Following a strong set of Q3 results in October, Seplat has now agreed to acquire ExxonMobil's entire Nigerian offshore shallow water oil and gas business, which produces some 95 kboepd from 409 Mbbl of 2P oil & 211 Bscf of gas (with additional development potential), for $1.283bn plus a $300m contingent consideration. This scale will mean Seplat becomes a major oil player, both in Nigeria and by global standards. To us it makes little sense that a company that was already undervalued has only appreciated by <15% today, having announced a mechanical doubling of 2P reserves & tripling of its production with no dilution of equity holders, following completion. The shares traded at 105p at the start of February, since which time the price of oil has increased significantly with little respite in sight. And that's before we even begin to think about the upside potential from undeveloped gas assets and the LNG export capacity in a world that is quickly decoupling itself from Russian gas exports. We believe the market is missing a trick here.
