‘Oando’s 82% reserves increase good for shareholders’

There is good news for Oando Energy Resources (OER) shareholders.

OER, the exploration and production (E&P) arm of Oando Group, has shown outstanding performance despite the downturn in global oil and gas industry, posting 82 per cent increase in reserves — a development that will likely have a positive impact on future revenue.

In a statement, OER stated that as a result of the slump in oil prices, 2014 ended on a sour note for the sector. The downward trend has continued, with speculations that as much as $1.6 trillion will be wiped out in earnings for producing companies and countries. But, despite the pessimism, Oando has remained strong by proactively acting on some initiatives to sustain its viability as an investment grade stock.

OER has significantly increased its Proved and Probable net reserves (2P) from 230.6 million barrels of oil equivalent (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 DeGolyer and MacNaughton (D&M). It also indicated the economic value of the company’s 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’s assets in July 2014 was indeed a strategically important and timely move.

Commenting on the milestone, OER Chief Executive Officer, Pade Durotoye said: “We are very pleased with the new 2014 reserves numbers which confirms our thesis at the time we embarked on our transformative ConocoPhillips’ (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 barrels of oil equivalent per day (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.