Africa Oil goes it alone in Nigeria deal

Africa Oil will go it alone in the acquisition of stakes in major fields offshore Nigeria after its partners, Delonex Energy and Vitol Investment Partnership, both withdrew.

An amended agreement has been signed by Petrobras International Braspetro, which is selling the stakes, and Petrovida Holdings. The latter was a consortium made up of Africa Oil, Delonex and Vitol. The asset in question is a 50% stake in Petrobras Oil and Gas BV (POGBV).

Africa Oil will take the entire 50% stake in the Petrobras unit. This has an indirect 8% stake in Nigeria’s OML 127 and an indirect 16% stake in OML 130. The first block is operated by Chevron and holds the Agbami field, while the second is operated by Total and has the Egina and Akpo fields.

Lundin Group-backed Africa Oil said it intended to complete the deal on the previously agreed terms. The company has reached a deal with BTG Pactual for a guarantee and bridge loan of up to $250 million. This financing, in addition to its own cash resources, would allow it to acquire the stake and cover its expected spending in 2020.

Africa Oil’s president and Keith Hill described the acquisition as a “unique and transformational opportunity to acquire an increased interest in world class producing assets operated by Chevron and Total. We remain committed to completing this acquisition and look forward to working with Petrobras and all stakeholders to accomplish that goal.”

Vitol, in a short statement, said simply that it would not proceed with the deal.

The original deal was announced on October 31, 2018, with a proposed price of $1.41 billion. At the time the deal was announced, production from the fields was put at 368,000 barrels per day, projected to rise to 568,000 bpd in the second half of 2019.

Petrobras began shopping its 50% stake in late 2017 as it faced domestic pressure to tackle its debt problem.

BTG holds the remaining 50% stake in the Petrobras unit, POGBV. The bank signed a deal with Petrobras in 2013 creating an Africa-focused joint venture. BTG contributed $1.525bn in exchange for half of Petrobras’ assets on the continent, largely the Nigerian assets. Also involved was Helios Investment Partners.

Agbami began producing in 2008 and Akpo in 2009, while Egina began in January this year, offering capacity of 200,000 bpd.

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