Nigeria’s foremost indigenous energy company, Seplat Energy Plc, has said that it is still awaiting the next action by the government, over the assets acquisition deal it struck with Mobil Producing Nigeria Unlimited (MPNU), earlier in 2022.

The deal had to be suspended following the intervention by the government regulator, the Nigerian National Petroleum Corporation (NNPC) Limited, which later expressed its interest to acquire the same facilities.

Seplat had in February sealed an agreement to acquire the entire share capital of MPNU from Exxon Mobil Corporation.

The transaction, which is subject to ministerial consent and other required regulatory approvals, is a sale and purchase agreement to acquire the entire share capital of MPNU for a purchase price of $1.28 million, plus up to $300 million contingent consideration.

However, while awaiting the stipulated ministerial consent, the NNPC opted to exercise its right of first refusal as contained in the Joint Operating Agreement (JOA) of the JV + details of NNPC’s position on the planned sale of ExxonMobil shares to SEPLAT Energy Plc.

Consequently, the NNPC notified MPNU of its intention to exercise a Right of Pre-emption on ExxonMobil’s planned sale of its entire asset in Nigeria’s onshore and shallow waters.

The NNPC’s decision effectively means the sales agreement between SEPLAT and ExxonMobil had hit the rocks, at least in the meantime.

The right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.

The NNPC would be required by terms of the joint venture JOA, to fully match the offer of the winning bid.

Chief Executive Officer, Seplat Energy Plc, Mr Roger Brown, while reviewing the company’s unaudited results for the three months ended 31st March, 2022 recently, said the parties were still awaiting the government’s next line of action as this is a condition precedence for the parties to move ahead with the deal.

We are still “awaiting the necessary approvals from government and regulators”, Brown said, adding that the “proposed acquisition of MPNU remains on course,” and that the deal is expected to be completed in the second half of 2022.

He said: “Our proposed acquisition of MPNU remains on course. We are awaiting the necessary approvals from government and regulators and expect the transaction to complete in the second half of this year.

“The effective date of January 1, 2021, means we will benefit from higher recent oil prices and as we have previously reported, the addition of MPNU will nearly triple our production and double our reserves on a pro forma 2020 basis.

“The acquisition will reinforce our leadership of Nigeria’s indigenous energy sector and enable us to generate strong future cash flows that will underpin our investment in Nigeria’s energy transition and improve our overall stakeholder returns.

“It will also bring a significant undeveloped gas resource base which, alongside our ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed,” he said.

He added that the company delivered a good quarter that benefited from higher oil pricing, which offset lower production, owing to continuing problems with the Trans Forcados Pipeline.

“However, the alternative Amukpe-Escravos pipeline is mechanically complete and once we have signed the commercial agreements, we expect Chevron to be lifting our oil through the Escravos Terminal in the third quarter”, he stated.

Seplat has declared an improved revenue by 58.6 percent to N100.6 billion in its unaudited results for the three months ended 31st March, 2022.

According to the report, its gross profit soared to N48.8 billion from N20.1 billion year-on-year, rising by 122.3 percent. The company recorded a rise in profit before tax by 197.8 percent to N34.7 billion from N10.6 billion year-on-year.

Seplat also generated cash from its operations to the tune of N74.4 billion from N1.7 billion year-on-year, rising by 197.8 percent.

In its earlier insight, Wood Mackenzie, a trusted intelligence provider with unique insights on the world’s natural resources, had said in the energy transition era that the ExxonMobil and Seplat deal offered huge upside for oil, as well as gas.

Industry sources have described the decision of the NNPC to exercise its right of pre-emption as a setback to the deal that held huge prospects for Nigeria’s downstream oil and gas sector.

The NNPC authorities were reportedly set to meet the management of Exxon Mobil Corporation on March 17, 2022, over the Seplat-MPNU deal.

It cannot be confirmed if the meeting was held. (SOURCE: THEWILL)