The value of listed equities at the nation’s stock exchange (NSE) is set to increase by $3billion (about N500billion) as Seplat Petroleum Development Company plc plans to float its shares on both the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE).
Upon listing, the current market cap of the Nigerian Stock Exchange is expected to surge well above N13trillion from the current level of N12.613trillion.
The company said yesterday that it intends to apply for admission of its ordinary shares to the Financial Conduct Authority of the LSE’s main market and the Official Trading List of the NSE.
A successful listing will make Seplat the first Nigerian oil and gas company to have its ordinary shares listed on both the LSE and the NSE.
“The global offer proceeds will allow us to further implement our business strategy which includes acquiring new assets,” Bryant Orjiako, Seplat’s chairman, said in the statement. “Seplat has a disciplined approach to acquiring new onshore and shallow-water assets in the Niger Delta which will be strictly adhered to.”
BusinessDay’s analysis of comparable listed peers shows that Seplat may achieve a post-listing valuation of $3 billion.
Afren, another independent oil and gas exploration company which is listed on the LSE, has a market capitalisation of $2.95 billion. Afren had average oil production of 47,000 barrels per day (bpd) last year. This compares with Seplat with average gross operated oil production of 51,400 bpd as at December 31, 2013, having grown from 13,900 bpd in August 2010.
Seplat was founded in 2009 by Shebah Petroleum Development Company Limited and Platform Petroleum (Joint Ventures) Limited for the purpose of investing in Nigerian oil and gas opportunities. Maurel & Prom, a French independent oil company, subsequently acquired a 45-percent equity interest in Seplat. This interest was later spun off to form Maurel & Prom Nigeria S.A. (now Maurel & Prom International).
In July 2010, Seplat acquired a 45-percent participating interest and was appointed operator of a portfolio of three onshore producing oil mining leases (OMLs 4, 38 and 41) located in the Niger Delta.
In June 2013, the company entered into an agreement for the acquisition of a 40-percent participating interest in the Umuseti/Igbuku marginal field area, located within OPL 283 in the Niger Delta.
The company’s average gross gas production in 2013 was 99 million standard cubic feet per day (MMscfd). SEPLAT is targeting gross operated oil production from its existing assets of 85,000 bpd by the end of 2016.
The company noted in its announcement that it “intends to use the net proceeds of the Global Offer to repay in full all outstanding amounts under its shareholder loan from MPI S.A. (MPI); and use the remainder of the net proceeds to be available for acquiring and developing new acquisitions, and/or pay down any additional debt raised in connection therewith, of both onshore and shallow offshore acreages, assets or joint venture (JV) farm-ins. The main source of acquisitions is expected to come from divestitures by various international oil companies (IOCs)”.
An increasing number of Nigerian E&P companies are looking to global capital markets to increase their capacity to raise funds for acquisition and development projects. A major attraction has been the Alternative Investment Market (AIM) on the London Stock Exchange.
Over the years, companies such as Mart Resources (market cap: $494m), Eland Oil & Gas (market cap: $228m), Heritage Oil (market cap: $642m), and more recently, Lekoil (market cap: $130m) have been listed on foreign exchanges. At present, less than 2 percent of oil assets are represented on the NSE.
Seplat has appointed BNP Paribas SA and Standard Bank Group Ltd as joint coordinators and bookrunners, it said. Renaissance Securities Cyprus Ltd, Citigroup Inc. and RBC Europe Ltd will act as joint bookrunners, while Stanbic IBTC plc and Renaissance Securities Nigeria Ltd were appointed as Nigerian joint issuing houses.
Seplat’s full-year revenue rose 41 percent to $880 million, it said in the statement. Operating profit rose 45 percent to $479 million during the same period.
PATRICK ATUANYA
