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Seplat Energy Set To Acquire Mobil Producing Nigeria Unlimited

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…Proposed Cash Acquisition of Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Plc (Seplat Energy)

…Proposed Cash Acquisition of Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Plc (Seplat Energy)

Olushola Okunlade Writes

Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange 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 (ExxonMobil).

The completion of the transaction is subject to ministerial consent and other required regulatory approvals.

Transaction Summary

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 the 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)  

Transformational Impact   

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  o 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 MMboe

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. The 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 the 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.

…Proposed Cash Acquisition of Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Plc (Seplat Energy)

A Strong Operating Portfolio

The MPNU portfolio primarily consists of: 

A 40% operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure (NNPC is the 60% partner).

The Qua Iboe Terminal, is one of Nigeria’s largest export facilities.

51% interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.

It does not include ExxonMobil’s deepwater assets in Nigeria.

MPNU will operate as a standalone subsidiary of Seplat Energy and upon closing and following receipt of requisite regulatory approvals, Seplat Energy will align MPNU with its overall strategic goals and ESG objectives.

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, a new $550 million senior term loan facility, and a $275 million junior offtake facility. 

Global financing syndicate comprising Nigerian and international banks, as well as commodity trading companies.

Contingent payments, if materialized on Brent oil price annual average above $70/bbl, will be funded through a 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 a 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.

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.”    

…Proposed Cash Acquisition of Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Plc (Seplat Energy)

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 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. 

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.” 

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NNPC Board Chairman Commends Nigeria’s Participation At OTC 2022

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‘There’s Sufficient Petrol’, Don’t Panic To Buy, Says NNPC

Olushola Okunlade Writes

Senator Margery Chuba-Okadigbo, Chairman of the Board of the Nigerian National Petroleum Company (NNPC) Ltd., on Monday commended the Nigerian delegation at the 2022 Offshore Technology Conference (OTC), in Houston, Texas, United States.

Chuba-Okadigbo gave the commendation while declaring open the OTC Nigerian exhibition pavilion at the conference.

She expressed her excitement toward declaring the pavilion open, saying that it was a thing of joy and pride that Nigeria is well represented at the conference.

Reports have it that the theme of the Nigerian exhibition pavilion is: “Energy Transition and the Future of Africa”, organized by the Petroleum Technology Association of Nigeria (PETAN).

The OTC is a platform where energy professionals across the globe meet to exchange ideas and opinions to advance scientific and technical knowledge for offshore resources.

“I am delighted to declare this exhibition open. Again, it’s a thing of joy and pride to see you Nigerians well represented in foreign countries,” she said.

Earlier in his opening remarks, the Chairman of PETAN, Mr. Nicolas Odinuwe, said that the theme was carefully chosen to “reflect the current realities in African oil and gas.”

Odinuwe called on Nigerian oil and gas industry leaders to continue to echo PETAN’s calls to deepen Nigerian content as always and implored the NNPC Ltd. board and others to indulge the association.

“OTC means different things to different people. But thanks to PETAN’s focused participation.

“PETAN and Nigeria have built capacities, capabilities, and visibility. PETAN has been the host of the Nigerian Pavilion for over 15 years.

“And we have been fully supported by the NNPC (now NNPC Limited) who are in transition.

We are here to continue to propagate, advocate and advance technology that has led to Nigeria being the only country in Sub-Saharan Africa with a robust exploration and production service industry,” he said.

According to the chairman, OTC gives attendees access to leading-edge technical information.

He said: “The benefits of the OTC 2022 event include showcasing companies’ capabilities to over 1,000 delegates and over 250 companies in the oil and gas industry.

“Also to give exhibitors the chance to promote their products and services to operators and contractors in the local region.

“Other benefits include gaining access by organizations to the latest industry news, a presence at one of the world’s largest oil and gas events and access to networking opportunities with professional contacts from across the world.

“Networking with the upstream, midstream, and downstream organizations as well as high profiled government officials and key decision-makers in the industry.

