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

Seplat Energy Plc, a leading Nigerian energy company listed on both the Nigerian Exchange and the London Stock Exchange, has signed a legally binding agreement to sell a 10% working interest in its joint venture with the Nigerian National Petroleum Company Limited (NNPC Limited) for approximately $281.6 million.

The agreement, executed through Seplat Energy Offshore Limited and Seplat Energy Producing Nigeria Unlimited, will increase NNPC Limited’s ownership from 60% to 70%. Seplat will retain a 30% working interest and continue as operator of the assets.

The transaction, expected to close in the second half of 2026, remains subject to regulatory approvals and customary conditions, with an effective date of April 1, 2026.

Strategic realignment within joint venture

The stake sale marks a strategic realignment within one of Nigeria’s most important upstream oil and gas partnerships. Despite reducing its equity position, Seplat will maintain operational control, ensuring continuity in production and asset management.

The deal value represents approximately 25% of the gross consideration paid during Seplat’s acquisition of the assets, including contingent payments.

Capital allocation and shareholder returns

Seplat plans to deploy proceeds from the transaction toward debt reduction and direct shareholder returns, aligning with its long-term capital allocation framework.

The company intends to distribute approximately $140 million as a special dividend, equivalent to $0.233 per share, subject to completion. This payout will complement its regular dividend policy tied to underlying performance.

On the debt side, Seplat is targeting up to $300 million in repayments. About $200 million linked to its Advanced Payment Facility has already been settled, with the remaining balance expected after deal completion.

Production outlook remains stable

The transaction is not expected to disrupt production guidance for 2026. The joint venture currently contributes around 80,000 barrels of oil equivalent per day at the midpoint of Seplat’s group production range of 135,000 to 155,000 barrels per day.

However, following the effective date adjustment, net contribution is expected to moderate to approximately 65,000 barrels per day. Updated guidance will be issued after completion.

Long-term reserves and growth outlook

Seplat expects the transaction to reduce its 2P reserves by approximately 13% to 872.9 million barrels of oil equivalent. A revised reserves statement will be released upon completion.

Despite the reduction, the company believes proceeds from the sale, combined with lower capital expenditure obligations, will offset potential impacts on long-term cash flow through 2030.

The company reaffirmed its commitment to distributing between 40% and 50% of free cash flow to shareholders over the 2026 to 2030 period, targeting at least $1 billion in cumulative returns.

CEO highlights strategic importance

Chief Executive Officer Roger Brown described the joint venture as a critical asset within Nigeria’s energy landscape, emphasizing strong alignment with NNPC Limited.

He noted that the transaction allows Seplat to enhance financial flexibility while continuing to deliver operational efficiency and long-term value.

Positioning for future growth

With a diversified portfolio spanning onshore and shallow water assets, as well as gas processing and export infrastructure, Seplat continues to position itself as a leading indigenous energy supplier.

The company’s focus remains on optimizing its asset base, strengthening its balance sheet, and delivering sustainable growth in a changing global energy market.