Hello, everybody, and welcome to Seplat Energy's financial results for the full year 2023. On the call today, we are joined by our CEO, Roger Brown, CFO, Emeka Onwuka, and our COO, Samson Ezugworie. We'll first present our business and financial highlights, followed by the outlook, and after this, we'll move to Q&A. Before we start the presentation detail, I encourage you to take note of the forward-looking statements on slide two. Now I'll pass over the call to Roger. Over to you, Roger.
Thank you, James, and hello, everyone. Welcome to the full year 2023 Seplat Energy results. So you can see on slide four, we have set out our 2023 highlights, and underpinning that is a strong operational and fiscal performance, in what was a quite a challenging year for Seplat. But I'm glad to say that our policies, procedures, and very important, our staff really rose to the challenge in 2023. So I set out five main highlights. First one there is on our 2P reserves. We just had an upgraded CPR, and we've seen a 9% increase in our reserves, both in gas and oil. And so they've moved up to 478 million bbl of oil equivalent, which is a very good increase, year- on- year.
The next one, looking at the daily production, and we were within guidance. We were just slightly short of 48,000 bbl of oil equivalent. Roughly 60% of that was oil and 40% was gas, and that production's up 8% year-on-year. And that's largely we saw reduced losses and lower deferments, and then importantly, in terms of operational performance, we hit mechanical completion on a very important strategic ANOH Gas Plant. We'll talk about that in a couple of slides' time. A third one there is our 2023 revenue, and you can see that we've gone through the $1 billion of turnover, up 12% on last year, and, you know, very monumentally through that $1 billion turnover milestone for us.
The last two ones at the bottom there is the looking at the year-end net debt, and that is obviously decreased. Cash flow has increased through the year, and Emeka, when he goes through his slides, we'll, we'll pick up on that. Then the final one there is in terms of our commitments to dividends, and we are continue our dividend payout. So we have declared a $0.06 per share dividend, split between a $0.03 core dividend, which makes it $0.12 for the year, $0.12 for the year, and then we're also declaring a $0.03 special dividend, which will be paid assuming it's approved to the AGM in shortly after May. So next slide. On the slide, we like to set out just some of our achievements.
Obviously, this year, we're going through our 10-year anniversary of being on both the Nigerian Stock Exchange and the London Stock Exchange, and we looked back through our prospectus. We looked back at what objectives we set for ourselves in 2014 and how we actually achieved that, looking at achievements up to 2023. It's quite interesting sort of task to do this. And you can see it in the left-hand side. I'm not going to go through every single one of them, but you know, our commitments on production, acquisition strategy, commercializing gas production, progressive dividend policy, and maintain good relations and integrate with our host communities.
On the right-hand side, we just talk a little bit about what we've achieved, and you can see there that we exceeded our gross production targets, which was 85, and it's, we've, at the end of 2023, it was 106. That's gross, and obviously, the working interest is less than that. Our 2P reserves have increased since inception. Our reserve replacement ratio is very healthy for 2023, and then diversified evacuation routes. In terms of our acquisitions, we've been pretty active through the years. So we now have a portfolio of seven onshore blocks.
We acquired Chevron's OML 53 back in 2016, and that was a very critical acquisition because this delivered the ANOH gas opportunity, and we see the east of the country really giving massive potential for the country and obviously our partners and ourselves. In 2019, we acquired Eland, and we've been spending years bedding that in. You can start to see the real improvement in results from Eland or Elcrest. And then the last one there, we signed the sale and purchase agreement for MPNU, that's gone through its two-year anniversary, and we remain hopeful that the government will finally approve this, and we can move ahead and grow those assets.
In terms of gas, which is a very big part of what we do, our processing capacity really is, you know, leading, puts us out in leading in the market, next to government when we bring on stream the ANOH Gas P lant, and the Sapele Gas Plant, which we're aiming to do this year. Then, obviously, gas revenues have increased quite dramatically there. We've paid back in terms of dividends. We've returned more than we raised at IPO, and I think that's quite critical, and we continue to return dividends to investors. The core dividend itself has increased, and the special dividends, and look, we, over time, what we want to be able to do is increase our dividends.
Subject to certain constraints around our lending and bond covenants, et c. The final one there is, really importantly, how we interact with our communities. Our GMOU, which is a Global Memorandum of Understanding, investment in host communities, that's approaching $60 million of investments over the years, and it's very critical that we continue that going forward. So, on to the next slide. I will cover briefly just our sustainability dashboard. We put sustainability right at the heart of our strategy, in our three-pillar strategy, and obviously, we'll be increasingly reporting on various metrics. We just put some up here in this dashboard for the first presentation.
It's looking at it, if you're looking in terms of the environment and climate, you know, the big reduction of that is going to be our end of routine flaring. We have a number of projects underway at the minute, and they'll largely be completed this year. And we'll be, in terms of end of routine flaring, we're now guiding the second half of 2025. Then you'll start to see those carbon intensity reduce, the flaring emissions significantly reduced by over 80%. In the middle, the dashboard, we look at what we're doing with our people, partners, and communities, and social spending, you know, is quite critical. It's $10 million in 2023. It was $9 million in 2022.
