Nigerian Government approves Seplat’s $1.28 billion acquisition of ExxonMobil assets

Omokolade Ajayi -
Key Points
  • Seplat Energy secures Federal Government approval for its $1.28 billion acquisition of ExxonMobil's Nigerian assets, a pivotal move for the company.
  • The acquisition includes stakes in key oil mining leases and the Bonny River gas recovery plant, enhancing Seplat's production capabilities.
  • Following the approval, Seplat's shares surged 9.9%, boosting its market capitalization to N3.37 trillion ($2.05 billion).

Seplat Energy, the energy group co-founded and partly owned by Nigerian energy tycoon Austin Avuru, has received crucial approval from the Federal Government of Nigeria for its acquisition of ExxonMobil Corp.'s Nigerian assets.

This approval marks a significant milestone in the long-awaited $1.28 billion deal, which was first announced in February 2022.

The deal, which includes the acquisition of ExxonMobil’s onshore assets, faced considerable delays due to Nigeria’s complex legal framework and regulatory hurdles.

On Nigeria’s Independence Day, President Bola Ahmed Tinubu announced the government's readiness to approve the sale, stating that ministerial approval would follow shortly.

The CEO of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, confirmed on Monday that the necessary approvals had been granted.

Acquisition details and implications

Under the terms of the agreement, Seplat will acquire a 40 percent stake in four oil mining leases, including the Qua Iboe export terminal, and a 51 percent stake in the Bonny River natural gas liquids recovery plant, previously owned by Mobil Producing Nigeria Unlimited.

This acquisition is seen as a pivotal move for Seplat, allowing it to expand its operations and enhance its production capabilities amid the backdrop of oil majors withdrawing from onshore operations due to challenges such as theft and sabotage.

As Nigeria's largest oil exporter, the country has seen a shift in focus among oil majors toward more lucrative deep offshore fields.

The NUPRC has streamlined the approval process for pending asset sales, offering quicker resolutions for transactions that require operators to address oil spill liabilities and community compensations.

Financial performance amid challenges

Despite a 4.7 percent decline in average daily production, Seplat Energy has demonstrated resilience through effective financial management and strategic growth initiatives.

The company reported a net profit of $42.89 million for the first half of 2024 and increased its dividend payout ratio to 80 percent, up from 51.4 percent the previous year.

The anticipated acquisition is poised to bolster Seplat’s position as Nigeria's largest listed energy company, potentially leading to increased production and revenue growth.

Following the government’s approval of the acquisition, Seplat Energy's share price surged by 9.9 percent in today’s trading session, rising from N5,217.2 ($3.18) to N5,738.2 ($3.50).

This increase not only benefited shareholders but also elevated the company's market capitalization to N3.37 trillion ($2.05 billion).

As Seplat Energy moves forward with this acquisition, it stands to further solidify its role in stabilizing Nigeria's vital oil sector and enhancing its competitive position in the energy market.