Oando Has $1.6 Billion for Conoco Assets as Completion Nears

Jan 13, 2014 9:49 am ET

(Updates with share price in last paragraph.)

Jan. 13 (Bloomberg) -- Oando Plc, a Nigerian oil producer and fuel retailer, raised $1.63 billion to buy ConocoPhillips’s assets in the country as foreign energy explorers retreat.

The transaction is due to complete at the end of the month, Tokunbo Akindele, Oando’s head of investor relations, said in an interview in Lagos, the commercial capital. “We are looking at a total acquisition cost of $1.65 billion.”

ConocoPhillips, based in Houston, has holdings in Nigerian oil-production leases and offshore prospects. Local oil companies are boosting their share of output by taking up fields in restive areas as international energy companies are pushed out by unrest, violence and crude theft.

The deal’s original $1.79 billion price, set a year ago, was cut after a liquefied natural gas project was excluded, Akindele said. Oando paid a $435 million initial deposit and $15 million last month. It raised $119 million in a private share sale, got $815 million of commitments from banks and realized $250 million from the disposal of East Horizon Gas Co., he said.

Nigeria, Africa’s biggest oil exporter, pumped 1.9 million barrels of crude a day last month, according to data compiled by Bloomberg. Oando expects the purchase of ConocoPhillips’s assets to raise production from its Oando Energy Resources unit to about 50,000 barrels a day from 5,000, Akindele said.

Power Generation

Oando also plans to expand its power-generation business to supply industries in the oil-rich Rivers state and in Lagos, where it’s based. The company intends to spend $600 million on electricity production, Bolaji Osunsanya, head of Oando Gas & Power, said Jan. 9, without giving a time frame.

Its plans include a possible 400-megawatt to 500-megawatt plant, which would start in one to three years, Osunsanya said.

Nigeria sold electricity assets to non-state investors in September to boost supply and end blackouts in the West African country, where demand is almost double its 4,000-megawatt capacity. President Goodluck Jonathan handed control of 14 power companies to new owners including Siemens AG, Korea Electric Power Corp. and Transnational Corp. of Nigeria Plc.

Oando is already developing 60 megawatts of generation to serve Rivers state and Lagos, where it opened a 10.4-megawatt plant in October. The 3.6 billion-naira ($22.5 million) facility brought its total capacity to 25 megawatts, Osunsanya said.

The company will “explore debt and equity” options for its electricity projects, he said. “With the unbundling of the power sector, we’re hopeful we can get counterparties and credit engagements.”

Oando gained 0.7 percent to 26.52 naira at the close of trading in Lagos. It has risen 9.4 percent this year, compared with a 0.3 percent gain by the Nigerian Stock Exchange All Share Index.

--Editors: Amanda Jordan, Ana Monteiro