Oando Energy Resources announces first quarter results

CALGARY, May 15, 2013 /CNW/ - Oando Energy Resources Inc. ("OER" or the 
"Company") (TSX:OER), a company focused on oil exploration and production in 
Nigeria, today announced financial and operating results for the quarter ended 
March 31, 2013. The unaudited financial statements, notes and management's 
discussion and analysis (MD&A) pertaining to the period are available on the 
System for Electronic Document Analysis and Retrieval ("SEDAR") at 
www.sedar.com and by visiting www.oandoenergyresources.com. All monetary 
figures reported herein are U.S. dollars unless otherwise stated. 
Operational Highlights 
Acquired, effective April 30, 2013, a 40% working interest in the Qua Ibo 
Marginal Field within OML 13, located onshore Nigeria. The asset was evaluated 
with an effective date of December 31, 2012 and the acquisition added 1.04 
million barrels ("MMbbls") of Proved plus Probable (2P) Reserves (oil) and 
2.37 MMbbls of Best Estimate (2C) Contingent Resources (oil) (net to OER, 
before deduction of royalties). See the Company's press releases dated March 
27, 2013 and April 30, 2013 and the Company's material change report dated 
April 8, 2013 for further information regarding this acquisition and the 
Contingent Resources. 


    --  Resumed full production from the Ebendo Field of 1368 barrels
        of oil per day ("bbl/day") (net to OER) following the full
        repair of the Kwale-Akri pipeline;
    --  3,637 bbl/day in average net production for the quarter ended
        March 31, 2013. This represented a 17% decrease from the same
        period last year;
    --  $29.7 million in revenue from the sale of crude for the quarter
        ended March 31, 2013. This represented a 16% decrease from the
        same period last year and was attributable to the natural
        decline in producing reservoirs and shut-in production at the
        Ebendo Field, as was previously announced; and
    --  Average gross sales price realized per barrel of oil produced
        was $114 for the quarter ended March 31, 2013.

Financial Highlights
    --  $(3.1) million in cash flow from operating activities for the
        quarter ended March 31, 2013. This represented a decrease of
        115% from the same period last year;
    --  $10.1 million in capital expenditures for the quarter ended
        March 31, 2013. This represented a decrease of 22% from the
        same period last year;
    --  $232 million in cash and cash equivalents for the quarter ended
        March 31, 2013; and
    --  $480 million in borrowings as at March 31, 2013. These
        borrowings consisted of a US$345 loan from Oando PLC and US$135
        million of bridge loans from a syndicate of Nigerian banks.
        These funds were used to finance a cash deposit required to be
        paid pursuant to the sale and purchase agreements executed in
        connection with the proposed acquisition of Nigerian oil and
        gas assets from ConocoPhillips.

"The past several months were highlighted by the resumption of full production 
from our Ebendo asset as well as the closing of the Qua Ibo acquisition, which 
will add 1.04 million barrels of Proved plus Probable (2P) Reserves and 2.37 
million barrels of Best Estimate Contingent Resources to our growing portfolio 
of Nigerian assets," said OER CEO, Pade Durotoye. "From a transactional 
standpoint, we continue to progress our proposed acquisition of 
ConocoPhillips' Nigerian assets and remain on track to close the transaction 
by the September deadline. This acquisition will, we expect, be a 
transformational one for our company and it is our plan to update the market 
in the months to come."

Selected First Quarter Results
                                                               
                                                             
                    Three months   Three months    $ Change
                    ended March    ended March
                      31, 2013       31, 2012     (US$'000s,  % Change
                                                  except as
                                                  otherwise
                                                  indicated)
                                                             
                                                             
                                   US$'000s,
                                                   2013/2012  2013/2012
                    except as otherwise indicated

Total Revenue              29,702          35,436     (5,734)      -16%

Barrels of oil            334,612         396,747    (62,135)      -16%
equivalent produced
(boe)

Average sales price           114              91          23       25%
per barrel (US$) 
(Gross)

Average sales price         95.85           89.32        6.53        7%
per barrel (US$)
(Net)((1))

Cashflow from             (3,125)           6,229    (10,301)     -115%
operations

Total Comprehensive       (7,699)          12,430    (20,129)     -162%
Income

Total Comprehensive        (0.07)            0.12      (0.19)     -158%
Income on a
per-share basis

Total Assets            1,080,109       1,068,008      12,101        1%

Total non-current         156,462         153,402       3,060        2%
financial
liabilities

((1)) Price excludes royalties (8% on OML 125 (Abo) and 5% on Ebendo), 
Nigerian Government profit share of profit oil on the production sharing 
contract in respect of OML 125 (Abo).

OPERATIONAL UPDATE OML 125

Nigerian Agip Energy ("NAE"), the operator of OML 125, together with the 
Company, completed the work over of Abo-9 well that started in 2012, during 
the three months ended March 31, 2013. The partners also completed the 
drilling of Abo 4ST during the quarter.

