Oando close to buying $1.79bn ConocoPhillips' Nigerian assets

An indigenous oil firm, Oando Plc has said it is close to securing funds to buy ConocoPhillips' Nigerian assets.

The Chief Executive, Oando, Mr. Wale Tinubu, said the company was not struggling to raise money for the $1.79bn deal.

Tinubu told Reuters in an interview in Lagos that the firm, having already raised the additional equity needed in February with a rights issue, had now also agreed in principle to the necessary debt.

Oando has been looking for the past year to finance its transformation from a marketer of refined petroleum products into an upstream firm focused on oil and gas exploration and production.

The deal to acquire Conoco's fields, that were producing around 43,000 barrels of oil per day last year and have proven reserves of 213 million barrels of oil equivalent, is scheduled to close by mid-2013.

But analysts have questioned whether Oando can persuade investors to deliver the funds.

'We're confident in our ability to raise finance,' Tinubu said. 'Because we have a diverse group, we've been able to raise equity from our shareholders and extract value from parts of our business to reinvest in the upstream.'

Tinubu also said that in reality the deal would only cost Oando around $1.5bn, not the $1.79bn headline figure. He declined to explain the discrepancy, but a source close to the deal said this was because of a net positive cash flow from the assets of $200-$300m.

He said of the $1.5bn cost around $725m would come from debt.

'The debt is already arranged,' he said, but he declined to name banks involved and said some details remained to be worked out. Banking sources say the debt will be in the form of a syndicated loan of international and Nigerian banks.

Tinubu said once Oando had completed its acquisitions, the upstream business would account for about three quarters of its assets, against 40 per cent now.

The ConocoPhillips deal is the latest of several sales of Nigerian onshore assets made by foreign oil companies and Brazil's Petrobras is now looking to sell $5bn of assets.

'We would certainly be interested in considering it,' Tinubu said when asked if Oando was interested in buying some of the Petrobas interests.

'We know we will be approached by them,' he added