In terms of our employees, every year, we have the Seplat P eople Voice, employment engagement, and we actually measure ourselves against a global index. And that's 77%. That's an improvement on last year. And then in terms of governance standards, the Board independence, and we'll talk about that in a second, but you know, obviously, we're, we are announcing today a new chair and senior INED, and you can see the independence of the Board is, it's still at 60%. And then we're obviously rated by various Sustainalytics, MSCI, and other ones there below. So just before I leave this dashboard, in terms of the staff at Seplat, 27.5% of our scorecard for the entire company is related to ESG and safety.
That's how importantly we take it. Almost a third of comp is related to ESG metrics, et c. I'm just going to stop now and pass over to Sam, who will cover our 2023 operational highlights.
Thank you very much, Roger. Good morning, good afternoon, good evening, everyone, depending on where you are joining us from. I would like to deepen on the operational highlights already presented by Roger, starting with our resource volume and our life going forward. On the bars, you will see the resource volume journey and evolution since 2013, and it demonstrates how healthy our funnel is. And coming to the end of 2023, where we ended with 478 million bbl of oil equivalent in terms of resource volumes. If you just reference this back to our end position in 2022, where we ended at 438 million bbl, this reflects a 9% growth in our resource base.
The key areas where we experienced this growth are around the drilling outcome in OML 40, where we had the Sibiri wells outcome, and then also our farming into Abiala marginal fields. Last but not the least, is the conversion of 2C to 2P in our OML 53. All this translates to a future life of about 25 years of production life for Seplat. If you then go to the next slide, that tries to present to you our core operational performance in the year. As already highlighted, we ended the year at nearly 48,000 bbl of oil equivalent, working interest, which represent 8%, 8.3% growth relative to 2022. The production is again split around 60/40%, 60% for liquids, 40% for gas.
And our production per-performance is underscored supported by our diversification of the export routes. Our AEP continues to come very strong into our operational performance, reducing the downtime in the western asset. Our drilling performance also in OML 40 really helps us to deliver a very strong, performance, production, operational performance in the year. And our partner relationships, supply chain, security management, interface with our host communities, continues to also drive higher performance in our operations. Also to highlight that our production unit OpEx went up by 1%, and this is essentially driven by higher crude handling charges. Overall, we continue to see and address the challenges that evacuation presents to our operations, especially in the eastern asset.
But I'm also happy to say that our renewed effort, working with the key stakeholders is yielding some good efforts, and we see TNP Zone 6 being reinstated in the coming months. Going to the next slide. Our midstream business also continued to show some great resilience. Our gas revenue reached 12% of our underlying group revenue in 2023, and while our gas is sold into the domestic market, all our contracts are priced in USD and settled in naira. And in line with our commitment to support the industry growth and foster economic growth in Nigeria, we recorded some improved performance in our gas supply out of Oben, with 114 million scf of gas averaging for the whole year, 2023. This is an additional 2% increase year-on-year average, while our average gas price ended at $2.90 per thousand scf. This is also a 3% increase year-on-year.
By end of last year, we reported the mechanical completion of our ANOH Gas Plant, and all the four upstream wells been delivered as of quarter four 2023. We continue to work with our government partners on the OB3 and Spur Line, with an outlook for their completion by Q1 2024. Moving on to our accelerated gas plant at Sapele. This, I would also like to report that three out of the four compressors are now commissioned, and the upgrade will increase our capacity to 90 million scf per day export, and with a new export module for LPG, which will bring a new product into the market.
So overall, we continue to see resilience in our midstream gas business while we continue to explore actively additional exploration and appraisal opportunities and third-party gas opportunities to ensure that we fully maximize installed capacities in our gas plants. Moving on to the next slide. Just to spend the last moment and talk about our CapEx program and CapEx performance for 2024. Happy to say that we delivered on the 14-well program that we reported to you in a revised guidance as of quarter three last year, and our CapEx outlook for 2024 is already underway. We have already commenced the drilling of our 2024 activity program, where we have a plan to deliver 13 wells in the course of the year.
This is where I would like to hand over to Emeka, our CFO, to give you further insight into the financial performance. Thank you very much.
Thank you so much, Sam. I will now run you through our financial performance for full year 2023. On slide 13, we present the highlights of our financial performance. We delivered a very strong financial results, despite the prevailing oil price during the year, falling by 18% to $3.4 per barrel. However, our gas price was 3% higher, at $2.9 per scf, as we renegotiated commercial agreement with some of our offtakers, while also signing on new customer during this period. Revenue performance was impressive, and we crossed the $1 billion mark in gross revenue, growing by 12% to $1.06 billion. The growth in revenue was driven by strong lifting program, which offset the weaknesses in oil price, which I referred to earlier.
This consequently drove higher profitability as adjusted EBITDA grew by 7% to $448 million, while net income grew 18% to $124 million, further aided by lower tax expense during the year. Cash generation remained strong. In 2023, we had pre-tax cash flow from operations of $520 million and $445 million after tax, which more than funded our CapEx program, our dividend, and debt payments in the year. Our overall average position continues, our delivery position continued to improve, supported by our ability to generate cash, as net debt dropped by 16% to $306 million. Full year 2023 total dividend, including special dividend, is maintained at $0.15 per share. More details on dividend, I will talk about in, in following slides. I'll take you to the next slide.
