Good morning. Welcome to Seplat Energy Plc's half year results 2026. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session through the phone lines. Instructions will follow at that time. I would like to remind all the participants that this call is being recorded. I will now hand over to James Thompson, Head of Investor Relations, to open the presentation. Please go ahead.
Thank you very much, John. Hello, everybody. Good afternoon. Welcome to Seplat Energy's financial results for the half year 2026. On the call today, I'm joined, for the last time, our CEO, Roger Brown. Alongside him, we are joined by Effiong Okon, who will be our CEO from August 1st. Our COO, Samson Ezugworie, and our CFO, Eleanor Adaralegbe. We'll follow the normal results process. We have our Q&A that will follow the prepared remarks. Before we start, I'd like to encourage you to take note of the forward-looking statement here on slide two. Now I'll pass the call over to Roger for the opening remarks. Roger, over to you.
Thanks, James. Hello, everyone. Let's run through the six months financial highlights. In terms of production, you can see there we're just slightly less than 140,000 boepd . It's within guidance range of 135 kboepd- 155 kboepd. We've had a recovery in the Q2. You'll see a much better performance in the onshore. If you recall, Q1, we were interrupted by a shutdown of the pipeline. We see a recovery in that. We can now see quarter-on-quarter we're up 15%. We maintain our guidance. In terms of group revenue, we've obviously now benefited from a strong oil price. We're 30% up on year-on-year. You can see across NGLs, the gas to oil, they're all up in terms of percentages.
In terms of quarter-on-quarter, again, Q2's been a much stronger quarter for us. We're up 16%. Looking at the EBITDA, we are approaching not far off $1 billion for the half year. That's up year-on-year, 52% margin. If I look at the six months cash flow from operations pre-tax, again, there's almost $1 billion, up 29% year-on-year. It's a very strong set of financials in terms of the P&L. In terms of dividends, you will see that this has been a trend for us over a while now. We're increasing our dividends. We've increased the second quarter dividend to $0.12 a share. That's up 161% year-on-year. That's a $72 million payment.
If you look at year- to- date, combining the Q1, we're $0.21 per share or $124 million. We're really starting to return some value back to shareholders. With the new dividend guide, we would expect to outturn this year at $0.45 per share or $270 million, which is about 80% year-on-year. Moving then to the operational highlights. Sam will deal on most of these things, but just give you a summary. Production growth, we're up 39%, so we've added about 20,000 barrels a day quarter-on-quarter on our onshore working interest production, so we're just slightly less than 71,000 bbl. Strong performance across all the assets from East to West to Elcrest.
Our commitment to lowering CO2 emissions, we can see there that we've got a 29% decrease in CO2 emissions, and that's largely from the onshore with our flares out program. In the offshore business, we've started to reduce CO2 emissions there as well. In terms of Western asset, 2% flare gas and Eastern asset the same, 5% gas flares with ANOH ramping up. With ANOH at full production, we would expect to see those just as routine flares. In terms of the offshore highlights, in the idle well restoration program, this is a very efficient way to bring revenues into the business, and we've added 16,000 bbl out of 15 wells. Our commitment has always been about 1,000 bbl a well. If you look for the first half, we've added 26,000 bbl from 24 wells.
If you look at what that means since inception, 73 wells have been restored and added 75,000 bbl of oil equivalent. This is really material. That's cost us $109 million. It was about $1.5 million a well. At these oil prices, literally these are paying back in a matter of weeks. The next bit to say here in the offshore is that we have announced this morning that we have signed heads of agreement with NNPC to do the 10% sell down. I'll move straight onto the next slide because we have a summary of that transaction. This is something that we highlighted to you earlier in the Capital Markets Day, and it's been something that's been in discussion for quite some time. We've now agreed as heads of agreement, which is a legally binding document.
It will then go into sale and purchase agreement to finalize it. We are selling 25% of the acquisition we made from Exxon for $281.6 million. The effective date of that transaction is 1 April 2026. You may recall that we completed on the 12th of December 2024. We expect to close this during this second half this year, when we sign the SPA and have directory approval to proceed. The observations there that we will remain operator, and that's very critical in the JV partnership. We have alignment fully with our partner, NNPC, and we have a very strong relationship with. The sale proceeds, it will largely offset lower free cash flow over the plan period. In terms of the proceeds itself, of $281.6 million, we project to return half of that to investors.
