Nigeria focused 
Oando Energy Resources Inc. (OER) has completed the acquisition of ConocoPhillips' Nigerian upstream oil and gas business for a total cash consideration of US$1.5 billion, after customary adjustments, plus a deferred consideration of $33 million. The transaction entails the acquisition of ConocoPhillips' Nigerian oil and gas businesses consisting of both onshore and offshore business activities.
OER said Phillips Oil Co. Nigeria Ltd. (POCNL) holds 20% non-operated interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Co. Ltd. (NAOC) joint venture (NAOC JV). The other co-venture partners are the Nigerian National Petroleum Corp. (NNPC) with 60% interest, and NAOC (20% and operator).
Also included in the transaction are Conoco Exploration and Production Nigeria Ltd. (CEPNL), which holds a 95% operating interest in OML 131, located 70km offshore in water depths of 500m to 1200m, and Phillips Deepwater Exploration Nigeria Ltd. (PDENL), which holds 20% non-operated interest in Oil Prospecting License (OPL) 214 located 110km offshore in water depths of 800m to 1800m.
The other co-venture partners are ExxonMobil (20% and operator), Chevron (20%), Svenska (20%), Nigerian Petroleum Development Co. (15%) and Sasol (5%).
In June 2014, Nigeria's petroleum resources minister 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 1 January 2012.
In connection with this transaction, OER retained the Petroleum and Renewable Energy Company Ltd. (Petrenel) as Independent Reserves Evaluator to report on the reserves and resources of the newly acquired assets, OMLs 60, 61, 62 and 63 (onshore).
OER CEO, Pade Durotoye, said: "This transaction represents a transformational leap forward for our company and is in keeping with our overall strategy to grow our portfolio of Nigerian-based assets by focusing on those opportunities that deliver high-quality growth in reserves and production. Our management team is familiar with these assets and possesses the managerial experience and technical expertise necessary to unlock their value for our shareholders."
Adewale Tinubu, Chairman and Director of OER (pictured at right), said: "We believe in the significant potential that the Nigerian oil and gas industry holds and are privileged to play a pivotal role in its consolidation, growth and development. We will continue to seek strategic opportunities that provide a platform for enhanced growth and value creation for our stakeholders."
OER believes that the transaction represents a significant opportunity to create significant value for its shareholders, adding:
- The total reserves and resources associated with this transaction are: Proved plus Probable Reserves of 211.6MMboe; best estimate contingent resources of 498.6MMboe; unrisked best prospective resources of 656.9MMboe. A 20% working interest in the NAOC JV, which includes 40 discovered oil and gas fields, of which 24 are currently producing approximately 40 identified prospects and leads, 12 production stations, approximately 1490km of pipelines, three 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.
- OER's sales production from the onshore assets averaged 36,494 boe/d in 2013 and 39,266 boe/d in H1 2014. The onshore assets contain 211.6MMboe of proved plus probable reserves, 217.0MMboe of best estimate contingent resources and 333.6MMboe of unrisked best prospective resources, gross to OER.
- The offshore assets include a significant share of six separate discovered fields and eight separate prospects and contain a total of 281.6MMboe of best estimate contingent resources and 323.3MMboe of unrisked best prospective resources, gross to OER.
- Upon completion of the transaction, OER will be positioned as one of the leading E&P players in the Nigerian oil & gas sector, as measured by year-end 2013 proved plus probable reserves of 230.6 MMboe, best estimate contingent resources of 536.8 MMboe, unrisked best prospective resources of 2051.8MMboe and H1, 2014 production of 44,512boe/d, all gross to OER.
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 after 12 months.
Subscribe
