The Seplat Energy Plc and Mobil Producing Nigeria Unlimited (MPNU) Sale and Purchase Agreement (SPA) is slated for official closure this Thursday, per a reviewed document. Seplat Energy's recently issued prospectus indicates a revised final consideration of $800 million, down from the initial $1.28 billion.

A prospectus is a legally mandated document disclosing a listed company's operational details, financial position, and shareholder composition to prospective investors considering a specific security or investment.

In October, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) authorized the sale of ExxonMobil's onshore Nigerian oil and gas assets to Seplat Energy, following the initial agreement in February 2022.

Seplat Energy Plc, a prominent Nigerian energy company listed on both the Nigerian Exchange and the London Stock Exchange, informed the investing public about the new assets following the deal's conclusion and announced that it had also received approval from the Financial Conduct Authority (FCA) in the UK.

Seplat Energy Plc characterized the transaction as transformative, indicating that it is expected to double its crude oil production to approximately 120,000 barrels per day upon finalizing the sale and purchase agreement.

Seplat Energy Plc characterized the agreement as a game-changer, indicating that it is poised to double its crude oil output to approximately 120,000 barrels per day upon finalizing the sales and purchase agreement.

“The transaction, anticipated to conclude on December 12, 2024, is a pivotal moment for Seplat Energy, as it will more than double production to around 120,000 barrels of oil equivalent daily.

“This development presents a substantial opportunity for the company to enhance its growth and profitability while making a significant contribution to the Nigerian economy. The assets involved are of established quality and are situated in one of the premier hydrocarbon basins globally,” the company stated.

Highlighting the key aspects of the transaction, Seplat Energy disclosed that the total cash consideration payable to ExxonMobil at closing is now set at $672 million, with a $128 million deposit made in 2022 at the initial signing of the SPA, bringing the total consideration at closing to $800 million.

The company confirmed that the deal is fully financed through existing cash and debt facilities, eliminating the need for new equity issuance.

An additional $257.5 million is deferred until December 2025, related to Decommissioning and Abandonment, as well as certain Joint Venture (JV) costs, which will be partially mitigated by JV cash calls.

The after-tax effect of this component on MPNU is projected to be between $25 million and $35 million. The company will incur $23 million in other transaction-related expenses, with $64 million in regulatory consent fees accounted for in the adjustments to the cash consideration due at closing,” the indigenous oil firm noted.

Under the leadership of Roger Brown, the company also reported that the pro-forma 2P reserves for the expanded group stand at 887 MMboe of oil as of June 30, 2024, reflecting an 86 percent increase over Seplat’s previously reported 2P reserves, and pro-forma 2P + 2C reserves and resources totaling 1,210 MMboe, marking a 124 percent increase.

While 2P reserves represent the total of a company's proven and probable oil reserves, 2C resources are considered the most accurate estimate of the petroleum quantities that can be extracted from known deposits.

The revenue is projected to increase by 245 percent on a pro-forma basis, reaching $1.456 billion, while adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is expected to rise by 199 percent on a pro-forma basis (for the first half of 2024) to $800 million.

The prospectus indicates that the newly formed entity aims to become Nigeria's premier independent energy company, possessing equity in 11 blocks located in onshore and shallow water regions of Nigeria, along with 48 operational oil and gas fields.

Furthermore, the company now operates five gas processing facilities and three export terminals, presenting numerous high-potential investment opportunities to foster growth.

The acquisition of the entire issued share capital of MPNU will enhance the Seplat Group with the following assets: a 40 percent operated interest in OML 67, 68, 70, and 104; a 40 percent operated interest in the Qua Iboe export terminal and the Yoho FSO; a 51 percent operated interest in the Bonny River Terminal (BRT); a 9.6 percent interest in the NGL recovery plant; and a participating interest in the Aneman-Kpono field.

Regarding human resources, Seplat Energy Plc estimates that approximately 1,000 employees and 500 contractors will transition to the Seplat group.

The transaction, which was announced on February 25, 2022, with an effective date of January 1, 2021, involved an initial payment of $1.283 billion, along with potential contingent payments of up to $300 million over five years (starting January 1, 2022), in addition to other standard closing adjustments.

Seplat Energy reports that the final payment now includes the agreed-upon 'locked box' adjustment, effective January 1, 2021. Following reconciliation of the locked box mechanism and other closing conditions, the total payment to ExxonMobil will be $800 million, with $128 million already disbursed.

The remaining $672 million will be funded by a $350 million draw from the Revolving Credit Facility (RCF), a new $300 million three-year Advance Payment Facility with ExxonMobil, and $22 million in existing cash reserves.