ExxonMobil’s Nigerian petroleum assets sale to Nigeria’s Seplat could be approved in less than two weeks, the country’s oil regulator told Reuters on Thursday.
The $1.28 billion sale in Africa’s largest oil exporter has awaited regulator approval since 2022.
Gbenga Komolafe, chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), told Reuters the parties involved would be invited to a meeting on Friday.
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“Subject to the outcome of the meeting, consent…could be given in less than two weeks from the date of the meeting,” he said.
NUPRC would give the companies two mutually exclusive options that, if accepted, would permit approval of the deal, he said.
He did not spell out what these options were but said the law requires money to be set aside for decommissioning, host community development and environmental remediation.
“As a commission, we don’t want our nation to carry unwarranted financial burdens arising from the operations of the assets over time by the divesting entities.”
A spokesperson for Seplat declined to comment. An Exxon spokesperson did not immediately comment.
Observers say approving the deal would bring much needed investment into Nigeria’s petroleum sector. While it is pending, there is little incentive to put money into the assets, which means production will gradually decline.
Former Nigerian president Muhammadu Buhari initially consented to the transaction, but withdrew that consent days later after the oil regulator refused to sign off on it.
Seplat Energy Plc has consistently assured that said the federal government will approve its acquisition of ExxonMobil’s assets.
The government had earlier noted that it was not opposed to the deal, but that due process should be followed in acquiring the assets.
The Chief Executive Officer, Seplat Energy Plc, Roger Brown, had stated: “There is increasing confidence that President Tinubu’s administration will approve our acquisition of ExxonMobil’s share capital of Mobil Producing Nigeria Unlimited (MPNU).
“We remain confident that we can conclude our transformational acquisition of MPNU. We wholly align with and support President Tinubu’s efforts to make Nigeria a more attractive place to invest, and we will play our part by delivering affordable and reliable energy that will support our nation’s growth.”
Seplat Energy PLC, recently announced its unaudited results for the three months ended 31 March 2024, declaring US 3 Cents dividend per share for the period.
For the period under review, production averaged 49,258 barrels of oil equivalent per day (boepd), down 4.8% on prior period (3M 2023: 51,720 boepd), but 5.7% above Q4 2023 production, and towards the upper end of 2024 guidance (44,000 boepd – 52,000 boepd).
Seplat Energy also achieved more than 2.3 million hours without Lost Time Injury (LTI) at Seplat-operated assets in Q1 2024.
The Company also applauded the progressive moves taken by President Bola Tinubu and the industry regulators, following the signing of the executive orders that will provide fiscal incentives in Nigeria’s gas and midstream businesses. In addition, an executive order was signed and gazetted into law, which has potential to materially improve our contracting process and bring the right level of efficiency that will support costs reductions. This can drive the much-needed efficiency gains across our industry.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently lifted the domestic gas price to $2.42/Mscf supporting revenue generation and re-emphasising the government’s commitment to develop Nigeria’s gas resources, a factor aligned with Pillar 2 in our strategy.
According to Seplat Energy, the message to investors on the acquisition of ExxonMobil’s share capital in Mobil Producing Nigeria Unlimited (MPNU) is unchanged. Dialogue between key parties is active and constructive, and the company remains confident that a conclusion will be reached on the transformational acquisition.
The company says it is working with NNPC and the government to conclude the acquisition of ExxonMobil’s share capital in Mobil Producing Nigeria Unlimited (“MPNU”). We remain confident that President Tinubu’s administration will approve the transaction.
Operational highlights
Production averaged 49,258 boepd, down 4.8% on prior period (3M 2023: 51,720 boepd), but 5.7% above Q4 2023 production, and towards the upper end of 2024 guidance (44,000 boepd – 52,000 boepd).
ANOH gas plant pre-commissioning works ongoing. Seplat maintains its first gas target in 3Q 2024.
Sibiri-1 on stream a few weeks after FDP approval, work ongoing to commence production from Sibiri2.
Discovery of hydrocarbons in previously untested deep reservoirs at Sapele-37 and Okporhuru-9.
Carbon emissions intensity: 29.4 kg CO2/boe (3M 2023: 26.4 kg CO2/boe). End of Routine Flaring (“EORF”) projects are on track, with EORF expected in H2 2025, these will deliver a material reduction in emissions intensity.
It was achieved more than 2.3 million hours without Lost Time Injury (“LTI”) at Seplat-operated assets in Q1 2024.
Financial highlights
Revenue $179.8 million, down from $331.0 million in 3M 2023 (after adjusting for underlift and overlift oil volumes, 3M 2024 adjusted revenues of $236.3 million, against $255.6 million in 3M 2023).
Average realised oil price $86.17/bbl (3M 2023: $82.32/bbl); average realised gas price $3.11/Mscf (3M 2023: $2.88/Mscf).
Unit production opex of $9.6/boe, (3M 2023: $9.0/boe).
Cash generated from operations of $16.8 million, primarily due to timing of liftings, $95 million received in April for volumes lifted in March, down from $145.0m in Q1 2023. Capex invested of $47.1 million (3M 2023: $44.7 million)
Balance sheet cash down to $335.8 million (YE 2023: $450.1 million), $128 million MPNU cash deposit not included.
Net debt at end March increased to $385 million (Dec 2023: $305 million), a further $19.3 million of RBL borrowings were repaid in the quarter. Net Debt to EBITDA was 0.9x.
Q1 2024 dividend declared of US3.0 cents per share.
Post-reporting period events
NMDPRA increased the domestic market gas price to $2.42/Mscf from $2.18/Mscf, effective 1 April 2024. New pricing will be applied to approximately 30% of gas volumes.
On April 14th, 2024, after approximately 2 years of outage, Zone-6 of SPDC operated Trans Niger Pipeline (“TNP”) resumed operations, four months ahead of management’s expectations.
Commenting on the results, Roger Brown, Chief Executive Officer, Seplat Energy Plc, said: “Seplat Energy continued its trend of strong operational performance in the first quarter. Oil production on OMLs 4, 38, 40 and 41 outperformed expectations, benefitting from low pipeline losses and deferments, which were ahead of plan. Cash flow was down in the first quarter, but this is largely due to timing difference of lifting oil from the terminals. The business remains strong, production is firmly on track this year and price realisations remain supportive of cash generation.
“In our FY 2023 results we outlined several growth opportunities for 2024. The first of these to start generating revenue for Seplat is Sibiri, which came on stream just a few weeks after the FDP approval was received from NUPRC. At Abiala (a marginal field within OML 40), the drilling programme is on track to start during 2Q. We were delighted to see resumption of operations on the Trans Niger Pipeline in April, approximately four months ahead of plan. Access to the pipeline will enable us to increase production from OML53, as well as providing the primary export route for condensate from AGPC, which remains on track for first gas in 3Q 2024.
“Looking further forward, we are pleased to share that we discovered hydrocarbons in deeper reservoirs than had previously been tested at Sapele-37 and Okhorpuru-9. The initial results are promising, again highlighting the world class quality of the geology in Nigeria.
“In Nigeria, we were pleased to see more progressive actions taken by President Tinubu and the industry regulators. In March, the President signed executive orders that will provide fiscal incentives in our gas and midstream businesses. In addition, an executive order was signed and gazetted into law, which has potential to materially improve our contracting process and bring the right level of efficiency that will support costs reductions. We applaud the change, which can drive much needed efficiency gains across our industry. More recently NMDPRA lifted the domestic gas price to $2.42/Mscf supporting revenue generation and re-emphasising the government’s commitment to develop Nigeria’s gas resources, a factor aligned with Pillar 2 in our strategy.