Ebendo Marginal Field

Energia Limited ("Energia"), operator of the Ebendo field in OML 56, along 
with Oando Production and Development Company (of which the Company has a 
42.75% economic interest), drilled and completed the Ebendo-4 well during the 
report period. The well was spudded on March 24, 2012, and drilled to a 
total depth of 12,120 feet MD (3697 m MD) which was reached on June 10, 2012. 
The well encountered 10 separate reservoir sands, tagged XV -XXb, with a gross 
pay thickness of 116 m (preliminary figures). Individual thicknesses range 
from 3.6m in the XXb to about 31 m in the XIX (main reservoir sand).

Currently, the Ebendo-4 well was completed in the XIX and the XXa reservoirs. 
The well was tested from July 29 to August 28, 2012. The tests results are not 
necessarily indicative of long-term performance or of ultimate recovery.

The rig moved off the well location on September 28 and skidded to the 
Ebendo-5 location. Drilling of well 5 commenced in the fourth quarter of 2012 
and was completed early in the first quarter of 2013. Well 6 drilling has 
commenced and the expected completion date is the third quarter of 2013.

Other operations of note within the period were the commencement of contract 
for the purchase of pipes for the Umugini pipeline, which is planned as an 
alternative evacuation route to the current routing through the Kwale 
Flowstation operated by Agip Oil Company Limited ("NAOC") . The planned 
pipeline is 53 km long, of which Energia and OER jointly own 25%. The planned 
pipeline is 53 km long. The contract sum to be paid by OER is approximately 
US$8.87 million.

The Ebendo marginal field was shut in as a result of damages to the Kwale-Akri 
oil delivery pipeline that is operated by NAOC. This pipeline connects the 
Ebendo field to the Brass export terminal. The pipeline, which went down on 
November 1, 2012, was repaired and production commenced thereafter on December 
27, 2012. However, a requirement for further repairs resulted in another 
production shut-in from February 13, 2013. Production subsequently resumed 
April 24, 2013.

Akepo Marginal Field

The Company, with its partner Sogenal Limited (as operator), successfully 
re-entered and tested the suspended Akepo-1st well. The drilling rig, Noble 
Lloyd Noble, was demobilized on January 5, 2010 after a 50-day well testing 
and completion program on the Akepo field. Drill Stem Tests (DST) proved 
flowing hydrocarbons in all the three targeted reservoirs.

The test results are not necessarily indicative of long-term performance or of 
ultimate recovery.

The Akepo-1 ST was completed as a two-string multiple completions to produce 
on two strings from two of the three zones, with the third zone selective on 
one of the strings. Following the completion, the Akepo-1 ST was successfully 
flow tested from the D6 sand with good flowing wellhead pressures. There was 
insufficient tank capacity available to further test the D1 or C1 sands. With 
the success of the well test and completion, the partnership is now expecting 
to move towards first oil. The partnership has awarded a contract to build a 
wellhead jacket facility over the well location and lay a 15km pipeline from 
the Akepo Wellhead facility to a nearby crude processing facility, as well as 
negotiating crude handling and sales agreements with the facility owners. 
Due to the earlier than expected onset of the rainy season which has delayed 
pipe lay, first oil is now expected to occur during the fourth quarter of 
2013. There is no certainty that first oil will occur within the expected 
timeline.

OUTLOOK

The Company and its partners have requested more data from NAOC, the pipeline 
operator, at Ebendo. This is to determine the accuracy of the pipeline losses 
being charged to the Company and its partners by NAE. The Company is making 
provision of 17% for such losses and is seeking ways to reduce it. The plan 
the Company has includes volume reconciliation, verification of meters 
accuracy and renegotiation of the crude handling contracts. The success of 
this plan is dependent on the cooperation of NAOC and the other cluster 
members.

The Company, through its partner, is currently involved in the construction of 
the Umugini pipeline to a different export terminal for Ebendo crude. The 
completion of this alternate pipeline is not expected to be until the third 
quarter of 2013. A new purchase agreement may then have to be signed with 
another party for the purchase of Ebendo crude.

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 5,205 bopd from the Abo Field in OML 125 and the 
Ebendo Field in OML 56. 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.

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.

There is no certainty that any portion of the resources referred to herein 
will be discovered and, if discovered, there is no certainty that it will be 
commercially viable to produce any portion of the resources.

Oil and Gas Equivalents

Production information is commonly reported in units of barrel of oil 
equivalent ("boe" or "Mboe" or "MMboe") or in units of natural gas equivalent 
("Mcfe" or "MMcfe" or Bcfe"). However, boe's or Mcfe's may be misleading, 
particularly if used in isolation. A boe conversion ratio of 6 Mcf = 1 barrel, 
or a Mcfe conversion ratio of 1 barrel = 6 Mcf, is based on an energy 
equivalency conversion method primarily applicable at the bumer tip and does 
not represent a value equivalency at the wellhead.

Definitions

"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.

"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.

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. In particular, this news release contains forward-looking 
statements relating to intended acquisitions.

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 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.



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@tmxequicom.com dfeick@tmxequicom.com

SOURCE: Oando Energy Resources Inc.

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

-0- May/16/2013 03:54 GMT


 
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