Africa-Press – Namibia. THE events of the past two years have accelerated mergers and acquisitions trends in Africa, and 2022 is already witnessing increased deals activity. The continent has now positioned itself as a driver of oil and gas deals, with several transformational transactions already announced over the past six months.
In fact, the proposed acquisition of Mobil Producing Nigeria by Seplat Energy in February remains, so far, the biggest acquisition in the industry globally this year. However, and while deal-making is on the rise, acquisition strategies and targets vary from one region to another.
Higher oil prices since 2021 have further unlocked the African mergers and acquisitions market, especially for well-established operators and asset owners. However, companies remain highly cautious in their spending given continued market uncertainty and a focus on shareholder returns.
This translates into consolidation around key producing assets for companies seeking to maximise the value earned from blocks or fields they are already familiar with.
Examples include Vaalco Energy’s acquisition of Sasol Gabon’s participation in Etame Marin, or Kosmos Energy, Tullow Oil and PetroSA’s acquisition of Occidental Petroleum’s interests in the Jubilee and Ten fields offshore Ghana.
All these assets are producing and witnessing fresh drilling campaigns that will boost output this year, making them ideal targets given current market conditions.
In the mature petroleum provinces of west and central Africa, deals are focused on brownfield opportunities. These include both producing fields with strong upside potential, or appraisal and near-producing assets where barrels can be produced and exported in a short time frame with capex.
Several such transactions have occurred since 2020, including small and mid-sized acquisitions by Perenco in Gabon and the DRC, by Panoro Energy in Gabon and Equatorial Guinea, or by Decklar Resources and San Leon Energy in Nigeria. Brownfield assets are also the ones attracting the biggest mergers and acquisitions by far.
At the end of last year, Savannah Energy announced its acquisition of the entire upstream and midstream asset portfolio of ExxonMobil and Petronas in both Chad and Cameroon. The deals were valued at some US$626 million, making them among the biggest in the region.
Earlier this year, Seplat Energy also announced its proposed cash acquisition of Mobil Producing Nigeria for US$1,2 billion (plus up to US$300 million contingent consideration), in what remains so far the biggest deal of the year globally.
Both Savannah Energy and Seplat Energy’s acquisitions are in fact so significant that they constitute Reverse Takeover transactions pursuant to the UK listing rules. While risk appetite for new assets in west and central Africa is relatively low, it is considerably higher in frontier basins in southern Africa.
This is particularly the case in Angola (Namibe and Kwanza Basins), Namibia (Kavango, Walvis Bay, and Orange Basins), and South Africa (Orange Basin), but also in Zimbabwe (Cabora Bassa Basin).
While Angola is one of the oldest producing markets on the continent, substantive reforms since 2017 have successfully brought investors back into the country’s producing and exploration blocks.
In fact, Angola is one of the very few oil producing markets that is supporting mergers and acquisition activity in exploration assets. Such deals are notably driven by Sonangol’s partial divestment process, which has already attracted the interests of Afentra in Block 23 (Kwanza Basin) and of the consortium of Angolan independent Somoil and British independent Sirius Petroleum in Block 27 (Namibe Basin).
Further south, Namibia and South Africa have become exploration hotspots and are both driving significant mergers and acquisitions activity now. This is especially the case within the Orange Basin, where both Shell and TotalEnergies have announced world-class discoveries this year.
In January, Eco (Atlantic) Oil and Gas acquired Azinam in a bid to enter Blocks 3B/4B and Block 2B within the Orange Basin offshore South Africa, and to consolidate its interests in its four existing licences within the Walvis Basin offshore Namibia.
This year will only entrench the rise of established and new independents across the continent, as they continue to top the list of buyers. Southern Africa is steadily imposing itself on the table of many buyers, as the region offers the right mix of producing assets, exploration blocks in frontier basins, and a supportive business environment.
These factors are providing fertile grounds for a new generation of local and international independents set to shape the region’s energy landscape this decade.
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