Following news on the failed asset acquisition deal between Seplat Energy and ExxonMobil, an inquiry has shown that the Nigerian National Petroleum Corporation, the country’s national oil corporation, has offered an enticing offer to acquire the assets.
ExxonMobil and Seplat Energy recently announced a $1.6 billion sales agreement in which Seplat will buy ExxonMobil’s entire stake in the state-owned oil company.
However, just as all hopes were high for the deal’s completion, the Nigerian Upstream Petroleum Regulatory Commission informed ExxonMobil in a letter dated May 16, 2022, that the deal could no longer stand because the NNPC had exercised its contractual right of first refusal on the assets as part of a new era to focus solely on building the long-term profitability of the NNPC Ltd.
Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.
According to findings, the NNPC objected to the sale of ExxonMobil’s equity to Seplat, and insisted on exercising its first right of refusal, after which the Corporation made an offer above $1.6bn to ExxonMobil.
The state-owned oil firm is the major shareholder in the Joint Ventures (JV) with ExxonMobil.
The NNPC will officially debut in July, in its bid to acquire ExxonMobil’s assets as part of the Corporation’s expansion plan.
Seplat Energy had made the winning bid, having staked $1.583bn for the deal to acquire the entire share capital of Mobil Producing Nigeria Unlimited plus contingent consideration, with the asset transfer waiting for the minister’s assent.
In a letter sighted by the press in March, and signed by Group Managing Director, Mele Kyari, and addressed to ExxonMobil, the NNPC reiterated its resolve to take over ExxonMobil’s share of the assets.
“We are aware that you reached an agreement to divest from onshore and shallow waters JVs,” the NNPC said in the letter, stating “clearly we are interested.”
The NNPC also reiterated, in the letter, that it had already transformed from being a corporation to being a profit-driven company and that it now had the capacity to buy over the share of ExxonMobil in the Joint Ventures.
This means that the state-owned oil firm must have, based on its exercise of right of first refusal, paid above the $1.583bn mark offered by Seplat.
Sources disclosed that the Corporation must have parted with as much as $2 billion for the assets.
Recall that the NNPC recently announced a funding agreement with AFREXIM for up to $5 billion to grow its investment in new and existing upstream assets.