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UPDATE: Seplat Petroleum acquires Eland Oil & Gas

Seplat Petroleum Development Plc has just announced that it will be acquiring Eland Oil & Gas, following agreements by the companies’ boards of directors.

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Seplat Petroleum

Seplat Petroleum Development Plc announced earlier today that it will acquire Eland Oil & Gas, an independent exploration company that was founded in 2009 and “listed on AIM, the London Stock Exchange’s growth market.”

According to a statement signed by Seplat’s Company Secretary, Mrs Edith Onwuchekwa and issued to the Nigerian Stock Exchange, the development follows the finalisation of acquisition agreements between the boards of both companies.

“Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), a leading Nigerian independent oil and gas company listed on both the Nigerian Stock Exchange and London Stock Exchange, today notifies that the Boards of Seplat and Eland are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Eland by Seplat (the “Acquisition”).”

Terms of agreement: The statement by the Seplat further disclosed that the deal will be effected through a scheme of arrangement in accordance with Nigeria’s Companies Act; part 26. Further details are summarised below.

  • Every Eland Oil & Gas shareholder will receive 166 pence in cash per share.
  • The entire issued and yet to be issued ordinary share capital of Eland Oil & Gas has been valued at approximately £382 million.
  • On a fully diluted basis, this represents a premium of 28.5% to Eland’s closing share price of 129.2 pence on 14 October 2019.
  • It also represents “a premium of approximately 32.6% to the three-month volume-weighted average price per Eland Share as of 14 October 2019 of 125.2 pence.”
  • Any shareholder of Eland Oil & Gas whose name appears on the register as at close of business on Friday, October 18th, will stand a chance of receiving and retaining the interim dividend which the company is set to pay on October 31st, 2019.

In the meantime, the board members of Eland Oil & Gas believe that terms of this scheme of arrangement are “fair and reasonable”. In view of this, the directors have urged the company’s shareholders to vote in favour of this scheme during a court-ordered meeting, the date for which was not disclosed in the press statement.

A done deal? Apparently, Eland’s board of directors signed an undertaking that makes this agreement binding. In other words, Seplat Petroleum received an irrevocable undertaking, not just from the board of Eland Oil & Gas, but also from other stakeholders such as Helios Natural Resources Limited, Lombard Odier Asset Management (Europe) Limited, and
Richard I Griffiths. These entities are to ensure that the scheme is voted through during the court-ordered meeting.

“Therefore, as at the date of this Announcement, Seplat has received irrevocable undertakings to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting with respect to a total of 129,727,705 Eland Shares, representing approximately 60.17 per cent. of the existing issued ordinary share capital of Eland. Further details of the above-mentioned irrevocable undertakings are set out in Appendix III to this Announcement.”

[READ: Seplat Petroleum’s H1 profit increases by 152.6%]

Deal book 300 x 250
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Good for Seplat: With this acquisition, Seplat Petroleum Development Company Plc is positioning itself to become Nigeria’s biggest oil exploration and production company. The company has so far remained profitable this year, with half-year 2019 profit increasing 152.6% to N37.5 billion.

Seplat’s stock is currently trading at N490 on the Nigerian Stock Exchange. This is slightly below the opening share price of N517, indicating that investors may be reacting lukewarmly to this development. But there really is no reason for them to be worried, seeing as Eland’s acquisition is expected to boost Seplat’s production output to 64,000 barrels per day. Eland Oil & Gas’s main asset is the OML 40 license in the Niger Delta.

[READ: Seplat exonerates self from $114m court judgement against Chairman]

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Why the proposed Borno power plant may not materialise 

The glaring security challenge cannot be overlooked in considering a major power plant project in Borno State.

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Only a few days ago, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, led a delegation to Borno State to meet with the Governor of the State, Babagana Zulum.

In the conversation with Zulum, Kyari promised the establishment of a gas-fired power plant in Borno State within a maximum of 4 months to solve the recent blackouts that resulted from insurgents cutting off Borno from the national grid since January this year.

In Kyari’s words, “We have talked to each other and we think it’s very possible to establish a dedicated power plant in Maiduguri which will serve current needs of power supply not only in Maiduguri but to other parts of the neighbouring cities.”

Yet, there is a significant possibility that the power plant promised by Kyari may not materialize for many reasons, the first of which is security. In the meeting with Kyari, Governor Zulum had noted: “The ongoing insurgency has cut off the entire Borno from the national grid in the last three months. We put all our efforts and restored it back… but unfortunately, after 48 hours, the same group of insurgents went back and destroyed the main tower again.”

