Chevron Nigeria Limited (CNL) may have ignored a case pending before the Supreme Court, over a controversial oil assets sale initiated in 2013 following the announcement yesterday by Seplat Petroleum Development Company plc that it has concluded the takeover of Oil Mining Leases (OMLs) 53 and 55, two of the three assets, the multinational oil company offered in the bid round.
A raft of suits seeking to stop Chevron Nigeria Limited from signing off these assets to a Seplat-led consortium followed a stalemated bidding session when Chevron failed to announce an outright winner. The assets had been bundled for sale in a single bid, and the announcement by Seplat on conclusion of sale on two of the assets will come as a surprise to many who have followed the controversial sale since 2013.
The Nigeria court cases had led to a pending case at the Supreme Court, where Brittania-U Nigeria Limited, said to have posted the highest bid for the assets, had gone to seek redress and was awaiting a scheduling of hearing when the new announcement was made yesterday by Seplat. Brittania-U also has a case pending in the United States of America, where it is suing the parent company of Chevron Nigeria, Chevron Corporation, whose officials had superintended the two bid sessions that the process underwent before it ran into troubled waters.
Brittania-U Nigeria Limited, an indigenous company, had posted a bid of $1.1 billion for the three assets, OMLs 52, 53, and 55. Seplat bided $800 million.
But Seplat Petroleum Development Company Plc, in a statement, yesterday, announced that it had concluded negotiations to purchase 56.25% of the share capital of Belemaoil Producing Limited (“Belemaoil”), a Nigerian special purpose vehicle (“SPV”) that has completed the acquisition of a 40.00% interest in the producing OML 55, located in the swamp coastal zone of south eastern Niger Delta, an acquisition from Chevron Nigeria Limited.
NNPC holds the remaining 60 percent interest in OML 55. Seplat’s effective working interest in OML 55 as a result of the acquisition is 22.50 percent.
The consideration for Seplat to acquire its 22.50 percent effective working interest in OML 55 is $132.2 million after adjustments, which include a deferred payment of $11.6 million net to Seplat contingent on oil prices, averaging $90/bbl or above for 12 consecutive months over the next five years.
The company claimed that it had also advanced certain loans of $80.0 million to the other shareholders of Belemaoil to meet their share of investments and costs associated with Belemaoil.
“In addition, discussions are underway to determine repayment terms for the initial deposit against the acquisition of $52.5 million that Belemaoil funded with bank debt.”
This amount may subsequently be added to the total amount loaned to Belemaoil by Seplat. Under the agreed terms Seplat will recover the loaned amounts, together with an uplift premium of up to US$20.6 million and annual interest of 10 percent, from 80 percent of the other shareholders oil lifting entitlements.” Seplat said in a statement
The company estimates net recoverable hydrocarbon volumes attributable to its 22.50 percent effective working interest to be approximately 20 MMbbls of oil and condensate and 156 Bscf of gas (total 46 MMboe).
“The addition of OML 55 to its portfolio,” it stated, “together with the separately announced acquisition of OML 53, has expanded it footprint in the Niger Delta to six blocks and further cements our position as a leading indigenous independent E&P in Nigeria.”
According to Austin Avuru, Seplat’s Chief Executive Officer. “OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritising those that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria.
Some industry operators are wondering why Chevron should go ahead to give the assets to Seplat when the case is in court. According to them the action amounts to subjudice and at variance with the law of the country.
They presidency and the minister of petroleum resources, they opined, should bring Chevron to book for allegedly not being transparent in this transaction.