Power for Nigeria - Seven Energy/media/Files/S/Seven-Energy/reports-and... · Seven Energy is an indigenous Nigerian oil and gas exploration, development and production company with

Power for NigeriaSeven EnergyAnnual Review 2012

Seven Energy is an indigenous Nigerian oil and gas exploration, development and production company with a vision to be the leading supplier of gas to the domestic market for power generation and industrial usage.

Our objective is to exploit first mover advantage as a supplier to the domestic gas market in our core operating areas and to maximise shareholder value through sustainable long-term growth across the full value chain.

Our business model is designed to capture the full value chain from upstream appraisal, development and production, to ownership of processing and distribution infrastructure and marketing to end users. This model is supported by an experienced management team, high standards of corporate governance and social responsibility and underpinned by a robust capital structure.

Headquartered in Lagos and London, Seven Energy has an upstream reserves and resources base of in excess of 350 MMboe, midstream processing and distribution capacity of 200 MMcfpd and long-term gas sales agreements in place to supply over 1 Tcf of gas to the domestic market.

ContentsIFC About Us 01 Highlights02 Asset Overview04 Opportunities

for Growth06 Reserves and Resources07 Midstream Activities08 Integrated Business

Model12 Chairman’s Statement 14 Chief Executive’s

Statement19 Key Performance

Indicators20 Financial Review 22 Risk Management 24 Governance & People28 Glossary of Terms

01Seven EnergyAnnual Review 2012

Revenue$ million

+18.0%2010 2011 2012

86.8

0.0

102.4

EBITDA$ million

2010 2011 2012

7.7

-64.0

33.9

+340.2%

Capital expenditure$ million

2010 2011 2012

223.7 215.1232.0

+7.9%

HighlightsFirst 100 MMcfpd train of Uquo Gas Processing Facility and 62 km pipeline to Ibom Power station commissioned

Right of Way acquired and route cleared for 37 km pipeline to supply gas to Calabar NIPP power station

Successful 35 MMcfpd well test on the Uquo Field

Stubb Creek Field development progressed with Early Production Facilities installed

Increased production and revenues: 2012 net production entitlement increased 46.8% to 3,092 bopd from 2,106 bopd

Net 2P + 2C reserves and resources increased 24.3% to 363 MMboe

$33.9 million EBITDA, an increase of 340.2% over 2011

Nil Total Recordable Injury Rate

Lagos

Benin City

Port Harcourt

Calabar

OML 41

Warri

Forcados

OML 4

OML 38

OML 56

OML 13

OML 14

Qua Iboe

Calabar NIPP

Ibom Power

Uquo Stubb CreekIkot Abasi

Aba

Oron

Matsogo

Oben

north west

south east

Sapele OkporhuruAmukpe

Ovhor

kilometres 1000

Seven Energy’s interests

Export terminal

Gas pipeline

Oil pipeline

Seven Energy gas pipeline (under construction)

Third party gas pipeline (under construction)

Power plant

02 Seven EnergyAnnual Review 2012

Asset Overview

OMLs 4, 38 and 41Indirect interest through Strategic Alliance Agreement with NPDC

Seven Energy pays NPDC’s 55% share of costs, provides technical input and receives cost recovery volumes plus a share of incremental production

Operator: Seplat Petroleum

Gross 2P + 2C reserves and resources of 350 MMbbl of oil and over 2 Tcf of gas

2012 gross production averaged 33,400 bopd

Includes Oben, Amukpe, Ovhor, Sapele and Okporhuru producing fields

Ongoing drilling, development and facilities expansion programme

Matsogo Marginal Field in OML 56, 49% interest

Operator: Chorus Energy

Development options under review

Seven Energy has two core areas of operation in the north west and south east onshore Niger Delta.

Lagos

Benin City

Port Harcourt

Calabar

OML 41

Warri

Forcados

OML 4

OML 38

OML 56

OML 13

OML 14

Qua Iboe

Calabar NIPP

Ibom Power

Uquo Stubb CreekIkot Abasi

Aba

Oron

Matsogo

Oben

north west

south east

Sapele OkporhuruAmukpe

Ovhor

kilometres 1000

Seven Energy’s interests

Export terminal

Gas pipeline

Oil pipeline

Seven Energy gas pipeline (under construction)

Third party gas pipeline (under construction)

Power plant


Nigeria

Niger Delta

Uquo Marginal Field in OML 13, 40% interest

Operator: Frontier Oil

Seven Energy pays 100% of costs and receives enhanced revenue share until payback

Gross 2P + 2C reserves and resources of in excess of 600 Bcf

Production commencing 2013

Stubb Creek Marginal Field in OML 14, 51% interest

Operator: Universal Energy (62.5% owned by Seven Energy)

Gross 2P + 2C reserves and resources of 20 MMbbl of oil and in excess of 400 Bcf of gas

Production commencing 2013

Development plans in progress for gas resources

Gas marketing, processing & distributionTwo long-term gas sales agreements with Ibom Power station and Calabar NIPP power station

200 MMcfpd Uquo Gas Processing Facility

62 km 18-inch Uquo-Ikot Abasi pipeline to supply Ibom Power station

37 km 24-inch Uquo-Oron pipeline under construction to supply Calabar NIPP power station


4,803Per capita electric power consumption (2010)kWh/person

EgyptAlgeria Libya South AfricaNigeria

1,6081,026

136

4,270

Nigerian demand for gasBcfpd

20152012

West African gas pipeline

Local gas distribution

Large industry

Power

2020 2025

1.82.7

4.5

6.7

Opportunities for Growth

Nigeria presents significant opportunities for growth, particularly for gas, with expected continued strong demand and infrastructure development. With the largest population and one of the fastest growing economies in Africa, there is now an increased focus by the Federal Government on developing power infrastructure to support economic growth.

+11.4%Forecast increase in gas demand p.a. 2012–2025

180 TcfGas reserves – largest in Africa

Sources: World Bank, Poten & Partners, US Energy Information Administration


2.65

23.09Price benchmarking – power generation$/MMbtu

Ibom Power station

Calabar NIPP power station

Seven Energy’s average sales price $2.50/Mcf

Diesel

2.00

+6.7%Forecast average GDP growth from 2012–2017

160 millionNigerian population – largest in Africa

Nigeria is one of the fastest growing economies in Africa with real GDP growing at a compound average growth rate of 8.6% from 2000 to 2012 and projected GDP growth at a compound annual growth rate of 6.7% between 2012 and 2017. It has a large, young and urbanising population of 160 million people, making Nigeria the most populous country in Africa.

