Oando Energy Resources (OER), a leading exploration and production player in the Nigerian oil and gas sector, has once again demonstrated its superior strategy despite the downturn in the sector.
The company said that its recent announcement of an 82 per cent increase in reserves is especially reassuring for its shareholders as it is likely to have a positive impact on future revenue for the business.
As a result of the slump in oil prices, 2014 ended on a sour note for the sector. This downward trend has continued in 2015 with speculations indicating that as much as $1.6 trillion will be wiped out in earnings for producing companies and countries.
“With such a pessimistic view Oando has kept above the fray by proactively acting on a number of initiatives to sustain its viability as an investment grade stock.”
OER significantly increased its Proved and Probable (2P) net reserves from 230.6 MMboe to 420.3 MMboe. The new reserves figures are based on an annual evaluation report of OER’s reserve and resources conducted by worldwide petroleum independent company, De-Golyer and MacNaughton (D&M), and it also indicated the economic value of the company’s Proved and Probable Reserves (2P) has increased from $545 million to $1.8 billion. This reserves increase is further validation that Oando’s $1.5 billion landmark acquisition of ConocoPhillips Nigeria assets in July 2014 was indeed a strategically important and timely move.
Commenting on this most recent milestone, OER chief executive officer, Pade Durotoye, said: “We are very pleased with the new 2014 reserves numbers which confirm our thesis at the time we embarked on our transformative COP acquisition. This large reserves base gives us a substantial value driver, with the opportunity to further enhance production over the coming years, and pursue in-field exploration prospects that will complement our resource base and ensure we are well positioned within the sector.”
In the last 10 months, Oando has evolved from an indigenous player producing circa 4,500 boepd from three producing assets, to being ranked alongside the international majors with a production of 53,000 boepd from seven producing assets.
More recently, the company reset its hedge from $95 to $65 per barrel, restructured its debt obligations by $238 million, thereby making savings of $65 million in interest payments over the remaining term of the loan facilities.
These actions have seen a considerable reduction in its debt, an eradication of significant interest payments and an improvement in its balance sheet.
Given its reserves, exploration drive and vision, the company looks set to meet its medium term objective of producing 100,000 boepd and reserves of 500MMboe by 2017. With the global downturn and energy firms declaring write downs, Oando is still uniquely well-positioned and is clearly a sure bet investment.
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