President Muhammadu Buhari has approved Seplat Energy’s (SEPLAT.LG) acquisition of Exxon Mobil’s Nigerian unit in a $1.28 billion deal announced in February. Buhari, who also serves as oil minister, gave the deal ministerial approval.
Exxon and Seplat are expected to operate the unit’s oil licenses, assisting Nigeria in meeting its OPEC production quota and accelerating the development of gas resources in the area.
Seplat said in February its offshore unit had entered an agreement to buy the entire share capital of Exxon’s Nigerian offshore shallow water business for $1.28 billion, plus a further consideration of up to $300 million based on the oil price and the average production of the unit, Mobil Producing Nigeria Unlimited, over a five-year period.
This is seen as the first transaction to be announced since the Federal Government ratified Petroleum Industry Act (PIA).
According to the transaction summary, 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, subject to the lockbox, working capital, and other adjustments at closing relative to the effective date.
“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 95,000 of oil per day (kboepd) in 2020,” Seplat stated.
Seplat said the buy-over does not include ExxonMobil’s deep-water assets in Nigeria.
It stated that the transaction would 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.
Seplat said 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 off-take facility. Also, a global financing syndicate comprising Nigerian and international banks, as well as commodity-trading companies will aid the deal.
According to the agreement, the transaction will not result in any changes to the Board of Seplat Energy.
Commenting on the development, Chairman of Seplat Energy, Dr. Bryant (ABC) Orjiako, said:
“This is a transformational acquisition for Seplat Energy that strengthens our partnership with the national oil company, the Nigerian National Petroleum Corporation (NNPC) Limited, 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.”
Chief Executive Officer of Seplat Energy, Roger Brown, said: “This transaction 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 monetize our significant gas resources through domestic and export opportunities.
“This is 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 stated.
Seplat is listed on the London and Nigerian stock exchanges.
