Oando raises $1.66b fund to complete ConocoPhilips acquisition

Oando raises $1.66b fund to complete ConocoPhilips acquisition

Posted by Sylvester on Wednesday, January 8, 2014 0

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Nigeria’s indigenous energy group, Oando plc said it has successfully raised $1.66 billion equivalent to N265.6 billion to complete its purchase of ConocoPhiliphs’ assest.

The Energy group which listed on both the Nigerian and Johannesburg Stock Exchange has succeeded in securing all financing required towards the acquisition of the assets

According to SBG Securities Oil & Gas Analyst, Gbenga Sholotan said “Oando recently raised an aggregate of US$442m through the sale of the East Horizon Gas Company for $250 million and a special placement of 2.05bn shares for $192 million.

All funding sources have now been secured to be in a position to close the ConocoPhillips Nigeria (COPN) asset acquisition. We do not consider the need to obtain the minister of petroleum’s consent as a major risk to this transaction, given antecedents of divestments over the last three years.”

Corporate Communications Manager of Oando plc, Alero Balogun in a statement said the company had 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 Corporate Communications Manager added that once concluded, the ConocoPhillips transaction will substantially boost Oando Energy Resources’ (OER) operations, with circa production of 50,000boepd post acquisition, generating extensive growth in revenue and profitability. Stressing that the acquisition will immediately position OER as the largest indigenous oil producer in Nigeria, as the company will also grow its 2P reserves and 2C resources by 221MMboe and 492MMboe respectively.

Recall that Nigeria has suffered capital flight in excess of $10 billion or N159 trillion in the last four years as a result of divestments from the oil and gas industry by some international oil companies, IOCs.

For example, Shell, the leading oil producer in Nigeria said in 2012 that it was holding back a planned investment of about $30 billion in two offshore deepwater projects.

Meanwhile, Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Andrew Yakubu, said the of divestments of certain onshore oil blocks by some IOC would not lead to crisis in the nation’s oil and gas industry.

According to him, “These are not withdrawals in the real sense of withdrawals. The fact is that a number of these IOCs are moving into more challenging frontiers in the deep offshore and are leaving the onshore blocks which they consider less challenging,” he said.

The NNPC GMD noted that the major players that were divesting had actually been sitting on those acreages and had allowed them to go fallow for years without significant development.

“So it is only fair for them to release these blocks so that others, especially the indigenous operators, can have the blocks and grow in the upstream business.

“This indeed is a good development and I think we are moving in the right direction,” he said.

The GMD hinted that the divestment offered immense opportunities for the nation’s  indigenous flagship upstream operator, NNPC, to grow its capacity and capability, especially as it strives to meet the aggressive target of daily crude production of 250,000 barrels by 2020.