Although strong, the pace of economic development has been constrained due to a lack of investment in Nigeria’s power infrastructure. With low levels of installed power capacity of approximately 6 GW, Nigeria has significantly lower per capita electric power consumption than other major African countries (at 136 kWh per person).

Despite being the largest producer of crude oil and having the largest proven gas reserves (180 Tcf) in Africa, Nigeria imported approximately 62% of its consumed petroleum products, principally in the form of diesel, the bulk of which is used in electricity generation. Domestically produced gas has a significant price advantage over imported diesel fuel, with the current average tariff for Seven Energy’s gas sales to power stations being approximately one tenth of the current cost of diesel.

Recognising the need to significantly expand domestic power generation capacity, the Federal Government is seeking to implement power sector reforms, with domestic gas utilisation as a central part of this strategy. Under the Gas Master Plan, the Federal Government is seeking to increase installed power capacity to 40 GW by 2020, with the majority of this additional capacity expected to come from newly constructed gas fired power plants. Owing to the significant price differential between domestically produced gas and imported refined petroleum products (in particular diesel) and the expected growth in demand for domestic energy, demand for gas is projected to grow from 1.8 Bcfpd in 2012 to 6.7 Bcfpd by 2025.

Seven Energy, as an integrated gas business in the Niger Delta, has a substantial first mover advantage, given that the barriers to entry for new competitors are considerable by virtue of the capital expenditure required and time it would take to replicate Seven Energy’s business model. As such, Seven Energy is well positioned to capitalise on the projected market opportunities in Nigeria for gas.


Oil vs Gas: 2P + 2C

Oil39%

Gas61%

2P + 2C reserves

2P218 MMboe(1,310 Bcfe)

2C145 MMboe(870 Bcfe)

2008 – currentMMboe-net

2008

400

300

200

100

0

201120102009

157

997

62171

121

218

145

Current2P reserves 2C resources

Reserves and Resources

Since its inception in 2004, Seven Energy has a strong record of reserves growth with 2P reserves as at 31 March 2013 of 218 MMboe, and 2P+2C reserves and resources of 363 MMboe.

Reserves and resources

5 years of growth

Based on independent audit


Calabar

OML 14/OPL 276

Oron

OML 13

62 km

37 km

23 km

Stubb Creek

Uquo

Qua IboeTerminal

Aba

Uyo

Calabar NIPPpower station

Ibom Power station

Port Harcourt

Ikot Abasi

Seven Energy licence areas

Seven Energy oil and gas fields

Seven Energy gas pipeline

Seven Energy gas pipeline(under construction)

Seven Energy oil pipeline

East Horizon gas pipeline

NGC gas pipeline

Third party gas pipeline(under construction)

Export terminal

kilometres 300

Demand areas

Power plant

South East Niger Delta Infrastructure and Assets

Midstream Activities

Accugas is Seven Energy’s gas marketing, processing and distribution business focused on supplying gas to the domestic market.

The Accugas business model has two components:

– processing and distributing gas from the upstream activities of its affiliates, currently comprising the Uquo and Stubb Creek Fields; and

– processing, distributing and marketing gas for upstream partners and third parties.

Accugas currently has two long-term take-or-pay gas sales agreements in place to sell over 1 Tcf of gas: a 10-year contract to supply 43.5 MMcfpd to Ibom Power station, and a 20-year contract to supply 131 MMcfpd to Calabar NIPP power station.

Accugas owns the Uquo Gas Processing Facility for processing gas from the Uquo and Stubb Creek Fields. The processing facility comprises two trains: Train 1, which was completed in 2012 and has the capacity to process 100 MMcfpd; and Train 2 which is due for completion in 2013 and will double the processing capacity to supply the 560 MW Calabar NIPP power station which is currently under construction and nearing completion.

The first leg of the distribution infrastructure, a 62 km 18-inch pipeline from Uquo to Ikot Abasi to deliver gas to the 190 MW Ibom Power station, was completed in 2011. This pipeline has transportation capacity of over 200 MMcfpd and was commissioned in Q1 2013. An additional 37 km 24-inch pipeline from Uquo to Oron is under construction to supply gas to the 560 MW Calabar NIPP power station.

With spare capacity built into its processing and distribution infrastructure, Accugas is capable of providing a long-term supply of gas to additional offtakers for power generation and lower cost fuel for local industry. This is leading to an influx of inward investment opportunities for gas-based enterprises in the south east Niger Delta and Accugas is working closely with those partners to help them realise their projects.


Integrated Business Model

Vision & objectiveOur vision is to be the leading supplier of gas to Nigeria’s domestic market for power generation and industrial usage.

Our objective is to exploit first mover advantage in the south east region to maximise shareholder value through sustainable long-term growth across the full value chain.

Delivered Delivered

Acquisition of over 300 MMboe of 2P+2C reserves and resources

Successful appraisal drilling of Uquo Field

Gas sales agreements secured for in excess of 1 Tcf

$225 million of long term project finance secured for infrastructure development

Uquo Field developed with three wells drilled and completed

Stubb Creek Field under development

Increasing production from OMLs 4, 38 and 41

First 100 MMcfpd train of Uquo Gas Processing Facility commissioned in early 2013

62 km Uquo – Ikot Abasi pipeline constructed and commissioned

10-year take-or-pay contract for 43.5 MMcfpd with Ibom Power station

20-year take-or-pay contract for 131 MMcfpd with Calabar NIPP power station

Near term Near term

Exploration well planned on Uquo licence area with over 600 Bcf of unrisked prospects identified

Additional offtakers of pipeline gas

Appraisal of Stubb Creek gas field

Uquo Field on production in 2013, with gross field production planned to increase to 175 MMcfpd in 2014

Stubb Creek oil field to come on production in 2013

Ongoing development of OMLs 4, 38 and 41

Second 100 MMcfpd train of Uquo Gas Processing Facility nearing completion

37 km Uquo – Oron pipeline under construction for targeted completion in 2014

Leverage spare capacity in existing infrastructure with gas sales to light industrial customers close to existing pipelines

Long term Long term

Acquisition of strategically located reserves and resources

New licence applications

Develop expertise or strategic partnerships for alternative gas markets (e.g. CNG, Floating LNG)

Development of Stubb Creek gas field Installation of incremental processing capacity driven by gas demand

Expansion of pipeline network to reach new demand centres

Expanded marketing effort to access Port Harcourt and Aba markets

Develop CNG and Floating LNG capability

$0.18/Mcfe 2P+2C reserves and resources average acquisition cost

over 600 Bcfegross contingent resources converted to reserves through commercialisation

175 MMcfpdgross field production from Uquo expected by end of 2014

Gas value chain

Reserves & resources Commercialisation Development

& production

Measuring our progress – our strategy in action


Business modelSeven Energy’s business model is designed to capture the full gas value chain from upstream exploration and development, through the ownership of processing and distribution infrastructure, to marketing to end users. This model is supported by an experienced management team, high standards of corporate governance and social responsibility and underpinned by a robust capital structure.