” The conference will give participants the opportunity to build and establish new leads as well as entrench a global presence in the industry.

“It will enable them to get familiar with competitors’ capabilities to stay ahead in the industry.”

Odinuwe said that PETAN had been responsible for leading and hosting the Nigerian government agencies, stakeholders, oil and gas companies, and investors at the OTC yearly.

He said that among the reasons for OTC was to deliver a unique experience for exhibitors and delegates to interact with global professionals as they share their insights on technological advances, energy transition, safety, environmentally focused solutions, and economic and regulatory impacts of the offshore energy sector.

“Organisations’ attendance will create a chance to develop business relationships and tap into emerging regions that are vital to offshore development as well as obtaining recognition necessary for growth and visibility to thousands across the globe,” he added.

He recalled that at the OTC 2019, Nigeria had the fifth-largest representation of over 60 participating countries.

“The value of participating organizations’ presence cannot be overestimated as they stand a chance to project their activities to investors and stakeholders spanning different countries.

The event will feature, among others, the formal opening of the Nigerian exhibition pavilion in the NRG Park; the luncheon and panel sessions on the Nigerian energy and supportive industries; the Nigerian Industry Awards Dinner and Cocktail; sideshows of Nigerian culture displays and entertainment; technical sessions and networking golf event,” he said.

PETAN is an association of indigenous Technical Oilfield Service Companies.

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Nigeria Oil Firms Spill 1,545 Barrels Of Crude Oil In First Quarter 2022

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Nigeria Boosts Oil Production By 200,000b/d

Oil and gas companies operating in the Niger Delta spilled 1,545 barrels of crude oil, an equivalent of 246, 000 liters, in three months, from January to March 2022, according to data obtained from the National Oil Spill Detection Response Agency, NOSDRA.

Although this indicates 52.6 percent less than the 3,262 barrels of crude oil spilled in the corresponding period of 2021, the development reflects the severe impact of environmental pollution on the nation’s economy due to crude oil exploration.

On a company by company basis, the report revealed that Heritage Energy Operational Service Limited recorded the highest spills, with 404.3 barrels of crude oil spilled in 31 incidents; followed by Shell Petroleum Development Company, SPDC, with 404.3 barrels of crude oil spilled in 31 incidents.

Others on the list include Empire energy, 314.47 barrels of crude oil spilled in one incident; Eroton Exploration and Production Limited spilled 69.57 barrels of crude oil in one incident; Nigerian Agip Oil Company, NAOC, spilled 49.7 barrels of crude oil in 16 incidents; while Enageed Resource Limited spilled 15 barrels in two incidents.

While the value of the crude oil spilled might not be huge, the damage to the environment, the disruption to the livelihoods of individuals within the impacted communities, and the manpower and financial resources required to clean up the spill and return the environment to its original state, run into billions of dollars.

Reacting to the development, the former Chairman, Petroleum Association of Nigeria, Bank-Anthony Okoroafor, said, “It cost millions of dollars to clean a barrel of a crude oil spill.

The cost of managing oil spillage is very huge, it cannot be quantified because the cost to human life is more. Environmental degradation caused by the spillage affects human life. A lot of people in the next 10 years or more will suffer from serious lungs problems and cancer among others.

According to Duke Energy Distinguished Professor of Environmental Engineering and Science, Hilary Inyang, who has completed a scientific study of the areas, “A deep analysis should show that it would cost more than $50 billion to clean up more than 2,500 sites in the entire Niger Delta, even with the recognition that there have been more spills than spill sites.

Speaking further, he said, “It would also take more than 50 years, even if that money was available. My back-of-the-envelope estimate is that for Ogoniland sites alone, about $6 billion are needed but risks can be reduced to tolerable levels with $3 billion.”

