Seplat Petroleum (SEPL) has launched a £382m cash takeover of fellow London player Eland Oil & Gas (ELA), whose board has backed the move.
The two Nigeria-focused companies would produce a combined net 64,000 barrels of oil equivalent per day, and Seplat’s 2P oil reserves and 2C oil resources would increase 20 per cent to 330 million barrels of oil.
Seplat said it would fund the acquisition, completed at a 28.5 per cent premium to Eland’s Monday closing price, from cash and through an undisclosed new loan. At the end of the first half, Seplat had net cash of $83m (£66m). Panmure Gordon analyst Colin Smith said Seplat would be better placed to “manage the financing burden” borne by Eland on its stake in the OML 40 oil project.
The deal needs 75 per cent support from Eland’s shareholders and already has the three largest holders on board, making up almost 60 per cent of the issued shares.
Seplat said it would review Eland’s structure within 12 months of completion, assessing the “strengths and fit of Eland’s management team and employees”.