Oando Energy Resources announces second quarter results
CALGARY, Alberta, August 15, 2013
CALGARY, Alberta, August 15, 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 June 30, 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.
*2,500 barrels of oil per day ("bopd") (1,069 bopd net to OER) in
additional production capacity from the Ebendo Marginal Field following
the successful completion of the Ebendo-5 well;
*3,924 bopd (net to OER) in average production for the six months ended
June 30, 2013. This represented an 12% decrease from the same period last
*$36.1 million in revenue from the sale of crude for the quarter ended June
30, 2013. This represented an 8% increase from the same period last year
and was a reflection of comparatively higher oil prices in 2013 versus
*Average gross sales price realized per barrel of oil produced was $109 for
the six months ended June 30, 2013.
*Filed a Cdn$550 million preliminary short form base shelf prospectus with
the securities regulators in each province of Canada, except for the
Province of Quebec;
*$(22.2) million in cash flow from operating activities for the six months
ended June 30, 2013. The decrease was primarily a result of changes in
working capital brought about by increase in receivables;
*$41.6 million in cash flow from operating activities excluding changes in
working capital for the six months ended June 30, 2013. This represented
an increase of 6% from the same period last year.
*$24.0 million in property, plant and equipment for the six months ended
June 30, 2013. This represented an increase of 68% from the same period
*$1.89 million in cash and cash equivalents as at June 30, 2013; and
*$208.0 million in long-term liabilities as at June 30, 2013. This
represented an increase of 17% from the period ended December 31, 2012.
The increase was primarily a result of an additional loan from Diamond
Bank plc to fund the Qua Ibo Marginal Field development project.
"Our second quarter was characterized by the continued progression of our
proposed acquisition of ConocoPhillips' Nigerian assets through the filing of
a Cdn$550 million preliminary short form base shelf prospectus as well as by
our operational activities that have grown our existing production capacity by
3,454 bopd," said OER CEO, Pade Durotoye. "Looking forward, our team remains
focused on becoming Nigeria's leading indigenous energy company by completing
this proposed acquisition and maximizing the value inherent in our current
suite of high quality assets."
Selected Second Quarter Results
Six months ended June 30 except as
2013 2012 indicated)
except as otherwise
Total Revenue 65,774 68,908 (3,134)
Barrels of oil equivalent produced (bbl) 687,778 784,775 (96,997)
Average sales price per barrel (US$) (Gross) 109 91 18
Average sales price per barrel (US$) (Net)(1) 96 89 7
Cashflow from operations -22,171 26,977 -49,148
Total Comprehensive Income -8,866 20,805 -29,671
Total Comprehensive Income on a per-share basis -0.08 0.17 -0.25
Total Assets 1,193,585 1,127,050 66,535
Total non-current financial liabilities 207,981 177,699 30,282
^(1) Price excludes royalties (8% on OML 125 and 5% on Ebendo Marginal Field),
Nigerian Government profit share of profit oil on the production sharing
contract in respect of OML 125.
Ebendo Marginal Field
Oando Petroleum Development Company (OPDC) in conjunction with Energia
Limited, the operator of the Ebendo Marginal Field, drilled and initially
completed the Ebendo-5 well with the Acme Rig 5, after which the rig was
demobilized. The well was drilled to a total vertical depth (TVD) of 11,513
(12,325 ftah ) and encountered eight hydrocarbon bearing sands. Ebendo-5 was
initially completed as a two string multiple on three zones (XV, XVIIIc &
XVIIId). The well, which is expected to provide an additional 1,069 bopd (net
to OER) in production capacity, is currently closed-in pending the completion
of the alternative Umugini pipeline & evacuation infrastructure.
With the completion of the surface locations for additional wells, 6 and 7,
another rig, Deutag T-26, was mobilized to drill the Ebendo-6 well in order to
appraise the shallow reservoir and develop the intermediate reservoirs earlier
discovered during the drilling of the Ebendo-4 and Ebendo-5 wells. The
Ebendo-6 well was drilled to a total depth of 11,268 ft MD (10,712 ft TVD) and
discovered two shallow reservoirs (located in the XIIa & XIII sands) and
further appraised five intermediate reservoirs (located in the XV, XVI, XVII,
XVIIIa & XVIIIb sands).The Ebendo-6 well was being perforated and tested
across the XV and XVI sands during the end of the reporting period and will be
initially completed as a dual producer and closed-in.
