CALGARY, May 15, 2013 /CNW/ - 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 March
31, 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 www.sedar.com and by visiting www.oandoenergyresources.com. All monetary figures reported herein are U.S. dollars unless otherwise
Acquired, effective April 30, 2013, a 40% working interest in the Qua
Ibo Marginal Field within OML 13, located onshore Nigeria. The asset
was evaluated with an effective date of December 31, 2012 and the
acquisition added 1.04 million barrels ("MMbbls") of Proved plus Probable (2P) Reserves (oil) and 2.37 MMbbls of Best
Estimate (2C) Contingent Resources (oil) (net to OER, before deduction
of royalties). See the Company's press releases dated March 27, 2013
and April 30, 2013 and the Company's material change report dated April
8, 2013 for further information regarding this acquisition and the
Resumed full production from the Ebendo Field of 1368 barrels of oil per
day ("bbl/day") (net to OER) following the full repair of the
3,637 bbl/day in average net production for the quarter ended March 31,
2013. This represented a 17% decrease from the same period last year;
$29.7 million in revenue from the sale of crude for the quarter ended
March 31, 2013. This represented a 16% decrease from the same period
last year and was attributable to the natural decline in producing
reservoirs and shut-in production at the Ebendo Field, as was
previously announced; and
Average gross sales price realized per barrel of oil produced was $114
for the quarter ended March 31, 2013.
$(3.1) million in cash flow from operating activities for the quarter
ended March 31, 2013. This represented a decrease of 115% from the same
period last year;
$10.1 million in capital expenditures for the quarter ended March 31,
2013. This represented a decrease of 22% from the same period last
$232 million in cash and cash equivalents for the quarter ended March
31, 2013; and
$480 million in borrowings as at March 31, 2013. These borrowings
consisted of a US$345 loan from Oando PLC and US$135 million of bridge
loans from a syndicate of Nigerian banks. These funds were used to
finance a cash deposit required to be paid pursuant to the sale and
purchase agreements executed in connection with the proposed
acquisition of Nigerian oil and gas assets from ConocoPhillips.
"The past several months were highlighted by the resumption of full
production from our Ebendo asset as well as the closing of the Qua Ibo
acquisition, which will add 1.04 million barrels of Proved plus
Probable (2P) Reserves and 2.37 million barrels of Best Estimate
Contingent Resources to our growing portfolio of Nigerian assets," said
OER CEO, Pade Durotoye. "From a transactional standpoint, we continue
to progress our proposed acquisition of ConocoPhillips' Nigerian assets
and remain on track to close the transaction by the September deadline.
This acquisition will, we expect, be a transformational one for our
company and it is our plan to update the market in the months to come."
Selected First Quarter Results
except as otherwise indicated
Barrels of oil equivalent produced (boe)
Average sales price per barrel (US$) (Gross)
Average sales price per barrel (US$) (Net)(1)
Cashflow from operations
Total Comprehensive Income
Total Comprehensive Income on a per-share basis
Total non-current financial liabilities
(1) Price excludes royalties (8% on OML 125 (Abo) and 5% on Ebendo),
Nigerian Government profit share of profit oil on the production
sharing contract in respect of OML 125 (Abo).
OPERATIONAL UPDATE OML 125
Nigerian Agip Energy ("NAE"), the operator of OML 125, together with the Company, completed the
work over of Abo-9 well that started in 2012, during the three months
ended March 31, 2013. The partners also completed the drilling of Abo
4ST during the quarter.
Ebendo Marginal Field
Energia Limited ("Energia"), operator of the Ebendo field in OML 56, along with Oando Production
and Development Company (of which the Company has a 42.75% economic
interest), drilled and completed the Ebendo-4 well during the report
period. The well was spudded on March 24, 2012, and drilled to a
total depth of 12,120 feet MD (3697 m MD) which was reached on June 10,
2012. The well encountered 10 separate reservoir sands, tagged XV -XXb,
with a gross pay thickness of 116 m (preliminary figures). Individual
thicknesses range from 3.6m in the XXb to about 31 m in the XIX (main
Currently, the Ebendo-4 well was completed in the XIX and the XXa
reservoirs. The well was tested from July 29 to August 28, 2012. The
tests results are not necessarily indicative of long-term performance
or of ultimate recovery.
The rig moved off the well location on September 28 and skidded to the
Ebendo-5 location. Drilling of well 5 commenced in the fourth quarter
of 2012 and was completed early in the first quarter of 2013. Well 6
drilling has commenced and the expected completion date is the third
quarter of 2013.
