Further Investment in Seven Energy
Press Release
10 June 2011
PETROFAC LIMITED
FURTHER INVESTMENT IN SEVEN ENERGY
Petrofac, the international oil & gas facilities service provider, has agreed to invest up to US$75 million, funded from cash resources, into Seven Energy International Limited ('Seven Energy'), subject to certain conditions being met. The additional investment will take Petrofac's interest to 24.5% on a fully diluted basis.
Seven Energy is a leading Nigerian production and development company. Its management team, led by chairman, Philip Ihenacho and chief executive, Scott Aitken, has a long and successful track record of developing assets with low geologic risk profiles in the West African hydrocarbon industry. As at 31 December 2009, Seven Energy had gross assets of approximately US$528 million and reported a loss after tax for the year ended 31 December 2009 of approximately US$52 million.
In November 2010, Petrofac entered into a strategic alliance with Seven Energy and invested US$100 million, to acquire a 15.0% interest (12.6% on a fully diluted basis). This additional investment will assist Seven Energy with the further development of its existing and potential opportunities.
Since the initial investment, Petrofac has provided experienced personnel to assist with the delivery of Seven Energy's key existing projects, and continues to provide active engineering and procurement support.
Gordon East, managing director, Production Solutions, commented: "We have worked closely with Seven Energy's team since we made our initial investment. This has increased our confidence in the value of their existing and potential portfolio of oil & gas assets. As the relationship with Seven Energy progresses, we will continue to provide capability from across the Petrofac group to support their development activities, which in turn will drive value for the shareholders of both Petrofac and Seven Energy.
"At the same time, we will continue to build our knowledge of local operations as we focus on building a local presence for Petrofac in Nigeria. We are making good progress and the knowledge and exposure we have gained during the course of the last six months has resulted in the identification of additional potential prospects for the group."
Phillip Ihenacho, chairman of Seven Energy, added: "The Petrofac alliance has been important in building additional capacity within Seven Energy, and in helping us to achieve our objectives. Since the recent elections in Nigeria there is renewed business confidence which is creating a very positive operating environment. Petrofac's additional investment demonstrates their belief in the potential for Seven Energy as a firm, and in the opportunities for developing our business model in Nigeria."
Interests in Seven Energy expressed on a fully diluted basis assume the full conversion of all convertible securities and exercise of all outstanding warrants and options.
Ends
For further information contact:
Tulchan Communications Group Ltd +44 (0) 20 7353 4200
Martin Robinson
David Allchurch
petrofac@tulchangroup.com
Notes to Editors
Background to the Alliance
Petrofac has been examining how to establish an ongoing local presence in Nigeria for a number of years. Nigeria has very substantial undeveloped hydrocarbon reserves combined with a large population whose growing demands for energy are not currently being met. Nigeria is forecast to be one of the fastest growing emerging countries, and is planning for significant growth in the energy and power sectors. It is currently the tenth largest oil producer in the world with proven oil & gas reserves estimated at 37 billion barrels and 185 trillion cubic feet respectively. However, significant new infrastructure is needed to meet Nigerian Government targets. It aims to increase power generation capacity to 10,000 Megawatts in 2011, from its current capacity of 8,000, MW and estimates that the gas infrastructure alone will cost around US$30 billion, not including upstream development costs.
Seven Energy's focus on upstream gas supply projects proximate to demand centres is a key differentiator compared to other independent E&P companies operating in Nigeria, and the company is filling a gap in the Nigerian market for an indigenous gas player. Nigeria is one of the few regions in the world where independent development and production companies can gain access to significant onshore fields and prospects, and there are high barriers to entry.
Seven Energy has assembled an attractive portfolio of oil & gas assets in selected areas close to significant centres of demand. Through its investment and alliance agreement, Petrofac believes it can help Seven Energy by assisting them on the ground with the build out of the infrastructure necessary to fully exploit the value of these assets.
For additional information, please refer to Seven Energy's website at www.sevenenergy.com.
Petrofac
Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry, with a diverse customer portfolio including many of the world's leading integrated, independent and national oil & gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC) and is a constituent of the FTSE 100 Index.
The group delivers services through seven business units: Engineering & Construction, Engineering & Construction Ventures, Engineering Services, Offshore Engineering & Operations, Training Services, Production Solutions and Energy Developments.
Through these businesses Petrofac designs and builds oil & gas facilities; operates, maintains and manages facilities and trains personnel; enhances production; and, where it can leverage its service capability, develops and co-invests in upstream and infrastructure projects. Petrofac's range of services meets its customers' needs across the full life cycle of oil & gas assets.
With around 14,000 employees, Petrofac operates out of six strategically located operational centres, in Aberdeen, Sharjah, Woking, Chennai, Mumbai and Abu Dhabi and a further 20 offices worldwide. The predominant focus of Petrofac's business is on the UK Continental Shelf (UKCS), the Middle East and Africa, the Commonwealth of Independent States (CIS) and the Asia Pacific region.
For additional information, please refer to the Petrofac website at www.petrofac.com.
This information is provided by RNS
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