Chibisi Ohakah, Abuja

Oando, a Nigerian oil company, has announced plans to raise fresh capital over the next two years. Although the mode of raising the new capital is not stated yet, the new capital will enable the company to offset debts arising from the acquisition of Conoco Phillips’ Nigerian assets in 2014. The lingering debt portfolio is said to be one of the reasons the oil company has not paid dividend to shareholders.

The company’s chief executive officer, Mr Wale Tinubu told Reuters that with the capital, Oando will be able to pay dividends and bounce back into the business. Analysts agree that Oando succeeded in transforming in the past few years from being a fuel retailer to a major oil producer, and now compete with multinationals such as Shell, Chevron, Agip and ExxonMobil, but its growth has been largely built on debt.

In July 2014, Oando Plc announced the acquisition of the Nigerian upstream oil and gas business of ConocoPhillips for $1.5 billion (about N2.3 trillion at the time). In a statement, the head of media communication of Oando, Alex Irune, said the cost outlay of $1.5 billion (N2.43 trillion) was arrived at after customary adjustments plus a deferred consideration of $33 million (N5.34 billion).

The transaction involved the acquisition of ConocoPhillips’ Nigerian oil and gas businesses consisting of Phillips Oil Company Nigeria Ltd. ConcoPhilips Oil Company Ltd held 20% non-operating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Joint Venture (NAOC JV) Ltd, the Nigerian National Petroleum Corporation (NNPC) 60% interest and NAOC 20%.

Conoco Exploration and Production Nigeria Ltd (CEPNL) held 95% operating interest in OML 131 located 70 km offshore in water depths of 500m to 1,200m. Phillips Deepwater Exploration Nigeria Ltd (PDENL) which holds a 20% non-operating interest in Oil Prospecting Licence (OPL) 214 located 110 km offshore in water depths of 800m to 1,800m. Other owners are ExxonMobil with 20% and operator, Chevron 20%, Svenska 20%, Nigerian Petroleum Development Company 15% and Sasol 5%.

Mr. Irune stated then that the then minister of petroleum resources, Deziani Allison-Madueke, had a month earlier, approved the conversion of OPL 214 to OML 145 for an initial period of 20 years. The transaction made Oando Energy Resources own indirectly all of the issued share capital of POCNL, CEPNL and PDENL.

According to him, the transaction compelled Oando to retain The Petroleum and Renewable Energy Company Ltd as an independent reserve. Expressing his belief at the time of the acquisition of Conoco Phillips, Oando boss, Wale Tinubu said he believes in the significant potential that the Nigerian oil and gas industry holds and are privileged to play a pivotal role in its consolidation, growth and development. “We will continue to seek strategic opportunities that provide a platform for enhanced growth and value creation for our stakeholders,” he said

Be the first to know when we publish an update

Be the first to know when we publish an update

Leave a Reply