A leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, Seplat Energy Plc has entered into an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) from Exxon Mobil Corporation, Delaware (“ExxonMobil”).
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, with an effective date of January 1, 2021.
The agreement is however subject to lockbox, working capital and other adjustments at closing relative to the effective date.
The potential additional contingent consideration of up to $300 million in total, is payable over the period between 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 in such calendar year.
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.
Transformational acquisition
The Chairman of Seplat Energy, Dr. Bryant Orjiako, described the deal as a transformational acquisition for Seplat Energy that would strengthen its partnership with the national oil company, the NNPC, and consummates the spirit of the newly enacted Petroleum Industry Act.
Orjiako said “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.”
Win-win agreement
The CEO of Seplat Energy, Roger Brown, said the agreement was a win-win for both companies as together; they will strengthen their focus on profitability and cash generation to reinvest in Nigeria’s energy development.
Brown said “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.”
The Transaction is expected to create one of the largest independent energy companies on both the Nigerian and London Stock Exchanges, and boost Seplat Energy’s ability to drive increased growth, profitability and overall stakeholder prosperity.
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 off take 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.
Timetable and Conditions:
The Transaction is subject to customary closing conditions for a transaction of this nature, including Ministerial Consent and regulatory approvals from the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Federal Competition and Consumer Protection Commission.
The Transaction is classified as a reverse takeover for the purposes of UK Listing Rules relating to the Company’s listing on the London Stock Exchange.
Upon completion of the Transaction, Seplat Energy will need to re-apply for admission to the Official List. Accordingly, Seplat Energy will prepare a prospectus in respect of Seplat Energy as enlarged by MPNU in connection with the required reapplication for listing of such shares on the Official List and to trading on the London Stock Exchange’s Main Market for Standard-Listed securities.
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.
The Transaction will not result in any changes to the Board of Seplat Energy. The Company currently expects the Transaction to close in H2 2022.
Nneka Ukachukwu
