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ExxonMobil-Seplat Share Deal: Not an Asset Deal

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A.B.C Orjiako

Apparently worried by unending inquiries by its happy investors and stakeholders who barely a week ago welcomed its share deal with ExxonMobil, Seplat Energy on Monday March 7 said  no event of cancellation of the transaction has occurred. 

Nigeria’s corporate and business world, especially the oil and gas industry, was literally lit and agog following the announcement by Seplat Energy Plc., a leading indigenous energy company listed on the Nigerian Exchange and the London Stock Exchange, and Exxon Mobil Corporation, Delaware, USA (ExxonMobil) that they had entered into an agreement for the Seplat to acquire the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) from the latter, subject, however, to the usual Ministerial Consent.

The President, ExxonMobil Upstream Oil and Gas, Liam Mallon, said the company sold its equity interest in its shallow-water business, Mobil Producing Nigeria Unlimited (MPNU), to Seplat Energy through Seplat’s wholly-owned Seplat Offshore.

“Seplat Energy has become aware of newspaper and social media reports that the Nigerian National Petroleum Company Limited (NNPC) has exercised a right of pre-emption under the NNPC/Mobil Producing Nigeria Unlimited (MPNU) Joint Operating Agreement (JOA).

“The Company wishes to clarify that the Sale and Purchase Agreement (SPA), earlier announced on the 25 February 2022, deals with the acquisition of the entire share capital of MPNU’s shareholders, Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc., being entities of Exxon Mobil Corporation registered in Delaware (ExxonMobil). MPNU, is not a party to the SPA and continues to hold its interests, rights and obligations under the NNPC/MPNU JOA,” Seplat Energy said in a statement  at the Nigerian Exchange Limited (NGX).

This announcement was made pursuant to Rule 17.10 of the Rulebook of the Nigerian Exchange, 2015 (Issuer’s Rule).

“There are also some reports that the SPA between ExxonMobil and Seplat Energy has been terminated. Seplat Energy confirms that no event of termination has occurred, and the SPA remains valid and subsisting.

Seplat Energy is a compliant company and will continue to follow the laws of the Federal Republic of Nigeria,” the statement read.

Interestingly, the ExxonMobil-Seplat transaction is not the first in the industry in recent times. Many industry watchers wondered why the NNPC did not exercise the same pre-emption action in the divestments by SPDC.

Rendering highlights of the deal, which is the first of its kind since the coming on stream of the Petroleum Industry Act (PIA), Seplat, on its part, put the purchase price at $1,283 million plus up to $300 million contingent consideration.

The transaction, it said, would create one of the largest independent energy companies on both the Nigeria Stock Exchange and London Stock Exchange as well as bolster Seplat Energy’s ability to drive increased growth, profitability and overall stakeholder prosperity, delivering 186 per cent increase in production from 51,000 bpd to 146,000 bpd or 170 per cent increase in 2P liquids reserves, from 241 MMbbl to 650 MMbbl.

In addition, it was expected to deliver a 14 per cent increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf).

Nigerians are excited as they await the final Ministerial Consent to bring such strategically important national assets fully into Nigerian ownership alongside the Nigerian National Petroleum Corporation, NNPC, the exiting Joint Venture Partner. This is in line with government’s objective to achieve a pragmatic, progressive and just energy transition for Nigeria.

In its incisive analysis, Wood Mackenzie (WoodMac), a global and reputable intelligence provider that empowers decision-makers with unique insights on the world’s natural resources, lauded the deal saying it was a win-win for Seplat, ExxonMobil, and the Nigerian government, offering huge upside for oil and gas.

Very instructively, Mackenzie added: “Because this is a corporate acquisition, NNPC has no rights to pre-empt a deal under the Joint Operating Agreement (JOA), which governs the JV. This means that ministerial consent would be the only hurdle remaining, although nothing can be taken for granted.

A Misinterpretation of Joint Venture Agreement

Unfortunately, amid this local and international acclaim, the NNPC appears strangely more interested in throwing spanner in the works. In a move to block the transaction, the NNPC, as widely reported in the media, has through its Group Managing Director (GMD), Mele Kyari, written to MPNU, notifying it of its intention to exercise a Right of Pre-emption over the deal.

“We are aware that you reached an agreement to divest from onshore and shallow waters JVs….  Clearly we are interested”, the GMD was quoted as stating.

