Annual $308.7 million (2019: $337.8 million). An
General Meeting, which will be held in Lagos, income tax payment of $10.4 million was
Nigeria, on 20 May 2020. made in the period (2019: $3.5 million).
Repayment of Elcrest development loan Capital expenditure $150.1 million
to Seplat Capital expenditures were $150.1 million
In acquiring Eland, Seplat has acquired the including costs of around $83.5 million
right to be repaid a shareholder loan. The for drilling and completion of nine wells
loan was advanced to Elcrest by Westport, including three gas wells and six
Eland’s 100%-owned financing subsidiary development oil wells that were completed
for the development of OML 40. Following earlier in the year. Associated facilities and
its acquisition of Eland, Seplat is entitled engineering costs amounted to $61.3 million.
to 100% of Elcrest’s production and net
cash flows until the loan is repaid in full. At Net debt $439.7 million
31 December 2020, the outstanding balance Seplat ended the year with gross debt of
of the loan was approximately $417 million. $698.4 million with most maturities in 2023,
and cash at bank of $258.7 million, which
After repayment of the loan, Seplat’s interest includes restricted cash of $33.6 million,
in OML 40’s production and net cash flows leaving net debt at $439.7 million.
will revert to 20.25%, representing its 45%
interest in Elcrest, which in turn owns 45%
of OML 40.
Cash flows from operating activities
Net cash flows from operating activities,
after movements in working capital, were
$308.7 million (2019: $337.8 million). An
income tax payment of $10.4 million was
made in the period (2019: $3.5 million).
The Group received $188.1 million from
the major JV towards the settlement of
outstanding dollar-denominated cash
calls and $154.2 million (Naira equivalent)
to offset Naira cash calls totalling
$342.3 million received in 2020. This
compares favourably to $179 million
received in 2019.
The major JV receivable balance now stands
at $107.0 million, down from $222.3 million
at the end of 2019.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 55
Cash flows from investing activities Most of the Group’s As a result, capital expenditures were
The Group implemented a modest capex capital expenditures $150.1 million in 2020 and included costs
programme for the majority of 2020, in are discretionary with of around $83.5 million for drilling and
response to low oil prices caused by a price the flexibility to align completion of nine wells including three gas
war between OPEC+ members in the first investment with cash wells (completion of Oben 48; Oben 49 and
half of the year, exacerbated by the impact of flow in response to Oben 50) and six development oil wells
Covid-19 on global oil demand. Our planned prevailing conditions (Sapele-35, Ovhor-6ST, Ovhor-20, Ohaji
spend of $120.0 million for 2020 was and future growth South-5, Ohaji South-6 and Gbetiokun-5)
designed to sustain production from our oil opportunities. Capital that were completed earlier in the year.
wells and increase gas production in order expenditures were Associated facilities and engineering costs
to meet our gas contractual obligations. $150.1 million in 2020 amounted to $61.3 million.
and included costs of
Mindful that we cannot fully control the pace around $83.5 million for The payment of $60.0 million reflects the
of project execution in this environment, the drilling and completion final equity contribution towards the ANOH
Group established various initiatives to of nine wells. Gas Processing Plant project.
maximise work programme flexibility while
preserving cash. Most of the Group’s capital The Group received total proceeds of
expenditures are discretionary with the $4.8 million under the revised OML 55
flexibility to align investment with cash flow commercial arrangement with Belema Oil for
in response to prevailing conditions and the monetisation of 67.5 kbbls. Recovery
future growth opportunities. As oil prices during the year was impacted by OPEC+
improved, an additional capex of $30 million production cuts and low oil prices.
was approved in the fourth quarter of 2020,
towards drilling the ANOH upstream wells at After adjusting for interest receipts of
OML 53 and project costs related to delivery $1.7 million, the net cash outflow from
of the Sapele Gas plant. investing activities was $203.7 million
compared to a net cash outflow in 2019 of
$732.9 million, which included the AGPC
deconsolidation, ANOH equity contribution
and acquisition costs in 2019.
56 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Cash flows from financing activities Reserve-Based Loan (RBL) Hedging Strategic Report 01—77
Net cash outflows from financing activities Eland’s existing RBL was consolidated into Seplat’s hedging policy aims to guarantee
were $217.4 million (2019 net cash inflows: the Group’s balance sheet in 2020. The RBL appropriate levels of cash flow assurance Governance Report 78—144
$145.2 million). This reflects a further was most recently refinanced in November in times of oil price weakness and volatility.
$10.0 million drawn from the Westport RBL 2018, via the Group’s subsidiary Westport Oil During 2020, the Group had in place dated
facility, interest of $64.8 million paid on loans Limited, and was a five-year loan agreement Brent put options covering a volume of 6.5
and dividend payments to shareholders of with interest payable semi-annually, with the MMbbls as follows: (i) for Q1, Q2 and Q3,
$58.3 million. In August 2020, the Company maximum facility amount starting to reduce 1.5MMbbls for each quarter at a strike price
repaid $100.0 million of the revolver. in January 2020. The RBL was secured of $45/bbl; and (ii) for Q4, 1.5MMbbls at a
against the Group’s producing assets in OML strike price of $30/bbl and 0.5MMbbls at
Seplat ended the year with gross debt of 40 via the Group’s shares in Elcrest, and by a strike price of $35/bbl.
$698.4 million with most maturities in 2023, way of a debenture that created a charge
and cash at bank of $258.7 million, which over certain assets of the Group, including This hedging programme has been continued
includes restricted cash of $33.6 million, its bank accounts. The available facility in 2021 with up-front-premium put options
leaving net debt at $439.7 million. was capped at the lower of the available as follows: (i) for Q1, 1.0MMbbls at a strike
commitments and the borrowing base. price of $30/bbl and 1.0MMbbls at a strike
Issue of $650m senior notes price of $35/bbl; (ii) for Q2, 2.0MMbbls at
On 25 March 2021, the Company priced its In March 2021 we announced that Seplat’s a strike price of $35/bbl; and (iii) for Q3,
offering of $650 million in aggregate principal wholly owned subsidiary, Westport Oil 1.0MMbbls at a strike price of $35/bbl
amount of 7.75% senior notes due 2026 (the Limited, had successfully refinanced its and 1.0MMbbls at a strike price of $40/bbl.
“Notes”). The gross proceeds of the Notes will existing US$100 million reserve-based The Board and management team continue
be used to redeem the existing $350 million lending facility due November 2023 with a to closely monitor prevailing oil market
9.25% senior notes due 2023, to repay new five-year US$100 million reserve-based dynamics and will consider further measures
drawings of $250 million under the existing lending facility due March 2026. to provide appropriate levels of cash flow
$350 million revolving credit facility, for assurance in times of oil price weakness
general corporate purposes, and to pay The RBL carries initial interest of LIBOR + 8% and volatility.
transaction fees and expenses. payable semi-annually. The five-year RBL
is scheduled to commence repayment from Credit ratings
Dividends returned to shareholders March 2023. The RBL includes a US$75 Seplat maintains corporate credit ratings
$m million accordion to accommodate further with Moody’s Investor Services (Moody’s),
400.0 commitments in the future. Standard & Poor’s (S&P) Rating Services
and Fitch. The current corporate ratings
are as follows: (i) Moody’s B2 (negative);
(ii) S&P B (although the bonds are rated
B- due to priority indebtedness) and
(ii) Fitch B‑ (positive).
$344m 58.3
total
300.0 58.7 Emeka Onwuka
200.0 58.9 Chief Financial Officer
22.5 0.0 Financial Statements 145—308
71.8
100.0 73.2
0 2015 2016 2017 2018 2019 2020
2014
Liquidity
The balance sheet continues to remain healthy with a solid liquidity position.
Net debt reconciliation $ million Coupon Maturity
at 31 December 2020 353.4 9.25% June 2023
Senior Notes* 246.4 June 2022/
Revolving Credit Facility* LIBOR+6.00% December 2023
98.6 November 2023
Westport RBL* 698.4 LIBOR+8%
Total borrowings 258.7
Cash and cash equivalents 439.7
Net debt
* including amortised interest.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 57
Corporate social responsibility
58 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
SAFETY Governance Report 78—144
ENVIRONMENT
COMMUNITIES Financial Statements 145—308
PEOPLE
Seplat is committed to being a best practice operator
and a responsible and accountable corporate citizen as
demonstrated in the approach to our operations. This is
further illustrated through the strong relationships that
we have built with our host communities and other
stakeholders to create a stable operating environment
with positive socio-economic outcomes.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 59
Corporate social responsibility |continued
Jay Smulders ENSURING A HEALTHY
Technical Director WORKFORCE, SAFE
OPERATIONS AND
ENVIRONMENTAL
CONSERVATION
At Seplat, we believe we have a role to play
in shaping the future of energy in Nigeria.
HSE strategic principles • At the start of the Covid-19 pandemic, • Lessons learnt from incident investigations
Our HSE Policy is implemented with measures were immediately put in place to were shared company-wide via LFIs, HSE
consideration for guidelines stipulated protect our personnel and operations from meetings and other personnel and
in ISO 45001 & ISO 14001. This is further the spread of the illness: contractors’ engagement fora.
reinforced by the Company’s HSE
Management System to guarantee – Infrared thermometers, hand sanitisers • We continued sustained focus on asset
adherence to local regulations, industry and face masks were deployed to all integrity and maintenance of safety critical
standards, and international best operating locations for immediate elements by conducting a comprehensive
practices. Our HSE philosophy is distribution and use. audit and health check on the Asset Integrity
communicated to all employees, and Maintenance Management Systems.
customers, contractors, and other – A multi-discipline Corona Virus Monitoring
stakeholders of our business. Group (COVIMOG) was set up to monitor • We conducted trainings for frontline
and coordinate Seplat’s response to the leaders to drive safety leadership amongst
At Seplat, we are governed by the three pandemic with a view to sustaining the workforce.
core strategic principles of our HSE policy: operations.
Environment
• Healthy Employees and Safe Workplaces – Operations Continuity Teams were set In all Seplat projects and operations, our
up at the two operational bases. objective is to manage the environmental
• Environmental Protection and social impacts of our activities.
and Sustainability – NCDC approved laboratories and hospitals
were engaged for provision of PCR testing • We remain committed to environmental
• Mutual Respect with Host Communities and clinical services for positive cases. protection and sustainability by identifying
and Local Stakeholders and evaluating the impacts of our activities
– Almost 3,000 PCR tests conducted with on the environment. Environmental Impact
Health less than 0.5% positive cases; all positive Assessment studies were carried out for four
We have been working to protect our cases treated and returned to work. fields – Amukpe, Jisike, Ogume and Owu.
people through a more systematic
approach to health. Safe operations and prevention • We continued with our Environmental
of major incidents Compliance Monitoring Programme to
• We provided comprehensive health We continue to promote deep capability and ensure environmentally safe and sound
services and access to all employees. safe operating culture across our locations. operations and compliance with all
regulatory requirements.
• We provided 24-hour clinical coverage in • Recorded Zero Lost Time Injury or Fatality
all our areas of operation with standby for more than two years of our operation. • We developed a verifiable process for Green
ambulances for emergencies. House Gas Emissions quantification to
• Introduced 11 Mandatory Safety monitor effectiveness of the ongoing Flares
• Employees and guests are encouraged Rules which were rolled out across the Out projects.
to be more proactive towards a healthy organisation to reinforce the required
lifestyle via health campaigns and foundations for improvements in our
provision of biometric monitoring safety culture.
equipment in all facilities.
• Leadership Commitment continued
• A personal fitness programme has to be demonstrated through senior
been introduced into daily activities of management review of all high potential
office-based personnel while a fitness incidents. 300% more incidents were
gym is provided in our Field Logistic Bases. reviewed in 2020 compared with 2019
and all recommendations are being
implemented.
60 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
2020 Performance review 5 Years Lost Time Injury Frequency (LTIF) Trend Governance Report 78—144
In 2020, we sustained our performance in
keeping people safe with zero lost time injury 0.35
incidents (LTI) and fatality. Due to a variety of
safety initiatives implemented across the 0.30
organisation, Lost Time Injury Frequency
(LTIF) has dropped steadily from 0.33 in 2016 0.25
to 0 in 2019. This was also sustained in 2020.
0.20
The gas stations were optimised to achieve
high availability of compressor uptime. The 0.15
compressor units were also overhauled in
some stations to attain a 39% reduction in 0.10
gas flared in 2020 from 2019. The Flares Out
project is still on course with planned 0.05
construction of additional Booster
Compressors in all operating facilities 0.00 2016 2017 2018 2019 2020 Financial Statements 145—308
in 2021.
Health and Safety – 2020 performance review: 2017 2018 2019 2020
We continue to improve on environmental 0 0 0 0
impact via effective pipeline integrity 2014 2015 2016
and leaks management. Seven spills 0.31 0.14 0 0
(>0.75bbl or equivalent of 1kg) were recorded. Fatalities 000
Replacement of aged pipelines and integrity (employee and contractor)
checks are continuously conducted.
Lost Time Injury Frequency (LTIF) 0.4 0 0.33
We took proactive steps to protect
biodiversity and groundwater in our Environment – 2020 performance review: 2016 2017 2018 2019 2020
operations and like previous years, the 4,757
effects of our operations on groundwater 2014 2015
contamination remained nil. 0.002
Flaring – million standard 9,465 7,642 8,418 6,487.99 8,910.18 10,624.97
In the coming years we will continue to strive cubic feet (MMscf) 0.002
for an even greater improvement in our HSE
performance across Seplat operations. Volume of oil spilled through own 0.0004 0.1089 Nil 0.002 0.0032 0.001 0.0091
operations (Thousand tonnes) 0.28
Volume of oil spilled through 0.0014 0.0021 N/A Nil 0.0001 0.0001 0.0037
sabotage (Thousand tonnes)
Groundwater contamination Nil Nil Nil Nil Nil Nil
0.24 0.19 0.19 0.19
Freshwater consumption 1.18 1.5
(MMbbls)
Total Greenhouse Gas Emissions N/A N/A N/A N/A N/A 2.8
(MM tonnes CO2 equivalent)
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 61
Corporate social responsibility |continued
ELCREST HSE
REPORT
Ensuring a healthy workforce, safe operations
and environmental conservation.
HSE strategic principles Safe operations and prevention Environment
At Elcrest, we are governed by the three of major incidents • We remain committed to environmental
core strategic principles of our HSE policy: HSE Manager and Technical HSE Lead
appointed to Elcrest HSE Team in November protection and sustainability by identifying
• No harm to people and December 2020. and evaluating the impacts of our activities
on the environment.
• Accident free workplaces All operational sites have competent Site
HSE Officers (and back-to-back) in place to • Environmental Impact Assessment
• No damage to the environment monitor, advise, train workforce and report study was carried out for Gbetiokun
daily to Project and HSE Management. field development.
Health
• We provide comprehensive health services • Sixteen of the recommendations, including • Standby spill response team and
all high-priority items, have been closed equipment provided for response to the
to all employees and access to a medical out and the final two items will be risky impact of potential oil/chemical spill
doctor to provide medical advice concluded shortly. in the swamps.
• We provide 24-hour clinical coverage in • Clear Leadership commitment 2020 performance review
all our areas of operation with standby demonstrated through Management In 2020, we maintained zero LTI and
ambulances for emergencies and Facilities Visits (MFV), reviews of all incidents disseminated the learning from BRVS
retainership agreements with local at the monthly Incident Review Panel (IRP) incident and commenced safety culture
hospitals/clinics meeting and active participation at all HSE improvement programmes Company-wide.
meetings. Management involvement in
• Covid-19 pandemic preventive/control implementation of incident investigation and
measures were immediately implemented site inspection recommended actions has
to protect our personnel and operations taken a high priority.
from the spread of the illness, these
included: • Lessons learnt from incident investigations
were shared Company-wide through HSE
– Infrared thermometers, hand sanitisers meetings and the quarterly contractor’s
and face masks were deployed to all engagement forum.
operating locations for immediate
distribution and use. • Conducted Permit to Work and Safe
Systems of Work training for field personnel
– C-19 Monitoring by HR interfaces with and supervisors.
Seplat COVIDMOG for coordination and
response to the pandemic with a view to Health and Safety – 2020 performance review: 2020
sustaining operations with minimum 7
impact of the C-19 virus. Fatalities (employee and contractor)
Lost Time Injury Frequency (LTIF) 0.00
– C-19 protocols have been implemented
and complied with strictly at field Environment – 2020 performance review: 2020
operations to ensure business continuity 2,257
with minimum impact of Covid-19 virus. Flaring – million standard
cubic feet (MMscf) 0.1159
– Temperature testing and medical Volume of oil spilled through own
assessment of all personnel arriving on operations (Thousand tonnes) 0.000567
site, either first time arrivals or returning Volume of oil spilled through sabotage
from rotational leave. (Thousand tonnes) Nil
Groundwater contamination N/A
Freshwater consumption (MMbbls) 0.13
Total Greenhouse Gas Emissions
(MM tonnes CO2 equivalent)
62 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
BRVS incident Governance Report 78—144
Accident summary Financial Statements 145—308
On 7 July 2020, a tragic accident involving seven
fatalities occurred due to an explosion during
planned maintenance work by contractors at the
Benin River Valve Station on OML 40 in Delta State.
Our thoughts and prayers remain with the families
and friends of all those who lost their lives. The
NPDC/Elcrest joint venture has provided support
to all the bereaved families.
Field operations at Gbetiokun, 30km away, were
unaffected, but we suspended operations to allow
repairs to the export site, which were concluded in
August. Three investigation teams including a
DPR-led team, an independent investigator and a
combined team of NPDC/Elcrest (led by NPDC as
the operator) began separate investigations in the
immediate aftermath of the accident. Over the
course of the investigation, a multi-disciplinary team
of experienced internal and external specialist
personnel was constituted to distil out lessons from
the accident and review operational practices with a
view to revising operational controls to prevent such
incidents in the future.
