Shell has disclosed that the company received the divestment approval from Nigeria's Minister of Petroleum (Oil) Sen. Heineken Lokpobiri for the sale of $2.4 billion in onshore and shallow-water assets to Renaissance Africa Energy, a consortium of five companies comprising four exploration and production companies based in Nigeria: ND Western, Aradel Energy, First E&P, Waltersmith, and an international energy group Petrolin.

According to the acquisition terms, the consideration payable to Shell as part of the transaction is US$1.3bln. The buyer will make additional cash payments to Shell of up to US$1.1bln, primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid at the completion of the transaction.

Shell further noted that the amounts above will be adjusted to reflect any shareholder distributions, above US$200 million, made before completion. Other contingent payments, including those related to gas supply to NLNG, may become payable depending on business performance and fluctuation of product prices.

“Completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions and will preserve SPDC’s operating capabilities for the benefit of the joint venture. The transaction has been designed to preserve the full range of SPDC’s operating capabilities following the change of ownership. “

“This includes the technical expertise, management systems, and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV)*. SPDC’s staff will continue to be employed by the company as it transitions to new ownership.” Shell stated 

On the entire coverage of onshore assets involved in the above transaction, SPDC JV holds 15 oil mining leases for petroleum operations onshore and 3 oil mining leases for petroleum operations in shallow water in Nigeria. All assets are operated by SPDC and as of December 31, 2022, SEC proved reserves that are the subject of this transaction were approximately 458 MMboe.

Following completion, Shell said that it will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG. 

‘Shell is providing additional financing of up to US$1.3bln over future years to fund SPDC’s share of the development of the SPDC JV’s gas resources to supply feed gas to NLNG, and its share of specific decommissioning and restoration costs. This additional financing will only be drawn down when these costs are approved and incurred by the SPDC JV.” Shell Emphasized.

The company further emphasized that the net book value of the entity subject to this transaction is approximately US$2.8bln as of December 31, 2023. Under the agreed deal structure, economic