The remainder, we will take down some leverage and also return some money to cash. What that means in terms of dividends is that we then, with $140 million forecast, then we would expect to add that to the core dividend and the special dividend for the year and go to $410 million. That's the $0.683 per share, which is a very material return of dividends and a very big proportion of the billion dollars that we've committed. You can see that on the right-hand side, some of the metrics, the production, the CapEx, the reserves, which is about a 13% reduction in reserves. The important thing is that even at 30% working interest, we're committing to at least over to 2030. Let me just hand across now to Sam, who can run you through the operational performance.
Thank you. Thank you very much, Roger, and good afternoon, everyone. On the operational performance, we start, as always, with safety, which is our priority and core to our sustained operations. It's also good to underscore that within the first half of 2026, we recorded no lost time injuries across all our business units onshore, offshore, with 18.8 million man hours of work-related activities accomplished within the same period. Roger already started highlighting the key message and the achievement we are making with the end of routine flaring program in our environmental stewardship across our businesses, and then the emission intensity reduction down to 16.4 kg CO2 BOE in our onshore business, and also the major improvement that we're also recording in emission intensity decline 9% in our offshore business. All these are all coming together to lay the foundation for the operational performance.
Going straight into the operational performance for the first half of the year. We saw strong performance in the second quarter, following the recovery from the Trans Forcados Pipeline that was out for 38 days in the first quarter, and then riding on the idle well restoration program that Roger highlighted, and improved evacuation across all our assets. What you will see is a 4% growth year-on-year on our production performance compared to equivalent period in the last year. Quarter-on-quarter, you will see a 15% growth between quarter one and quarter two 2026, for the real good reasons that have already been highlighted. Unit production OpEx also saw some decline in the second quarter of 2026 due to improved production and lower cost. Half year unit production OpEx is at 15.8 BOE, and this is inclusive of Yoho restoration cost.
Ex Yoho, we will be back to $14 per barrel of oil equivalent. Roger already made the strong statement around the idle well restoration program, which continues to deliver real value for the business, and we continue to drive those. We have 26 of those in this remaining second half of the year, and we are on track to deliver them. If we now go straight into our midstream business. Our midstream business also experienced significant growth and improvement in the period. Year-on-year, we are up 4%, and quarter-on-quarter, also some very big significant improvement in our midstream business and gas delivery. I think within the period, we have seen improved performance from ANOH Gas Plant, which also promises to unlock more value in the third quarter of this year when OB3 becomes fully operational.
Oso-BRT phase I project is also on schedule for commissioning and achieving first gas in the fourth quarter of this year. If you recall, this is one project that will deliver additional 120 million scf per day, taking our export capacity in the offshore business to 240 million scf per day by the fourth quarter of this year. Giving you an outlook for the third quarter and fourth quarter, the remaining half of this year. On the gas, I already started talking to our delivery of the Oso-BRT gas pipeline and project. That is very critical to us meeting our gas program for the year. We will ramp up our production out of ANOH, and commence LPG production.
It's also important to highlight at this point that at the Oben Gas Plant, we signed a spec capacity program with a third party, Gwato, to bring in additional gas into that plant to maximize the utilization of the installed oilage at Oben. That is also coming. Drilling campaign, you will see that by the next quarter, we will have a total of eight rigs drilling across Seplat businesses. Happy to announce that we are now fully ready to start drilling offshore with the first rig coming in. You would have noticed that we have fully signed this contract for the second rig that is going to commence drilling activities in our offshore business by the first quarter of next year. We will continue with the idle well restoration program, targeting the remaining 26, and we will have two rigs in the eastern asset.
Of importance here is to underscore the fact that we are now drilling our next exploration well in Aku, which is coming after the last one that we drilled in Sibiri in 2022. The western asset, we have four rigs coming up, one rig that is on continuous program in the Elcrest for the next four years. On the integrity and restoration program, I'm sure you will also like to hear that the long-awaited Yoho is mechanically complete, and we are now going into commissioning, as we speak, in the coming days. The volumes from Yoho will come and begin to count as we go into the third quarter of this year. Single point of failure analysis continues to deliver a lot of value for us in the business.