Results of investigations
The investigations identified failure of the Permit to
Work system as the root cause of the incident and
recommended improvement actions. A total of 16
key findings related to the causes of the accident
emerged. The team developed a series of 18
recommendations to address each of its key
findings, which are intended to enable prevention of
similar accidents as well as address other potential
issues. Categories of the findings included gaps in
documentation, training, processes and interface
management.
Our response
We recognised that full implementation of the
18 recommendations would involve long-term
commitment and a team was set up to drive HSE gap
closure. A prioritised action plan was put in place
with due dates and accountabilities for each
element of the plan, with actions tracked to
completion. Sixteen of the recommendations,
including all high-urgency items, have been closed
out and the final two items will be concluded shortly.
Elcrest’s management has prioritised building a
robust HSE culture across the organisation and aims
to finalise implementation of the enhanced
standards across its locations.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 63
Corporate social responsibility |continued
ENVIRONMENT
Roger Thompson Brown
Chief Executive Officer
Our primary aim at Seplat is to meet Nigeria’s
energy needs in an economically, socially
and environmentally responsible way. We are
committed to taking utmost care to properly
assess and manage environmental risks
and minimise our environmental impact.
While we believe that fossil fuels are critical Following an extensive gap analysis GOVERNANCE
to ensuring the sustainable development of of Seplat’s sustainability approach,
Nigeria, we also recognise the risks that conducted by an external party in 2020, Role of management
climate change poses to our business and we have taken steps to integrate climate Climate change and sustainability are
the local communities around our change into our overall corporate strategy. integrated across all business functions
operations. We are therefore committed to These steps, and the actions we are within Seplat, with each area of the business
providing clean and affordable energy to planning to undertake will move Seplat playing a role in shaping and working
Nigeria while minimising the effects of towards full alignment with the guidelines towards our long-term climate ambition.
climate change and preserving the of the Taskforce for Climate-related As CEO, I am responsible for guiding Seplat’s
environment. We believe the most immediate Financial Disclosures (TCFD). They will climate strategy, identifying the main
priority is to replace small-scale off-grid help ensure that all strategic decision climate-related risks to the business and
diesel power generation by transitioning making is informed by a proper monitoring the Company’s progress against
to utility-scale gas-fired power stations, assessment of climate-related risks key climate and sustainability goals. To
providing much needed base load energy and opportunities, in line with our enhance governance of sustainability and
as a step towards a longer-term broader sustainability commitments. climate-related issues, we created a
renewable generation. dedicated organisational structure in 2020
The TCFD recommendations are to streamline our work in this area. The
We recognise climate science and support structured around four thematic areas: figure below shows the business functions
the goals of the Paris Agreement to keep governance, strategy, risk management, and executives with clear responsibilities
global temperature increase to well below and metrics and targets. related to managing and mitigating
2°C. We also support the United Nations climate-related risks and opportunities.
Sustainable Development Goals (SDGs) and
are actively working towards achieving these
goals in Nigeria, including Goal 13 on Climate
Action. To that end, we support the efforts of
the Nigerian Government and the
international community to minimise and
manage the impacts of climate change and
facilitate economic development in a
climate-resilient Nigeria.
64 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
The Risk Management and HSSE Governance Report 78—144
Committee supports the Board in
maintaining effective oversight of Seplat’s
risk management framework and profile,
including as it pertains to climate-related
risks and opportunities.
Under its current composition, our Board
is well positioned to assess the strategic
implications of climate change on our
business and scrutinise our response,
with several of our Board members having
sufficient subject-matter knowledge to
understand climate-related risks and
opportunities. Nevertheless, we are
working to enhance our Board’s knowledge
and understanding of climate change as it
relates to our business and intend to
consider the climate-specific credentials
of future appointees, alongside our
assessment of their broader experience in
sustainability-related issues in the oil and
gas industry.
In 2021, we will continue engagement and
training activities for Seplat employees
relating to sustainability, including specific
training on climate change for relevant
personnel in order to increase internal
awareness and understanding of the issue
and its importance to our business.
Role of the Board Seplat Board of Directors (BoD) Financial Statements 145—308
Responsibility for the governance of Climate change management is overseen by Seplat’s BoD and is discussed at every Board meeting.
sustainability issues, including climate Board Committees
change, within Seplat rests with our Board The BoD is supported in its oversight function by two main committees. The Terms of Reference
of Directors. The Board recognises both the for both committees have been recently revised to include clear mandates for climate
risks and opportunities that climate change change-related issues:
presents to Seplat’s business and works • The Risk Management and HSSE Committee oversees Seplat’s processes for identifying,
with Executive Management to ensure the
Company’s response considers both the managing and mitigating climate-related risks and opportunities.
external context and the interests of • T he CSR/Sustainability Committee has primary responsibility for providing strategic direction
stakeholders.
on Company-wide ESG, social responsibility and climate change issues. The committee also
The Board plays a crucial role in guiding monitors Company performance against its climate goals.
Seplat’s strategic approach to climate
change and assessing the main climate- Chief Executive Officer (CEO)
related risks to the Company’s portfolio. Seplat’s CEO is responsible for managing climate change-related risks
Several committees support the Board’s and opportunities and implementing our climate change response.
oversight of climate-related issues.
External Affairs Department Sustainability Working Group
The CSR Committee assists the Board in Seplat’s sustainability function sits under the External Affairs In 2020, we established a
overseeing the Company’s sustainability Department. The Director, External Affairs & Communications cross-functional working group,
and ESG-related performance, policies and reports to the CEO and BoD on climate and sustainability- with senior representation from
practices, including on climate-related related issues. all departments, to coordinate
issues. The Committee is responsible for Research & Sustainability Division ESG and climate-related
understanding the impact of climate change Established in 2020, the Research & Sustainability Division activities across the Group.
on local communities and ensuring that plays a crucial role in shaping Seplat’s climate strategy, goals
Seplat has taken the necessary steps to and targets. Led by the GM Research & Sustainability, the
mitigate its impacts. department is responsible for the coordinating all sustainability-
related activities across the business, including climate change.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 65
Corporate social responsibility |continued
STRATEGY RISK
MANAGEMENT
While climate change poses a significant Our ‘New Energy’ business forms the core
challenge to our society and business, our of our efforts to deliver cleaner fuels for Seplat has a robust process for identifying,
primary aim is to provide Nigerians with Nigeria and will be key to delivering our assessing and managing risks to our
access to clean, affordable and reliable climate strategy. Under this new unit, we business through our enterprise risk
energy. Currently the majority of electricity will explore opportunities to expand our management (ERM) system. While in
in Nigeria is generated using small scale gas business as well as opportunities to previous years we have not identified climate
off-grid diesel generation. This is GHG use renewable energy. We are already change as a key risk, we recognise the
intensive, expensive, noisy and uses vital investigating ways to incorporate solar potentially material impact that climate
foreign currency as the diesel is imported. power at our own operations to minimise change and the energy transition could have
Affordable on-grid electricity generation our emissions and supply local on our business, especially given growing
will be the catalyst for infrastructure communities with electricity using global attention on the issue. Consequently,
development, education, healthcare, food renewable sources instead of gas. we are in the process of developing our
security and general employment of a understanding of our exposure to climate-
young fast growing population. As recommended by the TCFD, we have related risks and opportunities. As part of
begun climate-change scenario analysis this process, we are looking to integrate
We believe that gas will provide the base to stress-test the resilience of our climate change into our ERM system and our
load for a function grid which will have a portfolio against a variety of low-carbon Corporate Risk Register. This will help us
twofold benefit of initially displacing diesel scenarios, including a well-below 2°C assess the potential impact of the various
generated power as well as providing a scenario. With the support of independent climate-related risks and opportunities and
means to develop and distribute on grid consultants, we are developing our develop coherent mitigation and adaptation
renewable energy. We have developed our approach to scenario analysis, which strategies in response.
climate strategy around this vision and explores both how global hydrocarbon
have integrated climate-related risks and prices may alter under different transition There are two main categories of climate-
opportunities into our long-term pathways and what the impacts may be on related risks that we are exposed to:
commercial planning and corporate the Nigerian energy market. More details transition risks and physical risks.
strategy to ensure resilience during the of this scenario analysis are below.
energy transition. Transition risks
We have identified several categories of risk
Scenario analysis resulting from the transition to a lower-
carbon economy. These include regulatory
This year, for the first time, Seplat We are protected to a degree from and policy, technology, market, reputational
conducted a deep-dive scenario exercise commodity price fluctuations given that and financial risks.
to assess the commercial implications a material proportion of our production,
of a global transition to a lower-carbon namely the gas business, is contracted at • Regulatory and policy risks include
economy. We intend to update this fixed prices. However, our analysis finds impacts resulting from the increased cost
analysis annually and use it to inform our that we face relatively high risks of of GHG emissions (such as through any
corporate strategy and overall risk and climate-induced changes to fiscal policy regulatory emissions pricing, taxing or
opportunities assessment. in Nigeria. Finally, we have analysed the emissions trading schemes), enhanced
implications of an energy transition on emissions-reporting obligations and
Industry best practice around climate country risk in Nigeria, and the implied international efforts to limit fossil fuel use.
change-related scenario analysis impacts on borrowing costs, and have While these risks are unlikely to be material
continues to evolve and there is no found these impacts to be limited. for Seplat in the short term, intensifying
one-size-fits-all approach. At Seplat, we action on climate change by governments
use the IEA’s Stated Policies Scenario Combining the effects of these three risk could result in increased operating costs in
(STEPS) as our base case and the IEA’s factors, we estimate that Seplat faces a the medium term. We intend to mitigate this
Sustainable Development Scenario (SDS) reduction in portfolio-level NPV of risk by working to reduce our emissions,
to simulate a well-below 2°C outcome approximately 13% under a low-carbon ensure accurate emissions accounting,
against which we can test the resilience of scenario. and monitor the international and Nigerian
our portfolio. Finally, we test for the regulatory environment.
impacts of additional climate-related In the coming year, we intend to integrate
value drivers, including fiscal and country this analysis fully with our financial risk • Technology risks include the adoption of
risk. Our analysis shows that our business assessments to provide a solid foundation new or improved lower-carbon alternatives
is resilient to a low-carbon energy for strategic decision-making. This will to Seplat’s current products by our
transition, and all of our assets remain provide the basis for the development of competitors. This could result in reduced
NPV positive in a low-carbon scenario. Seplat’s long-term strategy and help demand for our products in the short to
However, we face material risks to ensure that the Company remains resilient medium term. We aim to mitigate this risk
profitability and valuation should the and creates value for shareholders by integrating climate-related risks into our
transition occur rapidly and we will through the energy transition. business strategy and by improving the
continue to monitor this closely. efficiency and reducing the carbon
intensity of our operations.
66 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
METRICS & TARGETS Strategic Report 01—77
• Market risks include changes in demand Seplat supports the Paris Agreement with its aim to limit global temperature rise to
for our product due to changing customer below 2°C. In line with our aim to be a leader on climate change in the Nigerian oil and
behaviour as a result of the increased gas industry, we are constantly working to monitor and reduce our GHG emissions.
stigmatisation of fossil fuels and
preferences for lower-carbon alternatives. As the majority of our emissions currently come from gas flaring, our primary goal in
This is a short- to medium-term risk that relation to emissions reduction is to eliminate gas flaring by 2023. We have been
could have a negative impact on our investing in infrastructure and technology to help us achieve this goal, for instance
revenues. We have undertaken scenario we are installing compressors at our Sapele operations to help us move towards
analysis to enhance our understanding of zero-flaring.
this risk and intend to adapt our strategy
based on the findings. While we do not envisage setting an emissions reduction target for our scope 1
and 2 emissions in the short term due to the ongoing work to develop a historic
• Reputational risks could arise from understanding of our emissions profile, we are investigating other opportunities
increased stakeholder concern or negative to reduce our emissions.
stakeholder feedback, such as divestment
campaigns or criticism from local Carbon footprint calculator
communities over Seplat’s environmental
impact. These risks are considered to be In 2020, we partnered with an independent Factors such as global warming potentials Governance Report 78—144
medium term and could both impact our consultant to develop a comprehensive (GWP) and liquid fuels properties are taken
licence to operate and limit our access to GHG emissions calculator to build an from the Intergovernmental Panel on
capital. The development and accurate measurement of our emissions. Climate Change (IPCC) fifth assessment
implementation of robust climate and report.
sustainability-related governance The calculator was developed in
structures will help us to mitigate this risk. accordance with the American Petroleum The calculator will be important in
Institute (API) compendium of greenhouse developing a comprehensive
• Financial risks could result from the gas emissions methodologies for the oil understanding of our contribution to
decisions of financial institutions and and natural gas industry (2009). The API emissions in Nigeria, and as a basis for
investors to withdraw from financing the oil compendium provides comprehensive identifying opportunities for emissions
and gas sector as a result of external guidance on accounting and reporting reduction. We will disclose our emissions
pressure, stigmatisation of fossil fuels or GHG emissions in the oil and gas industry. in future annual reports.
Seplat’s strategy. This is a medium- to
long-term risk. We hope to mitigate this risk TCFD NEXT STEPS
through integrating climate change into our
long-term business strategy and Governance 2021 2022 Financial Statements 145—308
investigating opportunities to diversify into Strategy • F urther enhance Board-level • E stablish an early-warning
renewables.
Risk management expertise on climate and system to monitor stakeholder,
Physical risks sustainability issues investor or policy actions
In addition, we recognise that Nigeria is Metrics & targets • A dopt an internal carbon price
extremely vulnerable to physical climate • Informed by the results
risks – including temperature increases, of the scenario analysis, • D evelop mitigation and
variable rainfall, sea level rise, drought and incorporate climate-related adaptation strategies for
desertification, land degradation and more risks and opportunities into the physical risks identified
frequent and extreme weather events – and broader company strategy and
the stress these risks could put on both our investment decision-making • Set emissions reduction targets
operations and the resilience of the local for scope 1 and 2 emissions
communities around our assets. We intend • Investigate opportunities to
to undertake a risk assessment of our engage external stakeholders
assets’ resilience to physical risks and adapt on Seplat’s climate strategy
them accordingly, while also working to help
local communities respond to and mitigate • Conduct an in-depth physical
the physical impacts of climate change. risk assessment of Seplat’s
exposure to climate change-
related risks
• U pdate scenario analysis,
enhanced by the development of
a bespoke gas demand scenario
for Nigeria
• I nvestigate opportunities to
invest in carbon offsets
• Initiate data collection on further
Scope 3 emissions categories
• B ecome a signatory of the
Methane Guiding Principles
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 67
Corporate social responsibility |continued
COMMUNITIES
Lord Mark Malloch-Brown
Independent Non-Executive Director
Seplat aspires to be a good corporate citizen,
committed to driving positive socio-economic
benefits for our country and our host communities,
and recognising that we must continuously earn
our social licence to operate. Indeed, we embed
this commitment in one of the five strategic
pillars that guide our approach to business:
Behave responsibly and share our success.
We endeavour to align our activities with the There is a growing imperative to address Seplat’s approach to community relations
United Nations’ 17 Sustainable Development the challenges of climate change and this Seplat develops relationships of trust with
Goals (SDGs). Our community relationships imperative may force a shift away from its local communities by recognising the
are governed by a Global Memorandum of fossil fuels long before Nigeria’s reserves need to engage and listen, understand their
Understanding, which is a guideline are depleted. Therefore, we must help our needs and concerns, proactively inform
document that sets out goals, intentions, communities prepare for a time when our them of our intentions and involve them in
and responsibilities agreed after industry may no longer be operating in collaborations they find empowering. In
consultation with the host oil and gas their midst. Helping them diversify their doing so, we aim to assure peaceful and
producing communities themselves. economies is a priority that will ensure mutually beneficial relationships that
robust, resilient communities long after support our prosperity, which in turn
Through proactive collaboration and reserves have been extracted or allows us to help theirs.
needs analysis, we identify and address renewables have overtaken fossil fuels.
opportunities for development and concerns Aside from this long-term commitment, We operate fairly and transparently,
for mitigation. Regular dialogue with our host we recognise the need to help our engaging in open dialogue, managing
communities has helped broaden our social host communities with more expectations, and conducting ourselves
investment programmes from health, immediate concerns. with the utmost respect for their cultural
education, and infrastructure improvement and ethnic traditions, while helping them
to nurturing local entrepreneurship. As you will read in this report, we helped understand our operations’ social,
provide medical and other assistance that environmental, and economic potential.
helped our communities cope with the To clearly understand and respond
Covid-19 pandemic. As this pandemic appropriately, we collaborate with the
continues, and long beyond, we will never communities, analyse local needs and then
waver from our commitment to provide design and implement sustainable
whatever help we can to drive positive development projects accordingly. Our social
change in our host communities. We look investment aligns with the United Nations’
forward to working with them to deliver SDGs, and our development projects are
real impact where it is most needed. designed to promote the socio-economic
development for the benefit of
the population.
68 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
We operate fairly and transparently, engaging Strategic Report 01—77
in open dialogue, managing expectations, and
conducting ourselves with the utmost respect
for their cultural and ethnic traditions, while
helping them understand our operations’ social,
environmental, and economic potential.
