British Savannah Energy has completed the acquisition of the entire issued share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (SIPEC), a Nigerian subsidiary of the Chinese state-owned oil and gas company Sinopec International Petroleum Service Corporation (SIPC).
SIPEC's principal asset is the 49% non-operated interest in the Stubb Creek oil and gas field, which is operated and 51% owned by Universal Energy Resources Limited, a Savannah affiliate company. The acquisition consolidates Savannh Energy's interest in the Stubb field.
The acquisition follows the signing of separate Share Purchase Agreements (SPAs) by Savannah with SIPC and Jagal Ventures Limited (Jagal) in March 2024.
Under the terms of the SPAs, Savannah acquired 100% of the outstanding share capital of SIPEC. The SPA with SIPC sees Savannah Energy acquire a 75% equity interest in SIPEC for a cash consideration of $52 million, while the SPA with Jagal involved the acquisition of a 25% equity interest in SIPEC for a cash consideration of $7.5 million, plus $2 million in deferred cash consideration payable in eight quarterly installments post-completion.
The acquisition consideration was fully funded through a drawdown under a $60 million Reserve-Based Lending debt facility arranged by Standard Bank Group of South Africa Limited. At completion, the cumulative consideration paid was approximately $35.1 million, inclusive of $19.5 million of cash available to SIPEC, with $2 million in deferred cash consideration payable in eight quarterly installments post-completion as agreed.
The acquisition of SIPEC is expected to significantly enhance Savannah Energy's reserves and resources base, increasing it by approximately 30% from 151 million barrels of oil equivalent (MMboe) to 197 MMboe.
The deal is also anticipated to be highly accretive to the group's net asset value, with management estimating the value of SIPEC at $194 million on a pre-debt basis.
The acquisition is expected to provide material potential production upside, with Savannah Energy planning to commence an up to 18-month expansion program at the Stubb Creek Field. This program is anticipated to increase gross production at the field from an average of 2.7 thousand barrels of oil per day (Kbopd) in 2024 to approximately 4.7 Kbopd.
In addition, the acquisition adds 227 billion standard cubic feet (Bscf) of 2C gross gas resources at the Stubb Creek Field, securing significant additional long-term feedstock gas available for sale to Savannah Energy's Accugas customers.
ENR Advisory led by Partner, Nosa Osazuwa with support from Associates, Rasheed Belo-Osagie, Makana Nria and Ibiyode Ibikunle —advised Savannah, on the Nigerian law aspects of the acquisition. While Bracewell LLP advised on the British law aspects.
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