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Seplat gets $700m war chest as Afren merger on the cards

7 takeaways from Seplat Energy’s 11th AGM
Seplat Petroleum Development Co. secured the option to raise $700 million of debt for acquisitions as the Nigerian oil producer considers buying London-based Afren Plc, reports Bloomberg.
The company refinanced debt with $1 billion of new facilities split between a $700 million seven-year tranche and a $300 million three-year loan, it said in an e-mailed statement on Thursday.
The debt maturing in 2022, provided by Nigerian banks, can be doubled for “qualifying acquisition opportunities,” the company based in Lagos said.
Seplat said in November it is looking to buy Nigerian gas assets, including those of Royal Dutch Shell Plc, to take advantage of higher prices in Africa’s biggest economy. Seplat, which listed its shares in Lagos nine months ago, has until January 19 to make a firm offer to Afren after approaching the U.K. explorer, it said last week. Shares of the companies, which have a combined market value of about $1.5 billion, have been battered as crude oil prices plunged.
“They should be able to secure more deals as there are so many more assets becoming vulnerable, including public companies, in this weak oil price environment,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by phone from Moscow.
The acquisition would extend Seplat’s reach beyond its fields in Nigeria to include Iraq’s Kurdistan region, which Afren focuses on in addition to the country. Seplat produces about 70,000 barrels of oil a day at three Nigerian fields, in which it owns a 45 percent working interest.
Seplat’s shares rose 3 percent in Lagos to N310 on Thursday, trimming its plunge since they started trading in April to 46 percent. The stock added 1.1 percent to 117.75 pence in London on Thursday, snapping a five-day decrease.
Afren surged 24 percent in London, headed for the steepest advance since 2009 and trimming a loss this year to 43 percent. The company’s market value increased to £296 million ($451 million).