Resolution of problems In addition to the direct grievance Governance Report 78—144
We recognise that sometimes, things do not management and conflict resolution efforts
go as planned. Accidents happen, by our Community Relations team, we use
commitments may be overlooked, and reliable, unbiased third-party or
misunderstandings can cause problems for independent mediators and arbitrators to
both Seplat and our host communities. bring resolution. Depending on the
appropriacy, we use but are not limited to
Our grievance management mechanism the following: local community leaders,
equips us to listen to concerns and identify key influencers, and key state government
relevant problems or grievances at the local offices (e.g. state Ministry of Justice and
level, monitor and handle complaints and the Ministry of Oil and Gas). Working with
then prepare adequate responses or traditional rulers is particularly helpful in
communicate appropriate actions to matters regarding intra-community
alleviate any issues of concern. disputes, while state governments may
provide support in the resolution of
Besides, our conflict management boundary disputes and multiple land
guidelines ensure that any conflicts, ownership claims.
disagreements, misunderstandings and
disputes between any community or their
representatives and Seplat or its agents or
contractors will be resolved peacefully and
amicably through dialogue and in line with
the grievance mechanism and conflict
resolution processes.
The Global Memorandum of Understanding Grievance management mechanism
Seplat’s community relations are
implemented through formal stakeholder Specific activities Specific achievements
engagement procedures governed by our
Global Memorandum of Understanding Western Assets Eastern Assets
(GMoU) signed with each of our host
communities. 1. Potential operation disruption 10 11 Financial Statements 145—308
dispute averted
The principles embodied in this GMoU are also
applied when dealing with communities that 2. Mediation/ arbitration efforts 49 27
are impacted by our operations, but which do requiring support of
not host them – for example, communities traditional rulers, regulatory
through which our pipelines pass or to whose agencies and government
land we need essential access.
3. Training on grievance 11
By working within the frameworks of the management/ conflict
GMoU and our stakeholder engagement resolution
procedures, we can sustain good
relationships with local communities before 4. Environmental scanning/ 20 N/A
the commencement of our projects, heads off & detected early
throughout our operations to the warning signs of conflicts
decommissioning phase. We strive to leave
the area as we found it and hope to say 5. Peaceful community awards 1* 1
goodbye to a community that has benefited
from our presence. 6. Major issue raised during i. More employment opportunity i. More labour slots
grievance ii. Employment of community during projects
person into managerial position
iii. More contract awards to
community vendors**
* Under the terms of the GMOU, communities that ensured peaceful/disruption free operations during the year receive
incentive in the form of peaceful community awards. All the host oil and gas bearing and facility hosting communities
qualified for the awards in 2019 in the Western Assets. Awards are presented retroactively in the following year
**Q uality employment opportunities and award of more contracts to qualifying community vendors
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 69
Corporate social responsibility |continued
Capacity development and We focus on improving literacy, discouraging
local economic empowerment school dropout, and providing infrastructure
We recognise the need to help create that improves positive teaching outcomes.
long-term value and drive prosperity in the
communities where we operate in Nigeria. Sustainable community development Education
Our social and economic initiatives aim to infrastructure and other initiatives Education is a priority for social and
boost inclusive and sustainable economic In addition to our direct business economic development and helping to
growth, the creation of small businesses investments, and our contribution to local improve local educational facilities and
and, as a result, improvements in local and national economies through the outcomes is one of our core priorities.
employment opportunities, in line with payment of taxes and levies to the various
the UN’s SDG 8. government tiers, we fund a significant We focus on improving literacy, discouraging
amount of sustainable community school dropout, and providing infrastructure
To address the levels of poverty and development initiatives. These initiatives that improves positive teaching outcomes.
unemployment among youth and women aim to create long-lasting benefits that Our efforts include scholarships, building
and reduce the prospect of militancy in the contribute to improving human development and renovating classrooms and teachers’
communities, we implement economic indexes, thereby raising living standards in offices, providing equipment, library
development programmes that help improve our host communities. facilities and teachers’ living quarters. Also,
prosperity through skills training and the in 2020 we continued our annual Seplat
encouragement of community These social investment activities align Pearls Quiz and launched our new Seplat JV
entrepreneurship. with the UN’s SDGs. Working with the local Teachers Empowerment Programme (STEP)
communities’ approved leaders to create initiative designed to improve teaching
This effort is complemented by direct shared value for communities, Seplat standards in our local communities.
employment from the community by Seplat, channels investment to areas that align local
when appropriate, supported by the priorities to its business objectives whilst We implemented the National
necessary training programmes for local addressing the people’s broader Undergraduate Scholarship, which assists
people. These programmes are implemented development objectives. needy students in completing their studies;
with Seplat’s technical support and 120 undergraduates benefited in 2020.
oversight and are monitored throughout all In 2020, and despite the Covid-19 pandemic,
phases of the initiative. The beneficiaries are we continued these efforts, making Seplat trained 15 entrepreneurs through the
selected from a wide range of communities significant investments in strategic Conversations for Change partnership, in
within our operating locations. Candidates community development projects and which young people with great ideas are
can choose trades or courses that best fit programmes in such core areas as empowered to use these ideas to make a
their individual skills and interests at community infrastructure, education, living.
designated training centres. At the end of the health and water schemes.
training period, students are provided with We published a Sustainability Report, which
the tools and equipment and a start-up Our social development approach aligns with enabled Seplat to provide transparent
grant to establish a small business. the UN’s SDG 6 (access to clean water and reporting against ESG milestones showing
sanitation), SDG 4 (quality education), SDG 3 value creation to stakeholders.
We organised structured training on (good health and wellbeing) and SDG 2 (zero
Leadership Competence, Grievance hunger), amongst others, SDG 8 (Decent CSR achievements accounted for 95% of
Management and Conflict Resolution for Work and Economic Growth) and positive messages on Seplat across all
Community Leaders and GMoU SDG 1 (No Poverty). media channels thus enhancing our Brand
Administration for four Ohaji South and Reputation.
communities (Avu, Awarra, Obitti and
Umuapu) in February 2020 at Crystal Lake
Resort, Oguta. A total of 16 participants from
four communities were trained. This was to
complete the training commenced in 2019
where 40 participants from ten other
communities were given the same training in
November 2019 in Port Harcourt.
Our social and economic
initiatives aim to boost
inclusive and sustainable
economic growth,
the creation of small
businesses and, as a
result, improvements
in local employment
opportunities.
70 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Case study: Strategic Report 01—77
SEPLAT
TEACHERS
EMPOWERMENT
PROGRAMME
(STEP)
In November 2020 Seplat launched another As a responsible corporate citizen, we are Governance Report 78—144
initiative to improve the standard of delighted to play a role in improving schools’
education in our host states. The Seplat educational capabilities in our host states.
Teachers Empowerment Programme (STEP)
is a well-rounded programme that provides A hundred teachers and 43 Chief Inspectors STEAM education is crucial in creating a Financial Statements 145—308
six months’ in-person and online training of Education, drawn from Edo and Delta robust educational foundation for students
designed to help teachers enhance their States, benefit from this initial project. They pursuing careers in Science, Technology,
knowledge and skills, enabling them to be were selected from an initial application of Engineering, Arts and Mathematics, all of
more effective and motivate their students nearly 400 teachers from schools in Edo which will help drive growth and prosperity
to learn. and Delta States. Of the 100 teachers to in Nigeria. Highly skilled teachers are a
be trained, 75% are from public schools, critical success factor for delivering the
The maiden STEP made its debut in Benin while 25% are from private schools. quality education it requires.
City, Edo State, in November with a five-day
residential workshop that kicked off a As a responsible corporate citizen, we are The Seplat Teachers Empowerment
three-month programme online. delighted to play a role in improving schools’ Programme has reinforced our widely
Participants were trained in specially educational capabilities in our host states. acclaimed track record for supporting
designed teaching applications for Science, With the STEP programme, Seplat now has a education. Seplat is optimistic that the
Technology, Engineering, Arts and full suite of programmes to address the newly introduced STEP initiative will
Mathematics (STEAM). entire educational value chain, with our enhance and sustain the quality of
initiatives covering the improvement of education in Nigeria.
Following the introductory workshop, the school infrastructure, enhancing students’
training continues online with teachers academic performance, and building
receiving customised training modules on teachers’ skills and competencies.
efficient pedagogical methods for STEAM
education, as well as leadership and Seplat’s firm belief is that education is the
self-improvement training using a Seplat bedrock for national growth and prosperity;
customised application. we invested significantly in various
educational Corporate Social Responsibility
Seplat developed an Online Teachers (CSR) programmes. These programmes
Resource Centre that provides the teachers support Sustainable Development Goals,
with access training on the best techniques notably Goal 4, which aims to “ensure
and practices for implementing STEAM inclusive and equitable quality education
teaching methods, focusing on how best to and promote lifelong learning opportunities
implement these in the classroom for the for all”.
benefit of students.
The learning platform will provide teachers
with resources to enhance their skills and
teach STEAM subjects more effectively,
motivating students through engaging
discussions and demonstrations. Seplat is
supporting the teachers with the provision of
electronic devices and internet data for the
period of training.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 71
Corporate social responsibility |continued
Case study: This programme rekindles the spirit of academic
excellence and healthy competition in our youths
PEARLS QUIZ by motivating, encouraging and rewarding the
scholarship spirit in them.
Despite the challenges posed by the
Covid-19 pandemic, Seplat held its annual Launched in 2012, by Seplat and its JV Likewise, many winning schools have
Pearls Quiz competition amongst schools in partner, the Nigerian Petroleum benefited from prize-funded projects,
Edo and Delta States where the Company Development Company (NPDC), the annual including a new language laboratory, three
operates. In November, following a mix of contest is part of our efforts to boost Delta roofing projects, five computer laboratories
online and contact sessions for the and Edo States’ educational achievement, deployed in different schools and four brand
preliminaries, the winner of the 2020 which host our operations. It aims to support new school buses.
competition emerged. The winning school, the UN’s Sustainable Development Goal 4, to
St. Michael Academy in Benin City, Edo State “ensure inclusive and equitable quality Promoting educational excellence is a
joyfully went home with the coveted prize education and promote lifelong learning crucial objective of our community-based
comprising ₦7 million and other awards in opportunities for all”. programmes. Speaking at the awards
November. The victorious team beat off ceremony, our CEO Roger Brown
intense competition from 574 other schools In its ninth year, the Pearls Quiz aims to commented: “This programme rekindles the
that entered the competition in June, foster a spirit of healthy competition in spirit of academic excellence and healthy
whittling down through rounds that began students by motivating, encouraging and competition in our youths by motivating,
online, which ended up with a final featuring rewarding the ethos of scholarship while encouraging and rewarding the scholarship
the four best schools battling it out in front providing them with the right platform to spirit in them as they inculcate the principles
of a packed audience at the Imaguero prepare for their examinations. Since its of teamwork and hard work.”
College Hall in Benin City. Winning students inception, the Quiz has impacted 45,140
Iyere Godiy, Ehizogie Jeffrey and Okanofua students through prizes won or just through We hope that the Quiz has contributed to the
Eseose also walked away with prizes worth competition enjoyed in a fun and fact that students in Delta and Edo States
₦100,000 to support their education. learning spirit. have maintained very high pass rates in
external examinations such as the West
Students from McNell Secondary School, Africa Examination Council (WAEC).
Sapele, Delta State, took the second prize of
₦3 million for their school and ₦75,000 each,
while the third prize of ₦1 million and ₦50,000
in student grants was won by students from
Gloryland Secondary School, Igarra,
Edo State.
72 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
SEPLAT’S COMMUNITY Strategic Report 01—77
INITIATIVES IN 2020
Seplat joins Covid-19 relief effort Governance Report 78—144
In March 2020, as the pandemic began to
take hold, Seplat joined the Nigerian National A.B.C. Orjiako, Non-Executive Imo State Infectious Diseases Hospital Financial Statements 145—308
Petroleum Corporation (NNPC), and 32 oil Chairman at the groundbreaking In June 2020, Seplat and its joint venture
and gas companies to contribute $30 million ceremony of a permanent 150-200 bed partner NNPC commenced constructing
to help the Federal Government fight Emergency and Infectious Diseases a permanent 150-200 bed Emergency
Covid-19 in Nigeria. The sector donation Hospital at Imo State University and Infectious Diseases Hospital at Imo
supported healthcare delivery facilities, Teaching Hospital (IMSUTH) Orlu, Imo State University Teaching Hospital
including ventilators, personal protective State donated by the NNPC/Seplat JV. (IMSUTH) Orlu, Imo State.
equipment, test kits and ambulances to
different states in the country. The facility is one of the 12 hospitals
that the NNPC intends to construct
In addition, Seplat joined an effort to fight across the country’s six geo-political
the pandemic in Edo, Imo and Delta states. zones. The NNPC in collaboration with
For Edo State, the donation was made in the its partners embarked on this initiative
form of medical supplies and equipment to strengthen the country’s national
including motorised sprayers, backpack healthcare delivery facilities in combating
sprayers, eye goggles, hand sanitisers, nose the ravaging Coronavirus (Covid-19)
masks, temperature guns, chemical gloves, pandemic sustainably.
and personal protective equipment. Similar
donations and donations of additional At the groundbreaking ceremony,
equipment were made in Imo State. In Delta Dr. A.B.C. Orjiako, Chairman of Seplat,
State, Seplat, First Hydrocarbon Nigeria said the hospital represented Seplat’s
(FHN) and ND Western also donated critical philosophy of improving local
medical equipment and materials to the communities’ wellbeing in Seplat’s
state in the quest to check the spread of areas of operation.
Coronavirus, thus enhancing Government’s
readiness to manage possible incidences
of Covid-19.
The essential medical supplies donated
by the independent oil and gas companies
included high power suction machines,
infusion pumps, syringe drivers, personal
protective equipment (PPE), and nebulisers.
Other vital medical materials that were
delivered by Seplat, FHN and ND Western
to the state government comprised
temperature guns, hand sanitisers
and examination gloves.
The sector donation Seplat donates medical supplies
supported healthcare and equipment to Edo State as
delivery facilities, Covid-19 intervention.
including ventilators,
personal protective
equipment, test kits and
ambulances to different
states in the country.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 73
Corporate social responsibility |continued
If the community is good to host your business,
the people from the community should also be
good to be part of the management.
Seplat partners Ugborhen Seplat also provided technical input on
community to promote security vehicle types to be procured and provided
In August 2020, we provided the Ugborhen guidance on how to agree with the security
Community, in Delta State, critical support agencies (the Nigerian Navy, the Nigerian
leading to the community handing over three Police and the NSCDC). Though procured by
security vehicles to the Nigeria Police, Navy the community, Seplat helped to inspect the
and the Nigeria Security and Civil Defense vehicles and ensured they were fit for the
Corps (NSCDC). intended purpose.
Ugborhen is one of Seplat’s foremost oil and The vehicles were presented to the Navy
gas host or producing communities in Ovhor commander for the Nigerian Navy logistics
field in OML 38 & 41, a swampy terrain in base, Sapele; the Police Area Commander
Okpe Kingdom in the Western Niger Delta and the Commander of the Nigerian Security
of Nigeria. The three Toyota Hilux vehicles’ and Civil Defence Corps in Sapele Local
presentation was made at the Ugborhen Government by the President of the
Community town hall, following a period of community, Engineer Phillip Mebradu.
security in the area.
Strengthening relationships
Seplat responded to community concerns with Imo communities
about the security situation, which had Seplat’s ongoing commitment to community
been raised in our regular liaison with engagement was highlighted in August,
local representatives. After assessing the when our Chairman Dr. A.B.C. Orjiako, led a
problem and the community’s needs, we team of the Company’s representatives on
provided advice on how to address the a courtesy call to Governor Hope Uzodinma
situation, particularly the community’s and leaders of host communities in Ohaji and
location, where ease of access by both land others, at the Government House, Owerri.
and water makes it vulnerable to insecurity.
The visit aimed at fostering better
relationships among stakeholders to drive
sustainable development in the State. At the
meeting, Governor Uzodinma urged Seplat
to take advantage of the current shared
prosperity model of 3-R, representing the
Rehabilitation, Reconstruction and Recovery
of key economic and political institutions in
the State and its host communities. He
stated that: “If the community is good to
host your business, the people from the
community should also be good to be part
of the management. If you think they do not
have the requisite qualifications, train them
to your standard and use them.”
74 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
Governance Report 78—144
He pledged to work with Seplat to ensure Seplat donates medical Items Further Covid-19 assistance Financial Statements 145—308
that the ANOH Gas Project at Assa becomes to Delta State Government to In June, Seplat and its joint venture
a success story. Responding to the Governor, equip Delta State Covid-19 partners, the NNPC and its subsidiary,
Dr. Orjiako agreed on the need for Treatment Centre in Asaba. the Nigerian Petroleum Development
development plans and stressed the Company (NPDC) Limited, made
Company’s commitment to developing additional donations to state
communities where its facilities are located. governments to fight against the
Coronavirus pandemic.
Seplat formed a Community Engagement
Management Board (CEMB) in April 2020 For Edo State, the items donated were
with 10 Ohaji – Egbema Communities to 25 hospital beds and a transport
manage the Ohaji South (OHS) GMOU, which ventilator, the same donations being
officially commenced in January 2020. made to Delta State. For Imo State, the
The Government of Imo State led by the items donated were 25 hospital beds,
Commissioner for Environment swore in the sanitary buckets, alcohol-based hand
members of CEMB from the communities. sanitisers, infrared thermometers,
protective equipment and a transport
ventilator, amongst other donations.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 75
Corporate social responsibility |continued
OUR PEOPLE ARE EMPLOYEE
OUR GREATEST WELFARE
ASSETS
Employees are our greatest assets,
The health, happiness and professional and we are committed to ensuring their
development of our employees is at the heart safety and welfare.
of our Human Resources and employment
development policies. In response to the Covid-19 pandemic
in 2020, we continued to take proactive
steps to offer a safe and reliable business
environment for our employees by
establishing a robust Covid-19 protocol.