We recorded growth in both gas and oil revenues on the prior year, as you can see, in cost of sales routes, with higher operating costs following our investment in our takeaway evacuation routes. G&A has a number of one-off items. When you exclude these items, we'll be closer to $115 million, but we'll still work in 2024 to do that G&A on a unique basis. Now, revaluation is a major theme in 2023, and will continue to be a focus in Nigeria. It drove a non-cash impact of $27.5 million during this period. Net finance costs improved as we paid off $22 million of debt principal in the year, giving a profit before tax, giving a profit before tax of $191 million, down 6% in 2022.
Tax charge for the year benefited from deferred tax credits, giving an effective tax rate of 37%, and leading to a reported net income of $124 million, more than covering our current dividend during this period. I take you to slide 15. On slide 15, we are looking at our cash generation, which we started in 2022 with a cash balance of $404 million and ended with $450 million, an 11% growth in cash. We generated $520 million in pre-tax operating cash flow. This was down 10% on prior period. After tax and other operating cash flow items, net cash from operation was $445 million, also down by about 10% on 2022 figures, but benefiting from the strong leases achieved in course of the year.
Cash flow more than covered our $1.4 million of CapEx. We only generating about $281 million, $261 million free cash flow during this year. Further cash benefit came from the Ubima disposal proceeds, which continued during the year. On financing activity, we paid about $9.9 million in cash dividend during this calendar year, while we also paid $22 million in debt principal repayment during this period on the outstanding Westport RBL facility. We also paid $69 million in interest on loans and borrowing. Due to the value of the naira, which I referenced earlier, we recorded an FX loss of $40 million in converting our naira balances at a prevailing exchange rates.
This movement led to a net increase in cash balance of $45 million during the year, bringing our year-end 2023 cash balance to $450 million. I take you to the next slide. Our balance sheet continued to strengthen through 2023, despite weaker oil prices. Following our principal repayment to RBL facility, which I referenced earlier, brought debt, including amortized interest, fell by 2% to $756 million. Following the growth, the growing cash balance of $450 million and net debt position fell by 16% to $306 million as at year-end. This balance sheet strength is reflected in our key leverage ratios.
Our net debt to EBITDA fell to 0.7 x in 2023, staying well above our debt coverage of 3, 3.0 x and our business plan benchmark of 2.0 x. Our debt to capital ratio was 22% as at the end of 2023. We continue to improve, implement a robust hedging program, derived solely of, deferred premium puts. For the first half of 2024, already we have hedged 3 million bbl, at an average price of $60 per barrel. We'll continue to hedge more more barrels for the many parts of 2024 . On slide 17, I'm focusing on our liquidity and debt profile.
Expanding on the balance sheet, we retain adequate duration on our debt facilities with our EUR 650 million euro bond maturing in 2026. We repaid the first $22 million of the Westport loan, I referenced this earlier during the year, in line with the parties' amortization and leaving a balance of $18 million as at end of the year, and a further $19.25 million will be repaid this March. We also have a fully undrawn RCF of $450 million, which begins amortization later in 2024. If you combine the RCF and our cash balance, we have available liquidity at the end of 2023 of $800 million.
The primary planned usage of this strong position is to support our M&A ambition, principally in the near term, of course, this will be used for the MPNU acquisition. We manage our balance sheet with a conservative eye, reflected in our historic leverage chart. At year-end, the balance sheet was at its strongest level in recent years. Also, though not shown here, in the course of the year, Elcrest came in to payment of the shareholder loan between them and Westport. In 2023 alone, they repaid about $28.4 million. I'll take you to the next slide. This slide focuses on our reward to shareholders. In 2023, we sustained our tradition of rewarding our shareholder by returning more cash via dividend.
We paid out a record $9.9 million in dividend in 2023, a combination of the timing of the 2022 special dividend and increased quarter dividend run rate in 2023, which we raised to $0.00333 per quarter, and all together, about $0.12 of core dividend for 2023. Of note, in 2023 distribution, brought cumulative cash dividend paid to shareholders to $565 million, which is about 107% above the $5.5 million we raised during the IPO in 2014. Roger has also alluded to the fact that this year, we'll be celebrating our 10 years of listing on both the Nigerian and the London Stock Exchange.
For quarter four 2023, the Board approved the dividend payment of $0.06 per share, broken into core dividend of $0.03 per share, and special dividend of $0.03 per share, leaving the total payouts, as mentioned earlier, to $0.15 per share for 2023. I'll now hand back to Roger to summarize and take you through our outlook for 2024.
Okay. Thanks, thanks, Emeka. Let me just conclude here by looking at the outlook and growth potential for the business. So, w e highlight five specific growth opportunities for 2024 on this quite busy slide. But we start with obviously the acquisition of MPNU. We just highlighted some of the metrics around it. You know, obviously, this is back on the 2020 basis, and it's going to be important for us just to, you know, get an update on MPNU when we when the government approves the transaction to move forward. We have a high confidence of completion this year, and we're encouraged by the public statements the Honorable Minister of State for Petroleum Resources. He made at the very start of this year. So we are confident we can get this game-changing acquisition over the line. The other four we've highlighted here is obviously the ANOH gas project.