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Adulterated Fuel: Reps Clear Oando, MRS, Others, Ask SON To Test For Methanol

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Adulterated Fuel:

By Moninuola Sulaiman

The House of Representatives has exonerated the oil marketers accused of importing adulterated fuel into the country

The lower chamber cleared Duke Oil, MRS Oil and Gas, Oando Oil and Emadeb, Energy/Hyde/AY Maikifi/Britannia-U Consortium, noting that they did not commit any offence.

The House had earlier asked the NNPC Limited to suspend the four oil companies from the importation of PMS and other products pending the outcome of the investigation.

The decision to exonerate the oil marketers followed the consideration of the report of the Committee on Petroleum (Downstream) by the Committee of the Whole.

The committee recommended that the marketers did not commit any crime because they were exonerated by the NNPC Limited.

Two weeks ago, the lower chamber rejected this same report because it did not address the fate of those that imported the adulterated fuel into the country. Therefore, the House ruled that the committee should rework the report.

Background To Adulterated Fuel

In February, the government had detected a high quantity of methanol in a batch of PMS imported into the country. The attempt to recall the products led to fuel scarcity across the country.

NNPC Limited, which coordinates the government’s direct sale and direct purchase fuel policy, listed the four oil marketers for the importation of the adulterated fuel. However, MRS dismissed the claim by NNPC Limited, stating that NNPC Limited is the sole importer of PMS.

In another twist, Emadeb, Energy/Hyde/AY Maikifi Consortium also accused Britannia-U of importing the fuel on behalf of NNPC Limited.

It was expected that the intervention of the House would end the accusation and counter-accusation trailing the importation of the contaminated products.

When the Group Managing Director of NNPC Limited, Mele Kyari, appeared before the investigative panel, he said the marketers had refused to bear the liability for importing the methanol contaminated fuel.

Mr Kyari said the marketers claimed they imported the specification requested by the country. He added that Nigeria does not test for methanol.

New Recommendations

The Committee made seven recommendations to the House. It asked the Standard Organisation of Nigeria to include the test for methanol for future imports.

NNPC Limited was also asked to ensure a local supply of 90 million litres of PMS for local consumption.

The others are: “That the Hon. Minister of Petroleum Resources should expedite action for completion of the rehabilitation work and ensure upgrading of the major refineries at Warri, Port Harcourt and Kaduna to meet AFRI5 Specification to boost local refining and reduce over-dependence on imported PMS into Nigeria to avert reoccurrence.

“Minister of State, Petroleum Resources should initiate the adoption of the 2017 PMS Standard (NIS 116:2017) as approved by the Standards Organization of Nigeria (SON) which include testing for Methanol for future importation of the product into the country to mitigate reoccurrence.

“The Federal Government should position the Standards Organisation of Nigeria (SON) to implement its mandate to the latter by subjecting all imported white Petroleum and other products to the Offshore conformity assessment and also resume routine quality control of them and other products imported into the country at our various Seaports, Airports and Borders throughout Nigeria as shrined in the Standards Organisation of Nigeria enabling Act of 2015. This will finally address the reoccurrence of the importation of off-specification PMS and other substandard goods into Nigeria;

“Based on the Nigerian National Petroleum Company Limited exoneration, the Four(4) Oil Marketers/Importers (Duke Oil, MRS Oil and Gas, Oando Oil and Emadeb, Energy/Hyde/AY Maikifi/Britannia-U Consortium) did not commit any offence, therefore not recommended for suspension;

‘The Federal Government is to note that the Standards Organisation of Nigeria (SON) mandate is also specifically enshrined in item 62 (d) of Part I of the Second Schedule (Exclusive Legislative List), to the 1999 Constitution;

“The Regulatory Authority in this case Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) should ensure proper housekeeping by working with Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Major Oil Marketers Association of Nigeria (MOMAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) in ensuring water is drained regularly out of the tanks in the Tank Farms, Tankers (trucks) and underground tanks at the service stations;

“The Nigerian National Petroleum Corporation (NNPC) Limited shall maintain local supply and distribution of 90 Million litres daily across the country until normalcy is restored.

The recommendations were adopted without any objection by the members of the House.

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