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Oando nears completion of $1.66bn asset acquisition

By on January 10, 2014

Oando Plc, an indigenous energy group listed on both the Nigerian and Johannesburg stock exchanges, on Wednesday said it was on the verge of completing its purchase of ConocoPhillips’ Nigerian assets valued at $1.66bn.

SBG Securities’ oil & gas analyst, Mr. Gbenga Sholotan, said about the development, “Oando recently raised an aggregate of $442m through the sale of the East Horizon Gas Company for $250m and a special placement of 2.05 billion shares for $192m.

“We do not consider the need to obtain the minister of petroleum’s consent as a major risk to this transaction, given the antecedents of divestments over the last three years.”

The Head, Corporate Communications, Oando Group Plc, Dr. Alex Iruna, recalled that the oil company had paid an initial deposit of $450m, and had received additional funds through debt commitment letters received from financial institutions ($815m), private placement of shares ($200m), and the recent sale of its EHGC asset to Seven Energy for $250m.

He said, “The availability of $815m in committed credit facilities from local and foreign banks and the already paid $435m deposit place OER in good stead to finalise the financing of the balance necessary to close the $1.66bn purchase.”

Oando has steadily focused on upstream diversification in an effort to increase annual free cash flows and increase value creation for shareholders.

Once concluded, Iruna said the ConocoPhillips transaction would substantially boost Oando Energy Resources’ operations, with circa production of 50,000boepd post-acquisition, generating extensive growth in revenue and profitability.

This acquisition, Iruna said, would be a transformational milestone, making Oando the largest indigenous exploration and production company in Nigeria with 50,000 barrels of oil equivalent per day in production, 236 million in 2P reserves and over 500 million in contingent resources.

[Punch]