03 April 2015, Lagos – Oando Energy Resources, a wholly-owned subsidiary of Oando Plc focused on oil and gas exploration and production in Nigeria, has disclosed that it has budgeted $135.1m (N26bn) in capital expenditures for crude oil and gas projects this year.
The company, while announcing its financial and operating results for the year ended December 31, 2014, said it would fund essential projects this year and prudently utilise capital in recognition of the current crude oil environment.
OER estimated that $35.6m would be expended on crude oil-related projects and $24.1m on gas projects in the Oil Mining Lease 60 to 63 areas, which it acquired last year.
It said planned oil and natural gas projects consisted of drilling and completing new wells, along with asset integrity projects and enhancements to natural gas facilities and pipelines.
The company had on July 2014 completed the acquisition of the Nigerian upstream oil and gas business of the United States-based ConocoPhillips for a total cash consideration of $1.5bn.
OER said it had budgeted $67.1m for OML 125 (Abo field), adding that the planned expenditures included gathering system construction projects, completing and hooking up of Abo 12 upper, drilling Abo 13, along with safety projects and extending the life of the floating production, storage and offloading facility.
The company said it would spend $7.7m for facility and pipeline repairs on OML 56 (Ebendo field) in the year.
It said $0.6m had been budgeted for facility enhancement on OML 13 (Qua Ibo field), which commenced production in January 2015, from the field’s C4 and D5 reservoirs.
The Chief Executive Officer, Oando Energy Resources Inc., Mr. Pade Durotoye, said, “In 2014, we executed on our growth strategy by acquiring the Nigerian upstream business of ConocoPhillips Company and our continued focus over the near term will be on optimising the performance of these key assets.
“While the acquisition propelled sizable improvements in our production base, we also invested in our legacy assets, which we expect will support further organic production growth in the near future. In the wake of the acquisition, we have acted on a number of opportunities to improve our balance sheet, including converting debt to equity and, subsequent to year end, resetting our oil hedging programme, which contributed $234m of the $238m debt reduction in a $50 per barrel environment.”
The company’s 2014 production increased to 9.1 million barrels of oil equivalent (average 24,945 boepd) from 1.5 mmboe (average 3,991 boepd) in 2013, buoyed by production from the acquired assets.
The company said its net revenue in 2014 was $421.4m, an increase of $294.2m over the $127.2m earned in 2013, primarily as a result of the ConocoPhillips acquisition.
“The COP acquisition added $1.099bn in fair value of assets and $161m was incurred on capital expenditures during the year. The capital expenditures consisted of $38.1m for enhancing the acquisition assets and $122.9m for legacy assets’ drilling and completion activities, construction of gathering systems and facilities, and capital asset maintenance projects,” the company said.
– – Punch