This glaring security challenge cannot be overlooked in considering a major power plant project in Borno State, particularly noting that the State and its surrounding communities have been the hot zone of insurgent and terrorist attacks by Boko Haram insurgents since 2009. Borno, Yobe and Adamawa have particularly been states where the insurgents have set up shop and carried out various activities, including kidnap, extermination of entire communities, burning of markets and religious buildings and the attack on the United Nations compound, in each case claiming tens or hundreds of innocent lives.

One report reveals that at least 37, 500 people have been killed by the insurgent group since May 2011, a modest number, some say. Also, till date, some of the secondary school girls kidnapped in the April 2014 Chibok incident are yet to be returned to their families. It is then bewildering how Kyari intends to see to the construction and operationalizing of this gas power plant.

Additionally, while the Minister of Petroleum for State, Chief Timipre Sylva, announced last year about the discovery of oil and gas deposits in the North, we have not seen any exploration and production kick-off. It then begs the question of where the gas for the Borno power plant intends to be sourced. The only gas pipeline that runs through the North – the AKK- is still in its first phase of construction out of three phases and has been earmarked at the earliest, to be completed in 2023 – not counting the typical delays the project will experience along the way.

Should the AKK by some stroke of luck materialize much earlier than the target date, the pipeline route is a considerable distance from Borno. It runs the route of Ajaokuta-Abuja-Katsina-Kano, its endpoint, a striking 481km from Borno State. Thus, there would have to be construction of a tie-in pipeline almost as long as the AKK from Kano to Borno State to get gas to Borno.

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Optimists may reference the oil and gas discovery in the North and how production may start soon, thus obliterating the need for a 481km pipeline. This optimism however is not well-founded, as insecurity has been shown to be a major risk to oil and gas projects everywhere in the world. One of the major reasons the Trans-Saharan Gas Pipeline proposed to run from Nigeria to Algeria was abandoned was due to security challenges posed by Nigeria’s Movement for the Emancipation of the Niger Delta (MEND), the Tuareg guerilla movement in Niger and other insurgent groups along the proposed route of the pipeline.

These increased the risks across board, including for completion and operations through the lifecycle of the project. As such, failing to fix the security threats in northeast Nigeria makes any proposed gas plant project a pipe dream. Transporting gas via LNG trucks is not a better option, given that the drivers and their cargoes would be in danger of being kidnapped, shot at or bombed. The risks for both personnel and investors are high.

In any event, promising a power plant in 4 months for the people of Borno is unconscionable, since a typical gas power plant will take between 1 to 6 years to construct in relatively peaceful regions. What the government needs to do instead of making promises it cannot keep is to work arduously to fix the security challenges in Northern Nigeria and at the same time consider using decentralised solar power to provide power supply to homes, government institutions, schools and businesses while plans to produce gas in the region or transport gas to it are underway.

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Business

Lagos Commissioner of Police dismantles road blocks on Lagos-Badagry expressway

The Commissioner warned the concerned Area Commanders to take action on full compliance as any defaulter will be sanctioned accordingly.

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The Commissioner of Police in Lagos State, CP Hakeem Odumosu, has ordered the immediate dismantling of all illegal roadblocks by police teams from the command on the Lagos-Badagry expressway.

The directive is to checkmate the illegal activities of the police on that route which have been condemned by the government, some stakeholders and international bodies and also bring sanity and decency to their operations along that axis.

That disclosure is contained in a statement signed by the Police Public Relations Officer of the Lagos State Police Command, CSP Olumuyiwa Adejobi, on Saturday, April 10, 2021.

Adejobi in the statement said that CP Odumosu gave the order on Friday while addressing Area Commanders and Divisional Police Officers in the command on the general security situation in the state and reviewing the anti-crime strategies of the command in order to sustain its feats on crime control.

What the statement from the Lagos State Police Command is saying

The statement from the Lagos Police Command partly reads, “In his bid to restore sanity and decency to the operations of the police along the ever-busy international route, Lagos/Badargy Expressway, the Commissioner of Police, Lagos State, CP Hakeem Odumosu, has ordered for the immediate dismantling of illegal roadblocks by the police teams from the Lagos State Police Command.

The police boss, while reacting to some complaints from the general public and some security reports on the police activities along the international route, ordered the Area Commanders and Divisional Police Officers whose jurisdictions fall along the Badargy Expressway; Festac and Area K, Marogbo, to withdraw their men from the illegal roadblocks and embark on aggressive motorised patrol and surveillance to police their areas and the route.

The Commissioner of Police confirmed that the illegal police roadblocks along the route have been condemned by the government, international bodies and interest groups and they must be dismantled without delay,” he said.

The Commissioner, however, noted that other police operatives from other police formations, outside the supervision of the Lagos State Police Command who operate along the route, would be contacted to adjust and do the needful to restore sanity to their operations.

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The CP Odumosu then warned the concerned Area Commanders to desist and take necessary action on full compliance with his order as any defaulter will be sanctioned accordingly.

 

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