Officialising a transaction that has been in the making for some time, Seplat Energy has announced this morning its proposed cash acquisition of Mobil Producing Nigeria (MPNU) for $1.283bn.
Seplat Energy Offshore Ltd, a subsidiary of Seplat Energy, has now entered into the Sale and Purchase Agreement to acquire the entire share capital of MPNU from Exxon Mobil Corporation. The purchase price is set at $1.283bn plus up to $300m contingent consideration, subject to lockbox, working capital and other adjustments.
While Seplat expects the transaction to close in the second half of this year, it is still subject to Ministerial Consent and regulatory approvals from the NUPRC and the Nigerian Federal Competition and Consumer Protection Commission.
By acquiring MPNU, Seplat Energy takes over Exxon Mobil’s entire offshore shallow water business in Nigeria which includes assets that are very rich in natural gas and gas liquids. The acquisition would increase Seplat Energy’s production by a whooping +186% while increasing its total 2P reserves by +89%.
The total portfolio includes a 40% operating ownership of OMLs 67, 68, 70 and 104 and their associated infrastructure. Combined, the assets produced an average of 177,000 boepd gross in 2021 according to NUPRC data. OMLs 67, 68 and 70 form what is known in Nigeria as the “East Area”, where ExxonMobil has executed some of the most successful flaring reduction and valorization projects in the Niger Delta.
Such developments notably included the Oso natural gas liquids (NGL) plant commissioned in 1998, and its expansion with the NGL II project in 2008. Both projects also provide gas to the Bonny River Terminal, enabling production of key commodities such as LPG for the domestic and export markets. Last year, the Bonny River Terminal provided some 70,000 metric tonnes of LPG to the local market for instance, making it Nigeria’s second biggest source of domestic LPG supply.
On the other side, OML 104 contains the producing Yoho field. The shallow water Yoho development project came on stream in early 2003 and oil is exported via the Yoho FSO terminal.
OML 104 has significant undeveloped gas reserves and could potentially see the deployment of a floating LNG (FLNG) unit in the near future. The license for the project was awarded to local company UTM Offshore in 2021.
As part of the transaction, Seplat Energy is also acquiring all the aforementioned infrastructure, including the Qua Iboe Terminal, a 51% interest in the Bonny River Terminal and the EAP and Oso natural gas liquids recovery plant.
Seplat Energy will fund its cash acquisition through a combination of existing cash resources and credit facilities. In addition, it is securing a new $550m senior term loan facility and a $275m junior off-take facility. The financing syndicate comprises of both Nigerian and international banks, along with commodity trading companies.