Career development Employee engagement
To Support Seplat’s vision and mission Seplat recognises that effective
statements, we ensure to attract and retain communication and consultation with
the right mix of skilled personnel and employees is essential to ensuring an engaged
develop them into the highest calibre of workforce and a conducive work environment.
professionals required to grow a world-class Through consultation, engagement, fairness,
energy company. This includes our Graduate and proactive intervention, the Seplat Joint
Trainee Programme, where recent graduates Consultative Committee (JCC) plays an
launch their careers. advisory role to management and has
additional jurisdiction on matters of mutual
In 2020, despite the Covid-19 pandemic concern relating to industrial relations in the
and the resulting work from home strategy workplace such as safety, work organisation,
adopted to protect employees from exposure business tools and more.
to the virus, the Company leveraged
on ‘learning’ as a strategic tool for Employee wellness initiatives such as the
organisational transformation, growth Employee Assistance Programme (EAP),
and development. a confidential and voluntary workplace
service, support employees to address work
We adopted deployment of learning related or personal issues and improve job
intervention programmes via virtual performance. It promotes the general
mentored learning (VML) and other online wellbeing of the workforce thus ensuring
training courses, to address identified they remain happy and fulfilled at work.
competency gaps. Also, continuous
coaching, mentoring and engagement of
employees through online platforms to
ensure that our employees have the internal
support they need to develop professionally.
We undertake rigorous skills and
competency management, to ensure
employees make the most of the career
development opportunities that Seplat has
to offer. The Leadership Development
programme and other transformational
activities that focused on capabilities and
behaviours linked to value drivers of the
business were delivered online.
76 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Welfare Initiatives HOW WE WORKED Strategic Report 01—77
• Online Fitness Programme: To ensure DURING THE YEAR
employee wellbeing especially during the Employee wellness programmes Seplat at 10 – online celebrations Governance Report 78—144
period of lockdown, self-isolating or To ensure employee wellbeing especially The month of July, which marked ten years
physical distancing, the Online Fitness during the period of lockdown, self-isolating since the Company commenced operations,
Daily class was launched, enabling or physical distancing, the Online Fitness was well celebrated. A team of volunteers
employees to keep fit and reduce stress. Daily class was launched. In addition, made up of staff from different departments
regular interactive sessions with the worked arduously to bring a variety of
• Under the Seplat Medical Scheme, Employee Assistance Programme (EAP) activities to mark the anniversary. These
employees and registered dependants consultant were held to provide information exciting activities were well liked and
were provided free access to 24-hour on prevailing developments as it relates enjoyed by all staff included the Anniversary
comprehensive medical care through to the Covid-19 pandemic and help build Staff Quiz; Seplat Ideas Challenge; Seplat
designated health management resilience. Employees and dependants Got Talent; My Seplat Story; and Meet the
organisations. also had access to the EAP consultant for Seplat Family. These activities ran through
private consultations. the week with live events which concluded
• A robust Covid-19 protocol was with finals that produced winners. The
established by Seplat where employees Meetings and engagements activities ignited the Company with
were provided access to medical A couple of major activities were planned excitement and peaked with a fun-filled
treatment and test centres at and executed during the year by employees virtual party dubbed ‘A Toast to Seplat at
designated facilities. working from home. A lot of planning 10’ on Saturday, July 25, 2020. At the party,
meetings were held online during this period leaders commended staff members for the
• In accordance with best practices, to achieve the success rate recorded. many milestones achieved by the Company
the mandatory remote working policy General departmental meetings were also and enjoined them to continue to put in
was issued to outline the Company’s held online to track progress of activities and their best.
minimum expectations from employees foster engagement between colleagues
for any period of Mandatory Remote while working from home. Activities such as
Working and to manage the spread of the exhibitions, the Company’s Annual General
Covid-19 virus thus ensuring employee Meeting, Seplat Energy Summit etc were
safety during high-risk conditions. planned and executed successfully due to
the hard work and resilience of staff working
Other initiatives such as the Joint at home despite internet challenges.
Consultative Committee which is a
committee of management and staff
representatives review issues of mutual
concern. The Employee Assistance
Programme also promotes employee
wellbeing through counselling, wellness
seminars, stress management and so
much more.
COVID-19: SHOULD
WE BE WORRIED?
Covid workshop/HSE meeting The Operations Director, Mr. Effy Okon Financial Statements 145—308
– September 2020 closed out the session thanking the guest
A special HSE edition was organised by the speakers and encouraging all staff to stay
HSE team to discuss the Covid-19 pandemic safe. Everyone left the session with a lot of
from a health perspective. The Guest knowledge on how to manage during the
Speakers were Dr Adeyemi Johnson of pandemic and as well as reassurance.
First Cardiology Hospital and Dr Chikwe members for the many milestones achieved
Ihekweazu, the Director General of the by the Company and enjoined to continue to
Nigeria Centre for Disease Control. The put in their best.
two-hour session comprised of two
enlightening presentations by the guest
speakers followed by a question and answer
session. Staff were able to get answers to
burning questions from qualified medical
personnel. Scenarios and experience of
some members of staff were also shared
during the session.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 77
78–
144
Chairman’s overview 80
Board of Directors 82
Corporate governance report 87
Board Committee reports 96
Directors’ remuneration report 113
Report of the Directors 137
Statement of Directors’ responsibilities 142
Audit Committee’s report 143
Statement of Corporate Responsibility 144
78 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
Governance Report 78—144
GOVERNANCE Financial Statements 145—308
REPORT
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 79
Chairman’s overview
CORPORATE As we continue to experience
GOVERNANCE: major disruptions to the world
THE ROADMAP TO as we once knew it, agility,
SUSTAINABILITY adaptability, and innovation
are critical factors to an
organisation’s resilience and
sustainability. The ability to
keep all of these factors on a
well-balanced scale, should be
the focus of an effective board
in an unprecedented time.”
A.B.C. Orjiako Dear Shareholders
Non-Executive Chairman It gives me great delight to present to you
the Corporate Governance report for the
80 financial year ending 31 December 2020.
In the last one year, the entire world has
been saddled with the major task of
responding and adapting to the disruptions
brought about by the Coronavirus (Covid-19)
pandemic. The Covid-19 pandemic which
inflicted the world with a wave of existential
threat equally inflicted an unprecedented
shock on the global economy.
In response to this major disruptor,
governments all over the world were forced to
shut down economic activities. As a result of
the suspension of economic activities across
aviation, road and rail transportation, crude
demand dropped drastically resulting in an
all-time crude demand loss. The combination
of demand loss and the oil price war pushed
oil price off the cliff, left the entire world in
turmoil with global economies shrinking and
corporate entities struggling for survival.
I am happy to report, on behalf of the Board,
that despite the existential threat posed by
the health and economic circumstances in
the financial year 2020, Seplat, as a company
remained resilient and responded with
agility to, ensure protection of employees,
maintain financial prudence and operational
efficiency, support the communities where
we operate and contributed our fair share
in support of both the Federal and State
governments in the provision of palliatives
to the most impacted communities.
Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Seplat’s ability to effectively respond to As a forward looking Company, Seplat is In furtherance of the Board succession Strategic Report 01—77
the disruptions in the financial year under mindful of the increasing focus, by climate planning, our former Senior Independent
review, is underpinned by the effective change advocacy groups, investors, and Non-Executive Director (S.I.D) Mr. Michael Governance Report 78—144
governance framework already in place, the regulators alike, on Environmental, Social Alexander and Mrs. Ifueko Omoigui Okauru
collaborative approach adopted by the Board and Governance (ESG) approach to (INED) both retired from the Board on 31st
and management in prioritising , addressing sustainability of business and our world. In January 2021. I would like to seize this
existential risk, proffering innovative short, recognition of the changing narrative in the opportunity to thank both Independent
medium, and long-term solutions for a energy space, the Board and management Non-Executive Directors for their meritorious
sustainable business and environment kept at the fore of deliberations in the year service to the Company and wish them all
which cannot be overemphasised. under review, the urgent need to reduce the best in their future endeavours.
carbon footprint, innovative ways to leverage
As a dual listed company, Seplat continues gas as an energy transition, whilst keeping I would also like to thank the Board, the Senior
to be bound by several corporate governance sight on the Company’s transformational Leadership Team, and most importantly, our
laws and regulations both in Nigeria and strategy of portfolio diversification. Details employees for the commitment, passion
in the United Kingdom. These laws and of the Board’s activities for the financial year they brought to work and for contributing
regulations include but are not limited to, under review, are contained in the Corporate immensely to the stability of the Company
the Companies and Allied Matters Act, 2020 Governance Statement and Board in such an unprecedented year.
(‘CAMA’), the Financial Reporting Council Committee reports.
of Nigeria (“FRCN”)’s Nigerian Code of I would like to thank our shareholders for
Corporate Governance, 2018 (“NCCG”), the The year 2020 also witnessed the deliberate their support and for staying the course with
Securities & Exchange Commission (‘SEC’) effort at refreshing the Board membership. us through the years. We are assured that
Code of Corporate Governance for Public To invigorate its capabilities, the Board together we would deliver the world class
Companies in Nigeria (the ‘Nigerian Code’), welcomed three new members in the energy company of our dream.
the Nigerian Stock Exchange (‘NSE’) financial year under review – Mr. Emeka
Rulebook, the United Kingdom (“U.K”) Onwuka as an Executive Director/Chief A.B.C. Orjiako
Corporate Governance Code, 2018 (the Financial Officer (CFO), Ms. Arunma Oteh, Chairman
‘UK Code’), UK Listing Rules (‘LRs’) and the OON and Mr. Xavier Rolet, KBE as
Market Abuse Regulations, 2016 (‘MAR’). Independent Non-Executive Directors Financial Statements 145—308
(INEDs). The Board is gratified by the relevant
These laws and regulations have played a skills and fresh perspectives that these
pivotal role in the laying of a solid foundation directors bring to the Board. The Company
for our Company’s governance framework also witnessed the retirement of Mr. Austin
and practice; culminating in the Company’s Avuru as the Chief Executive Officer (CEO)
demonstrated resilience amidst the health and the resumption of Mr. Roger Brown as
and economic challenges occasioned by the the new CEO. Mr. Avuru’s retirement as
Covid-19 pandemic. CEO is a testament to the success of the
Company’s succession planning. I would like
In the 2020 financial year, the Board, to take this opportunity to thank Mr. Austin
through its Corporate Governance, Avuru for leading the development of a
Compliance and Culture Board Committee, strong organisation, deployment of agile
carried out extensive review and updates systems, processes and stakeholder
to its governance policies including but relationships that allowed Seplat to grow
not limited to the Board Charter, Code of rapidly both organically and inorganically
Business Conduct, Conflict of Interest policy to be a listed exploration and production
and the Whistleblowing policy. The annual company on both the Nigerian and London
Board evaluation was externally facilitated to international stock markets and recognised
assess how the Directors, Board Committees as a major player in the Nigerian and wider
are committed to their roles and work African hydrocarbon industry. The Board
together effectively in the achievement of Seplat is grateful to Mr. Avuru for these
of the Company’s objectives. accomplishments. To ensure that the
Company retains valuable knowledge,
skills, experience, and maintain continuity,
Mr. Avuru continues on the Board as a
Non-Executive Director.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 81
Board of Directors
EXPERIENCED, PROACTIVE
AND EFFECTIVE LEADERSHIP
Non-Executive Chairman
Board meetings and main subjects discussed in 20201
Corporate strategy 25 Dr.Ambrosie Byrant Chukwueloka (A.B.C.) Orjiako
Finance 27 Non-Executive Chairman
Structure and capital 7 Biography
Risk management and internal control 12 Dr. A.B.C. Orjiako is the Chairman and co-founder
Corporate governance and ESG 29 of Seplat since inception in 2009. He is a fellow
of the West African College of Surgeons in
Board composition as at 1 March 2021 1 Orthopaedics and Traumatology. Dr. Orjiako
3 ventured into full-time business in 1996 after
Chairman 3 11 years of active medical practice and has
Executive Directors developed extensive experience in the Nigerian
Non-Executive Directors 6 oil and gas sector.
Independent Since the inception of Seplat, Dr. Orjiako has
Non-Executive Directors spearheaded new business development,
providing leadership on strategy and
Board skills and experience 2020 13 stakeholder management. Seplat under his
11 leadership, has become a highly reputable
1. Executive and strategic leadership Nigerian Independent recording several
2. Governance and Board 7 milestones and firsts; successfully closing
3. Work health, safety, 10 landmark acquisitions, growing exponentially
under a strong and transparent corporate
environment and sustainability 9 governance framework.
4. Financial and risk management 8 He is also a founding member of the London
5. Capital management 11 Stock Exchange Group’s Africa Advisory Group
6. Oil & gas (LAAG). He is a recipient of several awards for
7. Strategy his service to humanity and entrepreneurial
achievements, including a knighthood award
1. S enior executive experience including international experience exposed to a range of political, cultural, from Pope John Paul II and Officer of the Order
regulatory and business environment. of the Niger (OFR) among others.
Experience
2. E xperience as a board member or member of a governance body. Dr. Orjiako brings a wealth of leadership
3. E xperience related to health, safety, environmental, sustainability or social responsibility. experience in the Nigerian oil and gas sector
4. S enior executive or equivalent experience in financial accounting and reporting, corporate finance, having established and managed several
companies in the upstream, downstream and
risk and internal controls. service sectors of the industry in Nigeria. These
5. E xperience in capital management strategies, including capital partnerships, debt financing and include: Abbeycourt Trading Company Ltd,
Abbeycourt Energy Services Ltd, Zebbra Energy
capital raisings. Ltd and Shebah Exploration and Production
6. E xperience in oil and gas industry with knowledge of markets, competitors, operational issues, Company Ltd. He also has other business
interests in construction, real estate
technology and regulatory concerns. development, pharmaceuticals and shipping.
7. Track record of developing and implementing successful business strategies including assets or
Date of appointment
business portfolio. • As Director on 14 December 2009
• As Executive Chairman on 1 February 2010
• As Non-Executive Chairman on 1 January 2014
Board meetings attended
• 10/10
Committee membership
•N o longer applicable
Independent
• Not applicable
82 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Strategic Report 01—77
Executive Directors
Roger Thompson Brown Emeka Onwuka Effiong Okon
Chief Executive Officer;Executive Director Chief Financial Officer;Executive Director Operations Director;Executive Director
Biography Biography Biography Governance Report 78—144
Mr. Brown joined Seplat as Chief Financial Mr. Emeka Onwuka brings over 30 years of Engineer Effiong Okon (MNSE) joined Seplat in
Officer in 2013. With a background in finance, experience in the financial services sector in the February 2018 as Operations Director and brings Financial Statements 145—308
he is a qualified Chartered Accountant with the Sub-Saharan Africa region. He was the former 27 years’ experience in upstream and integrated
Institute of Chartered Accountants of Scotland Group Managing Director & CEO of Diamond oil and gas operations across Africa, Europe,
and also a member of Association of National Bank Plc and former Chairman Board of USA, Middle East, and Nigeria. He is primarily
Accountants of Nigeria. Directors, Enterprise Bank Limited. Mr. Onwuka a Petroleum Reservoir Engineer with extensive
Mr. Brown has over 25 years’ experience in the was a Partner at Andersen Tax Nigeria until his experience across all aspects of the Exploration
financial sector, primarily focused on emerging appointment in Seplat. & Production business including strategy,
markets with extensive experience in structuring Mr. Onwuka received his B.Sc. in Political leadership, petroleum engineering, exploration,
energy and infrastructure transactions on the Science from the University of Nigeria, Nsukka front end development studies, project
African continent. Prior to joining the Company, and holds an MBA from the University of Benin. execution, operational excellence in production
he held the position of Managing Director of Oil He is a Chartered Accountant, a Fellow of the and asset management.
and Gas EMEA for Standard Bank Group. Institute of Chartered Accountants of Nigeria Prior to joining Seplat, in 2018 Engr. Okon was
Following Mr. Avuru's retirement on 31st July (FCA), a Fellow of Chartered Institute of Taxation appointed Vice President Cost Leadership and
2020, Mr. Brown was appointed CEO and of Nigeria (FCIT), a Fellow of the Institute of Continuous Improvement for Royal Dutch Shell,
assumed the role on 1st August 2020. Directors Nigeria (FIoD). He has attended most recently General Manager Deepwater
Experience executive programmes at the Lagos Business Production for Shell Nigeria. Previous
Mr. Brown brings to Seplat extensive financial, School, Wharton Business School and Harvard appointments at Shell also include General
accounting, M&A, debt and equity capital Business School. Manager Offshore Assets (Shallow Water and
markets experience in the emerging markets He holds the Nigerian National Honour, Officer Deepwater), Deputy Vice President Technical/
space, and in particular the African oil and gas of the Order of the Niger (OON) Manager North Field Wells and Reservoir Business
sector. He has advised on some of the largest Experience for the commissioning, start-up and early
and highest profile transactions that have Mr. Onwuka brings to Seplat his extensive board production phase of two mega projects for Qatar
occurred in Nigeria in recent years. experience as non-executive Director at several Shell (Pearl GTL and Qatar Gas LNG Trains 7 & 8).
companies in the financial sector in Nigeria and Experience
Date of appointment West Africa including Chairman of the Board of Engr. Okon brings extensive experience in Safety,
• A s Chief Financial Officer and Executive FMDQ Securities Exchange Limited, FMDQ Leadership, Strategy, Cost Leadership, Field
Holdings Limited, Ecobank Nigeria Limited and Development, Project Delivery, Asset
Director on 22 July 2013 Bharti Airtel Nigeria and formerly First Atlantic Management, Full Life Cycle Management of
• A s Chief Executive Officer; Executive Director Bank Ghana. Complex Oil and Gas Assets (Upstream and
Mr. Onwuka began his professional career with Midstream), Onshore and Offshore, diverse
on 1 August 2020 Arthur Andersen Nigeria in 1988 as a Staff geographies and cultures, successfully leading
Board meetings attended Assistant and left in 1992 as a Senior Consultant, multi-disciplinary teams, leading change and
• 10/10 providing accounting, audit, tax, business advisory innovation, talent identification and
Committee membership and strategic services to companies in banking, oil development, managing service providers and
• Not applicable and gas, manufacturing and general commerce. controlling material budgets. Engr. Okon is a
Independent At Diamond Bank, he successfully manoeuvred member of several professional organisations,
• Not applicable the bank through the industry-wide consolidation including the Society of Petroleum Engineers
and recapitalization challenges of 2004/2005 (SPE), Nigeria Society of Engineers (NSE),
through private placements, listing on the Council for the Regulation of Engineering in
Nigerian Stock Exchange and the acquisition of Nigeria (COREN), etc. Engr. Okon is Alumni of IMD
Lion Bank Plc. He also expanded the bank into the Business School (Lausanne, Switzerland) and
West African sub region from Benin Republic to Harvard Business School (Boston
Senegal, Ivory Coast and Togo. He concluded a Massachusetts, USA).
strategic partnership in 2007 with Actis and
launched in 2008 a GDR offering on the London Date of appointment
Stock Exchange (LSE). • 23 February 2018
Board meetings attended
Date of appointment • 10/10
• 1 August 2020 Committee membership
Board meetings attended • R isk Management and HSSE Committee
• 3/3 Independent
Committee membership • Not applicable
• Not applicable
Independent
• Not applicable
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 83
Board of Directors | continued
Non-Executive Directors
O junekwu Augustine (‘Austin’) Avuru Madame Nathalie Delapalme Olivier de Langavant
Non-Executive Director Non-Executive Director Non-Executive Director
Biography Biography Biography
Mr. Avuru is a co-founder of Seplat and became Madame Delapalme is an Independent Director Mr. Olivier Cleret de Langavant has been CEO
the Chief Executive Officer (CEO) on 1 May 2010 on the Board of Directors of Maurel et Prom, of Maurel & Prom since 1 November 2019.
until he retired as CEO on 31 July 2020. and since 30 June 2014, acts as an alternate Before that position, he did most of his career
A geologist by background, Mr. Avuru spent to Maurel et Prom’s nominee, Michel Hochard with the Total Group which he joined in 1981.
