Oando Energy Resources Inc., a Nigerian oil and gas exploration and production firm, yesterday announced the completion of its acquisition of the Nigerian Upstream Oil and Gas Business of ConocoPhillips for a total cash consideration of US$1.5 billion after customary adjustments plus a deferred consideration of US$33 million.
The transaction entails the acquisition of ConocoPhillips’ Nigerian oil and gas businesses consisting its onshore business which include Phillips Oil Company Nigeria Limited, which holds a 20per cent of non-operating interest in Oil Mining Leases (“OMLs”) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited Joint Venture.
The other coventurers are the Nigerian National Petroleum Corporation (“NNPC”) with a 60per cent interest and NAOC (20per cent and operator).
The company’s offshore business include Conoco Exploration and Production Nigeria Limited, which holds a 95per cent operating interest in OML 131 located 70 km offshore in water depths of 500m to 1,200m.; and the Phillips Deepwater Exploration Nigeria Limited, which holds a 20per 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 (20percent and operator), Chevron (20per cent), Svenska (20per cent ), Nigerian Petroleum Development Company (15per cent) and Sasol (5per cent). In June 2014, Nigeria’s Minister of Petroleum Resources Daizani Alison Madueke approved the conversion of OPL 214 to OML 145 for an initial period of 20 years.
With this transaction, OER will now indirectly own all of the issued share capital of POCNL, CEPNL and PDENL. The effective date of the transaction is January 1, 2012.
Consequently with this transaction, OER retains the Petroleum and Renewable Energy Company Limited as Independent Reserves 2 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 “Offshore Assets”).
On the other hand 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.
According to the energy firm, the transaction represents a significant opportunity for it to create scale and significant value for its shareholders, adding: that the total reserves and resources associated with it are; proved plus probable reserves of 211.6 million barrels oil equivalent; It also has Best Estimate Contingent Resources of 498.6 MMboe; Unrisked Best Prospective Resources of 656.9 MMboe.
The company explained that a 20per cent working interest in the NAOC JV, which includes forty discovered oil and gas fields, of which twenty-four are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km 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 barrels of oil equivalent per day in 2013 and 39,266 in H1 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, gross to OER.
The company’s 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, 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 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 H1, 2014 production of 44,512 boe/d, all gross to OER.
The transaction was financed with an approximate 50/50 debt-equity ratio. Half of the deferred consideration of US$33 million is due six months after closing with the balance due 12 months after closing and is immediately cash generative and will contribute significantly to the cashflows of the company.
“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,” said Pade Durotoye, CEO, OER. “Our management team is familiar with these assets and possess the managerial experience and technical expertise necessary to unlock their value for our shareholders.”
Also commenting, Mr. Wale Tinubu, Chairman, OER 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”.
