Seplat to accelerate growth with MPN acquisition __Brown
Divests Ubima interest for $55 m
Earns N100.6 bn revenue, N48.8 bn profit
Sopuruchi Onwuka
Indigenous multinational independent energy firm, Seplat, has declared that its proposed acquisition of Mobil Producing Nigeria Unlimited (MPNU) remains on course and awaits regulatory approval.
On the other hand, Seplat is pulling out from the Ubima oil assets, targeting $55 million from divestment of its interests in the oilfield where it is beginning to record reserves depletion.
The company also announced significant N100.6 billion in revenue in the first quarter of the year, posting a strong business outlook with prospects of larger portfolio in the post pandemic upstream oil business.
In its first quarter performance statement, the company said it expects to conclude acquisition of a basket of assets hosted in ExxonMobil’s joint venture with government within the second half of the year. The assets in prospect are expected to raise Seplat’s status and position it to become a major hydrocarbon liquids producer and unassailable gas factor in the Nigerian petroleum industry.
Chief Executive Officer, Seplat Energy Plc, Mr. Roger Brown, said benefits from the acquisition might have retroactive effect and capture the prevailing oil price windfalls for his company.
“Our proposed acquisition of MPNU remains on course. We are awaiting the necessary approvals from government and regulators and expect the transaction to complete in the second half of this year. The effective date of 1 January 2021 means we will benefit from higher recent oil prices and as we have previously reported, the addition of MPNU will nearly treble our production and double our reserves on a pro forma 2020 basis.
“The acquisition will reinforce our leadership of Nigeria’s indigenous energy sector and enabling us to generate strong future cash flows that will underpin our investment in Nigeria’s energy transition and improve our overall stakeholder returns. It will also bring a significant undeveloped gas resource base which, alongside our ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed,” he said.
The acquisition deal will enable London listed Seplat Energy Plc secure the full joint venture portfolio currently operated by MPN Unlimited in partnership with the Nigerian National Petroleum Company (NNPC) Limited.
Seplat Energy Offshore Limited is expected to operate the new portfolio at conclusion of the deal.
According to updated notes on operations of MPN, the production assets cover over 90 offshore platforms comprising about 300 producing wells hosted in four oil mining licenses with joint capacity for over 550,00 barrels a day (b/d) of crude, condensate and natural gas liquids (NGL).
The deal, at consummation, would scale up the status of Seplat to a critical indigenous producer by pushing its gross operated output to over 600,000 barrels of wellhead hydrocarbon liquids per day.
“Acquisition remains on track and awaiting necessary approvals, expected to complete in H2 2022,” according to the company’s performance results made available to the media by the corporate spokesman, Dr Chioma Nwachuku.
In declaring its unaudited financial results for the first three months of the year, Seplat its N100.6 billion revenue in the period represents a 58 percent improvement on the company’s revenue of N57.9 billion for the same period in 2021.
Seplat stated that its gross profit also jumped by 122.3 percent from N20.1 billion from first quarter of 2021 to N48.8 billion in the same period in 2022.
Dr Nwachuku stated that Seplat’s operations cash flow also rose by 197.8 percent from N1.7 billion year-on-year to N74.4 billion.
Within then period, she said, Seplat extended incident free uptime at operated assets by 2.0 million hours to a record 26.1 million hours of operations without lost time on incidents (LTI).
The company posted working interest production average of 47,603 barrels of oil equivalent per day (boed) in the period, comprising 29,079 barrels of oil per day (bopd) and 18,524 boepd of natural gas.
It left its full-year guidance at a range of between 50,000 boepd and 60,000 boepd.
Mr Brown stated that “Seplat Energy delivered a good quarter that benefited from higher oil pricing, which offset lower production owing to continuing problems with the Trans Forcados Pipeline.”
The company also announced that it would commission its pipeline from operated Amukpe field to Escravos terminal before end of June. It explained in the report that the pipeline commissioning is currently undergoing counterparty approval processes for signature.
Mr Brown said “the alternative Amukpe-Escravos Pipeline is mechanically complete and once we have signed the commercial agreements, we expect Chevron to be lifting our oil through the Escravos Terminal in the third quarter.”
On the sustainability of the business, Seplat said data analysis is underway for successful Sibiri exploration well drilling, adding that partners were working to secure regulatory approval for Extended Well Test.
On cash out from Ubima asset, Seplat said it reached decision to sell out its stake in the asset to its Joint Venture partner for $55 million. It added that agreement for the sale has been reached and awaiting consummation.
The Ubima field divestment is expected to pull Seplat’s combined proven and probable reserves down to 455 million barrels of oil equivalents (Mboe) from current 457 Mboe.
“We announce the decision to divest the Group’s interest in the Ubima marginal field for a consideration of $55million, which marginally reduces the company’s 2P reserves by 2 MMboe to 455 MMboe.
“We have proven we have the financial strength and credibility to attract international finance into Nigeria’s energy sector and this will help us in our aim to deliver energy transition and provide cleaner, more reliable and more affordable energy for Nigeria’s young and growing population,” Mr Roger Brown declared.
