By Bassey Udo
One of Nigeria’s leading indigenous energy companies, Seplat Energy Plc, on Thursday announced it has sealed a deal to acquire the entire share capital of Mobil Producing Nigeria Unlimited from ExxonMobil Corporation. Seplat Energy Offshore Limited is a wholly-owned Nigerian subsidiary of Seplat Energy Plc.
Although the completion of the deal was still subject to regulatory and ministerial approvals, Seplat, which is listed on both the Nigerian Exchange and the London Stock Exchange, said a Sale and Purchase Agreement has already been signed with ExxonMobil.
The price of the acquisition of the shares is about $1,283 million, apart from an additional $300 million contingent consideration, subject to the lockbox, working capital, and other adjustments at closing relative to the effective date.
The payment for the acquisition is over the period January 1, 2022 and December 31, 2026, and contingent upon average Brent crude oil prices exceeding $70 per barrel and subject to MPNU’s average working interest production exceeding 60,000 BOE per day in such calendar year.
Details of the transaction announced by Seplat’s Chief Financial Officer, Emeka Onwuka, showed that the acquisition encompasses the entire offshore shallow water business of ExxonMobil Corporation in Nigeria.
ExxonMobil Corporation reputed to be Nigeria’s second-largest producer of oil after Shell Petroleum Development Company Limited, has the capacity to produce about 95,000 barrels of oil equivalent per day in 2020, made up of about 92 percent liquids.
Seplat said the deal would not only help create one of the largest independent energy companies on both the Nigerian and London Stock Exchanges, but it would also bolster the company’s ability to drive increased growth, profitability, and overall stakeholder prosperity.
Based on the combined 2020 pro forma working interest volumes for Seplat Energy and MPNU, the company believes the transaction would enable the company to deliver over 186 percent increase in production from 51,000 barrels of oil equivalent to 146,000 BOE per day; increase by 170 percent in 2P liquids reserves, from 241 million barrels to 650 million barrels.
Also, the deal would boost the company’s gas reserves by 14 percent, from 1,501 billion standard cubic feet per day of gas to 1,712 BSCF, plus a significant undeveloped gas potential of 2,910 BSCF, and 89 percent increase in total 2P reserves from 499 MMBOE to 945 MMBOE.
The MPNU concessions Include offshore fields with dedicated, MPNU-operated export routes at the Qua Iboe oil terminal, Ibeno offering enhanced security and reliability, while supporting Nigeria’s energy transition and objectives of the Petroleum Industry Act (PIA).
Seplat Energy has already expressed its full commitment to work with the Nigerian Government to bring these strategically important national assets fully into Nigerian ownership alongside the Nigerian National Petroleum Company (NNPC) Limited.
The company sees the development of MPNU’s gas resources as a huge support to the Federal Government’s objective to achieve a pragmatic, progressive, and just energy transition for Nigeria.
Chairman of Seplat Energy, Bryant Orjiako, 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.”
The CEO 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.
He said the acquisition of MPNU’s assets is a perfect fit with Seplat’s 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.
“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.”
MPNU’s operated shallow water portfolio primarily comprises a 40% interest in four oil mining leases (OMLs 67, 68, 70 and 104) under a joint operating agreement with NNPC, along with the Qua Iboe Terminal and a 51% interest in the Bonny River Terminal and the Natural Gas Liquids Recovery Plants at EAP and Oso.
ExxonMobil’s deep-water business in Nigeria would, however, not be transferred under the deal.
The acquisition of MPNU includes MPNU’s dedicated and highly experienced workforce consisting of approximately 1,000 employees and 500 contractors. Employees exclusively involved in ExxonMobil’s deep-water business will not be transferred.