The assets Sale and Purchase Agreement (SPA) between Seplat Energy Plc and Mobil Producing Nigeria Unlimited (MPNU) is set to close officially on Thursday, a document has shown.
In its official prospectus released yesterday, the Nigerian indigenous oil and gas company disclosed that whereas the deal was previously for an initial $1.28 billion, the final consideration has now been put at $800 million.
Essentially, a listed company publishes its prospectus, a legal document that contains details about its business, finances, and shareholding structure, to provide investors with information about a security or investment offering.
In October, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) approved the sale of ExxonMobil’s onshore oil and gas assets in Nigeria to the local company Seplat Energy, more than two years after the deal was first signed in February 2022.
Seplat Energy Plc, a leading Nigerian energy company, listed on both the Nigerian Exchange and the London Stock Exchange, in a document intimating the investing public of the new assets, following the conclusion of the deal, announced that it also received an approval from the Financial Conduct Authority (FCA) in the United Kingdom.
Describing the deal as transformative, Seplat Energy Plc noted that it was set to double its crude oil production to around 120,000 following the conclusion of the sales and purchase agreement.
“The transaction, which is expected to complete on December 12, 2024 is transformative for Seplat Energy, more than doubling production to around 120,000 barrels of oil equivalent per day.
“This will provide the company with a significant opportunity to further drive its growth and profitability, whilst contributing significantly to the Nigerian economy. These assets are of proven quality, located in one of the world’s leading hydrocarbon basins,” the company said.
Listing the transaction highlights, Seplat Energy noted that the final cash consideration payable to ExxonMobil at closing is now $672 million, with $128 million deposit paid in 2022 at first SPA signing, and total consideration at closing now $800 million.
It revealed that the deal is fully funded from available cash and debt facilities, with no new equity issuance required
“Further amount of $257.5 million (is) deferred to December 2025, related to Decommissioning and Abandonment and certain Joint Venture (JV) costs that will be partially offset by JV cash calls.
“The after-tax impact of this component on MPNU (is) expected to be $25-$35 million. The company will incur $23 million in other transaction related costs, with $64 million regulatory consent fees reflected in adjustments to the cash consideration due at closing,” the indigenous oil company stated.
The Roger Brown-led company also put the pro-forma 2P reserves for the enlarged group at 887 MMboe of oil as of June 30, 2024, with an increase of 86 per cent on Seplat’s reported 2P reserves, and pro-forma 2P + 2C reserves and resources of 1,210 MMboe an increase of 124 per cent.
While 2P reserves are the sum of a company’s proven and probable oil reserves, 2C resources are regarded as the best estimate of petroleum quantities that could be recovered from known accumulations.
It also put revenue increases at 245 per cent on a pro-forma basis to $1.456 billion, with adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increase to 199 per cent on a pro-forma basis (6M 2024) to $800 million.
Set to create Nigeria’s leading independent energy company, the prospectus showed that the enlarged company has equity in 11 blocks in onshore and shallow water Nigeria as well as 48 producing oil & gas fields.
In addition, it now has five gas processing facilities and three export terminals, with multiple high-potential investment opportunities to drive growth.
“The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (BRT); NGL recovery plant 9.6 per cent and participating interest in the Aneman-Kpono field,” it pointed out.
In terms of human resources, Seplat Energy Plc put the number at approximately 1,000 staff and 500 contractors, that will transition to the Seplat group.
The transaction, announced on February 25, 2022 with an effective date of January 1 2021, it said, was for an initial consideration of $1.283 billion, with up to $300 million in contingent payments payable over a period of five years (commencing 1 Jan 2022), and other customary closing adjustments.
But the final consideration payable, Seplat Energy said, now takes into account the ‘locked box’ adjustment with an effective date of January 1, 2021.
“After adjusting for locked box and other completion items, the final consideration payable to ExxonMobil will be $800 million, of which $128 million has already been paid as deposit,” the company stressed.
It added: “The $672 million payable on closing the transaction will be funded by: $350 million drawn under the RCF (Revolving Credit Facility), $300 million new three year Advance Payment Facility with ExxonMobil, and $22 million balance sheet cash.”
Emmanuel Addeh
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