Indigenous independent exploration and production company, Seplat Petroleum, stands the chance of having a bigger and better capitalised partner in Maurel et Prom of France which has declared intention to acquire its former Nigerian unit, Maurel & Prom International (MPI). Maurel & Prom said it was reabsorbing its former Nigerian unit MPI as a first step towards tripling in size to cope with the impact of a plunge in the oil price.
MPI is a key partner investor in Seplat Petroleum Development Company Limited which is one of the leading indigenous oil and gas producing independents in Nigeria. The company has been aggressive in asset acquisition as its key growth strategy and also drives most of the ambitious facility and infrastructure projects in the industry.
The projects carry huge funding responsibilities , the primary reason for inclusion of MPI in the equity structure of the company and which also informed the dual listing of Seplat both in the local and foreign stock markets. M&P remains a key funding factor in the company which suffered a heavy impact of combined business adversities but managed to deliver less than expected results with positive balance sheet.
Seplat is currently pulling down funds from its escrow but retains keen interest in asset acquisition, leveraging on its ability to raise funds from different sources. Thus, a stronger partner that also trades on strong capital market platform would be a welcome development.
The new came that Maurel & Prom said the MPI deal, due to be completed in December, would add Nigeria to its operations in Gabon and Tanzania, giving it presence in three key sub- Saharan oil and gas countries. MPI also had a “strong cash position” with no debt.
The combined company would have an enterprise value close to $2 billion, the industry’s fourth largest after Tullow Oil, Premier Oil and Genel Energy, or the fifth-biggest by market capitalisation, Maurel & Prom said. The deal was unanimously approved by the boards of Maurel & Prom and MPI, and will be put to a shareholders’ vote in December.
According to credible sources, the deal between the parent and daughter French companies would now produce a better consolidated company that would further open cheaper funding windows to the Nigerian independent oil producer which currently stands on a partnership tripod.
Maurel & Prom said weekend it was buying MPI in a deal that would give MPI investors one Maurel & Prom share for two shares held. MPI would also pay a 0.45 euro exceptional cash dividend per share before the merger.
Chief Executive Jean-Francois Henin said on Friday that the group would work intensively in the coming weeks to secure another deal with a competitor of its stature.
“Companies the size of MPI, or MPI plus Maurel & Prom, are no longer big enough to remain independent,” Henin said. “We can survive, but in terms of the future for our shareholders, it’s absolutely necessary to build a larger, more diversified group.”
Maurel & Prom and MPI face a tough macroeconomic environment following a 60 percent drop in oil prices in the last year. They see expansion as the route to better access to financing and greater opportunities for external growth.
“Everyone is talking to everyone, because everyone feels the same need,” Henin said. “All players in the sector today are considering how to combine forces with someone else and what are the best possible combinations.”
The world’s top oilfield services provider, Schlumberger , said this week it would buy equipment maker Cameron International for $14.8 billion to offer a broader range of products at lower prices to oil companies slashing budgets.
Its rivals Halliburton and Baker Hughes announced a $35 billion tie-up last November.