Seplat Energy to sell 10% NNPCL joint venture stake for $281.6m

Seplat Energy Plc has reached a binding agreement with the Nigerian National Petroleum Company Limited (NNPC Ltd) to sell a 10 per cent working interest in the joint venture assets they hold together. The deal is valued at approximately $281.6 million and marks a major shift in the ownership structure of the NNPCL/SEPNU Joint Venture (JV). The transaction was announced following a statement released by Seplat Energy on Thursday, confirming that its subsidiaries, Seplat Energy Offshore Limited (SEOL) and Seplat Energy Producing Nigeria Unlimited (SEPNU), have entered into a Heads of Agreement with NNPC Ltd. The agreement outlines the terms under which Seplat will transfer its 10 per cent interest in the joint venture. Completion of the deal depends on obtaining necessary regulatory approvals and fulfilling other customary conditions. It is anticipated that the transaction will be finalized in the second half of 2026, with an effective date set for April 1, 2026. Upon completion, SEPNU will maintain a 30 per cent working interest in the joint venture assets and continue to operate them. Meanwhile, NNPC Ltd's stake will rise from 60 per cent to 70 per cent. Seplat Energy emphasized that it will retain full ownership of SEPNU despite the sale. Proceeds from the transaction will be allocated according to the company’s capital allocation strategy. Approximately 50 per cent of the funds will go toward reducing debt, while the remaining portion will be used to improve shareholder returns. As part of this plan, around $140 million, equivalent to 23.3 US cents per share, will be distributed to shareholders as a transaction dividend once the deal is completed, in addition to the company’s regular dividends tied to its core operations. Seplat Energy has already made progress in reducing its debt burden, having repaid $200 million of its Advanced Payment Facility in the second quarter of 2026. The remaining $100 million is expected to be settled after the transaction closes. Despite the change in ownership structure, the company stated that the 2026 production targets for the NNPCL/SEPNU Joint Venture will remain unaffected. Production performance has been robust so far this year. However, the company noted that SEPNU’s contribution to the overall production guidance would decrease from roughly 80,000 barrels of oil equivalent per day (kboepd) to approximately 65,000 kboepd, based on the transaction’s effective date. This adjustment reflects the reduced working interest resulting from the sale. Additionally, Seplat Energy’s 2030 production target will be revised from 200,000 barrels of oil equivalent per day (net working interest) to 170,000 boepd, contingent on the deal being completed. According to the company, the proceeds from the transaction along with the reduced capital expenditures linked to the divested interest should largely counterbalance the impact of holding a smaller stake in the joint venture assets. Seplat Energy reiterated its commitment to distributing between 40 and 50 per cent of free cash flow to shareholders throughout the 2026–2030 period, aiming to return at least $1 billion cumulatively to shareholders over that timeframe. The transaction is projected to result in a reduction of Seplat Energy’s group 2P reserves by about 13 per cent, bringing them down to 872.9 million barrels of oil equivalent, based on the company’s most recent reserves assessment. Roger Brown, Seplat Energy’s Chief Executive Officer, remarked that the NNPCL/SEPNU JV represents one of Nigeria’s most crucial license areas. He highlighted the continued strength of the partnership with NNPC, noting that enhanced development efforts since Seplat took on the role of operator have boosted production performance and opened avenues for additional growth. “We are in a solid financial position, allowing us to utilize the proceeds from this disposal to boost shareholder distributions and further reduce our financial leverage, thereby freeing up future cash flows for shareholders,” Brown stated.