OER Signs Documentation to Acquire 40% Participating Interest in Qua Ibo Marginal Field within OML 13

OER Signs Documentation to Acquire 40% Participating Interest in Qua Ibo 
Marginal Field within OML 13 
CALGARY, March 27, 2013 /CNW/ - Oando Energy Resources Inc. ("OER" or the 
"Company") (TSX: OER) is pleased to announce that, further to its press 
release dated September 17, 2012, it has signed binding documentation ("Final 
Agreements") with Oando Plc ("Oando"), to indirectly acquire, from Oando, 
equity interests in Oando Qua Ibo Limited ("OQI"), a Nigerian company 
established to hold a 40% participating interest in the Qua Ibo Marginal Field 
within Oil Mining Lease 13 ("OML 13") located onshore Nigeria, and Oando 
Reservoir and Production Services Limited, a Nigerian company ("ORPS" and 
together with OQI, the "OQI Companies") (collectively, the "Acquisition"). 
Oando currently holds 94.6% of the issued and outstanding common shares of 
OER. No securities of OER will be issued in relation to the Acquisition and 
completion of the Acquisition will not result in any changes to the 
shareholders of OER. The Acquisition is expected to close on or about April 
12, 2013 (the "Closing Date"), subject to satisfaction of customary closing 
conditions. 
Commenting, Pade Durotoye, OER's Chief Executive Officer, said "We are very 
excited about the transfer of this asset to the OER portfolio as we expect 
that it will significantly increase our resource base and our drive to create 
additional reserves and ramp up our production. The execution of the work 
programme for the development of this asset has already commenced and we look 
forward to it delivering value to us in the short term". 
Asset Overview 
The Qua Ibo Field is located onshore near the mouth of the Qua Ibo River in 
Akwa Ibom state, approximately two kilometres from the Mobil Producing Nigeria 
Qua Ibo Terminal. 
A total of five wells, Qua Ibo -1, Qua Ibo -2, Qua Ibo -3, Qua Ibo -4 and one 
side track (Qua Ibo -3ST1), have been drilled in the Qua Ibo Field, of which 
the latter two were drilled by ORPS and NEPN. The Qua Ibo -1 well was 
plugged and abandoned after inconclusive tests in 1960. The Qua Ibo -2 well 
had indications of oil in six horizons and gas in five zones at depths of 
3,310 to 7,100 feet in 1971. It is currently suspended, but inaccessible. 
The drilling of Qua Ibo -3 appraisal well began in the fourth quarter of 2008 
and was suspended in 2009. The primary objective of Qua Ibo -3 was to 
determine if oil seen in the deeper D 5.0 zone in wells Qua Ibo -1 and Qua Ibo 
-2 was from one continuous pool linking the two wells. This appraisal 
confirmed that the D 5.0 zone is compartmentalized by a fault and that Qua 
Ibo-1 and Qua Ibo-2 are in separate independent fault blocks, D5.0 North and 
D5.0 South. 
Qua Ibo -4, planned as a highly deviated appraisal/development well, was 
spudded on September30,2012 and drilled to a total depth of 6,940 feet 
measured depth (3,964 feet true vertical depth), targeting four of the 
reservoirs which had been prognosed based on the results of the previous 
wells, namely C 1.0 to C4.0 reservoirs. It found 26 feet net oil (specific 
gravity of 18.8 degrees API) at the C 4.0 reservoir, and gas at the C 1.0 and 
C 2.0 reservoirs. An attempt was made to test the C4 reservoir but this was 
unsuccessful due to sand production. The C 3.0 reservoir was wet. The well is 
perforated across the C4 sand and is currently suspended while finalizing 
plans to complete as a single string producer with Electric Submersible Pump 
(ESP). 
Qua Ibo -3 ST1 was re-entered on November 21, 2012 as an updip sidetrack of 
the Qua Ibo -3 well, targeting the D 5.0 reservoir (North). The deviated well 
was drilled to a total depth of 10,773 feet MD (7,260 feet TVD) on December 3, 
2012. 43 feet of oil was encountered in two lobes of the D 5.0 reservoir 
(North). The well was initially completed as a single string selective 
producer, but after testing the lower lobe, the decision was made to 
recomplete the well as a dual string producer. The well is currently testing 
in the upper zone. 
It is expected that Qua Ibo -5, the sixth well in the Qua Ibo Field, will be 
drilled as an additional drainage point to produce the C 4.0 reservoir, also 
with ESP. First oil is expected in the third quarter of 2013 upon the 
successful completion of the Qua Ibo -5 production well, successful testing 
and completion of the Qua Ibo -4 well and tie back to the nearby Qua Ibo 
facilities. The drilling campaign is currently being undertaken and the tie 
back will commence once the wells have been completed and tested. 
Reserves and Resources 
The Petroleum and Renewable Energy Company Limited ("Petrenel"), an 
independent qualified reserves evaluator within the meaning of National 
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 
51-101"), undertook an evaluation of the reserves and resources of the Qua Ibo 
Field in a report dated March 26, 2013 with an effective date of December 31, 
2012 (the "Petrenel Report"). The Petrenel Report was prepared in compliance 
with NI 51-101 and the COGE Handbook. 
Summary of Oil Reserves and Net Present Values of Future Net Revenue as of 
December 31, 2012, based on forecast prices and costs as used by Petrenel in 
the Petrenel Report. 
The following is a summary of the oil reserves and net present values of 
future net revenue of OER associated with the Acquisition as evaluated by 
Petrenel. The estimated future net revenue figures contained in the following 
tables do not necessarily represent the fair market value of OER's reserves. 
There is no assurance that the forecast price and cost assumptions contained 
in the Petrenel Report will be attained and variances could be material. Other 
assumptions relating to costs and other matters are included in the Petrenel 
Report. The recovery and reserve estimates attributed to OER's properties 
described herein are estimates only. The actual reserves attributed to OER's 
properties may be greater or less than those calculated. 
Summary of Oil Reserves 


