MERGERS AND ACQUISITION AS TOOLS IN MARGINAL FIELD DEVELOPMENT IN NIGERIA

    PC Obutte^[1] and Jerome Okoro^[2]

Abstract

The Federal Government of Nigeria in the 1990s, took steps to develop Nigerian marginal fields by mandating transfer of the fields by the IOCs to other companies interested in acquiring them. The new policy saw the emergence of several indigenous players in the Nigerian upstream petroleum industry as operators of the marginal fields. While this might have actualized the indigenization policy motive of the Government whereby the fields were awarded exclusively to the indigenous oil companies in order to incorporate them in the upstream petroleum scene, the more significant objectives of developing the fields and boosting production and reserve base through them have been seldom achieved. Shortly after the first licensing round of the marginal fields, the limitations of most of the indigenous farmees of these fields became glaring. Most of the existing literature on the problems of developing the marginal fields focus on the specific problems of the development agenda such as funding and technological needs, while glossing over issues of the corporate structures of the marginal field companies and its impact on the development of the fields. This paper aims at discussing mergers and acquisition, a prominent aspect of corporate restructuring, and its prospects for the marginal field companies. It finds that in spite of the rigorous procedural burden consisting mainly of consents and approvals from multiple regulatory organs, mergers and acquisition are viable tools for rapid development of the marginal fields.

Key words: merger, acquisition, marginal field, development, regulation.

 

1.0 Introduction

An oil and gas Marginal field is simply defined in the Petroleum Act as “such field as the President may, from time to time, identify as a marginal field.”^[3] It is more elaborately described in the Guidelines for Farm Out and Operations of Marginal Fields, 2013^[4] as, “any field that has (oil and gas) reserves booked and reported annually to the Department of Petroleum Resources and has remained un-produced for a period of over 10 years”.

 Following amendment of the Petroleum Act in 1996 to provide for farm-out of the marginal fields, the Federal Government of Nigeria in 2003 awarded 24 of the fields to 31 indigenous companies as part of the marginal fields licensing round, while additional five were awarded after 2003. Data from the Department of Petroleum Resources (DPR) reveals that there are currently 30 awarded marginal fields on the whole. Out of these 30, only 12 have made the list of producing fields, while 18 are not yet producing.^[5]

The common observation is that most of the operators have not fared well with their fields, as the vast majority of these fields remain unattended, while operations on marginal field in Nigeria generally remain at low ebb. Hence, more than a decade since the marginal field program commenced, the contribution of marginal field operators to Nigeria’s crude oil production remains insignificant as marginal fields account for only 2.1 per cent of the country’s crude output with a total daily production of about 60,000 barrels of oil and 100 million standard cubic feet of gas.^[6]

In apparent recognition of the lack of requisite upstream oil and gas operating experience by many of the new operators, and their need for financial and technical partnership to commence their field development work, the Guidelines for the marginal field licensing rounds made permissive provisions for financial and technical partnerships between the indigenous companies and foreign firms, with 40% upper stake-holding limit for the foreign partners. The Guidelines also allowed joint bidding for the fields. But these measures have largely failed to salvage the situation.

In the midst of this slow pace of the marginal fields, the government proposed to undertake a second round offer of 31 marginal fields. At the moment, the problems of developing the already awarded marginal fields remain in place while this second bid round is proposed. However, the bid-round which was scheduled to take place in 2013 is suspended indefinitely. The consideration of the mergers option in this paper is for both the existing marginal field operators, and the prospective bidders for the fields in subsequent licensing rounds. For the current farmees of the fields, the mergers option would be instrumental to bringing the non-producing fields on-stream and the general turnaround of their operations. For the prospective companies, some of them can come together in mergers to gain greater advantage at subsequent marginal field bid-rounds.

A sound prospect of merger for Nigerian marginal field companies was indicated in the merger between Platform Petroleum Limited, and Shebah Petroleum Development Company Limited in 2009 which gave birth to Seplat Petroleum Development Company. Prior to that, Platform Petroleum Limited founded in 2001 was awarded the sole operating right in Egbaoma marginal field (OML 34) in the 2003 licensing round. This field, located onshore in Delta state, was one of Shell/NNPC JV abandoned assets. Several landmark achievements by SEPLAT followed the merger. SEPLAT became the first Nigerian company to hit a production capacity of 70,000 barrels per day, which was more than the combined production capacity of all the marginal fields. The company also executed a Sales and Purchase Agreement, SPA, with Shell, Total, and Eni for the acquisition of their combined 45 percent interest in Oil Mining Lease, OML 04, 38, and 41, three blocks in onshore western Niger Delta covering about 2,650 sq. Km, with 30 wells and a production capacity of approximately 50,000 bpd. The existing Asuokpu/Umutu field is at the eastern end of OML 38. NNPC online data of 2014 discloses that its gross oil and gas production by August 2015 was 54,751 bbls and 623,434 mscf respectively.^[7]

The formation of SEPLAT and its acquisition of OMLs 4, 38 and 41 coupled with several divestments of some of the IOCs from their minor oil concerns following plummeting oil price encouraged other Nigerian companies to form consortia to position themselves financially and technically for acquisition of bigger acreages being relinquished by the IOCs. In this trend for instance, the Aiteo-led consortium acquired OML 29 along with the 60-mile Nembe Creek trunk line sold by Shell and its partners in a $2.562 billion deal.^[8]

 

2.0 Theoretical Framework

Pradeep Gupta in his article, referred to an earlier work of Friedrich Trautwein where the latter summarized the 7 major theories of mergers and acquisition.^[9] Gupta made a tabular analysis of the theories as follows:

Merger as a rational choice	Merger benefits bidder’s shareholders	Net gains through Synergies	Efficiency Theory
		Wealth Transfer from Target’s customers	Monopoly Theory
		Wealth Transfer from Target’s shareholders	Raider Theory
		Net gains through private information	Valuation Theory
	Merger benefits bidder’s managers		Empire-building Theory
Merger as a process outcome			Process Theory
Merger as a macroeconomic phenomenon			Disturbance theory

Source: Risberg, A. 2006. Mergers and Acquisitions: A Critical Reader, 1st Ed. New York: Routledge.

