Vitol acquires producing assets in deepwater Nigeria

A consortium led by Vitol and comprising Africa Oil Corp (“Africa Oil”) (25%), Delonex Energy Ltd.

(“Delonex”) (25%) and Vitol Investment Partnership II Ltd. (“Vitol”) (50%), is pleased to announce that it has entered into a Share Purchase Agreement (“SPA”) to acquire a 50% ownership interest in Petrobras Oil and Gas B.V. for $1.407 billion. BTG Pactual E&P B.V. will continue to own the remaining 50% of POGBV. The transaction is subject to customary conditions precedent.

The primary assets of POGBV are an indirect 8% interest in Oil Mining Lease (“OML”) 127, which contains the producing Agbami Field, operated by affiliates of Chevron Corporation, and an indirect 16% interest in OML 130, operated by affiliates of TOTAL S.A., which contains the producing Akpo Field and the Egina Field, which is expected to commence production by the end of 2018. Current production of 368,000 barrels per day is anticipated to increase to over 568,000 barrels per day by the second half of 2019.

Russell Hardy, CEO, Vitol said: “Vitol has a long history of investing in Nigeria’s energy sector. We are pleased and proud to add this significant upstream asset to our infrastructure and downstream Nigerian investments. POGBV has a strong non-operated portfolio, managed by Chevron and Total, and which represents circa 20% of Nigerian production. Vitol looks forward to growing and investing in Nigeria.”

Africa Oil CEO Keith Hill commented, “We are very pleased to be able to join Vitol and Delonex in acquiring an interest in these established, low unit cost, producing assets, with additional appraisal and development upside, that are operated by some of the best companies in the industry.”

“With the addition of production and cash flow, Africa Oil will transform into a significant, Africa-focused, independent oil company. Combining these assets with our Kenya development project and recently rejuvenated exploration portfolio, we believe that Africa Oil is exposed to high growth potential in the current and anticipated strong oil price environment. The two producing fields have consistently outperformed expectations and our goal will be aligned with our operators and partners to keep the FPSOs as full as possible for the foreseeable future.”

Rahul Dhir, CEO of Delonex, said: “We are delighted to join Vitol and Africa Oil in acquiring an interest in these high quality assets. These assets are operated by leading industry operators and have consistently outperformed expectations. This acquisition represents an important strategic step for our company.  We look forward to working with our operators and partners to further develop and achieve the goals of the consortium and deliver value for the government and nation of Nigeria.” The agreed base purchase price of $1.407 billion, is on a cash and debt free basis as of the effective date of 1st January 2018 (the “Effective Date”). A deferred payment of up to $123 million may be due to the Seller depending on the date and ultimate OML 127 tract participation in the Agbami Field, which is subject to a redetermination process.

The Consortium’s funding required to ultimately close the transaction will be reduced by any leakage paid to the Seller by POGBV, including dividends, and increased by any contributions made to POGBV by the Seller during the period between the Effective Date and completion.

POGBV has an existing reserve-based lending facility, with a syndicate of international banks and commitments of $1.245 billion, which POGBV and the Consortium believe may be increased. Given the anticipated time required to complete the transaction, POGBV’s debt capacity, forecast post effective date cash flow and the structure of the transaction, Africa Oil expects to fund its share of the acquisition with cash on hand.

The three fields in these two licenses are all giant fields, located over 100 km offshore Nigeria, and are some of the largest and highest quality in Africa. Two of these fields, Agbami and Akpo, have been on production since 2008 and 2009, respectively, and in 2017 averaged a combined gross production rate of approximately 368,000 barrels of oil per day. Lifting costs in 2017 were well below $10/bbl.