Aradel Holdings Plc, a company listed on the Nigerian Exchange Limited, says the Minister of Petroleum Resources has given his blessing for acquisition of The Shell Petroleum Development Company (SPDC) by Renaissance Africa Energy Limited.

Aradel, in a notice to the NGX, signed by the Adegbite Falade, its Managing Director/Chief Executive Officer, described the approval to Renaissance  a company in which it is a shareholder, approval “marks a significant step forward from the announcement of the Sale and Purchase Agreements in January 2024.”

Members of the Renaissance Africa consortium are: ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin.

Shell had in a January 16, 2024 statement announced an agreement to sell its Nigerian onshore subsidiary, SPDC for US$1.3bn to Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group. Thereafter, the buyer will make additional cash payments of up to US$1.1bn, “primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid at completion of the transaction.”

The net book value of SPDC, subject to the transaction was estimated at about US$2.8bln as off December 31, 2023.

Both amounts “will be adjusted to reflect any shareholder distributions, above US$200m, made prior to completion. Other contingent payments, including those related to gas supply to NLNG, may become payable depending on business performance and fluctuation of product prices.”

The transaction, Shell had also noted, will preserve the full range of SPDC’s operating capabilities, following the change of ownership, including the technical expertise, management systems and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV). Also, SPDC’s staff will continue to be employed by the company as it transitions to new ownership, while Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG.

“Under the agreed deal structure, economic performance accrues to the buyer with effect from December 31, 2021 (the effective date). However, Shell will continue to consolidate SPDC until control transfers at completion. Although any amounts will depend on the future financial performance of the business, we expect to recognise impairments in respect of the business up to the date of completion, including to the extent that the net book value of SPDC exceeds the expected consideration at completion.

“At closing, Shell will provide secured term loans of up to US$1.2bln, to cover a variety of funding requirements,” in addition to providing additional financing of up to US$1.3bln over future years to fund SPDC’s share of the development of the SPDC JV’s gas resources to supply feedgas to NLNG, and its share of specific decommissioning and restoration costs. This additional financing will only be drawn down when these costs are approved and incurred by the SPDC JV.

The statement by Shell had quoted Zoë Yujnovich, its Integrated Gas and Upstream Director, as saying the “agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions.

“It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium.”

Continuing, he said “Shell sees a bright future in Nigeria with a positive investment outlook for its energy sector. We will continue to support the country’s growing energy needs and export ambitions in areas aligned with our strategy.”

The statement also noted that Shell has three other main businesses in Nigeria that are outside the scope of this transaction, namely: Shell Nigeria Exploration and Production Company Limited (SNEPCo), which produces oil and gas in the deepwater Gulf of Guinea; Shell Nigeria Gas Limited (SNG), which supplies gas to domestic industrial and commercial customers; and

Daystar Power Group, which provides integrated solar power to commercial and industrial business across West Africa.

In addition, Shell holds a 25.6% interest in NLNG, which produces and exports LNG to global markets. Shell’s interest in NLNG is also outside the scope of this transaction.

This press release contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future