Seplat Energy Plc, a Nigerian independent energy supplier, has embarked on an ambitious plan to revitalize its oil production capacity following the landmark acquisition of Exxon Mobil Corp’s onshore oil and gas assets in Nigeria. This acquisition, finalized for $1.28 billion, marks a significant shift in the Nigerian oil landscape as international companies divest from the region, presenting opportunities for local players like Seplat to expand their footprint. The acquisition significantly expands Seplat’s portfolio, adding 48 producing oil and gas fields, five gas-processing facilities, and three export terminals to its existing assets. The immediate priority for Seplat is to bring hundreds of idle oil wells back into production, optimizing its existing infrastructure. With only 200 out of 600 oil wells currently active, the potential for increased output is substantial, promising a significant boost to Seplat’s production capacity and overall revenue.
The acquisition, which was initially announced in 2022, received regulatory approval from the Nigerian Upstream Petroleum Regulatory Commission in October of the same year. The transaction involved an initial payment of $128 million upon signing the deal, followed by an $800 million payment upon finalization. The remaining $257.5 million has been deferred to December 2025 to account for anticipated decommissioning, abandonment, and joint venture costs associated with the acquired assets. This structured payment approach allows Seplat to manage its financial obligations while integrating the new assets into its operations. Seplat’s leadership views the acquisition as a financially sound investment, anticipating a rapid return on investment based on the projected earnings before interest, taxes, depreciation, and amortization (EBITDA).
Seplat’s Chief Financial Officer, Eleanor Adaralegbe, highlighted the favorable financial outlook of the acquisition, indicating that the payback period is expected to be relatively short. This positive projection is underpinned by the company’s strong financial performance, with EBITDA increasing by 25% to $383 million for the nine months ending in September, compared to the same period in the previous year. The acquisition is not just about acquiring existing assets; it’s a strategic move to significantly increase Seplat’s production capacity. The company aims to more than double its current output of approximately 71,000 barrels of oil equivalent per day to over 200,000 barrels per day, although a specific timeline for achieving this target has not been disclosed. This ambitious goal underscores Seplat’s commitment to becoming a major player in the Nigerian oil and gas sector.
The acquisition positions Seplat to capitalize on Nigeria’s vast gas reserves and the growing demand for both domestic gas and liquefied natural gas (LNG). CEO Roger Brown emphasized the significant gas opportunities within the acquired portfolio, highlighting the potential for growth in both the LNG and domestic gas markets. This strategic focus on gas aligns with global energy trends and positions Seplat to contribute to meeting Nigeria’s growing energy needs while also tapping into the lucrative international LNG market. The acquisition not only expands Seplat’s oil production capabilities but also diversifies its portfolio, providing a balanced approach to hydrocarbon resource development.
The revitalization of idle wells is a key component of Seplat’s strategy to boost production. Chief Operating Officer Samson Ezugworie outlined the company’s immediate focus on rig intervention, short-term oil generation activities, and bringing idle wells back online. This approach demonstrates a commitment to maximizing the value of the acquired assets and optimizing production efficiency. By reactivating these dormant wells, Seplat can quickly ramp up its output without the need for extensive exploration and development of new fields. This strategy allows for a more immediate return on investment and contributes to the company’s overall growth trajectory.
Seplat’s acquisition of ExxonMobil’s assets signifies a broader trend in the Nigerian oil and gas industry, where indigenous companies are increasingly taking on a more prominent role. This shift in ownership dynamics presents both challenges and opportunities for the Nigerian energy sector. While established international players are divesting, local companies like Seplat are stepping up to fill the void, demonstrating their capacity to manage and operate large-scale oil and gas projects. This transition represents a significant step towards greater local participation and control over Nigeria’s valuable energy resources. Seplat’s ambitious plans to increase production and capitalize on gas opportunities position the company for continued growth and solidify its role as a key player in the evolving Nigerian energy landscape.
