To Get Personalised contents and be able to add items to your favourites, please Sign In or Sign Up          

Oando Raises $1.5b To Acquire Conocophilips Assets

News » Business

IMAGE: Oando »

June 18, 2013


Oando has expressed readiness to acquire  ConocoPhillips Nigerian assets as the company raises the necessary  finance for the $1.79 billion (1.17 billion pounds) deal.

The company’s chief executive, Wale Tinubu, disclosed that Oando, having already raised the additional equity needed with a rights issue, now also has agreed in principle to pay the necessary debt.

Oando has been looking to finance its transformation from a marketer of refined petroleum products into an upstream firm focused on oil and gas exploration and production. The deal to acquire Conoco’s fields, that were producing around 43,000 barrels of oil per day (bpd) with proven reserves of 213 million barrels of oil equivalent heightened last year and is scheduled to close by mid-2013.

But analysts have questioned whether Oando can persuade investors to deliver the funds.

“We’re confident in our ability to raise finance,” Tinubu said. “Because we have a diverse group, we’ve been able to raise equity from our shareholders and extract value from parts of our business to reinvest in the upstream.”

Tinubu also said that in reality the deal would only cost Oando around $1.5 billion, not the $1.79 billion headline figure. He declined to explain the discrepancy, but a source close to the deal said this was because of a net positive cash flow from the assets of $200-$300 million. Tinubu said of the $1.5 billion cost, around $725 million would come from debt. “The debt is already arranged,” he said, while declining to name banks involved. He further said some details remained to be worked out. Banking sources say the debt will be in the form of a syndicated loan from international and Nigerian banks.

Tinubu said once Oando had completed its acquisitions, the upstream business would account for about three quarters of its assets, against 40 per cent now. The ConocoPhillips deal is the latest of several sales of Nigerian onshore assets made by foreign oil companies and Brazil’s Petrobras is now looking to sell $5 billion of assets.

“We would certainly be interested in considering it,” Tinubu said when asked if Oando was interested in buying some of the Petrobas interests. “We know we will be approached by them,” he added.

Political pressure from a government keen to have more indigenous firms operating fields, in addition to rampant oil theft by armed gangs hacking into pipelines and potential liabilities from damaging oil spills, has encouraged some foreign firms to slowly move out of onshore oil production. But other firms like Britain’s Afren and Nigerian firms like Seplat and Conoil are moving in, creating competition for Oando.


Article Credit: The Leadership News

Updated 6 Years ago

Find Us On Facebook

Tags:     Oando Raises $1.5b To Acquire Conocophilips Assets