As illustrated in the table above, Trautwein classified the first four theories namely, efficiency, monopoly, raider and valuation, as beneficial to the shareholders of the acquiring company. The fifth one was classified as beneficial to the managers of the acquirer company and not to its shareholders. Trautwein grouped the mergers carried out under these first five theories as mergers by rational choice. In Trautwein’s view, the process theory explains mergers to be an outcome of a process, whereas, by using disturbance theory he tries to explain mergers as macroeconomic phenomenon.^[10]

 

These theories reflect the various motives of mergers and acquisition.

 

3.0 Overview of Mergers and Acquisition in Nigeria

 

The term “merger” is a polysemous word. Securities and Exchange Commission (SEC) Rules defines a merger as an amalgamation of the undertakings or any part of the undertakings or interest of two or more companies and one or more bodies corporate.^[11] Section 119(1) of the Investment and Securities Act, 2007 defines the term in near-similar words as follows: “…any amalgamation of the undertakings or any part of the undertaking or interest of two or more companies or the undertakings or part of the undertakings of one or more companies and one or more bodies corporate”

Merger involves the joining of the whole undertakings of the acquired company with the acquiring company to form one corporate entity. It envisages the combination of companies whereby, the transferor company may be wound-up or dissolved, or both companies may be merged into a new company.  In effect, the assets of two (or more) companies may become vested in or under the control of one company (which may or may not be one of the original two companies.^[12]

While the two words, mergers and acquisition are often used interchangeably or as a single term, they are of different meanings, processes and effects in the business context. Acquisition has been defined as a transaction or a series of transactions where an entity acquires control over assets, either directly or indirectly.^[13] But unlike in mergers, the companies that are parties to the relevant transaction in an acquisition may not necessarily combine their respective businesses and operations, depending on the transaction structure adopted, and they may remain independent separate legal entities but there may be a change in the control of the subject entity.^[14]

There are three broad categories of merger, namely:

1. Horizontal merger: whereby two or more companies offering the same products or services are combined to form one entity. This has come to be the commonest type of merger, and is the merger that most ideally avails marginal field companies. It is usually geared towards reducing competition and saves the costs associated with proliferation of facilities. The 2009 merger of Dangote Cement PLC and Benue Cement Limited is a perfect example of a conglomerate merger. This type of merger most strongly applies to marginal fields.
2. Vertical merger: In this type of merger, two or more distinct enterprises engaged in the same market but operating at different levels of the market, combine. Here, the object is usually to ensure a supply or an outlet for products or services, but the effect of merger may be to improve efficiency by increasing flow of production and reducing stockholding and handling costs.

 

iii. Conglomerate merger: A conglomerate merger involves the coming together of two companies in different industries which have no vertical or horizontal relationship. In fact, in a pure conglomerate merger, there are no important common factors between the merged entities in terms of production, marketing, research and development or technology.

 

In consideration of the requirements of SEC notification for some mergers, mergers are also categorized into small, intermediate and large mergers.^[15] Parties to a small merger need not notify SEC of the merger unless specifically required by SEC to do so.^[16] On the other hand, parties to an intermediate or large merger are mandated by law to notify SEC of, and obtain its formal approval to, such merger.^[17] Section 120 of the ISA empowers the SEC to determine the threshold for each category from time to time. The threshold has been changing since 2007 following the SEC Rules of subsequent years as illustrated in the table below.

S/N	Class of Merger	Threshold under ISA 2007	Threshold under SEC Rules 2010	Threshold under SEC Rules 2013
1	Small merger	Below N500million	Below N250million	Below N1billion
2	Intermediate merger	N500million and N5billion	Between N250million and N5billion	Between N1billion and N5billion
3	Large merger	Above N5billion	Above N5billion	Above N5billion

 

3.1       Merger Regulation

SEC is the main regulatory body on mergers for companies in all business sectors in Nigeria. Its operations are guided by the Investments and Securities Act (ISA), 2007 and the SEC Rules. The Corporate Affairs Commission (CAC) is involved in mergers to the extent that changes in shareholding occasioned by the merger or changes in directorship of the resulting or surviving entity are registered or filed with the CAC. The Companies Regulations 2012 made pursuant to Sections 16, 585 and 609 of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria, 2004 requires the registration of notice of merger to include inter alia: Special resolution of each company in the merger scheme; Scheme of merger arrangement duly approved by the Securities and Exchange Commission (SEC); Court order to be published in Gazette and at least 1 newspaper; Original certificate of incorporation of each dissolved company for cancellation; Updated annual returns; and payment of fees.^[18]

The omnibus power of the Federal Inland Revenue Service to administer the various tax laws pursuant to Section 25(1) of the Federal Inland Revenue Service (Establishment) Act, 2007 has also vested FIRS with a measure of merger regulatory powers. One of the tax laws, the Companies Income Tax Act (CITA) Cap C21, LFN, 2004 (as amended) in its section 29(12) provides:  “No merger, take-over, transfer or restructuring of the trade or business carried on by a company shall take place without having obtained the Board’s direction under subsection (9) of this section and clearance with respect to any tax that may be due and payable under the Capital Gains Tax Act.” In 2006, FIRS released a Circular on Tax Implications of Mergers and Acquisitions.^[19] The Circular in its Paragraph 2.0 re-emphasized the above statutory provision in CITA by expressly stating that the approval of the Federal Board of Inland Revenue (FBIR), now Federal Inland Revenue Service (FIRS)^[20] is a necessary condition for the completion of the process in a merger or acquisition bid, and that no merger or acquisition bids would be fully consummated without the companies involved having obtained the consent from the FIRS and provided the Procedure for Obtaining FIRS’ Approval.^[21]

 

While the above regulatory provisions concern mergers in all sectors, the enabling laws of some specific sectors provide for mergers involving companies in such sectors. For instance, mergers involving banks are subject to the Banks and other Financial Institutions Act 1991 (as amended), the Central Bank of Nigeria Act 1991 (as amended) and the Central Bank of Nigeria Procedural Manual for processing Applications for Bank Mergers/Take-over 2004 (as updated). Those involving insurance companies are subject to provisions of the Insurance Act, while those involving telecommunications companies are subject to the Nigerian Communications Commission (NCC) Act. There are currently no express provisions in the Petroleum Act creating mergers regulations with exclusive application to Petroleum Companies. Merger relations for oil and gas companies can only be deduced from the Act by implicit construction.

