Seplat Energy has debunked newspaper and social media reports that its recent deal with ExxonMobil to buy some of the latter’s oil assets in Nigeria has been called off.
The oil driller made the disclosure in a note to the Nigerian Exchange Limited on Monday.
The energy firm equally responded to reports claiming the Nigerian National Petroleum Corporation (NNPC) has decided to exercise a right of pre-emption under the NNPC/Mobil Producing Nigeria Unlimited (MPNU) joint operating agreement.
Also called right of first refusal, right of pre-emption confers the contractual right to be offered a property first on a person/entity in the event that the owner resolves to get rid of it.
“The Company wishes to clarify that the Sale and Purchase Agreement (“SPA”), earlier announced on the 25 February 2022, deals with the acquisition of the entire share capital of MPNU’s shareholders, Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc., being entities of Exxon Mobil Corporation registered in Delaware (“ExxonMobil”),” Seplat said.
According to the energy firm, MPNU, is not a party to the agreement and continues to hold its interests, rights and obligations under the NNPC/MPNU JOA.
Seplat declared in February it had inked a deal worth $1.3 billion with Exxon Mobil, the parent company of MPNU, towards procuring its Nigerian shallow water assets.
Seplat said, contrary to news making the round, its pact with Exxon Mobil has not been terminated, further stating that the contract remains valid.
Seplat’s agreement with ExxonMobil involves the takeover of the entire offshore shallow water business of the latter, “which is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing 95 kboepd (W.I.) in 2020.”
The deal requires ministerial consent and some regulatory approvals to be successful, and the NNPC has stated some prerequisites that must be fulfilled for the agreement to be perfected. International oil companies that offload their stakes in Nigeria’s upstream oil industry must handle matters like abandonment and decommissioning of oil assets, NNPC boss Mele Kyari has said.
“Because this is a corporate acquisition, NNPC has no rights to pre-empt a deal under the Joint Operating Agreement, which governs the JV. This means that ministerial consent would be the only hurdle remaining,” Business Day reported, citing analysts at research house Wood Mackenzie.
“If NNPC wants to acquire that portfolio, then it will have to out-bid the competition. If successful in raising up to US$5 billion with Afreximbank, it would have the firepower to do just that, and massively strengthen its position in the onshore delta.”
The transaction will nearly treble Seplat’s daily output by delivering a 186 per cent increase in production from 51 kpoed to 146 kpoed at consummation.
ExxonMobil has been desirous of offloading its shareholding in a joint venture operated with NNPC, where it holds a 40 per cent stake.
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