Uche Cecil Izuora
Chappal Energies, a Mauritius-based oil and gas exploration company focused on Africa is considering bringing new investors once it completes the purchase of TotalEnergies SE assets in Nigeria.
The company agreed in July to buy TotalEnergies SE’s 10 per cent stake in 15 oil mining leases and the Forcados and Bonny export terminals for $860 million, a deal it expects to close very soon.
“As a consequence of that transaction, we’ll be expanding our equity base” Managing Director Ufoma Immanuel said in an interview. “It’s fair to say that in order to grow and develop we need partnership and some of those partnerships will be on the capital side and that is what we’re focused on,” he said.
Earlier this month, Chappal closed the $1.2 billion purchase of Equinor Nigeria Energy Company, a unit of the Norway-based Equinor ASA.
The deal required an immediate payment of $710 million with the balance structured as contingent payments. Soon after, Chappal sold 5.14 percent of its equity to Aradel Holdings, a Nigerian listed oil and gas firm, for an undisclosed sum.
Chappal expects to average about 20,000 barrels a day in production on the back of the Equinor acquisition. Production from the TotalEnergies’ assets represented approximately 14,000 barrels of oil equivalent a day last year, the French energy giant said in a separate statement. Chappal targets about 77,000 barrels of oil equivalent a day in the next two to three years with additional asset buys, Immanuel said.
Oil multinational have been offloading Nigerian assets, mostly in onshore and shallow water blocks, a challenging operating environment, where infrastructure damage from crude theft is a regular occurrence.
Exxon Mobil, Eni have closed deals on their onshore and shallow water oil assets in the West African nation to domestic producers as they turn their focus on deep-water projects with better fiscal terms and less environmental degradation risks.
Port Louis, Mauritius-based MCB Group contributed $120 million in a $360 million senior secured bridge facility to part finance the acquisition of the Equinor assets, the lender said in an emailed statement on Monday,
Immanuel, 45, said he expects to see more movement in Chappal’s balance sheet over the coming 24 months.
The size of any future equity sale will be determined by shareholders, taking into consideration the scale of planned expansion and risk preference of target investors, he said.
The company aims to look beyond Nigeria to sub-Saharan Africa for acquisitions and growth as well as work with partners to optimize production from acquired assets, Immanuel said.
Chappal’s current shareholders are largely in three groups, Immanuel said. “There is management who own a portion of the equity, there is family office and strategic partnerships,” he said, without giving names of specific shareholders.