Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

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

  PR Newswire

  CALGARY, Alberta, March 27, 2013

CALGARY, Alberta, March 27, 2013 /PRNewswire/ --

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
AkwaIbom 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 September 30, 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 C 4.0 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
    plus Possible                       1,404.2          1,334.0

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 Producing     0.00      0.00     0.00      0.00     0.00
           Developed
           Non-Producing           0.00      0.00     0.00      0.00     0.00
           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 Probable    56.94     46.33    38.51     32.58    27.99
    Possible                      29.58     23.61    19.40     16.32    14.00
    Total Proved Plus Probable
    Plus Possible                 86.52     69.94    57.91     48.91    41.99

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
         Producing      0.00          0.00          0.00          0.00          0.00
         Developed
         Non-Producing  0.00          0.00          0.00          0.00          0.00
         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
    Probable           25.49         21.05         17.66         15.03         12.93
    Possible           12.66         10.09          8.29          6.97          5.98
    Total Proved plus
    Probable
    plus Possible      38.15         31.14         25.95         21.99         18.91

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%)              Gross Working
                   Resources[1]               Interest[2]             Net Entitlement[3]
              Low      Best     High     Low      Best     High     Low      Best     High
            Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate  Estim
                                                                                      -ate
    Light
    and
    Medium
    Crude
    Oil
    (Mbbls)  4,263    5,924    7,497    1,705    2,370    2,999    1,620    2,251    2,847

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 February 28, 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 February 28, 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 July 24, 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
Oando Akepo 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 ( http://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. 

For further information:Pade Durotoye, CEO Oando Energy Resources Inc.
pdurotoye@oandoenergyresources.com +1-403-561-1713

Tokunboh Akindele Head Investor Relations Oando Energy Resources Inc.
takindele@oandoenergyresources.com +1-403-560-7450

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

(OER. OER.WT. OER.WT.A.)
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement