By Mobolaji Adegoke
Seplat Energy Plc has announced that it has entered into an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) from Exxon Mobil Corporation, Delaware for the operations of its onshore and shallow water assets for $1.2bn
The deal is the first transaction to be announced since President Muhammadu Buhari, recently ratified the Petroleum Industry Act (“PIA”), which supports its key objectives.
With this deal, Seplat takes over the operatorship of Exxonmobil assets in Oil Mining Lease 67, 68,70 and 104. and associated infrastructure (NNPC is the 60 per cent partner)
Seplat and Exxonmobil confirmed the sale of the assets in two separate statements made available to the media, adding that the completion of the transaction is subject to Ministerial Consent and other required regulatory approvals.
Seplat Energy Plc, added further that its wholly-owned Nigerian subsidiary, Seplat Energy Offshore Limited has 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, subject to the lockbox, working capital and other adjustments at closing relative to the effective date
The deal signals the exit of Exxonmobil operations in shallow waters and onshore terrains in Nigeria.
The Transaction encompasses the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria, which is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing 95 barrels per day in 2020 (92 per cent liquids)
According to Seplat, the transaction will create one of the largest independent energy companies on both the Nigerian and London Stock Exchanges and bolster 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 delivers 186 per cent increase in production from 51 barrels per day to 146 barrels per day, 170 per cent increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl
Other deliverables of the deal are; 14 per increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, plus the significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf), 89 per cent increase in total 2P reserves from 499 MMboe to 945 MMboe and includes offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability.
Further details of the transaction included the acquisition of the entire share capital of MPNU from Exxon Mobil Corporation, Delaware (USA Incorporated), with an effective date of 1 January 2021 for a consideration of $1,283 million, subject to the lockbox, working capital, and other adjustments at closing relative to the effective date
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) in such calendar year
MPNU will 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 Dr. Bryant (ABC) Orjiako, Chairman of Seplat Energy, said: “This is a transformational acquisition for Seplat Energy that strengthens our partnership with the national oil company, the NNPC, and consummates 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.”
