Oando Energy Resources Inc. a company focused on oil and gas exploration and production in Nigeria has disclosed a $238 Million prepayment of certain loan facilities, which it utilized for the $1.5 Billion acquisition of the ConocoPhillips Nigerian Oil and Gas Business.
The company successfully realized $234 Million by resetting its crude oil hedge floor price from an average of $95.35 per barrel to $65.00 per barrel on 10,615 bbls/day for the next 18 months and another 1,553 bbls/day for a further 18 months until January 2019.
The proceeds from the hedge unwind/reset (in addition to $4 Million from cash in hand) were applied to pre-pay certain loan facilities.
The facilities include, $188 Million applied to the $415 Million in the Reserves Base Lending facility, resulting in a balance of $227 Million, and the $51 Million applied to the $338 Million in the Corporate Facility, resulting in a balance of $287 Million.
“The decline in global crude oil prices led to a substantial gain for our company and we have 10,832 bbls/day average production hedged for the balance of 2015 and 8,000 bbls/day for 2016,” said Pade Durotoye, CEO Oando Energy Resources.
“Cashing out some value from this hedge will enable us reduce our outstanding loans and leverage by $238 Million, saving the company $65 Million in interest payments over the remaining term of the loan facilities, whilst preserving a floor of $65 per barrel.
With 50 percent of our Oil Production Hedged and 65 percent of our Production being Gas committed to stable long term priced contracts, we are well positioned with strong cashflow to meet our obligations and aspirations through this current oil price down cycle.”
As at the ConocoPhillips acquisition OER had a total debt of approximately $900 Million inclusive of a $100 Million structured facility provided by Afrexim.
After taking account of previous amortizations and the hedge-related prepayment, the total debt of OER currently stands at $615 Million.
OER currently has a broad suite of producing, development and exploration assets in the Gulf of Guinea (predominantly in Nigeria).
OER’s sales production was 53,161 boe/d for the month ending January 31, 2015.