FG’s approval of $1.28bn Seplat-ExxonMobil divestment excites equities market

• The stocks of Seplat have appreciated at the capital market following FG’s approval of $1.28 billion Seplat-ExxonMobil divestment deal
• The approval comes two years after the deal was struck, bringing the number of approved divestment deals to four
• The deal between Shell and Renaissance was rejected by the government

The stocks of Seplat trading at the Nigerian Exchange Limited were boosted on Monday, October 21, following the Federal Government’s approval of the Seplat-ExxonMobil divestment deal.

The price appreciation led to a N376 billion for investors as Seplat’s stocks went up by 9.99 per cent to N5,738, as such, the All-Share Index (ASI) rose by 0.64 per cent, closing at 98,694.80 basis points.

The bullish sentiment drove market capitalisation up by 0.64 per cent to N59.8 trillion. Accordingly, the Month-to-Date and Year-to-Date returns printed +0.1 per cent and +32.0 per cent, respectively.

By the close of the session, there were 32 gainers against 19 losers.

FG approves Seplat-ExxonMobil divestment deal

The Federal Government approved the application of a $1.28 billion sale of ExxonMobil Corporation’s onshore assets to Seplat Energy, more than two years after the deal was struck.

The Chief Executive Officer of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr Gbenga Komolafe, during an event in Abuja on Monday, October 21, said the delayed transaction received final ministerial approval following clearance from the NUPRC.

Komolafe noted that out of the five divestment applications for consent received by the commission, four have passed the regulatory test and secured ministerial consent. 

Under the agreement, Seplat Energy will acquire 40 per cent of four oil mining leases and associated infrastructure, including the Qua Iboe export terminal and 51 per cent of the Bonny River natural gas liquids recovery plant, previously owned by ExxonMobil’s Nigerian unit, Mobil Producing Nigeria Unlimited (MPNU).

Recall that President Bola Tinubu, in his Independence Day speech on October 1, said the deal will receive speedy ministerial approval, having been concluded by the NUPRC as the regulator, in line with the Petroleum Industry Act (PIA) to create vibrancy in the sector and increase oil and gas production.

President Tinubu said, “Fellow compatriots, our administration is committed to free enterprise, free entry and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively.

“As such, the ExxonMobil-Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.

“The move will create vibrancy and increase oil and gas production, positively impacting our economy.”

Deal has been long time coming

Seplat’s interest to acquire the shares of and offshore shallow water operations of MPNU from ExxonMobil Corporation to the tune of $1.28 billion was first struck on February 25, 2022.

The deal was initially rejected by the Nigerian National Petroleum Corporation (NNPC) in the exercise of its right of first refusal. In May 2022, the Federal Government, through the NUPRC, declined to approve the transaction due to “overriding national interest.”

Also, an Abuja-based court, on July 6, 2022, gave an interim injunction preventing ExxonMobil from completing any divestment of a subsidiary holding four licenses in Nigeria.

However, in a turn of twists, in May 2024, the NNPCL signed a settlement agreement for the ExxonMobil-Seplat deal, withdrew the lawsuit against the deal in June 2024 and granted approval for the sale to proceed in line with the PIA.

Shell-Renaissance deal left out

Though the details of the Shell-Renaissance deal were not stated by the NUPRC, the commission said it is committed to following regulatory standards established under the PIA in all the divestment deals brought to it.

Komolafe said the commission has “processed four of the transactions and four of them have received ministerial consent.” The approved deals include Equinor–Project Odinmim, Agip to Oando, ExxonMobil-Seplat and TotalEnergies’ 10 percent divestment to Telema Energies.

Komolafe also noted that this is the first time in history that such a comprehensive regulatory framework has been implemented to ensure transparent divestment processes within Nigeria’s oil and gas sector.

Shell had announced its agreement to sell its 30 per cent stake in SPDC to a local consortium, Renaissance, for over $2.4 billion to streamline its portfolio and direct disciplined investments towards deepwater and integrated gas ventures in Nigeria. The assets include an estimated 6.73 billion barrels of crude oil and condensate, along with 56.27 trillion cubic feet of gas.

IOCs’ divestment has become a fad

After many years of operations, many International Oil Companies (IOCs) like Shell, ExxonMobil, Eni and Equinor, are divesting from Nigeria’s onshore sector and allowing local energy players to run the show.

Apart from the Seplat-Exxon Mobil and the Shell-Renaissance deals, Eni sold 100 per cent of its shareholding interest in Nigerian Agip Oil Company (NAOC) to Oando for a total consideration of $783 million, which comprises consideration for the asset and reimbursement.

Earlier this year, Equinor Nigeria Energy Company (ENEC) sold its oil stake in Nigeria to Chappal Energies. ENEC owned about 54 per cent of OML 128, an oil and gas lease which also includes a share in the Agbami oil field operated by Chevron.

Tinubu-led Oando takes over Eni’s Nigerian Agip Oil Company in $783m deal 

Meanwhile, TheRadar reported that Oando Plc has taken over Nigerian Agip Oil Company (NAOC) from Eni following the acquisition of a 100 per cent shareholding interest in the company for a total consideration of $783 million, which comprises consideration for the asset and reimbursement.

This was contained in a statement sent to the Nigerian Exchange (NGX) Limited on Thursday, August 22 by Oando’s Chief Compliance Officer and Company Secretary, Ms Ayotola Jagun.