March 30, 2016/ OER

Oando Energy Resources Inc. (“OER” or the “Corporation”) (TSX: OER), a company focused on oil and gas exploration and production in Nigeria, today announced financial and operating results for the three and twelve months ended December 31, 2015. The audited consolidated financial statements, notes and management’s discussion and analysis pertaining to the period are available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and by visiting www.oandoenergyresources.com. All monetary figures reported herein are U.S. dollars unless otherwise stated.

“Despite broader macroeconomic and commodity price challenges, 2015 proved to be an operationally successful year for us as we maintained our production output and successfully reduced our debt obligations with the restructuring of our hedge instrument,” said Pade Durotoye, CEO of Oando Energy Resources. “2016 will be focused on maintaining our production levels through low cost rigless activities and intensifying our efforts on Cash and Cost management”.

Key Financial and Operational Highlights

• Production in 2015 increased to 19.9 MMboe (average 54,520 boe/day) from 9.1 MMboe (average 24,945 boe/day) in 2014. During the fourth quarter of 2015 production decreased to 4.8 MMboe (average 52,637 boe/day), compared with 5.0 MMboe (average 54,721 boe/day) in the fourth quarter of 2014. The increase between the annual periods is primarily as a result of the input from the Nigerian onshore and offshore assets acquired on July 30, 2014 from the ConocoPhillips Company (“COP Acquisition”) that included substantial production from OMLs 60 to 63, significant reserves and resources, and a considerable base of development and exploration opportunities. Gas production reduced quarter on quarter as a result of the production constraints arising from the Ebocha flowstation fire;
• During 2015 revenues increased by $33.5 million, to $455.0 from $421.4 million in 2014, primarily as a result of the COP Acquisition producing assets of OMLs 60 to 63, countered by a substantial decline in crude oil and natural gas sales prices;
• In 2015, approximately 46% of crude oil production was hedged. At December 31, 2015, 9,617 bbls/day of crude oil production was hedged at $65/bbl (average) with expiries ranging from July 2017 to Jan 2019, and further upside if certain price targets are met, which represented 43% of the fourth quarter production of crude oil;
• The Corporation recognized net income of $16.1 million in 2015, compared to a net loss of $320.0 million in 2014. The increase was primarily the result of the decrease in the non-cash impairment of assets, which was partially offset by lower commodity prices;
• In December 2015, OER entered into an agreement to sell its interest in OMLs 125 and 134 to the operator for cash proceeds of $5.5 million and assumption of $84.5 million in cash call liabilities due to the joint venture. The divesture requires lender and regulatory consent;
• In October 2015, the Corporation increased the capacity of the Senior Secured Facility and Corporate Finance Facility by $90.7 million; proceeds from the loan and cash on hand were used to repay the $100 million subordinated debt facility and fees of $4.6 million;
• In December 2015, OER entered into a definitive agreement with Oando PLC and Oando E&P Holdings Limited to acquire, by way of an arrangement, all of the issued and outstanding common shares of OER for a cash consideration of US$1.20 per share. Following consideration of the transaction by a committee comprised of the Corporation’s independent directors (the “Independent Committee”) and the receipt of a formal valuation and fairness opinion, the Independent Committee and board of directors recommended that OER’s shareholders vote in favour of the transaction.  At the meeting of OER’s shareholders held on February 25, 2016 for the purposes of considering the transaction, 100% of the votes cast were voted in favour of the resolution to approve the transaction.  On February 26, 2016 the Supreme Court of British Columbia issued a final order approving the arrangement.  Completion of the transaction is subject to satisfaction or waiver of certain conditions precedent including the consent of lenders under one of OER’s loan facilities and Oando PLC’s lenders. The outside date for completion of the transaction is April 29, 2016; and
• As at December 31, 2015, OER had a working capital deficiency of $835.8 million, compared with a working capital deficiency of $567.2 million at December 31, 2014. The increase in the working capital deficiency was due to the reclassification of non-current borrowings to current borrowings as a result of breaching a loan agreement requirement at December 31, 2015. The Corporation had amalgamated two of its subsidiaries, one of which was a party to the Senior Secured Facility, prior to receiving lender consent which triggered a default and prompted lenders to exercise their right to restrict cash payments from lender-held cash deposits.  The default gives the lenders the ability to accelerate the maturity of the facility on demand.  As of the date of these financial statements, the lenders have chosen not to exercise their acceleration rights under the loans. As a result of this default, $268.6 million of borrowings was reclassified to current borrowings as at December 31, 2015.

Selected Financial and Operational Review

The table below summarizes selected financial and operational information for the years ended December 31, 2015, 2014 and 2013 and for the three months ended December 31, 2015 and 2014.

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