This is one program that we have significantly used to manage deferment and unscheduled interruptions in the offshore business. That is what we have also used to mitigate the delayed restoration of Yoho, because we promised that we're going to restore Yoho by the end of June. Onshore deferment improvement continues to also get significant attention. With all this, I will now hand over to Eleanor, who will take us through the financial outcome of the first half of the year. Eleanor, over to you.
Thank you very much, Sam, and hello, everybody. Thank you for making the time to join our call. It's been a very busy half year for us, and we're very pleased to be sharing some of the details from the financials. Let me start with what has really driven our strong financial performance in this first half. First of all, as Roger already mentioned, revenues increased 30% to $1.8 billion, supported not just by the stronger realized price, but also by higher production. I think what's important that I'd like to really flag here is the realized premium to Brent, which has increased by over $7 per barrel, and up significantly from almost $2 per barrel in the prior period. I'd like to state that this premium has become a very meaningful competitive advantage for us at Seplat and continues to strengthen the quality of our revenue base.
I think the second point I want to make on this slide is we are seeing much stronger earnings conversion this time. Our earnings per share has increased to almost $0.27 per share, more than five times the levels that we saw in the prior period. I'd highlight also that beyond the commodity prices, we're also starting to see benefits from the combined business, both offshore and onshore. Some of those efficiencies that we delivered in our onshore business, we're starting to see that come through alongside some fiscal advantages that are coming from onshore assets since we converted to PIA. These factors are what has really supported a much stronger margin profile for us in our business. Finally, on this slide, I'd just like to highlight the hedging strategy, which has continued to work exactly as we have planned. Basically, simple puts.
We are taking advantage of the upside, and in a stronger price environment, that's also benefiting the shareholders. Going to the next slide. This slide, the key takeaway here really is it's really showing the strength of our cash generation. Our free cash flow at $526 million in the first half of the year is actually almost the same as our free cash flow from all of 2025. That's quite significant. Yes, it reflects the higher oil prices, the stronger operational performance, and also we got some benefit from receivables collection during this period. I would highlight as well that the CapEx was lower because more of our CapEx you'll start to see in the second half. CapEx this first half was just about 27.5% of our plan for the year.
I think importantly really is the underlying free cash flow before debt, which you can see on the slide at $632 million. This is what supported the decision that we made to accelerate the debt reduction in this period. Obviously, this has saved us interest charges and in line with our capital allocation framework. If you go to the next slide. This is really the strength of our balance sheet continues to show. Our gross debt has reduced from pre-acquisition levels at $1.4 billion to around $805 million. We've effectively returned to our debt portfolio before we made this acquisition. Another very positive position for us, it's showing that we've rapidly managed our debt portfolios and within six quarters we've basically paid back almost everything that we've spent in acquiring the asset from Exxon.
In total, if you look on the top right-hand corner of the slide, you'll see our available liquidity of approximately $834 million, and that exceeds our gross debt today. With basically near-term maturities, the next big ones really are in 2030. We have significant free cash flow generation that continues to support the business, and it gives us additional flexibility and to support some of our growth plans. My final slide is on the dividend. It's usually the best slide. We usually keep it last. Roger has really spoken to all the benefits that we have put forward as dividend. I think it's worth reiterating. It's actually highlighting the confidence the board has in the underlying business, and this is why you saw all these announcements in dividend.
Just to reiterate, for the second quarter, we've declared $0.12 per share, which has taken the total distributions declared in the first half to $0.21 per share. We've also increased our full-year guidance to $0.45 per share. This is after considering the potential completion of the 10% divestment. I think the second point is the additional $140 million that we have highlighted will be paid to the shareholders, subject to the completion of the transaction. This is what then takes the dividend up to the $0.68 that Roger mentioned earlier. I think I'll just really say that, look, we're very pleased to be making this much progress as a business. Considering the target that we laid out during the Capital Markets Day of delivering a cumulative dividend of $1 billion, we've already delivered 41% of that commitment.
Really, $410 million for 2026 are very significant for shareholders. I guess, in summary really, I'll end with just saying the message for us is very simple. Stronger earnings, exceptional cash generation, rapidly de-leveraged our balance sheets, and also increased return to shareholders. What this is also showing, going back to our capital allocation framework, is we are delivering on all the four pillars while also maintaining the capacity that we need to invest for future growth. Thank you. I'd like to hand over to Roger. Thank you.