Other operations of note within the period were the commencement of
contract for the purchase of pipes for the Umugini pipeline, which is
planned as an alternative evacuation route to the current routing
through the Kwale Flowstation operated by Agip Oil Company Limited ("NAOC") . The planned pipeline is 53 km long, of which Energia and OER
jointly own 25%. The planned pipeline is 53 km long. The contract sum
to be paid by OER is approximately US$8.87 million.
The Ebendo marginal field was shut in as a result of damages to the
Kwale-Akri oil delivery pipeline that is operated by NAOC. This
pipeline connects the Ebendo field to the Brass export terminal. The
pipeline, which went down on November 1, 2012, was repaired and
production commenced thereafter on December 27, 2012. However, a
requirement for further repairs resulted in another production shut-in
from February 13, 2013. Production subsequently resumed April 24, 2013.
Akepo Marginal Field
The Company, with its partner Sogenal Limited (as operator),
successfully re-entered and tested the suspended Akepo-1st well. The
drilling rig, Noble Lloyd Noble, was demobilized on January 5, 2010
after a 50-day well testing and completion program on the Akepo field.
Drill Stem Tests (DST) proved flowing hydrocarbons in all the three
The test results are not necessarily indicative of long-term performance
or of ultimate recovery.
The Akepo-1 ST was completed as a two-string multiple completions to
produce on two strings from two of the three zones, with the third zone
selective on one of the strings. Following the completion, the Akepo-1
ST was successfully flow tested from the D6 sand with good flowing
wellhead pressures. There was insufficient tank capacity available to
further test the D1 or C1 sands. With the success of the well test and
completion, the partnership is now expecting to move towards first oil.
The partnership has awarded a contract to build a wellhead jacket
facility over the well location and lay a 15km pipeline from the Akepo
Wellhead facility to a nearby crude processing facility, as well as
negotiating crude handling and sales agreements with the facility
owners. Due to the earlier than expected onset of the rainy season
which has delayed pipe lay, first oil is now expected to occur during
the fourth quarter of 2013. There is no certainty that first oil will
occur within the expected timeline.
The Company and its partners have requested more data from NAOC, the
pipeline operator, at Ebendo. This is to determine the accuracy of the
pipeline losses being charged to the Company and its partners by NAE.
The Company is making provision of 17% for such losses and is seeking
ways to reduce it. The plan the Company has includes volume
reconciliation, verification of meters accuracy and renegotiation of
the crude handling contracts. The success of this plan is dependent on
the cooperation of NAOC and the other cluster members.
The Company, through its partner, is currently involved in the
construction of the Umugini pipeline to a different export terminal for
Ebendo crude. The completion of this alternate pipeline is not expected
to be until the third quarter of 2013. A new purchase agreement may
then have to be signed with another party for the purchase of Ebendo
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 5,205 bopd from the Abo Field
in OML 125 and the Ebendo Field in OML 56. 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.
There is no certainty that it will be commercially viable to produce any
portion of the Contingent Resources.
The estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to the effects
There is no certainty that any portion of the resources referred to
herein will be discovered and, if discovered, there is no certainty
that it will be commercially viable to produce any portion of the
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 bumer tip and does not represent a value equivalency
at the wellhead.
"Reserves" are estimated remaining quantities of oil and natural gas and
related substances anticipated to be recoverable from known
accumulations, as of a given date, based on analysis of drilling,
geological, geophysical, and engineering data; the use of established
technology; specified economic conditions, which are generally accepted
as being reasonable, and shall be disclosed. Reserves are classified
according to the degree of certainty associated with the estimates.
"Proved Reserves" are those Reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated Proved
"Probable Reserves" are those additional Reserves that are less certain
to be recovered than Proved Reserves. It is equally likely that the
actual remaining quantities recovered will be greater or less than the
sum of the estimated Proved plus Probable Reserves.
"Contingent Resources" are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known accumulations
using established technology or technology under development, but which
are not currently considered to be recoverable due to one or more
contingencies. Contingencies may include factors such as economic,
legal, environmental, political and regulatory matters or lack of
infrastructure or markets. It is also appropriate to classify as
contingent resources the estimated discovered recoverable quantities
associated with a project in the early evaluation stage. Contingent
resources are further classified in accordance with the level of
certainty associated with the estimates and may be sub-classified based
on project maturity and/or characterized by their economic status.
"Best Estimate" is considered to be the best estimate of the quantity of
resources that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less than
the best estimate. Those resources that fall within the best estimate
have a 50% confidence level that the actual quantities recovered will
equal or exceed the estimate.
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
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.
Head Investor Relations
Oando Energy Resources Inc.
Jeremy Dietz/David Feick