Seplat, one of Nigeria’s biggest independent oil companies, recently listed on the London and Lagos stock exchanges. The money raised will be used mainly to buy new upstream assets, as domestic firms begin to seize a once-in-a-generation opportunity to gain a substantial role in the nation’s oil and gas industry. The potential is clear and the company is keen to expand in a sustainable manner.
Seplat was set up by Shebah Exploration & Production and Platform Petroleum as a Special Purpose Vehicle for acquisitions of oil assets. In 2010, Seplat acquired its first assets from oil majors and that was the official start of this great journey.
With the IPO which took place in April, Seplat listed 26% of its shares, raising $500m, thus valuing the company $1.9bn in the process. This would make the company the 58th biggest listed firm in Africa.
This is also the first IPO of an emerging markets’ oil company in London since the global financial crisis and since rules on corporate governance for newly listed firms in the City were tightened in the wake of problems in the 2000s.
In an interview, Chairman Orjiako stressed that the company would continue to expand in a prudent manner: “The global offer proceeds will allow us to further implement our business strategy, which includes acquiring new assets.
Seplat has a disciplined approach to acquiring new onshore and shallow water assets in the Niger Delta, which will be strictly adhered to.
“We are confident that Seplat will continue to succeed and flourish as a leading Nigerian oil and gas operating company with a proven track record for delivering value to its investors, while fostering indigenous participation in the Nigerian oil and gas industry. We are committed to maintaining our track record and achieving our growth aspirations through sound corporate governance and best practice.”
First Nigerian dual listing
Standard Bank and BNP Paribas were the global coordinators on the flotation, which made Seplat the first Nigerian company to have its ordinary shares dually-listed on the two bourses. Most of the money raised will be used to fund new acquisitions, although $48m will be used to reduce its debt obligations, which stood at $141m at the end of 2013.
The company did not seek a premium listing in London, as this would require it to move its headquarters to London. Orjiako said: “We are a Nigerian company and very proud of that fact. We would like to remain a Nigerian company.”
The company has built up formidable management expertise including those with a strong track record in the Nigerian oil industry. Seplat is putting this experience to good use in selecting its asset targets.
Orjiako said: “The global offer proceeds will allow us to further implement our business strategy, which includes acquiring new assets. We are very interested in Shell’s assets: We believe that Seplat is very well positioned to develop them.”
Seplat is already involved in negotiations to buy assets currently held by Shell Petroleum Development Company (SPDC), US giant Chevron and other established producers. SPDC is the biggest oil producer in Nigeria and a number of its assets with proven reserves are currently up for sale.