In a First Major Post-PIA Deal, Seplat Energy yesterday announced its acquisition of oil and gas assets belonging to Mobil Oil Producing Nigeria Unlimited (MPNU), in a deal seen as the first since the signing of the Petroleum Industry Act (PIA) by President Muhammadu Buhari in August last year. The deal is however subject Ministerial Consent and other required regulatory approvals.
Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange Limited (NGX) and the London Stock Exchange (LSE), was expected to announce the agreement to acquire the entire share capital of Mobil, with the completion of the transaction subject to ministerial consent and other required regulatory approvals.
The statement from the company obtained by THISDAY, showed that Seplat Energy Offshore Limited, a wholly owned Nigerian subsidiary of Seplat Energy Plc, entered into a Sale and Purchase Agreement to acquire the entire share capital of MPNU for a purchase price of $1,283 million plus up to $300 million contingent consideration.
The transaction, according to statement, encompasses the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria, which it said is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations.
The transaction, it said, would create one of the largest independent energy companies on both the NGX and LSE and bolster Seplat Energy’s ability to drive increased growth, profitability and overall stakeholder prosperity. The deal would deliver 186 per cent increase in production from 51,000 bpd to 146,000 bpd or 170 per cent increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl.
In addition, it was expected to deliver a 14 per cent increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf)
Furthermore, it was expected to increase by 89 per cent, the total 2P reserves from 499 MMboe to 945 MMboe and includes offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability.
In the oil industry, 2P reserves are the total of proven and probable reserves while probable reserves are less likely to be recovered than proven reserves.
Being the first transaction to be announced since the Nigerian government’s recently ratified PIA, the company stated that the deal would support Nigeria’s energy transition and objectives of the new Act.
Seplat Energy said it was fully committed to working with the Nigerian government to bring the strategically important national assets fully into Nigerian ownership alongside the national oil company, NNPC.
In addition, it noted that the development of the gas resources would support the government’s objective to achieve a pragmatic, progressive and just energy transition for Nigeria.
The transaction agreement also includes potential additional contingent consideration of up to $300 million in total, payable over the period 1 January 2022 to 31 December 2026, and contingent upon average Brent crude oil prices exceeding $70 per barrel and subject to MPNU’s average working interest production exceeding 60 kboepd (JV: 150 kboepd).
The deal primarily comprises a 40 per cent operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure with NNPC being owner of the rest 60 per cent.
It includes the Qua Iboe Terminal, one of Nigeria’s largest export facilities as well as a 51 per cent interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.
However, the contract does not include ExxonMobil’s deep-water assets in Nigeria.
According to statement, the cash consideration payable under the transaction will be funded through a combination of existing cash resources and credit facilities of Seplat Energy, and a new $550 million senior term loan facility and $275 million junior offtake facility.
Also included is a global financing syndicate comprising Nigerian and international banks, as well as commodity trading companies, while contingent payments, if materialised on Brent oil price annual average above $70/bbl, will be funded through share of net cash flows from operations.
Under the Sale and Purchase Agreement, Seplat Energy will pay a deposit of $128 million, which will be applied towards the purchase price on closing.
“If the transaction does not proceed, the deposit will be repaid to Seplat Energy where the agreement is terminated by Seplat Energy in certain circumstances.
“The Transaction does not require the approval of Seplat Energy’s shareholders and will not result in any changes to its Board. The Company currently expects the Transaction to close in H2 2022,” it stated.
Commenting on the deal, Chairman of Seplat Energy, Dr. Bryant Orjiako, said: “This is a transformational acquisition for Seplat Energy that