TEMPLARS has advised Heirsholding Oil and Gas Limited (previously called TNOG Oil and Gas Limited), a related company of the investment company, Heirs Holdings Limited and the conglomerate, Transnational Corporation of Nigeria Plc (“Transcorp”) on its US$800 million acquisition of a 45% participating interest in Nigerian oil mining lease (OML) 17 and associated facilities from joint venture partners Shell, Total and Agip (ENI) and on the multi-tranche US$1.1 billion financing for the acquisition and working capital requirements for the asset.
The transaction is precedent-setting in its use of a multi-tiered debt financing structure, the variety of the makeup of the lending group, and also for being the first divestment in Nigeria by Shell, Total and Agip to feature a deferred purchase-price component.
The multi-tranche debt financing comprised a senior reserves-based lending (RBL) facility, a junior term loan facility and subordinated unsecured notes structured as long-term fixed-return instruments with detachable production-linked units. The senior lenders include ABSA Bank, Afrexim Bank, Africa Finance Corporation, Hybrid Capital & Asset Management, Shell Western Supply & Trading, Standard Chartered Bank, Union Bank of Nigeria Plc and United Capital Plc, while the junior lenders are Shell Trading and Hybrid Capital & Asset Management.
TNOG will step into Shell’s shoes as the sole operator of the OML which has a current production of 27,000 barrels of oil equivalent per day and estimated 2P reserves of 1.2 billion barrels of oil equivalent with an additional 1 billion barrels of oil equivalent resources.
The transaction also involved extensive negotiation of key commercial revenue generating contracts including the crude transportation and handling agreement for the evacuation and storage of crude oil from OML 17, gas sale agreements (for domestic consumption and export) and crude offtake contracts.
The TEMPLARS team on the transaction was led by Yemisi Awonuga (Partner, Energy and Projects) who was assisted by Managing Counsel Modupe Dabiri (Finance and Energy & Projects). Additional support was provided by Chike Obianwu (Partner and Head of Finance Practice Group), and Dipo Komolafe (Head of Tax Practice). Other team members included Senior Associates Bernard Ehigiamusor and Ojonugwa Ichaba and Associates Promise Madubuobu, Benita Ogbodo, Ojuolape Kalesanwo and Uba Emole.
According to TEMPLARS Managing Partner Oghogho Akpata: “TEMPLARS’ role on this transaction is a further testament to our consistent and preeminent position as an advisor of choice to leading Nigerian and international corporations, asset owners, developers and financiers on the largest and most complex oil and gas asset acquisitions, project developments and financings and other natural-resource commercialization transactions in Nigeria. We are pleased to have played a central role in the successful completion of this noteworthy transaction during a pandemic.”
Commenting further, lead transaction Partner Yemisi Awonuga added: ‘TNOG’s unparalleled leadership, technical expertise as well as the strategic partnerships formed with leading oil and gas participants across the value chain bolsters TNOG’s capability to perform its operatorship role and achieve near-term objectives of rapidly unlocking value in the asset. We are proud to be part of the TNOG narrative.’