4.0 Legal Framework for Mergers and Acquisitions of Marginal Fields.

 

Mergers and acquisition for oil and gas companies in general and marginal field operators in particular are not expressly enabled by the law. What can be linked to mergers of oil and gas companies by necessary implications are provisions requiring consents and creating regulatory powers in processes of alienation of oil and gas rights and interests which can include mergers by interpretative stretch. Most of these provisions do not even mention mergers, acquisition or corporate restructuring as among the arrangements attracting the regulatory influence of any authority or warranting any procedural compliance. This raises doubt as to whether there was ever intended to be a special legal framework for mergers exclusive to the petroleum sector as is the case with other gigantic sectors of the Nigerian economy like banking, insurance and telecommunication.

Examples of the implicit provisions being linked to merger are Paragraphs 14 and 15 of the 1^st Schedule to the Petroleum Act, 1996 which provide as follows:

“14.        Without the prior consent of the Minister, the holder of an oil prospecting licence or an oil mining lease shall not assign his licence or lease, or any right, power or interest therein or thereunder.

15. The prescribed fee shall be paid on an application for an assignment under paragraph 14 of this Schedule and the Minister’s consent for the assignment may be given on payment of such other fee or such premium, or both, and upon such terms, as he may decide: Provided that the Minister may waive payment of that other fee or that premium, or both, if he is satisfied that the assignment is to be made to a company in a group of which the assignor is a member, and is to be made for the purpose of re-organization in order to achieve greater efficiency and to acquire resources for more effective petroleum operations.”

From the above provisions, any assignment of the Oil Prospecting License or Oil Mining Lease or any right or interest therein requires the prior consent of the Minister of Petroleum Resources. What lingered as knotty issues here are: what is the scope of assignment under this provision that calls for ministerial consent, the payment of prescribed fees, and other requisite terms? Could the term “assign” in the context of the provisions connote the alienation of any right however minute or in whatever form by the licensee of an OPL or lessee of an OML? Assuming the alienation contemplated here includes merger of the OML holder, is a marginal field akin to an OML, such that the mergers of marginal field farmee companies must undergo the procedure stipulated in Paragraphs 14 and 15 of the 1^st Schedule to the Petroleum Act stated above? The legislative silence on the above significant questions created room for assumptions which were capable of placing a merger of marginal field companies at the risk of judicial nullification for want of compliance with the Petroleum Act.

In a merger or an acquisition, the ownership and structure of the merging entities undergo significant changes which extend to the ownership of the OML involved. Hence, there is an assignment of a right, power or interest in the OML as contemplated by Paragraph 14 above. Again, a merger or acquisition of oil and gas entities is usually geared towards “re-organization in order to achieve greater efficiency and to acquire resources for more effective petroleum operations” as required in the proviso to Paragraph 15 above. This is however, an interpretative attempt open to judicial scrutiny, just like other presumptions on the scope of the above provisions.

 

All the presumptions were however brought under judicial test in Moni Pulo Limited v. Brass Exploration Unlimited & 7 Others.^[22] In that case, PetroSA holding 100% share capital in Brass which had 40% participating interest in OML 114, sought to transfer the controlling shares and the 40% interest to Camac. PetroSA did not apply to the Minister for consent to the transfer. The key issue which the court had to resolve was whether by virtue of Paragraph 14 of the First Schedule to the Petroleum Act, and Paragraph 4(a) and (b) of the Petroleum Regulations, a transfer, assignment, sale and/or takeover of an oil mining lease or any right, power, or interest therein or thereunder could be validly effected without the prior consent of the Minister of Petroleum Resources first sought and obtained.

The court, pursuant to its findings, held inter alia that, “whoever buys, acquires and takes over the controlling shares of Brass ultimately buys, acquires and takes over the right, power and interest in the Brass’ 40% participating interest in OML 114 and must      obtain the approval of the Minister of Petroleum Resources before such an      assignee can exercise such right, power and interest.”

This judgment created a wider ambit of transfer of interest in OML that would require minister’s consent by extending the scope of such transfers beyond direct sale of percentage interest in an OML to sale of shares in a company having percentage interest in the OML. With this wider scope created, it would be safe to infer that any alienation of any right in an OML or any part thereof, including marginal fields, would require ministerial consent, especially considering the liberal construction the court gave paragraph 14 of the 1^st Schedule to the Petroleum Act. But the greater impact of the decision especially on the issue of merger is that it prompted the Department of Petroleum Resources (DPR) to produce and circulate the “Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas                                                                                                                                  Assets.”

The Guidelines is meant to establish the procedure for obtaining consent of the Minister of Petroleum Resources (“Minister”) to the assignment of rights, powers or interests in an oil prospecting license (OPL), oil mining lease (OML), marginal field, or oil and gas pipeline license (Assets).

In its Paragraph 3.1, the Guidelines describes an “assignment” as involving “the transfer of a licence, lease or marginal field or an interest, power or right therein by any company with equity, participating, contractual or working interest in the said OPL, OML or marginal field in Nigeria, through merger, acquisition, take-over, divestment or any such transaction that may alter the ownership, equity, rights or interest of the assigning company in question, not minding the nature of upstream arrangement that the assigning company may be involved in, including but not limited to Joint Venture (JV), Production Sharing Contract (PSC), Service Contract, Sole Risk (SR) or Marginal Fields operation.”

 

The express mention of marginal fields, merger, and acquisition effectively resolves the issue of applicability of paragraphs 14 and 15, 1^st Schedule of the Petroleum Act to the mergers of marginal fields. Furthermore, paragraph 20 of the Guideline for Farmout and Operation of Marginal Fields, 2013 impliedly equates a marginal field to an OML by providing that: “the Farmee has all the rights of the OML leaseholder in respect of the farm-out area.” It also gives the farmee right and obligation to deal directly with the DPR and other administrative authorities as the new leaseholder; and all rights, interests, obligations and liabilities of the Farmor in respect of the farm-out area containing the fields automatically transfer to the Farmee, while the Farmor is relieved of the same as from the date of the execution of the Farm-out Agreement. Paragraph 20 suggests that a marginal field is treated as separate and distinct from the OML from which it is farmed out. The Farmee can be said to be conferred with a legal title which is distinct from that of the Farmor. Furthermore, the consent of the President to a farm-out agreement between an OML holder and the Marginal Field Operator under the Act also supports this conferment of legal title.

The combined effect of the above laws and policies is that in addition to the general procedure and requirements for mergers and acquisition for all corporate entities under the Investments and Securities Act, 2007, mergers of upstream petroleum companies in particular are also subject to the procedure and requirements in Paragraphs 14 and 15 of the 1^st Schedule to the Petroleum Act, and this extends to marginal fields.

