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Thursday, 31 July 2014 01:34

Oando completes acquisition of $1.65b ConocoPhilips’ assets

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• FCMB Capital Markets emerges lead arranger

OANDO Energy Resources (OER), the upstream business of Oando Plc, yesterday, signed the ConocoPhilips acquisition agreement that will make Oando one of the largest indigenous oil and gas companies in the country. 

The agreement signing and completion ceremony took place yesterday, in Paris.

  OER, through the acquisition, picks up Philip Oil Co. Nigeria Limited’s 20 per cent non-operating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63, as well as the related infrastructure and facilities, in the Nigerian Agip Oil Company Ltd joint venture (NAOC JV). 

  The 20 per cent interest in the NAOC JV included 40 discovered oil and gas fields with remaining oil and gas recovery; approximately 40 identified prospects and leads; twelve production stations; approximately 950 km of crude oil, natural gas liquids and natural gas pipelines; two gas processing plants; the Brass River Oil Terminal; the Kwale-Okpai 480 MW combined cycle gas-fired power plant (“Kwale-Okpai IPP”), and associated infrastructure. 

Other assets covered by the acquisition includes; Phillips Deepwater Exploration Nigeria Limited (PDENL), which holds a 20 per cent non-operating interest in Oil Prospecting Licence (OPL) 214 located 110 km offshore in water depths of 800m to 1,800m. The other coventurers are ExxonMobil (20 per cent and operator), Chevron (20 per cent), Svenska (20 per cent), Nigerian Petroleum Development Company (15 per cent) and Sasol (5 per cent). 

    After several months of delay, the minister of petroleum resources last month, approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.

  “Through this Transaction, OER will indirectly own all of the issued share capital of POCNL, CEPNL and PDENL. The effective date of the transaction is January 1, 2012.

  “In connection with this transaction, OER retained The Petroleum and Renewable Energy Company Limited as Independent Reserves Evaluator to report on the reserves and resources of the newly acquired assets, OMLs 60, 61, 62 and 63 and OMLs 131 and OPL 214 (OML 145, after conversion).

  “The independent reserves report has an effective date of December 31, 2013 and has been prepared in accordance with National Instrument 51-101 standards and the guidelines set out in the Canadian oil and gas evaluation handbook,” it stated.

   Oando stated further that, “sales production from the onshore assets averaged 36,49 bpd in 2013 and 39,266 bpd in first half of 2014. The Onshore Assets contain 211.6 mmboe of proved plus probable reserves, 217.0 mmboe of best estimate contingent resources and 333.6 mmboe of unrisked best prospective resources.

  “The offshore assets include a significant share of six separate discovered fields and eight separate prospects and contain a total of 281.6 mmboe of best estimate contingent resources and 323.3 mmboe of unrisked best prospective resources.

  “Upon completion of the transaction, OER will be positioned as one of the leading E&P players in the Nigerian oil and gas sector, as measured by end-2013 proved plus probable reserves of 230.6 mmboe, best estimate contingent resources of 536.8 mmboe, unrisked best prospective resources of 2,051.8 mmboe and first half of 2014 production of 44,512 bpd.

  “The transaction was financed with an approximate 50/50 debt-equity ratio. Half of the deferred consideration of $33 million is due six months after closing with the balance due 12 months after closing, “ it stated.

  The Transaction is immediately cash generative and will contribute significantly to the cash flows of the ompany.

  The $1.65 billion (N256.13 billion) deal, which is expected to increase Oando’s crude oil production from about 5,000 barrels per day to 50,000 bpd, was concluded following the satisfaction of all statutory requirements and approval of the Federal Government of Nigeria.

  FCMB Capital Markets Limited, a subsidiary of FCMB Group Plc, played the dual role of the mandated lead arranger and technical bank, while First City Monument Bank Limited, it’s sister company, was one of the major lenders in the transaction.

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