Flash Note: SEPLAT acquisition of MPNU

Event: Seplat Energy Plc (SEPLAT) has released a prospectus in connection with the acquisition of MPNU. Below are the key points from the prospectus and our initial assessment.

• The total consideration at closing for the acquisition of Mobil Producing Nigeria Unlimited ("˜MPNU') is $800 million. Since SEPLAT initially deposited $128 million in 2022, the outstanding/final consideration is now $672 million.

• The balance will be fully funded from cash and debt facilities, and no new equity will be raised to finance the deal.

• There is a further amount of $257.5 million deferred to December 2025 that is related to the decommissioning and abandonment of certain Joint Venture ("˜JV') costs that will be partially offset by JV cash calls. MPNU's after-tax share is estimated to be between US$25 million to US$35 million. The company will also incur $23 million in other transaction-related costs and a $64 million regulatory consent fee.

• The transaction should lead to an 86.0% surge in 2P reserves for the enlarged group to 887 MMboe, and proforma 2P + 2C reserves and resources are expected to rise by 124.0% to 1,210 MMboe.

• The document also communicated a proforma net debt position of $1.07 billion for SEPLAT as of June 2024 (vs $366 million for SEPLAT as of H1'24.

• The prospectus communicated EV/2P and EV/2P+2C ratios of $2.00/boe and $1.20/boe.

• MPNU boasts a strong operating portfolio, operating a joint venture (JV) with NNPC with a 40% share in four oil mining leases (OMLs 67,68,70 & 104) and other associated infrastructure.

• MPNU also has a 40% interest in the Qua Iboe Terminal and a 51% interest in Bonny River Terminal and Natural Gas Liquids (NGLs). It also has recovery plants at the East Area Project (EAP) and Oso.

• Prospectus revealed that MPNU's pre-tax cash flow from operating activities (CFFO) stood at $422 million in H1'24, with a post-tax CFFO of $36 million. This pattern of high tax cash was also observed between 2021 and 2023 with an average effective tax rate of 90.0%.



• For the acquisition, SEPLAT would draw down $350 million from its existing Revolving Credit Facility (RCF), $300 million from its Advance Payment Facility and utilise cash of $22 million.

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