Oando Energy recorded $88m third quarter loss

Oando personnel working on a production facility16 November 2014, Sweetcrude, Lagos – Oando Energy Resources Incorporated, a subsidiary of Oando Plc, has announced a net loss of $88.008 million for the nine months ended (third quarter), September 30, 2014.

This, according to its financial and operating results for the three and nine month periods ended September 30, 2014, was in spite of a net income of $89.541 million for the three months ended — July and September 2014.

This was in comparison to a net income of $2.778 million for the nine months ended September 30, 2013 and a $12.371 million for the three months ended, September 30, 2013.

Oando Energy Resources, listed on the Toronto Stock Exchange, recorded revenue of $247.38 million, rising by 139.63 per cent from $103.235 million recorded in the third quarter of 2013.

Also, for the three months ended, September 30, 2014, the company recorded revenue of $184.777 million, appreciating by 393.3 per cent from the revenue of $37.461 million recorded in the same period in 2013.

Commenting on the financial performance, Mr. Pade Durotoye, Chief Executive Officer, Oando Energy Resources said, “At the end of July we completed the transformational acquisition of the Nigerian Upstream business of ConocoPhillips Company, that substantially grew our production, reserves, resources and cashflow, which will allow us exploit a broader suite of assets and new growth opportunities both onshore and offshore Nigeria.

“In the third quarter, we saw an immediate and significant impact on revenue with only a partial two months of production contribution from the assets acquired in the ConocoPhillips transaction.

“We also took steps to strengthen our balance sheet with the conversion to equity of more than $315 million in principal, interest and fees payable under the $1.2 billion facility agreement.”

He further stated that the company achieved total production of 4.1 million barrels of oil equivalent (boe) in the nine months and 3.2 million boe in the three months periods ended September 30, 2014 compared with 1.1 million boe and 363,000 boe in the comparative periods ended September 2013, respectively.

The increase, according to him, was primarily due to the company’s newly acquired working interest in OML 60 – 63 which contributed 2.9 million boe of production over the 62-day period from July 30 to September 30, 2014.

He also stated that during the quarter, the company and its partners completed the construction of the 45,000 barrels per day (bbls/d) Umugini pipeline project and commenced final testing in readiness for commercial injection into the pipeline.

Continuing, Durotoye said, “From July 30 to September 30, 2014, average production of 47,934 boe/d for 62 days and capital expenditures on Acquisition Asset fields were $25.3 million. In this period, $19 million was spent on the Ogbogene NE and Ogbainbiri Deep C projects, and $6.3 million was spent on other capital projects. The Corporation’s share of NAOC JV budgeted costs for fourth quarter 2014 is estimated to be $28.6 million.

“Budgeted capital expenditures for OML 125 for the nine months ended September 30, 2014 were $33.3 million. The Company incurred $66.3 million of capital expenditures in this period, which is attributable to Abo 3, Abo 8, and Abo 12 drilling and completion activities.

“Capital expenditures on Abo 3 were $41.8 million, which is the main driver of the over budget amount due to increased completion costs. Expenditures on Abo 8 and Abo 12 were $3.9 million and $20.6 million, respectively.”

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