Excited by the news that Oando Energy Resources (OER), the upstream business of Oando Plc will complete the acquisition of ConocoPhillips (COP) Nigerian business by January 2014, some investors have renewed demand for the shares of the company.
The renewed demand boosted the shares of Oando last week by 12.3 per cent compared with decline the previous week. Specifically, the share price of Oando had declined by 11.4 per cent the previous, falling from N15.87 to N14.06. However, the stock made a rebound last week, rising by 12.4 per cent to close at N15.80 per share.
Market operators traced the renewed demand for the stock to the news that the company would complete the COP asset acquisition by the first month of 2014.
The company had explained that the availability of $815 million in committed credit facilities from local and foreign banks and the already paid $435 million deposit, places OER in good stead to finalise the financing of the balance necessary to close the $1.68 billion purchase.
“OER and COP have agreed to an increase in the deposit by $15 million making a total deposit of $450 million by December 6, 2013. The new agreement is testament to OER’s confidence and belief in closing the transaction, and also shows COP’s’ confidence in OER’s ability to close the deal,” Oando said.
Oando has steadily focused on upstream diversification in an effort to increase annual free cash flows and increase value creation for shareholders.
It added: “Acquisition is expected to be a transformational milestone, making Oando the largest indigenous exploration and production company in Nigeria with 50,000 barrel of oil equivalent per day (boepd) in production, 236 million in proven reserves and over 500 million in contingent resources, an unprecedented achievement by an indigenous player in the Nigerian oil and gas space.”