According to a statement by the company, the reduction was achieved through the active restructuring activities the Group has embarked on over the last 12 months, even as it has impacted on the company’s net interest expense.
In line with its corporate strategy for balance sheet optimization and the financing of growth initiatives in the Upstream sector, the integrated energy firm sought to raise N54.6 billion through the issuance of 4.5 million ordinary shares to existing shareholders 50 Kobo at N12 per share between December 2012 and February 2013.
The proceeds from the Rights issue were earmarked for part-repayment of a N60 billion syndicated loan used to fund the acquisition of upstream assets and swamp drilling rigs, part-financing of acquisition of upstream and midstream assets by Oando’s Upstream subsidiary, Oando Energy Resources (“OER”), and investment in working capital to support the increased level of business.
A total of N62 billion total subscription was realized from its Rights Issue, indicating an oversubscription of N8 billion or 14 percent, due to high investor demand.
As a result, the successful outcome of the Rights Issue, according to the statement has positioned the company to further refined its three-pronged strategy to reduce debt, improve diversification in upstream, and focus on higher margins.
It has also indicated its intention to increase growth margin value for shareholders in the upstream through a focused portfolio growth in production, cash margins, and improved returns on capital deployed.
“The ongoing acquisition of ConocoPhillips’ entire Nigerian asset base for $1.79 billion will transform OER from a small size oil company with 4,500 bbls/day of production and 9 million barrels of oil equivalent (“MMboe”) to a midsize oil producer with close to 50,000bbls/day of production.
“Once completed, the purchase will substantially increase crude oil market share and strengthen white products market position by leveraging new import infrastructure. Oando has successfully conducted five drilling campaigns in Nigeria in three fields: Abo Field (OML 125), Ebendo Field (OML 56) and Qua Iboe Field (OML 13).” It added.
Information from Guardian was used in this report.