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Afren offers $37m for stake in Nigerian firm

By on March 27, 2013

AFREN Plc, a United Kingdom-based oil and gas company, is planning to expand reserves by 29 per cent after increasing its stake in an indigenous firm, First Hydrocarbon Nigeria Company Limited.

Afren, according to a statement obtained by The Guardian, said the proven and probable reserves would climb to 270 million barrels of oil equivalent from 210 million barrels.

The statement said Afren has agreed to pay about $37 million for 10.4 per cent of First Hydrocarbon Nigeria Co. (FHN), raising its stake to about 55 percent.

The Board noted that: “COGIL has exercised the terms of an amended agreement under which Afren would acquire the beneficial interest in approximately 10.4 per cent of the issued share capital of FHN in exchange for an aggregate consideration of $37.05 million, payable in cash.

Under the terms of agreement, Afren will acquire a beneficial interest in 15 million shares in FHN. Following the acquisition Afren will have a beneficial interest in 54.8 per cent of the issued share capital of FHN. This will also result in a material change in 2P reserves net to Afren.

It stated that the Group’s pro forma net proved and probable reserves is expected to increase from 210 mmboe to approximately 270 mmboe, adding that it plans to increase its net proved and probable reserves by 29 per cent after completion of the deal.

The agreement also emphasized that FHN will remain as an indigenous Nigerian oil and gas company.

FHN was established in June 2009 in direct response to the Nigerian government’s policy to increase indigenous participation in the Nigerian upstream oil and gas sector and its commitment to deepening indigenous involvement in the sector at all levels.

Afren initially held 40 per cent of FHN’s issued shares and currently holds (directly or indirectly) 44.5 per cent of the issued share capital of FHN (46.7 per cent as at 31 December 2012 prior to a new issue of shares by FHN).

In December 2011, FHN acquired a 45 per cent interest in the OML 26 portfolio of assets in Nigeria from Shell Petroleum Development Company of Nigeria, Total Exploration and Production Nigeria and Nigeria Agip Oil Company.

 

( Guardian)