Seplat to Sell 10% Stake in NNPC JV for $281.6m, Plans Special Dividend, Debt Reduction

By Adedapo Adesanya

Seplat Energy Plc has signed an agreement with the Nigerian National Petroleum Company (NNPC) Limited to sell a 10 per cent working interest in its joint venture assets for approximately $281.6 million, a move aimed at strengthening its balance sheet while boosting shareholder returns.

The Nigerian energy company, which is listed on both the Nigerian Exchange (NGX) Limited and the London Stock Exchange (LSE), announced on Thursday that its subsidiaries, Seplat Energy Offshore Limited (SEOL) and Seplat Energy Producing Nigeria Unlimited (SEPNU), reached the agreement with the Nigerian oil company following earlier discussions.

The transaction represents about 25 per cent of the gross consideration paid by Seplat for its acquisition of SEPNU, including any contingent payments.

Upon completion of the deal, SEPNU will retain a 30 per cent working interest in the joint venture and continue as operator, while NNPC Limited’s stake will increase from 60 per cent to 70 per cent. Seplat Energy will continue to own 100 per cent of SEPNU’s share capital.

The transaction remains subject to regulatory approvals and other customary closing conditions, with completion expected in the second half of 2026. The effective date has been backdated to April 1, 2026.

Seplat said it intends to deploy the proceeds in line with its capital allocation framework, splitting the funds equally between reducing debt and enhancing shareholder returns.

Subject to the completion of the transaction, the company plans to pay a special cash dividend of about $140 million, equivalent to 23.3 US Cents per share, in addition to its regular performance-based dividend.

The company also disclosed plans to reduce its gross debt by up to $300 million. It noted that $200 million of its Advanced Payment Facility (APF) had already been repaid during the second quarter of 2026, while the remaining $100 million will be settled after the transaction closes.

Seplat said the divestment would not affect production targets for the NNPCL/SEPNU joint venture in 2026, as operational performance has remained strong.

SEPNU currently contributes around 80,000 barrels of oil equivalent per day (kboepd) at the midpoint of Seplat’s 2026 production guidance of 135,000 to 155,000 kboepd. Based on the transaction’s effective date of April 1, 2026, that contribution would reduce to about 65,000 kboepd, with production guidance to be updated after completion.

Looking further ahead, Seplat said the proceeds from the sale and the lower capital expenditure associated with the reduced working interest are expected to largely offset the impact of lower cash flows from the joint venture through 2030.

Consequently, its long-term production target will be revised from 200,000 kboepd to 170,000 kboepd on a net working interest basis.

Despite the adjustment, the company reaffirmed its commitment to distribute between 40 and 50 per cent of free cash flow over the 2026–2030 period and said it remains on track to deliver at least $1 billion in cumulative shareholder distributions.

The transaction will also affect Seplat’s reserves. Based on its latest reserves assessment, the company’s 2P reserves are expected to decline by approximately 13 per cent to 872.9 million barrels of oil equivalent following completion.

Commenting on the agreement, Seplat Energy’s outgoing chief executive, Mr Roger Brown, described the NNPCL/SEPNU joint venture as one of Nigeria’s most strategically important energy assets.

“The NNPCL/SEPNU JV is one of the pre-eminent licence areas in Nigeria and of strategic importance to the country. Our relations with our partner NNPCL are strong, and we are fully aligned on the agreed work programmes.

“Together, we are focused on delivering significant value from the JV, which has responded very well to increased development activity since we became operator and has clear potential to deliver strong production growth well into the next decade,” he said.

Mr Brown added that Seplat’s strong financial position allows it to use the proceeds from the disposal to increase shareholder distributions while further reducing financial leverage, thereby creating greater cash flow flexibility for future returns.