                             
                            Reserves - Light and Medium Oil
                            Gross(1)             Net(2)
                              Mbbls              Mbbls
                                                           

Proved                                                     

  Developed Producing          0.0                 0.0

  Developed Non-Producing      0.0                 0.0

  Undeveloped                 738.3              701.4

Total Proved                  738.3              701.4

Probable                      303.3              288.2

Total Proved plus Probable  1,041.7              989.6

Possible                      362.5              344.4

Total Proved plus Probable  1,404.2             1,334.0
plus Possible
                                                                              

Notes:                                                                        

1       Represents OQI's working interest share prior to deduction of
        royalties.

2       Represents OQI's working interest share after deduction of
        royalties.
         

Net Present Value of Future Net Revenue as of December 31, 2012
                                                        
                  Before Future Income Tax Expenses(1) and Discounted
                                          at
                  0 per   5 per   10 per   15 per           20 per
                  cent    cent     cent     cent             cent
                                                                 

($000s)                                                          

Proved                                                           

  Developed       0.00    0.00     0.00     0.00             0.00
  Producing

  Developed       0.00    0.00     0.00     0.00             0.00
  Non-Producing

  Undeveloped     34.86   28.91   24.36    20.81             18.00

Total Proved      34.86   28.91   24.36    20.81             18.00

Probable          22.07   17.41   14.14    11.77             10.00

Total Proved Plus 56.94   46.33   38.51    32.58             27.99
Probable

Possible          29.58   23.61   19.40    16.32             14.00

Total Proved Plus 86.52   69.94   57.91    48.91             41.99
Probable
Plus Possible
                                                                

Notes:                                                          

1.       Qua Ibo is assumed to be subject to the terms of the Marginal
         Field Licensing, and the Petroleum Profits Tax has
         been assumed as Income Tax. Unit value is calculated on OQI's
         net reserves
          


                  After Future Income Tax Expenses(1) and Discounted at
                  0 per   5 per   10 per   15 per            20 per
                  cent    cent     cent     cent              cent
                                                                  

($000s)                                                           

Proved                                                            

  Developed       0.00    0.00     0.00     0.00               0.00
  Producing

  Developed       0.00    0.00     0.00     0.00               0.00
  Non-Producing

  Undeveloped     16.15   13.60   11.57     9.93               8.59

Total Proved      16.15   13.60   11.57     9.93               8.59

Probable          9.34    7.45     6.10     5.10               4.35

Total Proved Plus 25.49   21.05   17.66    15.03              12.93
Probable

Possible          12.66   10.09    8.29     6.97               5.98

Total Proved plus 38.15   31.14   25.95    21.99              18.91
Probable
plus Possible
                                                                

Notes:                                                          

1.     Qua Ibo is assumed to be subject to the terms of the Marginal
       Field Licensing, and the Petroleum Profits Tax has
       been assumed as Income Tax. Unit value is calculated on OQI's
       net reserves.
        

The total Proved plus Probable plus possible volume is an arithmetic sum of 
multiple estimates of Proved plus Probable plus Possible reserves, which 
statistical principles indicates may be misleading as to volumes that may 
actually be recovered. Readers should give attention to the estimates of 
individual classes of Proved plus Probable plus Possible and appreciate the 
differing probabilities of recovery associated with each class as explained in 
the appropriate section.

