Seplat Energy Not Certain About Negotiations Outcome to Acquire ExxonMobil’s Shallow-Water Assets

By YANGE IKYAA

Seplat Energy Plc has confirmed that it is in the process of acquiring ExxonMobil’s Nigerian shallow water business.

However, there is no certainty as to the outcome of the ongoing discussions, according to a statement issued by the company on Monday.

“Seplat Energy Plc, a leading Nigerian energy company listed on the Nigerian Exchange and the London Stock Exchange, notes the recent press speculation and confirms that Seplat Energy, together with a partner, is in competitive discussions to acquire ExxonMobil’s Nigerian shallow water business,” the statement read in part.

Credited to Emeka Onwuka, its Chief Financial Officer, the statement said discussions are progressing on the acquisition which will improve the stake of the company in the oil and gas industry.

“Deliberations are ongoing and, accordingly, there can be no certainty as to the outcome. A further announcement will be made as and when appropriate, in line with regulatory requirements.”

The proposed deal is coming barely days after Fitch Ratings upgraded the rating of Seplat Energy Plc to ‘B’ from ‘B-‘ on its Long-Term Issuer Default Rating (IDR) in a rating driven by its gas business, company resilience, ESG efforts, and others.

Fitch also confirmed Seplat’s Outlook to be ‘Stable’ and also upgraded its senior unsecured rating for $650 million senior notes due 2026 to ‘B’ from ‘B-‘, with a Recovery Rating of ‘RR4’.

Fitch said “the upgrade reflects improved financial flexibility and a strong liquidity profile following debt refinancing in 2021, which in our view will help Seplat Energy survive for more than two years of force majeure without access to the Trans Forcados Pipeline (TFP). Amukpe-Escravos Pipeline (AEP), an alternative oil export route, has been completed and is undergoing commissioning, according to Seplat, but there is no certainty around when it will ship its first oil.”

The rating incorporates the smallscale of Seplat Energy’s cash flows, concentration of the company’s asset base in Nigeria (B/Stable) and a historically unstable operating environment in the troubled Niger Delta, including recurring issues with the oil transportation system. The rating also reflects moderate leverage, conservative financial policies, competitive unit profitability, end-2020 2P reserve life of 27 years, and a growing domestic gas business.