5.0       Economic Importance of Mergers for Marginal Fields

Generally, the following have been identified as circumstances warranting mergers: the desire to diversify and reduce risks; the need to take advantage of the resulting economics of scale by large scale production, thus lowering unit costs and so enhance profits; the desire to create efficient management where the acquired company is poorly managed; and the desire to eliminate or at least reduce competition.^[23]

In outlining the above situations, Orojo envisioned a merger arrangement in which a company is reconstructed by transferring its assets to another company, and whereby the shareholders of the transferor company receive shares or other interests in the transferee company.^[24]

In respect of the marginal field companies in Nigeria, and considering the above-stated factors behind mergers, the importance of mergers and acquisition as a turnaround mechanism for these companies are identified from the following standpoints:

• Funding Needs:

Inadequate funding sources is the most glaring of the marginal field development challenges besides low level of support infrastructure. For these two, mergers and acquisition come in handy as a panacea. Considering that commencement of production and volume of production is the commonest mode of assessment of the marginal field companies, economics of scale resulting from merger saves costs and enhances the production status of the merging companies. On the issue of bankability which is an obstacle to accessing of credit facilities by the marginal field companies, the joinder of assets for credit collaterals enhance the credit-worthiness of the marginal field company seeking a loan. Asset combination through mergers would create a greater pool of assets of bankable value. Reserves-based lending also comes to mind on the issue of funding needs of the companies. This is a form of collateral for credits with oil that is still in the ground, in other words, the oil and gas reserves is accepted as security for the loan. This can be the ready source of finance for a low-asset holder of a marginal field. A greater collateral base for reserve-based lending can be created by the bringing together of fields as a portfolio through merger. Reserve-based lending thus thrives on portfolio and not necessarily on one field.

• Integrated Market for Gas and Electricity:

The combination of gas marginal fields in a merger would further lead the natural gas and electricity market in Nigeria on an integrated basis, and enhanced integrated operations improve profitability. Some of the fields are quite richer in gas reserves than others and some farmee companies have indeed keyed into gas production faster than others. For example, Frontier Oil Limited emerged as the first indigenous operator to develop a non-associated gas field and project in sub-Saharan Africa by supplying natural gas to Ibom power plant for power generation^[25] and Platform petroleum has demonstrated the monetization of natural gas in development of its marginal oil field the Asuokpu/Umutu field which lie in the Northern Delta Depobelt, in Shell’s OML 38. With this capacity and potential of gas production in the above examples, a merger with or acquisition of other companies with rich gas reserves but lacking in gas production equipment and experience would enhance gas production and further boost integration of natural gas and electricity market.

5.3       Expanding the Reserves Base:

Although oil exploration continues, with possibilities of future discoveries, the OML holders are operating on finite petroleum reserves. The case of the marginal field companies is worse considering that most of them have single fields to exploit, and mostly on joint operation basis. The marginal fields have limited oil and gas resources. To remain successful and indeed to remain in business beyond the life of its particular field, a marginal field company must expand its reserves of oil and gas. Mergers entail field combination and a stronger financial and technological competence to bid for more fields. Hence, mergers is a sound means of perpetuating the business life of a marginal field operator.

5.4 Field Development:

With mergers, combination of field development equipment need no further negotiations or agreements. By this arrangement, the operator of a non-producing field may accept a minority investment from the operator of a producing field and operations would proceed simultaneously in both fields as joint assets.

5.5 Diversifying operational areas:

Among the marginal fields awarded so far, some are offshore, some are onshore while some are in the swampy terrain. An offshore company successful in producing from its field would have less limitations with an onshore field. So, for an onshore field holder who is stuck with his own field, a merger with the successful offshore producer could be the way forward. Relevant factors here include: the costs necessary to extract resources offshore, proximity to refineries, quality of pipeline and other infrastructure. Oil and gas prices are usually across the board, and never takes all these factors into consideration. Thus operation in some geographical areas could place the marginal field operator in grave disadvantage. Consequently, a diversified portfolio can minimize risk by spreading it across multiple unrelated revenue streams. Merger is a sound means of achieving this.

5.6 Technology Acquisition:

The various marginal field companies are of different core competencies. Some of the companies are quite new and are indeed taking off with the Nigerian marginal field programme, unlike others that had been in petroleum operations. The experience of the latter companies entails a higher technological base than in the case of the former. Likewise, some of the companies are better at deep-water drilling. Combination of desired know-how that would result from merger or acquisition can bring a non-producing field on-stream.

6.0       Issues in Mergers for Marginal Fields

6.1       Compatibility of the Merging Entities

This should be among the foremost considerations in mergers and acquisition. It is not unusual for the corporate motives of different entities even in the same line of business to differ. Thus incompatibility issues are bound to arise after the coming together of such entities. Moreover, while it is true that a company is an artificial legal personality, it is still run by Directors and Managers and these real life persons have diverse ways and systems of running their business. The marginal field companies are of diverse backgrounds. There are those that were in existence and in operation long before the government’s marginal field programme. Some came into existence following the Oil and Gas Local Content Act, 2010 which was meant to create preferential treatments for indigenous oil and gas companies, while others are specifically meant to key into the marginal field programme and the indigenization policy pursued vide the programme. For instance, Oriental Energy Resources Limited founded in 1990 was awarded the sole operating right of Okwok (OML 67) and Ebok (OML 67) marginal fields in 2006 and 2007 respectively as a compensation to the company for losing part of OML 115 to Equatorial Guinea due to international boundary adjustment. Oriental made dogged effort towards field development like entering into financial and technical service agreement (FTSA) with Afren Energy Resources of UK that led to achieving first oil in 2011 and completion of full field development programme with 14 wells in 2012.^[26]  Oriental’s keen interest in marginal fields development would make it a perfect match to a struggling upstart marginal field farmee which lacks the requisite experience and assets because with Oriental’s competence and experience the development of all fields within its reach is guaranteed. But when a company of that capacity whose mainstay is not marginal fields can also merge with an exclusively marginal field company just to boost its reserve base and then concentrate on larger fields, the goal of immediate development of the field may be defeated.

 

Common questions to ask to determine compatibility include:^[27] Why does A want to acquire Z? Why should Z sell to A and not to B? What is their management style? Will the buyer relocate the headquarters and offices? Will the seller be represented at the buyer’s board of Directors and also retain pre-existing staff? How much freedom and responsibility will be accorded to the seller’s management after the acquisition? What is the buyer’s acquisition “track record”?