Delivered Delivered

Acquisition of over 300 MMboe of 2P+2C reserves and resources

Successful appraisal drilling of Uquo Field

Gas sales agreements secured for in excess of 1 Tcf

$225 million of long term project finance secured for infrastructure development

Uquo Field developed with three wells drilled and completed

Stubb Creek Field under development

Increasing production from OMLs 4, 38 and 41

First 100 MMcfpd train of Uquo Gas Processing Facility commissioned in early 2013

62 km Uquo – Ikot Abasi pipeline constructed and commissioned

10-year take-or-pay contract for 43.5 MMcfpd with Ibom Power station

20-year take-or-pay contract for 131 MMcfpd with Calabar NIPP power station

Near term Near term

Exploration well planned on Uquo licence area with over 600 Bcf of unrisked prospects identified

Additional offtakers of pipeline gas

Appraisal of Stubb Creek gas field

Uquo Field on production in 2013, with gross field production planned to increase to 175 MMcfpd in 2014

Stubb Creek oil field to come on production in 2013

Ongoing development of OMLs 4, 38 and 41

Second 100 MMcfpd train of Uquo Gas Processing Facility nearing completion

37 km Uquo – Oron pipeline under construction for targeted completion in 2014

Leverage spare capacity in existing infrastructure with gas sales to light industrial customers close to existing pipelines

Long term Long term

Acquisition of strategically located reserves and resources

New licence applications

Develop expertise or strategic partnerships for alternative gas markets (e.g. CNG, Floating LNG)

Development of Stubb Creek gas field Installation of incremental processing capacity driven by gas demand

Expansion of pipeline network to reach new demand centres

Expanded marketing effort to access Port Harcourt and Aba markets

Develop CNG and Floating LNG capability

$0.18/Mcfe 2P+2C reserves and resources average acquisition cost

over 600 Bcfegross contingent resources converted to reserves through commercialisation

175 MMcfpdgross field production from Uquo expected by end of 2014

Seven Energy’s strategyAcquire controlling interests in low cost undeveloped gas fields with clear near-term monetisation opportunities

Secure long-term offtake agreements with credit worthy customers

Build and operate processing and distribution infrastructure in strategic locations

Acquire strategically located oil reserves with near-term cashflow potential and gas resource upside

Focus on secure areas of operation in the Niger Delta

Processing Distribution Marketing



Seven Energy’s wholly owned gas marketing, processing and distribution subsidiary, Accugas, has constructed this gas processing plant near the Uquo field in Akwa Ibom State, Nigeria. The two train plant has a processing capacity of 200 MMcfpd of gas and 2,000 bopd of oil.


Chairman’s Statement

We have achieved a number of major project milestones, increased our production and reserves and significantly improved our financial performance.

As an indigenous oil and gas company with a unique focus on gas, our vision is to be the leading supplier of gas to Nigeria’s domestic market.

Nigeria’s domestic gas market is poised for significant expansion over the next ten years, stimulated by GDP growth and power sector investment and reforms to address the country’s chronic power shortages. Our integrated business model covering the spectrum from upstream field appraisal and development to downstream gas distribution and marketing aims to capture value across the entire gas supply chain, and provides Seven Energy with a competitive advantage in exploiting this domestic gas market opportunity.

Full year 2012 and the early part of 2013 has seen continued progress in executing our business plan in pursuit of our vision. We have achieved a number of major project milestones, increased our production and reserves, and significantly improved our financial performance.

Project updateIn December 2012, we commenced commissioning of the first train of the Uquo Gas Processing Facility with nameplate capacity of 100 MMcfpd and the 62 km pipeline to Ikot Abasi to supply gas to the 190 MW Ibom Power station. Nominations for delivery under this 10-year, 43.5 MMcfpd take-or-pay contract commenced in March 2013 and first commercial deliveries are expected to commence mid-year following completion of a major maintenance programme at Ibom Power station.

In January 2013, the Final Investment Decision was made to proceed with the second phase of the Uquo Field development in order to supply 131 MMcfpd of gas under a 20-year take-or-pay contract to the 560 MW Calabar NIPP power station. This second phase of the Uquo Field development involves the construction of a 37 km pipeline from Uquo to Oron, installation of additional processing capacity to the Uquo Gas Processing Facility and the drilling of three additional supply wells on the Uquo Field.

Good progress is already being made with the second, 100 MMcfpd, train of the Uquo Gas Processing Facility nearing completion. The Right of Way land acquisition for the Oron pipeline and the Right of Way clearance are complete and pipe laying activities are scheduled to commence before the end of 2013.

Development of the Stubb Creek oil field is still ongoing but progress has been slower than planned due to on-site construction delays and delayed access to tie-in to ExxonMobil’s Qua Iboe terminal. First production from the Stubb Creek Field is now being targeted for the third quarter of 2013.

Operating updateField operations during 2012 were exclusively focused on OMLs 4, 38 and 41 in which we have a participating interest through our Strategic Alliance Agreement with NPDC, a subsidiary of the national oil company. Under the terms of our Strategic Alliance Agreement with NPDC, we receive cost recovery in the form of lifted barrels and are entitled to a share of incremental production above a defined baseline.

$33.9 millionEBITDA

NilTotal Recordable Injury Rate (TRIR)


Corporate social responsibilityWe aim to conduct our business in a responsible and transparent fashion and we remain committed to sustainability and the health, safety and security of our workforce and the communities in which we operate. By the end of 2012, we had reached six million man hours without a Lost Time Incident, no environmental issues or major security incidents were reported and we continued to work with our host communities to provide employment, education, training and essential infrastructure.

In addition, the land acquisition programme for the Right of Way acquisition was implemented in accordance with the International Finance Corporation’s Performance Standard for Land Acquisition and Involuntary Resettlement.

Financial performanceI am pleased to be able to report significantly improved financial performance in 2012 with revenues 18.0% higher at $102.4 million (2011: $86.8 million), EBITDA 340.2% higher at $33.9 million (2011: $7.7 million) and a significantly reduced loss for the year of $6.6 million (2011: $26.9 million). Net cash flow generated from operations was $77.8 million (2011: $34.6 million net outflow) with capital expenditure incurred amounting to $232.0 million (2011: $215.1 million).