So it's a monumental achievement to hit mechanical completion on that project at the end of the year. It's been very challenging in the east with security, et c., but the team has done an extremely good job in delivering it. Now, we are working with our government partner, they're delivering two very critical gas pipelines, the OB3 and the Spur Line, and work is very much underway on both of those. We've maintained at Q3 2024 for first gas, just to build some buffer into the estimates there, but our government partner is certainly working at an earlier completion of those projects. The project will obviously then deliver two streams of revenue.
One is back to the upstream and the wet gas sales, and we're gonna get a higher price than we would normally get for just dry gas. And then, we're then obviously going to receive dividends out of from AGPC. The next two, Abiala and Sibiri, relate to OML 40, and Abiala is an extension of the Gbetiokun development at OML 40. So this is a marginal field. We farmed into it with a 95% equity interest. So government's not actually in this development, and we're looking at first oil Q3 this year. It's reasonably straightforward to tie that oil back into the Gbetiokun development, where we have an export route for it.
Then in Sibiri, which is an extension of Opuama development in OML 40, and again, we drilled an exploration well a couple of years ago. Now we've announcing the FID approval in Q1. I think that's faster than we expected. And now we'll go into developing Sibiri, and again, we can tie that back to Opuama and actually monetize that oil through pipelines. And the final one there is, Sam covered anyway, which is Sapele Gas Plant. And this is quite a critical plant for us, 90 million scf, and we can supply in the Sapele area, but also it can tie back up into Oben and increase our gas exports.
So that completion is expected the second half of 2024, and critically, it's gonna bring LPG modules, which allow us to come in, supply into LPG market. Similarly, ANOH will also deliver LPG, which is obviously critical for, you know, getting Nigeria off using firewood for cooking, and you can use bottled gas. So onto the final slide, just setting out some guidance on our priorities for 2024. The key guidance items here is on production, and we're guiding 44 bbl-52 bbl of oil equivalent. And you can see the midpoint of that is similar to the 2023 actuals. CapEx, again, $170 million-$200 million, and again, the CapEx midpoint looks similar to 2023.
Operating costs, we're expecting them to reduce, and therefore we've got a $9.5-$10.5 guidance on that. In terms of wells, again, Sam covered this, but it's 13 new wells to deliver production and maintain output, and it's quite a heavy, heavy activity in the west, around that. In terms of fiscal strength, you know, Emeka again highlighted this in terms of strengthening our balance sheet, which is looking very strong, optimizing our G&A costs and reducing those, and, and continuing to prioritize the shareholders' dividend, for the core dividend of $0.12 a share.
The third one is around strategic growth, which is delivering the upstream and the midstream growth opportunities, mature new energy project evaluations to our pillar three business and towards an FID in the power sector, later this year. Reducing our flaring projects at Oben and Sapele in these key and eliminating routine flaring, which is quite critical to us. And then, you know, at the minute, we're deploying renewable energy across a lot of the sites and actually into a lot of our communities, and that's a commitment we've made, and we'll continue to do that.
Finally, before I hand back to the operator for Q&A, I just want to talk about our Board changes. We had our Board meeting yesterday, and after that Board meeting, we had a vote for the incoming chairman. I'm delighted to announce that Udoma Udo Udoma has been elected as Chairman unanimously, and we also then voted for Mr. Bello Rabiu to be the Senior Independent Non-Exec Director. Both will assume office on the first of April this year, after Mr. Basil Omiyi and Mr. Charles Okeahalam step down from the Board at the end of March. So that concludes our presentation. I'm going to hand it back to the operator for Q&A.
Thank you, and the floor is now open for questions. Participants can submit questions in written format via the webcast page by clicking the Ask a Question button. If you are dialed into the call and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. Again, that is star one on your telephone keypad to raise your hand and join the queue. And there are no questions on the conference line. I will now hand over to James Thompson, Head of Investor Relations, to read out the written questions.
Great. Thank you very much, operator. We do have a few written questions, but for those that are dialing in, you've got some time now to raise your hand if you want to ask a question. You know, I'll group them together a little bit. Roger, maybe there's a few questions here on MPNU. First one, obviously, this is essentially the big event for the year. It's been some time now. Could you perhaps just revisit the key elements of the deal here, the consideration, the effective date, and there was a lockbox. You know, is that still valid? And how much of an amount do you think will be in that lockbox to lower the final consideration, given the time that's passed?
Okay. Thanks, James. So, just to recap on MPNU, obviously, we signed this sale and purchase agreement in February 2022, so we've gone through the two-year anniversary of that. In terms of the transaction itself, you know, we, the headline consideration is $1.283 billion for the four, w ell, actually, we're buying the entire company, so just four blocks and a terminal and a lot of related infrastructure. So, as part of the purchase consideration, there's also a $300 million contingent payment, and that's only linked to oil price. And there's an effective date on the 1st January , 2021. And obviously, the sale and purchase agreement was extended last May in 2023.
So in terms of the effective date adjustment, the lockbox, and of course, the lockbox, you know, will reduce the final payment. We put a $128.3 million deposit, and so the balancing payment obviously will have to be reduced because of the lockbox adjustment. It's too early to say at this stage what the quantum of that's gonna be. Obviously, there's been three years of production coming out of it. But everyone will be aware, hopefully, that in 2022, through the dispute, NNPC took Exxon to court and also went into arbitration proceedings. And when that happened in Q3 2022, then obviously we had to stop all communication with Exxon around the technical details of the assets.
