Seplat Energy to Revive Hundreds of Dormant Oil Wells Following ExxonMobil Deal
Seplat Energy Plc has announced plans to rejuvenate hundreds of inactive oil wells in Nigeria following its $1.28 billion acquisition of ExxonMobil’s onshore and shallow water assets in the country. The move marks a strategic step to boost the company’s oil and gas output while capitalizing on opportunities left by international oil firms divesting from Africa’s largest crude producer.
Speaking about the initiative, Seplat’s Chief Operating Officer, Samson Ezugworie, highlighted that only 200 out of the 600 oil wells under its control are currently operational. “Our immediate focus is rig intervention, short-term oil-generation activities, rejuvenating idle wells, and bringing them back to production,” he said in a recent interview.
Acquisition Details
The acquisition of Mobil Producing Nigeria Unlimited, which was finalized after receiving regulatory approval in October, significantly expands Seplat’s portfolio. The company’s assets now include 11 oil blocks, 48 producing oil and gas fields, five gas-processing facilities, and three export terminals.
Seplat revealed that it paid $800 million of the purchase price this week, adding to an initial $128 million disbursed when the agreement was signed in 2022. A further $257.5 million is deferred until December 2025 to cover decommissioning, abandonment, and joint venture costs.
Eleanor Adaralegbe, Seplat’s Chief Financial Officer, described the acquisition as a cost-effective move, noting that its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first nine months of the year grew 25% year-on-year to $383 million. “It’s just a little over half of the EBITDA for the full year, so it pays back itself very quickly,” she explained.
Doubling Oil Production
Seplat CEO Roger Brown stated that the company aims to more than double its oil production, targeting over 200,000 barrels per day from the current 71,000 barrels of oil equivalent daily. Brown also noted the significant potential in gas production, particularly in the liquefied natural gas (LNG) and domestic gas sectors, as part of its long-term strategy.
Strategic Importance
The deal underscores the shift in Nigeria’s oil and gas sector, where local firms like Seplat are taking over assets divested by global oil majors. Seplat’s revitalization of dormant wells is expected to boost Nigeria’s oil production, a critical factor as the nation seeks to maintain its position as a leading oil producer in Africa amidst economic challenges.
This merger is seen as a win for Seplat, with the company positioning itself for growth in both oil and gas production while addressing long-standing issues like underutilized wells and energy supply gaps in the country.