Seplat Energy Plc 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.
Completion of the Transaction is subject to Ministerial Consent and other required regulatory approvals.
According to a statement by Seplat Energy on the website of the Nigerian Exchange, the Group stated thus:
“Seplat Energy Offshore Limited, a wholly owned Nigerian subsidiary of Seplat Energy Plc, has 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).
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
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)
- 89% increase in total 2P reserves from 499 MMboe to 945 MMboe1
- Includes offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability
Supporting Nigeria’s energy transition and objectives of the Petroleum Industry Act
- 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
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.”