Seplat Energy Agrees US$281.6 Million Sale of 10% NNPCL-SEPNU JV Interest

Seplat Energy PLC has signed a legally binding Heads of Agreement to sell a 10% working interest in the NNPCL-SEPNU joint venture to Nigerian National Petroleum Company Limited, or NNPC Limited.

The headline transaction value is approximately US$281.6 million. If the deal completes, Seplat intends to return around US$140 million to shareholders through a transaction dividend while using part of the proceeds to reduce debt.

The trade-off is equally clear. Seplat will retain a smaller economic interest in an important producing asset, reducing its production target for 2030 and its reported reserves. However, it will remain the operator and retain a 30% working interest, allowing it to stay involved in the joint venture's future development.

Seplat Energy's proposed transaction at a glance

Key term	Detail
Interest being sold	10% working interest
Headline transaction value	Approximately US$281.6 million
Buyer	NNPC Limited
SEPNU interest after completion	30%
NNPC Limited interest after completion	70%
Transaction dividend	Approximately US$140 million
Dividend per share	23.3 US cents
Expected completion	Second half of 2026
Effective date	1 April 2026

A working interest is the percentage of an oil and gas asset's production, costs and economic benefits attributable to a partner.

NNPC Limited currently owns 60% of the joint venture, while Seplat Energy Producing Nigeria Unlimited, or SEPNU, holds the remaining 40%. Following completion, NNPC Limited's interest will rise to 70% and SEPNU's will fall to 30%.

Importantly, SEPNU will continue as operator. Seplat will also continue to own 100% of SEPNU's share capital, so this is an asset-level disposal rather than the sale of the subsidiary itself.

The commercial terms represent approximately 25% of the gross transaction consideration paid, plus any contingent consideration payable, for Seplat Energy Offshore Limited's acquisition of SEPNU.

The full terms are available in the original company announcement.

Shareholders are in line for a transaction dividend

Seplat intends to divide the proceeds broadly between reducing debt and enhancing shareholder returns.

Subject to completion, approximately US$140 million will be distributed as a cash dividend. That works out at 23.3 US cents per share and will be paid in addition to the dividend supported by the underlying business's performance.

That distinction matters. The proposed payment is a transaction dividend funded by the disposal, rather than a new permanent level of recurring dividend.

The payment is not guaranteed yet because the transaction remains subject to regulatory approvals and other customary conditions. Seplat expects completion during the second half of 2026.

Debt reduction remains part of the plan

Seplat has targeted repayment of up to US$300 million of gross debt during 2026.

Of that amount, US$200 million under its Advanced Payment Facility was repaid in the second quarter. The remaining US$100 million is due to be repaid after completion of the transaction.

This means some of the planned debt reduction has already happened, while the final US$100 million remains linked to the disposal completing.

Lower debt can reduce financing costs and financial risk, while potentially freeing more future cash flow for shareholders. However, the announcement does not disclose the interest saving expected from the repayments.

What happens to production guidance?

The deal will not immediately change the production targets for the NNPCL-SEPNU joint venture itself. Those targets remain supported by production performance during the year to date.

It will, however, reduce the share of production attributable to Seplat because the company's working interest is becoming smaller.

SEPNU represents approximately 80 thousand barrels of oil equivalent per day, or kboepd, within the midpoint of Seplat's 2026 group guidance range of 135-155 kboepd. Assuming the transaction's 1 April 2026 effective date, that contribution falls to approximately 65 kboepd.

Seplat will update its formal group production guidance when the transaction completes.

Investors should therefore distinguish between operational performance at the assets and the production recognised for Seplat's own working interest. The fields may continue producing at the targeted level even though a smaller proportion belongs economically to Seplat.

The 2030 target falls to 170 kboepd

Subject to completion, Seplat's 2030 production target will fall from 200 kboepd to 170 kboepd on a net working-interest basis.

That is the most obvious strategic cost of the transaction. Seplat is exchanging some long-term production exposure for cash today, alongside lower capital expenditure requirements and a smaller share of future operating cash flow from the assets.

Management expects the sale proceeds and reduced capital expenditure associated with the divested interest to largely offset the net cash-flow impact of owning a smaller interest through to 2030.

The word "largely" is worth noting. Seplat has not claimed that the disposal will completely offset the lost cash flow, and the detailed assumptions behind that assessment were not disclosed in the announcement.

Reserves will decline by approximately 13%

The transaction would reduce Seplat's group 2P reserves by approximately 13% to 872.9 million barrels of oil equivalent.

2P reserves are the total of proved and probable reserves. They represent volumes considered commercially recoverable based on the available technical and economic information.

The lower reserve figure is a mechanical consequence of selling part of Seplat's economic interest. It does not indicate that the physical resources have disappeared or that asset performance has deteriorated.

A further group reserves update will be provided following completion.

What looks positive for investors?

The proposed disposal has several potentially attractive features:

• A headline value of approximately US$281.6 million converts part of Seplat's asset base into cash.
• Approximately US$140 million is intended for a transaction dividend.
• The planned dividend is additional to distributions from underlying business performance.
• A further US$100 million of debt is due to be repaid after completion.
• SEPNU will remain operator, preserving Seplat's operational involvement.
• Lower ownership should also mean a reduced share of future capital expenditure.
• Seplat remains committed to distributing 40-50% of free cash flow during the 2026-2030 cycle.
• Management says it remains firmly on track to return at least US$1 billion cumulatively to shareholders.

The transaction therefore supports near-term distributions and balance-sheet strengthening without removing Seplat from the joint venture.

What are the main risks and drawbacks?

The deal also comes with meaningful negatives:

• The 2030 production target falls by 30 kboepd.
• Group 2P reserves are expected to decline by approximately 13%.
• Seplat will receive a smaller share of future production and cash flow from the assets.
• Completion still requires regulatory approvals and customary conditions.
• The US$140 million transaction dividend remains conditional on completion.
• Updated 2026 production guidance will not be available until the deal completes.

There is also execution risk around timing. Completion is expected in the second half of 2026, but a more precise date was not disclosed.

A deliberate exchange of future volume for cash today

This announcement is best understood as a capital-allocation decision rather than an exit from the NNPCL-SEPNU joint venture.

Seplat is giving up part of its future production, reserves and cash-flow exposure in exchange for approximately US$281.6 million, lower capital requirements, further debt reduction and a sizeable shareholder distribution.

Retaining operatorship and a 30% working interest means Seplat remains exposed to the joint venture's potential growth. The key question for investors is whether the transaction value, reduced spending obligations and immediate cash returns adequately compensate for the lower long-term production and reserve base.

For now, the regulatory process is the next major milestone. The dividend, final debt repayment and revised group guidance all depend on the transaction reaching completion.