Barely two weeks from now, Oando plc will at an Extra-Ordinary General Meeting be seeking board’s approv¬al for the authorized share capital of the Company to be increased from N5 billion to N7.5 billion.
As a company listed on both the Nigerian and Johannesburg Stock Exchanges, Oando’s move to increase share capital is a key component of its overall strategy to reduce reliance on debt and loans. The company firmly believes that in its bid to maximize long term shareholder value, it is necessary to optimize its balance sheet by funding its operations where necessary through equity as opposed to expensive sources of debt.
Earlier in January, Oando said it was on the verge of completing its purchase of ConocoPhillips’ Nigerian assets for a reported $1.66billion.
Analysts had said once concluded, the ConocoPhillips transaction will substantially boost Oando Energy Resources’ (OER) operations, with circa production of 50,000boepd post acquisition, generating extensive growth in revenue and profitability. Additionally, the acquisition will im¬mediately position OER as the largest indigenous oil producer in Nigeria, as the company will also grow its 2P re¬serves and 2C resources by 221MMboe and 492MMboe respectively.
Wale Tinubu group chief execu¬tive, Oando plc said, “As we contem¬plate our world post the acquisition of Conoco Phillips (COP) Nigerian business unit, which will undoubt¬edly provide significant growth in size and scale in our upstream busi¬ness, our mature mid-stream and downstream units continue to retain dominant positions in their market space whilst not requiring material equity infusion.”
The first facet of this long term plan will seek to raise further capital by way of rights of N50 billion expected to be concluded by end of Q2, 2014. The company highlighted that the proceeds of this Rights exercise will be utilized towards debt reduction and Oando’s immediate working capital needs, with none of the proceeds raised allocated to the closure of the COP acquisition.
