Seplat Energy Plc has received a ministerial approval to acquire Exxon Mobil’s Nigerian oil assets for $1.28 billion.
According to a press statement, the ministerial approval was given by President Muhammadu Buhari, who also doubles as Minister of Petroleum Resources in Nigeria.
Seplat Energy, a leading indigenous oil exploration company listed on the Nigerian Exchange and the London Stock Exchange, first announced the deal in February this year.
Apart from the $1.28 billion up-front payment Exxon Mobile would be getting for the deal, the company would also get an additional $300 million from Seplat over a five-year period.
However, the additional consideration would depend on factors such as oil price and the average production of the oil assets during the period.
Exxon Mobil explained that the divestment, which includes more than 90 shallow-water oil assets and 300 producing wells, is aligned with its new investment strategy.
“This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations. We value the relationships we have spent decades building with the government and people of Nigeria, which will continue as we maximize the value from our deep-water operations”.
Exxon Mobile’s President for Upstream Oil and Gas, Liam Mallon
Exxon Mobile is not the only oil major that is currently in the process of divesting from Nigeria. It was reported in May this year that French multinational oil and gas firm, TotalEnergies, was planning to sell its oil assets in the West African country.
Ongoing process to sell 30% stake in Shell Plc
Shell Plc also has an ongoing process to sell its 30% stake in the joint venture Shell Petroleum Development Company of Nigeria (SPDC) despite a recent Supreme Court ruling.
In March 2022, a Federal High Court in South-Eastern Nigeria ordered Shell to suspend the planned asset sale. The ruling followed an earlier appeal by the oil major against a $1.95 billion penalty that was imposed on it in 2020. The oil company had been found guilty of oil spillage and environmental degradation in a class action suit filed by 88 oil producing communities in Nigeria’s Niger Delta.
Following the March 2022 ruling by a three-judge panel suspending the planned asset sale, Shell again appealed.
Interestingly, Nigeria’s Supreme Court issued a ruling ordering all parties involved in the suits to “maintain the status quo” pending final rulings on the original suit against Shell by the communities and Shell’s appeal.
Mohammed Ndarani, the lawyer representing the communities, explained that the Supreme Court ruling meant that “there should be no bids, no sales until the hearing of the applications which has been fixed for November 3, 2022.”
Meanwhile, a spokesperson for the oil company, Bamidele Odugbesan, later disclosed that the Supreme Court ruling was not related to the suit stopping the company’s planned divestment. In other words, the sale would go ahead.
Shell announced last year that it was divesting from the SPDC which is a joint venture consisting of 13 oilfields and co-owned by ENI, TotalEnergies and the Nigerian National Petroleum Corporation (NNPC). According to Shell, the venture no longer aligns with its long-term energy transition goals.
Following the announcement of its intention to sell, the likes of Seplat Energy Plc, Sahara Group Ltd, Heirs Oil and Gas Ltd and ND Western Ltd indicated interest to acquire the assets.
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