Seplat will buy Exxon’s shallow water oil and gas
Nigerian oil company Seplat has agreed to buy ExxonMobil’s shallow water assets in Nigeria through the acquisition of US oil company’s Nigerian subsidiary Mobil Producing Nigeria Unlimited (“MPNU”), in what Seplat said transformational acquisition for the company. Seplat will pay $1.28 billion for the acquisition.
“The transaction includes the acquisition of the entire shallow water offshore business of ExxonMobil in Nigeria, which is an established, high quality operation with a highly skilled local operating team and a track record of operations. safe, producing 95 kboepd (WI) in 2020. (92% liquids)”, specifies Seplat.
Based on the 2020 pro forma working interest volumes for Seplat Energy and MPNU, the transaction will enable Seplat to increase production by 186% from 51 kboepd to 146 kboepd; a 170% increase in 2P liquid reserves, from 241 MMbbl to 650 MMbbl; a 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 an 89% increase in total 2P reserves of 499 MMboe to 945 Mboe.
The deal includes offshore fields with dedicated export routes, operated by MPNU, offering enhanced safety and reliability, Seplat said.
Seplat Energy said it would purchase the entire share capital of MPNU from Exxon, effective January 1, 2021 “for consideration of $1,283 million, subject to lockbox, fund rollover and other closing adjustments from the effective date”. “
The transaction agreement also includes potential additional contingent consideration of up to $300 million in aggregate, payable over the period of January 1, 2022 through December 31, 2026, and subject to average Brent crude oil prices exceeding $70 per barrel. and subject to MPNU’s average operating rate. interest generation greater than 60 kboepd (JV: 150 kboepd) during that calendar year.
Assets being acquired
The MPNU portfolio mainly consists of a 40% operating stake in four oil mining concessions (OML 67, 68, 70, 104) and associated infrastructure (NNPC is the 60% partner); the Qua Iboe Terminal, one of Nigeria’s largest export facilities; and a 51% interest in the Bonny River terminal and natural gas liquids recovery plants at EAP and Oso.
The deal does not include ExxonMobil’s deepwater assets in Nigeria
MPNU will operate as a stand-alone subsidiary of Seplat Energy upon closing and upon receipt of required regulatory approvals.
Existing cash and loans to fund the “transformational” deal
Seplat said it would finance the transaction through a combination of Seplat Energy’s existing cash resources and credit facilities, and a new $550 million senior term loan facility and a junior levy of $275 million; Global finance syndicate comprising Nigerian and international banks, as well as commodity trading companies. Contingent payments, if they materialize on an annual average Brent price above $70/barrel, will be funded by a share of net cash flow from operations, Seplat said.
Dr. Bryant (ABC) OrjiakoPresident of Seplat Energy, said: “This is a transformational acquisition for Seplat Energy that strengthens our partnership with the national oil company, NNPC, and is in line with the spirit of the newly enacted PIA.
“As a much larger company, with a stronger resource base and significantly enhanced capabilities, we will be better positioned to deliver sustainable energy solutions that drive growth and profitability for the benefit of all of our stakeholders, especially our host communities and the wider Nigerian economy.
“We fully support the Federal Government’s ‘Gas Decade’ goals, and this acquisition will accelerate our development of Nigeria’s gas resources to help achieve a just transition for our rapidly growing country.”
Roger Brun, CEO of Seplat Energy, said: “This transaction reinforces Seplat Energy’s desire to be a leader in growing the indigenous independent energy sector in Nigeria. The acquisition fits perfectly with our strategy to build a sustainable business and ensure the energy transition in Nigeria. Our financial strength has enabled us to attract high quality local and international capital providers to finance this transaction without diluting our existing shareholders and reflects our deliberate approach to capital allocation.
“We are committed to driving our growth through the vast low-cost, low-risk production opportunities it offers in the near term, while also developing longer-term opportunities to monetize our significant gas resources through domestic opportunities. and export.
It’s 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 employees and contractors have a solid reputation for safety and operational excellence, and I look forward to welcoming them to the Seplat Energy family.”