Contingent Resources

All Contingent Resources presented in the table below are considered to be 
economically recoverable based on forecast prices and costs assumed by 
Petrenel in the Petrenel Report.

Values in the table below are unrisked.
                                                               
        Total (100%) Resources(1)  Gross Working Interest(2)        Net Entitlement(3)
          Low     Best     High      Low     Best     High      Low     Best     High
        Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate
                                                                                        

Light     4,263    5,924    7,497    1,705    2,370    2,999    1,620    2,251     2,847
and
Medium
Crude
Oil
(Mbbls)
                                                                

Notes:                                                          

1     Represents OML 13 prior to deduction of royalty.

2     Represents OQI's working interest share prior to deduction of
      royalty.

3     Represents OQI's working interest share after deduction of
      royalty.
       



Classification of these resources as Reserves is contingent upon a successful 
commercial test of the C4.0 resevoir. This will require the implementation of 
a successful solution to sand production which is believed to have plugged the 
Qua Ibo-4 well during testing. The medium/heavy nature of the crude will 
also require successful deployments of ESPs to lift the oil.

Structure of Acquisition

In February 2012, OQI signed a farm-in agreement to acquire a 40% 
participating interest in the Qua Ibo Field from Network Exploration & 
Production Nigeria Limited ("NEPN"), a Nigerian company, which transfer of 
interest remains subject to third party and Nigerian governmental consent. 
Approval of the Nigerian Department of Petroleum Resources was obtained in 
October 2012 and OER now awaits approval from the Nigerian Minister of 
Petroleum Resources. In the event that the consent of the Nigerian Minister 
of Petroleum Resources is not obtained, OQI shall be entitled to certain 
economic interests in the Qua Ibo Field. If the economic interests are for 
any reason unenforceable, then OQI is entitled to be reimbursed by NEPN in 
respect of all the disbursements, costs and contributions made by OQI in 
respect of the development and operation of the Qua Ibo Field. Separately, 
pursuant to the terms of the Farm-In Agreement, OQI has the option and right 
to acquire up to a 40% interest in the share capital of NEPN at an aggregate 
subscription price of US$1 which, so long as the economic interests are valid 
and effective, bear no economic rights or obligations and shall, if the 
economic interests become invalid and ineffective, entitle OQI to 40% of the 
economic rights and benefits in all distributions of NEPN.

As the Qua Ibo Field is a marginal field, the royalties which OER and NEPN are 
required to pay to the Nigerian government are treated favourably in 
accordance with applicable Nigerian law. Pursuant to the joint operating 
agreement, NEPN is operator of the Qua Ibo Field. In addition, ORPS is 
technical services provider and accordingly oversees, together with NEPN, the 
operations on the Qua Ibo Field. In its role as technical services provider, 
ORPS has agreed to fund NEPN's share of development costs on the Qua Ibo Field 
until first oil, following which it will be entitled to be reimbursed for 
these costs, plus a 10% fee.

Pursuant to a financing agreement between ORPS and NEPN (the "Financing 
Agreement"), ORPS agreed to provide funding to NEPN, on a secured basis, of up 
to US$90 million. As at February28,2013, the amount drawn down by NEPN 
was approximately US$28.4 million. In order for ORPS to fund the ORPS Loan 
and for OQI to fund its obligations as the holder of a 40% working interest in 
the Qua Ibo Field, OQI entered into a secured loan agreement with Diamond Bank 
plc, a Nigerian bank, providing for a facility of US$100 million (the "Diamond 
Bank Loan"). As at February28,2013, the amount drawn down under the 
Diamond Bank Loan was US$45 million. The security for the Diamond Bank Loan 
comprises pledges over the shares of OQI, as well as an assignment of the 
proceeds from the sale of crude oil from OML 56 (Ebendo). Oando is a 
guarantor of the Diamond Bank Loan.

Pursuant to the Referral and Non-Competition Agreement between Oando and OER 
dated July24,2012 and the Heads of Agreement between Oando and OER dated 
September 17, 2012, Oando agreed to sell its interests in the Qua Ibo Field to 
the Company for a purchase price consisting of all properly documented and 
commercially reasonable expenses incurred by Oando relating to its acquisition 
up to the closing date of the Acquisition, plus an administrative fee of 
1.75%. As at February 28,2013, Oando's properly documented and 
commercially reasonable expenses, including plus the 1.75% administrative fee 
and including fees and interest payable under the Diamond Bank Loan, 
aggregated to approximately US$3,333,355. OER and Oando have agreed that OER 
will calculate the purchase price within 60 days of the Closing Date, 
following which the purchase price will need to be paid. The Acquisition was 
negotiated at arm's length between OER and Oando.