During 2012 and the first part of 2013, we secured over $340.0 million of additional capital arranged through a combination of equity, long term project finance, listed convertible bonds and short-term working capital with a further $280.0 million arranged. We have also refinanced our existing debt facilities to increase the availability of capital and to extend their maturity dates. Further details of our funding activities are provided in the Financial Review.

Board and senior managementWe are committed to good Corporate Governance and have continued to strengthen the Board and senior management during 2012 and 2013. At Board level, Osam Iyahen, Atul Gupta and Robin Pinchbeck were appointed as Non-executive Directors, Michael Lynch-Bell was appointed as an independent Non-executive Director and Clare Spottiswoode and Fidelis Oditah were appointed as independent Board Advisers. In January 2013, I assumed the role of Non-executive Chairman, allowing Phillip Ihenacho to focus on the role of Chief Executive Officer. The senior management team has also been strengthened with the recruitment of Jeff Corey as Chief Operating Officer, based in our Lagos office, who joined us in January 2013 after over 25 years of service with ConocoPhillips. We have also strengthened our Nigeria team with senior appointments in the areas of operations, asset management and QHSSE.

OutlookCommissioning of the first phase of the Uquo Field development was a major milestone for the Group, but the second phase to supply gas to the Calabar NIPP power station is, in many ways, a transformational project for Seven Energy and will be the principal focus during the second half of 2013. The experience gained to date on our infrastructure capital projects, together with the organisational changes we have made, will be invaluable to delivering the Calabar project on schedule and on budget by mid-2014. An extensive appraisal, development and workover drilling programme and facilities de-bottlenecking programme is also in progress on OMLs 4, 38 and 41, with the operator targeting gross field production of 60,000 bopd by the end of 2013. We are now looking to expand our upstream asset portfolio and infrastructure network in the Niger Delta to provide long term production, reserves and earnings growth and to enhance shareholder value.

Finally, at the beginning of my tenure as Chairman of Seven Energy, I would like to give my appreciation to all our shareholders for their continued support and my thanks to our management and employees for their commitment and efforts over the last year.

Dr Andrew Jamieson OBEChairman


Uquo Prospects

Uquo 2

Uquo 3 Attic

Uquo 4

Uquo 2

Uquo 1

Uquo 5

Uquo 3

Uquo 1N

Uquo 1 NE

Uquo 1SE

Uquo 3 E

Uquo 3 S

Uquo 3 W

Uquo 3 Ext

Uquo 2W

3D Seismic area

Uquo field concession

kilometres 40Prospective reservoirs

B Sand

C Sand

D Sand

C+D Sand

U Sand

2D Seismic

Chief Executive’s Statement

During the year, we have strengthened our management team and, as we move into operational mode, we have broadened our skills base with a highly professional and experienced team in Nigeria comprising 95% Nigerian nationals.

Our three years of intensive development work in the south east Niger Delta to develop the infrastructure to process and transport gas to regional power stations have now delivered results with gas having been introduced into our Uquo Gas Processing Facility for the first time in December 2012. Our primary objective of exploiting gas for use in the domestic market is now bearing fruit, with gas nominations to the Ibom Power station having commenced, and construction work to deliver power to the Calabar NIPP power station in 2014 now well underway.

Our Strategic Alliance Agreement with NPDC, covering three oil producing blocks in the north west Niger Delta, has gone from strength to strength, with field production having almost trebled since we first entered the project.

Upstream development & productionUquo FieldIn the second quarter of 2013, the Uquo-4 well was re-entered and recompleted to increase gas deliverability for our

commercial supply to the Ibom Power station. A 60ft interval was tested at 35 MMcfpd, a rate that was in line with expectations and confirmed the excellent characteristics of the reservoir. This is a very good start to our planned drilling programme of three new wells later in 2013.

First gas was produced for testing and commissioning purposes on 29 December 2012. Initial gas production is dedicated to supply the Ibom Power station via our 62 km 18-inch pipeline to Ikot Abasi. This will be followed in 2014 by deliveries to the Calabar NIPP power station for which development work is now underway. The full field development of the Uquo Field includes the three currently completed wells, three wells planned for later this year and at least three further development wells to provide planned plateau production of approximately 200 MMcfpd. A number of exploration prospects have been identified on the block, with unrisked resources of some 600 Bcf. An exploration well is planned within the upcoming drilling programme.

35 MMcfpdwell test on Uquo Field

$102.4 millionRevenue in 2012

The Uquo Field, which was discovered by Shell in 1958, lies within OML 13 licence area. Since that time, five wells have been drilled, all of which have encountered hydrocarbons, with the most recent well having been drilled in 2008. In 2010, the Uquo-3 and Uquo-2 wells were re-entered, tested and confirmed to have very good reservoir characteristics with high porosity and permeability. The Uquo-3 re-entry also confirmed the presence of an oil sand that flowed at rates of up to 950 bopd.


Uquo Field

Stubb CreekField

Uquo Gas Processing

Facility

37 km24-inch pipeline

(under construction)

8 km4-inch

pipeline

2 km4-inch

pipeline




(under construction)

Oron tie-in

62 km 18-inch pipelineIbom

Power station190MW

Calabar NIPP power station

560MW

GasReceiving

Facility

Qua IboeTerminal

FUNManifold

Stubb CreekEarly Production

Facility

Key

Gas pipeline

Oil pipeline

Oil well

Oil and gas well

Gas well

South East Area Facilities Overview

Oil production from the Uquo-3 well, and condensate produced with the gas, will be delivered to ExxonMobil’s Qua Iboe Terminal via a 8 km pipeline and a manifold that collects oil from the Uquo Field, the Stubb Creek Field and another third party field, ready to deliver to the terminal. This manifold is in the final stages of completion, with work to connect within ExxonMobil’s Qua Iboe Terminal ongoing.

Stubb Creek FieldThe Stubb Creek Field is located close to the Uquo Field in Akwa Ibom State. The field lies within the OPL 276 (formerly OML 14) licence area near the mouth of the Cross River and was discovered by Shell in 1971.

To date, a total of nine wells have been drilled on the field. Four exploration and appraisal wells were drilled by Shell between 1971 and 1983. Subsequent to the award of the field in 2003, Universal Energy undertook a 3-D seismic survey in 2006 and subsequently five development wells were drilled, tested and completed between 2007 and 2009.

Development activities on the Stubb Creek Field have advanced over the past year with the installation of an Early Production Facility. This is connected by a 23 km 6-inch pipeline to the FUN Manifold. The development is now almost complete, with the facilities fully installed, a water disposal well and a water source well drilled, and the flowlines connecting the wells to the Early Production Facility completed.

