LAGOS, March 3 (Reuters) – Nigerian energy company Oando Plc has prepaid $238 million out of the $753 million it borrowed to part finance the acquisition of ConocoPhillips’ Nigerian oil and gas business, the company said on Tuesday.
Oando bought ConocoPhillips’s upstream oil and gas business in Nigeria last July for $1.5 billion, helping it transition from a marketer of refined petroleum products into one of the top players in the West African country’s oil industry. Oando said it hedged 11,000 barrels per day at $95.35 for 36 months in 2014 and realised $234 million by resetting its oil hedge floor price to $65 a barrel, as crude prices fell.
“Cashing out some value from this hedge will enable us to reduce our outstanding loans … saving the company $65 million in interest payments over the remaining term of the loan facilities,” Pade Durotoye, chief executive of Toronto-listed Oando Energy, said in a statement. Oando said $188 million would be used to reduce the $415 million reserve base lending facility, an initial 5.5-year loan it took last year with an interest rate of Libor plus 8.5 percent. Shares in Lagos-listed parent Oando, which has just concluded a 48.7 billion naira rights issue, rose slightly to 14 naira on Tuesday.
Oando plans to increase its oil production capacity to 100,000 barrels per day over a five-year period, up from 42,500 bpd after buying ConocoPhillips’ Nigerian assets.
(Reporting by Chijioke Ohuocha; editing by Susan Thomas)
Source: Reuters and Rigzone