Afren suitor SEPLAT advised by RBC and Citi on bid approach
Nigerian oil and gas group SEPLAT [LON:SEPL] is being advised by RBC and Citi on its “highly preliminary approach” to Afren [LON:AFR], according to a person familiar with the matter. The two banks worked on SEPLAT’s IPO in April this year, alongside BNP Paribas, Standard Bank and Renaissance.
Morgan Stanley and Bank of America Merrill Lynch are Afren’s corporate brokers but a recent news report suggested that the company had engaged Rothschild to shore up its defences.
Today (22 December) Afren said to have received an early approach from SEPLAT regarding a possible combination with Afren. SEPLAT will have until 19 January 2015 to either announce a firm offer or walk away. SEPLAT's share price jumped to 49.39p on the announcement.
The Africa and Iraq focused oil and gas group could attract the attention of other potential bidders, according to two sector sources. Decent assets, combined with management issues and a falling oil price make the company an attractive target, said the sources. Afren recently dismissed its CEO, COO and two associate directors after an investigation into unauthorised payments by management and senior employees.
It has assets in West Africa, most of which are located in Nigeria – both on and offshore – East Africa, South Africa and the Kurdistan region of Iraq.
A reported suitor is another Nigerian oil and gas group South Atlantic Petroleum (also known as SAPetro), which has been acquiring shares in the company and now owns 7.055%, according to a 16 October regulatory filing. SAPetro is the exploration vehicle of businessman and former Nigerian minister Theophilus Danjuma.
Nigeria has seen oil and gas activity in 2014 with a bid round for marginal fields but is seen as a difficult country to work in for foreign operators, said one of the sources.
Glencore [LON:GLEN] would also make sense as a bidder, said the second source. Earlier this year the commodity group acquired Caracal Energy in neighbouring Chad.
A buyer could look to divest Afren’s Kurdistan assets separately, suggested the second source.
Now is seen as a good time to acquire oil and gas assets due to the dramatic fall in the oil price, which has impacted share prices across the board.
Part of the reason for listing SEPLAT earlier this year was to raise money for acquisitions, according to the person familiar. SEPLAT became the first Nigerian company to dual list in London and Lagos when it floated earlier this year.