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SEPLAT successfully issues largest ever Nigerian Oil & Gas bond worth $650mn

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Seplat Petroleum Development Company Plc, a leading Nigerian independent energy Company listed on both the Nigerian and London Stock Exchanges has priced its offering of $650 million in aggregate principal amount of senior notes due 2026 (the “Notes”).  The size represents, the largest ever Nigerian oil and gas bond issuance. 
   
The Notes priced at a yield of 7.75percent, represents a significant pricing reduction from its $350 million debut issuance in 2018, which priced at a yield of 9.50 percent , with a coupon of 9.25percent.
 

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The offering was well oversubscribed with demand from 120 global investors from more than 20 countries resulting in a final overbook in excess of $1.1billion, which was 1.7 times book coverage. 
   
The Global Coordinators on the transaction are Citi, J.P. Morgan, Standard Bank and Standard Chartered Bank, with Natixis, Rand Merchant Bank and Société Générale acting as Joint Bookrunners and FCMB Capital Markets, Nedbank, United Bank for Africa and Zenith Bank Plc acting as Co-Managers.
   
Orders came from high quality institutional investors with long term commitments to Seplat as well as new institutional investors.    

The transaction was well received in the market and traded above par post-pricing. 
   
The transaction shows confidence by the international market in the Nigerian economy and the oil and gas sector in particular, with a number of the investors committing to the transaction based on the strong gas story of Seplat.
   
The bond proceed will be used to redeem the existing Seplat 2023 notes, repay drawings under the Revolving Credit Facility, for general corporate purposes, and pay transaction fees and expenses.
   
SEPLAT had notified investors of the conditional redemption of its $350million aggregate principal amount of 9¼percent Senior Notes due 2023. The Issuer has elected to redeem the entire outstanding principal amount of the Notes outstanding on April 1, 2021.
   
The leading independent indigenous upstream oil and gas company operating in Nigeria is rated B2 by Moody’s, B by S&P and B- by Fitch.
   
Seplat is pursuing a Nigeria focused growth strategy and is well-positioned to participate in future divestment programmes by the international oil companies, farm-in opportunities and future licensing rounds.
   
For 2021 Seplat expects to produce an average of 48,000 – 55,000 boepd, taking into account the impact of OPEC+ quotas. The company continues to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices.  
   
Seplat which has significant cash resources had said it will continue to manage its finances prudently in 2021, expecting to invest $150 million of capital expenditure across the full year.         

The oil & gas company remains confident that its ongoing cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth. 
   
Following its successful funding, the completion of the ANOH project remains a major priority for SEPLAT. 

Although it expects some COVID-19 related delays to push completion into early 2022, following a cost optimisation programme.

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