12 years at the Nigerian National Petroleum until 18th July 2019, when she was appointed a He started as a Reservoir Engineer, holding
Corporation, where he held various positions Non-Executive Director on the Board of Seplat. positions in France, Congo, the United States
including Well Site Geologist, Production Experience and Colombia, before being appointed Senior
Seismologist and Reservoir Engineer. In 1992, Madame Delapalme served the French Vice President, Operations in the Netherlands.
he joined Allied Energy Resources in Nigeria, a Government as an Inspector General of Finances Mr. De Langavant was then Deputy Managing
pioneer deep water operator, where he served as at the Ministry of Economy and Finance, and as Director of Total E&P Angola from 1998 to 2002
Exploration Manager and Technical Manager. In the advisor for Africa and Development in the during which time he was heavily involved in the
2002, Mr. Avuru established Platform Petroleum offices of various Foreign Affairs Ministers. She early development phase of the deepwater
Ltd and held the role of Managing Director until also served as an advisor for the Finance and Girassol field. Following this post, he was
2010, when he left to take up the CEO position Budgetary Commission in the French Senate. appointed Managing Director of Total E&P
at Seplat. Currently Executive Director of the Mo Ibrahim Myanmar. In 2005, Mr. de Langavant returned to
Experience Foundation, she remains deeply involved in Angola as Managing Director of Total E&P
Mr. Avuru has over 40 years’ experience (1980 governance and development in Africa. Angola, a position he held until 2009. Upon
– 2020), working in the Nigerian Oil and Gas leaving Angola in 2009, Mr. de Langavant was
Sector in increasingly senior technical and appointed Senior Vice President, Finance,
management roles. He has spent the last Economics & Information Systems of Total’s
15 years in CEO roles at Platform Petroleum and Exploration Production (E&P) branch.
Seplat Petroleum, and has built up a strong In March 2011, Mr. de Langavant took up the
reputation as a reference resource professional position as Senior Vice President E&P Strategy,
on the Nigerian Oil and Gas Industry play. Business Development and R&D which he held
until February 2015. Starting March 2015, Mr. de
Langavant was appointed Senior Vice President
Asia Pacific. Mr. de Langavant became a
member of the Total Group Management
Committee (thereafter Performance Group
Committee) in January 2012. Mr. de Langavant
holds an engineering degree from the National
School of Mines of Paris (1978).
Date of appointment Date of appointment Date of appointment
• 1 May 2010 • 18 July 2019 • 28 January 2020
Board meetings attended Board meetings attended Board meetings attended
• 10/10 • 10/10 • 10/10
Committee membership Committee membership Committee membership
• R isk Management and HSSE Committee • CRS Committee • Audit Committee
Independent • C orporate Governance, Compliance Independent
• Not applicable • Not applicable
and Culture Committee
Independent
• Not applicable
84 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Independent Non-Executive Directors Strategic Report 01—77
Basil Omiyi Lord Mark Malloch-Brown Charles Okeahalam
Senior Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director
Biography Biography Biography Governance Report 78—144
Mr. Omiyi’s career spans 40 years at Royal Dutch Lord Malloch-Brown is a former Deputy Dr. Okeahalam is a co-founder and Chairman of
Shell, during which time he occupied a number Secretary General of the United Nations as well AGH Group, a private equity and diversified
of senior roles in Nigeria and Europe, including as a previous Administrator of United Nations investment holding company with assets in
Managing Director of Shell Petroleum Development Programme. He has also served in several African countries. Prior to co-founding
Development Company of Nigeria Limited and the British Cabinet and Foreign Office. He is AGH Group in 2002, he was a professor of
Country Chairman of Shell Companies, Nigeria. active both in business and in the non-profit finance and banking at the University of the
Mr. Omiyi also holds board positions in a range world. He also remains deeply involved in Witwatersrand in Johannesburg. His other roles
of other companies including as Chairman of a international affairs. Lord Malloch-Brown have included advising a number of African
Banking and Financial Services company as well is a former Chair of the Royal Africa Society. central banks and government ministries, the
as Chairman of a Real Estate Company. In 2011, Experience World Bank and the United Nations. He has held
he was awarded the National Honour of Lord Malloch-Brown brings a great deal of board positions in several companies including
Commander of the Order of the Niger by the knowledge and experience on international and ABSA, South African Airways, Sun International
President of Nigeria for pioneering Nigerian external affairs, and particularly the promotion and is a former non-executive chairman of
leadership in the oil and gas sector. of business and commerce in African Heritage Bank Limited, Nigeria and non-
Experience economies, including Nigeria, within a global executive chairman of the Nigeria Mortgage
Mr. Omiyi has extensive insight into and context. He also brings extensive experience Refinance Company. He is the chairman of the
experience in the global oil and gas industry on corporate responsibility and governance board of directors of AMREF Health Africa.
and in particular brings a detailed knowledge systems to the Board. Experience
and understanding of the Nigerian oil and Dr. Okeahalam brings extensive corporate
gas sector together with senior management finance, banking and capital markets expertise
expertise gained in a large-scale and experience to the Board.
multinational organisation.
Financial Statements 145—308
Date of appointment Date of appointment Date of appointment
• 1 March 2013 • 1 February 2014 • 1 March 2013
Board meetings attended Board meetings attended Board meetings attended
• 10/10 • 9/10 • 10/10
Committee membership Committee membership Committee membership
• G as Committee (Chairman) • C SR Committee (Chairman) • Finance Committee (Chairman)
• R isk Management and HSSE Committee • Finance Committee • Gas Committee
• N omination and Establishment Committee • Remuneration Committee
(Chairman) Independent Independent
• N omination and Establishment Committee • Yes • Yes
• Remuneration Committee
Independent
• Yes
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 85
Board of Directors | continued
Independent Non-Executive Directors
Damian Dinshiya Dodo,SAN Arunma Oteh,OON Xavier Rolet,KBE
Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director
Biography Biography Biography
A renowned lawyer, Mr. Dodo, SAN has acted Ms. Oteh is a seasoned C-suite executive with Mr. Xavier R. Rolet, KBE is an experienced CEO,
and continues to act for a wide range of major several years of experience operating at the Co-Founder, and Entrepreneur. He was named
Nigerian corporations, governmental and highest levels at major global institutions and in one of the 100 Best CEOs in the World in the 2017
regulatory bodies across a number of business Government. She has been an academic scholar Harvard Business Review, Mr. Rolet has
sectors and has served on a number of panels at the University of Oxford since January 2019 demonstrated a history of successful
and commissions in Nigeria, including the NNPC and a member of the London Stock Exchange turnarounds in the global financial services
Commission of Inquiry, the Governing Board of Africa Advisory Group since January 2020. industry. In his decade at the helm of the London
the National Agency for the Prohibition of Ms. Oteh served as Treasurer and Vice President Stock Exchange, the LSE’s market valuation
Trafficking in Persons (NAPTIP) and National of the World Bank from 2015 to 2018. She was rose from £800 million to more than £15 billion,
Lottery Regulatory Commission where he all the Director General, Securities and Exchange transforming it into one of the world’s largest
served as Chairman. Commission (SEC) Nigeria from 2010 to 2015. exchanges by market capitalization. He is
In 2001, Mr. Dodo, SAN was awarded Nigeria’s Previous to SEC Nigeria, she worked in a variety currently the Chairman, Board of Directors at
highest legal practice rank of Senior Advocate of roles notably as Group Vice President, Phosagro PJSC, a member of the Board of
of Nigeria (SAN). In 2011, he was awarded the Corporate Services and Group Treasurer, African Directors of the Saudi Stock Exchange Tadawul
National Honour of Officer of the Order of the Development Bank. Her career started in 1985 as an appointee of the Public Investment Fund,
Federal Republic of Nigeria by the President of at Centre Point Investments Limited, a Nigerian Senior Advisor, TowerBrook Capital Partners
Nigeria. He was also awarded a fellowship by the investment bank. LLC, Chairman of the Board, Shore Capital
Nigerian Institute for Advanced Legal Studies. She obtained a first-class honours degree in Markets, INED, Golden Falcon Special Purpose
In 2017, Mr. Dodo, SAN was appointed a Fellow Computer Science, from University of Nigeria Acquisition Company and an Expert Adviser to
of the Nigerian Chartered Institute of Arbitrators; Nsukka in 1984 and a Master’s degree in the Shanghai Institute of Finance for the
a Member of the Taraba State Judicial Service Business Administration, from Harvard Real Economy.
Commission; and a life Bencher. He is also an Business School in 1990. She has received He has held various senior positions in the
alumnus of the Said Business School of the several recognitions, notably, the Officer of the financial services industry throughout his
University of Oxford, an alumnus of the IMD Order of the Niger (OON) National Honour for career: CEO of CQS, a global hedge fund; CEO of
Business School, Lausanne, Switzerland; an her contribution to the economic development Banque Lehman Brothers in Paris; co-head of
associate of the Chartered Institute of and role in transforming the Nigerian capital Global Equity & Derivatives Trading at Lehman
Arbitrators in London; a Member of the Institute markets. She was among New African’s Brothers New York; Global Head of Risk and
of Directors; a member of the Nigerian Institute “100 Most Influential Africans” in 2015, and Ai Trading at Dresdner Kleinwort Wasserstein;
of International Affairs; and a member of the 2018 Global Institutional Investment Personality Vice-President, International Equity Risk
National Judicial Council (NJC). of the Year. In 2020, she was named amongst the Arbitrage at Goldman Sachs New York; and
Experience top 100 people in the UK of African heritage, by co-Head of European Equities Sales and Trading
Mr. Dodo, SAN brings an extensive legal Power list and Africa’s top 50 women by Forbes. at Goldman Sachs International Ltd in London.
expertise and knowledge base to the Board Experience Mr. Rolet received his post-graduate degree in
together with a firm understanding of relevant Ms. Oteh brings to the Board over 34 years Defense Studies and Economic Intelligence from
regulatory regimes and corporate governance. of global experience, spanning securities Institut des Hautes études de défense Nationale
regulation, the capital markets and business. (“IHEDN”), an MBA in International Finance from
She also has extensive experience in corporate Columbia Business School, and an MSc in
governance, the public sector and sustainability. Management from Kedge Business School.
Ms. Oteh has also served on several Boards, Mr. Rolet is an Honorary Knight.
notably, the International Organization of Commander of the Order of the British Empire
Securities Commissions (2010 to 2015) which (KBE), a Knight of the National Order of the Legion
regulates 95% of the world’s securities markets. of Honour of France, an Officer of the Royal
Sharifian Order of Al-Alawi, and a Member of the
Order of Friendship of the Russian Federation.
Experience
Mr. Rolet brings to the Board an extensive expertise
in the fields of regulation, capital markets,
Technology and Environmental Conservation
and business governance. His knowledge and
wisdom are great additions to the Board.
Date of appointment Date of appointment Date of appointment
• 30 June 2014 • 1 October 2020 • 1 October 2020
Board meetings attended Board meetings attended Board meetings attended
• 8/10 • 3/3 • 3/3
Committee membership Committee membership Committee membership
• N omination and Establishment Committee • Finance Committee • Remuneration Committee
• N omination and Establishment Committee • R isk Management and HSSE Committee
(Chairman) • Gas Committee • CSR Committee
• Audit Committee Independent Independent
• C orporate Governance, Compliance & Culture • Yes • Yes
Committee Annual Report and Accounts 2020 Picture credit: Roger Askew/S hutterstock
• Remuneration Committee
• CSR Committee Seplat Petroleum Development Company Plc
Independent
• Yes
86
Corporate governance report
The Board of Directors of Seplat Petroleum as stipulated in the applicable Nigerian and UK laws, codes, rules, Strategic Report 01—77
Development Company Plc. (the ‘Board’) continues and regulations. Members of the Board are aware of their right to
to strive towards ensuring that management acts obtain independent professional advice at the Company’s expense, Governance Report 78—144
in the best interest of the shareholders and other where required.
stakeholders of the Company while sustaining the Financial Statements 145—308
prosperity of the Company. To this end, the Board The roles and responsibilities of the Chairman and the CEO are
exercised its oversight and control function in relation clearly separated and are outlined under their respective
to the Company in the financial year under review. appointment letters. This role separation is monitored by the Senior
The Board equally provided entrepreneurial, strategic Independent Non-Executive Director (SID) and is periodically
as well as ethical culture leadership for the Company assessed during Board evaluations.
to ensure that the affairs of the Company were
conducted in a responsible manner becoming of The Board has adopted a comprehensive Board Charter that sets out
a good corporate citizen. the matters that are exclusively reserved for its approval. The matters
that require exclusive approval of the Board are also captured in the
The Board, as the highest governing body in Seplat, is aware and alive Authority Matrix of the Company to ensure strict compliance by the
to its overall responsibility for – corporate governance, setting the Senior Leadership Team and management. The Board deliberated
Company’s short, medium, and long-term strategies, providing on the following matters for the financial year under review:
oversight in the achievement of the Company’s objectives, and
supporting management in their day to day running of the Company’s • Appointment of Non-Executive Director
business. The Board has the appropriate mix of knowledge, skills,
and experience, including business, commercial and industry • Review of the Interim Condensed Consolidated Financial
expertise; which they brought to bear in the discharge of their duties Statements (Unaudited) for the fourth quarter ended
in the financial year under review. The Board equally has 31 December 2019
the appropriate mix of Executive, Non-Executive, and Independent
Non-Executive Directors. The majority of the Seplat Board are • Group Tax Strategy
Non-Executive Directors, most of whom are Independent
Non‑Executive Directors. • Production Performance
As a Company with dual listing under both the Nigerian and the • Financial Performance
London Stock Exchanges, Seplat is subject to a number of listing
and governance provisions. Some of the key provisions that apply to • Update of Capital Projects
Seplat for the year ended 31 December, 2020, are the Companies and
Allied Matters Act (CAMA) 2020, the Nigerian Securities Exchange • Legal Risk Analysis
Commissions’ Rules and Regulations on Code of Corporate
Governance for Public Companies (2011) as amended (‘SEC Code’), • 2019 Full Year Audited Financial Result
the Nigerian Code of Corporate Governance 2018 (NCCG), UK Listing
Rules (LRs), the Market Abuse Regulations, 2016 (MAR), the UK • 2020 Budget Reforecast and effects of oil price slump
Corporate Governance Code as updated and published by the
Financial Reporting Council (FRC) in July 2018 (UK Code). • Bond Refinancing 2020
In line with the requirements of these Laws, rules and regulations, • 5 Year Corporate Plan
the Board of Seplat strives to ensure that the Company meets high
standards of environmental, social and governance performance • Consideration and adoption of Annual General Meeting (AGM)
in order to sustain and improve on shareholders’ value. The Board Process Documents
regards corporate governance as a critical factor in the achievement
of the Company’s objectives and has therefore put in place and • Consideration and Adoption of the Re-election of retiring Directors
adopted appropriate charters, policies, and processes for the day at the AGM
to day running of the Company.
