Seplat Lists On The LSE, Looks To Raise $500Million, By Fred Akanni

Needs cash to expand gasproduction to 390MMscf/d by 2017, crude output to 100,000BOPD..

Nigerian independent Seplat Petroleum has won a three year struggle to list on the main board of the London Stock Exchange. The company, with operated gross daily production of 60,000BOPD of crude and 90MMscf/d of natural gas, intends to use the platform to raise about $500Million, in part for debt repayment, in part for prime acreage acquisition and in large part for aggressive increase in hydrocarbon output, to 100,000BOPD by 2017 for crude and 390MMscf/d by 2017 for natural gas (gross).

Seplat, which also plans a listing on the Nigerian Stock Exchange, is the first company, incorporated in Nigeria, to make the main board of the LSE. Companies from ‘outside the west’, or from the so called emerging markets, have had a hard time listing on the LSE, since “the flotations of ENRC of  Kazakhstan and Bumi of Indonesia in the 2000s tarnished the reputation of the City of London”, the Financial Times reports. “Controlled by foreign tycoons and lured to London by persuasive bankers, each was allowed to list despite a poor record in regard to corporate governance”.Since then, the newspaper explains, “the UK Listing Authority, which acts as the gatekeeper for the London Stock Exchange, has tightened rules for IPOs”. In Seplat’s case, there was also the poor perception of Nigeria as a haven of corrupt businessmen.

Seplat’s application, submitted in 2011, went through such a rigorous scrutiny that, at some point, there were whispers in elite business circles in Lagos that the deal was off. On its own, the Seplat management never contemplated the idea of failure. “A listing on the LSE, imposes the sort of corporate governance that aids our growth as a company”, company sources remark.

SEPLAT was founded in 2009 by Shebah Petroleum Development Company Limited and Platform Petroleum (Joint Ventures) Limited for the purpose of investing in Nigerian oil and gas opportunities.  Maurel& Prom, a French independent oil company, subsequently acquired a 45% equity interest in SEPLAT; this interest was later spun-off to form Maurel& Prom Nigeria S.A (now Maurel& Prom International).In July 2010, SEPLAT acquired a 45% participating interest in, and was appointed operator of, a portfolio of three onshore producing oil mining leases (OMLs 4, 38 and 41) located in the Niger Delta. In June 2013, the Company entered into an agreement for the acquisition of a 40% participating interest in the Pillar Oil operatedUmuseti/Igbuku marginal field area in the western Niger Delta. Seplat also has a similar agreement with Chorus Energy which holds the Matsogo/Amoji/Igbolo fields. Seplat hopes to be able to deliver 100MMscf/d from Platform operated Egbeoma field, Pillar operated Umuseti/Igbuku and Chorus held Matsogo/Amoji/Igbolo fields combined by 2017.

Seplatalso hopes to have completed the de-bottlenecking of the Oben Gas Processing plant to 240MMscf/d capacity by the end of 2014, in order to satisfy some contractual agreements with power companies that are due by 2015. The company is thinking of looping the Sapele Gas Plant to Oben. “The offtake in Sapele has been epileptic so we may as well expand the Oben processing plant and mothball the Sapele plant”, company sources say.

Raising $500Millionis quite ambitious and if it succeeds would rank as perhaps the largest oil industry IPO in London in several years. Officially, Seplat says that the money it raises will be used as follows: (i) $[48] million to repay in full all outstanding amounts under its shareholder loan from MPI S.A.; and (ii) the remainder of the net proceeds to be available for acquiring and developing new acquisitions, and/or pay down any additional debt raised in connection therewith, of both onshore and shallow offshore acreages, assets or joint venture farm-ins. The main source of acquisitions is expected to come from divestitures by various international oil companies”. Seplat is in the running to acquirethe 45% stake held by Shell, TOTAL and ENI, in one of the four Oil Mining Leases (OMLs) 18, 24, 25 and 29, that the three European partners have put up for sale. Shell, which is managing the transaction, is expected to announce the winnersby April 2014.



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