Despite the fact that [DATA OAO:Oando Plc]’s exploration and production subsidiary acquired all the necessary funds to complete the acquisition of the Nigerian upstream oil and gas business of ConocoPhillips assets, the transaction valued at 1.65 billion dollars, suffered over a year of prolonged delay in seeking approval.
(READ MORE: Oando receives consent to buy ConocoPhillips Nigeria oil and gas business)
“We don’t see this as a delay, it takes time for the department of petroleum resources to do these things, at the start of these transactions we didn’t know how long it was going to take,” Pade Durotoye CEO Oando Energy Resource told CNBC Africa.
According to the Petroleum Act of 1969, ministerial consent by the Minister of Petroleum Resources is the mandatory final approval of all oil and gas acquisitions and now that Oando Energy Resources has secured it, the exploration company’s operations are expected to receive a significant boost.
“It’s really exciting, the most important thing is that it is transformational for us, this definitely makes us the number one indigenous independent company in Nigeria, it brings 36,000 barrels of production up immediately in addition to what we have,” he said.
Following the announcement, demand for Oando shares saw a huge surge on the Nigerian stock exchange today as the deal restored investor confidence in the oil and gas company.
“Oil prices today are really strong, production at that level is transformational and this is radically transformational for the company and for our shareholders.”
“The entity that is buying the acquisition is Oando Energy Resources and that is a company that we listed on the Toronto stock exchange in July of 2012,” he explained.
Regardless of the challenges the oil and gas sector in Nigeria faces, upstream oil and gas acquisition activities in Nigeria continue to rise as over 300,000 barrels of oil per day worth of equity in onshore and shallow-water producing asset has been sold this year and activity is expected to remain strong till the end of the year.
“We believe acquisitions in Nigeria are here to stay. The divestments from the international oil companies to properly run indigenous companies is here for the long run so this deal is a platform to be able to create value for our shareholders,” he added.