Seplat Petroleum Development Plc acquire Eland Oil & Gas, an independent exploration company that was founded in 2009 for £382m, the companies have agreed, in a bid to scale the business and grow in Nigeria.
The acquisition of Eland, whose main asset is the OML 40 license in the Niger Delta, is set to boost Seplat’s production to 64,000 barrels of oil equivalent a day, a jump of as much as 30% from 2019 guidance. While it’ll still trailing top domestic rival Aiteo Eastern E&P Co., the deal highlights how the retreat of some oil majors in recent years is allowing independent players to grow.
The West African oil operator Seplat will pay 166 pence per share in cash for Eland, or a premium of 28.5 per cent to Monday’s closing price. Shares in Eland climbed 28 per cent in early trading on Tuesday.
The new combined entity would have oil production of 38,000 barrels per day and will mostly focus its operations in the West Delta region.
“We firmly believe that Eland is a complementary fit with Seplat and that there will be enhanced scale and a wider range of capabilities made available to the enlarged group through the combination,” Dr Orjiako said.
Eland’s board has backed the offer, as have its three largest shareholders, who have given irrevocable commitments for about 60 per cent of the shares in the company.
“Eland is an excellent fit with Seplat and the combination should achieve for us growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland shareholders,” said Seplat’s CEO Austin Avuru.
Eland said the all cash £383mn deal has been recommended by the firm’s board and is supported by its three largest shareholders. The statement said Seplat had also secured backing for its offer from major shareholders in Eland including Helios Natural Resources, Lombard Odier Asset Management (Europe) and Richard Griffiths. As such, 60.17% of Eland’s shareholders support the move.