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Oando to meet 100,000bpd production target by 2017

By BusinessNews Staff on April 16, 2015

Oando Energy Resources (OER) has stated that it would meet a medium term objective of producing 100,000 barrels of oil equivalent per day (boepd) and reserves of 500 million barrels of oil equivalent per day (mmboepd) by 2017, two years ahead of the 2019 initial target date, given its recent increase in reserves by 82 per cent, despite the downturn in the sector.

With the global downturn and energy firms declaring write downs, the company said in a statement on Tuesday that it would remain uniquely well-positioned and clearly a sure bet INVESTMENT, saying the increase in reserves is reassuring for its shareholders as it is likely to have a positive impact on future revenue for the business.

After completing the acquisition of ConocoPhillips’ (COP) Nigerian assets for $1.65 billion in July 2014, Oando had targeted 2019 for the attainment of the 100,000 bpd production capacity.

As a result of the slump in oil prices, 2014 ended on a sour note for the sector, this downward trend has continued in 2015 with speculations indicating that as much as $1.6 trillion will be wiped out in earnings for producing companies and countries.

But Oando said with such a pessimistic view it has kept above the fray by proactively acting on a number of initiatives to sustain its viability as an INVESTMENT grade stock.

Commenting on this most recent milestone, the Chief Executive Officer of OER, Pade Durotoye, said “We are very pleased with the new 2014 Reserves numbers which confirm our thesis at the time we embarked on our transformative COP acquisition.”

“This large reserves base gives us a substantial value driver, with the opportunity to further enhance production over the coming years, and pursue in-field exploration prospects that will complement our Resource Base and ensure we are well positioned within the sector,” he added.

Most recently, the company significantly increased its proved and probable net reserves (2P) reserves from 230.6 MMboe to 420.3 MMboe.

The new reserves figures are based on an annual evaluation report of OER’s reserve and resources conducted by worldwide petroleum independent company DeGolyer and MacNaughton (D&M).

It also indicated the economic value of the company’s proved and probable reserves (2P) has increased from $545 million to $1.8 billion.

This reserves increase is further validation that Oando’s $1.5 billion landmark acquisition of ConocoPhillips Nigeria assets in July 2014 was indeed a strategically important and timely move.

In the last few months, Oando has evolved from an indigenous player producing circa 4,500 boepd from three producing assets to being ranked alongside the international majors with a production of 53,000 boepd from seven producing assets.

More recently, the company reset its hedge from $95 to $65 per barrel, restructured its debt obligations by $238 million, thereby making savings of $65 million in interest payments over the remaining term of the loan facilities.
According to the company, these actions have seen a considerable reduction in its debt, an eradication of significant interest payments and an improvement in its balance sheet.

[ThisDay]

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