Economy
Seplat Acquires Eland for £382m to Buoy Profit, Value for Shareholders
By Dipo Olowookere
The board of Seplat Petroleum Development Company Plc has announced its intention to acquire Eland Oil & Gas Plc, an energy firm listed on the London Stock Exchange (LSE), for the sum of £382 million.
Business Post gathered that Seplat is intending to buy up 129,727,705 units of Eland shares, representing approximately 60.17 percent of the existing issued ordinary share capital of Eland.
Seplat, a Nigerian oil and gas company listed on both the LSE and the Nigerian Stock Exchange (NSE), said under the deal, shareholders of Eland will receive a cash of 166 pence for each of the company’s share.
It was stated that this amount represents a premium of approximately 28.5 percent to the closing price per Eland share of 129.2 pence as at the close of business on October 14, 2019 and a premium of approximately 32.6 percent to the three-month volume weighted average price per Eland share as of October 14, 2019 of 125.2 pence; and a premium of approximately 32.7 percent to the six-month volume weighted average price per Eland share as of October 14, 2019 of 125.1 pence.
According to a disclosure by Seplat on Tuesday, October 15, 2019, in addition, Eland shareholders on the register at the close of business on October 18, 2019 will be entitled to receive and retain the interim dividend of one pence per Eland share to be paid on October 31, 2019.
While commenting on the deal, which is yet to be approved by shareholders of Eland Plc, Chairman of Seplat, Mr Bryant Orjiako, said, “Since Seplat acquired its first blocks and commenced production in 2010, we have increased oil and gas production and grown reserves in each year of operation, delivering significant growth and value for our shareholders.
“We firmly believe that Eland is a complementary fit with Seplat and that there will be enhanced scale and a wider range of capabilities made available to the enlarged group through the combination.
“This acquisition signals the next step in our journey that will underpin Seplat’s ambition to be the leading independent E&P in Nigeria.”
On his part, CEO of Seplat, Mr Austin Avuru, stated that, “We are pleased to have reached an agreement to acquire Eland and its portfolio of assets that will enhance our existing operations. Eland is an excellent fit with Seplat and the combination should achieve for us growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland shareholders.
“The acquisition, made possible by our robust operational platform and headroom in our capital structure, is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near term production with cash flow and reserves potential.
“The acquisition reinforces Seplat’s status as one of Nigeria’s leading indigenous, independent E&Ps and will create a Nigerian E&P champion with the footprint and technical capabilities to further grow and consolidate in Nigeria.”
In his comments, Chairman of Eland, Mr Russell Harvey, stated that, “We are pleased to announce this recommended acquisition by Seplat. Eland’s management team has done an excellent job executing our strategy.
“We have demonstrated a strong track record of operational delivery and value creation in Nigeria from our high-quality assets. This offer allows Eland shareholders to benefit from an accelerated and enhanced realisation of this value through a cash offer at a significant premium to the current market value.
“In addition, the business will benefit from the opportunity to become part of a more significant player in the Nigerian oil and gas market. For these reasons, the Eland board unanimously intends to recommend the offer to Eland shareholders.”
For Chairman of Eland, Mr George Maxwell, “This recommended offer from Seplat represents the culmination of a very successful journey by Eland, the management team and all of its stakeholders.
“Since founding Eland, we have, jointly with our partners in Elcrest, acquired our interests in OML 40, a non-producing asset, achieved an all-time record production on this asset and become a significant independent producer in Nigeria’s E&P landscape and one of the biggest oil producers on London’s AIM market.
“Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers and the AIM Oil & Gas Index. This transaction represents a record share price for Eland and crystallises Eland’s stated goal to maximise shareholder value.”
Eland is an independent oil and gas company focused on production, development and exploration in West Africa, particularly the Niger Delta region of Nigeria.
The energy firm was established in 2009 with a strategy to deliver exceptional shareholder returns through a combination of development, production growth and exploration success.
In 2012 Eland, through its joint venture company, Elcrest, purchased a 45 percent interest in OML 40 and in 2014 acquired a 40 percent stake in a second licence, Ubima.
Led by its experienced senior management and operating team, the Eland Group took gross production on OML 40 from 3,338bopd average daily production for producing days in 2014 to a peak 2018 production rate of over 31,000bopd, an increase of over 800 percent. Eland’s headquarters are in Aberdeen, with additional offices in London, Lagos, Benin City and Abuja.
By Adedapo Adesanya
Pressure further mounted on the Nigerian Naira in the different segments of the foreign exchange market on Tuesday, making its value to shrink against the United States Dollar at the close of business.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency crashed against its American counterpart during the session by 0.18 per cent or N2.73 to settle at N1,552.78/$1, in contrast to Monday’s closing price of N1,550.05/1.
But against the Pound Sterling and the Euro, the local currency traded flat in the official market yesterday at N1,906.98/£1 and N1,613.48/€1, respectively.
