Seplat Energy Plc, a leading Nigerian indigenous oil and gas company, is set to complete a landmark $800 million deal to acquire ExxonMobil’s onshore and shallow water oil and gas assets in Nigeria, a move that will double its crude oil production to 120,000 barrels per day (bpd).
The Assets Sale and Purchase Agreement (SPA) between Seplat Energy and Mobil Producing Nigeria Unlimited (MPNU) is scheduled for official closure on Thursday, December 12, 2024, as disclosed in a recent document released by the company.
Initially pegged at $1.28 billion when first signed in February 2022, the deal’s final consideration has been adjusted to $800 million. According to Seplat’s official prospectus, the transaction is fully funded through available cash and debt facilities, eliminating the need for new equity issuance.
A Transformative Deal for Nigeria’s Energy Sector
Described as transformative by Seplat Energy, the acquisition is expected to significantly boost the company’s growth, profitability, and contribution to the Nigerian economy. “This transaction is transformative for Seplat Energy, more than doubling production to around 120,000 barrels of oil equivalent per day,” the company stated.
The acquisition brings strategic assets, including equity in 11 blocks, 48 producing oil and gas fields, five gas processing facilities, and three export terminals, positioning Seplat as Nigeria’s leading independent energy company.
Key Transaction Highlights
Seplat Energy outlined the following highlights of the transaction:
- Final Cash Consideration: $800 million, including $128 million paid in 2022 at the initial SPA signing.
- Deferred Payment: $257.5 million, related to decommissioning and joint venture costs, payable by December 2025.
- Reserves and Resources: Pro-forma 2P reserves of 887 million barrels of oil equivalent (MMboe), representing an 86% increase, and combined 2P + 2C reserves and resources of 1,210 MMboe, an increase of 124%.
- Revenue Growth: Pro-forma revenue of $1.456 billion, a 245% increase, with adjusted EBITDA rising 199% to $800 million.
Additionally, the deal will add approximately 1,000 staff and 500 contractors from MPNU to the Seplat Group, further strengthening the company’s human resource base.
Regulatory Approvals Secured
The transaction, initially signed in February 2022 with an effective date of January 1, 2021, has undergone a rigorous approval process. In October 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) approved the sale, followed by clearance from the Financial Conduct Authority (FCA) in the United Kingdom.
Assets and Investment Opportunities
The acquisition includes a 40% operated interest in four oil mining leases (OMLs 67, 68, 70, and 104), the Qua Iboe export terminal, and the Yoho Floating Storage and Offloading (FSO) vessel. It also adds a 51% operated interest in the Bonny River Terminal and a 9.6% interest in the Aneman-Kpono field.
Seplat highlighted the high potential for further investment and growth within these assets, emphasizing their quality and strategic location in one of the world’s leading hydrocarbon basins.
Funding Details
The final $672 million payable at closing will be financed through a combination of sources:
- $350 million from the Revolving Credit Facility (RCF).
- $300 million through a three-year Advance Payment Facility with ExxonMobil.
- $22 million from balance sheet cash.
Conclusion
This acquisition marks a significant milestone for Seplat Energy and the Nigerian oil and gas industry. By securing these strategic assets, Seplat is poised to drive substantial economic growth, enhance energy security, and reinforce Nigeria’s position as a key player in the global oil and gas market.
