BRITISH fossil fuel giant Savannah Petroleum has announced the completion of the acquisition of a majority stake in Nigerian oil and gas exploration company Seven Energy International for an undisclosed amount.
Seven Energy, which described itself as the leading integrated gas company in southeast Nigeria, had announced in November 2017 that it had entered into a transaction for a comprehensive capital restructuring. This has resulted in the sale of the oil and gas exploration, development, production, and distribution company to Savannah Petroleum.
Exactly two years after the commencement of negotiations, Savannah Petroleum announced today that the transaction with Seven Energy had been completed. Troubled over recent years, Seven Energy has had several defaults on its debt-servicing obligations as it took a beating from a severe liquidity challenge.
A Savannah spokesman said: “At a court hearing on 13 November, administrators were appointed to Seven Energy International Limited and yesterday effected the transfer of the Seven Assets to group companies controlled by Savannah and AIIM. Following this step, final long-form documentation with respect to the transaction was executed in accordance with the agreed steps as set out in the implementation agreement and the transaction has now been completed.”
With the deal, the British firm now owns an 80% stake in Seven Uquo Gas, which in turn holds a 40% participating interest in the Uquo field located in southeast Nigeria. It also owns a 51% interest in the Stubb Creek field located in southeast Nigeria, through the 100% ownership of Universal Energy Resources.
In addition, the firm also acquired an 80% interest in the Accugas midstream business, comprising the 200mmscfd Uquo gas processing facility, a 260km pipeline network and long-term gas sales agreements with downstream customers. One of Savannah’s partners, African Infrastructure Investment Managers, as part of the transaction completion, acquired a 20% interest in SUGL and Accugas in return for cash consideration to Savannah of $54m, which had been received.
Andrew Knott, the chief executive of Savannah Petroleum, said: “We are very pleased to have completed the Seven Energy Transaction. The deal transforms Savannah into a full-cycle E&P company in West Africa and marks the start of a very exciting time for us.
“We have acquired a business with great people and a strong set of exploration, appraisal, development and production assets which are expected to be highly cash flow generative for the company.”
Seven Energy operated in Nigeria through its wholly-owned subsidiaries, Septa Energy Nigerian and Accugas, with headquarters in Lagos and London. The firm said its liquidity was severely affected by a range of external factors, including loss of material cash flow from its Strategic Alliance Agreement since February 2016 because of recurrent militant activity that resulted in the closure of Forcados export terminal and a significant backlog of unpaid invoices relating to the supply of gas to federal and state-owned power stations.