So it's a bit early to say around that. We'll be able to communicate that in due course. But anyway, we remain hopeful of the transaction closing, given the statements that have been made, and, you know, it's, I think it's in everyone's best interest to get this deal over the line. They're very prolific assets, but we do need to arrest the decline in those blocks and then actually develop the oil. And there's quite significant gas reserves there, contingent resources there, which we can then link into domestic gas plants and, LNG export plants as well.
Thanks, Roger. There's a couple more here following up on that, on MPNU. Is there any update to the legal challenge, the arbitration, related to the SPA for MPNU?
Yeah, I mean, look, and again, we're not part of it. We're not joined into this. We're not joined into the court case, nor are we joined into the arbitration. The arbitration proceedings are well, the sort of pre-arbitration proceedings have gone through and are underway around that, and the various, I think three judges have all been appointed. They were due to start earlier this year. I think they've been slightly delayed, but we're not really privy to the exact timetable. We're not, we're not part of that overall process. But certainly, I think they're scheduled for this year.
Okay. Just, we've got a follower on the line. Pardon?
We do. We've got a question from Nikhil Bhat from JP Morgan. Your line is open.
Morning and afternoon. Thank you for taking my question. I just have two, one on your euro bond. I know it's still some way away, but just wondering if you have what are your initial thoughts on refinancing it, especially given the potential sort of MPNU acquisition closing? And on a similar note, sorry, part 1 A, I guess, is given the healthy cash balance and liquidity that you have, are you considering buying back some of your bonds, given the yield they are currently at? And then the second question was on your cash policy. I think in one of the previous conference calls, there was some mention of sort of reevaluating your the currency you keep your cash in or the split of currency you keep your cash in, given the naira devaluation. Was wondering if there's any update on that?
Thank you.
Thank you. I'm gonna hand both of those questions over to Emeka Onwuka, our CFO. And we also have Eleanor Adaralegbe, who will be in the room in Lagos, who will be taking over from Emeka later this year. Emeka?
Yeah, and thank you so much, Roger. Thank you for your time, for the question. On the euro bond, continue to watch the price of my trade there currently, even majority 2026. Our major focus currently to conclude the MPNU transaction, use our cash, and then rebalance our, our, our financing. So we're looking at reevaluating the situation toward the end of the year and also watching the market. That's on the euro bond. On, I think it's related to that in terms of the cash balance we're holding currently. Our focus is to conclude the transaction.
Roger gave a view already about the pricing of that transaction and the nature of the fact that we don't know ultimately how much they're gonna cost by the end of, by the time we conclude that transaction. So we're keeping all this in view. We definitely wanna balance, you know, the funding structure of the company after that MPNU transaction. So we are holding on to that, and that affects a lot of positioning on that. The good thing is that we still have time, and while we watch how the markets are trading. Our accuracy, we communicated previously, is still holding. We normally keep 70% of our liquidity offshore and 30% in country.
As at the year end, 2023, the offshore peak look at is 76/24. About 70% of our balance sheet foreign currency held outside the country. It's specifically our narrow balance as at end of 2023 was about NGN 48 billion, which function in dollars of about $58 million. So our policy is still holding, and we'll continue to watch the market in terms of the foreign currency situation of the country and how the policies are changing. I will give the assurance, use opportunity to respond to this question to say there's nothing in terms of the policy that is same from CBN that threaten our position in terms of the money.
We'll continue to watch it, I believe that we're in a good position on that. Thanks.
Thank you.
We will now hand back to James for further written questions.
Brilliant. Okay, thank you, and thank you very much, everyone, for the questions. They keep flying in, which is great. So I'll just stick with MPNU for the minute, Roger, here. Could you maybe talk about what we can say or anything we can say about the performance of the asset? And linked to that, a couple of questions linked to this, you know, something around our confidence here, timing of the transaction, and urgency, perhaps of the government, given the statements that were made earlier this year.
Yeah. Okay. Thanks, James. Look, you know, it's hard for us to give any level of accuracy on the performance. You know, we give, when we announce the transaction, we give some, you know, working interest volumes there. I think they'll have softened from that. We'll naturally get a decline, probably 5%-10% decline in these, on these assets. And, you know, so you've got to really drill the standstill here, and it hasn't been a well drill for a number of years. So we expect some decline on it. We don't think that material of a decline, we don't think, but we're pretty confident we can get in quickly and arrest that and actually grow production.
In terms of it, you know, I did say that we, you know, in the oil side of it, you know, we have quite an extensive development plan in the next five years, which is a mixture of infill wells and new drills, and the resource is extremely good. And then on the gas side of things, you know, it is primed for, you know, really a gas solution, domestic and international. Exxon currently dries that gas and reinjects it. And actually, we see a real opportunity alongside the government partners to actually then monetize that gas. In terms of then, certainly around the getting the deal over the line, you know, I think there's a genuine commitment from the government to resolve this.
