Seplat Energy Targets $650m Bond to Refinance Existing Debt

Seplat has announced the launch of a $650 million Senior Notes offering due 2030. The net proceeds from this issuance will be used to repurchase the company’s outstanding 7.750% Senior Notes due 2026 and cover associated transaction fees and expenses. Concurrently, Seplat has initiated a tender offer to repurchase all of its existing $650 million 7.750% Senior Notes maturing in April 2026. The tender offer, which expires on March 18, 2025, is contingent on the successful completion of the new notes offering. Should any of the 2026 Notes remain outstanding, Seplat intends to redeem them in line with its existing indenture agreement.

This move reflects Seplat’s ongoing strategy to optimize its capital structure and reduce financing costs. The company previously issued a $650 million bond in 2021 at a yield of 7.75%, marking the largest ever Nigerian oil and gas bond issuance at the time. The upcoming bond is expected to attract significant investor interest, following the oversubscription of previous offerings.

What This Means

Seplat Energy is essentially taking out a new loan to pay off an old one. By issuing new bonds, the company can replace its existing debt, ideally at better terms, such as lower interest rates or a longer repayment period. This helps Seplat manage its financial obligations more efficiently while freeing up resources for future investments. The move also signals confidence to investors, showing that the company is proactive in managing its finances.

MPNU Acquisition

The acquisition of Mobil Producing Nigeria Unlimited (MPNU), finalized in December 2024, was a transformative move for Seplat Energy, effectively doubling its oil production capacity to approximately 120,000 barrels of oil equivalent per day. The $800 million deal significantly expanded Seplat’s asset base, adding strategic interests in multiple oil mining leases and export terminals.

In its full-year 2024 financial results, Seplat reported an 85% increase in independently audited 2P reserves, reaching 886 million barrels of oil equivalent, with 65% classified as liquids. The company’s total 2P+2C reserves and resources surged by 125% to 1,217 million barrels of oil equivalent, underscoring the substantial impact of the MPNU acquisition on its long-term production potential.

Sector Context: IOC Divestment and Regulatory Reforms

Seplat’s expansion and debt refinancing come amid broader shifts in Nigeria’s oil and gas industry. Over the past decade, international oil companies (IOCs) such as Shell, ExxonMobil, TotalEnergies, and Eni have been divesting from onshore and shallow-water assets, citing security risks, regulatory complexities, and a strategic pivot towards deepwater projects and energy transition initiatives.

This wave of divestment has allowed indigenous companies, including Seplat, Heirs Energies, and First E&P, to acquire significant assets, strengthening local participation in the sector. However, these transactions have often faced prolonged regulatory approvals. Seplat’s MPNU acquisition, for instance, was delayed for nearly two years due to regulatory hurdles involving the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPC), which sought to exercise preemptive rights over the assets. The eventual approval in December 2024 marked a turning point, signaling improved regulatory clarity and a more investor-friendly environment.

Recent policy measures have further enhanced Nigeria’s oil and gas investment landscape. The 2021 Petroleum Industry Act (PIA) established a more transparent fiscal framework, while executive orders under President Bola Tinubu’s administration have streamlined project approvals, shortened contracting cycles, and introduced fresh fiscal incentives for deepwater oil and gas investments. The Nigerian government’s push to unlock its vast natural gas reserves through new policies and incentives has also attracted foreign direct investment, reinforcing the sector’s long-term growth potential.

 

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