Seplat Energy Offshore Limited has entered into an agreement to acquire the entire share capital of the Nigerian unit of Exxon Mobil Corporation – Mobil Producing Nigeria Unlimited (MPNU).
The former’s Chief Financial Officer, Emeka Onwuka, who announced this in a statement on Friday, however, said the completion of the transaction was subject to ministerial consent and other required regulatory approvals.
According to him, the company – the Nigerian subsidiary of Seplat Energy Plc, entered into a sale and purchase agreement 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 kboepd (W.I.) in 2020 (92% liquids),” Onwuka said.
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On the impact of the transaction, he explained that it 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.
“Based on 2020 pro forma working interest volumes for Seplat Energy and MPNU, the transaction delivers 186% increase in production from 51 kboepd to 146 kboepd; 170% increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl; 14% 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); and 89% increase in total 2P reserves from 499 MMboe to 945 MMboe,” he said.
The Seplat Energy official added that the transaction included offshore fields with dedicated MPNU-operated export routes offering enhanced security and reliability.
In his reaction, Chairman of Seplat Energy, Dr Bryant Orjiako, described the development as a transformational acquisition that would strengthen the company’s partnership with the Nigerian National Petroleum Company (NNPC) and consummate the spirit of the newly enacted Petroleum Industry Act (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,” he said.
“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 the CEO of Seplat Energy, Roger Brown, the transaction underpins the company’s drive to be a leader in the growth of the indigenous independent energy sector in Nigeria.
He also believes the acquisition is a perfect fit with the company’s strategy to build a sustainable business and deliver energy transition in the country.
“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,” said Brown.
“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.
“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.”