According to sources close to the deal, the state oil giant, Nigerian National Petroleum Corporation, has made an intriguing offer to buy the assets after news on the failed asset acquisition deal between Seplat Energy and ExxonMobil.
ExxonMobil and Seplat Energy recently announced a $1.6 billion sales agreement in which Seplat will buy ExxonMobil’s entire stake in the state-owned oil company. The Nigerian Upstream Petroleum Regulatory Commission, in a letter to ExxonMobil dated May 16, 2022, stated that the deal could no longer be completed because the NNPC had exercised its right of pre-emption first refusal on the assets as part of a new era focused solely on building the NNPC Ltd.’s long-term profitability.
Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the joint venture if either party chooses to trade them off. The NNPC opposed to the sale of ExxonMobil’s shares to Seplat, and insisted on exercising its first right of refusal, following which the Corporation made an offer to ExxonMobil over $1.6 billion, according to the results. The state-owned oil company is a key shareholder in ExxonMobil’s joint ventures. The NNPC will make its formal debut in July, and its bid to purchase ExxonMobil’s assets is regarded to be part of the Corporation’s development strategy.
The winning bidder, Seplat Energy, had put up $1.583 billion for the deal to buy Mobil Producing Nigeria Unlimited entire share capital plus contingent consideration, with the asset transfer awaiting the minister’s approval.
The NNPC underlined its commitment to take over ExxonMobil’s part of the assets in a letter sighted by The PUNCH in March, signed by Group Managing Director Mele Kyari and sent to ExxonMobil. In the letter, the NNPC also stated that it had already changed from a corporation to a profit-driven enterprise and that it now had the potential to purchase ExxonMobil’s stake of the Joint Ventures. This means that the state-owned oil company must have paid more than the $1.583 billion offered by Seplat since it exercised its right of first refusal. According to sources, the Corporation must have paid up to $2 billion for the properties. Recall that the NNPC recently signed a financial agreement with AFREXIM worth up to $5 billion to expand its upstream asset investment. As a result of this, experts believe that Total Energies and some other oil companies that are trying to sell some of their assets, may be discouraged from entering discussions as a result of the failed agreement.
Source: The Punch, Capital Post