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Seplat Acquires Interest in OML 55 Onshore Nigeria

Source: 2/5/2015, Location: Africa

SEPLAT Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange and London Stock Exchange, announces that it has concluded negotiations to purchase 56.25% of the share capital of Belemaoil Producing Limited, a Nigerian special purpose vehicle (“SPV”) that has completed the acquisition of a 40.00% interest in the producing OML 55, located in the swamp to coastal zone of south eastern Niger Delta, (the “Acquisition”), from Chevron Nigeria Limited (“CNL”). NNPC holds the remaining 60.00% interest in OML 55. SEPLAT’s effective working interest in OML 55 as a result of the Acquisition is 22.50%.

The cost for SEPLAT to acquire its 22.50% effective working interest in OML 55 is US$132.2 million. The Company has also advanced certain loans of US$132.9 million to the other shareholders of Belemaoil to meet their share of investments and costs associated with Belemaoil. Consequently, the up-front cash outlay to SEPLAT after adjustments is US$265.1 million. The adjustments to the up-front acquisition cost include a deferred payment of US$20.6 million contingent on oil prices averaging US$90/bbl or above for 12 consecutive months over the next five years. Under the agreed terms SEPLAT will recover the loaned amounts, together with an uplift premium of US$20.6 million and annual interest of 10.00%, from 80.00% of the other shareholders oil lifting entitlements. The Company estimates net recoverable hydrocarbon volumes attributable to its 22.50% 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% 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. OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritizing those that offer near-term production growth, cashflow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria,” said Austin Avuru, SEPLAT’s Chief Executive Officer. “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 840km2 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). The majority of production on the block is from the Robertkiri, Idama and Inda fields. The Robertkiri field is located in swamp at a water depth of five meters and has a production platform and utility platform installed. Production capacity at the Robertkiri facilities is 20,000 bpd and 10 MMscfd. Production facilities at the Idama field comprise a jack-up mobile offshore production unit (“MOPU”) and riser platform that have a capacity of 30,000 bpd of total fluids and 34 MMscfd. The Jokka field is produced through a manifold tied-back to the Idama facilities. Production facilities at the Inda field comprise a MOPU with a capacity of 30,000 bpd of total liquids and 34 MMscfd. Other infrastructure on OML 55 comprises four flowstations, a network of flow-lines and two eight-inch pipelines that connect to third party operated infrastructure. The Belema field is unitized with OML 25 and is produced via a flow-station on that block. All produced liquids from OML 55 are delivered via third party infrastructure to the Bonny terminal for processing and shipping. In addition to the oil potential on the block there is also an opportunity to develop the significant gas resources that have also been identified.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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