6.2       Time Demand

It has been observed that M&A transactions are usually time-consuming to the extent of taking months, even years to complete; and that these timelines would typically vary depending on a number of factors including issues arising from due diligence, regulatory hurdles, tax and accounting issues, amongst others.^[28] The recommended strategy is to draw a timeline to guide and expedite the activities in each merger transaction. It must be noted however that it may not always be possible to strictly follow such timelines, because in many circumstances, delays in the pace of the merger may be from the end of the regulatory agencies and beyond the control of the merging parties who might have complied with all requirements. A welcome development in this respect is the Nigerian Federal Government’s introduction of an executive order on ease of doing business which is meant, among other things, to tackle delays in granting consents and approvals by government agencies. Yemi Osinbajo as Acting President of Nigeria on May 18, 2017 signed the Federal Government Executive Order on the Promotion of Transparency and Efficiency in the Business Environment.^[29] The Order in its Article 1 mandates every Ministry, Department and Agency (MDA) of the FGN to publish a complete list of all requirements or conditions for obtaining products and services within the MDA’s scope of responsibility, including permits, licenses, waivers, tax related processes, filings and approvals. The list shall: include all fees and timelines required for the processing of applications for the products and services; and be conspicuously pasted on the premises of the relevant MDA and published on its website within 21 days from the date of issuance of this Order. Significantly, the Order provides that where the relevant agency or official fails to communicate approval or rejection of an application within the time stipulated in the published list, all applications for business registrations, certification, waivers, licenses or permits not concluded within the stipulated timeline shall be deemed approved and granted.

6.3      Multiplicity of Regulatory Agencies and Rigorous Procedures

 

Generally, the regulatory authorities for mergers and acquisition as already highlighted in this work are quite many and they are all with rigorous, time-consuming procedures which includes monetary compliance. All corporate mergers involve SEC, CAC and FIRS as regulators. The court also comes in at times for the purpose of incidental orders and directives. This, coupled with requirements of the regulars in some sector-specific mergers, all compound the merger procedure. In the case of oil and gas companies under which marginal field falls, the requirement of ministerial consent with the requisite fee under paragraph 15, First Schedule to the Petroleum Act would constitute an extra burden for the marginal field companies that have scaled other hurdles in the merger procedure. Paragraph 15 provides: “The prescribed fee shall be paid on an application for an assignment under paragraph 14 of this Schedule and the Minister’s consent for the assignment may be given on payment of such other fee or such premium, or both, and upon such terms, as he may decide”

6.4       Restrictive Entry Policy on Nigerian Marginal Fields

With the provisions on marginal fields in the 1996 amendment to the Petroleum Act, entry into the Nigerian marginal field industry is now highly restricted. It is certain that no interest can be acquired on a marginal field otherwise than in the manner prescribed in the Act and the Guidelines for farm out of the fields. The act mentions only farm-out while the Guidelines adds technical and financial partnership between a farmees and third parties.^[30] The Guidelines also provides that further assignment of right or interest in the marginal field by the farmee must also be through a farm-out and must be notified to the Petroleum Minister.^[31] One of the driving policies of the marginal field development programme is indigenization whereby the fields are awarded exclusively to Nigerian indigenous companies as the government seeks mainly to use the marginal field platform to enable indigenous participation in the upstream petroleum industry. This is made clear ab initio from the introductory provisions of the Guidelines for each marginal field bid round. Thus Paragraph 3.0 of the 2013 Guidelines provides: “Pursuant to the relevant provision of the Petroleum (Amendment) Act No. 23, 1996, it is the intention of Government to carry out in collaboration with operating companies, farm-out of un-produced, unapprised, abandoned or producing fields on existing Oil Mining Leases (OMLs) to independent indigenous companies on a periodic basis.”  Participation of foreign companies in the Nigerian marginal field industry is limited to financial and technical partnership at 40% upper limit of interest-holding. With this illiberal approach, a pertinent question is: can a foreign company or an indigenous petroleum company not yet into marginal field development use the door of mergers and acquisition to obtain majority interest in a marginal field; or is the door of mergers shut against such companies by the above-mentioned restrictions? A marginal field prima facie, is not an OML, but copious provisions of the farm-out on marginal fields which grant rights to a marginal field farmee equivalent to an Oil Mining Lessee equate it to an OML.^[32]  The decision in Moni Pulo V. Brass^[33] has also given a wide ambit the term “assignment” as used in Paragraphs 14 and 15 of the 1^st Schedule to the Petroleum Act to encompass mergers and acquisition. The Petroleum Act did not restrict the modes of acquisition of interest in any oil concession. It only requires ministerial consent for any mode of acquisition. It is therefore safe to conclude that the extant law permits mergers and acquisition in the marginal field industry for any oil company, Nigerian or foreign.

 

In the face of plummeting oil prices, technological challenges in gas utilization and myriads of other problems stalling development of most of the fields, mergers and acquisition constitute a means of creating corporate strength for the companies with the non-producing fields. It is also another expeditious route of foreign direct investment in the marginal fields without the limitations of rights in financial and technical partnership as expressly allowed in the Farm-out Guidelines, and without the indefinite wait for a Marginal Field licensing round by the DPR. Considering all these, mergers and acquisition should not be unduly circumscribed by indigenization or other similar policies, because the objective of bringing the marginal fields on-stream, which was why the programme was embarked on in the first place, is paramount and supersedes the objective of empowering indigenous companies through the marginal fields. It should always be noted that on the whole, there are over 183 marginal fields in Nigeria.^[34] Out of these, only 30 have been farmed out, and of the 30 only 12 are producing. Thus there are still over 153 marginal fields left untouched and 18 farmed out but not producing yet. It is therefore crystal clear that progress with the fields is at snail’s pace. Mergers and acquisition should therefore be encouraged as a means of building capacity for rapid development of the fields.

