Nigeria-based oil and gas company Seplat Petroleum has agreed to buy fellow Nigerian company Eland Oil and Gas for $486m (£382m), which values Eland at 166p a share.
The acquisition must be approved by 75% of Eland shareholders at a general meeting and, if agreed, the deal will take place by the end of 2019. Seplat will fund the acquisition through existing cash resources and a loan provided to the company.
Following the announcement, Seplat’s stock price jumped slightly on the London Stock Exchange from 107p to 111p a share. Eland’s share price also rose from 129.20p to 164.60p a share on the London Stock Exchange, giving the company a market capitalisation value of £356m.
Seplat share price in 2019
Eland share price in 2019
Seplat chairman Dr 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 an 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.”
Eland chairman Russell Harvey added: “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.”
Seplat was dual-listed on the Nigerian and London Stock Exchange in April 2014, raising $535m in an initial public offering (IPO). In 2018, the company’s revenue grew by 65% from $452m to $746m and its gross profit also rose by 84% from $212m to $391m.
Eland Oil and Gas
Eland’s assets include a 45% equity stake in the OML 40 licence in the Niger Delta and a 40% in the Ubima discovery well in Rivers State.
The OML 40 licence covers 498 square kilometres and produced an average of 8,000 barrels per day in 2018.