Oando Energy Resources Announces Second Quarter Results
CALGARY, Alberta, August 15, 2014
CALGARY, Alberta, August 15, 2014 /PRNewswire/ --
Oando Energy Resources Inc. (" OER " or the " Company ") ( TSX:OER) , a
company focused on oil and gas exploration and production in Nigeria, today
announced financial and operating results for the six month period ended June
30, 2014. The unaudited financial statements, notes and management's
discussion and analysis 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.
*Production from existing assets for the six months ended June 30, 2014 was
821,786 bbls (an average of 4,540 barrels per day) compared to 687,757
bbls (an average of 3,800 barrels per day) for the comparative period
primarily as a result of improved well optimization at OML 125;
*The average net sales price of $76.18/bbl for the six months ended June
30, 2014 declined by 20.3% from $95.64/bbl in the comparative period;
*Progressed construction of the 45,000 bbls/d Umugini pipeline, designed as
an alternative evacuation route for the OML 56 (Ebendo Field) asset, with
a target completion date of Q4, 2014; and
*Completion of the $1.5 Billion acquisition of ConocoPhillips' Nigeria
Business Unit (the COP Acquisition).
Six Months Ended June 30
US$'000, except production and per share data (unless otherwise noted)
Revenue 62,603 65,774
Barrels of oil produced (bbl) 821,786 687,757
Average sales price per barrel (Gross) 108.79 109.00
Average sales price per barrel (Net, Including
unrecognized revenue) 91.25 95.64
Average sales price per barrel (Net) 76.18 95.64
Cash flows from operating activities (11,220) (22,171)
Comprehensive income/(loss) (177,549) (8,866)
Net income/(loss) per share: Basic (0.41) (0.08)
Net income/(loss) per share: Diluted (0.41) (0.08)
Total assets 1,662,142 1,299,422
Total non-current Financial liabilities 245,925 275,195
*The average net sales price of $76.18/bbl for the six months ended June
30, 2014 declined by 20.3% from $95.64/bbl in the comparative period, due
to the non-recognition of $13.0 million in revenues related to excessive
liftings' by the NNPC at OML 125. If the unrecognised revenues of $13.0
million related to excessive NNPC liftings' at OML 125 was recognized, the
net average sales price per barrel would be $91.25 for the six months
ended June 30, 2014.
*Cash outflow from operating activities for the six months ended June 30,
2014 was $11.2 million, compared to $22.2 million in the comparative prior
*For the six months ended June 30, 2014 revenue declined from the
comparative period by $3.2 million. During this period, lower realized net
sales prices reduced revenues by $13.4 million and increased production
increased revenues by $10.2 million. Lower revenues from lower realized
net sales prices were primarily due to $13.0 million in unrecognized
revenue at OML 125. Increases in production were due primarily to
increased production at OML 125 and the Ebendo Field (OML 56). OML 125
production increased by 17% to 651,000 bbls in the six months ended June
30, 2014 from 557,000 bbls in the comparative period. The Ebendo Field
(OML 56) production increased by 30% to 171,000 bbls in the six months
ended June 30, 2014 from 131,000 bbls in the comparative period.
*The $177.5 million loss is attributed to the following:
*Fair value loss on financial instruments of $106.9 million in the
quarter driven primarily by warrants and equity conversion rights
held by Oando PLC, these losses were recognised due to the large
swing in OER's share price from CA$ 1.31 per share on 31 ^st March,
2014 to CA$ 1.90 per share on 30 June, 2014 and PLC's right to
convert at CA$ 1.57 per share;
*$30.7 million financing fee due to Oando PLC, which was recognised as
a finance expense for the six months period;
*Non-recurring G&A cost of $27.3 million due to the COP acquisition;
*Unrecognized revenue of $13.0 million from production at OML 125
related to excessive liftings' by the NNPC.
*Capital expenditures for the six months ended June 30, 2014 were $66.9
million, compared to $44.7 million for comparative period.
On July 30, 2014, the Corporation completed the acquisition of ConocoPhillips
Nigerian business unit, with an effective date of January 1, 2012. The final
purchase consideration for the Acquisition transferred on July 30, 2014, net
of working capital adjustments, transaction costs, purchase price adjustments
was $1.5 Billion. The total reserves and resources associated with this
transaction are; Proved plus Probable Reserves of 211.6 million barrels oil
equivalent ("MMboe"); Best Estimate Contingent Resources of 498.6 MMboe;
Unrisked Best Prospective Resources of 656.9 MMboe.
