Mr. Pade Durotoye reports

OANDO ENERGY RESOURCES ANNOUNCES THE OPTIMISATION OF ITS CRUDE OIL HEDGE PROGRAM AND A $238-MILLION PREPAYMENT OF CERTAIN LOAN FACILITIES

Oando Energy Resources Inc. has made a $238-million prepayment of certain loan facilities, which it utilized for the $1.5-billion acquisition of the ConocoPhillips Nigerian oil and gas business in July, 2014. The company realized $234-million by resetting its crude oil hedge floor price from an average of $95.35 per barrel to $65 per barrel on 10,615 barrels per day for the next 18 months and another 1,553 bbl per day for a further 18 months until January, 2019. The proceeds from the hedge unwind/reset (in addition to $4-million from cash in hand) were applied to prepay certain loan facilities as detailed as follows:

1. $188-million applied to the $415-million in the reserves base lending facility, resulting in a balance of $227-million;
2. $51-million applied to the $338-million in the corporate facility, resulting in a balance of $287-million.

"The decline in global crude oil prices led to a substantial gain for our company, and we have 10,832-barrel-per-day average production hedged for the balance of 2015 and 8,000 bbl per day for 2016," said Pade Durotoye, chief executive officer, Oando Energy Resources. "Cashing out some value from this hedge will enable us [to] reduce our outstanding loans and leverage by $238-million, saving the company $65-million in interest payments over the remaining term of the loan facilities, whilst preserving a floor of $65 per barrel. With 50 per cent of our oil production hedged and 65 per cent of our production being gas, committed to stable long-term priced contracts, we are well positioned with strong cash flow to meet our obligations and aspirations through this current oil price down cycle."

As at the ConocoPhillips acquisition date of July 30, 2014, Oando had a total debt of approximately $900-million (inclusive of a $100-million structured facility provided by Afrexim). After taking account of previous amortizations and the hedge-related prepayment, the total debt of Oando currently stands at $615-million.

We seek Safe Harbor.