Thanks, Eleanor. Before we go look in the outlook and the guidance going forward, let's just talk a little bit around the leadership changes. We have obviously announced this in June, but in the room here today, we have our new Chief Executive Officer, Effiong Okon, who will take over from 1st of August. Of course, Effiong is not new to the business. He has been here eight years. Joined in 2018 and has been very much focused on the operations of the business, more naturally in the gas business at ANOH and brought it to first gas. Effiong will take over. I'll step down tomorrow actually, 31st, and Effiong will start take over on the Saturday, actually, the 1st of August.
The other change will happen at the end of the year, will be that our current Chairman, Senator Udo Udoma, will step down, and Sir Tony Elumelu will take over from the 1st of January. He's been on the board since 22nd of January this year. Let me hand across now to Effy to deal with the second half guidance.
All right. Thank you very much, Roger. Thanks, Roger, for 13 years in Seplat. It's quite a long time. Thanks for the legacy. Thanks for all the contributions you've made to the company. I'm sure if you look back 13 years when you joined, I'm not too sure that you imagined Seplat would be where it is today. I'm sure it's a moment of pride for you as well. I want to say thank you for that foundation, and we will build on that going forward to take Seplat to unimaginable level. Thank you. Well done. Good afternoon, everyone, again. For the second half, you heard from Sam, from Roger, from Eleanor, we will continue to pretty much consolidate on performance. We keep driving operational excellence.
It's going to be a very busy second half of the year as we restore production at Yoho, also at Gas to LNG, and also ramp up ANOH. It's going to be a very exciting period. If you look back, Q1 was very challenging. Q2, we did recover, the second half, we expect and hope to recover even better so that we can deliver strong operational performance that drives the very strong financial performance you heard from Eleanor. I'm not going to read through all the slides. I think focus for us for second half is really, really driving that operational performance and then delivering world-class safety, as you heard from Sam. Finally, if you then look at our guidance, we're very much confident that we should end up the year within our guidance.
The only two additional slight tweak you see on the slide on the right side is operating costs, which is pretty much tied to Yoho, like you heard from Sam, and also on the cash tax as well. High oil prices, we've, of course, benefited a lot from that. Additional tax to be paid on that additional cash that's come in. I think that's really where we want to end up our 2026. Thank you. Back to James.
Great. Thank you very much, Effy, speakers. John, on the call, I think time to open up for Q&A, please. We got anyone on the line?
I will give out the instructions first. For those interested to ask their questions, you 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, followed by the number one on your telephone keypad. Once again, for those that are dialed into the conference lines, if you are interested in asking a question, please press star, followed by the number one on your telephone keypad. It seems that we have no questions on the conference line. I will now hand over to James Thompson to read out the written questions.
Okay, great. Just while we give people time to put their hand up and ask some questions, I think we can sort of dive into things here. Thanks very much for the questions that are coming in at the moment. Maybe we can start on CapEx. We got a question here on guidance for 2026. 1, are we actually going to be able to spend the money? Obviously, we didn't spend much in the first half. What are the components of the second half CapEx? Maybe, Sam, do you want to pick that one up?
Yeah, indeed. Thank you. Thank you very much for that question. If you saw my slide on drilling activities, drilling activities is actually going to be fully loaded in the second half of this year, and that is where we are pretty confident that we are going to spend our CapEx for the year. I mentioned that the drilling offshore is commencing. The rig is finalizing its operations, with one of the operators in country in the first week of August, and will be moving to the offshore location. And in the onshore space of things, we've picked up two additional rigs, making it a total of seven rigs that will be operational in the last half of the year. With that, indeed, we are going to, not only fully recover, but do a bit more, because I also highlighted the drilling of the Aku exploration well.
That was actually on our program for 2028. With all the additional capacity we built for the second half of the year, we have now accelerated that well into 2027. I would also like to highlight and also note that that rig, the well was actually spudded in the late evening of yesterday. We are already in operations at the Aku location. Thank you.
Very good. Right. Have we got any calls? Hopefully, that's been enough time for someone to put their hand up. John, is anyone on the line?
Yes. We do have a question from the line of Nikolas Stefanou with REDD. Please go ahead.
