Market Report: Samuel Terry Asset Management Launches Offer to Acquire FAR’s Shares in Senegal

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Learn more about Gladius Commodities at www.gladiuscommodities.com.

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SENEGAL

Samuel Terry Asset Management has launched a takeover offer for the west Africa-focused oil and gas company FAR. The offer comprises the acquisition of FAR’s shares at 45c cash per share. The bidder, who already owns a relevant interest in 4.9% of FAR’s shares, said the offer price represented a premium of 23.3% relative to the closing price of FAR Shares on ASX on the Last Practicable Date (being 28 January 2022) of A$0.365 per share. According to the bidder, the size of the Fund is approximately $420 million. If acceptances are received for all shares on issue as of the date (other than those shares which the bidder already owns), the aggregate amount of cash consideration that bidder would be required to pay would be $42,705,341.10, plus all associated transaction costs.

Australia-based FAR said “The proposed offer is not yet open and will not close until mid-March at the earliest and accordingly there is no need for shareholders to take any action at this time. FAR will consider the offer and would advise shareholders of its recommendation in due course. The offer is conditional, including obtaining a minimum of 50.1% acceptance level. Accordingly, there is no certainty that the intended takeover bid will be complete. FAR has appointed Baker McKenzie as legal advisors concerning the bid”. FAR, which after the sale of its Senegal interests, decided to focus on exploration offshore Gambia. However, its Bambo-1ST1 well offshore The Gambia had not encountered live oil columns and would be plugged and abandoned.

NIGERIA

​​​​​The Group Managing Director of the Nigerian National Petroleum Company Limited (NNPC), Alhaji Mele Kyari, was awarded an honorary Doctorate Degree by the Federal University of Technology, (FUT) Minna, for his contribution to national development. Kyari expressed optimism with the various initiatives implemented by the NNPC in the oil and gas industry and said Nigeria would be out of energy poverty in three to four years. Kyari spoke at his lecture titled ‘Energy transition and energy accessibility – The new paradigm’ at the 30th convocation ceremony of FUT, Minna, highlighting a need to leverage technology and innovation to support energy sufficiency, job creation and economic growth.

The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva stated that the ministry’s priority in 2022 is to complete ongoing projects rather than initiating new ones, stating that the ministry has delivered on all the priority project areas assigned by President of Nigeria, H.E. Muhammadu Buhari. Minister Sylva also expressed that the country would continue to observe the subsidy regime until the refineries are working. He added that the government has confirmed that the subsidy of premium motor spirits will continue for the next 18 months.

GLOBAL

On February 3, oil prices ticked higher again with West Texas Intermediate (WTI) and global crude benchmark Brent crude markets both clearing $90/barrel on news of supply disruptions in Libya and Nigeria. The U.S. WTI crude futures hit an intraday high of $90.35 before settling at $90.27, up 2.3%, while Brent crude futures rose to as high as $91.18 per barrel before settling at $91.11, up at $1.64 or 1.8%. The U.S. Energy Information Administration’s (EIA) weekly report for February 2 showed that crude stockpiles fell by 1 million barrels in the week ending January 28, indicating strong demand.

The tight global supply situation, coupled with geopolitical tensions in Eastern Europe and the Middle East, have boosted oil prices to seven-year highs so far in 2022. Despite the feverish pace of the oil rally and forecasts for $100 a barrel next, some analysts think the market could cool after gaining virtually without any stopover a seven-week run-up that has added 26% to prices. An oil production and storage vessel exploded off the coast of Nigeria early on Thursday with 10 crew members on board, with no word yet on casualties or the amount of crude that might have spilt into the waters.

In Libya, the National Oil Corporation stated that it had halted exports from six ports — namely Brega, Zueitina, Ras Lanuf, Zawiya, Mellitah and Sidra — due to bad weather. No updates were immediately available on when crude shipments would resume. Stories of the disruptions added fervor to a market already hyped on the notion that the world will run short over the next few months with the approach of the peak summer demand period. Meanwhile, OPEC+ approved another 400,000 barrels per day in production that will begin in March. OPEC+ also announced similar hikes month after month but, data shows OPEC members consistently adding fewer net exports — suggesting production constraints at oilfields under-invested during the two-year-long coronavirus pandemic.

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