By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE) – First listed Nigerian oil and gas upstream firm, Seplat Petroleum Development Company Plc has until January 19, 2015 deadline to make a firm offer on its merger with Afren Plc, a U.K. oil and gas explorer, Afren said in a statement.
“There can be no certainty that an offer will be made or as to the terms of any offer.
Afren notes that in accordance with Rule 2.6(a) of the Code, by no later than 5.00 p.m. on 19 January 2015, Seplat must either announce a firm intention to make an offer for Afren under Rule 2.7 of the Code or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code,” Afren said.
The company gained 3.8 percent to 49.39 pence by the close of business on the London Stock Exchange (LSE). It earlier climbed 22 percent to 58 pence, the biggest intraday jump since April 3, 2009.
Seplat by the close of transactions on the Nigerian bourse gained N13.25 as it opened N265.02 and closed at N278.27.
Afren had said in November that it expects to produce 32,000 to 36,000 barrels of oil a day this year mainly from Nigeria which the first output may come from the Okoro and Okwok prospects in 2015.
According to the Financial Times, based on Seplat’s current enterprise value of £730 million, and Afren’s £1.1 billion, a combined entity would have a valuation of about £1.8bn ($2.8bn).
FT report says that a Seplat-Afren deal, if realised, has the potential to begin a round of consolidation among Nigeria’s nascent homegrown oil companies, which have expanded exponentially in the past five (5) years by buying up assets from the supermajors.
The report further affirmed that big oil companies has been keen to reduce its onshore presence in Nigeria, after ownership disputes, sabotage and long delays to a new law setting out terms for operators.
It noted that Royal Dutch Shell, Total of France, Eni of Italy and Chevron and ConocoPhillips of the US are among the companies that have sold billions of dollars worth of oilfields and pipelines since 2008-09.
FT disclosed that Nigerian oil companies such as Oando and Shoreline Natural Resources, as well as Seplat and Afren, have been among the buyers, supported with debt from local and international banks.
Seplat was listed on London and Nigeria’s stock exchanges in April, and had then raised $500 million from its initial public offerings (IPOs) and has onshore licenses with oil production at 60,000 barrels per day.
This is coming on the heels of the sack of Osman Shahenshah, long serving chief executive officer of Afren for what the U.K oil and gas explorer described as gross misconduct. The company is seeking the return of about $17 million received in secret payments by its former CEO.
