Exxon Nigeria’s shallow-water business to be purchased by Seplat

London-listed Seplat Energy has agreed to pay up to $1.58 billion for Exxon Mobil’s shallow-water oil and gas producing assets in Nigeria. Seplat’s output will more than double as a result of the acquisition.  

Exxon Mobil’s Mobil Producing Nigeria company, which owns a 40% share in more than 90 shallow-water and onshore platforms and 300 producing wells in Nigeria (the rest is controlled by the state-owned NNPC), as well as holdings in two significant crude export terminals, is involved in the agreement. 

Seplat will receive roughly 95,000 barrels of oil equivalent per day (boe/d) as a result of the agreement, bringing its total production to around 146,000 boe/d.  

Seplat said it will pay an initial $1.28 billion, with a further $300 million payable between 2022 and 2026 if average Brent crude prices surpass $70 per barrel and the bought assets’ output exceeds 60,000 barrels per day. It plans to pay the first instalment using a combination of cash and credit facilities, as well as $825 million in new loan facilities. It stated that any contingent payments will be made from cash flow.  

The acquisition also includes complete control of the Qua Iboe export facility and a 51% share in the Bonny River export terminal, in addition to the producing assets. This month, combined crude loadings from these facilities were expected to be about 245,000 b/d, with the latter being constrained by recent maintenance. Seplat will also purchase two natural gas liquid (NGL) recovery units as part of the agreement. 

ExxonMobil is still active in Nigeria’s offshore, with projects such as the deepwater Erha, Usan, and Bonga.  

“We will be able to focus competitively advantaged investments in our strategic assets as a result of this transaction, Its upstream activities in offshore Guyana and Brazil, as well as the US Permian basin, are its main emphasis”. the US company stated. 

The agreement is one of the first large transactions to emerge after Nigeria passed the Petroleum Industry Bill, which intends to clarify the legal environment in order to enable 3 million barrels per day of production capacity by attracting more foreign investment. Seplat is a London-listed firm, but it does all of its business in Nigeria, thus whether it displaced a corporation the size of ExxonMobil counts. 

According to Argus, Nigerian crude output was 1.5 million barrels per day in January.