In a bid to expand its businesses and increase its portfolio, Nigeria’s Seplat Petroleum Development Company Plc has agreed to acquire London-listed Eland Oil & Gas for £382 million ($484 million). The upstream exploration and production company will pay 166 pence per share in cash for Eland, or a premium of 28.5 per cent to Monday’s closing price and the deal will be financed through a combination of existing cash and a new loan facility.
According to Seplats chairman, Bryant Orjiako, Eland is a complementary fit to the company. “This acquisition signals the next step in our journey that will underpin Seplat’s ambition to be the leading independent exploration and production company in Nigeria.”
Eland said the all-cash deal has been recommended by the firm’s board and is supported by its three largest shareholders. As such, 60.17 percent of Eland’s shareholders support the move. In addition, Seplat also secured backing for its offer from major shareholders in Eland including Helios Natural Resources, Lombard Odier Asset Management (Europe) and Richard Griffiths.
Seplat operates a portfolio of assets in the Niger Delta region and with the acquisition of Eland, whose main asset is the Oil Mining Lease (OML) 40 license in the Niger Delta, Seplat’s production will increase to 64,000 barrels of oil equivalent a day. This is a jump of as much as 30 percent from 2019 guidance.
Nigeria’s Seplat Petroleum Development Company Plc has a 40 percent working interest in Oil Mining Lease (OML) and effective 22.5 percent working interest in OML 55 that it acquired from Chevron Nigeria Limited (CNL) in February 2015.
Seplat’s CEO Austin Avuru stated that “Eland is an excellent fit with Seplat and the combination should achieve for our growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland shareholders.” “The deal is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near term production with cash flow and reserves potential,” he added.
Shares in Eland climbed 28 per cent in early trading on Tuesday, as expected.