Production will start later in the year and will be increased to the 2,000 bopd capacity of the Early Production Facility by the year end. An expansion of the production facilities is being considered to increase field production to 8,000 bopd. Associated gas produced from the Stubb Creek Field will be transported via a 31 km 6-inch pipeline, already in place, to the Uquo Gas Processing Facility.

Plans are underway to develop the 400 Bcf gas resources at the field which will likely see the gas transported to the Uquo Gas Processing Facility for processing.


North West Niger Delta Development and Production

Chief Executive’s Statementcontinued

OMLs 4, 38 and 41During 2012, average gross production from these licenses amounted to 33,400 bopd from the four producing fields (Oben, Amukpe, Ovhor and Sapele). Daily production rates in excess of 40,000 bopd were regularly achieved during the latter part of the year, although overall production was affected by shutdowns to the Trans Forcados Pipeline.

During the first four months of 2013, gross production averaged 51,300 bopd. This increase was a result of the successful well workover and drilling programme that is on-going on the fields. The installation of two additional Ovhor bulk lines has increased the flow rate of the Ovhor wells feeding into the Sapele flow-station. Eight wells were worked over in 2012 and eight

new wells were drilled. During 2012, the Okporhuru field, a field first discovered in 1982, was appraised and developed and brought on stream in early May 2013 adding 4,000 bopd production.

A substantial development programme is ongoing with 10 new wells planned to be drilled and six existing wells to be re-entered during 2013. This plan is targeting production of 60,000 bopd by the end of the year, a rate that has already been achieved in 2013. This early success confirms both the effectiveness of the work programme and the quality of the reservoirs with the operator aiming for production of 100,000 bopd by 2016.

OML 4 covers 267 km2 with a single producing field (Oben)

OML 38 covers 2,094 km2 with three producing fields (Amukpe, Ovhor and Okporhuru) and additional undeveloped and unappraised discoveries. The two largest undeveloped discoveries are Mosogar and Okwefe

OML 41 covers 291 km2 and contains two producing fields (Sapele and Ovhor) and two discoveries (Okoporo and Ubaleme)

OML 41

OML 4

OML 38OML 56

Okoporo

Ubaleme

Benin River

Oriomu

Mosogar

Omoja

Okwefe Ijomi

Okporhuru

Orogho

Olokun

Nugu

Umutu

Asuokpu

Ogume

Matsogo

Oben

AmukpeOvhor

Sapele

kilometres 200

Seven Energy licence areas

NPDC strategic alliance licence areas

Oil field

Gas field

Prospect/discovery

Gas pipeline

Oil pipeline


Accugas: Gas marketing, processing and distributionDuring 2012, Accugas completed the construction of the first train of the Uquo Gas Processing Facility and gas was introduced into the plant on 29 December 2012. During the first weeks of 2013, the first train was fully tested and commissioned, along with the 62 km 18-inch Uquo to Ikot Abasi pipeline, whose construction was completed in 2011. In March 2013, nominations for deliveries to the Ibom Power station also commenced. The introduction of high pressure gas into the Uquo Gas Processing Facility and the pipeline have been accompanied by a focused education programme along the pipeline Right of Way to ensure the safety of residents along the route and security of supply to the Ibom Power station.

The decision to proceed with the construction of a 37 km 24-inch pipeline from Uquo to Oron was taken in mid-2012 and since that time the Right of Way has been established over the route and the land acquired in accordance with the International Finance Corporation’s Performance Standard for Land Acquisition and Involuntary Resettlement. This land acquisition was a complex process that involved the signing of Memoranda of Understanding with the local communities and individual compensation transactions with over 900 landowners. The planned route has now been cleared and the land profiled ready for installation of the pipeline during the 2013/14 dry season. This line will connect to a 24-inch pipeline from the Calabar NIPP power station to Oron that is being constructed by Calabar NIPP and will complete the connection of our Uquo Gas Processing Facility to the Calabar NIPP power station. In parallel with this work, Accugas has been completing the construction of the second train of the Uquo Gas Processing Facility to provide the additional capacity to supply 131 MMcfpd to the Calabar NIPP power station in 2014.

2013 ProgrammeOMLs 4, 38 and 41 10 new wells are planned to be drilled and six existing wells will be re-entered

Uquo Field • First production and deliveries

to the Ibom Power station• Three well drilling programme• Completion of Train 2 of Uquo

Gas Processing Facility• Construction of Uquo to

Oron pipeline

Stubb Creek Field• Completion of 2,000 bopd production

facilities and first production• Planning of facilities expansion

Completion of this second stage of the Accugas project will provide the area with a significant piece of gas processing and distribution infrastructure, spanning from Rivers State in the west, through Akwa Ibom State, to the significant demand centre at Calabar in Cross River State in the east. It is our plan for Accugas to continue our engagement with additional identified customers both to the east and the west in order to maximise the use of its infrastructure and to serve the industrial customer base. The attraction of using gas rather than diesel for large energy consumers is compelling, with the price of gas being a tenth of the price of diesel, providing a strong platform for Accugas to develop its business.

Summary and outlookOver the past year, we have brought a major gas infrastructure project and upstream field development to the point of first production. Moving forward, we plan to capitalise on this progress and, combined with our knowledge of the gas market in Nigeria, to further develop our reach in the south east Niger Delta by expanding our customer base in the region and supplying gas from our own resources or through processing and transporting third party gas.

Likewise our Strategic Alliance Agreement with NPDC has produced benefits both for Seven Energy and for NPDC with previously underexploited fields in the north west Niger Delta being developed to their potential. Our work programme will be to fully develop these fields and we will seek to optimise gas monetisation opportunities in the domestic market.

Phillip IhenachoChief Executive Officer


Flare stack at the Uquo Gas Processing Facility


Operating cash flow$ million

2010 2011 2012

77.8

-32.0 -34.6

2010 2011 2012

33,400

24,000

31,300

Gross productionBopd

2010 2011 2012

1,115

159 159

Contracted gas volumesBcf

2010 2011 2012

0.0

0.8

0.2

Total Recordable Injury RateTRIR

DefinitionCash flow from operations, before capital expenditure and financing activities.

RelevanceIndicator of Seven Energy’s efficiency in generating cash from its business.

OutlookContinued growth expected with the Stubb Creek and Uquo Fields commencing production and further development of OMLs 4, 38 and 41.

Risk managementTight financial and operational controls over expenditure and monitoring of cashflows to drive positive cash generation from activities.

DefinitionField oil production.

RelevanceUnderpins the value of Seven Energy’s portfolio of assets and indicates production growth from existing assets.

OutlookSignificantly increased gross production expected with the Uquo and Stubb Creek Fields coming on line in 2013, increasing further in 2014 with deliveries to Calabar NIPP.

