Oando Snaps Up Conoco's Assets

AllAfrica |

No sooner had word went out that Oando Plc had received government approval for the acquisition of ConocoPhillips' Nigerian assets than the shares in Oando rose the maximum 10 percent allowed on the Nigerian Stock Exchange.

Oando Energy Resources (OER), the upstream business of Oando Plc, last Wednesday announced the receipt of the consent of the minister of petroleum resources for the acquisition of the Nigerian upstream oil and gas business of the United States oil major ConocoPhillips for a total cash consideration of $1.65 billion subject to customary adjustments.

On December 20, 2012, Oando Plc, Nigeria's leading indigenous energy group listed on both the Nigerian and Johannesburg bourses, disclosed that OER had entered into agreements with ConocoPhillips to acquire its entire business interests in Nigeria.

The acquisition of the ConocoPhillips' Nigerian upstream oil and gas business is expected to position OER as one of the leading indigenous independent exploration and production (E&P) players in Nigeria, as measured by total reserves and production.

Challenging as it was to raise the required funds for the acquisition, the company took no prisoners in its bid to secure financing.

The company has paid an initial deposit of $450 million, and has received additional funds through debt commitment letters received from financial institutions ($815 million), private placement of shares ($200 million), and the recent sale of its EHGC asset to Seven Energy for $250 million.

The beginning of the end of the long journey:

"We are delighted to receive the approval of the Honourable Minister of Petroleum Resources for the completion of our acquisition. It has been a long journey, wherein we kept faith with our strategy and executed every milestone diligently," said Wale Tinubu, group chief executive, Oando Plc and chairman, OER.

He continued: "This acquisition satisfies our criteria for assets in production, as well as excellent appraisal and exploration prospects. We will work hand in hand with the management team of ConocoPhillips to immediately complete the acquisition."

Oando said though it had successfully acquired all funds required to complete its acquisition of the assets, closing of the ConocoPhillips acquisition had remained subject to the satisfaction of certain closing conditions, including government and regulatory approval, and the consent of the minister of petroleum resources.

OER, which is listed on the Toronto Stock Exchange, had in its latest extensions in May said that the outside date for completion of the proposed acquisition of the ConocoPhillips' assets had been extended to June 30, 2014 from April 30 2014. The extension was to enable the companies to satisfy all closing conditions, including the anticipated consent of the minister of petroleum resources.

The company had on January 31, 2014 said it had completed all the financials for the closure of the acquisition and awaiting the ministerial consent. OER and ConocoPhillips agreed to extend the outside date for completion of the ConocoPhillips acquisition from January 31 to February 28. It was later moved from February 28 to March 31; from March 31 to April 30 and then to June 30.

OER believes that the ConocoPhillips acquisition represents a 'game changing' opportunity for the company and its shareholders, with a 20 percent working interest in the Nigerian Agip Oil Company JV, which includes forty-one discovered oil and gas fields with remaining oil and gas recovery, about forty identified prospects and leads, twelve production stations, about 1,490 km of crude oil, natural gas liquids and natural gas pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai 480 MW combined cycle gas-fired power plant, and associated infrastructure.

ConocoPhillips' fields produced about 43,000 barrels per day (bpd)last year and have proven reserves of 213 million barrels of oil equivalent.

The acquisition comprises the indirect acquisition of all of the shares of Phillips Oil Company Nigeria Limited, Phillips Deepwater Exploration Nigeria Limited and Conoco Exploration and Production Nigeria Limited.

Ministerial consent is the mandatory final approval all oil and gas acquisitions by the Honourable Minister of Petroleum Resources as required by the Petroleum Act of 1969 which states that "prior consent of the Minister of Petroleum Resources is obtained before the assignment of any right, power or interest in an oil prospecting license or oil mining lease."

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