There has been a lot of statements from the minister around it, and I think that lines right back up to the president, who's the Minister of Petroleum. We did have a, w ell, NNPC, there was a disagreement with NNPC, with Exxon, and I guess us, by inference, because we're coming in to buy this. We believe there's a lot of work that's been done over the last 6-12 months to align more in that, and that's why we're giving a sort of confidence here to get the deal closed out. So we can't give an exact day, month, but I think we're getting pretty close on this transaction.
Great. So I'll move off MPNU onto ANOH. A few questions here. The river crossing has been pretty problematic, but appears to be some genuine progress there. Could you maybe give us a bit more detail on progress towards completion and your kind of confidence in 3Q 2024? And then alongside that, maybe around the guidance, we've included ANOH in production guidance. Could you give us some color on the ramp up, how long that might be. A third one there is, gas revenues made up about 12% of group in 2023. With ANOH, where do we see that moving to as a percentage?
Yeah, I think that's really a question for Sam. Sam, you want to come in on this one?
Yeah, thank you, and thank you very much for that question. On the river crossing of OB3, the river crossing has been very, very problematic, but, I think it's important for us to now report back that the grouting process, which, our partners, government partners, brought in some experts from London that built the London Underground, actually completed, and, now tunneling has commenced. For some of you who follow Nigerian news, there was, a release from NNPC two days ago, just announcing the commencement of the tunneling, which is, the last phase of it. So that in itself, making sure that we completed the grouting across the river crossing and to the end of the line, is, a major milestone.
Now that we are in tunneling, that is a confidence booster that completion of that process is in sight. So that's a really, really major, major milestone achieved. And that kind of reinforces our confidence in the onstream date for ANOH in quarter three this year. Ramp up especially is expected to take 3-6 months period. So in terms of full blast impact of ANOH, you will see that in 2025. But in terms of guidance and what we envisage as an exit rate, we will exit, hopefully, we have quite a number of opportunities in the pipeline, including ANOH, including the receipt of TNP Zone 6, and supply to Edo Refinery, among other production boosting opportunities.
If all of them come in place, we see ourselves closing, ending at the upper end of our guidance. That's my long response to this question. Thank you very much. Back to you, James.
Thank you very much, Sam. We can go to the operator, I think, for another question on the line.
We do. We have a question from Alex Acheiv from GSAM. Your line is open.
Hi, gentlemen. Thank you for the presentation. I have a few questions. First is a follow-up to Nikhil's question. I'm afraid my line wasn't really good, so I didn't hear the number you had in naira at the end of the year. And to expand on that a bit, with the recent changes in cash repatriation rules from Nigeria, would it be safe to assume that going forward, we should see the balance of cash you're keeping onshore grow? Or maybe you could share how you're going to deal with it.
And my second question, just going through the press release, I noticed that you’re talking about new energy business again, and that the gas to power development project may go into FID this year. So I presume you should have rough numbers handy, and I'm just wondering what would be the ballpark CapEx estimate for this project, and how long it may take you to get it done? Thank you.
Okay, thank you. Can I bring in Emeka for the first two questions there, and then I'll deal with new energy?
Yeah. Yeah, thank you so much, Roger. I mentioned that, at our year-end, our split between dollars and naira, in line with our policy of 70/30, was 76% offshore in dollars and 24% in naira. Specifically, naira was what, NGN 8 billion. If you do using, our year-end conversion rate, that would give you a functional dollars of NGN 58 million, $ 58 million . Now, we are, we've always operated based on the CBN circulars, referring to how oil and gas companies utilize their export proceeds. And under the existing circular, we are allowed to make most of our payments in terms of interest, in terms of, our debt obligations, in terms of also contractors, and up to about ten categories of payment.
We currently cover our requirement for foreign currency currently, and that circular is still in force, and it's also important that circular is in force because the oil and gas companies are likely to operate freely if that circular, in any way, is compromised. Now, outside of this circular, sometime in 2015, the IOCs had an understanding with the central bank because of pulling of cash for the head of this cash management, that outside of this, they can pull some cash to the head of it, outside of this designated or allowable expenses, you know, for oil and gas companies. Now, that is the arrangement that been affected by the recent circular from CBN in terms of trying.
You know, to bring that arrangement into some kind of into some of, kind of, control, so it don't affect our current operation. We are. That said, we are aware that foreign currency become a major issue for the government and for the central bank, and they continue to look at the guidelines to be able to streamline the market. We do not believe that we have any new segment that can come that will affect our operations. So we are confident our ability to meet our foreign currency obligation, based on foreign currency, and it will not be impeded in any way by even future regulation changes by the central bank. So Roger, hand over on the capital and return on the capital designation for the new energy.
Yes, thank you. Just so the new energy business, you know, obviously it's a new, it's a new sector for us, you know, gas to power. And, you know, we're being extremely careful how we think about it, the risk profile around it, et c. The, the currency, mismatch, between, you know, likely CapEx, quite a lot of it's gonna be in USD, and obviously, in the power sector, it's a narrower, narrower base there. So it's something that we are taking our time over. We have set that challenge, that target for before the end of the year for FID. A little bit premature at this call to come out and set, set out, you know, quantum CapEx, et c. You know, we're looking.
