A Review of the Nigerian Energy Industry

Seplat IPO oversubscribed, starts trading on NSE today

A.B.C. Orjiako, Chairman, Seplat
Dr. A.B.C. Orjiako, Chairman, Seplat Petroleum Development Company

14 April 2014, News Wires – Seplat Petroleum Development Company’s shares will begin trading  today on the official trading list on the Nigerian Stock Exchange (NSE), while the company’s chairman, Dr. A.B.C. Orjiako, will ring the closing bell to signal the end of its first trading day. The company’s shares will also begin unconditional trading on the London Stock Exchange (LSE) today.

The dual listing of the company’s shares on the NSE and LSE follows the successful completion of its IPO, which was oversubscribed.
Seplat, which announced its intention to float its shares on March 11, had sought to raise $500 million and then get listed on the NSE and LSE. Its listing on the LSE is significant in many respects because it is the first such listing of a foreign company on the exchange in a decade, a feat made possible by Seplat’s very strict adherence to best corporate governance principles.

On March 28, the company announced that the indicative price range for its initial public offer had been set at N535 to N700 per ordinary share for shares to be listed on the official trading list of the NSE and 195 pence to 255 pence per ordinary share for shares to be traded on the LSE’s main market.
The offer comprises a base offering and an over-allotment option. The base offer sought to raise gross proceeds of about $500 million, equivalent to 300.9 million pounds and N82.5 billion.

The over-allotment option, the company said, would represent 15 per cent of the final amount allocated to the international offering in the base offer.
Facts and figures that have emerged following the successful completion of the book building exercise, indicated that the Seplat  offer was hugely successful and massively oversubscribed.
On April 9, the company announced that its offer price had been set at N576 per ordinary share for shares to be listed on the NSE  and 210 pence per ordinary share for shares to be traded on the LSE’s main market.

Based on the offer price, the total market capitalisation of Seplat  at the commencement of conditional dealings will be approximately £1.14 billion (N313 billion), excluding the exercise of the over-allotment option.
The base offer raised gross proceeds of approximately £300.9 million (equivalent to $500 million), while the over-allotment option shall consist of 10,336,183 new shares, representing 15 per cent of the final amount allocated to investors outside Nigeria (the “International Offering”) in the base offer. The over-allotment option can be exercised for a period of 30 calendar days from April 9.

With its IPO success, Seplat  has not just heralded a new era in the Nigerian exploration and production field, it will enjoy many advantages, especially  a significant reduction in its debt to equity ratio because, according to the prospectus, “The company intends to use the net proceeds of the global offer as follows: (i) US$48 million to repay in full all outstanding amounts under its shareholder loan from Maurel and Prom International S.A. (MPI).”
Reacting to the development, Orjiako said: “We are delighted with the support shown and happy to welcome a range of blue chip investors to our share register.  Despite a challenging market for oil and gas stocks, the response has been excellent and demonstrates strong demand in both London and at home for leading Nigerian indigenous E&P players.”

On his part, Seplat’s Chief Executive Officer, Mr. Austin Avuru, said: “We are already a leading indigenous independent company in our home market but the opportunities opening up in Nigeria for companies like ours are significant.”
As the company stated in its intention to float announcement, the net proceeds of the global offer would primarily be used to acquire and develop new acquisitions, and/or pay down any additional debt raised in connection therewith, of both onshore and shallow offshore acreages, assets and joint venture farm-ins.

Approximately $48 million shall be used to pay down, in full, a shareholder loan from MPI.
All these would help Seplat  realise its growth objectives as indicated in the prospectus, which include to maximise production, reserves and cash flows from operated assets; pursue a focused acquisition and farm-in strategy; and commercialise gas production.

The full admission of the ordinary shares to the official trading list of the NSE, under the ticker symbol “SEPLAT ” and to the official list of the Financial Conduct Authority (FCA)  as well as trading on the main market for listed securities of the LSE under the ticker symbol “SEPL” and the commencement of unconditional dealings are expected to take place today.

Seplat  was founded in 2009 by Shebah Petroleum Development Company Limited and Platform Petroleum (Joint Ventures) Limited for the purpose of investing in Nigerian oil and gas opportunities

Maurel and Prom, a French independent oil company, subsequently acquired a 45 per cent equity interest in SEPLAT . This interest was later spun-off to form Maurel & Prom Nigeria S.A (now Maurel and Prom International).
In July 2010, Seplat  acquired a 45 per cent participating interest in, and was appointed operator of, a portfolio of three onshore producing oil mining leases (OMLs 4, 38 and 41) located in the Niger Delta.
In June 2013, the company entered into an agreement for the acquisition of a 40 per cent participating interest in the Umuseti/Igbuku marginal field area located within OPL 283 in the Niger Delta.

Seplat  is one of the leading indigenous oil and gas operators in Nigeria with an average gross operated oil production of 51,400 barrels per day (bpd) as at December 31, 2013 having grown from 13,900bpd in August 2010.
The company’s average gross gas production in 2013 was 99 million standard cubic feet per day (MMscfd). Seplat  is targeting gross operated oil production from its existing assets of 85 mbpd by the end of 2016.
Seplat’s successful IPO and dual listing on the LSE and NSE clearly signpost a new era in the Nigerian E&P market and sets the company  apart as a veritable benchmark for others to follow.



– This Day



– Upstream

In this article

Join the Conversation