• Re-Election of the Chairman of the Board
Board processes
Scope and authority • Update on Chief Financial Officer (CFO)’s succession plan
In line with relevant codes of corporate governance and regulations,
the Board is responsible for ensuring compliance with all applicable • Update on Board Refreshment
laws, rules, and regulations. In discharging this responsibility, the
Board is supported by the Company Secretariat and the Compliance • Nomination of Board representatives to the Statutory
Unit headed by the Company Secretary/General Counsel (“CS/GC”). Audit Committee
In addition, the Board is also supported by key members of the
Senior Leadership Team and management as are required from time • Board Approval of the selection of new CFO
to time. To aid the Directors’ effective participation and making of
informed decisions at Board and committee meetings, all Board and • Update on Covid-19 and Seplat’s participation in containment
Board Committee papers are distributed to each Director in advance support efforts through donation of palliatives
of their meetings using the Board pad software that is designed for
that purpose. Formal minutes of Board and all Committee meetings • Update on 2020 Annual General Meeting
are taken by the Company Secretariat team and are reviewed,
discussed by the Board prior to approval and adoption at the • Approval of Q1 2020 Financial Result
subsequent Board meeting. The Company Secretary also advises
and gives guidance to the Board in the discharge of its obligations • Gas Update
• Risk Management Report
• Update on Board Evaluation
• Review of Half-Year (1H2020) Result
• Review of Company’s approach to ESG
• Changes to Seplat’s Corporate Representatives on AGPC Board
• Appointment of Two (2) Independent Non-Executive Directors
• Update on ANOH Project
• Presentation on new Organisational Structure
• Review of Q3 2020 Financial Result
• Review of 2021 Budget & Work Programme
• Appointment of New MD and additional Directors for AGPC
• Review of Directors’ Conflict of Interest and Recusal proposal.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 87
Corporate governance report |continued
To facilitate an efficient and effective discharge of its Board meetings
responsibilities, the Board has established seven Board Committees One of the principal ways in which the Board performs its oversight
and has delegated specific aspects of its responsibilities to these function and monitoring of the Company’s performance is through
Committees. These Board Committees are: Board meetings. In accordance with regulatory requirements, the
Board meets at least once every quarter. However, additional
1. The Finance Committee (established in line with the UK Code’s meetings are scheduled as matters which require the attention
requirement for an Audit Committee). of the Board prior to the convening of next quarterly Board
meeting arise.
2. The Remuneration Committee.
The Board held ten meetings during the 2020 financial year.
3. The Nomination and Establishment Committee. The dates of the meetings and attendance of each Director at the
meetings are as stated below. During the year under review, the
4. The Risk Management and HSSE Committee. Non-Executive Directors held exclusive meetings, without the
Executive Directors. In addition, the Chairman, and the Senior
5. The Corporate Social Responsibility (CSR) Committee. Independent Non-Executive Director each held different meetings
with the Non-Executive Directors, with the absence of the Executive
6. The Gas Committee. Directors. In compliance with the Nigerian Code and the UK Code,
it is the policy and practice of Seplat that no Director is involved in
7. The Corporate Governance, Compliance & Culture Committee. any deliberation pertaining to his/her remuneration.
In addition to these Board Committees, the Company has Dates of 2020 Board meetings are as follows:
established a statutory Audit Committee at its 30 June 2014 Annual
General Meeting (AGM). The establishment of the Audit Committee is 1. 28 January 2020.
in line with Sections 404(2) of the Companies and Allied Matters Act
(CAMA) as amended. In line with the provisions of Section 404 (3) of 2. 3 March 2020.
CAMA, the Audit Committee, currently consists of three shareholder
representatives and three Non-Executive Directors who are elected 3. 19 March 2020.
at every AGM to sit on the Audit Committee.
4. 28 April 2020.
All eight Committees (including the Audit Committee) have their
respective terms of reference that guide their members in the 5. 28 May 2020.
discharge of their assigned duties, and these Terms of Reference
are available for review by the public. All the Committees present 6. 6 July 2020.
a report to the Board, highlighting matters deliberated upon as well
as each Committee’s proposals/recommendations on matters within 7. 28 July 2020.
the remit of their respective Terms of Reference. The details of these
eight Committees are contained in the individual Committee reports 8. 8 October 2020.
in this governance section.
9. 27 October 2020.
Board review and evaluation
In line with the NCCG and the UK Code, which prescribes the 10. 24 December 2020.
establishment of a formal and rigorous annual evaluation of the
performance of the Board, its committees, the Chairman, individual S/N Name Designation No. of No. of times
Directors and that the process should be externally facilitated by meetings in attendance
an independent external consultant at least once in three (3) years, 1. A.B.C. Orjiako Chairman in the year
the Board in the year under review, engaged the services of an
independent external consultant, Messrs. DCSL Corporate Services 2. Roger Brown Chief Executive Officer 10 10
Limited (DCSL) to carry out an evaluation of the Board for the 10 10
financial year 2019. The independent consultant also carried out 3. Emeka Onwuka2 Chief Financial Officer
an assessment of the corporate governance practices within 33
the Company. 4. Effiong Okon Operations Director 10 10
10 10
In carrying out the evaluation, the following seven key corporate 5. Austin Avuru Non-Executive Director 10 10
governance areas were considered: 10 10
6. Olivier Langavant Non-Executive Director
1. Board Structure and Composition; 10 10
7. Nathalie Delapalme Non-Executive
2. Strategy and Planning; Director 10 10
3. Board Operations and Effectiveness; 8. Michael Alexander1 Senior Independent 10 10
Non-Executive Director
4. Measuring and Monitoring of Performance; 10 9
9. Charles Okeahalam Independent Non-
5. Risk Management and Compliance; Executive Director 10 9
6. Corporate Citizenship; and 10. Basil Omiyi Independent Non- 10 8
Executive Director
7. Transparency and Disclosure. 33
11. Ifueko Independent Non-
M. Omoigui Okauru1 Executive Director 33
12. Lord Mark Independent Non-
Malloch-Brown Executive Director
13. Damian Dodo, SAN Independent Non-
Executive Director
14. Arunma Oteh, OON2 Independent Non-
Executive Director
15. Xavier Rolet, Independent Non-
KBE2 Executive Director
1. I fueko M. Omoigui Okauru and Michael Alexander voluntarily retired from the Board
effective 31 January 2021.
2. T he Board appointed Emeka Onwuka as Chief Financial Officer/Executive Director
effective 1 August 2020; Arunma Oteh, OON and Xavier Rolet, KBE as Independent
Non-Executive Directors effective 1 October 2020.
88 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Board policies and insurance cover Appointment of the new Chief Executive Officer (CEO) Strategic Report 01—77
In addition to the Board Charter earlier discussed, the Board has in On 1 August 2020, Mr. Roger Brown assumed the role of the CEO of
place a Code of Business Conduct policy and other corporate the Company. Mr. Brown brings to the CEO role, a deep knowledge of Governance Report 78—144
governance policies covering anti-bribery and corruption, anti-fraud the Company in his six (6) years as the Chief Financial Officer (CFO)
policy, related party transactions, conflicts of interest, share dealing, and a member of the Board. Mr. Brown has strong financial,
whistleblowing, community relations, risk management, electronic commercial and Mergers and Acquisition (M&A) experience as well
information, and communication systems etc, details of which are as proven people skills which is an asset as the Company embarks on
discussed later in this governance section. the next phase of its growth plan. Prior to joining the Company, Mr.
Brown was an advisor to the Company since 2010 while he was the
The Board has also adopted the Market Abuse Regulations (MAR) Managing Director and head of EMEA Oil and Gas at Standard Bank
which replaced the Model Code for Directors’ dealings. The MAR Group. During his time at the bank, he was instrumental in providing
governs the disclosure and control of inside information and the advice and deploying capital across the African continent in the
reporting of transactions by persons discharging managerial Oil & Gas, Power & Infrastructure, and the renewable energy sectors.
responsibilities (PDMRs).
Appointment of new Chief Financial Officer
The Board is responsible for taking appropriate steps to ensure The Board is pleased to formally introduce Mr. Emeka Onwuka as
observance of the Article provisions of MAR by the Directors. The the new Chief Financial Officer (CFO) of the Company. Emeka Onwuka
Company is therefore committed to observing the MAR provisions joined as CFO and Board member on 1 August 2020. Mr. Onwuka has
as part of its commitment to good corporate governance practices. more than 30 years’ experience in financial services within Sub-
Saharan Africa. He has served as Group Managing Director/CEO of
The Company has arranged appropriate insurance cover for legal Diamond Bank Plc and is a former Chairman of Enterprise Bank
action against its Directors. This insurance cover losses and actions Limited. Mr. Onwuka was a Partner at Andersen Tax Nigeria and
arising from matters involving a Director’s failure to act in good faith holds various Board positions at companies including FMDQ
and in the Company’s best interest, failure to exercise his/her powers Securities Exchange Limited, FMDQ Holdings Limited, Ecobank
for a proper purpose, failure to use his/her skill reasonably, failure to Nigeria Limited and Bharti Airtel Nigeria.
comply with the law, etc. The Company regularly reviews this
insurance coverage to ensure adequate protection of its Directors. Appointment of two Independent Non-Executive Director (INEDs)
The Board is equally pleased to formally introduce Ms. Arunma Oteh,
Appointment, development and evaluation of Directors OON and Mr. Xavier R. Rolet KBE as newly appointed Independent
The Board has adopted a Board Succession Policy to guide the Non-Executive Directors of the Company, with effect from
appointment of its Directors in accordance with corporate laws, 1 October, 2020.
corporate governance codes, regulations, and international best
practice. The Board Succession Policy which requires the Ms. Arunma Oteh, OON is a seasoned C-suite executive with several
Nomination and Establishment Committee (NOMCO) to submit to the years of experience operating at the highest levels at major
Board on a yearly basis a succession plan identifying key and critical multilateral agencies, global financial institutions and in
positions, definitive designation of successors for such positions, Government. She has been an academic scholar at University of
articulation of specific development plans for identified successor Oxford since January 2019 and a member of the London Stock
which is tied to the Company’s overall performance management Exchange Africa Advisory Group since January 2020.
and career communication. NOMCO has overall responsibility for the
Board appointment, induction, training, and evaluation processes, Financial Statements 145—308
as well as changes to the Company Secretary and other senior
management staff, all of which are subject to approval by the Board.
The fundamental principles of the appointment process include
evaluation of the balance of skills, knowledge and experience on the
Board, leadership needs of the Company and ability of the candidate
to fulfil his/her duties and obligations as a Director. New Directors
are required to attend an induction programme on the Company’s
business, their legal duties, and responsibilities as well as other
information that would assist them in effectively discharging
their duties.
The Company believes in and provides continuous training and
development opportunities for its Directors to equip them with
required skills to effective discharge their duties.
Retirement of the Founding Chief Executive Officer (CEO)
On 31 July 2020, the Company’s founding CEO, Mr. Austin Avuru
voluntarily retired after putting in ten years of meritorious
service to the Company. Within ten years, Mr. Avuru led the
development of a strong organisation, the deployment of agile
systems, processes and stakeholder relationships that allowed the
Company to grow rapidly into a leading independent oil and natural
gas producer in Nigeria. The Board is immensely grateful to Mr. Avuru
for the accomplishments during his tenure as CEO and will continue
to count on his repertoire of knowledge and experience as a
Non-Executive Director.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 89
Corporate governance report |continued
Ms. Oteh served as Treasurer and Vice President of the World Bank The appointment and removal or reappointment of Directors is
from 2015 to 2018. As Treasurer, she led a global team that managed governed by its Articles of Association and the Companies and
the World Bank’s $200 billion debt portfolio as well as an asset Allied Matters Act, 2020. It also sets out the powers of Directors.
portfolio of $200 billion for the World Bank Group and several public
sector clients including 65 Central Banks. She was the Director Accountability
General of the Securities and Exchange Commission (SEC) Nigeria Details of the Directors’ responsibility for preparing the Company’s
from 2010 to 2015. As Director General of Nigeria’s apex capital financial statements and accounts, and a statement that they
market regulator, she was responsible for the regulation of Nigeria's consider the financial statements and accounts, taken as a whole, to
capital markets, including the Nigerian Stock Exchange, and led the be fair, balanced, and understandable and to contain the information
rebuilding of the capital markets after the global financial crisis. She necessary for shareholders to assess the Company’s position and
also served on Nigeria’s Economic Management team, chaired by the performance, business model and strategy, are given on page 142 of
Nigerian President. Prior to the SEC Nigeria, she worked at the Africa this report. Seplat’s business model and strategy for delivering the
Development Bank for 17 years in a variety of roles including Group objectives of the Company and the assumptions underlying the
Vice President, Corporate Services (2006 to 2009) and Group Directors’ assessment of the business as a going concern are given
Treasurer (2001 to 2006). on pages 16 and 19 of this report, respectively.
While Mr. Xavier Rolet, KBE, is an experienced CEO, Co-Founder, and The Board, during the financial under review, carried out an
Entrepreneur. Named as one of Harvard Business Review’s 100 Best assessment of the Company’s risk management and internal
CEOs in the World in 2017, Mr. Rolet has demonstrated a history of controls systems, including financial, operational and compliance
successful turnarounds in the global financial services industry. controls, and reviewed their effectiveness, details of which are given
In his decade at the helm of the London Stock Exchange, the LSE’s on pages 24-36 of this report.
market valuation rose from £800 million to more than £15 billion,
transforming it into one of the world’s largest exchanges by In compliance with CAMA and the NCCG, the Company has
market capitalisation. established a statutory Audit Committee (mentioned earlier), and in
compliance with the UK Code’s requirement for an Audit Committee,
He is currently the Chairman, Board of Directors at Phosagro PJSC, the Board has established a Finance Committee comprising four
a member of the Board of Directors of the Saudi Stock Exchange Independent Non-Executive Directors. Details of the Finance and
Tadawul as an appointee of the Public Investment Fund, and an Audit Committees’ membership and activities are given in their
Expert Adviser to the Shanghai Institute of Finance for the Real respective reports, on pages 98 and 112. The Board has also
Economy. He has held various senior positions in the financial established the Risk Management and HSSE Committee, which is
services industry throughout his career: CEO of CQS, a global hedge responsible for reviewing on behalf of the Board, operational risk,
fund; CEO of Banque Lehman Brothers in Paris; Co-Head of Global health and safety, and environment matters. Details of the
Equity & Derivatives Trading at Lehman Brothers New York; Global Committee’s membership and activities are given in its report
Head of Risk and Trading at Dresdner Kleinwort Wasserstein; on page 106.
Vice-President, International Equity Risk Arbitrage at Goldman
Sachs New York; and Co-Head of European Equities Sales and Corporate governance
Trading at Goldman Sachs International Ltd in London. In line with the recommended practices under the Nigerian Code of
Corporate Governance, the Board established a Board Committee
The Seplat Board is indeed privileged to have Arunma and Xavier on on Corporate Governance, Compliance & Culture (CG, C& C
board and look forward to their contributions towards the continued Committee). The CG, C & C Committee, which comprises only
success of the Board and Company. Independent Non-Executive Directors, is saddled with the
responsibility of assisting the Board in promoting, modelling,
Retirement of two Independent Non-Executive Directors institutionalising, and maintaining sound ethical culture and good
The Board during the financial under review, announced the corporate citizenship. The Committee, which was chaired by Mrs.
retirement of Mr. Michael Alexander, Senior Independent Non- Ifueko Omoigui Okauru for the financial year under review, advises
Executive Director (SID), and Mrs. Ifueko M. Omoigui Okauru, the Board on modalities of strengthening the Company’s corporate
Independent Non-Executive Director (INED), effective 31 January governance, compliance, and cultural ethos, to achieve the
2021. Mr. Alexander was appointed to the Board in June 2013 while Company’s continued survival and prosperity. Details of the
Mrs. Okauru was appointed in March 2013. In the past seven (7) Committee’s membership and activities are given in page 110.
years, Mr. Alexander and Mrs. Okauru served the Board
meritoriously, deploying their multi-facetted experiences towards Remuneration
the growth of the Company. Seplat remains grateful for their In compliance with the Nigerian Code of Corporate Governance and
immense contributions to the Board and the Company and wish UK Code, the Board has established a Remuneration Committee
them the very best in all of their future endeavours. solely comprising Independent Non-Executive Directors and was
chaired by Mr. Michael Alexander (SID) for the financial year under
Following the retirement of Mr. Alexander as SID, the Board has review. Details of the Committee’s membership and activities are
appointed Mr. Basil Omiyi, Independent Non-Executive Director given in its report on page 96. Details of how Seplat’s remuneration
(INED) as the new Senior Independent Non-Executive Director policy links remuneration to the achievement of the Company’s
effective 1 February 2021. Mr. Omiyi’s career spans 40 years’ strategy and the level of remuneration paid to each of the Directors
experience at Royal Dutch Shell, during which time he occupied a during the financial year are outlined on pages 130 and 131.
number of senior roles in Nigeria and Europe, including Managing
Director of Shell Petroleum Development Company of Nigeria Limited Seplat stated at the time of the IPO that remuneration for certain
and Country Chairman of Shell Companies, Nigeria. Mr. Omiyi has Non-Executive Directors may include performance-related elements
extensive insight into and experience in the global oil and gas and certain Executive Directors’ service contracts may include an
industry and in particular brings a detailed knowledge and initial fixed term of more than one year. In compliance with both the
understanding of the Nigerian oil and gas sector together with Nigerian Code and the UK Code, no Executive Director is a member
senior management expertise gained in a large-scale of the Remuneration Committee and no Director is involved in any
multinational organisation. deliberation of his/her remuneration. The Company’s remuneration
policy and practices are outlined on page 120 of this report.
90 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Engaging with our stakeholders The Company conducts an active investor relations programme with Strategic Report 01—77
The Board recognises the need to nurture successful relationships institutional investors and analysts. This includes participation at
with our stakeholders to secure the Company’s long-term goals. conferences, both within and outside Nigeria, where a few one-on- Governance Report 78—144
Through regular engagement, the Board is able to understand the one meetings and group presentations are made, including investor
views of all stakeholders and considers them in their decision- roadshows in key financial centres. In 2020, the Company held over Financial Statements 145—308
making process. 247 meetings with institutional investors and expanded
its analyst coverage.
