Seplat Energy Plc has been upgraded to ‘B’ from ‘B-‘ by Fitch Ratings on its Long-Term Issuer Default Rating (IDR).
A statement by Seplat Energy on Sunday said that Fitch also confirmed Seplat Energy’s Outlook to be ‘Stable’ and upgraded the company’s senior unsecured rating for 650 million dollars senior notes due 2026 to ‘B’ from ‘B-‘, with a Recovery Rating of ‘RR4’.
“The upgrade reflects improved financial flexibility and a strong liquidity profile following debt refinancing in the year, which in our view will help Seplat Energy survive for more than two years of force majeure without access to the Trans Forcados Pipeline (TFP).
“Amukpe-Escravos Pipeline (AEP), an alternative oil export route, has been completed and is undergoing commissioning, according to Seplat, but there is no certainty around when it will ship its first oil,” it said.
The statement said the rating incorporated the small scale of Seplat Energy’s cash flows, concentration of the company’s asset base in Nigeria (B/Stable) and a historically unstable operating environment in the troubled Niger Delta, including recurring issues with the oil transportation system.
It added that the rating reflected moderate leverage, conservative financial policies, competitive unit profitability, end-2020 2P reserve life of 27 years, and a growing domestic gas business.
It said: “Fitch, upgraded Seplat Energy’s 650 million dollars bond to B from B-; which reflected improved financial flexibility and a strong liquidity profile following debt refinancing in 2021.
“Fitch believes the company has built a very strong balance sheet, even if the Trans Forcados Pipeline was in force majeure for an unprecedented two years.”