Hi, guys. It's Nick here. Can you hear me?
Yep, we can hear you.
All right, great. I'd like to start by wishing to Roger all the best in his next chapter in his life. Will you tell us what you plan on doing, Roger, after this? Is that something you want to keep to yourself? Also to congratulate Effy on his step up as CEO of the company. Guys, my first question is on maybe how the company will look going forward. I guess, Roger, under your sort of helm, it was sort of inorganic narrative. The company did grow a lot. You did a really good job here. If you had been more of sort of operational guy, kind of the person that gets things done in operations. Are you thinking of sort of deviating the strategy of the company going forward?
Any specific sort of style you think going with Seplat kind of implementing under your leadership? That's the first question. The second one is on production. If you can give us a steer on what the X trade would be for this year and what we should expect in 2027 production. That would be quite helpful. The last one is for Eleanor on the capital structure. I think I ask you this question on every call. Is there an indication from you that now, especially with the disposal, you're going to call the notes in 2027? Should that be a fair assumption? Thank you.
Thank you.
Okay. Thanks, Nick. Have you got those?
Yeah, maybe, Nick, I think we missed the last question. It just broke up a bit there. Just could you repeat that one, the last one?
Yeah. Following the transaction that has been announced today, does it make sense to assume that you guys will call the notes in 2027, the bonds?
Oh, the bonds.
The bonds. Okay.
Okay, got you.
Bonds.
Got you. Okay, got that. Okay. Well, thanks very much for your kind comments. I haven't disclosed what the future of me is. At the minute, my near term is to go on holiday and spend some time with the family. That's what I would do. I'm sure it'll come out in due course if I do something else. In terms of where the company's going, let me just say one thing is, we laid out a five-year plan September last year, obviously in that plan, we then identified the 10% sell-down. We didn't give any real detailed numbers, but we gave some guidance numbers in terms of production. We've given it here, reiterated it today here, going from 200,000 target to 170,000 target. When the deal actually closes and completes, we'll give some updated numbers at that point.
The five-year plan is still the five-year plan. I will leave it for Effy to get in to seat to talk of the future, it's a bit early, I think, to talk about that. We will have probably, with the change of chairman and everything else, I'm pretty sure that there will be a reaffirmation of the strategy going forward, that will be put out in due course. I think it's fair to say at this point. It's a bit early to talk about that.
I mean, let me just add a few things there. I think if you look at the history of the company, for 16 years, the company has consistently grown. From the Western asset acquisition in 2010 to the East, then we then pretty much did the Eland acquisition. We're always looking out for how to grow the business. Then MPNU came in. That trend will continue. If you do look at the next five, 10 years, like Roger did mention, I think at the Capital Markets Day, we did lay out the five years plan. Every year we work out five years, 10 years plan. Like Roger mentioned, the new chairman comes on board in January.
We're going to be working a new strategy, we'll come out to the market back up when we're pretty sure about how that future is going to look like. One thing you got to be sure is Seplat is going to grow. Seplat is going to grow to what I call unimaginable levels, and we're looking out for opportunities where we're working existing portfolio. We're going to grow way beyond what you see within the five-year plan. Thank you. Then there was one on the bond, right?
Yeah. Thanks, Nick. Yes, the bond does come up for. We have an opportunity to refi. We'll look at the market at the time and also look at our existing business and see whether we want to take an opportunity to refi at the time. Thank you.
Sorry, I forgot to thank, I don't know the name. Thank you as well.
Nick
for welcoming me on board. I think for me, I'm super excited. I'm really delighted with this privilege and the opportunity provided by shareholders and the board of the company to stand on filling these big shoes that Roger is leaving. I've got big foot as well, don't worry. Thank you for that.
He also asked the question on potential exit rate
Yeah
for 2026.
No, thanks, Nick, for that. I think production, you've seen the ramp-up between Quarter One and Quarter Two. We continue to drive those improvement opportunities. I think it's also important to highlight that we are pretty confident that our exit rate will be somewhere at the top end of our guidance, which is 155 KBD. Maybe we will come back in the third quarter again.
Okay. Would you be able to give an indication for 2027 production?
Again, it's too early at this point in time, Nick.