We have a couple of projects in mind, but it's likely the FID being one particular one. So I think it's a little bit early for it. We certainly will be coming up maybe, later this half or maybe into the slightly in the second half with some of the information.
Thanks, Roger. So we've still got quite a few questions to get through. I will try and group them. We've got a few more on the assets, then we've got some, sort of, more detailed financial, and guidance questions, and then we can wrap up on a couple of macro questions. So just closing out on the assets, TNP, we talk about resolving that in the third quarter. Could we perhaps give an update on progress to get the TNP back up and running?
Yes, Sam.
Okay. Thank you very much for that question. TNP, Zone 6 , we have actually advanced the reinstatement of the line, and we are currently doing hydro testing of the line to ensure it holds pressure with water before we introduce hydrocarbon. So, knock on wood, we are looking at reinstating that line in a matter of in a short period of time, maybe a matter of weeks, months, maximum.
Okay, thank you very much, Sam. And then just on Sibiri, we talk about the in-place resource in our update today. Could you just give the caller an indication about whether we included any of Sibiri in our 2P reserves number and potential on the timing of first oil for the field?
Sam, that's you again.
All right. Thank you very much. Yes, indeed. The answer is yes, yes, yes. We included Sibiri in the reserves numbers, and we are quickly transitioning and trying to convert the appraisal well objectives into production. So the Sibiri -1 will bring in somewhere close to 2,000 bbl of oil per day potential before the end of the year. Target is to bring in the Sibiri -1 in the coming months, and then the Sibiri -2, that requires a wellhead, maybe a month after. So we are aggressively pursuing bringing in those opportunities, and the range from Sibiri -1 and then Sibiri -2 is 800 bbl-2,000 bbl, and then they will be coming in in stages in the course of the year.
Thanks, Sam.
Thank you.
I'll move to a couple of more detailed financial questions. We've reported an overlift through most of the year. Could we please give an update on where we were at the year-end and anything we're doing to address the overlift in 2024?
Emeka?
Okay, I'll take that. Most of the overlift, major part of that overlift, was the fact that we had an arrangement where we are selling crude from the eastern asset to a refinery, Waltersmith. Now, part of the arrangement that we have is that if the traditional route is compromised and not being used, then we can supply JV crude to Waltersmith. And because the TNP have been off, you know, for a very long time, for most part of last year, we are supplying JV crude to Waltersmith and receiving the money on behalf of our partner, NNPC. So we're holding that balance.
We are currently discussing with them, and when we finalize the arrangement, we are going to move some of this liquidity back to them, and that will slightly reduce the overlift. And that's the major part of the overlift that you have. The rest are usual routine scheduling in terms of lifting that you have.
And then obviously, with the TNP opening up, you know, obviously, then they'll be able to, the partner doesn't have a supply agreement with Waltersmith, and then we'll be able to export down into Bonny to the TNP.
Thank you. Tax expense was a little lower than expected in 2023. Do we have more tax assets, deferred tax assets, for 2023, 2024, sorry? Can we give any guidance on tax expense in the year ahead?
Emeka, I think.
Um.
That question's for you.
Yeah. I'm not in a position, we're not in a position to give any guidance. However, we'll check, and we can send a specific write-up on that. Yeah.
Okay, thank you. So just moving to the guidance that you've given to the market today, really around production. Question here from the call, the, the guidance here was, you know, the midpoint is similar to 2023's outturn. There was some disruptions in, in 2023, particularly in the middle of the year. Could we maybe talk about, how much, deferment we're factoring in across the assets, in, in 2024? And I'll carry on. There's another very similar question, but could we provide a little bit more guidance, on the asset-by-asset build up in, production guidance, the expectations that underpin it there?
Okay, Sam?
Yeah. Okay, thanks. I think, thanks for that. The deferment that we've applied in 2024 is similar to 2023. What I tried to allude to initially is that there are a lot of opportunities that are coming in, and they're coming in towards the latter part of 2024. And if you look at that, that would mean that we will have a closure on the year was in the upper end of our guidance, and then actually a much more improved exit rate, higher, far higher than what we will have in 2024.
The direct translation of that is that we will have a much higher guidance effective in 2025, because that is when all these key opportunities, including ANOH, with the full benefit of ANOH coming on stream, will be seen and felt in our business.
Thank you very much. I think we've got one question coming in from the call, from the lines here now. Operator, do you think we could go to the caller, please?
Yes, this call is from Nikolas Stefanou from REDD. Your line is open.
Hi, guys. It's Nick from REDD. Thank you for taking my questions. I have a couple to ask, if I may. I just want to go back to the production guidance for the year. I would say that this time, kind of like, looks a bit more conservative than other years. I just want to understand, especially, what is going on at the west assets, because if you're going to drill nine wells at OML 4, OML 41, and it looks like production is going to kind of, like, be the same there. So I just want to understand what am I missing, or is there, like, any sort of, like, decliners were in the portfolio?
And then another on production, that's on the TNP. So I'm looking at an MPNU's numbers there. It looks like from the Bonny Terminal the output has pretty much, like, tripled since maybe six months ago. So what is going on with your side of the operations there? Because to a large extent, it seems that a large part of the TNP is actually operational. So what exactly is the problem there? And then a final question on the leverage and then MPNU deal. Can you confirm whether you consolidate in MPNU after the transaction?
