Seplat acquires Mobil Producing Oil assets from ExxonMobil for $1.3bn (updated)

Seplat Energy Plc says 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 company disclosed this in a statement on Friday.

The statement added that the transaction is subject to ministerial approval and other required regulatory backings.

“This is the first transaction to be announced since the Nigerian Government’s recently ratified  Petroleum Industry Act (PIA), and supports its key objectives,” the statement reads.

According to the statement, Seplat Energy Offshore Limited, a wholly-owned Nigerian subsidiary of Seplat, entered into a sale and purchase agreement to acquire the entire share capital of MPNU.

A purchase and sale agreement is a type of legal contract that obliges the buyer to buy a product or a service and for the seller to sell the agreed-upon product or service.

Seplat said it would be buying the whole stock capital at a purchase price of $1.283 billion, plus up to $300 million contingent consideration.

“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),” the statement adds.

“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.”

Seplat said the deal will deliver 186 percent increase in production from 51000 bpd to 146000 bpd, 14 percent  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).

It added that it would increase production by 89 percent in total 2P reserves from 499 MMboe to 945 MMboe and includes offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability.

2P reserves are the total of proven and probable reserves.

The transaction agreement also includes potential additional contingent consideration of up to $300 million in total, payable over the period of January 1, 2022 to 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 kboepd (JV: 150 kboepd).

According to the company, the deal primarily comprises “40 percent operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure (NNPC is the 60% partner)”.

It also includes the Qua Iboe Terminal, 51 percent interest in Bonny River Terminal, and Natural Gas Liquids Recovery Plants at EAP and Oso.

However, it said it does not include ExxonMobil’s deepwater assets in Nigeria

“Under the Sale and Purchase Agreement, Seplat Energy will pay a deposit of $128 million, which will be applied towards the purchase price on closing. If the transaction does not proceed, the deposit will be repaid to Seplat Energy where the agreement is terminated by Seplat Energy in certain circumstances,” it said.

“The Transaction does not require the approval of Seplat Energy’s shareholders and will not result in any changes to its Board. The Company currently expects the transaction to close in H2 2022.”

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.”

Editor’s note: This report has been updated to reflect that Seplat Energy’s acquisition does not include ExxonMobil’s deepwater assets in Nigeria. The value of the sale was also erroneously rendered in millions rather than billions.