Contrary to claims that the Nigerian National Petroleum Company Limited (NNPC) has exercised a right of pre-emption under the NNPC/Mobil Producing Nigeria Unlimited (MPNU) Joint Operating Agreement (JOA), Seplat Energy stated that the transaction remains valid.
In a statement made available to The Guardian, Seplat said: “The Company wishes to clarify that the Sale and Purchase Agreement (“SPA”), earlier announced on the 25 February 2022, deals with the acquisition of the entire share capital of MPNU’s shareholders, Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc., being entities of Exxon Mobil Corporation registered in Delaware (“ExxonMobil”).
“MPNU is not a party to the SPA and continues to hold its interests, rights and obligations under the NNPC/MPNU JOA.
“There are also some reports that the SPA between ExxonMobil and Seplat Energy has been terminated. Seplat Energy confirms that no event of termination has occurred, and the SPA remains valid and subsisting.”
Seplat added that it will continue to follow the laws of the country.
Business intelligence provider, Wood Mackenzie (WoodMac) had said the deal between ExxonMobil and Seplat Energy Plc will aid the latter’s diversification into shallow water, which is largely devoid of the thefts afflicting its onshore operations, therefore offering huge upside to Nigeria’s for oil and gas production.
WoodMac noted that since this transaction is a corporate acquisition, the Nigerian National Petroleum Company (NNPC) has no right to pre-empt a deal under the Joint Operating Agreement (JOA), which governs the joint venture (JV).
This leaves the ministerial consent as the only hurdle left, “although nothing can be taken for granted.”
MPNU has a 40% operating interest in a Joint Venture with NNPC (60%). The JV includes oil mining leases OMLs 67, 68, 70, 104, and the Qua Iboe oil export terminal. MPNU also has a 51% stake in the Bonny River natural gas liquids (NGL) Recovery project.
Seplat agreed to pay $1,283 million-plus contingent consideration of up to $300 million. The effective date is January 1, 2021, and completion is expected in H2 2022, pending ministerial approval.
Seplat’s debt financing of $825 million is fully committed by a syndicate of Nigerian and African banks, and energy and commodity traders.
If completed, the deal will be transformational for Seplat Energy, which is already the leading indigenous company in Nigeria, and will triple its working interest production to over 140,000 barrels of oil equivalent daily (boe/d), to account for 15% of Nigeria’s oil production.
Although this is Seplat’s first offshore purchase, it will acquire all of MPNU’s Nigerian staff, thus allaying any concerns about its operational capabilities.