Savannah Energy to buy Nigerian unit of China’s Sinopec

Savannah Energy Plc announced on Tuesday that it has entered into agreements to acquire 100 percent of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (SIPEC).

The British independent energy company said it signed separate share purchase agreements (SPAs) with Sinopec International Petroleum Exploration and Production Corporation (SIPC), a subsidiary of Chinese energy giant Sinopec Group, and Jagal Ventures Limited for the acquisition.

SIPEC’s principal asset is a 49 percent non-operated interest in the Stubb Creek oil and gas field, located in Akwa Ibom State, Nigeria, while Universal Energy Resources Limited, an affiliate of Savannah, is the 51 percent owner and operator, according to a statement.

It said SIPC SPA will see Savannah Energy SC Limited, a wholly owned subsidiary of Savannah, acquire a 75 percent equity interest in SIPEC for cash consideration of $52 million, payable on completion and subject to customary adjustments for a transaction of this nature from 1 September 2023.

The Jagal SPA will see Savannah Energy SC Limited acquire a 25 percent equity interest in SIPEC for cash consideration of $7.5 million, payable on completion, plus $2 million in deferred cash consideration payable in eight equal quarterly instalments post-completion.

The transaction consideration is expected to be funded through a new bank debt facility arranged by The Standard Bank of South Africa Limited and the existing cash resources of the company, according to Savannah.

“Completion under each of the SPAs is subject to the parties’ satisfaction of customary conditions precedent, including certain regulatory approvals, as well as a mechanism ensuring that completion under both SPAs occurs simultaneously,” it said.

SIPEC oil production is estimated at an average for 2024 of 1,400 barrels of oil per day, according to the statement.

It said Savannah’s reserve and resource base will increase by approximately 46 million barrels of oil equivalent following the completion of the acquisition.

“The SIPEC Acquisition will secure significant additional feedstock gas available for sale to Savannah’s Nigerian gas processing and distribution subsidiary, Accugas Limited,” the company added.

Andrew Knott, CEO of Savannah Energy, restated the company’s commitment to growing its core business in Nigeria through a combination of both value accretive acquisitions and organic projects.