Risk managementContinued geological assessment and evaluation of Seven Energy’s portfolio of assets. Close monitoring and planning of production performance and asset security to guard against unplanned interruptions or project delays.

DefinitionTotal volume of gas contracted over the remaining life of the contracts.

RelevanceSupports Seven Energy’s long term revenue and cash generation from its portfolio of assets.

OutlookExpected to increase with additional gas sales contracts, supported by additional gas reserves and purchases of third party gas.

Risk managementDetailed monitoring of supply and demand constraints (reserves processing and delivery capacity).

DefinitionThe recognised industry metric, calculating the number of recordable incidences per million man hours work.

RelevanceDirect measure of safety performance and well established benchmark, as published annually by the Oil & Gas Producers Association.

OutlookSeven Energy continues to monitor TRIR closely and to benchmark against industry standards and other operators present in Nigeria. Seven Energy is committed to continuously improve its QHSSE performance.

Risk managementClose and ongoing review of all QHSSE policies and procedures and applications thereof, including rigorous incident reporting (including incident analysis, follow-up, remedial action and communications of learning).

Key Performance Indicators

Our key performance indicators record a spread of financial and operational measures in order for us to manage our business performance. Additional measures will be introduced once we commence gas production in 2013.


Revenue$ million

2010 2011 2012

86.8

0.0

102.4

EBITDA$ million

2010 2011 2012

-64.0

7.7

33.9

Financial Review

RevenuesIn 2012, revenue increased by 18.0% to $102.4 million (2011: $86.8 million), due to increased liftings under the Strategic Alliance Agreement with NPDC. In 2012, Seven Energy sold 918,676 barrels at an average price of $112 per barrel (2011: 768,740 barrels at $113 per barrel).

EBITDAEBITDA increased by $26.2 million to $33.9 million (2011: $7.7 million), an increase of 340.2%. The significant improvement was largely due to increased production entitlements from the Strategic Alliance Agreement with NPDC and reduced cost of sales, other costs and administrative expenses.

Finance costs and taxUnderlying finance costs increased to $32.8 million (2011: $12.4 million), primarily as a result of the issue of a convertible bond, the full year impact of the reserve based lending facility (“RBL”) and interest incurred on the Group’s working capital facility. Net finance costs were $18.7 million (2011: $6.8 million) whilst capitalised interest amounted to $14.1 million (2011: $5.7 million).

The Group incurred a tax charge of $1.8 million compared to $14.7 million in 2011, which included $13.0 million of deferred tax following a re-assessment of the tax rate applicable to a deferred tax liability.

Loss for the yearThe loss after tax for the year ended 31 December 2012 was $6.6 million (2011: $26.9 million).

Capital expenditureSeven Energy has continued to undertake significant infrastructure investments and during the year to 31 December 2012 the Group’s total expenditure amounted to $232.0 million (2011: $215.1 million). Of this, $131.3 million (2011: $188.8 million) related to the Uquo Field development and related infrastructure. The Group’s share of on-going capital expenditure on OMLs 4, 38 and 41 increased to $85.2 million (2011: $14.4 million). The Stubb Creek field development incurred capital expenditure of $11.0 million (2011: $8.9 million) whilst $1.0 million was spent on the Matsogo Field (2011: $0.5 million).

+18.0%Increase in 2012 revenues to $102.4 million (2011: $86.8 million)

$33.9 million2012 EBITDA – an increase of 340.2% (2011: $7.7 million)

2012 has seen significantly improved financial performance and continued investment in major infrastructure projects to create long-term value for stakeholders. Our capital structure has been strengthened to enable these investments and to ensure that the business is well positioned for future growth.


Cashflows and cashOperating cashflows improved by $112.4 million to $77.8 million (2011: outflows of $34.6 million) whilst the net inflow in cash and cash equivalents during 2012 was $20.2 million (2011: outflows of $55.0 million). As at 31 December 2012, the Group had cash balances of $32.2 million (2011: $12.7 million).

Financing and capital structureDuring 2012 and into 2013, we have strengthened the Group’s capital structure through the raising of additional equity and securing new and enlarged debt facilities with a balance of maturity profiles.

Seven Energy’s equity capital structure comprises ordinary shares and irredeemable convertible loan notes (“ICLNs”) and in 2012 an additional $77.4 million of equity was raised by way of a rights issue of ICLNs to existing security holders.

The Group’s current debt structure comprises a mixture of long term project finance, a medium term Reserve Based Lending facility, a pre-IPO convertible bond and shorter term debt, including a revolving working capital facility. These are summarised below, taking into account new facilities arranged since 31 December 2012 and the re-sizing of some existing facilities:

Summary of current debt facilitiesFacility

$m

Drawn at 31 December

2012$m Maturity date

Project finance to fund Accugas processing and pipeline infrastructure1 225.0 55.0 September 2019

RBL to fund the development of OMLs 4, 38 and 412 150.0 56.2 December 2017

Naira 1.5 billion term loan provided by Akwa Ibom Investment and Industrial Promotion Council for Stubb Creek Field development 9.9 9.9 September 2017

Term loan to provide funding for OMLs 4, 38 and 413 40.0 – March 2017

10% Convertible Bond listed on the Cayman Islands Stock Exchange4 150.0 121.2 December 2014

Working capital facility 40.0 35.0 March 2014

$232.0 million2012 capital expenditure (2011: $215.1 million)

$77.8 millionOf operating cashflows (2011: outflow of $34.6 million)

OutlookWe are optimistic that the improved financial performance seen in 2012 will continue in 2013 with production and revenue from the Uquo and Stubb Creek Fields forecast to come online in 2013, in addition to increased entitlement production from our interests in OMLs 4, 38 and 41.

We will look to fund the capital expenditure programmes on our current asset portfolio from a combination of operating cashflow and the debt facilities already in place. At the same time, we will continue to seek opportunities to enhance the Group’s capital strength, including deeper access to the global equity and debt markets, to ensure the appropriate capital structure is in place for long term growth, both organically and through acquisition.

Bruce BurrowsChief Financial Officer

1. This facility was expanded in March 20132. The amount available to be drawn under this facility is subject to periodic determination of the borrowing base

capacity of these assets, with a current borrowing base of $125 million3. Since 31 December 2012, this facility has been fully drawn4. Since 31 December 2012, the issued amount has increased to $150 million


Project execution Employee

retention

Partner relationships

Gas offtakers

Fundingand treasurymanagement

Fraud,bribery andcorruption

Security

Managingfor growth

QHSSE

Legislativechanges

Tax

Probability

Imp

act

–

–

+

+

Risk Management

Risks are inherent and inevitable within every business environment, particularly so within the oil and gas industry. This is recognised by Seven Energy’s Board and Senior Management who have taken responsibility to ensure that risks facing the Group are identified, assessed and managed to ensure creation and retention of shareholder value.

