Nigeria: TotalEnergies Sells Its Interest in SPDC JV, Retaining Interest in Gas Supply to Nigeria LNG

Rhea-AI Summary

TotalEnergies (TTE) has announced the sale of its 10% interest in the SPDC JV licenses in Nigeria to Chappal Energies. The transaction, valued at $860 million, involves the sale of TotalEnergies EP Nigeria's participating interest in 15 oil-producing licenses and the transfer of its 10% interest in 3 gas-producing licenses. However, TotalEnergies will retain full economic interest in the gas-producing licenses, which currently account for 40% of Nigeria LNG gas supply.

The deal aligns with TotalEnergies' strategy to focus on offshore oil and gas assets in Nigeria. The company aims to concentrate its onshore presence on the integrated gas value chain, ensuring continuity of feed gas supply to Nigeria LNG. The transaction is subject to customary conditions, including regulatory approvals.

Positive

• Sale of 10% interest in SPDC JV licenses for $860 million
• Retention of full economic interest in gas-producing licenses supplying 40% of Nigeria LNG gas
• Strategic focus on offshore oil and gas assets in Nigeria
• Streamlining of onshore operations to focus on integrated gas value chain

Negative

• Divestment of oil-producing assets with approximate production of 14,000 barrels equivalent per day in 2023

Insights

Financial Analyst

TotalEnergies' decision to sell its 10% interest in the SPDC JV highlights a strategic shift in its portfolio management. With the sale price of USD 860 million, TotalEnergies can reinvest these funds into its core offshore oil and gas assets. This move aligns with a broader industry trend where companies are streamlining their portfolios to focus on more profitable and strategic segments. For retail investors, this sale may indicate a potential reduction in operational risks associated with onshore production in Nigeria, which has been historically marred by disruptions.

Interestingly, despite divesting from the oil-producing licenses, TotalEnergies retains full economic interest in the gas-producing licenses. This ensures that their key role in the gas supply to Nigeria LNG remains intact. This strategic choice underscores the importance of gas in the company's future growth plans, potentially offering more stable and predictable returns compared to the volatility typically associated with oil production.

From a financial perspective, this deal could enhance TotalEnergies' balance sheet, reducing debt or funding new projects without diluting shareholder equity. Investors should monitor upcoming earnings reports to see how these funds will be allocated and the impact on overall financial health.

Oil and Gas Industry Expert

The sale of the 10% interest in the SPDC JV by TotalEnergies reflects a strategic realignment that many oil and gas companies are pursuing. By focusing on offshore and gas assets, TotalEnergies aims to mitigate geopolitical and operational risks associated with onshore oil production in Nigeria, which has faced challenges such as militant attacks and oil theft. Retaining economic interest in the gas licenses ensures that TotalEnergies continues to benefit from the lucrative and growing global LNG market.

This move also indicates a subtle yet significant shift towards cleaner energy sources, as natural gas emits less CO2 compared to oil. This aligns with global trends and regulatory pressures to reduce carbon footprints. For investors, this could translate into a more sustainable long-term growth strategy, potentially making TotalEnergies a more attractive investment for those looking for lower-risk, environmentally conscious energy investments.

The impact on the Nigerian market could be noteworthy as well. With Chappal Energies acquiring this stake, it will be interesting to see how the new operator manages these assets and whether this leads to increased production efficiency or changes in local employment dynamics.

PARIS--(BUSINESS WIRE)-- Regulatory News:

TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) announces that its subsidiary TotalEnergies EP Nigeria signed a sale and purchase agreement (SPA) with Chappal Energies for the sale of its 10% interest in the SPDC JV licenses in Nigeria.

SPDC JV is an unincorporated joint venture between Nigerian National Petroleum Corporation Ltd (55%), Shell Petroleum Development Company of Nigeria (30%, operator), TotalEnergies EP Nigeria (10%) and NAOC (5%), which holds 18 licenses in the Niger Delta.

Under the SPA signed with Chappal Energies:

• TotalEnergies EP Nigeria will sell to Chappal Energies its 10% participating interest and all its rights and obligations in 15 licenses of SPDC JV, which are producing mainly oil. Production from these licenses represented approximately 14,000 barrels equivalent per day in Company share in 2023;
• TotalEnergies EP Nigeria will also transfer to Chappal Energies its 10% participating interest in the 3 other licenses of SPDC JV which are producing mainly gas (OML 23, OML 28 and OML 77), while retaining full economic interest in these licenses which currently account for 40% of Nigeria LNG gas supply.

The transaction was concluded for a firm consideration of USD 860 million. Closing is subject to customary conditions, including regulatory approvals.

“TotalEnergies continues to actively manage its portfolio in Nigeria, in line with its strategy to focus on its oil offshore and gas assets. After the launch of the Ubeta gas development on OML58 license last month, this divestment of our interest in SPDC JV licenses allows us to focus our onshore Nigeria presence solely on the integrated gas value chain and is designed to ensure the continuity of feed gas supply to Nigeria LNG in the future”, said Nicolas Terraz, President Exploration & Production of TotalEnergies.

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About TotalEnergies in Nigeria
TotalEnergies has been present in Nigeria for more than 60 years and employs today more than 1,800 people across different business segments. Nigeria is one of the main contributing countries to TotalEnergies’ hydrocarbon production with 219,000 boe/d produced in 2023. TotalEnergies also operates an extensive distribution network which includes about 540 service stations in the country. In all its operations, TotalEnergies is particularly attentive to the socio-economic development of the country and is committed to working with local communities.

About TotalEnergies
TotalEnergies is a global integrated energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.

@TotalEnergies TotalEnergies TotalEnergies TotalEnergies

Cautionary Note
The terms “TotalEnergies”, “TotalEnergies company” or “Company” in this document are used to designate TotalEnergies SE and the consolidated entities that are directly or indirectly controlled by TotalEnergies SE. Likewise, the words “we”, “us” and “our” may also be used to refer to these entities or to their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate legal entities. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Information concerning risk factors, that may affect TotalEnergies’ financial results or activities is provided in the most recent Registration Document, the French-language version of which is filed by TotalEnergies SE with the French securities regulator Autorité des Marchés Financiers (AMF), and in the Form 20-F filed with the United States Securities and Exchange Commission (SEC).

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TotalEnergies

Corporate Media Relations: +33 (0)1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR

Investor Relations: +33 (0)1 47 44 46 46 l ir@totalenergies.com

Source: TotalEnergies SE

FAQ

What assets is TotalEnergies (TTE) selling in Nigeria?

TotalEnergies is selling its 10% interest in 15 oil-producing licenses of the SPDC JV in Nigeria to Chappal Energies, while transferring its 10% interest in 3 gas-producing licenses but retaining full economic interest in them.

How much is TotalEnergies (TTE) receiving for the sale of its Nigerian assets?

TotalEnergies is receiving $860 million for the sale of its 10% interest in the SPDC JV licenses in Nigeria to Chappal Energies.

What is TotalEnergies' (TTE) strategy for its Nigerian operations after this sale?

TotalEnergies is focusing on its offshore oil and gas assets in Nigeria and concentrating its onshore presence on the integrated gas value chain, particularly to ensure continuity of feed gas supply to Nigeria LNG.

How much of Nigeria LNG's gas supply comes from the licenses TotalEnergies (TTE) is retaining economic interest in?

The gas-producing licenses that TotalEnergies is retaining full economic interest in currently account for 40% of Nigeria LNG's gas supply.