Leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, Seplat Energy Plc, on Friday said it entered into a Sale and Purchase Agreement that will see it acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware.
The deal which is subject to Ministerial Consent and other required regulatory approvals, according to available details, Seplat’s subsidiary- Seplat Energy Offshore Limited will acquire the entire share capital of MPNU for a purchase price of $1.283bn, plus up to $300m contingent consideration, subject to lockbox, working capital and other adjustments at closing relative to the effective date. The deal is expected to close in the second half of this year,
Details of the agreement will see Seplat Energy paying a refundable deposit of $128m, which will be applied towards the purchase price on closing and repaid where the agreement is terminated by Seplat Energy in certain circumstances. The deal will not result in any changes to the board of Seplat Energy.
The transaction involves the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria, which Seplat said in a statement, is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing 95 kboepd (W.I.) in 2020 (92% liquids)
Impact of the transformation, the statement said includes the creation of one of the largest independent energy companies on both the Nigerian and London Stock Exchanges, bolstering Seplat Energy’s ability to drive increased growth, profitability, and overall stakeholder prosperity.
Based on 2020 pro forma working interest volumes for Seplat Energy and MPNU, the transaction, the statement continued, delivers a 186% increase in production from 51 kboepd to 146 kboepd; 170% increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl; in addition to 14% increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, plus a significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf). Others include a 89% increase in total 2P reserves from 499 MMboe to 945 MMboe; besides offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability.
The transaction, the first to be announced since the Nigerian government’s recently ratified Petroleum Industry Act (PIA), supports its key objectives; and Seplat Energy is fully committed to working with the Nigerian Government to bring these strategically important national assets fully into Nigerian ownership alongside NNPC. Development of MPNU’s gas resources, the statement continued, will support the Federal Government’s objective to achieve a pragmatic, progressive, and just energy transition for Nigeria.
The acquisition gives Seplat access to a portfolio primarily consisting of a 40% operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure (NNPC is the 60% partner); the Qua Iboe Terminal, one of Nigeria’s largest export facilities; and 51% interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.
It does not however include ExxonMobil’s deep-water assets in Nigeria; even as MPNU will continue to “operate as a standalone subsidiary of Seplat Energy and upon closing and following receipt of requisite regulatory approvals, Seplat Energy will align MPNU with its overall strategic goals and ESG objectives.”
“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.
“Global financing syndicate comprising Nigerian and international banks, as well as commodity trading companies
“Contingent payments, if materialised on Brent oil price annual average above $70/bbl, will be funded through share of net cash flows from operations,” the statement added.
Commenting on what he described as a transformational acquisition, Dr. Bryant Orjiako, chairman of Seplat Energy, said it will strengthen “our partnership with the national oil company, the NNPC, and consummate the spirit of the newly enacted PIA.
“As a significantly larger business, with a stronger resource base and greatly enhanced capabilities, we will be better positioned to provide sustainable energy solutions that drive growth and profitability for the benefit of all our stakeholders, particularly our host communities and the wider Nigerian economy.
“We fully support the aims of the Federal Government’s “Decade of Gas”, and this acquisition will accelerate our development of Nigeria’s gas resources to help achieve a just transition for our rapidly growing country.”
For Roger Brown, CEO of Seplat Energy, the deal “underpins Seplat Energy’s drive to be a leader in the growth of the indigenous independent energy sector in Nigeria.
“The acquisition is a perfect fit with our strategy to build a sustainable business and deliver energy transition in Nigeria. Our financial strength has enabled us to attract high quality local and international capital providers to fund this transaction without diluting our existing shareholders and reflects our deliberate approach to capital allocation.
“We are determined to drive our growth through the extensive low-cost and low-risk production opportunities it delivers in the near term, whilst also developing longer-term opportunities to monetise our significant gas resources through domestic and export opportunities.”
Continuing, he described the transaction as “a win-win for both companies. Together, we will strengthen our focus on profitability and cash generation to reinvest in Nigeria’s energy development.
“MPNU’s employees and contractors have a strong reputation for safety and operational excellence, and I look forward to welcoming them to the Seplat Energy family,” he stressed.