"This half year we have witnessed a 20% growth in production against last
year, due to optimization processes on our current producing assets". said
CEO, Pade Durotoye, "we are truly excited at the 9 fold ramp up in production
that we are experiencing in H2, 2014 as well as a much larger corporation, as
a result of our completion of the acquisition of the ConocoPhillips Nigeria
business unit, our immediate outlook will be to integrate the systems,
processes and people towards growing the business and creating true value for
Selected Quarterly Results
For the three months ended
(US$ '000, except June 30 March 31 December 31 September 30
[production and] per share
data) 2014 2014 2013 2013
Production (bbls) 413,985 407,802 406,029 363,032
Total Revenue 30,440 32,163 23,976 37,461
Net Income for the Period (137,668) (39,881) (41,008) 11,645
Earnings Per Share (0.24) (0.14) (0.32) 0.12
Diluted Earnings Per Share (0.24) (0.14) (0.32) 0.12
Capital Expenditures 24,355 42,550 45,573 29,684
Total Assets 1,662,142 1,689,937 1,299,422 1,223,808
Liabilities 245,925 274,812 275,195 206,150
OML 125 (Abo Field)
Budgeted capital expenditures for OML 125 for the six months ended June 30,
2014 was $26.6 million. The Corporation incurred expenditures of $40.7 million
during the first six months of the year on Abo 8 and Abo 12 drilling and
completion activities, FPSO revamp and Abo 3 flow line de-sanding.
Abo 8 re-entry and completion was budgeted at $9.1 million with actual
expenditure incurred to date being $5.8 million with remedial works still
ongoing to put the well back on stream. Abo 12 drilling and completion was
budgeted at $12.9 million for the first half of the year. Actual expenditure
to date of $20 million has been incurred. The increase in expenditure was as a
result of a delay in completion costs. The well is temporarily plugged pending
planned hook up in 2015.
Abo 3 flow line de-sanding costs of $5.5 million was incurred during the first
six months of the year but was not budgeted for in 2014. This expenditure was
incurred as a result of plugged flow lines from sand production. Remedial
works are ongoing to put well back on stream.
FPSO revamp activities were planned for the fourth quarter of 2014 at a budget
of $4.5 million. However, this expenditure was incurred during the first six
months of the year at a cost of $5.6 million.
OML 56 (Ebendo Field)
Budgeted capital expenditures for OML 56 for the six months ended June 30,
2014 was $11 million. The Corporation spent $9.2 on Umugini pipeline
construction and Ebendo Well 7 drilling and completion activities and flow
The Umugini pipeline project over the course of the year has achieved
completion milestones around fiber optic cable laying and pipeline works and
projected delivery date remain to be completed during the fourth quarter of
2014. Ebedo Well 7 was successfully drilled and completed on the 1 ^st of
April 2014. The well has since been shut in pending completion of Umugini
pipeline. The Akri-Kwale flow lines were also de-bottlenecked during the first
six months of the year to increase crude production capacity for the field.
The cost of de-bottlenecking was $1.1 million.
OML 13 (Qua Ibo Field)
Budgeted capital expenditures for OML 13 - Qua Ibo field were set at $40.6
million for 2014. In the six months ended June 30, 2014, the Corporation
incurred capital expenditures of about $9.4 million on pipeline and facility
costs as well as flow station construction. Oil production from the Qua Ibo
field's D5 reservoir is expected to commence in the fourth quarter of 2014
after the commissioning of a crude processing facility which is currently
under construction and should be finalized in the third quarter of 2014.
Production from the C4 reservoir of the Qua Ibo is expected to commence in the
first quarter of 2015.
OML 134 (Oberan Field)
Budgeted capital expenditures for OML 134 were set at $7.4 million for 2014.
In the six months ended June 30, 2014, the Corporation paid $7 million of the
costs incurred on exploratory activities related to the Mindiogboro prospect.
Based on results from the drilling of the exploration well into the
Mindiogboro prospect, the Corporation plans to continue geological,
geophysical, and environmental studies in 2015.
OML 90 (Akepo Field) and Blocks 5 & 12, EEZ of São Tomé & Príncipe
Budgeted capital expenditures for OML 90 and Block 5 and 12, EEZ of Sao Tome &
Principe were set at $2.0 million and $5.2 million, respectively, for 2014. No
significant capital expenditures were incurred in these fields in the six
months ended June 30, 2014. For OML 90, planned capital expenditures to
develop an evacuation route for crude production remain. For Blocks 5 & 12,
planned capital expenditures related to a four year work programme of 2D and
3D seismic acquisition and studies remains.
About Oando Energy Resources Inc. (OER)
OER currently has a broad suite of producing, development and exploration
assets in the Gulf of Guinea (predominantly in Nigeria). OER's sales
production was 41,071 boe/d in 2013 and 44,512 boe/d in the first half of
Reserves and resources attributable to OER as of July 31, 2014 include Proved
plus Probable reserves of 230.6 MMboe, Best Estimate Contingent Resources of
547.3 MMboe and Risked Best Prospective Resources of 525.2 MMboe.
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
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 integration of assets acquired under
the COP acquisition, 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 ) under 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
SOURCE: Oando Energy Resources Inc.
For further information:
Contact Information: Pade Durotoye, CEO Oando Energy Resources Inc.
Tokunboh Akindele Head Investor Relations Oando Energy Resources Inc.
David Feick Investor Relations +1-403-218-2839 firstname.lastname@example.org
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