CALGARY, Sept. 17, 2012 /CNW/ - Oando Energy Resources Inc. ("OER" or
the "Company") (TSX:OER) and Oando Plc ("Oando") are pleased to
announce they have entered into non-binding Heads of Agreement dated
September 17, 2012, providing for the acquisition by OER of Oando's 40%
participating interest in the Qua Ibo Field within Oil Mining Lease 13
("OML 13") located onshore Nigeria (the "Acquisition"). Oando
currently holds 94.6% of the issued and outstanding common shares of
"We are excited about signing these Heads of Agreement for a 40%
participating interest in the Qua Ibo Field which, if acquired, is
expected to grow our Gulf of Guinea portfolio significantly," said OER
CEO, Pade Durotoye. "The acquisition of additional reserves would
represent a preliminary step in our broader objective of portfolio
growth via the consolidation of marginal fields in Nigeria."
Oando signed agreements relating to the acquisition of its participating
interest in the Qua Ibo Field in February 2012, but such an acquisition
remains subject to the consent of the Nigerian Honourable Minister of
Petroleum and certain third parties. In the event that such consents
are not forthcoming or impose terms which are too onerous on Oando,
Oando is instead entitled to receive an indirect economic interest in
the Qua Ibo Field from NEPN, as defined below.
The Qua Ibo Field, which was originally held by a joint venture which
included The Shell Petroleum Development Company of Nigeria Limited,
was awarded to a Nigerian company, Network Exploration & Production
Nigeria Limited ("NEPN"), as part of the 2003 Marginal Field Round in
Nigeria. The Qua Ibo Field is located onshore near the mouth of the Qua
Ibo River in Akwa Ibom state, approximately two kilometres from Mobil
Producing Nigeria Qua Ibo Terminal.
Three wells, Qua Ibo - 1, Qua Ibo - 2 and Qua Ibo - 3 have been drilled
in the field. The Qua Ibo - 1 well was plugged and abandoned after
inconclusive tests. The Qua Ibo - 2 well found oil in six horizons and
gas in five zones at depths of 3310 to 7100 ft. It is currently
suspended. The drilling of the Qua Ibo - 3 appraisal well began in the
fourth quarter of 2008 and was completed in 2009, at which point it was
also suspended. The primary objective of Qua Ibo - 3 was to determine
if oil seen in the deeper D 5.0 zone in wells Qua Ibo - 1 and Qua Ibo -
2 was from one continuous pool linking the two wells. The appraisal
confirmed that the D 5.0 zone is compartmentalized by a fault and that
the two wells are in separate independent fault blocks.
Proposed Structure of the Acquisition
The Heads of Agreement provides a framework of terms and conditions for
the Acquisition which OER and Oando intend to use as the basis for a
definitive agreement ("Definitive Agreement"). The parties have
agreed to negotiate exclusively with each other and in good faith and
use their reasonable efforts to negotiate a Definitive Agreement to
give effect to the Acquisition on or prior to February 28, 2013, or
such other date as may be agreed to in writing by the parties.
As previously disclosed, pursuant to the Referral and Non-Competition
Agreement dated July 24, 2012 between OER and Oando, OER is entitled to
a right of first offer for certain interests or options acquired by
Oando and the Qua Ibo Field is such an interest. Pursuant to the terms
of the Referral and Non-Competition Agreement and the Heads of
Agreement, the purchase price for the Acquisition to be paid by OER
will consist of all of the properly documented and commercially
reasonable expenses incurred by Oando up to the closing date of the
Acquisition solely in connection with its acquisition of the Qua Ibo
interest, plus an administrative fee of 1.75%. If the Acquisition were
to close on the date hereof, the purchase price would be approximately
OER may, subject to market conditions, complete a financing to raise
funds for the Acquisition and subsequent development. Completion of the
Acquisition is subject to a number of conditions including the
completion of satisfactory due diligence, execution of a Definitive
Agreement, approval of the TSX and other securities regulatory
authority approvals, as applicable. OER has formed a special committee
of independent directors to evaluate the Acquisition. There can be no
assurance that the Acquisition will be completed as proposed or at all.
About Oando Energy Resources Inc.
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 4,500 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.
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 the
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
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 (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.
SOURCE: Oando Energy Resources Inc.
For further information:
Pade Durotoye, CEO
Oando Energy Resources Inc.
+44 207 793 2594
Head Investor Relations
Oando Energy Resources Inc.
+1 403 560 7450
Jeremy Dietz/David Feick
+1 403 218 2833