Protection of shareholder rights
The Board ensures that the statutory and general rights of Regular analysis of Seplat’s shareholder register and major
shareholders are always protected. It further ensures that all movements, together with market feedback, trading analysis and
shareholders are treated equally. On 25 March 2014, the Company peer performance, are communicated to the Board via the Chief
entered into a Relationship Agreement with its founding Financial Officer and the Head of Investor Relations.
shareholders (who are represented on the Board) to regulate their
degree of control over the Company so that the rights of minority The Board welcomes enquiries from shareholders, encourages
shareholders and the independence of the Board are protected. attendance at the Company’s AGM and participation in its results
All other shareholders are given equal access to information and presentations and webcasts. The Board further encourages
no shareholder is given preferential treatment. shareholders to subscribe to receiving news alerts via the
subscription service on the Company’s website.
Communication with shareholders
Seplat values effective communication with its shareholders. Host community engagement; donation of Covid-19 palliatives
As a matter of practice and based on regulatory requirements, Sustainable community development remains a priority and we have
the Company reports formally to shareholders four times a year continued to work collaboratively with our local partners to foster
with the announcement of quarterly and full-year results as well positive social and economic development. Executive Directors met
as providing disclosure on material changes to the business as and with leaders of the host communities, visited community events and
when required. However, with the new SEC requirement for Public projects in areas of operations. Additionally, Directors met with
companies to elect whether to file its fourth Quarter report, the ministers, state governors in the states where the Company operates
Company has elected the option of filing its Annual Audited Financial as well as other key government officials during the financial year
Statement within the regulatory stipulated period. The full-year under review.
Annual Report and Accounts are issued to shareholders and are
posted on the Company’s website. Results presentations are also In response to the Covid-19 pandemic emergency and the Nigerian
made available on the Company’s website together with replays National Petroleum Corporation (NNPC)’s call for contributions from
of webcasts. the petroleum industry to support the Nigerian Government both at
the federal and state levels, the Company made donations in support
Seplat’s seventh (7th) AGM was held on 28 May 2020 in Lagos, of the federal and state level palliative initiatives.
Nigeria, in line with the NCDC guidelines and CAC approval for
holding the AGM by proxy only and was attended by four shareholders In addition to the above, the Company, supplied medical
in person while 288 shareholders were represented by proxies consumables and in-patient support systems to the three (3) states
(holding 510,329,595 units of shares). The business transacted at the where the Company carries out its operations (i.e., Edo, Delta & Imo
meeting was based on CAMA requirements and as such, diverged in States respectively). This gesture was made to support the states’
some respects from that common to UK companies. The Company’s medical infrastructure for the fight against the Covid-19 pandemic.
AGM affords shareholders present the opportunity to discuss
matters regarding the Company’s business with the Chairman, Employee engagement
the Committee Chairmen, and individual Directors. The AGM also The Company has over the years established a Joint Consultative
provides the opportunity for the shareholder representatives to be Council (JCC) which comprises of Senior Management and
elected to sit on the Audit Committee, as required by CAMA. representatives of Seplat employees drawn from across the various
business units of the Company. The JCC, which is headed by the
The notice of the 2021 AGM has been sent to Shareholders with this General Manager Human Resources, meets at least once every
Annual Report and Accounts and it is intended that the best practice quarter to update employee representatives on key management
for AGMs as detailed in the Nigerian Code and the UK Code will decisions regarding the Company and to address issues which are
be followed. of concern to employees. Deliberations, suggestions, and
recommendations made during such meetings are cascaded to the
The Board maintains a dialogue with investors outside the AGM to entire employees and where required, recommendations which
foster mutual understanding of objectives and to gain a balanced require approval are cascaded to the Senior Leadership Team
view of key issues and concerns of shareholders. The primary headed by the CEO and to the Board, where necessary.
contact is through the Executive Directors.
The Company also facilitated four town hall interactive sessions,
The Non-Executive Directors, the Chairman and the SID, are available where the CEO updated all employees of happenings and
to attend meetings if requested specifically by shareholders. developments within the organisation.
Engagement with existing and potential shareholders regarding In line with the UK Corporate Governance Code relating to employee
business strategy and performance is coordinated by the Investor engagement, the Board, nominated one the Independent Non-
Relations function. The Head of Investor Relations reports directly Executive Directors (INEDs), Mrs. Ifueko Omoigui Okauru, as the
to the Chief Financial Officer. Matters regarding the general employee engagement representative of the Board, to work with
administration of shareholdings are coordinated by the the General Manager Human Resources to engage with employees,
Company Secretary. obtain their views and report its findings to the Board.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 91
Corporate governance report |continued
Disclosure of information • suspension of participation in any crowded event like training,
As a company listed on both the Premium Board of the NSE and on workshops, seminars, and meetings whether internal or
the Main market of the LSE, Seplat strives to comply with the highest external; and
standards of disclosure. As a matter of practice, the Company
simultaneously releases announcements through the relevant • COVIMOG team led by the Corporate HSE Manager monitored
regulatory channels in both Nigeria and the UK. It also ensures that developments locally and internationally in management of the
all announcements are available on the Company’s website together virus spread and advised SEPLAT leadership on actions to address
with copies of its latest results, financial reports, and other relevant its threat to our personnel and operations.
information. The Company has put in place relevant controls and
processes for the management of inside information. The Executive As part of our continuous corporate governance awareness
Directors are ultimately responsible for the approval of Company campaign in 2020, the Company administered the annual corporate
announcements and ensuring that such documents comply with governance online recertification programme for all employees
relevant legal and regulatory requirements. including contract staff.
Corporate governance framework, sustainability, response to The Board also paid close attention to ethical issues by formally
Covid-19 and compliance initiatives launching the updated Code of Business Conduct, where select
The Board places high premium on corporate governance as a members of the Board engaged with the entire workforce at the
veritable tool for compliance risk management, ensuring the workshop on the importance of compliance with the Code of
Company’s sustainability, achievement of the Company’s Business Conduct, after which all employees individually signed
strategic objectives and enhancement of shareholders’ value. personal commitment to abide by the tenants of the Code of
Consequently, the Board in fulfilment of its primary responsibility Business Conduct. In the course of the same event, the Company
has put in place a corporate governance framework with a ‘tone from held a round table discussion on the need for employees to speak up
the top’ approach to governance compliance. The Board regularly against unethical behaviour, which was facilitated by the Business
subjects itself to evaluations to determine level of corporate Integrity Unit.
governance compliance and takes remedial action to resolve any
areas of potential or perceived non-compliance. To buttress the importance for employees to speak up, the Company
held a Company-wide workshop on whistleblowing. The workshop,
The Covid-19 pandemic which led to lockdown at the tail end of first which was equally facilitated by our Business Integrity unit in
quarter of 2020, Organisation of Petroleum Exporting Countries conjunction with KPMG, was designed to further sensitise and to
(OPEC)’s restrictions on production, increasing stakeholder encourage employees to report concerns openly without fear of
expectations regarding Environment, Social and Governance (ESG) any form of victimisation and/or reprisals. Employees were also
and intensifying pressure from capital markets for the industry to reminded that they may elect to make a report anonymously by
generate higher total returns to shareholders brought to focus making use of the Seplat/KPMG Ethics Line which includes
discussions regarding sustainability of the Company, including the dedicated whistleblowing hotlines – 0800 444 1234 (Toll Free) or
need for reduction in carbon footprint and re-evaluation of the KPMG’s MTN toll free number: 0703-000-0026. Employees could
Company’s overall strategy development. Consequently, the Board also report their concerns by sending email to
organised a two (2) day Board and Management Strategy session, [email protected] or [email protected].
where the Board and Management engaged in debate and analysis The facilitators also demonstrated to employees that all reported
of the market outlook for global oil & gas and its implication for the cases in times past were treated with utmost confidentiality.
Company in the short, medium, and long term. The Board and To further encourage anonymity, the Company recently introduced
Management also considered issues such as – viability of gas as the Vault App, which grant employees real-time access to the Senior
transition fuel (particularly the gas to power opportunity) and key Leadership Team, particularly the CEO, to air their views make
messages on global renewables outlook. Further to the Board/ valuable suggestions and come up with innovative ideas that would
Management Strategy session, the Board also had a session on move the Company forward.
strengthening the Company’s approach to ESG reporting with focus
on how ESG trends are evolving, its impact on shareholders’ The Company also held a Bullying and Harassment awareness
value and how an integrated ESG strategy would benefit the session to underscore the importance of maintaining a friendly
Company’s business. workplace environment for all employees. The Board in addition,
reviewed reported incident of conflict of interest, set up a review
To safeguard the health and safety of employees, the Board panel to consider the conflict and mitigations to ensure that the
implemented various strategies to combat the Covid-19 pandemic Company’s overall interests are well protected.
such as the adoption of 28-day field rotations with frequent health
checks, remote working for non-field location staff in the Lagos, To foster an effective day to day implementation of our well-
Abuja, and London offices. The Company also set up a Covid-19 established corporate governance framework, a dedicated
monitoring group (COVIMOG) to review areas of risks and exposure. Governance Compliance team has been put in place in the Company.
A Business Continuity Plan was also put in place and implemented The Company collaborates with the Company’s regulators (NSE, SEC,
to mitigate identified risks due to the Covid-19 pandemic. Some of FRCN, CAC, LSE and FCA) as at when necessary to ensure the
the measures put in place included: Company maintains its robust corporate governance framework and
an effective compliance programme. The Company frequently
• restriction of all travels to business-critical needs only and with attends engagement sessions with its regulators.
approval of CEO;
The Board, during the year, had engagements with its industry
• mandatory 14-days’ self-quarantine of all Seplat personnel regulators to discuss and explain the steps the Company has and is
returning from oversea trips and the completion of a Risk taking to ensure compliance with the relevant provisions of
Assessment Form to be evaluated by the Company’s Medical applicable laws, codes, regulations and sectorial guidelines.
Consultant;
As of the date of this Annual Report and Accounts, the Board has
• personnel are re-admitted back to work location only on adopted the following corporate governance policies and practices;
satisfactory assessment of information indicated in the Risk most of which can be found on the Corporate Governance page in
Assessment Form, mandatory temperature screening and the Investor Relations section of the Seplat’s website:
hand-sanitising at all entry points into our facilities. https://seplatpetroleum.com/investor-centre/corporate-
governance/corporate-governance-policies/
92 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
In the financial year under review, the Board, through its Corporate support on other topics and policies. The Policy also provides for the Strategic Report 01—77
Governance, Compliance and Culture Board Committee, carried out role of the Board, senior managers, managers, and employees. It also
second level review of the Company’s Corporate Governance Policies requires suppliers, contractors, consultants, business partners Governance Report 78—144
and recommended updates to bring the respective policies and and third parties to apply the standards equivalent to that of the
procedures to date with new laws, listing rules as well as the Nigerian Company towards their employees, subcontractors, and suppliers. Financial Statements 145—308
Code of Corporate Governance, 2018 and the UK Code of Corporate
Governance, 2018. The recommended updates were approved, and 3) Code of Business Conduct
the reviewed policies were adopted by the Board. The already The Board has adopted a Code of Business Conduct (CoBC), which
adopted as well as reviewed corporate governance policies/ outlines the ethical framework under which Seplat conducts
practices are: business – with the highest standards of ethics, accountability, and
transparency. The CoBC has been designed into an easy-to-read
1) Board Charter. format and is an implied contract between the Company and its
employees, contract staff and business partners to conduct
2) Code of Business Conduct Policy. business with the highest ethical standards. The Board has reviewed
and restructured the COBC to provide for the following – (i) The Code
3) Code of Business Conduct. (which summarises the principles and values by which the Company
conducts its business); (ii) The Charge (which requires directors,
4) Board Succession Policy. employees and contractors to embrace the enshrined ethical values
of the Code); (iii) Personal Commitment Statement (which models a
5) Board Representation Policy for IJVs & Other Arrangements. top-down commitment to professional business and ethical
standards from directors, to employees and contractors and which
6) Anti-Bribery and Corruption Policy. everyone is expected to subscribe to by appending their signatures);
(iv) The Code of Business Conduct Policy (which states the principles
7) Anti-Fraud Policy. and values that the Code should embody, including guidance notes)
(v) The Code’s Practice Guide; and (vi) Frequently Asked Questions
8) Gifts and Hospitality Policy. (FAQs), which states examples of dilemmas that could arise in the
course of carrying out work for and on behalf of Seplat. The reviews
9) Bullying & Harassment Policy. carried out are all in line with the NCCG, UK principles and
recommended practices.
10) Community Relations Policy.
4) Board Succession Policy
11) Investors Complaint Management Policy. The Board has adopted a Board Succession Policy which sets out the
parameters for developing and implementing a succession planning
12) Conflicts of Interest for Policy Directors & Employees. programme for Directors of Seplat and ensures that a framework is in
place for an effective and orderly succession of Directors that will
13) Corporate Communications Policy. result in the collective knowledge, skills and experience in place for
the Board to effectively govern Seplat. The Policy stipulates Criteria
14) Electronic Information & Communication Systems Policy. for selection of Succession candidate as well as competencies that
such candidate must possess. The Policy provides Guidelines for
15) Inside Information Policy. Implementing the Succession Planning Programme as well as
Procedure for Executing a Board Succession Plan. The Policy which
16) Political and Charitable Contributions Policy. requires the Nominations and Establishment Committee (NOMCO) to
submit to the Board on a yearly basis a succession plan identifying
17) Related Party Transactions Policy and Guideline. key and critical positions, definitive designation of successors for
such positions, articulation of specific development plans for
18) Risk Management Policy. identified successor which is tied to the Company’s overall
performance management and career communication.
19) Share Dealing Policy.
5) Board Representation Policy for Incorporated Joint Ventures
20) Whistleblowing Policy. (IJVs) & Other Arrangements
The Board has adopted a Board Representation Policy which
21) Market Sounding Policy. stipulates principles and defines the parameters within which the
Seplat IJV Directors will execute their duties and represent Seplat
1) Board Charter on the IJV Boards. The Policy states the qualities, competencies,
The Board has adopted a Board Charter which has been updated to and skill which a candidate nominated to such IJV Boards must
align its provisions with the requirements of the NCCG 2018, SEC possess as well as the roles and responsibilities of such IJV
Code of Corporate Governance, UK Code of Corporate Governance, representative (including responsibilities prior to, during and
2018 as well as other applicable listing rules and international best after IJV Board meetings).
practice. The Board Charter sets out the responsibilities of the
Board; the establishment of the Board Committees with clear 6) Anti-Bribery and Corruption Policy
delegated responsibilities; the matters reserved for the exclusive The Board has adopted an Anti-Bribery and Corruption Policy which
approval of the Board; and the conduct of Board proceedings. The is updated from time to time. The Policy demonstrates Seplat’s zero
Board Charter stipulates the following – the separate and distinct tolerance and commitment to the eradication of bribery and
duties of the Board Chairman and the CEO, appendage of Sample corruption. It prohibits payment or receipt of facilitation payments,
Appointment Letter of the Board of Directors, inclusion of the role misappropriation, ‘kickbacks and blackmail/extortion’. It also sets
of the Non-Executive Directors (NEDs) and the Independent the parameters under which Directors and employees may give or
Non-Executive Directors (INEDs), the role of the Company Secretary; receive gifts and hospitality, deal with public officials, and make
the respective Terms of References for all the Board Committees and political and charitable donations. The Policy includes reporting,
Matters Reserved for the Board. documentation, and whistleblowing provisions as well as provisions
regarding the Company’s zero tolerance and disciplinary action for
2) Code of Business Conduct Policy any violation.
The Code of Business Conduct Policy establishes that the Company
shall have a Code of Business Conduct that states the general
business principles and commitments of the Company to its
stakeholders, sets out the values that guide the Company’s conduct,
legitimate and strategic expectations of its employees in their
everyday decision-making and with stakeholders. The Policy also
requires the Code to explain and give guidance on the behavioural,
attitudinal, and emulative roles of the Directors, Senior
Management, and employees. The Code is to provide guidance to
questions or concerns, steps to take and additional resources and
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 93
Corporate governance report |continued
7) Anti-Fraud Policy involving Independent Directors to ensure compliance with both
The Board has adopted an Anti-Fraud Policy which provides Seplat the letter and spirit of corporate governance regulations on such
stakeholders with relevant guidance on how to recognise and deal Directors. The Policy outlines a clear disclosure, review, and
with fraud, the responsibilities of employees, Directors and third documentation process for all conflicts of interest involving a
parties in upholding Seplat’s position regarding fraud and Director, beginning with a yearly declaration to the Company, for
misconduct, mechanisms for prevention, detection and response the consideration of a dedicated conflict of interest review panel.
to possible fraud and misconduct in Seplat’s operations; and how During the year under review, all members of the Board and
to foster a culture of integrity, transparency, thereby enhancing employees participated in the annual declaration of conflict of
anti-fraud culture within Seplat. The Policy covers transactions interest or affirmation of independence as applicable. This policy
conducted by Seplat, with Seplat or on behalf of Seplat and states has been further reviewed to include special requirements on
the responsibilities of each stakeholder. The Policy states potential Independent Directors as provided in the SEC code of corporate
indicators of fraud, protection of whistleblowers, fraud risk governance, NCCG and UK Code of 2018.
management strategy, reporting of fraud to law enforcement
agency(-ies) and applicable consequent management following 13) Corporate Communications Policy
investigation findings. The Board has adopted a Corporate Communications Policy which
establishes guidelines for communication with current and potential
8) Gifts and Hospitality Policy stakeholders, guarantee accurate and effective communication of
The Board has adopted a Gifts and Hospitality Policy which the Company’s perspective on all issues, ensures compliance with
establishes acceptable exchange of items of value, conditions under all relevant regulatory requirements and best practice standards
which gifts, hospitality and associated expenses may be made, and guidelines governing corporate communication. The Policy sets
received, offered, incurred, or reimbursed in compliance with out modalities for both internal and external communications,
Seplat’s related policies and international best practices. The Policy, Company’s Authorised Media Spokespersons, preparation and
which serves as part of the implementation strategy for the release of regulatory announcements, social media/
Anti-Bribery and Corruption Policy and other related corporate internet communication.
governance policy, applies to all Seplat employees, Directors,
business partners and other stakeholders. The Policy also sets out 14) Electronic Information & Communications Systems Policy
Guidelines on accepting or offering gifts/hospitality as well as The Board has adopted an Electronic Information & Communications
acceptable gifts to Host Communities. Systems Policy which demonstrates Seplat’s commitment to
responsible, secure, and efficient use of communication systems,
9) Bullying and Harassment Policy such as the internet, electronic mail, social media, intellectual
The Board has adopted a Bullying and Harassment Policy which sets property, etc.
parameters within which the Company will deal with all forms of
bullying and harassment within the workplace, reinforces Company’s 15) Inside Information Policy
commitment to diversity inclusion and mutual respect, creates a The Board has adopted an Inside Information Policy. The Policy
platform for rewarding conduct that aligns with the Company’s value clearly defines what constitutes ‘inside information’ and sets a clear
for diversity and outlines zero tolerance approach to addressing all process for the confidential preservation of such information. It also
acts of bullying and harassment. The Policy applies to all employees prohibits Seplat Directors, employees, contract staff, business
as well as third parties dealing with Seplat staff. The Policy partners and their connected persons from using inside information
stipulates examples of behaviour that could amount to bullying and to deal in Seplat shares or securities or those of another public
harassment, implications of bullying and harassment, procedure for company. This policy has equally been reviewed to bring it in line
making complaint and disciplinary action. with the Market Abuse Regulations (MAR).
