Oando completes acquisition of ConocoPhillips Nigerian assets
The company will raise its oil and gas production after paying $1.5 billion for the assets
Oando has completed its acquisition of ConocoPhillips' assets in Nigeria, raising its oil and gas production tenfold and securing a base for further expansion. The company's Canada-listed subsidiary, Oando Energy Resources, paid $1.5 billion in cash for the assets, which yielded more than 39,000 barrels of oil equivalent a day (boe/d) over the first half of the year.
The production comes from 20% interests in four licences in the onshore Niger Delta, OMLs 60, 61, 62 and 63, where Eni is operator with 20% and the state's Nigerian National Petroleum Corporation (NNPC) holds 60%. The acquisition includes interests in two non-producing deep-water licences, one operated and one participating.
Oando says the onshore licences hold more than 40 oilfields and gasfields, of which only 24 are producing, together with about 40 prospects and leads. The areas hold 12 production-stations, three gas-processing plants, the Brass River oil terminal and the 480-MW Kwale-Okpai gas-fired power station.
Oando's share of production from the licences over the first half of the year - the acquisition was back-dated - was 10,385 b/d of oil and condensate, 4.6 million cubic metres a day of sales gas and 2,076 boe/d of natural gas liquids. The firm's share of reserves amounted to 211.6m boe proven and probable, together with 498.6m boe contingent (including the deep-water areas), according to an independent assessment.
Oando says there is significant potential to increase production from the onshore licences, where the Eni venture has achieved an 89% drilling success rate over 15 years. Production would also rise if the authorities can reduce oil theft in the area, although the firm acknowledges that security remains a concern. The oil is of high quality and sells at a premium to Brent, while the gas accounts for 20% of the supply to Nigeria's liquefied natural gas (LNG) complex at Bonny.
Offshore, Oando gains a 95% interest in OML 131 which holds the undeveloped Chota field. Chota is linked with Shell's undeveloped Bolia field in the adjacent block, and the two have been unitised for Shell-led development studies. Oando also gains 20% of OML 145 (formerly OPL 214), where partners are ExxonMobil, the operator, 20%, Chevron, 20%, Svenska, 20%, NNPC's Nigerian Petroleum Development Company, 15%, and Sasol, 5%. The licence holds the Uge discovery, for which ExxonMobil is carrying out development studies.
It took Oando over a year to raise finance for the acquisition and to obtain approvals from the authorities. Before the purchase, the firm's production ran at 4,500 boe/d from non-operated interests in OMLs 56 and 125. Oando is also involved in gas distribution in Nigeria, and in oil trading and supply - it has 300 filling stations in Nigeria and 40 in Ghana and Togo.
One casualty of the acquisition might be the long-delayed Brass LNG project, in which ConocoPhillips had a 17% interest. Oando did not want the interest, so ConocoPhillips transferred it to the other shareholders - NNPC, which had 49%, and Total and Eni, which had 17% each. As NNPC had already planned to reduce its holding by 17%, the group could now be looking for two new participants. The go-ahead decision for the 10m tonnes a year complex was originally targeted for 2006.