Following the announcement by Seplat Energy Plc on February 25 of an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU), a subsidiary of ExxonMobil, Wood Mackenzie, a trusted intelligence provider that empowers decision-makers with unique insights on the world’s natural resources, in its recent insight, said in an energy transition era, both ExxonMobil and Seplat will be pleased with the deal which offers huge upside for oil and gas. 

Wood Mackenzie, the leading research and consultancy business for the global energy, power and renewable, resurface, chemicals, metals and mining industry, said because this deal is a corporate acquisition, NNPC has no rights to pre-empt transactions under the Joint Operating Agreement (JOA), which governs the Joint Ventures. He however said that rather a ministerial consent would be the only hurdle remaining, “although nothing can be taken for granted”.

MPNU has a 40percent operated interest in a Joint Venture with NNPC (60percent).

The JV includes OMLs 67, 68, 70, 104, the Qua Iboe oil export terminal. MPNU also has a 51percent interest in the Bonny River NGL Recovery project.

Related News

Seplat had agreed to pay $1,283 million plus a contingent consideration of up to $300 million. The effective date was 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.

Implications: If it completes, the deal will be transformational for Seplat Energy. It is already the leading indigenous company in Nigeria, but this will triple its working interest production to over 140,000 boe/d. In total, Seplat will operate 15percent of Nigerian oil production.

Crucially, the deal diversifies its operations into shallow water, which is largely devoid of the thefts afflicting its onshore operations. Although this is Seplat’s first offshore acquisition, it will acquire all of MPNU’s Nigerian staff, thus allaying any concerns about its operational capabilities.

On valuation he said “Our equity-based valuation of MPNU – excluding the Qua Iboe terminal – is $870 million (discounted 10percent, January 2021, $50/bbl long-term). However, at $70/bbl, we value the company at $1.678billion. In the energy transition era, ExxonMobil will be pleased with this deal. But so will Seplat, as the deal offers huge upside for oil as well as gas”.