Seplat acquires Exxon’ $1.3bn shallow-water oil assets

Seplat Energy Plc, Nigeria’s biggest independent oil company, has agreed to acquire some of Exxon Mobil Corp.’s assets in the country for at least $1.28 billion.

The acquisition will almost triple Seplat’s production volumes, adding about 95,000 barrels of oil equivalent a day. It’s another sign of the retreat by major international oil companies from certain Nigerian projects following years of spills and other disruptions, while investors push them toward cleaner forms of energy.

The deal to buy Mobil Producing Nigeria Unlimited encompasses the entire shallow-water business of Exxon — which retains its deep-water assets — in Nigeria, Seplat said Friday in a statement. Completion of the transaction will make it one of the largest independent energy companies on both the Nigerian and London Stock Exchanges, according to Seplat.

Nigeria is looking to its local companies, which are snapping up the assets that international producers are divesting, to stave off a decline in output as foreign investment shrinks. Heirs Oil & Gas Ltd. plans to restore an oil block it acquired last year from Shell Plc to previous production levels that would make it one of the country’s biggest domestic operators.

“This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations,” Exxon said in a statement.

With its latest deal, Seplat will get an operating stake in four licenses, in which state-owned Nigerian National Petroleum Co. holds a 60 per cent interest. Seplat is also among local bidders for other assets being sold by Shell. The European major is looking to complete an exit process started in the country more than a decade ago by selling its remaining onshore and shallow-water fields, so it can focus on deep-water developments.

Shell’s Sale
Seplat remains interested in the licenses Shell has put up for sale, Chief Executive Officer Roger Brown said in an interview with Bloomberg on Friday. “We will continue to talk to Shell,” he said.

The deal with Exxon will boost Seplat’s production to 146,000 barrels of oil equivalent a day from 51,000, according to the company. It also includes significant undeveloped gas potential, it said.

The new permits are also offshore, which means less chance of disruptions than it typically would be for onshore operations, and that’s “a real positive for us,” Brown said. “Exxon, even through difficult times, have been able to produce here,” he said.

While Seplat’s capital expenditure for the assets will differ from Exxon’s, “we do want to invest and grow them,” Brown said. Long-term plans also include the potential for liquefied natural gas exports, he said.

On top of the purchase price, there’s a contingent consideration of as much as $300 million depending on working capital and other adjustments. Completion is subject to regulatory approvals, and the transaction is classified as a reverse takeover for the purposes of U.K. listing rules.