OANDO ENERGY RESOURCES INC 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 Contingent Resources.
Resumed full production from the Ebendo Field of 1,368 barrels of oil per day ("bbl/day") (net to OER) following the full repair of the Kwale-Akri pipeline;
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 $114 for the quarter ended March 31, 2013.
Financial Highlights$(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 year;
$232,000 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, PadeDurotoye. "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 ResultsThree months ended March 31, 2013 | Three months ended March 31, 2012 | $ Change (US$'000s, except as otherwise indicated) | % Change | |
US$'000s, | 2013/2012 | 2013/2012 | ||
except as otherwise indicated | ||||
Total Revenue | 29,702 | 35,436 | (5,734) | -16% |
Barrels of oil equivalent produced (boe) | 334,612 | 396,747 | (62,135) | -16% |
Average sales price per barrel (US$) (Gross) | 114 | 91 | 23 | 25% |
Average sales price per barrel | 95.85 | 89.32 | 6.53 | 7% |
(US$) (Net)(1) | ||||
Cashflow from operations | (3,125) | 6,229 | (10,301) | -115% |
Total Comprehensive Income | (7,699) | 12,430 | (20,129) | -162% |
Total Comprehensive Income on a per-share basis | (0.07) | 0.12 | (0.19) | -158% |
Total Assets | 1,080,109 | 1,068,008 | 12,101 | 1% |
Total non-current financial liabilities | 156,462 | 153,402 | 3,060 | 2% |
(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 UPDATEOML 125Nigerian 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 reservoir sand).
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 KwaleFlowstation 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 targeted reservoirs.
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.
OUTLOOKThe 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.
Oando Energy Resources Inc. issued this content on 01 May 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 02 May 2016 08:38:06 UTC. Original document available at http://www.oandoenergyresources.com/downloads/wp-content/uploads/2013/05/OER-Announces-Q1-2013-Results1.pdf |
