ExxonMobil Corporation’s (XOM) long-awaited asset sale deal with Seplat Energy in Nigeria is nearing completion. President Bola Ahmed Tinubu announced on Tuesday that the deal will receive ministerial approval within days, following regulatory clearance from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This development signifies a significant step forward for both companies and the Nigerian oil sector.
President Tinubu emphasized his administration’s commitment to a free market, allowing for open investment opportunities while ensuring regulatory integrity. He highlighted that this principle guides all divestment transactions in the country’s upstream petroleum sector, underscoring the government’s dedication to positively transforming Nigeria’s economic fortunes.
The $1.28 billion deal, initially announced in 2022, has faced hurdles throughout its approval process. The Nigerian National Petroleum Company (NNPC) had previously contested Exxon’s sale of the assets to Seplat, citing a purported first right of refusal. These regulatory challenges, coupled with legal proceedings initiated by NNPC, delayed the deal’s finalization.
However, a breakthrough emerged in June 2024 when Seplat Energy confirmed the termination of the court proceedings initiated by NNPC, clearing a major obstacle for the transaction. This development paved the way for the impending ministerial approval.
Beyond the asset sale, ExxonMobil has shown a strong commitment to Nigeria’s energy future. Last month, the company announced a proposed $10 billion investment in the country’s deep-water oil operations. This investment plan includes a substantial commitment to maintenance operations, with ExxonMobil allocating $1 billion annually for this purpose. Additionally, the company plans to invest an additional $1.5 billion to boost production by 50,000 barrels per day over the coming years.
Investors can gain exposure to ExxonMobil (XOM) through various ETFs, including the EA Series Trust Strive U.S. Energy ETF (DRLL) and the Westwood Salient Enhanced Energy Income ETF (WEEI).
As news of the impending approval broke, XOM shares experienced a 2.15% increase, closing at $119.72 on Tuesday. The positive sentiment surrounding the deal reflects investor confidence in ExxonMobil’s continued presence in Nigeria and the potential for further growth in the country’s oil and gas sector.