07 February 2014, Lagos – The Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu, Thursday told stockbrokers on the trading floor of the Nigerian Stock Exchange (NSE) in Lagos that the ConocoPhillips (COP) Nigerian assets would boost its earnings before tax to N100 billion yearly.
Giving an update on the Oando’s bid to acquire the COP assets in Nigeria, Tinubu assured the stockbrokers that all the financial obligations for the acquisition have been met.
He re-emphasised that Oando is not raising fresh capital to finance COP acquisition, explaining that all the financings needed for the deal have been raised.
“All we require now is the consent of the minister, which is the legal requirement. The transaction will not be fully consummated until the minister consent is received. He assured the brokers that ministerial consent is a near certainty, saying the final approval will be granted very soon,” he said.
He told the brokers that, Oando, through its subsidiary Oando Energy Resources (OER), had in 2012, entered into an agreement with COP to acquire ConocoPhillips’ Nigerian businesses for a total cash consideration of $1.55 billion.
He said an initial deposit of $450 million was paid and a combination of equity and debt was raised to secure the balance financing towards the acquisition.
According to him, the acquisition is very strategic for the future growth of the disclosing that it will be of great benefit to all stakeholders.
He disclosed that the COP assets would increase the earnings before interest, taxes, depreciation and amortisation (EBITDA) of Oando to N100 billion, from the current average N45 billion annually.
The increased earnings, he said, would also lead to improved dividend payment to shareholders going forward.
Tinubu said: “Oando embodies a multifaceted approach in spite of our origins as a predominantly downstream company; and the successful acquisition of COP Nigerian assets is part of our diversification strategy into the higher margin upstream. We aim to maintain our dominant positioning in the mid-stream and downstream sectors but see this acquisition as holding unprecedented opportunities for the business.”
The acquisition is a game changer for Oando as it will immediately position the company as the largest indigenous oil producer in Nigeria. Oando through OER currently produces 4,500 barrels of crude oil per day from two producing fields, with this acquisition it will start producing circa 50,000 barrels per day from 6 producing fields.
– This Day