As for the black market segment, the Naira weakened against the Dollar on Tuesday by N5 to sell for N1,670/$1 compared with the preceding day’s value of N1,665/$1.
Meanwhile, the cryptocurrency market heaved a sigh of relief during the session as President Donald Trump created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.”
The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. This is after Mr Gary Gensler, an opponent of crypto, officially stepped down as chairman of the US Securities and Exchange Commission (SEC) after Mr Trump’s term started.
The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations.
Solana (SOL) recorded a 9.2 per cent growth to sell at $257.09, Dogecoin (DOGE) rose by 7.6 per cent to $0.36789, Ripple (XRP) added 4.0 per cent to finish at $3.18, and Bitcoin (BTC) increased by 3.7 per cent to $105,515.03.
Further, Binance Coin (BNB) appreciated by 2.8 per cent to close at $699.01, Cardano jumped by 2.1 per cent to trade at $0.9972, Ethereum (ETH) soared by 2.0 per cent to settle at $3,308.21, and Litecoin (LTC) went up by 1.5 per cent to end at $116.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
By Adedapo Adesanya
The price of the Brent crude oil grade went below the $80 mark on Tuesday after it shed 86 cents or 1.1 per cent to trade at $79.29 per barrel after the US President, Mr Donald Trump, signaled the possibility of his country boosting its oil production.
This move raised concerns of higher US output in a market widely expected to be oversupplied this year, with the US West Texas Intermediate (WTI) crude futures falling by $1.99 or 2.6 per cent during the session to $75.89 per barrel.
On his first day in office, the US President signed an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by former President Joe Biden.
As pledged in the campaign, the executive order follows the declaration of a national energy emergency.
The declaration includes measures to expedite energy infrastructure delivery, and emergency approvals by agencies “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources, including, but not limited to, on Federal lands.”
This will likely confirm expectations that the oil market will be oversupplied this year after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the US and China.
President Trump also said he was considering imposing 25 per cent tariffs on imports from Canada and Mexico from February 1, rather than on his first day in office as promised.
The delay helped ease concerns of an immediate tightening of the market among US refiners, many of which are geared to process the type of crude oil supplied by these countries.
The US Energy Information Administration (EIA) reiterated on Tuesday its expectations for oil prices to decline both this year and next.
On its part, the Organisation of the Petroleum Exporting Countries (OPEC) projects robust demand growth in the world both this year and next.
In 2025, OPEC says demand is set to grow by 1.4 million barrels per day leaving its projection unchanged from the December report.
However, losses were also limited after the US president said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea.
Yemen’s Houthis said on Monday they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
By Dipo Olowookere
Transactions on the floor of the Nigerian Exchange (NGX) Limited rallied on Tuesday by 0.75 per cent after investors intensified their demand for local stocks.
It was a tough battle between the bulls and the bears during the session, but the former overcame by a whisker after the bourse recorded 29 appreciating equities and 28 depreciating equities, indicating a positive market breadth index and strong investor sentiment.
The growth posted by Customs Street yesterday could be attributed to the appetite for MTN Nigeria shares, which chalked up 10.00 per cent to settle at N256.30.
SCOA Nigeria appreciated by 9.93 per cent to N2.99, Omatek grew by 9.88 per cent to 89 Kobo, Universal Insurance rose by 8.70 per cent to 75 Kobo, and CAP gained 8.52 per cent to trade at N47.75.
Conversely, Secure Electronic Technology lost 9.88 per cent to quote at 73 Kobo, Abbey Mortgage Bank declined by 9.09 per cent to N3.30, Sunu Assurances tumbled by 8.21 per cent to N6.15, Deap Capital slumped by 7.08 per cent to N1.05, and C&I Leasing depreciated by 6.82 per cent to N4.10.
A total of 440.3 million equities valued at N12.0 billion exchanged hands in 13,087 deals compared with the 1.3 billion equities worth N17.7 billion transacted in 13,891 deals on Monday, representing a decline in the trading volume, value and number of deals by 66.79 per cent, 32.20 per cent and 5.79 per cent, respectively.
Lasaco Assurance ended the session as the most traded stock after it sold 108.1 million units valued at N338.7 million, Access Holdings traded 44.0 million units for N1.1 billion, UBA exchanged 27.9 million units worth N945.7 million, Zenith Bank transacted 26.7 million units for N1.3 billion, and Universal Insurance traded 22.7 million units valued at N16.7 million.
On Tuesday, the insurance, banking and industrial goods sectors jumped by 1.03 per cent, 0.30 per cent, and 0.03 per cent, respectively, and the consumer goods and energy counters lost 0.38 per cent and 0.36 per cent apiece.
The All-Share Index (ASI) went up yesterday by 767.63 points to 103,137.99 points from 102,370.36 points and the market capitalisation increased by N472 billion to N63.333 trillion from N62.861 trillion.
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