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Seplat Gets $700 Million War Chest As Afren Merger On The Cards


Seplat Petroleum Development Company secured the option to raise $700 million of debt for acquisitions as the Nigerian oil producer considers buying London-based Afren Plc.

The company refinanced debt with $1 billion of new facilities split between a $700 million seven-year tranche and a $300 million three-year loan, it said in an e-mailed statement today. The debt maturing in 2022, provided by Nigerian banks, can be doubled for “qualifying acquisition opportunities,” the company based in Lagos said.

Seplat said in November it is looking to buy Nigerian gas assets, including those of Royal Dutch Shell Plc, to take advantage of higher prices in Africa’s biggest economy. Seplat, which listed its shares in Lagos nine months ago, has until Jan. 19 to make a firm offer to Afren after approaching the U.K. explorer, it said last week. Shares of the companies, which have a combined market value of about $1.5 billion, have been battered as crude oil prices plunged.
“They should be able to secure more deals as there are so many more assets becoming vulnerable, including public companies, in this weak oil price environment,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by phone from Moscow.

Afren Rallies

The acquisition would extend Seplat’s reach beyond its fields in Nigeria to include Iraq’s Kurdistan region, which Afren focuses on in addition to the African country. Seplat produces about 70,000 barrels of oil a day at three Nigerian fields, in which it owns a 45 percent working interest.

Seplat’s shares rose 3 percent in Lagos to 310 naira today, trimming its plunge since they started trading in April to 46 percent. The stock added 1.1 percent to 117.75 pence in London today, snapping a five-day decrease.

Afren surged 24 percent in London, headed for the steepest advance since 2009 and trimming a loss this year to 43 percent. The company’s market value increased to £296 million ($451 million).

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