02 August 2014, Abuja – Oando Energy Resources Incorporated, OER, a subsidiary of Oando Plc, Friday, announced a swift rise in its total crude oil production capacity from just about 4,500 barrels per day (bpd) to 50,000bpd following its acquisition of the Nigerian upstream oil and gas assets of ConocoPhillips for a total cash consideration of $1.5 billion.
The Chief Executive Officer of OER, Mr Pade Durotoye said at a press briefing in Abuja, that the acquisition of ConocoPhillips now transformed it as a leading indigenous Nigerian oil and gas operator.
Durotoye stated that OER expects its shareholders to see a year-end profit after tax in the region of $150 million, following from similar closing balance sheet of ConocoPhillips which last operated the assets and gained that much in 2013.
According to him, the acquisition includes its interests in six oil fields; four of which are currently producing, 12 production stations, Brass River terminal with a capacity of 3.6 million barrels (mmbbls), three gas plant facilities, 1490 kilometres of pipeline network and the 480 megawatts (MW) Kwale Okpai Independent Power Plant (IPP)
ConocoPhillips’ Nigerian oil and gas businesses consist of onshore and offshore businesses.
The onshore business consists of Phillips Oil Company Nigeria Limited, which holds a 20-per-cent 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 (NAOC) Joint Venture (NAOC JV).
The other co-ventures are the Nigerian National Petroleum Corporation (NNPC), with a 60 per-cent interest and NAOC, which is the operator with 20 per cent interest.
The offshore business consists of Conoco Exploration and Production Nigeria Limited, which holds a 95 per cent operating interest in OML 131 located 70 kilometres offshore in water depths of 500 metres to 1,200m and Phillips Deepwater Exploration Nigeria Limited, which holds a 20-per-cent non-operating interest in Oil Prospecting Licence (OPL) 214 located 110 kilometres offshore in water depths of 800m to 1,800m.
The other co-ventures are ExxonMobil, which is the operator with 20 per cent interest, Chevron (20 per cent), Svenska (20 per cent), Nigerian Petroleum Development Company (15per cent) and Sasol (5per cent). Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had in June 2014 approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.
“This transaction was made possible due to the overwhelming support from our shareholders, the Federal Government of Nigeria, Nigerian National Petroleum Corporation (NNPC) and the international and local financial institutions that assisted with the necessary debt funding.
“The acquisition speaks to our inorganic growth strategy of acquiring choice assets with good production rates, a large two key reserve base and two sea resource potentials for future developments,” Durotoye said.
He added that: “Oando Energy Resources as a consolidated entity now has working interests and investments in 16 licenses that produce about 45,000 to 50,000bpd equivalent per day with 2P reserves of 230 millions of oil and 2C resources of 536 million barrels; our team is well positioned to develop these assets and unlock values for our shareholders.”
Durotoye noted that OER has the right mix of capacities to operate the acquired assets.
“We are committed to playing our role as a leader in this industry and look forward to transactions of this nature to promote Nigerian grown companies to prominent positions internationally,” he said.
On the expectations of OER’s shareholders, he said: “With regards to the balance sheet, the acquisition was $1.5 billion, which was financed by a combination of equity and debt ratio of 50/50 and that essentially modified the balance sheet.
“We have identified that the asset is in production and cash supportive and it can support this structure of financing. That speaks directly of what it does to our shareholders.”
“The previous owners in the year 2013 generated a profit after tax that was $150 million, I will also like to point out that year was one that started on a little bit on the slow side because of a unique flood at the end of 2012 down south of Nigeria that severely affected the facilities and production of oil companies in Nigeria.
“Directionally, we expect for our shareholders to see profit after tax in that region; the business continues to grow and there are significant growth opportunities that we are able to see already manifesting in the production, which will be immediately generative and additive to our shareholders.”
– This Day