Seplat Petroleum, a Nigerian oil, and gas firm has reached an agreement to acquire Eland Oil and Gas for £383 million. Equally important, Eland Oil is a UK firm based in Aberdeen, Scotland.
The landmark deal is expected to be completed towards the end of the year after which Eland will be delisted from the London Stock Exchange.
Details of the deal garnered by 1st News indicate that Eland has all but accepted Seplat’s offer. The £383mn all-cash deal has been recommended by Eland’s board. Also, the deal is supported by the company’s three largest shareholders.
1st News understands that both businesses will operate as separate entities for a year before a planned merger of both operations.
Seplat and Eland Oil first inked a confidentiality agreement in April 2015. Further, Seplat’s offer represents a 28.5% premium to Eland’s share price on October 14.
In a statement released by the company, Eland disclosed that Seplat had also secured backing for its offer from major shareholders in Eland. These include Helios Natural Resources, Lombard Odier Asset Management (Europe) and Richard Griffiths. In principle, about 60.17% of Eland’s shareholders support the move.
Seplat CEO, Austin Avuru disclosed that the acquisition will position the company for increased growth and profitability.
“Eland is an excellent fit with Seplat and the combination should achieve for our growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland shareholders.
“The deal is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near term production with cash flow and reserves potential.”
The deal will see Seplat reach a production capacity of 38,000 BPD of liquids
Seplat Petroleum and Eland Oil have a number of similarities as business entities. Both companies are listed on the London Stock Exchange. Also, both firms operate assets in the Niger Delta. Eland holds a 45% stake in OML 40 and a 40% stake in the Ubima field. The investments are via the Elcrest Exploration and Production joint venture.
Interestingly, net production from OML 40 reached 9,948 barrels per day in the first half of the year.
Eland announced the start of production from its Gbetiokun field, on OML 40, in August. Two wells are flowing at 12,000 BPD, with the third well near completion.
Seplat is on its way to becoming the largest indigenous oil & gas company in Nigeria.
Indeed, the deal will see Seplat’s production capacity soar. As a matter of fact, the addition of Eland’s production will take Seplat to 38,000 BPD of liquids. Seplat’s 2P liquid reserves will increase by 41mn barrels to 268mn barrels, while 2P and 2C reserves will increase by 65mn barrels to 330mn barrels.
Meanwhile, Eland’s CEO George Maxwell had recently disclosed that the company was in the process of broadening its development focus into a more well-rounded company.
He noted that plans for exploration drilling on the Amobe prospect were due to begin in November. Maxwell affirmed that the work had the potential to double the company’s reserves.
Culled from 1stnews.com