 

6.5      Due Diligence

 

Due diligence in every merger is the means through which one merging entity ascertains that the company it seeks to merge with has a clean bill of health. It is thus akin to the searches conducted prior to purchase of a property to ensure absence of encumbrance on the property. Points of focus in a merger due diligence are: ascertaining the true corporate status of the entities – is the company legally incorporated; is it a going concern; is it a subsidiary of a parent company? Due diligence would also seek to know whether the company is statutorily permitted to operate in the sector where it is merging to continue it operation in – are all the required business permits, licenses, leases or their equivalents validly procured. Due diligence enquires to know whether the resolutions of board of directors, and general meetings were validly made in line with the company’s memorandum and articles; It enquires into outstanding obligations like taxes, levies, debts labour and employees issues and pending litigations. The accounts and overall financial records of the parties are thoroughly screened. The business performance and viability is assessed, just as the value of the assets of the parties; product portfolio and competitors; performance ratios, profitability and earnings ratios, and capital investment are all subjected to thorough scrutiny.

 

Due diligence is a sine qua non to every merger if the safety of the merging parties must be guaranteed. The party with the higher stake in the merger, just like the acquiring party in an acquisition, stands to lose more if any of the enquiry points is overlooked as liabilities may arise subsequently due to errors in representations. It must be noted however, the process of due diligence adds to the rigours of mergers and acquisition as each aspect must be very thorough. The cost is also a substantial part of the aggregate expenses in the entire merger. It involves the engagement of professionals from different fields like lawyers, accountants, and even experts in the business areas of the entities, like oil and gas specialists.

6.6       Protection of the Minority Interests

Mergers and Acquisition almost always involves the meeting of a larger entity with a smaller entity with the result of an imbalance of decision powers and choices among the stakeholders of the resulting entity. This would be most pronounced in the case of the marginal fields because the clarion call for mergers of the marginal field companies is as a result of the low fortunes of most of the companies. Based on this, minority rights protection following a merger is very crucial.

The issue of minority rights and how to protect them have been a complex issue of much concern in every corporate arrangement. The historical case of Foss V. Harbottle^[35] set down a doctrine that inflamed this controversy. The doctrine is to the effect that to redress a wrong done to a company or to enforce rights of the company, the proper plaintiff is the company itself and the court will not ordinarily entertain an action brought on behalf of the company by a shareholder. Consequently, in the corporate scheme, the minority can have their say, but the majority would always have their way. It was thus a sad reality that a minority right can be trampled upon with the law looking the other way, as the minority cannot invoke the law to redress the wrong. Once a matter is considered by the court to be within the internal affairs of a company, it will decline jurisdiction to entertain same. The Companies and Allied Matters Act first recognized the old rule as follows^[36];-

“Subject to the provisions of this Act, where irregularity has been committed in the course of a company’s affairs or any wrong has been done to the company’s affairs or any wrong has been done to the company, only the company can ratify the irregular conduct.

Whatever the rationale behind the rule in Foss V. Harbottle, the injustice which a strict adherence to the rule will engender has necessitated exceptions to the rule. These exceptions are meant to minimize the inhibitions imposed on the shareholder in the enforcement of personal and corporate rights. Hence, they assist the minority shareholder in the enforcement and enjoyment of his rights.

The exceptions where the minority would be enabled to approach the court to redress a wrong against it is contained in section 300 of CAMA. They include: Where the complaint by the minority shareholders is that the company is acting or proposing to act beyond its powers; Where an act required by specific law or the company’s memorandum or Articles of Association to be done by a special resolution is done by ordinary resolution; Where the personal rights of the shareholder are infringed or about to be infringed; fraud on the minority; where the interests of Justice required that the court should intervene to assist an otherwise helpless minority shareholder^[37]”.

CAMA also taking a cue from the English Jurisdiction goes further to provide for minority rights protection through inspection and investigation of the company’s affairs, which responsibilities falls on the corporate Affairs commission.^[38] This form of minority remedy is the focus of sections 314 to 327 of CAMA. It has also been noted that the primary concern of the law in regulating Mergers and Acquisitions is the protection of Shareholders, Creditors and the Public.^[39]

6.7       Tax Issues

FIRS Circular on mergers and acquisition^[40] provides the procedural requirements for mergers, and the tax effects of a merger. It provides in its Paragraph 3.0 a requirement for and the Procedure of obtaining the approval of the Board of FIRS prior to the merger. It requires the merging companies to submit to the Board, copies of the scheme of merger and scheme of arrangement on the consolidation request for its study and proper evaluation in order to ensure that taxes which may result from the companies’ transactions are correctly assessed and collected.

 

Most of the powers of FIRS under this Circular are anchored on Section 29(12) of the Companies Income Tax Act^[41] which provides that ‘‘no merger, take-over, transfer or restructuring of the trade or business carried on by a company shall take place without having obtained the Board’s direction under sub-section 9 of this section and clearance with respect to any tax that may be due and payable under the Capital Gains Tax Act.’’^[42] The implication of this provision is that the approval of the Federal Inland Revenue Service is a necessary condition for the completion of the process not only in a merger or acquisition bid but any corporate restructuring scheme. Therefore, no merger, acquisition or any corporate restructuring bid would be fully consummated without the companies involved having obtained the consent from the FIRS.

 

A significant omission in the Circular is the failure to indicate that this requirement is applicable to all companies including upstream petroleum companies. Such indication is necessary because the copious references to CITA in the circular would create the impression that the circular does not apply to upstream petroleum companies which includes marginal fields. This is so because upstream petroleum companies are taxed in the Petroleum Profit Tax Act, while downstream companies and all other companies are taxed under CITA. But in spite of this flaw, the circular is all-encompassing and extends to corporate restructuring among petroleum exploration and production companies, and the reasons abound. Firstly, Paragraph 2.0 of the circular reproduced above requires the clearance of FIRS with respect to any tax that may be due and payable under the Capital Gains Tax Act prior to the corporate restructuring.  Capital Gains Tax also arises in corporate restructuring of exploration and production companies just like those of all other companies. Secondly, the income of an upstream petroleum company is now taxed under CITA by virtue of Section 11(2) (d) of the Petroleum Profit Tax Act

 

The Circular contemplates the consequences of merger on the corporate status of the companies. The merger may result in:  formation of a new company; continuation of the consolidated business by one of the merging parties in its name or under a new name, Cessation of business by the other merging parties; or in acquisition, there is only an acquiring company and the company being acquired.^[43] For each of these consequences, there is must be a surviving entity and the Circular proceeded to provide the mode of subsequent tax returns and payments for the surviving entity.

 

Furthermore, Section 32 of Capital Gains Tax Act^[44] replicated in the Circular provides that a person shall not be chargeable to tax under the Act, in respect of any gains arising from the acquisition of the shares of a company, either merged with, or taken over or absorbed by another company, as a result of which the acquired company has lost its identity. However, where shareholders are either wholly or partly paid in cash for surrendering their shares in the ceased business, the gains arising from the cash payment will be subject to CGT.