Meanwhile, a recently published article in support of NNPC’s action quoted purported oil industry source of affirming NNPC’s rights under the law, to exercise such pre-emptive powers.

NNPC hinges its move on a June 28, 1990 Joint Operating Agreement between it and Mobil Producing Nigeria as it pertains to ‘Participating Interest”.

Regarding transfer and assignment of interest, Article 19.4 provides: Subject to sub-clauses 19.1 and 19.2, if any Party has received an offer from a third Party, which it desires to accept, for the assignment or transfer of its participating hereunder (the “Transferring Party”), it shall give the other Party prior right and option in writing to purchase such Participating Interest as provided in sub-clauses 19. 4.1 to 19 .4.2.

Sub-clause 19.4.1 provides: The Transferring Party shall first give notices to the other Party, specifying therein the name and address of the aforementioned third Party and the terms and conditions (including monetary and other consideration) of the proposed assignment and transfer.

Sub-clause 19 .4.2 states: “Upon receipt of the notice referred to in Sub-clause 19. 2.1, the other Party may within thirty (30) days thereafter, request in writing the assignment and transfer of such Participating Interests to it, in which event the assignment or transfer shall be made to it on the same or equivalent terms”.

Meanwhile, these provisions could not be read or understood in isolation of the definition of a “Participating Interest” by the same Agreement.

Article 1.24 states: “Participating Interest means the undivided percentage interest from time to time held by the Parties in the concession (s), the Joint Property and rights and obligations under this Agreement, namely: sixty per cent (60%), in case of NNPC; and forty (40 per cent), in the case of Mobil”.

Thus, these provisions clearly show that the NNPC is absolutely mixing things up because the transaction that happened between Seplat and ExxonMobil, Delaware, USA, was nothing close to a transfer of a “Participating Interest”. No! Seplat did not deal with Mobil Nigeria producing Unlimited (MNPU) the Party in partnership with NNPC. Rather, it transacted business with ExxonMobil, Delaware, the parent company, which acted within its rights, as it pleased and in line with its business/investment strategy, to dispose of all its shares in MNPU, which owns the said assets in Nigeria.

This is the major fact NNPC needs to get right so it could stop convoluting a very simple matter and making Nigeria a laughing stock before the international business community, as it visibly has no Right of First Refusal (RFR) to exercise on this transaction.

Of recent, the NNPC, and analysts pushing its case have argued that with its transition into a registered profit-making and limited liability company vide the PIA, it was out to reshape and optimise its portfolio by acquiring assets with high performance, low vulnerability and huge gas potential. For this reason, it prioritises the acquisition of divested assets under MPNU JV over those in Shell Petroleum Development Company (SPDC) JV. In other words, NNPC‘s sudden interest in the deal and taking over the entire JV (if it had the legal backing) is all about the attractiveness of the assets in question. As a government-backed entity, is it not supposed to be more interested in taking over perceived more vulnerable assets with higher security and production issues? If it is only interested in ‘juicy’ fleshes of the oil and gas industry, who does it expect to deal with the hard bones?

Worse, it is not even as if the NNPC is known to run these things by itself. Most Nigerians know how and where these portfolios end up.

Besides, the NNPC does not enjoy popularity as one of the managers. If the NNPC were to be an airline, it is to be wondered how many Nigerians would be confident to fly in its planes. If NNPC were a hospital, how many Nigerians would surrender their lives to it to manage?

As the sole importer of fuel, Nigerians are still dealing with not only intermittent biting fuel scarcity, but they are also yet to recover from the importation of toxic fuel that have wrecked vehicles and put households through hardships.

Worse, the NNPC is yet to tell Nigerians how the nation’s daily fuel consumption jumped from about 30 million litres about seven years ago to about 102 million litres and above.

Under NNPC’s watch, the refineries have degenerated from producing enough for local consumption, to producing little, and now nothing. In 2020, NNPC recorded N10.27 Billion in operational expenses without refining a single drop of fuel. It is unable to fix any of the refineries, even with the award of a USD1.5 Billion contract last year to fix the Port Harcourt refinery.

The NNPC has been struggling to meet its statutory obligations to the Federation Account in recent years. Despite the surge in oil prices in the international market, it was unable to remit anything to the Federation Account in January 2022, making it the second time within a year, as it was the case in April 2021. In fact, with a deficit of approximately N2 Trillion out of its projected N2.511 Trillion, NNPC was only able to disburse N542 billion as against the N2.511 Trillion it was budgeted to contribute. The Nigeria Governors Forum have protested the development.

