Oando Energy Resources announces second quarter results

CALGARY, Aug. 15, 2014 /CNW/ - 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 www.sedar.com and by visiting www.oandoenergyresources.com. All 
monetary figures reported herein are U.S. dollars unless otherwise stated. 
Operational Highlights 


        --  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).

Financial Highlights
                                                                           
    US$'000, except production                     Six Months Ended June 30
    and per share data                             (unless otherwise noted)
                                                  2014                 2013
    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 year period.
        --  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:
      o 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 31st March,
        2014 to CA$ 1.90 per share on 30 June, 2014 and PLC's right to
        convert at CA$ 1.57 per share;
      o $30.7 million financing fee due to Oando PLC, which was recognised
        as a finance expense for the six months period;
      o Non-recurring G&A cost of $27.3 million due to the COP acquisition;
        and
      o 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.

Subsequent Events

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 
our shareholders".

Selected Quarterly Results
                                        For the three months ended
    (US$ '000, except        June 30  March 31 December 31 September 30
    [production and]per
    share                       2014      2014        2013         2013
    data)
    Production (bbls)        413,985   407,802     406,029      363,032
    Total Revenue             30,440    32,163      23,976       37,461
    Net Income for the     (137,668)  (39,881)    (41,008)       11,645
    Period
    Earnings Per Share        (0.24)    (0.14)      (0.32)         0.12
    Diluted Earnings Per      (0.24)    (0.14)      (0.32)         0.12
    Share
    Capital Expenditures      24,355    42,550      45,573       29,684
    Total Assets           1,662,142 1,689,937   1,299,422    1,223,808
    Total Non-Current        245,925   274,812     275,195      206,150
    Liabilities
     

OPERATIONAL UPDATE

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 
station de-bottlenecking.

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 2014.

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 
Africa.

Cautionary Statements

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 
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 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 (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 
securities laws.



SOURCE  Oando Energy Resources Inc. 
Contact 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 
David Feick Investor Relations +1 403-218-2839 dfeick@tmxequicom.com 
To view this news release in HTML formatting, please use the following URL: 
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CO: Oando Energy Resources Inc.
ST: Alberta
NI: OIL ERN  
-0- Aug/15/2014 13:23 GMT
 
 
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