 

Expenses incurred in the Acquisition of a company are non-deductible from tax, and are thus included in tax computation. Fees paid to professional bodies are also subjected to WHT and VAT.^[45]

7.0 Recommendations

As discussed above, the bulk of the challenges threatening mergers and acquisition for the marginal field companies consist in the rigours and multiplicity of procedural hurdles. This is a corollary to the cost of compliance. To lessen the procedural burden for the marginal field companies in terms of the monetary costs, waiver of payment which is also provided in Paragraph 15, First Schedule to the Petroleum Act should be made automatic in the mergers of marginal fields. The proviso to Paragraph 15 states:  “Provided that the Minister may waive payment of that other fee or that premium, or both, if he is satisfied that the assignment is to be made to a company in a group of which the assignor is a member, and is to be made for the purpose of re-organization in order to achieve greater efficiency and to acquire resources for more effective petroleum operations.”

It is also observed that Nigeria has advanced to a commercial stage where merger regulation should be decentralized by law. In USA, there are both state laws and federal laws to administer Mergers and Acquisitions.^[46] In Nigerian, the merger laws are strictly Federal laws, for example CAMA and ISA.  The essence of two regimes of laws in USA is to allow each state within the federating unit to cater for its own peculiarities and suitability. It should be noted that some Nigerian states are more commercially viable than others e.g Lagos State. Jurisdictionally, the State Laws determine the process through which any merger or acquisition can be approved in the country. The Federal Laws keep a check on the size of the joint firm after a Merger or Acquisition, so that the merged firm cannot develop monopolistic power.

Another way of alleviating the rigours of compliance, and easing due diligence in marginal field mergers, both for the merging companies and the regulatory authorities is resorting to the disclosures captured in the records of the DPR in the course of the marginal field bidding process. For instance, Paragraph 6.5 of the Guidelines for Farm-out and Operation of Marginal Fields, 2013 mandates companies bidding for the marginal fields to provide: i. Information on their structure, composition, activities and experiences in the areas of oil and gas exploration and production; and ii. Evidence of the Company’s Technical and Managerial Capability.^[47]

The Nigerian Senate on June 8, 2017, passed the Federal Competition and Consumer Protection Bill, 2017.^[48] The Bill, upon receiving Presidential assent, would establish the Nigerian Trade and Competition Commission, with the power to formulate measures to restrain and where possible, eliminate all uncompetitive behaviour in trade activities in Nigeria. The power of this Commission is wide in scope as it relates to trade competition. SEC, considering its roles in competition, has a prospect of liaison with this Commission for exchange of information to aid detection of mergers with anti-competition motives and control of post-merger competition.

8.0 Conclusion

Considering the plight of the marginal fields companies which has left most of the fields in their non-producing states several years after the farm-out of the fields, mergers is a sound turn-around mechanism for the number of the companies challenged with their marginal fields. The success of mergers in marginal field development is evident in the case of Platform Petroleum/Shebah merger to form Seplat Petroleum which has led to massive production from the Egbaoma and Asuokpu/Umutu fields. Mergers comes in handy mostly in the face of the plummeting oil price. This is a factor recognized to be responsible for mergers even in the larger petroleum industry. The case of the marginal field companies is perhaps worse because the huge costs incidental to the bidding for the fields, especially the non-refundable fees in dollars under the Guidelines, were all incurred in an era of stable oil price and with a projection of increasing price that created expectations of high returns on investment. The reverse is the case now. Pooling of resources in mergers and acquisition therefore deserves good consideration as the way out of this predicament. The challenges of mergers peculiar to marginal fields have been considered, most conspicuous of which is the proliferated procedural requirements occasioned by multiplicity of regulatory authorities and rules. Remedies to this have been recommended. Most importantly, favorable discretion and waivers must be applied by the regulatory authorities to ensure that the game of mergers would be worth the candle in the long run. The Federal Government Executive Order on ease of doing business is the most welcome development in respect of lessening the burden of regulatory compliance. SEC has also alleviated the procedural burden of mergers by its 2015 amendment of the SEC Rules which reduced the filing stages from 3 to 2. The Nigerian banking reforms of the early 2000 did not set out with the motive of mergers, acquisition or any form of corporate restructuring for the banks. The policy from CBN under Professor Charles Soludo was to set a minimum capital base of N25billion for the banks, and mergers and acquisition naturally became the means resorted to by the banks to meet that standard. It is therefore opined that a similar policy like setting a mandatory minimum production limit for all marginal field companies with a timeline would compel mergers and acquisition among the companies. Such liberalization policy that would give room for foreign companies and experienced viable Nigerian companies not yet holding any field to merge with or acquire marginal field companies would broaden the horizon of participation in marginal fields through mergers and acquisition. At the end, the perception of marginal field companies would be that of full-fledged oil exploration and production companies and not upstarts hinging on indigenization and local content to survive, such that the marginal field operators can operate beyond the marginal fields and compete with the mega petroleum companies.

References

Adugbo, D. 2015 Nigeria: One Year After, Marginal Field Bid Round Fails to Take Off. Daily

                Trust, March 10, 2015.

 

Kanshio, S. 2016. How are Nigerian Marginal Field Operators doing?

https://www.linkedin.com/pulse/how-nigeran-marginal-field-operator. Retrieved on 6^th

                      March, 2017.

Risberg, A. 2006. Mergers and Acquisitions: A Critical Reader, 1st Ed. New York: Routledge.

Yusuf, I. Falling oil prices: Oil firms settle for mergers. The Nation. February 22, 2015

http://thenationonlineng.net/falling-oil-prices-oil-firms-settle-for-mergers/. Retrieved on

June 12, 2018.

 

Gupta, P. 2012.  Mergers and Acquisitions (M&A): The Strategic Concepts for

the Nuptials of Corporate Sector. Innovative Journal of Business and Management 1: 4

July – Aug (2012) 60 – 68 at p.64.

 

Ghemawat and Ghadar, “How Mergers Go Wrong”, the Economist 22 July, 2000, p.17

 

Speechley,. T ‘Acquisition Finance’ (2nd edition, Tottel Publishing Ltd), 2008. Referred to in

Dimgba, N. 2015. Law and Practice of Mergers and Acquisition in Nigeria.

              http://ssrn.com/abstract=2652362

 

Orojo, O. 2008. Company Law and Practice in Nigeria. (5^th Ed.). Pietermaritzburg: Interpak

Books. P. 340.

