UPDATE 2-Nigeria's Seplat plans IPO to pay for more oil assets

Tue Mar 11, 2014 10:53am EDT

By Freya Berry and Joe Brock

LONDON/ABUJA, March 11 (Reuters) - Nigerian oil company Seplat plans to raise at least $500 million by selling shares on the London and Lagos stock exchanges to pay down debt and snap up assets being sold by energy majors in Africa's largest oil producing nation, the company said.

Seplat, in which France's Maurel & Prom and Swiss-based trader Mercuria both hold minority stakes, is among consortia short-listed to bid for some $3 billion in assets being sold by Shell and others, sources said.

Competition is stiff for the blocks in the Niger Delta, which holds a large portion of Nigeria's 37 billion barrels of reserves. The oil is high-quality, relatively easy to drill and Nigerian firms say they can better handle security challenges that have prompted the majors to divest.

Commodity trader Glencore, involved in marketing Nigeria's crude oil and importing its fuel for decades, is among the companies vying to enter its upstream sector.

The cash Seplat will raise puts it in a strong position as it prepares for acquisitions in shallow-water areas, one sector banker said, because foreign companies must partner up with Nigerians in order to bid.

"The global offer proceeds will allow us to further implement our business strategy, which includes acquiring new assets," A.B.C Orjiako, Seplat's chairman and co-founder, said on Tuesday.

Shell is selling its 30 percent stake in four oil blocks, with France's Total and Italy's Eni also set to profit from sales of their 10 percent and 5 percent stakes. The Nigerian National Petroleum Corporation (NNPC) owns the remaining 55 percent.

Shell is also selling the 97-km (60-mile) Nembe Creek oil pipeline, which has been regularly attacked by oil thieves.

The London-listed major has already made $1.8 billion from asset sales in Nigeria since 2010 as several oil majors divested onshore blocks due to oil theft and a government drive to increase local ownership.

GLENCORE RIVAL

Founded in 2009 by wealthy Nigerian businessmen Orjiako and Austin Avuru, Seplat pumps about 60,000 barrels per day of oil from three blocks it operates in the Niger Delta.

It bought a 45 percent stake in the blocks from Shell, Total and Eni in 2010. NNPC owns the rest.

Seplat is also near completing a deal to buy a Niger Delta oil block from Chevron, but a legal dispute between the U.S. oil major and another Nigerian firm threatens to delay the agreement, sources close to the process say.

Cash from the listing could go partly towards the Chevron deal, the sources said.

A source close to Maurel & Prom said Seplat also planned to use the cash to fund a bid for Shell's OML 29 oil block.

OML 29 is the most coveted asset of the four being sold. Its output has peaked at 62,000 bpd of oil and 40 scf/d of gas and holds reserves of 2.2 billion barrels of oil equivalent (boe), according to a Shell prospectus seen by Reuters.

It is likely to fetch $1-$1.5 billion, industry sources say.[ID: nL5N0IQ2UD]

One of Seplat's directors, Basil Omiyi, was previously Shell's Nigeria country head, but the firm is likely to face competition from cash-rich Glencore.

Glencore has linked up with Nigerian traders Taleveras and Aiteo for its bid on OML 29, say two oil industry sources.

These two firms are involved in Nigeria's crude-for-product swap deals.

A source close to Maurel said Seplat's intention was to float in June and its equity value was about $1 billion, suggesting about half the company would be sold in the IPO.

BNP Paribas and Standard Bank are joint global co-ordinators, while Renaissance Capital, Citigroup and RBC Europe are joint bookrunners on the flotation.

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