Seven Energy Limited has completed the acquisition of the entire issued share capital of East Horizon Gas Company Limited (EHGC) for $250 million.
Seven Energy Limited is a wholly-owned subsidiary of Seven Energy International Limited (SEIL), the integrated oil and gas development, production and gas distribution company with interests in Nigeria,
This acquisition enhances Seven Energyâ€™s position as a leading gas marketing and distribution company in south east Nigeria, expanding the reach of its gas pipeline network in this growing market to over 260 km, diversifying its customer base across key sectors of the Nigerian economy and increasing long-term contracted gas sales volumes to 200 MMcfpd.
EHGC is a gas distribution and marketing company that operates the 128 km East Horizon gas pipeline through Akwa Ibom State and Cross Rivers State in south east Nigeria. EHGC also has a gas sales agreement with an industrial offtaker to supply up to 25 million cubic feet of gas per day (mmcfpd), increasing to 50 mmcfpd upon completion of the planned expansion of the offtakerâ€™s existing plant, under a 20-year gas sales agreement expiring in 2032.
Commenting on the acquisition, Phillip Ihenacho, Chief Executive Officer of Seven Energy said â€œThis acquisition marks a significant milestone for Seven Energy as we continue to deliver on our strategy to become the market leading independent gas distributor in south east Nigeria. The East Horizon pipeline is an important component of the energy infrastructure of the region and we are pleased to add this asset to our portfolio.â€
The aggregate consideration of up to US$250 million will be payable by way of an initial payment of US$100 million in cash; the assumption of existing liabilities of EHGC, including approximately US$62 million of bank indebtedness; and deferred payments due on achievement of certain operational and contractual conditions that are expected to enhance the long term profitability of EHGC.
It is expected that these operational and contractual conditions will be satisfied during first half of 2014. The cash component of the consideration is being funded using a new Accugas Limited medium-term loan facility of up to US$170 million and from SEILâ€™s internal cash flows.