Oando Energy Resources Announces First Quarter Results
CALGARY, May 16, 2013
CALGARY, May 16, 2013 /PRNewswire/ --
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 http://www.sedar.com and by
visiting http://www.oandoenergyresources.com . All monetary figures reported
herein are U.S. dollars unless otherwise stated.
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
*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
*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;
*Average gross sales price realized per barrel of oil produced was $114 for
the quarter ended March31,2013.
*$(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,
*$480 million in borrowings as at March 31, 2013. These borrowings
consisted of a US$345 loan from Oando PLC and US$135 million of bridge
loans from a syndicate of Nigerian banks. These funds were used to finance
a cash deposit required to be paid pursuant to the sale and purchase
agreements executed in connection with the proposed acquisition of
Nigerian oil and gas assets from ConocoPhillips.
"The past several months were highlighted by the resumption of full production
from our Ebendo asset as well as the closing of the Qua Ibo acquisition, which
will add 1.04 million barrels of Proved plus Probable (2P) Reserves and 2.37
million barrels of Best Estimate Contingent Resources to our growing portfolio
of Nigerian assets," said OER CEO, Pade Durotoye. "From a transactional
standpoint, we continue to progress our proposed acquisition of
ConocoPhillips' Nigerian assets and remain on track to close the transaction
by the September deadline. This acquisition will, we expect, be a
transformational one for our company and it is our plan to update the market
in the months to come."
Selected First Quarter Results
Three months Three months except as % Change
ended March ended March otherwise
31, 2013 31, 2012 indicated)
US$'000s, 2013/2012 2013/2012
except as otherwise indicated
Total Revenue 29,702 35,436 (5,734) -16%
Barrels of oil
equivalent produced (boe) 334,612 396,747 (62,135) -16%
Average sales price
per barrel (US$) (Gross) 114 91 23 25%
Average sales price
per barrel (US$) (Net)(1) 95.85 89.32 6.53 7%
Cashflow from operations (3,125) 6,229 (10,301) -115%
Total Comprehensive Income (7,699) 12,430 (20,129) -162%
Total Comprehensive Income
on a per-share basis (0.07) 0.12 (0.19) -158%
Total Assets 1,080,109 1,068,008 12,101 1%
financial liabilities 156,462 153,402 3,060 2%
^(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
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
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.
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
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.
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.
"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
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
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 ( 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
For further information:
Pade Durotoye, CEO Oando Energy Resources Inc.
Tokunboh Akindele Head Investor Relations Oando Energy Resources Inc.
Jeremy Dietz/David Feick Investor Relations +1-403-218-2833
Press spacebar to pause and continue. Press esc to stop.