Seplat Energy has restated its commitment to Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc. (ExxonMobil), saying it is committed to preserving the acquisition of its assets at $1.28bn, a transaction which was blocked by the Nigerian National Petroleum Company Limited over failure to follow due process.
Seplat said it further revised the Share Sale and Purchase Agreement (SSPA) in a manner that would allow ExxonMobile to share in a portion of the value that would accrue to Seplat Energy in the period between the effective economic date and the completion date of the transaction.
This was disclosed on Wednesday in a regulatory filing.
The development may be in a move to entice ExxonMobile to stick to it as a preferred buyer of the asset. It includes over 90 shallow-water and onshore platforms and 300 producing wells.
The transaction entails the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business.
Seplat said that it has “extended with Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc. the Share Sale and Purchase Agreement for the acquisition of ExxonMobil’s share capital of Mobil Producing Nigeria Unlimited in order to preserve the Transaction pending the resolution of certain legal proceedings and receipt of applicable regulatory approvals.
“In addition, the parties have revised the SSPA such that, in the event that applicable regulatory approvals are obtained and the Transaction closes, ExxonMobil would share in a portion of the value that would otherwise accrue to Seplat Energy in the period between the effective economic date and the completion date of the Transaction.
“The exact amount will depend on a number of factors, including production by MPNU and oil price. Except as disclosed herein, there has been no significant change in terms of the announcement dated 25 February 2022, and the headline consideration, effective date, and the contingent payment structure remain unchanged.”
NNPC Ltd and ExxonMobil are operating a Joint Venture which gives it a pre-emptive right over the asset.
Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party choose to trade them off.
This led the Group Chief Executive Officer of the NNPC Ltd to write ExxonMobil, stating “We are aware that you reached an agreement to divest from onshore and shallow waters JVs clearly we are interested.”
The NNPC Ltd said in the letter that it now has the capacity to buy over the share of ExxonMobil in the Joint ventures with the enactment of the Petroleum Industry Act, 2021.
Recall that in January 2022, the NNPC Ltd had secured a $5bn corporate finance commitment from the African Export Import Bank to fund major investments in Nigeria’s Upstream sector.
NNPC Ltd obtained an “order of interim injunction” on July 6, 2022, barring Exxon Mobil “from completing any divestment” in a unit that ultimately operates four licenses in Nigeria.
Reports had emerged that President Muhammadu Buhari had sanctioned the acquisition deal between Seplat and ExxonMobil but he later reversed himself on the matter.