Oando posts 22% increase in oil production in Q1 2014

Toronto-listed Oando Energy Resources Inc. (OER), the upstream business of Oando plc, said its average oil production for the quarter ended March 31, 2014, was 4,531 barrels per day (bpd), representing a 22 percent increase over the same period last year.

The increase in production was as a result of reduced shut-in periods on Oil Mining Lease (OML) 56 (Ebendo field), resulting in a 110 percent production increase over same period in 2013, the company said in the announcement of its financial and operating results for the quarter.

OER, which is focused on oil and gas exploration and production (E&P) in Nigeria, is in the final stages of acquiring ConocoPhillips’ Nigerian upstream oil and gas business.

The proposed acquisition is expected to position the company as one of the leading E&P players in Nigeria, as measured by total reserves and production.

The acquisition, which is expected to be financed with already secured debt and equity, is anticipated to close during the first half of 2014, to enable the companies satisfy all closing conditions including the anticipated consent of the minister of petroleum resources.

Pade Durotoye, CEO, OER, said: “Our first quarter was highlighted by positive operational results that saw us increase our year-on-year oil production by 22 percent. This increase in quarterly production from the Ebendo Field was as a result of a higher production uptime experienced due to reduced shut-in’s on the Agip trunkline evacuation route.”

The company said average gross sales price realised per barrel of oil produced was $111.40 for the quarter ended March 31, 2014, compared with $114.00 for the same period in 2013.

The ongoing construction of the 45,000bpd Umuginni pipeline, designed as an alternative evacuation route for the OML 56 asset, would be completed in the second half of the year, according to OER.

Capital expenditure for the quarter ended was $42.6 million, compared with $8.3 million for comparative prior year period, the company said, adding that the majority of the expenditure was on drilling and completion activities.

OER earned $32.2 million in revenue for the quarter, representing a 5 percent increase from the same period last year.

The company said a net loss of $32.9 million in net income for the quarter was primarily as a result of financing expenses relating to the ConocoPhillips acquisition.

It reported $10.3 million in cash flow from operating activities, compared with cash outflow of $18.0 million from the same period last year.

OER currently has a broad suite of producing, development and exploration properties in the Gulf of Guinea (predominantly in Nigeria) with current production of about 4,531 barrels of oil per day. The company 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.

FEMI ASU