 

Fox & Fox, 2004 Corporate Acquisitions & Mergers p.1-5

Emole, C. E. 1997. The Petroleum (Amendment) Decree, 1996, of Nigeria Journal of African

             Law 41.2:239-245

 

Idigbe, A. 1987. Take-overs and Mergers under Nigerian Law-Protection of shareholders,

creditors and the Public. Legal Practitioners ‘Review Vol. 1. P.42

 

[1] LL. B (Ib), B.L, LL. M (Ife), Cert. Antitrust (Fordham), Sp. LL. M, LL. D (Oslo), Senior Lecturer, Department of Jurisprudence and International Law, Faculty of Law, University of Ibadan. Email: pc.obutte@ui.edu.ng, pcobutte@gmail.com / Deputy Director, Center for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan.

[2] LL.B. (Nig.). B.L., LL.M (Lagos), MCIArb. (UK) Research Fellow, Center for Petroleum, Energy Economics and Law, University of Ibadan. Email: jerryooj@yahoo.com (Corresponding author).

[3]   Para. 17(4), 1^st Schedule, of the Petroleum Act, 1996.

[4] Guidelines for Farm Out and Operations of Marginal Fields – 2013, Paragraph 5.0. The Guidelines also outlines six attributes of marginal fields.

[5] Source: Department of Petroleum Resources. https://dpr.gov.ng/index/list-of-marginal-fields/

[6]Adugbo, D. 2015 Nigeria: One Year After, Marginal Field Bid Round Fails to Take Off. Daily Trust, March 10, 2015.

[7]Kanshio, S. 2016. How are Nigerian Marginal Field Operators doing? https://www.linkedin.com/pulse/how-nigeran-marginal-field-operator. Retrieved on 6^th March, 2017.

[8]Yusuf, I. Falling oil prices: Oil firms settle for mergers. The Nation. February 22, 2015 http://thenationonlineng.net/falling-oil-prices-oil-firms-settle-for-mergers/. Retrieved on June 12, 2018.

[9] Pradeep Kumar Gupta. 2012.  Mergers and Acquisitions (M&A): The Strategic Concepts for the Nuptials of Corporate Sector. Innovative Journal of Business and Management 1: 4 July – Aug (2012) 60 – 68 at p.64.

 

[10] Op. cit. p.65.

[11] Rule 227(1), SEC Rules.

[12] Ghemawat and Ghadar, “How Mergers Go Wrong”, the Economist 22 July, 2000, p.17

[13] Tom Speechley, ‘Acquisition Finance’ (2nd edition, Tottel Publishing Ltd), 2008. Referred to in Dimgba, N. 2015. Law and Practice of Mergers and Acquisition in Nigeria. http://ssrn.com/abstract=2652362   

[14] Dimgba, N. Op. Cit.

[15] Section 120, ISA

[16] Section 122 of the ISA

[17] Section 123(1) ISA 2007.

[18] Para. 53(1) of the Regulations.

[19] FIRS Circular No. 2006/04.

[20] FBIR became FIRS by virtue of the Federal Inland Revenue Service (Establishment) Act, 2007, precisely section 1(1) thereof.

[21] Paragraph 3.0.

[22]  (2012) 6 CLRN 153 – 235.

[23] Orojo, O. 2008. Company Law and Practice in Nigeria. (5^th Ed.). Pietermaritzburg: Interpak Books. P. 340.

[24] Op.Cit.

[25] Commencing from January, 2014. See Uquo Upstream Operations. http://www.frontieroilltd.com/page-uquo_field_upstream_operations. Retrieved on June 26, 2018. Developed facilities on the Uquo Marginal Field include the 200mmscf/d Uquo central Gas Processing Facility (Trains 1 and 2), 4 gas wells, 2 oil wells (1 currently plugged), and more than 30km of flow lines and a crude oil evacuation pipeline to deliver export quality crude to ExxonMobil’s Qua Iboe oil export terminal and two gas pipelines, owned and operated by Accugas, to deliver Uquo gas to two independent power plants in South-East Nigeria. See http://www.frontieroilltd.com/page-uquo_field_upstream_operations. Supra.

[26] Kanshio, S. Ibid.

[27] Fox & Fox, 2004 Corporate Acquisitions & Mergers p.1-5

[28] Dimgba, N. Ibid.

[29] See “Highlights of Executive Orders on Budget, Local Content and Ease of Doing Business in Nigeria.” http://www.pwcnigeria.typepad.com/…nigeria/…/highlights-of-executive-orders-on-budget-local retrieved on June 13, 2017.

[30] Paragraph 6.5(ii) of the Guidelines for Farm-out and Operation of Marginal Fields, 2013.

[31] Paragraph 17.0.

[32] Paragraph 19.0 of the Guidelines.

[33]  Supra.

[34] Emole, C. E. 1997. The Petroleum (Amendment) Decree, 1996, of Nigeria Journal of African     Law 41.2:239-245

 

[35] (1843) 2 Hare 461

[36] section 299

[37] Wigram v.c. in Foss v. Harbottle (supra); Akande v. Omisade (supra); Edopkolor & co. Ltd. V. Sem-edo Wire Industrial & Ors (1984) 7 S.C. 119

[38] 7 (1)  CAMA

[39]  Idigbe, A. 1987. Take-overs and Mergers under Nigerian Law-Protection of shareholders, creditors and the

Public. Legal Practitioners ‘Review Vol. 1. P.42

[40] Footnote 19 supra.

[41] Cap 21, LFN, 2004

[42] Para. 2.0 of the Circular.

[43] Para. 4.0.

[44] Cap C1 LFN, 2004

[45] Para. 4.6.

[46] Mergers and Acquisitions Law. https://finance.mapsofworld.com/merger-acquisition/law.html.  Retrieved on June 26, 2018.

[47] Paragraph 6.5 (vii) of the Guidelines also requires that a bidding company which must be an indigenous company shall be substantially Nigerian and shall be registered solely for exploration and production business; and that at the pre-qualification stage, attention shall be paid to the composition of the promoting team, their background and experience with exploration and production at sufficiently high level.

[48] Senate Passes Into Law Consumer Protection, Witness Protection & Federal Road Authority Bills. http://nass.gov.ng/news/item/508. Accessed on August 22, 2017