Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, announced recently that it has entered into an agreement with Exxon Mobil Corporation, Delaware (“ExxonMobil”) to acquire the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) (the “Transaction”).
The Transaction is subject to Ministerial Consent and other required regulatory approvals before it can be completed.
Seplat Energy Plc 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 $1,283 million plus up to $300 million contingent consideration at closing relative to the effective date, subject to lockbox, working capital, and other adjustments.
The transaction includes the acquisition of ExxonMobil’s entire offshore shallow water business in Nigeria, which is a well-established, high-quality operation with a highly skilled local operating team and a track record of safe operations, capable of producing 95 kboepd (W.I.) in 2020. (92 percent liquids).
The transaction will result in the formation of one of the largest independent energy companies on both the Nigerian and London Stock Exchanges, and will strengthen Seplat Energy’s ability to drive increased growth, profitability, and overall stakeholder prosperity.
The transaction delivers an 186 percent increase in production from 51 kboepd to 146 kboepd and a 170 percent increase in 2P liquids reserves from 241 MMbbl to 650 MMbbl based on 2020 pro forma working interest volumes for Seplat Energy and MPNU. a 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), an 89 percent increase in total 2P reserves from 499 MMboe to 945 MMboe, Offshore fields with dedicated, MPNU-operated export routes that provide enhanced security and dependability.
This is the first transaction announced since the recently ratified Petroleum Industry Act (“PIA”) by the Nigerian government, and it supports the PIA’s key objectives.
The development of MPNU’s gas resources will aid the Federal Government’s goal of achieving a practical, progressive, and just energy transition for Nigeria.
With an effective date of 1 January 2021, Seplat Energy will acquire the entire share capital of MPNU from Exxon Mobil Corporation, Delaware (USA Incorporated) 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 a potential additional contingent consideration of up to $300 million in total, payable from 1 January 2022 to 31 December 2026, and contingent on average Brent crude oil prices exceeding $70 per barrel and MPNU’s average working interest production exceeding 60 kboepd (JV: 150 kboepd) in such calendar year.
The analysis assumes an appealing EV / 2P metric of $2.9/boe, with significant gas upside potential.
The MPNU portfolio consists primarily of four oil mining leases (OMLs 67, 68, 70, and 104) and associated infrastructure (NNPC is a 60% partner), the Qua Iboe Terminal, one of Nigeria’s largest export facilities, and a 51% interest in the Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.
ExxonMobil’s deep-water assets in Nigeria are not included. MPNU will operate as a separate subsidiary of Seplat Energy, and Seplat Energy will align MPNU with its overall strategic goals and ESG after the transaction is completed and all necessary regulatory approvals are obtained.