On the Closing Date, OER will, through indirect wholly-owned Dutch 
subsidiaries, acquire shares of the OQI Companies. The shares to be 
indirectly acquired by OER will entitle it to 40% voting rights and the right 
to receive all of the dividends and distributions from the Qua Ibo Field 
(other than on liquidation). Oando will also own shares in the OQI 
Companies, which will entitle Oando to 60% voting rights but no rights to 
receive dividends or distributions from the Qua Ibo Field (other than on 
liquidation). OER, through the indirect wholly-owned Dutch subsidiaries, 
will enter into shareholders agreements with Oando governing how the shares of 
the OQI Companies can be exercised and transferred. These shareholder 
agreements will be substantially similar to the shareholder agreements 
relating to OandoAkepo Limited, Oando Petroleum Development Company Limited 
and Oando OML 125&134 Limited.

OER Approval Process

Prior to the execution of the Final Agreements relating to the Acquisition, 
OER's Corporate Governance Committee, comprised of the independent directors 
of the Company, met several times to review materials prepared in relation to 
the Acquisition, including the Petrenel Report, a legal due diligence report, 
as well as a reservoir engineering peer review report. OER also obtained an 
audit opinion which stated that the schedule of costs incurred by Oando until 
September 30, 2012 was prepared, in all material respects, in accordance with 
the financial reporting provisions in the share purchase agreements providing 
for the indirect acquisition by OER of equity interests in the OQI 
Companies. Following these meetings, the Corporate Governance Committee 
unanimously recommended to the board of directors of OER that they approve the 
execution of the Documentation.

TSX Approval and Multilateral Instrument 61-101

As a "non-exempt issuer" OER is subject to Part V of the Toronto Stock 
Exchange Company Manual (the "Manual"). Pursuant to section 501(c) of the 
Manual, where the value of consideration to be received by a related party in 
a transaction exceeds 10% of the market capitalization of the issuer, the TSX 
will require that the transaction be approved by the issuer's security 
holders, other than the related party. Pursuant to the Final Agreements, OER 
will pay to Oando the sum of $3,333,355 (the "Cash Payment") and assume, 
indirectly, on a consolidated basis, the obligations owing by the OQI 
Companies under the Diamond Bank Loan and otherwise (the "Underlying 
Obligations"). The Cash Payment equals approximately 2.8% of OER's market 
capitalization (as at February 28, 2013), whilst the Cash Payment and the 
Underlying Obligations, taken as a whole, exceeds 42% of OER's market 
capitalization (as at February 28, 2013). The Underlying Obligations do not 
take into account underlying receivables owed to the OQI Companies from third 
parties, which are substantial. In light of the potential to view the 
consideration payable to Oando as exceeding 10% of the market capitalization 
of OER, OER has, in consultation with the TSX, relied on section 604(f) of the 
Manual. Pursuant to section 604(f) of the Manual, security holder approval is 
not required where at least ninety percent (90%) of the issuer's equity and 
outstanding voting securities are held by one person.

OER is issuing this press release pursuant to section 604(f) of the Manual and 
accordingly the Closing Date will be at least 10 business days from the date 
hereof. In addition, the board of directors of OER have concluded, pursuant 
to the requirements of Multilateral Instrument 61-101 - Protection of Minority 
Security Holders in Special Transactions ("MI 61-101"), that neither the fair 
market value of, nor the fair market value of the consideration for, the 
Acquisition, insofar as it involves interested parties, exceeds 25% of OER's 
market capitalization (as defined in MI 61-101). The Closing Date is 
expected to be less than 21 days after the date hereof as a result of the 
commercial agreement between OER and Oando.

About Oando Energy Resources Inc. (OER)

OER currently has a broad suite of producing, development and exploration 
properties in the Gulf of Guinea (predominantly in Nigeria) with current 
production of approximately 3,500 barrels of oil per day. OER has been 
specifically structured to take advantage of current opportunities for 
indigenous companies in Nigeria, which currently has the largest population in 
Africa, and one of the largest oil and gas resources in Africa.

Forward Looking Statements:

This news release contains forward-looking statements and forward-looking 
information within the meaning of applicable securities laws. The use of any 
of the words "expect", "anticipate", "continue", "estimate", "objective", 
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends" 
and similar expressions are intended to identify forward-looking information 
or statements.

