Seplat: Why we Lost The Shell Bid

Dr. A.B.C. Orjiako, Seplat Chairman

Seplat says it failed to win the most prized acreage in the ongoing divestment by Shell, TOTAL and ENI because its bid “was not the highest priced offer”.
Nigeria’s largest indigenous E&P company explains that this was why its “strong bid” for Oil Mining Leases (OMLs) 29 and 24 “did not lead to the company’s selection as preferred bidder”.

Seplat did not disclose the value of its ‘strong bid’. It simply said it “will continue to exercise price discipline”.

The statement, made in the company’s first interim report since its listing on the Nigerian and London Stock Exchanges in April 2014, was the first official disclosure by any party involved in the very competitive race for the 45% equity held by the three European majors in OMLs 18, 24, 25 and 29, all producing onshore acreages in the eastern Niger Delta. Shell and Co had held tightly to information about the bid, which had lasted close to 12 months and had involved over 50 companies and consortia.

Africa Oil+Gas Report reported last week that Pan Ocean had won OML 24. The news agency Reuters, much earlier, disclosed that two Nigerian oil traders, Aiteo and Taleveras had jointly won OML 29, the most coveted of the four assets. Very impeccable sources affirmed to us that this consortium had, indeed, won the biggest prize, but the $2.85Billion that Reuters said they reportedly offered, has been harder to confirm.

Shell’s own figures state that the remaining reserves (P1+P2) in OML 29 is about 2.2Billion barrels of oil equivalent (BOE). The hydrocarbon fields on the acreage could deliver as much as 160,000BOPD and 300MMscf/d at peak, with focused, aggressive work programme.

A joint bid by Midwestern Oil and Gas and Mart Resources is said to have won OML 18, while a consortium of Nigerian and Canadian companies named Cresta is the preferred bidder for OML 25. When contacted, Midwestern Oil and Gas simply responded: “We’d talk about it later”.

Still more sources are sounding “very sure of their facts”, than ever before, and as the bid round winds down all the names and figures will soon be out in the open.

The Seplat statement can be interpreted to mean that the company is not sorely disappointed with the outcome. Seplat is confident that there is “a substantial pipeline of other material opportunities that are being pursued”, according Austin Avuru, its Chief Executive Officer.  “We will retain our focus on acquisition opportunities where we can leverage Seplat’s technical and financial strength,” he said.

Seplat’s net cash position currently is approximately $ 285 million, following receipt of the gross proceeds of the IPO of $535 million and repayment of the MPI shareholder loan of $48 million, it said in the statement.  “All of our development projects remain on track, and we are confident of delivering our target production exit rate for this year of 72,000 BOPD, and of recovering as much of the production lost in the period as possible”, Mr. Avuru noted.



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