KEY POINTS
- Seplat Energy’s $800 million deal with MPNU is set to double production and increase pro-forma revenue to $1.45 billion by the first half of 2024.
- The acquisition secures stakes in key oil fields and infrastructure, adding 887 MMboe in reserves and significant undeveloped gas resources.
- Fully funded without equity issuance, the deal maintains a strong balance sheet with a net debt-to-EBITDA ratio of 0.8x post-completion.
Seplat Energy Plc, Nigeria’s foremost indigenous energy company, is poised for transformative growth with its $800 million acquisition of Mobil Producing Nigeria Unlimited (MPNU).
The deal, initially valued at $1.28 billion and approved by the Nigerian Federal Government, was recalibrated to $800 million, showcasing Seplat’s strategic acumen and disciplined negotiation.
Seplat to double output, boost revenue
Scheduled to close in December 12, 2024, the acquisition is poised to more than double Seplat’s production capacity and significantly enhance its financial performance, cementing the company’s position as a leading force in Nigeria’s energy sector.
The acquisition will increase Seplat’s daily production by 148 percent to approximately 120,000 barrels of oil equivalent, while pro-forma revenue for the first half of 2024 is expected to rise by 245 percent to $1.45 billion. The move represents a strategic milestone in Seplat’s growth trajectory and its commitment to driving sustainable energy development in Nigeria.
Transaction details and funding
The $800 million acquisition cost includes a $128 million deposit paid in 2022, with the remaining $672 million to be financed through a $350 million revolving credit facility, a $300 million advance payment facility, and $22 million in balance sheet cash. The deal also includes deferred payments of $257.5 million, covering decommissioning and joint venture-related costs, due by December 2025.
Seplat’s CEO Roger Brown emphasized that the acquisition has been fully funded without requiring new equity issuance, ensuring that the company’s balance sheet remains robust. Post-acquisition, Seplat’s pro-forma net debt-to-EBITDA ratio is projected to remain at a conservative 0.8x, well within its corporate policy of 2.0x.
Strategic benefits and asset highlights
The acquisition brings a 40 percent operated interest in OML 67, 68, 70, and 104, along with stakes in key infrastructure such as the Qua Iboe export terminal and the Bonny River Terminal NGL recovery plant. These assets boast high-quality, liquids-rich production and significant undeveloped reserves, with combined 2P reserves of 887 MMboe and 2C resources of 1,210 MMboe for the enlarged group.
Seplat will also integrate approximately 1,000 MPNU employees and contractors, strengthening its operational capacity. Short-term opportunities include optimizing existing well stock and infrastructure, while longer-term growth will focus on monetizing multi-Tcf gas resources.
Financial impact
On a pro-forma basis, Seplat’s adjusted EBITDA for the first half of 2024 is expected to reach $800 million, a 199 percent increase compared to the standalone figure. The company’s enhanced production profile and operational efficiencies are expected to drive sustained profitability, with MPNU assets generating an average realized price of $84.8 per barrel in the period.
Completion timeline and outlook
The transaction, first announced in February 2022, has been classified as a Reverse Takeover under UK Financial Conduct Authority rules. Seplat’s shares will be re-admitted to trading on the London Stock Exchange and Nigerian Exchange following the transaction’s completion.
Brown noted, “This acquisition marks a pivotal moment for Seplat Energy, enhancing our scale, profitability, and ability to contribute meaningfully to Nigeria’s energy transition.” Investors are optimistic about the strategic benefits, which align with Seplat’s vision of becoming a leading energy provider in Africa.
