Oando Energy acquires Conocophillips oil, gas assets for $1.5bn

Oando Energy Resources Inc. a Nigerian oil and gas exploration and pro­duction firm, yesterday announced the comple­tion of its acquisition of the Nigerian Upstream Oil and Gas Business of ConocoPhillips for a to­tal cash consideration of US$1.5 billion after cus­tomary adjustments plus a deferred consideration of US$33 million.

The transaction entails the acquisition

of Cono­coPhillips’ Nigerian oil and gas businesses consisting its onshore business which include Phillips Oil Compa­ny Nigeria Limited, which holds a 20per cent of non-operating interest in Oil Mining Leases (“OMLs”) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited Joint Venture.

The other coventurers are the Nigerian National Petroleum Corporation (“NNPC”) with a 60per cent interest and NAOC (20per cent and operator).

The company’s offshore business include Conoco Exploration and Produc­tion Nigeria Limited, which holds a 95per cent operat­ing interest in OML 131 located 70 km offshore in water depths of 500m to 1,200m.; and the Phillips Deepwater Exploration Ni­geria Limited, which holds a 20per cent non-operating interest in Oil Prospecting Licence (“OPL”) 214 locat­ed 110 km offshore in water depths of 800m to 1,800m.

The other coventurers are ExxonMobil (20per­cent and operator), Chev­ron (20per cent), Sven­ska (20per cent ), Nigerian Petroleum Development Company (15per cent) and Sasol (5per cent). In June 2014, Nigeria’s Minister of Petroleum Resources Daizani Alison Madueke approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.

With this transaction, OER will now indirectly own all of the issued share capital of POCNL, CEPNL and PDENL. The effective date of the transaction is January 1, 2012.

Consequently with this transaction, OER retains the Petroleum and Renew­able Energy Company Limited as Independent Re­serves 2 Evaluator to report on the reserves and resourc­es of the newly acquired assets, OMLs 60, 61, 62 and 63 and OMLs 131 and OPL 214 (OML 145, after conversion) the “Offshore Assets”).

On the other hand the Independent Reserves Re­port has an effective date of December 31, 2013 and has been prepared in accor­dance with National Instru­ment 51-101 standards and the guidelines set out in the Canadian Oil and Gas Eval­uation Handbook.

According to the energy firm, the transaction repre­sents a significant oppor­tunity for it to create scale and significant value for its shareholders, adding: that the total reserves and re­sources associated with it are; proved plus probable reserves of 211.6 million barrels oil equivalent; It also has Best Estimate Con­tingent Resources of 498.6 MMboe; Unrisked Best Prospective Resources of 656.9 MMboe.

The company explained that a 20per cent working interest in the NAOC JV, which includes forty dis­covered oil and gas fields, of which twenty-four are currently producing, ap­proximately forty identi­fied prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas process­ing plants, the Brass River Oil Terminal, the Kwale-Okpai 480 MW combined cycle gas-fired power plant (“Kwale-Okpai IPP”), and associated infrastructure.

OER’s sales production from the onshore assets av­eraged 36,494 barrels of oil equivalent per day in 2013 and 39,266 in H1 2014. The onshore assets contain 211.6 MMboe of Proved plus Probable Reserves, 217.0 MMboe of Best Esti­mate Contingent Resources and 333.6 MMboe of Un­risked Best Prospective Re­sources, gross to OER.

The company’s Offshore Assets include a signifi­cant share of six separate discovered fields and eight separate prospects and con­tain a total of 281.6 MMboe of Best Estimate Contin­gent Resources and 323.3 MMboe of Unrisked Best Prospective Resources, gross to OER.

Upon completion of the transaction, OER will be positioned as one of the leading E&P players in the Nigerian Oil & Gas sector, as measured by end-2013 Proved plus Probable Re­serves of 230.6 MMboe, Best Estimate Contin­gent Resources of 536.8 MMboe, Unrisked Best Prospective Resources of 2,051.8 MMboe and H1, 2014 production of 44,512 boe/d, all gross to OER.

The transaction was fi­nanced with an approxi­mate 50/50 debt-equity ratio. Half of the deferred consideration of US$33 million is due six months after closing with the bal­ance due 12 months after closing and is immediately cash generative and will contribute significantly to the cashflows of the com­pany.

“This transaction rep­resents a transformational leap forward for our com­pany and is in keeping with our overall strategy to grow our portfolio of Nigerian-based assets by focusing on those opportunities that deliver high quality growth in reserves and produc­tion,” said Pade Durotoye, CEO, OER. “Our manage­ment team is familiar with these assets and possess the managerial experience and technical expertise neces­sary to unlock their value for our shareholders.”

Also commenting, Mr. Wale Tinubu, Chairman, OER said “we believe in the significant potential that the Nigerian oil and gas in­dustry holds and are privi­leged to play a pivotal role in its consolidation, growth and development. We will continue to seek strategic opportunities that provide a platform for enhanced growth and value creation for our stakeholders”.