TNOG Oil and Gas closes stakes acquisition in OML 17 onshore

TNOG Oil and Gas Limited, a related company of the investment company, Heirs Holdings Limited and the conglomerate, Transnational Corporation of Nigeria Plc (Transcorp), has completed the US$800 million acquisition of a 45% participating interest in Nigerian oil mining lease (OML) 17 and associated facilities from joint venture partners Shell, Total and Agip (ENI) and on the multi-tranche US$1.1 billion financings for the acquisition and working capital requirements for the asset.

The transaction is precedent-setting in its use of a multi-tiered debt financing structure, the variety of the makeup of the lending group, and also for being the first divestment in Nigeria by Shell, Total, and Agip to feature a deferred purchase-price component.

The deal includes the sale of a 30% interest of shell Petroleum Development Company of Nigeria Limited (SPDC) in Oil Mining Lease (OML) 17 in the Eastern Niger Delta, and associated infrastructure, for a consideration of US$533m. A total of US$453m was paid at completion with the balance to be paid over an agreed period. The other SPDC JV partners, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited have also assigned their interests of 10% and 5% respectively in the lease, ultimately giving TNOG Oil and Gas Limited a 45% interest in OML 17.

The multi-tranche debt financing comprised a senior reserves-based lending (RBL) facility, a junior term loan facility and subordinated unsecured notes structured as long-term fixed-return instruments with detachable production-linked units. The senior lenders include ABSA Bank, Afrexim Bank, Africa Finance Corporation, Hybrid Capital & Asset Management, Shell Western Supply & Trading, Standard Chartered Bank, Union Bank of Nigeria Plc and United Capital Plc, while the junior lenders are Shell Trading and Hybrid Capital & Asset Management.

TNOG will step into Shell’s shoes as the sole operator of the OML which has a current production of 27,000 barrels of oil equivalent per day and estimated 2P reserves of 1.2 billion barrels of oil equivalent with an additional 1 billion barrels of oil equivalent resources.

SPDC is the operator of a joint venture between the Nigerian National Petroleum Corporation (55%), SPDC (30%), Total E&P Nigeria Limited (10%), and Nigerian Agip Oil Company Limited (5%).