Lagos, Nigeria – Oando PLC (“Oando” or the “Group”), Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, announces that it has completed the sale of the entire issued share capital of one of its wholly owned subsidiaries, East Horizon Gas Company Limited (“EHGC”) to Seven Energy International Limited (“Seven Energy”) for a total gross consideration (the “Consideration”) of up to US$250 Million.
The Consideration consist of:
- An initial payment of US$100 Million in cash;
- The assumption by Seven Energy of existing liabilities of EHGC, including approximately US$62 Million of bank indebtedness; and
- The balance in deferred payments due on achievement of certain operational and contractual conditions. It is expected that these conditions will be satisfied during the course of 2014.
EHGC is a special purpose vehicle operating a 128km, 120mmscfd, 18-inch natural gas transmission and distribution pipeline traversing the Akwa Ibom and Cross River States. EHGC also has a gas sales agreement to supply up to 25 mmscfpd, increasing to 50 mmscfpd in 2016, under a 20 year “take-or-pay” agreement expiring in 2032.
Mr. Wale Tinubu, Group Chief Executive, Oando PLC said: “This divestment underscores our focus on making strategic portfolio choices to improve the Company’s overall intrinsic value whilst boosting our overall Group liquidity in furtherance of our upstream transformational growth initiatives. It gives us great satisfaction, as an enabler in the quest for solving the chronic power shortage, that our counterpart, Seven Energy, will be able to optimise gas resources by serving industrial consumption and power generation needs in the South East region”.
Oando Gas & Power’s Chief Executive Officer, Mr. Mobolaji Osunsanya, acknowledged the ongoing expansion efforts the Company continues to embark on in the midstream sector. Osunsanya said: “Oando will continue to play a major role in the development of Nigeria’s expanding gas and power footprint in the years ahead.
The construction of the 4th phase of our Greater Lagos pipeline is scheduled to commence this year; this will grow our capacity as well as customer base within the Lagos metropolis. Other key growth projects include the refurbishment and expansion of our recently acquired Port Harcourt gas distribution business; growth in our compressed natural gas distribution programme; as well as increase in our power generation capacity beyond 23MW. Longer term projects include the 400km SW-NW pipeline and the Central Processing Facility that will serve as a gas gathering and processing hub in the Niger Delta.
The development of midstream infrastructure remains invaluable to our future strategy as we look to address shortfalls in the power sector that currently blight our nation”.
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