Exxon Mobil to Sell Nigeria Shallow-water Affiliate for $1.3 Billion

Exxon Mobil Corp. agreed to sell its Nigerian offshore shallow-water business for $1.28 billion to Seplat Energy, a Nigerian independent oil and gas company.

Despite the sale, which is expected to close later this year the U.S. oil major said it will maintain a significant deepwater presence in Nigeria.

“This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations,” Liam Mallon, president, ExxonMobil Upstream Oil and Gas, commented in a release on Feb. 25.

When finalized, the sale will include the Mobil Development Nigeria and Mobil Exploration Nigeria equity ownership of Mobil Producing Nigeria Unlimited, which holds a 40% stake in four oil mining licenses, including more than 90 shallow-water and onshore platforms and 300 producing wells.

The deal involves a further contingent consideration of up to $300 million based on the oil price and the average production of the unit, Mobil Producing Nigeria Unlimited, over a five-year period, Seplat Energy said in a separate statement.

According to the company, which is listed on the London and Nigerian stock exchanges, the deal implies an EV/2P ratio—used to measure the valuation of oil and gas companies—of $2.9 per boe, with “significant gas upside potential.”

Exxon Mobil said the sale will not result in any loss of employment and is subject to regulatory and other approvals.

Following closing, Exxon Mobil will retain deepwater assets offshore Nigeria including interests in the Erha, Usan and Bonga developments via Esso Exploration and Production Nigeria Limited and Esso Exploration and Production Nigeria (Deepwater) Ltd.

“We value the relationships we have spent decades building with the government and people of Nigeria, which will continue as we maximize the value from our deepwater operations,” Mallon added in the. release.

Reuters contributed to this article.