Oando Energy Resources (OER), the upstream subsidiary of Oando Plc, on Wednesday said it has reduced its debt burden by 44 per cent, by repaying a $100 million African Export-Import Bank (Afrexim) loan facility.
The loan was utilised in the financing of the landmark $1.5 billion acquisition of the ConocoPhillips Nigerian Oil and Gas business in July 2014.
The repayment brings Oando Energy’s net debt position to $500 million from $900 million outstanding at the completion of the ConocoPhillips acquisition.
Confidence in the operations and asset quality of OER by international financial institutions has been further strengthened, notably due to OER’s operational performance in the last 12 months in spite of crude downturn.
OER has achieved significant milestones in the course of the year, generating cash inflow of $283 million from the reset of oil hedges; the commencement of production at Qua Iboe, which added 2,500 b/d to OER’s gross total taking it to 53,169 b/d; and finally an increase in 2P reserves by 82% to 420.3mn boe.
A $91 million RBL Upsize was arranged by Standard Chartered Bank and African Export-Import Bank with participation from Standard Bank of South Africa Limited, Stanbic IBTC Bank Plc, and Natixis; while the proceeds, along with cash on hand, were used to repay the $100 Million Afrexim Facility.
According to Pade Durotoye, Chief executive of Oando Energy Resources, “The upsizing of the RBL loan is a true testament to the quality of the assets we acquired in July 2014. The cashflows from these assets have continued to pay down the company’s post acquisition debt with the assistance of the value realized from the resetting of our hedge instruments, leaving a debt equity ratio of 0.57 today, compared with 0.91 in July 2014.
“OER remains focused on its financial and operational goals of strengthening its balance sheet and maintaining stable production levels through production optimisation in these times of reduced oil prices and limited capital investment.”
With the new global pricing reality, reduced investments, and industry shrinkage, Oando is reaffirming investors’ confidence in its operations and has espoused a strategic focus of aggressive debt reduction, optimization of production levels, and inorganic growth through M&A deals that create immediate and long term equity value for shareholders.