Although the Company believes that the expectations and assumptions on which 
such forward-looking statements and information are reasonable, undue reliance 
should not be placed on the forward-looking statements and information because 
the Company can give no assurance that such statements and information will 
prove to be correct. Since forward-looking statements and information address 
future events and conditions, by their very nature they involve inherent risks 
and uncertainties.

Actual results could differ materially from those currently anticipated due to 
a number of factors and risks. These include, but are not limited to: risks 
related to the proposed acquisition of the Qua Ibo Field, risks related to the 
international operations, the actual results of current exploration and 
drilling activities, changes in project parameters as plans continue to be 
refined and the future price of crude oil. Accordingly, readers should not 
place undue reliance on the forward-looking statements. Readers are cautioned 
that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect the 
Company's financial results are included in reports on file with applicable 
securities regulatory authorities and may be accessed through the SEDAR 
website (www.sedar.com) for the Company. The forward-looking statements and 
information contained in this news release are made as of the date hereof and 
the Company undertakes no obligation to update publicly or revise any 
forward-looking statements or information, whether as a result of new 
information, future events or otherwise, unless so required by applicable 
securities laws.

Cautionary Statements

There is no certainty that it will be commercially viable to produce any 
portion of the Contingent Resources.

The estimates of reserves and future net revenue for individual properties may 
not reflect the same confidence level as estimates of reserves and future net 
revenue for all properties, due to the effects of aggregation.

"Reserves" are estimated remaining quantities of oil and natural gas and 
related substances anticipated to be recoverable from known accumulations, as 
of a given date, based on analysis of drilling, geological, geophysical, and 
engineering data; the use of established technology; specified economic 
conditions, which are generally accepted as being reasonable, and shall be 
disclosed. Reserves are classified according to the degree of certainty 
associated with the estimates.

"Proved Reserves" are those Reserves that can be estimated with a high degree 
of certainty to be recoverable. It is likely that the actual remaining 
quantities recovered will exceed the estimated Proved Reserves.

"Probable Reserves" are those additional Reserves that are less certain to be 
recovered than Proved Reserves. It is equally likely that the actual remaining 
quantities recovered will be greater or less than the sum of the estimated 
Proved plus Probable Reserves.

"Possible Reserves" are those additional Reserves that are less certain to be 
recovered than Probably Reserves. It is unlikely that the actual remaining 
quantitates recovered will exceed the sum of the estimated Proved plus 
Probable plus Possible Reserves.

"Contingent Resources" are those quantities of petroleum estimated, as of a 
given date, to be potentially recoverable from known accumulations using 
established technology or technology under development, but which are not 
currently considered to be recoverable due to one or more contingencies. 
Contingencies may include factors such as economic, legal, environmental, 
political and regulatory matters or lack of infrastructure or markets. It is 
also appropriate to classify as contingent resources the estimated discovered 
recoverable quantities associated with a project in the early evaluation 
stage. Contingent resources are further classified in accordance with the 
level of certainty associated with the estimates and may be sub-classified 
based on project maturity and/or characterized by their economic status.

"Best Estimate" is considered to be the best estimate of the quantity of 
resources that will actually be recovered. It is equally likely that the 
actual remaining quantities recovered will be greater or less than the best 
estimate. Those resources that fall within the best estimate have a 50% 
confidence level that the actual quantities recovered will equal or exceed the 
estimate.

"Low Estimate" is considered to be a conservative estimate of the quantity of 
resources that will actually be recovered. It is likely that the actual 
remaining quantities recovered will exceed the low estimate. Those resources 
at the low end of the estimate range have the highest degree of certainty - a 
90% confidence level - that the actual quantities recovered will equal or 
exceed the estimate.

"High Estimate" is considered to be an optimistic estimate of the quantity of 
resources that will actually be recovered. It is unlikely that the actual 
remaining quantities of resources recovered will meet or exceed the high 
estimate. Those resources at the high end of the estimate range have a lower 
degree of certainty - a 10% confidence level - that the actual quantities 
recovered will equal or exceed the estimate.



Pade Durotoye, CEO Oando Energy Resources Inc. 
pdurotoye@oandoenergyresources.com +1403 561 1713

Tokunboh Akindele Head Investor Relations Oando Energy Resources Inc. 
takindele@oandoenergyresources.com +1403 560 7450

Jeremy Dietz/David Feick Investor Relations +1 403 218 2833 
jdietz@equicomgroup.com dfeick@equicomgroup.com

SOURCE: Oando Energy Resources Inc.

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CO: Oando Energy Resources Inc.
ST: Alberta
NI: OIL MNA 

-0- Mar/27/2013 21:00 GMT


 
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