The agreement signing and completion ceremony was much awaited as Oando’s acquisition of the 1.65 billion dollars assets from ConocoPhillips suffered several setbacks.
(READ MORE: Oando secures ConocoPhillips closure funding)
“It took a little bit more time than we envisioned. I’ll say six more months longer than we envisioned in our normal plan but we are there,” Wale Tinubu, Group CEO of [DATA ONO:Oando Plc] told CNBC Africa.
The deal is expected to boost Oando’s oil production level within the West African country from about 5,000 dollars to about 50,000 barrels a day, which is a tenfold increase.
“There was fundraising that we had to do, several steps we had to take to ensure as a corporate we had prepared ourselves to digest the acquisition and I’m very happy to say we’ve done it all the way,” he said.
(READ MORE: Oando receives consent to buy ConocoPhillips Nigeria oil and gas business)
The purchase is immediately cash generative and would contribute significantly to the company’s cash flows and despite the expenses associated with delay, Tinubu is confident that the costs will be recovered quickly.
“We are capable of recurring whatever costs we may have incurred. There have been losses, one of the key things which we’ve focused on doing was having less emphasis on debt in this acquisition,” he explained.
“It means that over 80 per cent of our balance sheet is now returning in excess so the downstream has to be over.”
The transaction was financed with an approximate 50/50 debt-equity ratio and the company raised 800 million dollars of equity capital in the last 10 months making it easier.
“It means that first and foremost their company [ConocoPhillips] has succeeded in transforming itself from a downstream player to a significant upstream player.”