OER Signs HoA for Qua Ibo Stake

Oando Energy Resources (OER) and Oando have entered into non-binding HoA dated September 17 providing for the acquisition by OER of Oando’s 40% participating interest in theQua Ibo field on OML 13 onshore Nigeria.

Oando signed agreements relating to the acquisition of its participating interest in the Qua Ibo field in February 2012, but it remained subject to the consent of the ministry of petroleum and certain other third parties. In the event that such consents are not forthcoming or impose terms which are too onerous on Oando, the company is instead entitled to receive an indirect economic interest in the Qua Ibo field from Network Exploration & Production Nigeria Ltd. (NEPN).

The HoA provides a framework of terms and conditions for the acquisition which OER and Oando intend to use as the basis for a definitive agreement. The parties have agreed to negotiate exclusively with each other and in good faith and use their reasonable efforts to negotiate a definitive agreement to give effect to the acquisition on or prior to the end of February 2013, or such other date as may be agreed to in writing by the parties.

The Qua Ibo field, which was originally held by a joint venture which included Shell’s SPDC,   was awarded to a Nigerian company NEPN as part of the government’s 2003 Marginal Field Round. The field is located onshore near the mouth of the Qua Ibo River in Akwa Ibom state. Three wells, the Qua Ibo-1, Qua Ibo-2, and Qua Ibo-3 were drilled on the field. TheQua Ibo - 1 well was plugged and abandoned after inconclusive tests. The Qua Ibo-2 well found oil in six horizons and gas in five zones at depths of 3310 to 7100 ft. It is currently suspended. The drilling of the Qua Ibo-3 appraisal well began in Q4 2008 and was completed in 2009, at which point it was also suspended. The primary objective of Qua Ibo-3 was to determine if oil seen in the deeper D 5.0 zone in wells Qua Ibo-1 and Qua Ibo-2 was from one continuous pool linking the two wells. The appraisal confirmed that the D 5 zone is compartmentalized by a fault and that the two wells are in separate independent fault blocks.

“We are excited about signing these Heads of Agreement for a 40% participating interest in the Qua Ibo Field which, if acquired, is expected to grow our Gulf of Guinea portfolio significantly,” said OER CEO, Pade Durotoye. “The acquisition of additional reserves would represent a preliminary step in our broader objective of portfolio growth via the consolidation of marginal fields in Nigeria.”
 

Oando currently holds 94.6% of the issued and outstanding common shares of OER.