OER Signs Heads of Agreement to Acquire 40% Participating Interest in Qua Ibo Marginal Field Within OML 13
CALGARY, Alberta, September 17, 2012 /PRNewswire/ --
Oando Energy Resources Inc. ("OER" or the "Company") (TSX:OER) and Oando Plc ("Oando") are pleased to announce they have entered into non-binding Heads of Agreement dated September 17, 2012, providing for the acquisition by OER of Oando's 40% participating interest in the Qua Ibo Field within Oil Mining Lease 13 ("OML 13") located onshore Nigeria (the "Acquisition"). Oando currently holds 94.6% of the issued and outstanding common shares of OER.
"We are excited about signing these Heads of Agreement for a 40% participating interest in the Qua Ibo Field which, if acquired, is expected to grow our Gulf of Guinea portfolio significantly," said OER CEO, Pade Durotoye. "The acquisition of additional reserves would represent a preliminary step in our broader objective of portfolio growth via the consolidation of marginal fields in Nigeria."
Oando signed agreements relating to the acquisition of its participating interest in the Qua Ibo Field in February 2012, but such an acquisition remains subject to the consent of the Nigerian Honourable Minister of Petroleum and certain third parties. In the event that such consents are not forthcoming or impose terms which are too onerous on Oando, Oando is instead entitled to receive an indirect economic interest in the Qua Ibo Field from NEPN, as defined below.
The Qua Ibo Field, which was originally held by a joint venture which included The Shell Petroleum Development Company of Nigeria Limited, was awarded to a Nigerian company, Network Exploration & Production Nigeria Limited ("NEPN"), as part of the 2003 Marginal Field Round in Nigeria. The Qua Ibo Field is located onshore near the mouth of the Qua Ibo River in Akwa Ibom state, approximately two kilometres from Mobil Producing Nigeria Qua Ibo Terminal.
Three wells, Qua Ibo - 1, Qua Ibo - 2 and Qua Ibo - 3 have been drilled in the field. The Qua Ibo - 1 well was plugged and abandoned after inconclusive tests. The Qua Ibo - 2 well found oil in six horizons and gas in five zones at depths of 3310 to 7100 ft. It is currently suspended. The drilling of the Qua Ibo - 3 appraisal well began in the fourth quarter of 2008 and was completed in 2009, at which point it was also suspended. The primary objective of Qua Ibo - 3 was to determine if oil seen in the deeper D 5.0 zone in wells Qua Ibo - 1 and Qua Ibo - 2 was from one continuous pool linking the two wells. The appraisal confirmed that the D 5.0 zone is compartmentalized by a fault and that the two wells are in separate independent fault blocks.
Proposed Structure of the Acquisition
The Heads of Agreement provides a framework of terms and conditions for the Acquisition which OER and Oando intend to use as the basis for a definitive agreement ("Definitive Agreement"). The parties have agreed to negotiate exclusively with each other and in good faith and use their reasonable efforts to negotiate a Definitive Agreement to give effect to the Acquisition on or prior to February 28, 2013, or such other date as may be agreed to in writing by the parties.
As previously disclosed, pursuant to the Referral and Non-Competition Agreement dated July 24, 2012 between OER and Oando, OER is entitled to a right of first offer for certain interests or options acquired by Oando and the Qua Ibo Field is such an interest. Pursuant to the terms of the Referral and Non-Competition Agreement and the Heads of Agreement, the purchase price for the Acquisition to be paid by OER will consist of all of the properly documented and commercially reasonable expenses incurred by Oando up to the closing date of the Acquisition solely in connection with its acquisition of the Qua Ibo interest, plus an administrative fee of 1.75%. If the Acquisition were to close on the date hereof, the purchase price would be approximately US$11.6 million.
OER may, subject to market conditions, complete a financing to raise funds for the Acquisition and subsequent development. Completion of the Acquisition is subject to a number of conditions including the completion of satisfactory due diligence, execution of a Definitive Agreement, approval of the TSX and other securities regulatory authority approvals, as applicable. OER has formed a special committee of independent directors to evaluate the Acquisition. There can be no assurance that the Acquisition will be completed as proposed or at all.
About Oando Energy Resources Inc.
OER currently has a broad suite of producing, development and exploration properties in the Gulf of Guinea (predominantly in Nigeria) with current production of approximately 4,500 barrels of oil per day. OER has been specifically structured to take advantage of current opportunities for indigenous companies in Nigeria, which currently has the largest population in Africa, and one of the largest oil and gas resources in Africa.
Forward Looking Statements:
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, this news release contains forward-looking statements relating to the intended Acquisition.
Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are reasonable, undue reliance should not be placed on the forward-looking statements and information because the Company can give no assurance that such statements and information will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined and the future price of crude oil. Accordingly, readers should not place undue reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect the Company's financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (http://www.sedar.com) for the Company. The forward-looking statements and information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
For further information:
Pade Durotoye, CEO
Oando Energy Resources Inc.
Head Investor Relations
Oando Energy Resources Inc.
SOURCE Oando Energy Resources Inc.