ConocoPhillips Acquisition Fuels $117.5m Loss For Oando

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VENTURES AFRICA – Nigeria’s emerging oil giant Oando Energy Resources has reported a $177.5 million loss in the first half of 2014 ended June 30 which it attributed to a host of factors including the acquisition of ConocoPhillips Nigerian assets.

Other factors include a fair value loss on financial instruments of $106.9 million in the quarter driven primarily by warrants and equity conversion rights held by Oando PLC, a $30.7 million financing fee due to Oando PLC, Non-recurring G&A cost of $27.3 million due to the acquisition of ConocoPhillips; and an unrecognized revenue of $13.0 million from production at OML 125 related to excessive lifting by the NNPC.

The company’s revenue took a 4.82 percent dip with $62.6 million recorded in the half year ended June 30 as against the $65.7 million recorded in the corresponding period of 2013.

The company blamed the dip solely on the non-recognition of $13.0 million in revenues related to excessive lifting by the NNPC at OML 125. “The average net sales price of $76.18/bbl for the six months ended June 30, 2014 declined by 20.3 percent from $95.64/bbl in the comparative period… If the unrecognised revenues of $13.0 million related to excessive NNPC lifting at OML 125 was recognized, the net average sales price per barrel would be $91.25 for the six months ended June 30, 2014” the company’s statement read.

The company added that in the first half of the year, lower realized net sales prices reduced revenues by $13.4 million and increased production increased revenues by $10.2 million. While it said lower revenues from lower realized net sales prices were primarily due to the $13.0 million in unrecognized revenue from OML 125, the company attributed the increase in production to increased production at OML 125 and the Ebendo Field (OML 56). OML 125 production increased by 17 percent to 651,000 bbls in the six months ended June 30, 2014 from 557,000 bbls in the comparative period. The Ebendo Field (OML 56) production increased by 30 percent to 171,000 bbls in the six months ended June 30, 2014 from 131,000 bbls in the comparative period.

Oando last month completed the acquisition of the Nigerian Upstream Oil and Gas Business of ConocoPhillips for $1.5 billion which made the company the largest indigenous upstream operator and the first to achieve a daily production of 50, 000 barrels.