The risk management framework includes identification and implementation of action plans and associated controls to protect or mitigate the business from risk and to ensure that the business has appropriate response procedures in place.

Categorisation of each risk and allocation to a risk manager for day-to-day oversight and with clear Board/Senior Management reporting lines

Review and evaluation of existing risks and early identification of new risks that may affect the Group and its strategic objectives

Review and recommendations by the Internal Audit team and assessment by the Governance Committee as to the effectiveness of action plans and controls

The review cycle is considered, revised or established, as appropriate, and implemented

Communication across business units and business levels is essential. For on-going discussion, each risk is allocated to either:• Board;• Executive Committee; or• Management

Each risk analysed according to:• Possible impact• Probability

Identification and implementation of appropriate action plans and control mechanisms for each risk. Retention and recruitment of skilled personnel to support the Group’s risk management framework are key

Seven Energy’s risk management framework

Risk distribution


Gas receiving facility at the Ibom Power station


Governance & People

The Board is committed to developing and applying high standards of corporate governance both in the management of its business and its accountability to shareholders as a whole.

LeadershipAt this stage of the Group’s growth, it is appropriate to split the roles of Chairman and Chief Executive Officer and this change was made at the end of 2012. The Chief Executive Officer has delegated responsibility for the management of the Group’s day-to-day operations and is responsible for setting the operating plans and budgets required to deliver the agreed strategy, whilst ensuring that the Group maintains appropriate risk management and control mechanisms.

In addition to other matters, the Chairman has responsibility for the leadership and effectiveness of the Board. The Chairman provides advice, counsel and support to the Chief Executive Officer as and when required and maintains open and continual contact with the Non-executive Directors to allow any issues to be addressed outside of the formal scope of the regular Board meetings.

All Non-executive Directors constructively challenge and assist in developing the strategy of the Group and scrutinise the performance of management against the Group’s objectives and strategy.

The Board and its CommitteesThe duties and responsibilities of the Board and its Committees are formally agreed in writing, with matters specifically reserved for the Board clearly defined within the Company’s constitutional documents. The Board meets on a scheduled basis six times a year, with additional meetings arranged as necessary to deal with any special business arising between these scheduled meetings. All Directors have access to the advice and services of the Group Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with. All Directors also have access to the Group’s professional advisers who they can consult at the Company’s expense should they consider this necessary in order to discharge their responsibilities.

The Board has three Committees to which it delegates responsibility. The terms of reference of the various Board Committees are available on the Company’s website. The day-to-day management of the Company is delegated to the Executive Committee and Senior Management Team.

Executive CommitteeThe Executive Committee meets on a monthly basis with agenda items including operations, financial performance and funding requirements, project updates, QHSSE, business development and legal and corporate governance.

Code of conductIn 2011, the Company published its Code of Conduct and Business Ethics which contains policies and procedures covering how Seven Energy conducts its business and maintains its relationships with business partners. The Code of Conduct is available on the Company’s website. All employees are required to self-certify compliance with the Code of Conduct annually and to receive training in relation to compliance with Anti-Bribery and Corruption legislation.

Seven Energy Board Committees

Audit & Risk CommitteeMichael Lynch‑Bell (Chair) Ashley Dunster Osam Iyahen Robin Pinchbeck

The Audit & Risk Committee is responsible for selecting the Group’s independent auditors, pre-approving all audit services and work plans, reviewing with management and with the auditors the financial statements and key audit issues, significant accounting policies and practices and the adequacy of internal control systems. The Audit & Risk Committee is also responsible for monitoring the effectiveness of the Group’s Internal Audit function which was established in 2011.

Environment & Community CommitteeDr Joshua Udofia (Chair) Osam Iyahen Robin Pinchbeck

The Environment & Community Committee is responsible for reviewing the Group’s policies, procedures and performance in relation to Quality, Health, Safety, Security and the Environment and in relation to Corporate Social Responsibility and Community Development and Relations with the host communities affected by the Group’s operations.

HR & Remuneration Committee Dr Andrew Jamieson OBE (Chair) Ashley Dunster Dr Yemi Osindero Robin Pinchbeck

The HR & Remuneration Committee is responsible for determining the terms and conditions of service of the executive management team including performance-related pay and share-based payments and for setting the Group remuneration strategy.


Dr Andrew Jamieson OBEChairman – Independent non-executive director of

Woodside Petroleum – Former executive VP of Gas and Projects

of Shell Gas and Power International BV – Over 30 years of experience in Europe,

Australia and Africa

Osam IyahenNon‑executive Director – VP, Oil and Gas at Africa Finance

Corporation (AFC) – Strategy consulting for the oil and gas sector

and financing for large scale oil and gas projects

Dr Joshua UdofiaNon‑executive Director – Co-founder and CEO of Gulf of Guinea Energy – Former senior management positions and

directorships held with Shell Nigeria – Over 36 years of experience in the oil and

gas industry

Robin PinchbeckNon‑executive Director – Non-executive director of IGas plc and Enteq

Upstream plc – Former group director of Strategy and

Corporate Development at Petrofac Limited – Over 39 years of experience in the upstream

and services sector, 23 years with BP

Phillip IhenachoChief Executive Officer – Co-founder of Amaya Capital Partners – Established and ran Afrinvest for over 10 years – Former chairman of the Aureos West Africa

Fund and worked with McKinsey & Co

Atul GuptaNon‑executive Director – Chairman of Shiva Uranium Pty Ltd – Former chief executive officer of Burren Energy – 25 years of experience in the international

upstream oil and gas business with Charterhouse Petroleum, Petrofina and Monument

Michael Lynch-BellNon‑executive Director – Independent non-executive director of Equus

Petroleum Plc and Kazakhmys PLC – Former partner at Ernst & Young – Over 38 years of experience in the energy

and resources sectors

Ashley DunsterNon‑executive Director – Managing Partner at Capital International

Private Equity – Former principal banker at the European Bank

for Reconstruction and Development

Dr Yemi OsinderoNon‑executive Director – Director of Standard Chartered Private Equity

responsible for West Africa – Former COO and co-founder of Virgin

Nigeria Airways

Fidelis Oditah QCBoard Adviser – Qualified in Nigerian and English Law – Queens’s Counsel (QC) in England and a Senior

Advocate of Nigeria (SAN)

