Oando Energy Resources Inc. has announced the optimisation of its crude oil hedge programme and a $238 million prepayment of certain loan facilities, which it utilised for the $1.5 billion acquisition of the ConocoPhillips Nigerian Oil and Gas Business in July, 2014.
The company said it successfully realised $234 million by resetting its crude oil hedge floor price from an average of $95.35 per barrel to $65.00 per barrel on 10,615 bbls/day for the next 18 months and another 1,553 bbls/day for a further 18 months until January 2019.
OER said 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 below: 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 bbls/day average production hedged for the balance of 2015 and 8,000 bbls/day for 2016,” said Pade Durotoye, CEO Oando Energy Resources. “Cashing out some value from this hedge will enable us 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.”