ACCORDING Wood Mackenzie, a major research and consulting firm, the Seplat and ExxonMobil transaction has significant upside for both oil and gas.
Seplat Energy Plc stated on February 25 that it had reached an agreement to purchase the full share capital of Mobil Producing Nigeria Unlimited, an ExxonMobil subsidiary.
However, Wood Mackenzie recently stated in an insight that both ExxonMobil and Seplat would be delighted with the agreement in the energy transition age, adding that the arrangement offers enormous upside for both oil and gas.
According to the research firm, because it is a corporate acquisition, the NNPC has no rights to pre-empt a deal under the Joint Operating Agreement, which governs the joint venture adding that ministerial consent would be the only remaining hurdle.
Mackenzie, on the other hand, cautioned against taking anything for granted.
In a joint venture with the NNPC, MPNU owns a 40% operating interest (60 per cent). The OMLs 67, 68, 70, 104, as well as the Qua Iboe oil export facility, are part of the joint venture
In addition, MPNU owns a 51% stake in the Bonny River NGL Recovery project.
Seplat has agreed to pay $1,283 million plus a $300 million contingent consideration.
A syndicate of Nigerian and African banks, as well as energy and commodity dealers, have completely committed $825 million in debt financing to Seplat.
It states in part, “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 15 percent of Nigerian oil production.”
It added, “There is also possible upside from the Petroleum Industry Act fiscal terms. Our analysis shows the joint venture portfolio would more than double in value if Seplat converts.
However, this is far from certain, since it would have to relinquish up to 60 percent of its acreage and much of the resource it has just acquired.
“A thorough review of its now extensive portfolio to identify the most advantaged barrels will be an urgent priority. The deadline for converting to the new fiscal terms is February 2023,” it added.
