TIDMSEPL
RNS Number : 8014C
Seplat Energy PLC
25 February 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
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/ .
Event Title: Seplat Energy Presentation
Event Date: 10.00 GMT / 11.00 WAT, 25 February
2022
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Webcast Live Event Link: https://secure.emincote.com/client/seplat/seplat011
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Conference call and pre-register https://secure.emincote.com/client/seplat/seplat011/vip_connect
Link:
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Archive Link: https://secure.emincote.com/client/seplat/seplat011
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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
+234 (0) 1 277
Seplat 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
-----------------
+44 (0) 20 3727
FTI Consulting (PR Adviser to Seplat Energy) 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
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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