You are here

Seplat snaps up Nigeria offshore acreage

05th February 2015

Seplat has acquired further interest in two blocks offshore Nigeria, purchasing 40 per cent of Chevron Nigeria’s interest in OML 53 and 22.5 per cent interest in OML 55

Seplat has acquired further interest in two blocks offshore Nigeria, purchasing 40 per cent of Chevron Nigeria’s interest in OML 53 and 22.5 per cent interest in OML 55
Seplat has snapped up acreage across onshore and offshore Nigeria as well as negotiating a takeover deal with London-listed Afren plc

Seplat has completed the acquisition of a 40.00 per cent working interest in OML 53, onshore north eastern Niger Delta from Chevron Nigeria Limited (CNL).  NNPC holds the remaining 60.00 per cent interest in OML 53.

The up-front acquisition cost to Seplat, after adjustments, is USD 259.4m, of which USD 69.0m had previously been paid as a deposit in 2013 and USD 190.4m paid at completion.  The adjustments to the up-front acquisition cost include a deferred payment of USD 18.75m contingent on oil prices averaging USD 90/bbl or above for 12 consecutive months over the next five years.  The company estimates net recoverable hydrocarbon volumes attributable to its 40.00 per cent working interest to be approximately 51 MMbbls of oil and condensate and 611 Bscf of gas (total 151 MMboe).  Seplat has been designated as Operator of OML 53 pursuant to the Joint Operating Model approved by the Honourable Nigerian Minister of Petroleum Resources.

"This transaction fits neatly with our strategy of securing, commercialising and monetising natural gas in the Niger Delta with a view to supplying the rapidly growing and evolving domestic market.  In addition to the large scale discovered, but undeveloped gas and condensate resources that are yet to be fully classified through detailed technical work, there are near term opportunities to increase and optimise oil production significantly above current levels," said Austin Avuru, Seplat's chief executive officer.  "We very much look forward to working with NNPC and leveraging our technical and commercial expertise as operator to realise the full potential of this high grade acreage," he added.

OML 53 covers an area of approximately 1,585 square kilometres and is located onshore in the north eastern Niger Delta.  The Jisike oil field, located in the north western area of the block, is currently the only producing field on OML 53.  

 

Seplat has also concluded negotiations to purchase 56.25 per cent of the share capital of Belemaoil Producing Limited (Belemaoil), a Nigerian special purpose vehicle (SPV) that has completed the acquisition of a 40.00 per cent interest in the producing OML 55, located in the swamp to coastal zone of south eastern Niger Delta, from Chevron Nigeria Limited (CNL).

NNPC holds the remaining 60.00 per cent interest in OML 55. Seplat's effective working interest in OML 55 as a result of the acquisition is 22.50 per cent.

The consideration for Seplat to acquire its 22.50 per cent effective working interest in OML 55 is USD 132.2m after adjustments.  The adjustments to the consideration include a deferred payment of USD 11.6m net to Seplat contingent on oil prices averaging USD 90/bbl or above for 12 consecutive months over the next five years.

The company has also advanced certain loans of USD 80m to the other shareholders of Belemaoil to meet their share of investments and costs associated with Belemaoil.  In addition, discussions are underway to determine repayment terms for the initial deposit against the acquisition of USD 52.5m that Belemaoil funded with bank debt.  This amount may subsequently be added to the total amount loaned to Belemaoil by Seplat.  Under the agreed terms Seplat will recover the loaned amounts, together with an uplift premium of up to USD 20.6m and annual interest of 10.00 per cent, from 80.00 per cent of the other shareholders oil lifting entitlements.

The company estimates net recoverable hydrocarbon volumes attributable to its 22.50 per cent effective working interest to be approximately 20 MMbbls of oil and condensate and 156 Bscf of gas (total 46 MMboe).

Current gross production at OML 55 is approximately 8,000 bopd (1,800 bopd on a 22.50 per cent working interest basis).  Pursuant to the Joint Operating Model approved by the Honourable Nigerian Minister of Petroleum Resources, Seplat has been designated operator of OML 55.  The Company will also act as technical services provider to Belemaoil. 

"The addition of OML 55 to our portfolio, together with the separately announced acquisition of OML 53, expands our footprint in the Niger Delta to six blocks and further cements our position as a leading indigenous independent E&P in Nigeria,” said Avuru.

“OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritising those that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria. We are pleased to have extended our operating partnership with NNPC who we look forward to working with in our capacity as operator pursuant to the Joint Operating Model," he added.

OML 55 covers an area of approximately 840 square kilometres and is located in the swamp to shallow water offshore areas in the south eastern Niger Delta.  The block contains five producing fields (Robertkiri, Inda, Belema North, Idama and Jokka).

Related topics: 

Got a news tip? Email news@oilandgastechnology.net