Afren plc announces that First Hydrocarbon Nigeria Company Limited (“FHN”) has been established to be a majority Nigerian owned oil and gas company in the indigenous Nigerian Exploration & Production (“E&P”) sector.
Strategic rationale
In direct response to the Nigerian government’s objective to increase the level of local participation in the oil and gas sector and in line with the Company’s strategy, Afren has established FHN with the support of two leading Nigerian financial institutions: First City Monument Bank Plc (“FCMB") and Guaranty Trust Bank Plc (“GTBank”). Afren has demonstrated its long-term commitment to working in partnership with indigenous companies and empowering local management in Nigeria; Afren also has a strong track record of working with Nigerian contractors and financial institutions. FHN has been created to build on - and extend - this platform. It will be fully capitalised at the time of consummating new acquisitions.
FHN will fulfil the Nigerian government’s criteria for indigenous operators, and will be used as a vehicle to acquire substantial oil and gas assets in Nigeria, including stakes in assets currently under negotiation, assets that may become available that are currently held by international independents and by the joint ventures between the Nigerian government and International Oil Companies, and assets that may be divested in connection with indigenous licensing rounds. FHN will also investigate opportunities to acquire the assets of other Nigerian indigenous companies, as appropriate.
Over time, FHN will be owned by a wider Nigerian stakeholder base, ensuring diversity of ownership and a reflection of Nigeria’s national character. Subject to market conditions, it is the intention that FHN will seek a listing on the Nigerian Stock Exchange in due course. FHN has been assisted in this task by FCMB and GTBank as financial advisors in Nigeria and Morgan Stanley as international advisor, Deloitte LLP as tax and audit advisor, and White & Case LLP as international legal advisor.
Background
Afren was founded in late 2004 with the vision to become the premier pan-African independent exploration and production company. The Company has pursued a differentiated strategy based on partnerships with indigenous companies, African National Oil Companies and Governments. The Company has a strong African representation in its board of directors and amongst its management and shareholders. Afren is also committed to working towards a solution to monetise the vast untapped gas reserves in the Gulf of Guinea, as evidenced by its cooperation with EdF, E.ON Ruhrgas and Gasol plc. Over this period, the Company has acquired stakes in 15 assets across 6 African countries, and currently has production of circa 26,000 boepd and 2P recoverable reserves from existing projects of 86 mmboe, with net unrisked resources from its exploration portfolio in excess of 500 mmboe.
Afren has established a strong presence and track record in sub-Saharan Africa’s largest resource base, Nigeria, and has demonstrated its long-term commitment to working in partnership with indigenous companies and fully capitalising on local management expertise. More than 70% of the Company’s existing reserves and production originates from Nigeria. In early 2009, Afren announced the successful appraisal of the Ebok development (in partnership with Oriental Energy Resources, Nigeria National Petroleum Corporation and Exxon Mobil), which is set to deliver an additional 35,000 barrels of oil per day by the end of 2010. FHN has been established to capitalise on the Company’s existing platform and to actualise the Company’s vision of achieving broader African ownership in the upstream sector.
Governance
The initial board of directors will comprise of Egbert Imomoh, (Chairman, Afren), Alhaji Magaji Muhammad Inuwa, Chief (Dr) Oladele Fajemirokun, Dr Jonathan Long (Chairman of FCMB), Constantine Ogunbiyi (Director, Afren), Ethelbert J.L. Cooper (Co-Founder of Afren), a nominee from GTBank’s board and Osman Shahenshah (Chief Executive, Afren).
Egbert Imomoh, Chairman of Afren, commented
“Afren has established a strong track record of working with indigenous companies in Nigeria, in line with the Company’s strategy since inception. I am very proud to be leading the establishment of First Hydrocarbon Nigeria Limited, as a majority Nigerian owned oil and gas champion in the indigenous Nigerian E&P space. We strongly believe the indigenous E&P sector has the potential to become a major force within the Nigerian upstream arena and the establishment of FHN is a demonstration of our commitment to this objective.”
Tayo Adenirokun, Managing Director of GTBank , commented
”GTBank has lent strong support to Afren in Nigeria, since its participation in the debt facility to finance the Company’s flagship Okoro project in Nigeria. We are delighted to be alongside Afren, at the forefront in helping to fulfil the Government’s objective of growing the indigenous participation in the Nigerian upstream sector.”
Dr Jonathan Long, Chairman of FCMB, commented
”We welcome and support this initiative to create an indigenous Nigerian E&P champion. Afren has worked extensively with Nigerian communities, partners and contractors since inception, and we look forward to helping to encourage a wider Nigerian ownership of prized Nigerian oil and gas assets.”
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