Seplat to increase gas production capacity with acquisition of ExxonMobil assets

Ezeme Solomon

Seplat Energy Plc, a leading Independent oil and gas producer in Nigeria, has restated its commitment to the development of Nigeria’s gas resources through the planned acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) from Exxon Mobil Corporation, Delaware (“ExxonMobil”).

This was contained in statement signed by Mr. Emeka Onwuka, Seplat Chief Financial Officer(CFO) and obtained by EnergyDay on Friday. The company revealed that the overall objective of the acquisition is to develop MPNU’s gas resources in order to support the Federal Government’s objective to achieve energy transition and Decade of Gas initiative.

EnergyDay check shows that Seplat presently delivers some 525 million cubic feet (Mscf) of gas per day into the domestic market. However, this transaction, it was gathered, will lead to 14 percent increase in proven and probable(2P) gas reserves of the company from 1,501 billions standard cubic feet (Bscf)of gas to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf (Joint Venture of 7,275 Bscf).

The Seplat Energy Offshore Limited, a wholly owned Nigerian subsidiary of Seplat Energy Plc, entered into the Sale and Purchase Agreement(SPA) 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.

EnergyDay further gathered that 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 thousand barrels of oil equivalent per day (kboepd) in 2020 (92% liquids)

However the statement revealed that the completion of the transaction is subject to Ministerial Consent and other required regulatory approvals. 
Dr. Bryant Orjiako, Chairman of Seplat Energy, said that, with the acquisition, Seplat will be able to provide sustainable energy solutions that will facilitate the growth and development of many businesses within its host communities and the energy sector in Nigeria, at large.
“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,” Dr. Orjiako said.
Roger Brown, the company’s Chief Executive Officer noted that the deal will favour both firms as they will jointly find a way to increase their generated income for reinvestment which would be targeted at developing the nation’s energy sector.
“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 monetize 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,” he said.
Brown further praised workers of MPNU for their known compliance to work and safety guidelines while noting that Seplat is expecting to receive them into its workforce.
“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,” he said.