Oando Energy Resources announces second quarter results
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 year; - $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 2012; and - 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 last year; - $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
$ Change (US$'000s, Six months ended June 30 except as otherwise 2013 2012 indicated) US$'000s, 2013/2012 except as otherwise indicated 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
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 re-awarded.
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
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
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 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
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 securities laws.
For further information: Pade Durotoye, CEO Oando Energy Resources Inc. email@example.com +1-403-561-1713 Tokunboh Akindele Head Investor Relations Oando Energy Resources Inc. firstname.lastname@example.org +1-403-560-7450 Jeremy Dietz/David Feick Investor Relations +1-403-218-2833 email@example.com firstname.lastname@example.org
SOURCE Oando Energy Resources Inc.