REG - Seplat Energy PLC - Proposed Cash Acquisition

Seplat EnergyAnnouncement

25/02/2022 07:16

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RNS Number : 8014C  Seplat Energy PLC  25 February 2022

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 25 February 2022

PROPOSED CASH ACQUISITION

of

Mobil Producing Nigeria Unlimited ("MPNU")

by

Seplat Energy Plc ("Seplat Energy" or the "Company")

 

Lagos and London, 25 February 2022: Seplat Energy Plc, a leading Nigerian
energy company listed on the Nigerian Exchange and the London Stock Exchange,
is pleased to announce 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 "Transaction"). 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 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:

o 186% increase in production from 51 kboepd to 146 kboepd

o 170% increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl

o 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)

o 89% increase in total 2P reserves from 499 MMboe to 945 MMboe 1 

o 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

·  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 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

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, 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 deep-water 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, and a new $550 million senior term loan facility and $275
million junior offtake facility

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

·  Contingent payments, if materialised on Brent oil price annual average
above $70/bbl, will be funded through 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 re-application for 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."

 

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 monetise 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."

 

-------

 

The person responsible for arranging the release of this announcement on
behalf of Seplat Energy is Emeka Onwuka, CFO Seplat Energy Plc.

 

Signed:

 

Mr. Emeka Onwuka

Chief Financial Officer

 

 

Presentation and webcast

At 10:00 GMT / 11.00 WAT on 25 February 2022, Seplat Energy's Executive
Management team will host a conference call and webcast to present the
proposed Transaction.

The webcast can be accessed remotely via a live webcast link and
pre-registering details are below. After the meeting, the webcast recording
will be made available and access details of this recording are also set out
below.

A detailed investor presentation summarising the Transaction will shortly be
made available on Seplat Energy's website at http://seplatenergy.com/
(http://seplatenergy.com/) .

 Event Title:                             Seplat Energy Presentation
 Event Date:                              10.00 GMT / 11.00 WAT, 25 February 2022
 Webcast Live Event Link:                https://secure.emincote.com/client/seplat/seplat011
                                         (https://secure.emincote.com/client/seplat/seplat011)
 Conference call and pre-register Link:  https://secure.emincote.com/client/seplat/seplat011/vip_connect
                                         (https://secure.emincote.com/client/seplat/seplat011/vip_connect)
 Archive Link:                           https://secure.emincote.com/client/seplat/seplat011
                                         (https://secure.emincote.com/client/seplat/seplat011)

 

Please dial in 10 minutes ahead of the call. When dialling in, please follow
the instructions that will be emailed to you following your registration.

 

Contacts

 Seplat                                                             +234 (0) 1 277 0400
 Roger Brown, Chief Executive Officer

 Emeka Onwuka, Chief Financial Officer

 Carl Franklin, Head of Investor Relations

 Chioma Nwachuku, Director, External Affairs and Sustainability

 Edith Onwuchekwa, General Counsel/Company Secretary

 Scotiabank (Sole Financial Adviser to Seplat Energy)               +1 713 752 0900
 Moncef Attia / Luke Kanczes

 Investec (Corporate Broker to Seplat Energy)                       +44 207 597 4000
 Chris Sim / Jarrett Silver / Cameron MacRitchie

 Citigroup Capital Markets Ltd (Corporate Broker to Seplat Energy)  +44 207 986 4000
 Tom Reid / Luke Spells

 FTI Consulting (PR Adviser to Seplat Energy)                       +44 (0) 20 3727 1000
 Ben Brewerton / Christopher Laing / Rosie Corbett

 

 

 

Information on Seplat Energy

Seplat Energy Plc is Nigeria's leading indigenous energy company. It is listed
on the Premium Board of the Nigerian Exchange (NGX: SEPLAT) and the Main
Market of the London Stock Exchange

(LSE: SEPL).

Seplat Energy is pursuing a Nigeria-focused growth strategy and is well
positioned to participate in future asset divestments by international oil
companies, farm-in opportunities, and future licensing rounds. The Company is
a leading supplier of gas to the domestic power generation market.

http://seplatenergy.com (http://seplatenergy.com/)

 

Information on MPNU

MPNU is a Nigerian incorporated subsidiary of ExxonMobil with more than 60
years' operating experience in Nigeria.

MPNU's operated shallow water portfolio primarily comprises a 40% interest in
four oil mining leases (OMLs 67, 68, 70 and 104) under a joint operating
agreement with Nigerian National Petroleum Corporation ("NNPC"), along with
the Qua Iboe Terminal and a 51% interest in the Bonny River Terminal and the
Natural Gas Liquids Recovery Plants at EAP and Oso.

ExxonMobil's deep-water business in Nigeria will not be transferred.

The acquisition of MPNU includes MPNU's dedicated and highly experienced
workforce consisting of approximately 1,000 employees and 500 contractors.
Employees exclusively involved in ExxonMobil's deep-water business will not be
transferred.

MPNU holds net working interest 2P liquids and gas reserves of 409 MMbbl
liquids and 211 Bcf respectively derived from the ERCE report as of 1 January
2021 ("ERCE Report") which is primarily based on the estimates of ERC
Equipoise Ltd ("ERCE") with respect to the quantities of natural gas and
liquids in OMLs 67, 68, 70 and 104 which are classified as 2P reserves and/or
resources. Produced gas has historically been used for fuel and re-injection
providing a source of significant incremental value and MPNU's net working
interest production was approximately 95 kboepd in 2020.

 

Further Information

Legal Advisors to Seplat Energy:

·    White & Case LLP

·    Olaniwun Ajayi LP

·    Udo Udoma & Belo-Osagie

 

 

 

Important Notices

This announcement has been issued by and is the sole responsibility of the
Company. No representation or warranty express or implied, is or will be made
as to, or in relation to, and no responsibility or liability is or will be
accepted by Scotiabank or by any of its affiliates or agents as to or in
relation to, the accuracy or completeness of this announcement or any other
written or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is expressly
disclaimed. This announcement is not a prospectus but an advertisement.

Scotiabank is acting exclusively for the Company in connection with the
Transaction and no one else and will not be responsible to anyone other than
the Company for providing the protections afforded to clients of Scotiabank
nor for providing advice in connection with the Transaction or any other
matters referred to in this document.

This announcement does not constitute or form part of any offer or invitation
to purchase, otherwise acquire, issue, subscribe for, sell or otherwise
dispose of any securities, nor any solicitation of any offer to purchase,
otherwise acquire, issue, subscribe for, sell or, otherwise dispose of, any
securities. This announcement is not an offer of securities for sale or a
solicitation of an offer to purchase securities.  The securities of the
Company referred to herein have not been and will not be registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United States unless they are registered with the U.S.
Securities and Exchange Commission or an exemption from the registration
requirements of the Securities Act is available.

The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restrictions.

Certain statements in this announcement are forward-looking statements which
are based on the Company's, expectations, intentions and projections regarding
its future performance, anticipated events or trends and other matters that
are not historical facts.  These statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties and
other factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements.  Given these risks
and uncertainties, prospective investors are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements speak only
as of the date of such statements and, except as required by applicable law or
regulation, the Company undertakes no obligation to update or revise publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.

 

 1  Based on a 5.8 Mscf to boe conversion factor

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