OER signs heads of agreement to acquire 40% participating interest in Qua Ibo marginal field within OML 13
Tuesday, Sep 18, 2012CALGARY, Sept. 17, 2012 /CNW/ - Oando Energy Resources Inc. ("OER" or the "Company") (TSX:OER) and Oando Plc ("Oando") are pleased to announce they have entered into non-binding Heads of Agreement dated September 17, 2012, providing for the acquisition by OER of Oando's 40% participating interest in the Qua Ibo Field within Oil Mining Lease 13 ("OML 13") located onshore Nigeria (the "Acquisition"). Oando currently holds 94.6% of the issued and outstanding common shares of OER.
"We are excited about signing these Heads of Agreement for a 40% participating interest in the Qua Ibo Field which, if acquired, is expected to grow our Gulf of Guinea portfolio significantly," said OER CEO, Pade Durotoye. "The acquisition of additional reserves would represent a preliminary step in our broader objective of portfolio growth via the consolidation of marginal fields in Nigeria."
Oando signed agreements relating to the acquisition of its participating
interest in the Qua Ibo Field in February 2012, but such an acquisition remains subject to the consent of the Nigerian Honourable Minister of Petroleum and certain third parties. In the event that such consents are not forthcoming or impose terms which are too onerous on Oando, Oando is instead entitled to receive an indirect economic interest in the Qua Ibo Field from NEPN, as defined below.
The Qua Ibo Field, which was originally held by a joint venture which included The Shell Petroleum Development Company of Nigeria Limited, was awarded to a Nigerian company, Network Exploration & Production Nigeria Limited ("NEPN"), as part of the 2003 Marginal Field Round in Nigeria. The Qua Ibo Field is located onshore near the mouth of the Qua Ibo River in Akwa Ibom state, approximately two kilometres from Mobil Producing Nigeria Qua Ibo Terminal.
Three wells, Qua Ibo - 1, Qua Ibo - 2 and Qua Ibo - 3 have been drilled in the field. The Qua Ibo - 1 well was plugged and abandoned after inconclusive tests.
The Qua Ibo - 2 well found oil in six horizons and gas in five zones at depths of 3310 to 7100 ft. It is currently suspended. The drilling of the Qua Ibo - 3 appraisal well began in the fourth quarter of 2008 and was completed in 2009, at which point it was also suspended. The primary objective of Qua Ibo - 3 was to determine if oil seen in the deeper D 5.0 zone in wells Qua Ibo - 1 and Qua Ibo - 2 was from one continuous pool linking the two wells. The appraisal confirmed that the D 5.0 zone is compartmentalized by a fault and that the two wells are in separate independent fault blocks.
Proposed Structure of the Acquisition
The Heads of Agreement provides a framework of terms and conditions for the Acquisition which OER and Oando intend to use as the basis for a definitive agreement ("Definitive Agreement"). The parties have agreed to negotiate exclusively with each other and in good faith and use their reasonable efforts to negotiate a Definitive Agreement to give effect to the Acquisition on or prior to February 28, 2013, or such other date as may be agreed to in writing by the parties.
As previously disclosed, pursuant to the Referral and Non-Competition Agreement dated July 24, 2012 between OER and Oando, OER is entitled to a right of first offer for certain interests or options acquired by Oando and the Qua Ibo Field is such an interest. Pursuant to the terms of the Referral and Non-Competition Agreement and the Heads of Agreement, the purchase price for the Acquisition to be paid by OER will consist of all of the properly documented and commercially reasonable expenses incurred by Oando up to the closing date of the Acquisition solely in connection with its acquisition of the Qua Ibo interest, plus an administrative fee of 1.75%. If the Acquisition were to close on the date hereof, the purchase price would be approximately US$11.6 million.
SOURCE Oando Energy Resources Inc.
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