Therefore, many Nigerians have wondered why a debt-burdened NNPC is so quick to accumulate more debts vide the $5 billion corporate finance commitment from the African Export-Import Bank (Afreximbank) to “acquire, invest and operate energy-producing assets in Nigeria as part of NNPC’s growth strategy following its incorporation as a limited liability company”. It is important to note that unlike other businesses that would secure their loans by their assets, NNPC rides on government’s back.

The question of prioritisation of gas

Meanwhile, it is reported that NNPC’s interest in taking 100 possession of the assets in question was informed by its efforts not to risk a another partner on the NNPC MPNU JV that might not see the monetisation of the assets gas component as a priority. This should not even be considered given Seplat’s profile in gas investment and its leading role in Nigeria’s energy transition. It produced 20,758 boepd gas in 2021 and supplies 30 per cent of gas to power Nigeria. It became the first company to record a 50-50 venture with the NNPC through the Seplat/NNPC gas plant project – ANOH Gas Processing Company (AGPC) where Seplat easily raised $260 Million through a consortium of banks to fund its part of $650 Million financing for the ANOH Gas Processing Plant.

Against these backdrops, it is understandable why industry players believe that the NNPC has not only misfired, but is also overreaching itself, playing up those needless interferences that discourage investors. It should retreat.

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Merger and Acquisition

Access Holdings Plc to Acquire Majority Stake in First Guarantee Pension Limited

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Herbert Wigwe - Investors King

Access Holdings Plc has agreed with First Guarantee Pension Limited to acquire a majority stake in the company in its drive to transform from a narrow banking business into a financial service company.

The leading financial institution stated in a press release obtained by Investors King on Thursday.

According to Access Bank, the transaction is in line with its strategy to evolve into a full-blown financial services company and gain relevant market share across Africa, global monetary centres and beyond banking verticals.

Speaking on the firm’s push to change the banking landscape, Dr. Herbert Wigwe, Group Chief Executive Officer, Access Corporation said “This transaction is a natural evolution for us. Over the last 20 years, we set our sights on and delivered ambitious plans to transform the African financial services landscape focusing on banking and have created the African leading Bank and largest bank by customer base.

“This large customer base both on the wholesale and retail segments makes the pension business a natural fit for the Corporation given its objective of ecosystem optimisation. We will leverage our well-established culture of strong corporate governance, risk management, cutting-edge technology, and digital capabilities to deliver high standards of professionalism in the management of pension assets to the benefit of our stakeholders.”

The firm added that the National Pension Commission and the Central Bank of Nigeria have given their no objection to the transaction.

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Shareholders Celebrate ABC Orjiako Who Retires as Seplat Chairman After 13 Years

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ABC Orjiako

It was a harvest of praises by representatives of Nigerian shareholder groups who were at Seplat Energy Plc 9th Annual General Meeting (AGM) which held in Lagos on Wednesday, May 18 as they visibly lauded Dr ABC Orjiako who just retired after 13 years as the board chairman of the leading energy company.

Speaking at the AGM, Ayodele Kudaisi of Independent Shareholders Association of Nigeria (ISAN) who tagged her comments as validiatory/ recommendation said, “As the saying goes, there’s nothing that has beginning that doesn’t have an end. It is so painful to all shareholders that you have to leave at this point in time. You have done so well and so much for the entity called Seplat Energy.”

“You and your team have taken Seplat to an enviable position among all its peers, with resiliency, commitment, focus and unsurpassed objectivity. You have come, you have seen and you have conquered. We are definitely going to miss you here, but don’t be too far away from Seplat.

“From time to time, there may be need to tap from your vast experience for a way forward. To the incoming chairman, the shoes that you are going to leave behind is so giant for anybody to wear, but I want to believe that the incoming chairman will not disappoint us, I pray not. Out going chairman, may you be blessed more. May your ways be smooth, and may your future endeavours be smooth,” Kudaisi said.

Also speaking, another shareholder, Prince Dr, Anthony Omoniyi Omojola, current national coordinator, Independent Shareholders Association of Nigeria said “That Seplat Energy Plc is a reliable energy company with limitless potentials is not a mere statement. This has been aptly demonstrated in our performance in the 2021 annual report and accounts we are considering.”