Yeah. Usually, Nick, we will guide on 2027 when we release our full year results. That will be in February, at the end of February next year.
Okay. That's fair. Thank you so much.
You bet.
Once again, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from the line of Phil Hallam with Canaccord Capital Markets. Please go ahead.
Hi, guys. Can you hear me okay?
Hey, Phil. Yeah.
Hello. Hi.
Yeah, we can hear you, Phil.
Thank you very much for the time, well done on a great first half. I've just got one question. I know we've already touched on M&A slightly, It's just more your thoughts on how you view Nigeria versus the rest of West Africa, and maybe even beyond that. What opportunities do you see within the country and in the wider area?
Yeah. Maybe I start that question. Look, I think certainly we've refined over the years. Nigeria presents awesome opportunities, you can see that with this acquisition with Exxon, the Mobil Producing. It's high, high-quality sands. It's one country we know inside out and can operate in. Nigeria is an obvious one. Now, there's a lot of divestments happened. When we went through, with the Exxon acquisition, there was about four others. In terms of the amount of opportunities in Nigeria, are less than there were previously, that doesn't mean that there aren't a number of opportunities. There are, both onshore, in the shallow water, and then ultimately, a natural step for the company in the future would be looking more in the deeper water offshore Nigeria.
In terms of the other opportunities in West Africa, yeah, there are some there, but you apply them against the opportunities we see within Nigeria, and we rank them accordingly. That's the general comment, but the company, as Effy said, is a growth company, and we still have appetite. We've delevered the balance sheet. The balance sheet is very low leverage. If a quality opportunity comes across our path, we'll assess it properly, and then we'll have the financial firepower to get after it.
You want me to add or Roger? Yeah, I think just to add to Roger's point, I think if you look at Nigeria, to be honest, I think the government is actually doing a lot to improve the investment climate. If you look at our rating, you look at FDIs, it's actually gone very well. With regard to our industry, the president has actually given a lot of executive orders, which is all driving towards encouraging more investment. You've seen the NNPC ambition of 30 million barrels per day by 2030 and 12 BC level gas. That's a massive investment going to gas infrastructure by NGIC. I think for me, if I look at what NNPC is doing under Bayo's leadership, it's quite very encouraging and very bold in terms of to the benefit of our industry.
Then if I look at the rest of Africa, apart from Côte d'Ivoire and probably Mozambique with all the big LNG projects, with Total going back to the Rovuma LNG, I think Nigeria still stands quite strategic with a lot of opportunities, just like Roger mentioned. We still expect some IOCs divestment, not very clear at this point in time. Of course, as the IOCs divest, there are fewer opportunities remaining. We are very well positioned to pretty much look at whatever comes up. I think it looks really good going forward.
Okay.
Great. Thank you. Very clear.
It seems that we have no further questions on the conference. I'll turn it back over to James for raising questions.
Okay, brilliant. Great, we've got a few here. Maybe just starting with the sort of production-related ones here, thinking about the second half. ANOH's got to 60%. What's holding it back from getting to 100% capacity, and what does it look like the journey to get there?
Yeah. Okay.
Maybe-
I think for ANOH, to be honest, it's been a really great plant. Having worked on ANOH, the problem we have in our business is really third-party infrastructure constraint. If you look at all the conversations we had today, even the Q1 performance, TFP outage, right? Then your mechanical damage. For ANOH, the biggest constraint was the condensate export route due to TNP integrity problem. That's been fixed now. TNP is now available for full condensate export. Then we now have the Oando's export route constraint, because we go through to LNG through Oando. At the Oben Gas Plant, there is a restriction which they're trying to sort out. Once that is sorted, the plant can now ramp up to full potential. In addition to that, I think Sam did mention that OB3, well, nearby OB3, pretty much done now.
They are going through hydro testing, commissioning. Once that line becomes available, it simply means now we can now put gas into the domestic market, into LNG, and also into Indorama. I will say before end of this year, we should be looking at taking ANOH to real full potential. That is the reason why ANOH is still a bit constrained, not because of the plant itself, but because of the export route to LNG.
Sticking with the operations side of things. When Yoho does come back up online, in Q3, how long should we expect it to take to ramp back up to normal production?
