Transfer of Oil Blocks Won’t Weaken Shareholder Value—Seplat Assures

By Dipo Olowookere

Shareholders of Seplat Petroleum Development Company Plc have been assured that the recent transfer of three key oil assets to a subsidiary of the organisation will not affect value of the securities.

This assurance was given by the firm in a statement issued last week to notify the investing community of the development.

Seplat, a leading energy company listed on the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), said it has handed over three oil blocks in Nigeria to Seplat West Limited.

The three oil assets are Oil Mining Leases (OMLs) 4, 38 and 41 and in the disclosure, the company said the transfer was effective January 1, 2020, adding that it has already received the authorisations of regulators and partners.

Seplat explained that the operatorship of the asset remains with it (Seplat) under the Joint Operating Agreement (JOA), as the transfer to an affiliate of the company under the terms of the JOA was permitted.

It noted that this intra-group transfer had been planned for some time and will not result in any change to the current business strategy for any of the assets or will it affect the way in which the Seplat Group commercially operates.

The firm assured that, “The outcome of the transfer will not, in anyway, result in loss of tax revenue to the government or an extinguishment of liabilities. Similarly, it will not diminish shareholder value in (and returns from) Seplat as a listed company.”

The energy giant said the transfer of OMLs 4, 38 and 41 out of Seplat Plc into Seplat West results in seven wholly owned subsidiaries; Newton Energy Limited; Seplat Petroleum Development Company UK Limited; Seplat East Onshore Limited; Seplat East Swamp Company Limited; Seplat Gas Company Limited; Eland Oil and Gas Limited and Seplat West Limited, with no operating oil and gas assets directly held in the Holding Company.

Explaining the rationale behind the deal, it said the new structure was consistent with its efforts to simplify its structure and designed towards segregating the businesses of the group in a more efficient manner thereby reducing risk, cost and complexity.

This is also expected to result in a simplified management and reporting framework for the Seplat Group, the statement noted.