A contract has been awarded and work has commenced on laying the alternative
pipeline to the Umusadege-Kwale-Agip's Brass evacuation route, which is
intended to go to Shell's Ogini-Forcados terminal. The total contract sum,
which was originally sanctioned at $35.5 million by the pipeline consortium,
has been subsequently revised to $64.1 million, (OER's share: $6.9 million).
Expected completion is in the fourth quarter of 2013 with commissioning
anticipated by the first quarter of 2014.
OML 125 (Abo Field)
Oando OML125 Ltd, in conjunction with Nigeria Agip Energy ("NAE"), operator of
OML 125, has commenced the Abo Phase 3 development plan and successfully
completed the sidetrack of the Abo-4 well with a moored semi-submersible rig,
the GSF-135,which was subsequently demobilized. Another dynamically
positioning rig, the Sedco-Express, has since mobilized and commenced work to
re-enter the Abo-3 well for an up-dip sidetrack.
Akepo Field Marginal Field
The second part of Akepo field development, which comprises the construction
of evacuation infrastructure (wellhead jacket, pipelines, and a tie-in to
Nigerian National Petroleum Corporation/NAE/ConocoPhillips' Beniboye flow
station) remained stalled in 2013 due to contractor issues, which limited
execution capability. With escalating costs and a limited favourable offshore
weather window for shallow offshore activities, the original lump sum contract
has been broken up and the offshore jacket installation and pipe lay scope was
Qua Ibo Field Marginal Field
OER, through its companies Oando Qua Iboe (OQIL) & Oando Reservoir and
Production Services (ORPS) owns a 40% operating interest (subject to
government consent) in the Qua Ibo Marginal Field and provides financial and
technical services to Network Exploration & Production Nigeria Limited, the
60% equity owner of the field and operator.
The Company completed Phase 1 activities during the second quarter of 2013,
which consisted of drilling and completing the QI-4 and QI-3ST1 wells. The
QI-4 well, which was intended as an appraisal/development well, was drilled to
a total depth of 6,840 ft MD (3,964 ft TVD) in order to appraise the shallower
C-levels sands. It encountered natural gas in the C1 reservoir and oil in the
C4 reservoir. The well was subsequently converted to a development well and
was completed as a single string electrical submersible pump producer. Owing
to currently limited crude storage & handling capacity, the production testing
has been postponed until the oil evacuation infrastructure & surface
facilities are completed.
QI-3ST1, a sidetrack targeting the D5 North reservoir, was drilled to a total
depth of 10,773 ft MD (7,118 ft TVD), and encountered oil in two distinct
lobes (upper and lower) in the D5 North reservoir. The well, which was
initially completed as a single string selective producer, was subsequently
re-completed as a dual string producer with the D5 north lower reservoir
producing 950 bopd (0.51 mmscf/d) and the D5 North upper reservoir producing
1,078 bopd (0.83 mmscf/d), on 28/64'' choke.
Both strings are currently shut-in pending the completion & commissioning of
the crude processing facilities & evacuation infrastructure.
The Qua Ibo oil evacuation infrastructure, consisting of the crude processing
facility which is undergoing front end engineering design (FEED) and tie-in to
a jointly operated group gathering facility (GGF) that subsequently will tie
in to ExxonMobil's Qua Ibo Terminal, is in advanced stages of completion.
Acquisition of ConocoPhillips' Nigerian Assets
During the second quarter of 2013, the Company pursued a number of
integration-related activities in order to ensure the appropriate technical
synergies and a more robust assessment of Concophillips' Nigerian assets.
This included finalizing specifications for subsurface software applications,
hardware, document and data archiving, as well as progressing the various
procurement processes. Financing-related efforts are continuing as scheduled.
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 5,100 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.
See the Company's Form 51-101F1 filed under the Company's profile on SEDAR at
http://www.sedar.com on April 1, 2013.
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 burner tip and does
not represent a value equivalency at the wellhead. Readers are cautioned that
boe may be misleading, particularly if used in isolation.
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.
firstname.lastname@example.org +1-403-561-1713Tokunboh Akindele Head
Investor Relations Oando Energy Resources Inc.
email@example.com +1-403-560-7450Jeremy Dietz/David Feick
Investor Relations +1-403-218-2833 firstname.lastname@example.org email@example.com
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