Oando Energy Resources Inc. (OER), a company focused on oil and gas exploration and production in Nigeria, says it has entered into an amendment agreement with ConocoPhillips in relation to the proposed acquisition by the company of the Nigerian upstream oil and gas business of ConocoPhillips.
The outside date for completion of the ConocoPhillips acquisition by OER has been extended from November 30, 2013, to January 31, 2014.
The acquisition comprises the indirect acquisition of all of the shares of Phillips Oil Company Nigeria Limited (POCNL), Phillips Deepwater Exploration Nigeria Limited (PDENL) and Conoco Exploration and Production Nigeria Limited, as previously announced on December 20, 2013, and September 16, 2013.
The company also announced that it had amended the loan agreement and associated repayment deed, each dated May 30, 2013, as amended, with Oando plc, the holder of 94.6 percent of the shares of OER, to increase the amount loaned to the company by $15 million, according to a statement posted on PR Newswire.
Pursuant to the amendment agreement, OER and ConocoPhillips agreed, among other things, to the extension of outside date for completion of the ConocoPhillips acquisition and increase in the deposit for PDENL.
OER would increase the deposit for the acquisition of the shares of PDENL by $15 million, and has agreed to pay the increased deposit amount to ConocoPhillips by no later than December 6, 2013. No change to the purchase price of PDENL results from this amendment.
As previously announced in December 2012, in connection with the ConocoPhillips Acquisition, the company paid a $435 million deposit. Following the increase in the deposit for PDENL, the aggregate amount of the deposit for the ConocoPhillips Acquisition will be $450 million.
As consideration for the extension of the outside date, the purchase price of the shares of POCNL will be increased by $10 million per month for the period from December 1, 2013 up to but excluding the outside date of January 31, 2014and will be calculated on a pro rata basis where the completion date of the ConocoPhillips Acquisition does not occur on the last day of the month. Any increase in the purchase price as a result of this consideration will be an adjustment to the net purchase price payable at completion of the ConocoPhillips Acquisition.
As a result of the amendments, the net purchase price payable to complete the ConocoPhillips Acquisition is estimated to be approximately $1.23 billion (after deducting the deposit including the increase referred to above) and giving effect to adjustments as of the outside date).
On the loan, the increase in the principal amount is being borrowed in order for OER to fund the increase in the deposit required to be paid to ConocoPhillips. The additional $15 million will bear an annual interest rate of 5 percent and be repayable in cash on December 31, 2013.
As a result of the increase in the principal amount by $15 million, the aggregate principal amount owing by OER to Oando will be $401 million, the statement said.