Seven Energy nets $255 mln in equity financing

Seven Energy, a Nigeria-focused oil and gas company, said Tuesday that it has raised $255 million in equity funding. The investors are Temasek, International Finance Corp. and the IFC ALAC Fund.

PRESS RELEASE

15 April 2014
London, Lagos: Seven Energy International Limited (“Seven Energy” or the “Group”), the indigenous integrated oil and gas development, production and gas distribution company with interests in Nigeria, is pleased to announce that it has secured US$255 million of new equity capital, enabling the Group to further develop gas supply opportunities in Nigeria’s domestic energy market.
Temasek, the Singapore investment company, has committed US$150 million, the International Finance Corporation (“IFC”), a member of the World Bank Group, has committed US$75 million, and the IFC African, Latin American, and Caribbean Fund (“IFC ALAC Fund”) has committed US$30 million. The investments will be in two tranches, the timing of which is subject to the satisfaction of certain conditions in the investment agreements.
The institutions are investing in Seven Energy’s irredeemable convertible loan notes which bear no coupon and are akin to equity capital. On a converted and fully diluted basis, on full satisfaction of the investment agreements, the new investors would account for approximately 26% of the equity capital of the Group.
This new equity capital will assist Seven Energy in the development of its growing portfolio of assets in Nigeria, where the Group is focusing on the development of upstream reserves and resources and gas infrastructure to provide gas to the domestic market for power generation and industrial consumption.
Through its gas processing, distribution and marketing subsidiary, Accugas Limited (“Accugas”), and its recent acquisition of the East Horizon pipeline, the Group has to date invested approximately US$1 billion in south-eastern Nigeria. This reinforces the Group’s position as a leading integrated gas company in Nigeria. The Group aims to capture the growing demand for gas and power as Nigeria’s industrial base grows and the liberalisation of the power sector spurs further investment in generating capacity.
The Group has long-term take-or-pay gas sales agreements in place to sell over 1.4 trillion cubic feet of gas. A 10 year contract to supply 43.5 million cubic feet of gas per day (“MMcfpd”) to Ibom Power; a 20 year contract to supply 131 MMcfpd to the federally-owned power plant at Calabar; and a 20 year contract to supply 25 MMcfpd to a cement plant in the Calabar area, increasing to 50 MMcfpd upon the anticipated expansion of the plant. The two power stations, which will have a combined installed capacity of approximately 750 MW when fully commissioned, will add an additional 20% of capacity to Nigeria’s current operating electricity generation capacity.
In collaboration with its customers and other stakeholders, Seven Energy is working to link its infrastructure together to establish a 300 km gas ring of 24-inch and 18-inch high pressure pipelines in Akwa Ibom and Cross Rivers states with total distribution capacity of 600 MMcfpd, capable of supplying the demand centres of Calabar, Uyo and Ikot Abasi, and giving access to Port Harcourt to the west. In addition, at Ekid, near the ExxonMobil Qua Iboe terminal, the Group owns a gas plant for treating and processing 200 MMcfpd of gas which is currently supplied from the Uquo Field where the Group is the 100% funding partner.
With this significant capacity built into its processing and distribution infrastructure, the Group is well-positioned to provide long-term gas supply for power generation as well as lower-cost fuel to local industries. The Group is currently in active discussions with a number of current, planned and potential off-takers with regards to future gas supply agreements.
The relative lack of investment in gas development for the domestic economy has resulted in most Nigerian industry and power generation relying heavily on imported diesel and fuel oil, which are significantly more expensive than locally-sourced natural gas.
Seven Energy’s Chief Executive Officer, Phillip Ihenacho, said of the equity investment:
“Seven Energy has developed a strong and strategically important position in the rapidly developing gas market in Nigeria. I am very pleased that the Group has gained the support of Temasek, IFC and the IFC ALAC Fund, all highly-respected global investors.
“These investments are a vote of confidence in Nigeria and in Seven Energy’s vision to be the leading supplier of gas in the country.”
Seven Energy International Limited is an independent Nigerian integrated oil and gas development, production and gas distribution company founded in 2004. With the backing of strategic long-term investors and main offices in Lagos and London, the Group has a unique focus on the emerging Nigerian domestic gas market. The Group’s upstream assets include licence interests in the Uquo Field and the Stubb Creek Field (south east Niger Delta), an indirect interest in OMLs 4, 38 and 41 through a Strategic Alliance Agreement with Nigerian Petroleum Development Company (north west Niger Delta) and a licence interest in OPL 905 (Anambra Basin). Its midstream infrastructure assets, focused on south east Niger Delta, include the 200 MMcfpd Uquo Gas Processing Facility and a gas pipeline network of 260 km with distribution capacity of 600 MMcfpd.
Seven Energy is committed to best industry operational and transparency practices.
About Temasek
Incorporated in 1974, Temasek is an investment company based in Singapore. Supported by 11 offices globally, Temasek owns a S$215 billion (US$173 billion) portfolio as at 31 March 2013, with more than 70% of its underlying assets in Asia (including Singapore).
Temasek’s investment themes centre on:
Transforming Economies
Growing Middle Income Populations
Deepening Comparative Advantages
Emerging Champions
Temasek’s portfolio covers a broad spectrum of industries: financial services; transportation, logistics and industrials; telecommunications, media & technology; life sciences, consumer & real estate; energy & resources. Total shareholder return since inception in 1974 has been 16% compounded annually. Temasek has had a corporate credit rating of AAA/Aaa since its inaugural credit rating in 2004, by rating agencies Standard & Poor’s and Moody’s respectively.
For more information on Temasek, please visit www.temasek.com.sg
For the latest Temasek Review 2013, please visit www.temasekreview.com.sg
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, the IFC uses its capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, its investments climbed to an all-time high of nearly US$25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org
About the IFC African, Latin American, and Caribbean Fund
The IFC ALAC Fund is a US$1 billion fund that has commitments from six sovereign and pension investors, as well as IFC. The IFC ALAC Fund was launched in April 2010 and is focused on making equity and equity related investments in Africa, Latin America and the Caribbean.