The Supreme Court has declared Nigeria’s Upstream Oil Company, Seplat Petroleum Development Company winner in the case brought against it by Brittania-U Nigeria Ltd over OMLs 53 and 55 sold to it by Chevron Nigeria Limited (also a defendant in the case).
The Supreme Court hadordered all parties to maintain the status quo with respect to the action brought by Britannia-U Nigeria Limited in its bid to stop Chevron from selling oil mining assets OML52, 53 and 55 to Seplat Petroleum Development Company.
Seplat was to acquire 40% working interest in OML 53 and effective 22.5% working interest in OML 55 from Chevron in February 2015 before Brittania-U took it to court claiming it should have been the preferred bidder.
Seplat shares gained 24% at the end of the week ended January 29th 2016.
What it means for Seplat
Austin Avuru explains;
“We are naturally very pleased with today’s ruling, not least because it means we are now free to deploy our proven operating expertise to realise the significant reserve, production and value potential these blocks hold.
To give an idea of scale, we estimate these blocks to hold recoverable volumes of around 200 million barrels of oil equivalent net to Seplat, a material volume by any standard and one which has now been unlocked for us.
“OML 53 fits neatly within our strategy of securing, commercialising and monetising natural gas in the Niger Delta to supply the rapidly growing domestic market and will further reinforce our position as a preeminent supplier of gas in Nigeria. OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritising assets that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria”.
What happened?
On February 5, 2015, Seplat had announced that it had acquired a 40.00% working interest in OML 53 from CNL. Simultaneously the company announced that it had concluded negotiations to purchase 56.25% of the share capital of Belemaoil Producing Limited (“Belemaoil”), a Nigerian special purpose vehicle that had completed the acquisition of a 40.00% interest in the producing OML 55, also from CNL. Seplat’s effective working interest in OML 55 as a result of the acquisition is 22.50%. NNPC holds the remaining 60.00% interest in both OML 53 and OML 55 and, pursuant to the Joint Operating Model, Seplat was designated operator of OML 53 and OML 55 (together the “Assets”).
However, the full completion and transfer of these assets and operatorship was hindered by a litigation brought against CNL and Seplat by Brittania-U, one of the counter bidders that also sought to acquire the assets from CNL and contested the outcome of the sales process.
Portions of this article was culled from Vanguard