Clare Spottiswoode CBEBoard Adviser – Former Director General of Ofgas and a

member of the UK Treasury’s Independent Commission on Banking

– Current directorships include G4S plc, Ilika plc and Enquest plc

Seven Energy Board of Directors


2010 2011 2012

Management

Operations and support staff

Administration

138158

172

100125

33 30 37

128

Governance & Peoplecontinued

Senior ManagementPhillip IhenachoChief Executive Officer

Bruce BurrowsChief Financial Officer – Former finance director of JKX Oil & Gas plc – Various positions at Ernst & Young in

Wellington and London offices

Jeff CoreyChief Operating Officer – Over 25 years’ experience spanning five

continents with ConocoPhillips – Executive VP Operations of Waha Oil, a joint

venture between the Libyan national oil company and ConocoPhillips

Campbell AirlieChief Technical Officer – Former reservoir engineering team leader,

Development Manager and Technical Director for BP’s Mature Assets

– Over 30 years’ experience with Schlumberger, BP, Edinburgh Petroleum Services (EPS) and Weatherford

Chidi ChukwuekeVice President, Joint Ventures – Former business relations manager for Shell

Nigeria Exploration and Production Company – Over 20 years’ industry experience with Royal

Dutch Shell in four continents

Kevin McGroryGroup General Counsel – Former partner and head of Oil and Gas Law

at Shepherd and Wedderburn LLP – Over 25 years’ industry experience with Unocal,

Chevron, Anadarko and Delta Group (KSA)

Chris ThomasVice President, Head of Strategy and Business Development – Former (and founding) director of Melrose

Resources plc – Over 25 years’ experience in corporate

finance and 17 years’ in the exploration and production sector

Stephen TierneyManaging Director, Accugas – Former divisional region manager for West

Africa at Weatherford – Specialised knowledge and expertise of gas

projects, business development and M&A in Nigeria

Nkem OkoroVice President, Wells and Services – Over 28 years’ drilling operations experience

with majority spent at Shell in various capacities – Previously drilling superintendent for

Addax Petroleum

Ani UmorenVice President, Operations – Over 27 years’ in the oil and gas industry

holding various roles with ExxonMobil – Most recent role as Field Construction Advisor

at ExxonMobil

Abdullah BukarTechnical Director, Uquo Joint Venture – Started his career in offshore facilities at

Woodside Australia – Over 35 years’ experience in the Nigerian oil

and gas industry with Shell

Seven Energy has a highly experienced management team which combines the experience and expertise of the original Nigerian founders with the international operating capability of the oil and gas supermajors and the oil service industry.

Average monthly number of employees


+8.9%increase in average number of employees from 158 to 172

Our workforceAs at December 2012, Seven Energy employed 172 people, of which 147 are based in Nigeria with the remaining 25 employees based in London. 95% of the Group’s in-country employees are of Nigerian nationality. In a country of high unemployment and uneven employee rights, we are committed to sustaining a workforce that is both diverse and inclusive and will continue to strengthen our policies and procedures for looking after and developing our staff.

Over the past year, the number of employees has continued to grow in support of the Group’s business. The Group also employs a number of contractors, particularly in connection with its various infrastructure projects. The number of contractors utilised by Seven Energy is project dependent and varies according to the number, type and activity level of the projects undertaken by the Group.

Seven Energy seeks to maintain workforce policies that are compliant with applicable local laws and fair, and to employ individuals who are qualified on the basis of merit and ability to fill its work positions. Seven Energy continues to develop the skills of its local workforce and to employ locally, as much as possible. Each employee, consultant and contractor is expected to abide by Seven Energy’s human resources policies, including its policy on equal employment opportunities and workforce diversity.

Seven Energy is committed to providing a safe and healthy working environment in which all personal injury and industry related diseases are regarded as preventable.


Glossary of Terms

“1P” Proved reserves

“2C” Contingent resources

“2P” Proved and probable reserves

“bbl” Barrel of oil, condensate or natural gas liquids

“Bcf” Billion cubic feet of gas

“Bcfe” Billion cubic feet of gas equivalent

“bcpd” Barrels of condensate per day

“Bnbbl” Billion barrels

“boe” Barrel of oil equivalent

“bopd” Barrels of oil per day

“Btu” British thermal unit, being the amount of energy required to heat 1 pound (0.454 kg) of water by 1°F (0.556°C) at a constant pressure of one atmosphere

“CAGR” Compound annual growth rate

“CNG” Compressed natural gas

“Contingent resources”

Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but where the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent resources are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status

“EBITDA” Earnings before interest, taxation, depletion and depreciation and amortisation

“ELPS” Escravos-Lagos Pipeline System

“FUN” Frontier-Universal-Network joint venture

“GDP” Gross domestic product

“GIIP” Gas initially in place

“km” Kilometre

“km2” Square kilometre

“kWh” Kilowatt hour

“LNG” Liquified natural gas

“Mbbl” Thousand barrels of oil or condensate

“Mbopd” Thousand barrels of oil per day

“Mcf” Thousand cubic feet of gas

“Mcfe” Thousand cubic feet of gas equivalent

“Mcfpd” Thousand cubic feet of gas per day

“MMbbl” Million barrels of oil or condensate

“MMboe” Million barrels of oil equivalent

“MMBtu” Million Btu

“MMcf” Million cubic feet of gas

“MMcfe” Million cubic feet of gas equivalent

“MMcfpd” Million cubic feet of gas per day

“MW” Megawatt

“NPDC” Nigerian Petroleum Development Company Limited, a subsidiary of the Nigerian National Petroleum Corporation

“OML” Oil mining lease

“OPL” Oil prospecting licence

“Probable reserves” Those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves

“Prospective resources”

Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity

“Proved reserves” Those quantities of petroleum which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods and government regulations. If deterministic methods are used, the term “reasonable certainty” is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate

“QHSSE” Quality, health, safety, security and environmental

“RBL” Reserve based lending facility

“QIT” ExxonMobil’s Qua Iboe Terminal

“Tcf” Trillion cubic feet of gas

“$” Currency of the United States of America

NigeriaSepta Energy Nigeria Limited7 Anifowose StreetVictoria IslandLagosNigeria

Tel: +234 1 277 0600Fax: +234 1 277 0644Email: [email protected]

United KingdomSeven Energy International Limited4th Floor6 Chesterfield Gardens London W1J 5BQ United Kingdom

Tel: +44 20 7518 3850Fax: +44 20 7518 3878Email: [email protected]

www.sevenenergy.com www.septa-nigeria.com www.accugas-nigeria.com

Documents

Power for Nigeria - Seven Energy/media/Files/S/Seven-Energy/reports-and... · Seven Energy is an indigenous Nigerian oil and gas exploration, development and production company with