Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, has announced that it has entered into an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) from Exxon Mobil Corporation, Delaware (“ExxonMobil”) (the “Transaction”).
Completion of the Transaction is subject to Ministerial Consent and other required regulatory approvals.
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 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)
A statement by Mr. Emeka Onwuka, Chief Financial Officer of the company said the Transaction will 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
The statement said further that 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).
Onwuka also noted that the transaction will see an 89% increase in total 2P reserves from 499 MMboe to 945 MMboe1 and Includes offshore fields with dedicated, MPNU-operated export routes offering enhanced
security and reliability
“This is the first transaction to be announced since the Nigerian Government’s recently ratified
Petroleum Industry Act (“PIA”), and supports its key objectives
“Seplat Energy is fully committed to working with the Nigerian Government to bring these strategically important national assets fully into Nigerian ownership alongside NNPC.
“Development of MPNU’s gas resources will support the Federal Government’s objective to achieve a pragmatic, progressive and just energy transition for Nigeria”
Details of the Transaction
• Seplat Energy will acquire the entire share capital of MPNU from Exxon Mobil Corporation, Delaware (USA Incorporated), with an effective date of 1 January 2021 for a consideration of
$1,283 million, subject to lockbox, working capital and other adjustments at closing relative to the
effective date.
• The Transaction agreement also includes potential additional contingent consideration of up to $300 million in total, payable over the period 1 January 2022 to 31 December 2026, and
contingent upon average Brent crude oil prices exceeding $70 per barrel and subject to MPNU’s average working interest production exceeding 60 kboepd (JV: 150 kboepd) in such calendar year.
• The consideration implies an attractive EV / 2P metric of $2.9/boe, with significant gas upside potential.
The MPNU portfolio primarily consists of:
• A 40% operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure (NNPC is the 60% partner)
• The Qua Iboe Terminal, one of Nigeria’s largest export facilities
• 51% interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.
• It does not include ExxonMobil’s deep-water assets in Nigeria
• MPNU will operate as a standalone subsidiary of Seplat Energy and upon closing and following receipt of requisite regulatory approvals, Seplat Energy will align MPNU with its overall strategic goals and ESG objectives.
Financing the Transaction.
• 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 offtake facility.
• Global financing syndicate comprising Nigerian and international banks, as well as commodity trading companies
• Contingent payments, if materialised on Brent oil price annual average above $70/bbl, will be funded through share of net cash flows from operations.
Dr. Bryant (ABC) Orjiako, Chairman of Seplat Energy, 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.”
Roger Brown, CEO of Seplat Energy, 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 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.”
