A Review of the Nigerian Energy Industry

Oando amends agreement with ConocoPhillips over Nigerian assets

Oando-Energy-Resources30 November 2013, Lagos – Oando Energy Resources Incorporated, a company in oil and gas exploration and production in Nigeria, has stated that it has entered into an amendment agreement with American energy company, ConocoPhillips in relation to the proposed acquisition of the Nigerian upstream oil and gas business of the American firm.

The deal comprises the indirect acquisition by Oando of all of the shares of Phillips Oil Company Nigeria Limited, Phillips Deepwater Exploration Nigeria Limited and Conoco Exploration & Production Nigeria Limited, as previously announced on December 20, 2013 and September 16, 2013.

Pursuant to the amendment agreement, Oando Energy Resources said it had agreed with ConocoPhillips for the extension of the outside date for completion of the acquisition of the Nigerian assets from November 30, 2013 to January 31, 2014.

According to a statement issued yesterday, Oando said the two parties also agreed that Oando would increase the deposit for the acquisition of the shares of Phillips Deepwater Exploration Nigeria Limited (PDENL) by $15 million.

By the terms of the agreed, Oando will pay the increased deposit amount to ConocoPhillips not later than December 6, 2013.

“No change to the purchase price of PDENL results from this amendment. As previously announced in December 2012, in connection with the ConocoPhillips acquisition, the company paid a $435 million deposit. Following the increase in the deposit for PDENL, the aggregate amount of the deposit for the ConocoPhillips acquisition will be $450 million,” the statement said.

As consideration for the extension of the outside date, the statement added that the purchase price of the shares of POCNL would be increased by $10 million per month for the period from December 1, 2013 up to but excluding the outside date of January 31, 2014.

This would be calculated on a pro rata basis where the completion date of the ConocoPhillips acquisition does not occur on the last day of the month, according to the statement.

The new agreement also provides that any increase in the purchase price as a result of this consideration would be an adjustment to the net purchase price payable at completion of the ConocoPhillips acquisition.
Following the amendments, the net purchase price payable to complete the ConocoPhillips acquisition is estimated to be approximately $1.23 billion, after deducting the deposit, including the increase and giving effect to adjustments as of the outside date.

Oando Energy Resources further disclosed that it has amended the loan agreement and associated repayment deed, each dated May 30, 2013, as amended, with Oando Plc, the holder of 94.6per cent of the shares of Oando Energy Resources, to increase the amount loaned to the company by $15 million.

“The increase in the principal amount is being borrowed in order for Oando Energy Resources to fund the increase in the deposit required to be paid to ConocoPhillips. The additional $15 million will bear an annual interest rate of five per cent and be repayable in cash on December 31, 2013. As a result of the increase in the principal amount by $15 million, the aggregate principal amount owing by Oando Energy Resources to Oando will be $401 million,” the statement added.

Oando Energy Resources also said its corporate governance committee, comprising independent directors unrelated to Oando, had unanimously recommended approval of the amendments to the loan agreement and repayment deed to the board of the company.

It further stated that the board of the company approved the amendments with directors affiliated with Oando abstaining from the vote. Oando Energy Resources last year entered into agreements with ConocoPhillips to acquire its entire business interests in Nigeria.

The proposed deal is the biggest acquisition by an indigenous company in the history of Nigeria’s oil and gas industry.

– Ejiofor Alike, This Day

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