Seplat Announces Acquisition Of Interest In Onshore OML 55

SEPLAT Petroleum Development Company Plc has announced conclusion of negotiations to purchase 56.25 percent share capital of Belemaoil Producing Limited. Belemaoil is a Nigerian special purpose vehicle (SPV) that has completed the acquisition of a 40.00 percent interest in the producing OML 55, located in the swamp to coastal zone of Southeastern Niger Delta from Chevron Nigeria Limited. NNPC holds the remaining 60.00 percent interest in OML 55.  
 Seplat is listed on both the Nigeria Stock Exchange and London Stock Exchange. Its effective working interest in OML 55, as a result of the acquisition, is 22.50 percent.  
The consideration for the indigenous oil firm to acquire its 22.50 percent effective working interest in OML 55 is $132.2 million after adjustments.  The adjustments to the consideration include a deferred payment of US$11.6 million net to Seplat contingent on oil prices averaging $90/bbl or above for 12 consecutive months over the next five years.  
    The company has also advanced certain loans of $80.0 million to the other shareholders of Belemaoil to meet their share of investments and costs associated with Belemaoil.  
   In addition, discussions are underway to determine repayment terms for the initial deposit against the acquisition of $52.5 million that Belemaoil funded with bank debt.  This amount may subsequently be added to the total amount loaned to Belemaoil by Seplat.  Under the agreed terms Seplat will recover the loaned amounts, together with an uplift premium of up to $20.6 million and annual interest of 10.00 percent, from 80.00 percent of the other shareholders oil lifting entitlements. The company estimates net recoverable hydrocarbon volumes attributable to its 22.50 percent 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 percent 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 prioritising those that offer near-term production growth, cash-flow 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 Southeastern 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 metres 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.
       Overall, the infrastructure on OML 55 comprises four flow-stations, a network of flow-lines and two eight-inch pipelines that connect to third party operated infrastructure.  
    The Belema field is unitised 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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