The divestment, initially revealed in 2023 and finalized in recent weeks, is expected to enhance cash flow in the fourth quarter and aligns with Equinor’s strategy to refine its international portfolio, as stated by the company.
“The divestitures allow for increased investments in regions where Equinor can provide the greatest value and develop a more concentrated and resilient international portfolio,” the company noted, without providing further details.
Equinor has previously indicated plans to boost its international production by approximately 100,000 barrels of oil equivalent per day (boed) by 2030, focusing on new developments in Brazil, the UK, and the US.
Philippe Mathieu, executive vice president for international exploration and production at Equinor, emphasized that this exit is part of the company’s strategy to maintain long-term production and profitability.
“With these divestitures, we unlock value and implement our strategy to streamline the international portfolio. Coupled with recent acquisitions and investments in our competitive projects, we aim to ensure sustained long-term production and profitability,” Mathieu stated.
He further remarked, “Nigeria and Azerbaijan have played significant roles in our international portfolio for many years. Alongside our partners and suppliers, we have generated substantial value for Equinor and the broader community. I extend my gratitude to them and our employees in Nigeria for their exceptional efforts and commitment over the years, and I wish our team well as they transition in their careers.”
The transaction grants Chappal Energies a 53.85 percent ownership interest in Oil Mining Lease (OML) 128, which includes a unitized 20.21 percent stake in the highly productive Agbami oil field operated by Chevron.
The Agbami field stands as one of Nigeria's largest deep-water oil fields, having commenced production in 2008 and yielding over one billion barrels of oil to date. This achievement underscores its status as one of Nigeria's most significant offshore resources.
Alongside the acquisition, Chappal Energies will take over the operatorship of OML 129, which holds substantial potential.
This block encompasses the Nnwa, Bilah, and Sehki discoveries, with the Nnwa discovery being part of the expansive Nnwa-Doro gas field. Despite its extensive reserves and critical role in Nigeria's energy strategy, the Nnwa-Doro resource has remained untapped for over two decades.
“This marks a significant milestone for us as a local company entering an offshore production sharing contract (PSC) through a competitive bidding process,” stated Ufoma Immanuel, managing director of Chappal Energies. “This acquisition is in line with our goals of securing current production while exploring development opportunities.”
Immanuel highlighted the importance of this acquisition in realizing the potential of world-class assets and enhancing Nigeria's economic growth.
“We are committed to advancing the Nigerian government’s energy initiatives, particularly the Decade of Gas agenda, which aims to maximise the value of the country’s gas resources for economic transformation,” he said.
S&P Global indicates that the project's financial viability could be greatly improved if the partners are able to negotiate favorable terms for the development of the Nnwa-Doro resources or align the project with the Petroleum Industry Act (PIA).
The implementation of post-PIA conditions, which include lowered royalties of 5 percent for exports and 2.5 percent for domestic gas and gas liquids, could enhance the project's Net Present Value (NPV) by over $1 billion based on a baseline gas price of approximately $3/Mcf. Additionally, this would lower the break-even price (BEP) from $7/Mcf to $3/Mcf, according to S&P Global.
Immanuel emphasized the essential nature of regulatory and governmental backing in promoting significant investments and supporting the growth of local energy firms.
Rand Merchant Bank, a division of FirstRand Bank Limited, served as the exclusive financial advisor to Chappal Energies for this transaction.
Although the financial specifics of the acquisition have not been revealed, this deal marks a pivotal advancement in Chappal Energies' initiative to rejuvenate aging assets and improve operational efficiency.
Industry experts believe this shift presents a distinctive opportunity for local companies like Chappal Energies to assume a prominent position in Nigeria's oil and gas sector and play a vital role in shaping the nation's energy landscape.