“You have shown leadership by example by your actions as we pray to reap the benefits of this well planned out accelerated growth pattern. We congratulate you. We are proud that the strong foundation you have laid to position Seplat as a leading indigenous energy company in Nigeria within a short space,”  Omojola said.

Matthew Akinlade, president,  Noble Shareholders Solidarity Association (NSSA) said “This is a unique occasion that one must commend the Board and Management of the company for stellar performance. I felt highly impressed the kind of progress. The turn around of the company this year to significantly improved profitability and what you are doing to take the company to higher heights especially the acquisition of Mobil Producing Nigeria Unlimited (MPNU)”.

“For our outgoing Chairman, I’m emotional about it because this is a gentleman that has led this company more or less from the cradle and to the height that it is today. I thank God for you. I think it is better to leave when your ovation is highest and I think today the ovation is highest. I say congratulations. I implore you not to be far away from this company because you have put so much into this company. We are talking of 13years into the service of this company. It is marvellous,” Akinlade added.

Seplat Energy Plc will latest this Friday annouce its new board chairman to replace ABC Orjiako who retires from the board after 13 years.

This was disclosed by Seplat Energy Plc shortly after the company’s 9th Annual General Meeting.

The retired chairman, Orjiako; the CEO, Roger Brown as well as Emeka Onwuka, Chief Financial Officer addressed the media after the annual general meeting.

Seplat Energy Plc, a leading indigenous Nigerian energy company with a strategic focus on Nigeria is listed on both the Nigerian Exchange Limited (NGX) and London Stock Exchange (LSE).

“This is my last AGM as your chairman. Now that I have climbed the iroko,  I have fetched all the firewood,” Orjiako cheerfully told the shareholders at the meeting.

“I’m very happy that I have been associated with the company in the last 13 years. It has been a good journey. It is the real actualisation of good dream that was supported by the people Seplat has,” Orjiako said.

While thanking the shareholders and all stakeholders in the company for their co-operations during his tenure, Orjiako noted that “though I am retired, but not tired.”

“I am sure that this company can only grow. I have absolute confidence in the board, management and staff of Seplat, also, the incoming chairman,” Orjiako added.

At the annual general meeting, the shareholders approved for the board to pay a final dividend of $0.025/share (2.5 cents) to Seplat’s shareholders whose names appear in the Register of Members as at the close of business on May 5, 2022.

Seplat Energy Plc audited results for the full year ended December 31, 2021 shows it recorded growth in its 2021 full-year gross profit by 128.9percent to N114.2billion.

The foremost indigenous energy company also recorded a 38.2percent rise in its 2021 full-year revenue to N293.6billion; and a growth in profit before tax by 321.1percent to N71billion.

Basil Omiyi, Senior Independent Non- Executive Director of Seplat Energy Plc in his farewell speech to the outgoing chairman stated: “It has been an exciting journey watching the exponential growth of Seplat since its inception. In my many decades of experience in the Nigerian oil and gas sector, I confidently believe no indigenous energy company has significantly impacted the Nigerian energy sector as Seplat Energy has in the last 12 years”.

According to him, “Since its entrance in 2010, Seplat has continued to expand and redefine the frontiers of the Nigerian energy landscape. Through a clear vision and astute leadership, the company has established itself as Nigeria’s leading independent energy provider.

“Under the steer of the outgoing Chairman, the management and every staff of this great company continue to play critical roles, resulting in the company’s many success stories. Seplat has had occasional challenges, as in any other company, yet it has achieved exceptional milestones”.

Omiyi further stated “Through his dexterity, the company recorded many firsts in the industry. For example, he played a pathfinding role in the company’s first asset acquisition with the 2010 landmark acquisition of a portfolio of three onshore oil and gas leases: OMLs 4, 38 and 41, from the international oil companies. This transaction was the first of its kind in Nigeria.

“Subsequent acquisitions under his tenure, including the Sale-Purchase Agreement for 40% participating interest in OML 53, onshore north-eastern Niger Delta, from Chevron Nigeria Ltd in 2013 and the 2019 acquisition of the entire issued share capital of Eland Oil & Gas, consolidated Seplat Energy’s reputation as a strategic business entity on a global scale. The Eland acquisition was another first of its kind, the first acquisition of a UK listed company by a Nigerian company.

