San Leon Energy interim results boast a strong position

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San Leon Energy PLC‘s (LON:SLE) interim results illustrate a company with a strong financial position and outlook.

In 2020 to date, the company with investments in Nigerian oil assets received US$41.5mln in payments from operators, via loan note arrangements. Some US$88.7mln of future loan note payments remain.

With US$35.6mln in cash at the end of the half-year – US$22.6mln by September 18, 2020, after US$6.8mln was put in escrow – the company said it is positioned to invest and grow further. In early September, new deals were announced which will see San Leon secure an interest in the Oza field, onshore Nigeria.

“Whilst the world and the industry has been through turbulent times, we have taken advantage of the opportunities presented by this as well as utilising our cash position to further build our portfolio in Nigeria in line with our strategy,” Oisin Fanning, San Leon’s chief executive said in the results statement.

READ: San Leon invests in Oza oil field

Fanning added: “Our strong position is expected to continue in the year ahead as we receive further loan note payments and deliver upon our strategy.”

San Leon paid out US$35.3mln to shareholders in the first half of 2020 and in May it announced that a US$33.3mln special dividend would be paid – representing a dividend yield of about 30% at that time – and a US$2mln share repurchase programme was completed early in the reporting period.

Also in May, Fanning purchased 98mln San Leon shares, taking his shareholding to 24%.

Operationally, at underlying asset level, the company noted that its associate Eroton has improved capital discipline in the wake of the coronavirus (COVID-19) pandemic and lower oil prices.

A three-well drill programme was completed in the early part of the year though the completion and flow of these wells were impacted by COVID-19 restrictions, and subsequently, Eroton decided to defer its next drill programme – now slated for late 2021.

Eroton delivered an average of 25,200 barrels of oil per day to the Bonny terminal during the first half of 2020. San Leon noted that operations in Nigeria continue to be impacted by pipeline losses and downtime, an impact of around 32%.

Production downtime was reported as 15% for the first half with the causes occurring via third party terminal and gathering system issues. Albeit, the company noted that the pipeline losses experienced by the Bonny terminal’s operator have been stable over the past year.

San Leon said that such issues are substantially resolved by a new pipeline that will run from the OML 18 operation out-to-sea to a dedicated floating storage and offloading (FSO) vessel some 50 kilometres offshore.

The new route market is expected to start in the ‘the coming quarters’, San Leon added.

San Leon reported a US$20.3mln loss from continuing operations, although it noted that the figure did not reflect the cash received via loan note payments during the period.

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