Thank you. Ramp up to full production at Yoho is a couple of weeks max, because we have actually tested all the components, all the systems, and the instrument room is already fired up. Full potential is a couple of weeks, then we start producing into the FSO, then we will then do the lifting according to the lifting schedule.
Following on from that, in terms of the Oso disruption, similar sort of question actually, what is the kind of recovery profile look like? When do we see improved production on the gas side of things from Oso?
Thank you. The Oso gas line disruption, we've finished and completed the mechanical fix of the line as well. We are now pigging the line. We ran the last set of pigs, in fact, in the last 24 hours, with a cocktail of chemicals, oxygen scavengers and stuff. We are also very positive that in the first week of August we would commence NGL production, and then test the line again for integrity before we go full blast into gas production. That will take a stage by stage approach. What you will see coming on shortly is NGL production, and then gas production will follow subsequently.
Thanks, Sam. Maybe switching gears a little bit, thinking about the divestment question here. The sale of the 10%, is that it, or do we have any plans to continue selling there? Maybe just following on from that, post the sale of the 10%, does that make the board more interested in M&A, and wanting to get back to that 200 KBD target?
The general point of M&A is the company's always interested in M&A, always looking at the opportunity set. Does this make it any more appetite? No, I don't think the board will change its appetite. It has appetite today to look at this. In terms of other divestments, no, there's no planned divestments at all. This had been in discussions with NNPC for some time. We're glad to, or delighted to, put the signature to heads of agreement, put it behind us and move on, and work closely with our partner, NNPC, that we have a very good relationship with and grow our assets. The assets, even at 30%, there's massive potential here, and that is what we've laid out in the Capital Markets Day. In reality, there's a lot more resource, and Sam's talking about exploration. This is direct.
We'll find more resource, I'm certain, in the offshore. That means that we will not have any immediate need for an acquisition. Acquisitions are done by opportunity sets of people wanting to sell. There's no real change there from the board's perspective.
Okay. Very good. Thinking about a question here on the proceeds. Can we provide a rationale for the sort of 50/50 split? Any reason why we might not pay more off in debt or more to dividend?
Yeah. Thank you. It's very much aligned with our capital allocation framework. We've talked about our policy and how we would distribute free cash flow. That's why we've done it this way. I think, if we present the 50% of the proceeds as dividend, the other bit we would delever the balance sheet, whatever's left, we put back in cash. Thank you.
Following on, just in terms of the dividend, obviously nice to see the dividend increase in the second quarter. How much of this was a function of price? What should we expect if oil falls back into the sort of $60-$70 range on dividend?
Yeah. Thank you. I think two key things. We've assumed an average of $85 per barrel for 2026 for the full year, and that is delivering the $0.45 per share. I think there's a lot of strength in our underlying business. We're expecting to grow production. This $0.45 also considers the potential 10% divestment. Last year, average oil price was just over $70 per barrel. I think we're basically driving growth from production, and we'll start to see, once we start to see higher volumes, if oil prices stay at these levels, obviously we can expect similar levels in the future.
A final one on the dividend. Is it a general intention to give a full year dividend guidance going forward?
I think that because of the commodity price and what we've seen this year with oil price, it felt quite important for us to let shareholders know what they can anticipate. We've run our numbers. We also ran a number of sensitivities, and we're very confident with this price environment and what we're doing with our operations, that we can deliver this. Because we have that information, we felt it was good for us to share that. You notice that in the first quarter, we had already lifted the dividend to $0.09 per share. Now with the second quarter, there was quite a bit of recovery around operational performance. With our forecast and all the drilling activities happening in the second half of the year, that's demonstrating that we're very confident as a management team that we can deliver on promise.
We felt it was good to share that. This is the first time we're doing it. We will see whether we will continue to do it that way, again, this market environment has basically given us that opportunity to do so. Thank you.
Couple of questions here on sort of more third-party elements. Can we give us any more details on UTM and the arrangement there? It's not a company I'm familiar with in the LNG world.
It's a Nigerian developer, but has top-rated equipment manufacturers, shipyards, et cetera. It's a project that's been in development for some time. We signed the gas sales agreement last month. Actually, earlier this month, in fact, it was. It's a new developer, but it's using very experienced constructors, et cetera. We're confident that they'll deliver on the project, which is why we're happy to sign that GSA. Yoho itself is stranded anyway, so it's not connected to the rest of our assets, and therefore, it really does need a sort of floating LNG solution. It's a good solution for the Yoho asset.