How the covenants will be calculated, will be including or, or excluding, you know, MPNU and production and, and, financials, et c. So thank you.
Okay, maybe, maybe I just start with that, and then, Sam, you can, you can kick in. So in terms of like, again, the production, I think the way to think about it, yeah, we are pretty active in the West. It's a timing when we're going to bring all those wells in, and you're going to see them coming back, back in sort of the second half of the year. So you're not really getting the benefit in the productions. If you look at the, the sort of exit volumes, we're going to see that they'll, they, they will grow towards the back end of the year. But it's just the timing of those wells coming in.
With regard to the question you had, Nick, on the TNP, and you're right, the lower sections of the TNP have been fixed, so you're starting to see these, those injectors really getting that volume down into Bonny, which is very, very encouraging. The upper section, Zone 6 to Zone 9, and we're injecting at Zone 6, they've been a lot more problematic, and they've taken longer. But as Sam said, we're hydrotesting Zone 6 at the minute, well, not we're not, obviously the operator is at the minute. But as soon as that's successful, then we're then going to start to inject into Zone 6. And we're very encouraged by the lower end of the line, which looks to be working quite well.
So it's the timing of when we can get the TNP up and running. You know, we've had to build a lot of conservatism into those sort of estimates. With regard to MPNU and consolidation, yes, it will be consolidated. You know, we will own 100% of the shares of MPNU, and obviously, it will be consolidated into our numbers. And then we'll have implications. I mean, it doesn't have implications on existing funding arrangements because obviously they won't be part of it, they're set to be funded. But obviously, we'll have to consolidate up around that. And it's a bit early for us to be able to communicate that because we have not had access to information since 2022.
But we have a team ready to go, and as soon as we can get the clarity from the government, get the court cases dropped and the arbitration dropped, then, you know, we are confident we can get information very quickly on it and update all our models and see what the consolidation looks like.
Okay, thank you.
Okay, great. Thank you very much, Roger. Nick, did that answer your questions? Okay, great. So, Roger, we've got just a couple more here, written questions, and then, we're nearly, nearly out of time there. Firstly, you know, we've seen a big improvement, or Seplat's seen a big improvement in the loss factor in 2023. We talked to security improvements on the Delta. Could you maybe give a little bit more color around both our and our partner and the government's efforts to improve security and production and the potential durability of those efforts in restoring production on the Niger Delta?
Yes. I mean, Sam, do you want to comment ?
Yeah. Yes, I do. Thank you. Yeah, thank you. I think the, what the major change here there is, the government has a good number of security architecture on the pipeline export routes between the east and the west, and this is holding. We've seen reduced theft and losses on the lines since this security architecture has been put in place. And I would say coming forward to January, we've actually seen even a further improvement in the losses along those lines, especially our AEP, for instance, where we've seen losses in the range of 1%-2%, which is really a big improvement from what we used to see. So overall, there is security architecture on the lines, and we see consistent improvement going forward.
So it's just to continue to work with the government agencies along those lines. So that is what we do. We continue to influence, because, again, this ties back to the revenue to the country. Thank you very much.
Thanks, Sam. So we'll take one more question. Then, I think we'll hand it back to Roger to close after that. If we haven't addressed your questions or if you have more, please do not hesitate to get in touch with me in IR. So final question, Roger. You know, there's been several transactions announced with the IOCs selling to indigenous partners and now all in the public domain. Could you maybe talk a little bit about how that might give us confidence that our deal may reach a conclusion? Is the final question, or how does that sort of change things from your perspective?
Okay, well, first of all, I think certainly our deal is certainly the first one to be announced, the sale and purchase agreement two years ago. It's a very critical transaction for the country. You know, it's not been a secret that the IOCs were really looking to focus their efforts in the deep water in Nigeria and certain aspects of some of the shallow water, and some of the IOCs obviously will remain onshore, particularly focused around gas going into LNG, et c. So it's not, you know, it's not a surprise that the vessels are coming. You know, this five really have come to the forefront. I don't think it really changes our transaction necessarily, you know, because it's, you know, each transaction is very specific.
I think you can take confidence in the statements from the ministers and everything else that because the IOC is not leaving, they're focusing on the deep water. There's a definite acceptance within government that these deals need to happen. And the quickly, because you know, when you're divesting, you're not investing, right? So you're not spending money, decline and gas goes decline if you're not continually working them. So I think it's now got to the stage that these things need to be clear, the government understands that, and there needs to be a lot of investment in on the onshore. So does it make it any more likely?
You know, I don't think it does necessarily make it any more likely than before, other than there's a lot of focus on it, and we remain confident with ours specifically, that I think we are ready to go. We told government what we're gonna do with the blocks, and we're very keen to start investing. Okay, so I think that wraps up the presentation for today. You know, I think 2024, we've laid out, you know, some of the stuff we're really looking at. I think there's a lot of catalysts here. I think it'll be an exciting year for the company.
Real value creators, a lot of the projects we've been working on for years. We're very keen and looking forward to getting them complete. And I think Seplat will exit 2024 in a much stronger and a better, better position. So thanks everyone for listening today, and I look forward to talking to you at the next presentation. Back to the operator. Thank you.