“To consolidate Seplat’ s vision of being a world-class energy provider, the company took another giant leap under the leadership of Dr ABC Orjiako to play on a global scale. In 2014, Seplat successfully raised $535million from its Initial Public Offering (IPO), which was over-subscribed and progressed to a dual listing on the Nigerian Stock Exchange (now Nigeran Exchange Ltd) and Main Board of the London Stock Exchange. This feat made Seplat’s Listing the first for a Nigerian Company and the Largest out of Sub-Saharan Africa at the time. In 2018, four years after, the Nigerian Stock Exchange migrated Seplat to its elite Premium Board. These accomplishments targeted good Corporate Governance and sustainability of the business.

“Again in February this year, Seplat Energy under the leadership of Dr. Orjiako, ticked another first. The company announced that it was on course to make one of the most significant acquisitions in the history of the Nigerian Petroleum industry. The company announced its successful signing of a Sales Purchase Agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Delaware. This deal represents a transformational acquisition for our company”.

He further noted: “Still, under Dr. ABC Orjiako, Seplat Energy maintaining a healthy relationship with its strategic stakeholders was paramount. This determination has resulted in the creation and retention of value for all parties. Indeed, his firm commitment to strong partnerships with the company’s communities, investors, regulators, and other critical stakeholders attest to his leadership insight, which produced invaluable dividends.

“For the past 12 years, Dr. Orjiako has steered the Seplat Energy Board with remarkable dexterity, rare foresight and uncommon determination. He instituted steps to running a high performing board. To share a few, he: Initiated Corporate Governance Training sessions and set the Corporate Governance Policies and Standards; Initiated Board Evaluation Reports to usher in HIGH-PERFORMANCE BOARD MATRIX; Set up the Corporate Strategy Committee, setting the stage for our corporate transformation; Ensured that the Seplat Board has the right combination of diverse, inclusive and well-experienced professionals who are deeply committed to building the Seplat Energy dream; And for board meetings, he produced a detailed, insightful, well-researched Chairman’s report that he read at the board meeting to lay out his strategic thoughts and set the tone for our meetings. These board reports remain a strategic reference material for the Board and management to stay the course”.

“Dr. Orjiako’s other achievements as the Chairman of Seplat include but are not limited to: He pursued an appropriate pricing framework for Domestic gas in Nigeria to drive Seplat’s gas commercialization, which led to our midstream business, starting with our flagship Oben gas plant; The acquisition of Chevron assets with operatorship provided Seplat with the opportunity for the ANOH project.

“Evidently, we all have good reasons to be proud to be a part of this outstandingly successful corporate story out of Nigeria, under the leadership of Dr. ABC Orjiako. He led the way in developing the company’s strategic vision, from which the Board and management derived their bearing in creating the solid foundation that Seplat now has.

“Therefore, as Dr. ABC Orjiako retires from the Board of Seplat Energy today, ladies and gentlemen, it is with a great sense of pride and gratitude that I thank him for providing Seplat with the strategic vision. It formed the bedrock of the Seplat Energy Success story and created immeasurable value for shareholders and other stakeholders alike.

“I also wish him the very best in all his future endeavours and many more of God’s blessings,” Omiyi said.

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Merger and Acquisition

FBN Holdings to Acquire Access Pension Fund Custodian Limited

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UK Eke Group Managing Director FBNHoldings - Investors King

FBN Holdings Plc on Wednesday announced it entered into a definitive agreement with Access Bank Plc to acquire 100% Share Capital of Access Pension Fund Custodian Limited held by Access Bank Plc.

The acquisition would be done through First Pension Custodian Limited, a subsidiary of FBNH, the bank disclosed this in a statement signed by Adewale L.O Arogundade, Ag. Company Secretary and obtained by Investors King.

According to FBN Holdings, the Central Bank of Nigeria and the National Pension Commission have given their no objection to the transaction, with completion subject to the receipt of all required regulatory approvals.

The statement reads, “FBN Holdings wishes to notify Nigerian Exchange Limited and investing public that First Pension Custodian Limited, a subsidiary of FBNH’s flagship subsidiary, First Bank of Nigeria Limited has entered into a definitive agreement with Access Bank Plc for the planned acquisition by First Pension of 100% Share capital of Access Pension Fund Custodian Limited held by Access Bank Plc.

 

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