10) Community Relations Policy 16) Political and Charitable Contributions Policy
The Board has adopted a Community Relations Policy which The Board has adopted a Political and Charitable Contributions
demonstrates Seplat’s value for the communities in which it Policy. The Policy prohibits Directors, employees, contract staff and
operates, and the Company’s commitment to developing the business partners from making political donations or engaging in
communities through capacity building, business opportunities, other political activities on behalf of Seplat. It also sets the standard
employment, academic scholarships, charitable donations, and processes for making charitable donations to lawfully
awareness creation, etc. The details of Seplat’s CSR activities are constituted charitable organisations, in line with the Corporate
contained in the CSR section of this report. Social Responsibility (CSR) initiatives of the Company.
11) Investors’ Complaint Management Policy 17) Related Party Transactions Policy and Guidelines
The Company established a Complaint Management Policy pursuant The Company has adopted a Related Party Transactions Policy which
to the Rules of the Nigerian SEC released on 16 February 2015 and sets out the policy statement, stringent disclosure requirements as
the subsequent directive of the NSE to all listed companies in well as the review and decision-making process for such
Nigeria. The Policy outlines the procedures established by Seplat to transactions. The policy also sets out the special requirements on
address the complaints and other communications received by its Interested Person Transaction as well as transfer pricing guidelines.
shareholders and the public in relation to specific matters. The Policy The Related Party Transactions Policy and Guidelines is a live
is available on the ‘Corporate governance policies’ page of the document that is revised from time to time to reflect changes in
Company’s website. both the Nigerian and the UK laws and regulations. The Policy was
updated by the Board on 29 January 2016.
12) Conflict of Interest Policy for Directors and Employees
The Board has adopted a Conflict of Interest Policy for Directors and The list of Seplat’s related party transactions is outlined in Note 41
employees. This Policy applies to Seplat Directors, shareholder to the financial statements of the Annual Report and Accounts.
representatives on our statutory Audit Committee, and employees. Seplat is committed to conducting all related party transactions
The Policy clearly sets out the legally imposed duties of the Board, in accordance with the arm’s length principles and good corporate
its members, and employees, along with some ethical requirements governance practices.
adopted by the Company. Particular attention is given to conflicts
94 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
Directors’ interest in contracts Directors’ declarations Strategic Report 01—77
The Chairman and the CEO have disclosable indirect interest in None of the Directors have:
contracts with which the Company was involved as of 31 December
2020 for the purpose of section 303 of the Companies and Allied • ever been convicted of an offence resulting from dishonesty, fraud,
Matters Act, 2020, Laws of the Federation of Nigeria. These are or embezzlement;
contained under the related party disclosures in Note 41.
• ever been declared bankrupt or sequestrated in any jurisdiction;
18) Risk Management Policy
The Board has adopted a Risk Management Policy which is updated • at any time been a party to a scheme of arrangement or made any
from time to time. Risk Management Policy demonstrates Seplat’s other form of compromise with their creditors;
commitment to the enterprise risk management and reporting
system that ensures efficient identification of operational, financial, • ever been found guilty in disciplinary proceedings by an employer or
health, safety and environmental risks, and risk eradication regulatory body, due to dishonest activities;
and management.
• ever been involved in any receiverships, compulsory liquidations, or
19) Share Dealing Policy creditors’ voluntary liquidations;
The Board has adopted a Share Dealing Policy which is updated from
time to time. The Policy demonstrates Seplat’s commitment to • ever been barred from entry into a profession or occupation; or
trading securities in compliance with the requirements of the NSE
Amended Listing Rules (ALR), the Nigerian Code, the UK Listing Rules • ever been convicted in any jurisdiction of any criminal offence or an
and European Union Market Abuse Regulations (MAR). The Share offence under any Nigerian or UK legislation.
Dealing Policy reflects the Company’s dual participation in the
Nigerian and UK Stock Exchanges and highlights the Company’s Signed by: Governance Report 78—144
respective obligations under both Nigerian and UK listing
regulations. The Share Dealing Policy sets the parameters under Edith Onwuchekwa
which Directors and employees of Seplat and its subsidiaries, and Company Secretary/
their connected persons, must deal with the Company’s shares, A.B.C. Orjiako General Counsel
securities and inside information. This Policy has been further Board Chairman
reviewed by the Board in line with MAR provisions which took
effect from 3 July 2016.
Statement of Compliance with Nigerian Stock Exchange Financial Statements 145—308
20) Whistleblowing Policy on Listing on the Premium Board
The Board has adopted a Whistleblowing Policy which is updated In Compliance with Section 12.4 of the Rules of the Nigerian Stock
from time to time. In addition to this Policy, whistleblowing provisions Exchange on Listing on the Premium Board, we wish to state that
are entrenched in all Seplat corporate governance policies. The the SEC Code of Corporate Governance for Public Companies in
Company has a dedicated whistleblowing hotline for employees and Nigeria, the Financial Reporting Council of Nigeria’s Nigerian Code
other stakeholders to confidentially report unlawful and unethical of Corporate Governance, 2018 and the UK Corporate Governance
conduct involving the Company, its Directors, or employees. The Code govern the operations of Seplat Petroleum Development
Company’s whistleblowing system comprises an internal and an Company Plc.
external channel, which are operated concurrently. The internal
whistleblowing channel is managed by the Company’s Business We hereby confirm that to the best of our knowledge, Seplat is
Integrity Unit, reporting directly to the CEO, while the external in compliance with the Codes.
whistleblowing channel is managed by KPMG. The Business Integrity
Unit and KPMG ensure that all reports are kept confidential and Signed by:
appropriately investigated and resolved.
Edith Onwuchekwa
21) Market Sounding Policy Company Secretary/
The Board has adopted a Market Sounding Policy which sets out A.B.C. Orjiako General Counsel
guidelines that ensures that the Company and disclosing market Board Chairman
participant (DMP) acting on the Company’s behalf complies with the
provisions of MAR when conducting market soundings. The Policy
stipulates procedure to be followed before conducting market
soundings, procedure to be followed during market sounding process
and specific information to be provided and requested where a
market sounding involves or would not involve the disclosure of
inside information.
Declaration of Compliance
In compliance with Section 14.4(b) of the NSE ALR, following specific
enquiry, all Directors acted in compliance with the NSE ALR
and Seplat’s Share Dealing Policy in respect of their securities
transactions during the financial year ending 31 December 2019.
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 95
Board Committee reports
Remuneration Committee
report
2020 Members 27 18 28 22 20 2
Jan Mar April July Oct Dec
Michael Alexander (SID) 1, 6/6
Chairman to 31 January 2021
Charles Okeahalam 2, Member 6/6
Basil Omiyi 2, Member 6/6
6 R emuneration Damian Dodo SAN2, Member 6/6
Committee
meetings in 2020 Xavier Rolet, KBE 3, – – – – 2/2
Member and Chairman from 1 February 2021
Xavier Rolet, KBE 1. Senior Independent Non-Executive Director.
2. Independent Non-Executive Director.
Picture credit: Roger Askew/S hutterstock 3. X avier Rolet was appointed to the Board as an Independent Non-executive Director
on October 1, 2020. Following his appointment, he attended the two Remuneration
Committee meetings that were held after his appointment and he was appointed
Chairman of the Remuneration Committee from 1 February 2021.
In the financial year ended 31 December 2020, the Committee held six meetings, the
dates and attendance records for which can be seen in the table above.
The Remuneration Committee is a standing committee of the Board All members of the Remuneration Committee are Independent
and is comprised wholly of Independent Non-Executive Directors in Non-Executive Directors in order to preserve the transparency and
compliance with the Nigerian Code and the UK Code. Michael integrity of remuneration processes. The Remuneration Committee
Alexander was chairman of the Remuneration Committee throughout meets at least four times a year and, when required, the meetings
2020 and on his retirement from the Board on 31 January 2021 was are attended by appropriate senior management of the Company
succeeded by Xavier Rolet. You will see below details of the terms of (such as the Chief Executive Officer and General Manager of Human
reference for the Remuneration Committee and a summary of the Resources), and external advisers upon invitation.
activities carried out during the year.
When proposing remuneration to the Board, the Committee ensures
The Remuneration Committee is established to ensure that that:
remuneration arrangements for Seplat’s Chairman, Executive
Directors, Non-Executive Directors and senior management support • the remuneration for Executive Directors is appropriately balanced
the strategic aims of the business and enable the recruitment, between fixed and variable pay elements, which may include annual
motivation and retention of relevant skilled personnel while bonus and equity-based awards;
satisfying the expectations of shareholders.
• Executive Directors do not receive any sitting allowances or fees
Details of the Company’s proposed remuneration policy are outlined that may be payable to Non-Executive Directors;
on pages 115-116 of the 2020 Annual Report and Accounts. In the
interest of transparency, no Director by reason of being a member • the remuneration of Non-Executive Directors is determined by the
of the Committee, is involved in any decisions relating to his/her Chairman and the Executive Directors; and
own remuneration.
• no Director or manager is involved in any decisions as to his/her own
Xavier Rolet, KBE remuneration.
Chairman of the Remuneration Committee
In accordance with its terms of reference, the Remuneration
Committee assists the Board in:
• Determining the framework for the remuneration of the Chairman,
Chief Executive Officer, Executive Directors and members of senior
management, including without limitation, the schemes of
performance-based incentives (including share incentive plans),
awards, and pension arrangements and benefits for the Executive
Directors and senior management.
• Ensuring that contractual terms and payments in respect of
dismissal, loss of office or termination (whether for misconduct or
otherwise) are fair and not excessive to the individual.
• Providing appropriate input on Directors’ remuneration for the
Company’s Annual Report and Accounts.
• Preparing necessary remuneration procedures and policies in
compliance with the Nigerian Code, UK Code and other applicable
laws and regulations, and in consideration of remuneration trends
in the oil and gas industry in the area where Seplat operates.
• Reviewing remuneration and related matters to ensure that they
are consistent with corporate governance best practice.
• Reviewing up-to-date information about remuneration in other
companies in the oil and gas sector with the aid of
qualified consultants.
96 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
• Overseeing any major changes in employee benefits structures • Granting awards under the Company’s LTIP as well as monitoring Strategic Report 01—77
throughout Seplat. performance progress of outstanding awards and determining
the vesting of the 2017 LTIP awards in current financial year. Governance Report 78—144
• Designing the policy for authorising claims for expenses from
Executive and Non-Executive Directors. • Drafting the Company’s Directors’ Remuneration Report.
• Regularly reviewing the ongoing appropriateness and relevance of • Reviewing the role of the Remuneration Committee and its
the Company’s remuneration policy. compliance with the 2018 UK Corporate Governance Code and
the 2018 Nigerian Code of Corporate Governance.
Highlights of business carried out by the Remuneration Committee
during the year include: • Reviewing the scale of the completed supplementary activity
requested by the Board carried out by the Finance Committee
• Monitoring the implementation of the Company’s remuneration Chairman and the additional one-off payment to the Finance
policy and practice. Committee Chair in compensation for the time involved in line with
approved policy.
• Ensuring the appropriate cascade of the remuneration policy to the
senior management grades. • Review of the outgoing CEO remuneration and exit package.
• Setting the forthcoming year Annual Bonus Performance targets • Review of the remuneration terms for the new CEO and CFO.
for the CEO; CFO; Board executives and senior management. These
targets are cascaded throughout the Company to ensure alignment. • Reviewed the framework for termination payments for senior
management employees and Non-Executive Directors.
• Review of executive remuneration and pay for the wider workforce
for FY 20 in light of the economic impact of the depressed oil price • Review of the Chairman’s Supplementary contract and proposed
and the Covid-19 implications on the economy. continuation of the contract from 1 January 2021.
• Review Executive Management performance over the past year • Review of the Remuneration Policy in line with corporate
to determine the appropriate levels of Annual Bonus – the governance best practice, changes to the Company’s business
consequence of this review cascades throughout the Company. strategy, the need to attract, retain and motivate executives and
investor sentiment and drafting the proposed remuneration policy
• Determining the 2021 fee and salary levels for the Chairman, set out on pages 115-116 of the 2020 Annual Report and Accounts.
Executive Directors and senior management.
The Committee will continue to be mindful of the concerns of
• Reviewing the LTIP performance measures and targets to ensure shareholders and other stakeholders and welcomes shareholder
continued appropriateness of the incentive structure and alignment feedback on any issue related to executive remuneration.
with underlying corporate performance.
Financial Statements 145—308
Seplat Petroleum Development Company Plc Annual Report and Accounts 2020 97
Board Committee reports |continued
Finance Committee
report
2020 Members 27 12 21 21 21
Charles Okeahalam 1, Chairman Jan Mar Apr July Oct
Michael Alexander 1, Member
Lord Mark Malloch-Brown 1, Member 5/5
Ifueko Omoigui Okauru 1, Member
Arunma Oteh 1&2, Member 5/5
5/5
5 Finance Committee 5/5
meetings in 2020
–––– 1/1
DDr.r.CChhaarlrelessOOkkeeaahhaalalamm 1. Independent Non-Executive Director.
2. A runma Oteh was appointed to the Board as an Independent Non-Executive Director
on October 1, 2020. Following her appointment, she attended one (1) Finance
Committee meeting that held after her October 2020 appointment.
Charles Okeahalam, Ifueko Omoigui Okauru and Arunma Oteh have recent and relevant
financial experience, as highlighted in the profile of Directors on page 85.
In the financial year ended 31 December 2020, the Committee held five meetings, dates
and attendance records for which can be seen in the table above.
I am pleased to make this report to Seplat shareholders on the The Finance Committee consists of five members, all of whom are
activities of the Finance Committee, which I trust you will find to be Independent Non-Executive Directors. The Committee meets at least
of interest. four times a year, and its meetings are attended by appropriate senior
management of the Company, including the Chief Financial Officer,
The Finance Committee was constituted in 2013 in compliance with the Head of Internal Audit, the Head of Business Integrity and the
the UK Code’s requirement for an audit committee and consists Head of Internal Controls.
wholly of Independent Non-Executive Directors as listed above. You
will see below the details of the terms of reference for the Finance The Finance Committee assists the Board in:
Committee. During the year, the Committee focused on strategies
to bolster the Company’s financial performance amidst volatile oil • monitoring the integrity of financial statements and any formal
prices and an extremely challenging operating and financial announcements relating to its financial performance, reviewing any
environment. We remained steadfast in our resolve to explore and significant financial reporting judgements contained in them;
execute viable solutions to each operational and financial
challenge. The details of our activities are contained below. • reviewing the Company’s financial controls and financial risk
management systems;
I shall be available at the AGM of the Company to be held on
20 May 2021 in Lagos, Nigeria to talk with shareholders, or if • overseeing financial strategy, policy and treasury matters;
you are not able to meet me there, I can be contacted via the
Company Secretary. • reviewing and approving major capital expenditures;
Dr. Charles Okeahalam1 • making recommendations to the Board for presentation to the
Chairman of the Finance Committee shareholders for approval at the AGM in relation to the
appointment, re-appointment and removal of the external auditor;
1 Independent Non-Executive Director. and approving the remuneration and terms of engagement of the
external auditor;
• reviewing and monitoring the external auditors’ independence and
objectivity and the effectiveness of the audit process;
• developing and implementing policy on the engagement of the
external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit
services by the external audit firm; and reporting to the Board,
identifying any matters in respect of which it considers that action
or improvement is needed and making recommendations as to the
steps to be taken;
• monitoring and reviewing the effectiveness of the Company’s
Internal Audit function and its activities;
• providing advice on whether the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy; and
• overseeing and evaluating the effectiveness of (and compliance
with) the Company’s corporate governance policies (including
without limitation: conflicts of interest, related-party transactions
and whistleblowing).
98 Annual Report and Accounts 2020 Seplat Petroleum Development Company Plc
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2020 Annual Report for SEPLAT Plc
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