chevron_logoThe $1.6 billion bid made by Brittania-U Nigeria Limited for the three oil blocks offered for sale by Chevron Nigerian Limited, has raised eyebrows among other bidders as they wait with bated breath for the company to finance the acquisition.

The concern in the oil industry, THISDAY learnt, has been fuelled by the fact that the largest Nigerian independent, Seplat Petroleum Development Company, which emerged the reserve bidder for the blocks and has a track record of funding large acquisitions, was unable to offer up to half of Brittania-U’s bid, described as very aggressive, for the assets.

In stark contrast to Brittania-U’s bid, Seplat offered only $630 million for Chevron’s 40 per cent stake in Oil Mining Leases (OMLs) 52, 53 and 55.

Meanwhile, the mean value of the three blocks combined was estimated at between $500 million and $600 million by oil industry sources.

Apart from the Seplat/Amni Consortium, two other bidders for the blocks included Niger Delta Petroleum/South Atlantic Petroleum (SAPETRO) and Sahara/Septa, which are all Nigerian companies.

Brittania-U and these three consortia made it to the final stage of the three-month long bidding process for the three acreages.

SAPETRO already has joint ventures with Total and China National Offshore Oil Corporation (CNOOC) for deepwater blocks.

Some of the other companies that could not make it to the final round included First Hydrocarbons Nigeria, the local-arm of London-listed Afren, Vertex, and Sogenal Oil.

Also, First Exploration and Production and Belema Oil were said to have submitted bids for only OML 55, but Chevron insisted on dealing with bidders that would acquire all the three acreages.

Although all efforts to contact the Chairman/CEO of Brittania-U. Mrs. Uju Ifejika, a lawyer, who had a long stint working in the oil and gas sector for Texaco, proved unsuccessful, an industry source conversant with the transaction said it was wrong for the other bidders to underestimate the capacity of Brittania-U to pay for the assets.

He said he was aware that Brittania-U, in conjunction with Schlumberger, as its technical partner, did its due diligence and like other bidders, had access to Chevron’s data room in Houston, Texas.

He said even the data and evaluation provided by the Department of Petroleum Resources (DPR) and Chevron on the blocks showed that the three acreages had 3.9 trillion cubic feet of gas and 2P (proven) reserves of 280 million barrels.

Giving a breakdown, he said OML 52 holds proven reserves of 67.09 million barrels of oil equivalent (mboe) but is predominantly a gas field, OML 53 has 75.51mboe, while OML 55 has 68.27mboe.

All these, he added, exclude the condensates, which attract a higher price than crude oil in the international oil market.

He said OML 52 has condensates of 8,340,000 barrels; OML 53, 93,780,000 barrels; while OML 55 has 15,330,000 barrels.

On this basis, he explained that Brittannia-U was properly advised on the valuation of the three blocks by Schlumberger, which felt that the $1.6 billion was a fair value for the assets.

He dismissed the notion that Britannia-U lacked the capacity to raise the money to pay for the three blocks, stating that other bidders that had gone out of their way to run down Britannia-U had forgotten that the company was already an upstream operator.

“Brittania-U is the operator of Ajapa field in OML 90, which currently produces 7,500 barrels per day. In addition, the company owns a Floating Production Storage Offloading (FPSO) vessel, has a shuttle tanker and a fleet of offshore vehicles and an oil block in Ghana.

“As you can see, Brittana-U is an upstream, downstream, shipping and sub-surface engineering company, which has made a lot of inroads in the oil and gas sector. It also has a debt-equity ratio, which is about the lowest in the industry, among indigenous operators.

“It is truly an indigenous operator and will source its funding for the three blocks from local and overseas banks,” he said.

Although the industry source said he was not conversant with the payment terms for the three blocks, he added that Brittana-U would surprise other bidders, who lost out in the deal.

The transaction, however, brings back memories of another deal when a Nigerian oil marketing firm MRS Nigeria Limited submitted an aggressive bid for Chevron’s downstream assets in Nigeria and the rest of West Africa.

The $790 million acquisition, which was financed by the defunct Bank PHB Plc (Keystone Bank Limited) and four other banks, resulted in one of the largest loan defaults in the history of Nigerian banking and was partly to blame for the takeover of Bank PHB and Union Bank Plc by the Central Bank of Nigeria (CBN) in 2009.


Information from This Day was used in this report.