Nigeria’s Seplat Petroleum has reached an agreement to acquire Aberdeenshire-headquartered Eland Oil and Gas for more than £380 million.
Eland said the all-cash £383mn deal has been recommended by the firm’s board and is supported by its three largest shareholders.
The statement said Seplat had also secured backing for its offer from major shareholders in Eland including Helios Natural Resources, Lombard Odier Asset Management (Europe) and Richard Griffiths. As such, 60.17% of Eland’s shareholders support the move.
“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,” said Seplat’s CEO Austin Avuru.
He went on to say the deal was “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”.
Both companies are listed in London and operate assets in the Niger Delta. Eland, via the Elcrest Exploration and Production joint venture, has a 45% stake in OML 40 and a 40% stake in the Ubima field. Net production from OML 40 reached 9,948 barrels per day in the first half of the year.
Eland announced the start of production from its Gbetiokun field, on OML 40, in August. Two wells are flowing at 12,000 bpd, with the third well near completion.
Adding in Eland’s production will take Seplat to 38,000 bpd of liquids. The buyer’s 2P liquid reserves will increase by 41mn barrels to 268mn barrels, while 2P and 2C reserves will increase by 65mn barrels to 330mn barrels.
Eland’s CEO George Maxwell commented that the company was in the process of broadening its development focus into a more well-rounded company, with plans for exploration drilling on the Amobe prospect due to begin in November.
This work had the potential to double Eland’s reserves, Maxwell said.
The transaction is expected to complete in late 2019. The two companies first struck a confidentiality agreement in April 2015. Seplat’s offer represents a 28.5% premium to Eland’s share price on October 14.