On the Dangote Refinery, the refinery is now sourcing a very significant proportion of its crude locally, up to around about 80%. Is Seplat in discussions or interested in a long-term crude supply agreement with Dangote on this basis that they are much more present locally?
Thank you. Seplat's always open to conversations. We have contracts with traders that we've signed up to. We've also had opportunities where some of our crude has been sold to the Dangote Refinery. If those opportunities are open in the future, we're happy to sort of get into those conversations.
Any interest in the Dangote IPO? I'm not sure we need to answer that. On the next question, in terms of the realized premium to Brent in the first half, $7 a barrel, much higher than we've seen historically. Is that just the Middle East, or is something else at play here?
It's mostly that. The volatility that's coming out of what's happened in the Middle East is part of the reason that we're seeing that. I think also the quality of our crude is also very strong. We've seen, in our business, we've had premiums periodically. We're happy to be reporting this level of premium in this first half. Thank you.
Okay. First half was obviously another pretty strong period of cash conversion. Does this ratio change at all in the 2026, 2030 plan? When we think about cash conversion, and actually there's a related question on cash taxes, 35% of CFFO. These two similar questions. Are these the sort of things that we all could see through the plan period, and are they affected at all by the divestment announced today?
Thank you for the question. Again, oil price is a very strong factor. When we did our planning, we planned at fairly conservative oil prices. I think cash conversion is driven by a number of things. We are beginning to invest in the offshore business to start to see tax efficiencies come through. We stated in our plan that we would try and be below 40% of cash flow from operations. I think that still is the case. The divestment does not really change what our plan is. I think some of what we're seeing in the lower, the lower value of that divestment is already, we're not going to have to pay as much in cash calls. It almost sort of nets off, and that's why we maintain that we'll retain the $1 billion target that we've laid out for dividends.
Again, just to reiterate that even at 30%, it's a very strong business. We're very confident that we can still deliver similar levels of cash generation over the period.
Thanks, Eleanor. John, any more hands raised at all on the call?
At this time, there are still no hands raised in the conference line.
Okay. We've just got a couple more then. Just going back to the bond. What are others are thinking right now in terms of calling the $650 million bond, which is callable from March 2027? Sort of similar related questions, thinking about the growth outlook for the company and the CapEx ambition plans, how are we thinking about financing that growth? Are there any more plans to enter the bond market to finance the growth?
Thank you. Yes, we do have an opportunity to call the bond. It's going to depend on obviously many things. Our business is cash generative. You could see from our results already that we're delivering good cash, and we're deploying that to some of the activity. Into 2027, our CapEx profile will increase, and you saw that laid out in the five-year plan. We will continue to deploy some of that cash to drive growth in the business. We also have an undrawn RCF that we can also leverage. Depending on opportunities that will present itself, we could potentially go to the bond market for opportunities. It's going to obviously depend on what is available at the time that we're making that decision. Thank you.
Sort of going back a little bit to the M&A theme. Thinking about the value chain in Nigeria, how are we thinking about investing in the value chain? Are there any plans to invest in the downstream? Just thinking about our general value chain exposure in Nigeria. Specifically, are we thinking about investing in the downstream?
I think it's a bit early. Look, I would say that the company's always looking at, we've set out a three-pillar strategy. We're always looking at expanding that strategy. It's a bit early to start talking about going down the value chain, et cetera. I think that will be discussions that the company will have and then will come out in due course. Short answer, it's too early to discuss.
Okay. Very good. With that, I think we've got through all of those questions, which is very good for timing. Just a final check, John, there's no more on the call there?
Still no questions on the conference line.
Brilliant. With that, maybe I can hand over to Roger to close the call.
Well, thanks everyone. Some really good questions there. We're delighted to put out the H1 results today. It's been a great performance by the team. What we're seeing ahead of us in second half this year, we should see a lot of the production coming back on stream, we should have a strong Q3 and Q4. For me, obviously, this is my last call. I want to thank everyone. I really enjoyed it. It's been great fun. Now it'd be nice to be on the next conference call, but not actually talking on it, but actually maybe on the call asking questions. Thanks, everyone. Have a great day. Thank you.
Thanks.