26 Feb 2022: Exxon sells off its entire shallow-water business in a $1.28 billion acquisition deal. This deal will almost triple Seplat Energy Plc’s production volume, adding about 95,000 barrels of oil equivalent a day. It’s another sign of major international oil companies pulling back from certain Nigerian projects following years of spills and other chaos, while investors push them toward cleaner forms of energy.

Completion of this deal will make Seplat one of the largest independent energy companies on both the Nigerian and London Stock Exchanges.

The deal to buy Mobil Producing Nigeria Unlimited includes the entire shallow-water business of Exxon, which retains its deep-water assets, in Nigeria.

Nigeria is focusing on its local companies, which are snapping up the assets that international producers are getting rid off, to avoid a decline in output as foreign investment declines. For instance, Heirs Oil & Gas Ltd. plans to restore an oil block it acquired last year from Shell Plc to its previous production levels that would make it one of the country’s biggest domestic operators.

“This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations,” Exxon said in a statement.

After this acquisition deal, Seplat will get an operating stake in four licenses, in which state-owned Nigerian National Petroleum Co. holds a 60% interest. 

Shell, a European major have been wanting to sell off their entire onshore and shallow water fields for more than a decade now, so they can focus mainly on their deep water assets. Seplat is trying to get their hands on Shells’s shallow water assets.

Seplat remains interested in the licenses Shell has put up for sale, and remains one of the top bidders.

The deal doesn’t only boost Seplat’s oil production to about 146,000 barrels of oil equivalent a day , but also has an untapped gas potential.

The new permits are also offshore, which means less chance of disruptions and chaos than it typically would be for onshore operations, and that’s “a real positive for us,” Brown said. “Exxon, even through difficult times, have been able to produce here,” he said.

Seplat’s capital expenditure for the assets would undoubtedly differ from that of Exxon’s, “we do want to invest and grow them,” Brown said. They are very ambitious with their long term vision. Their plans also include the potential for liquefied natural gas exports, he said.  

On top of the purchase price, there’s a contingent consideration of as much as $300 million depending on working capital and other adjustments. Completion is subject to regulatory approvals, and the transaction is classified as a reverse takeover for the purposes of U.K. listing rules.