Oando Energy Resources Inc (OER) – a subsidiary of Oando Plc – a company focused on oil and gas exploration and production in Nigeria, has announced that it intends to complete a private placement to raise the sum of US$50,000,000. In addition, in connection with the Offering, OER intends to acquire a 5% interest in OML 131 in exchange for common shares of the Company (the “OML 131 Acquisition”).

The Offering

The Offering is expected to consist of 35,070,063 common shares of the Company (the “Common Shares”) and 17,535,031 common share purchase warrants (the “Warrants”) for gross proceeds of US$50,000,000 (each Common Share and half-Warrant, a “Unit”) at a price of C$1.57 per Unit. Each whole Warrant will entitle the holder thereof to acquire one common share of the Company at a price of C$2.00 per common share for a period of 24 months from the date of the closing of the COP Acquisition (as defined below). If, after a period of six months from the closing of the COP Acquisition, the common shares of the Company trade on the Toronto Stock Exchange (“TSX”) at a price greater than C$3.50 for a period of at least 10 consecutive trading days, the Warrants will expire on the date which is 30 days following the last day of such 10 consecutive trading days.

Closing of the Offering is subject to receipt of applicable regulatory approvals, including approval of the TSX. The issue price of the Units represents approximately an 11% discount on the market price of the Common Shares on the date the TSX received the Company’s request for price protection. Securities issued will be subject to a hold period, which will expire four months plus one day from the date of closing of the Offering.

It is anticipated that the proceeds of the Offering will be used by the Company to satisfy a portion of the purchase price for the proposed acquisition by the Company of the Nigerian upstream oil and gas business of ConocoPhillips (the “COP Acquisition”). The Offering has been negotiated at arm’s length. Should OER elect to issue Common Shares to Oando Plc, the 94.6% shareholder of the Company, prior to or concurrent with the closing of the Offering as repayment of all or a part of a convertible loan outstanding to Oando Plc, the Offering is not expected to affect control of the Company and no new insiders are expected to be created as a result of the Offering.

The OML 131 Acquisition  

In connection with the Offering, the Company intends to acquire a 5% interest in OML 131 from an investor in the Offering for a purchase price of US$5,000,000. The purchase price will be satisfied by the issuance of an additional 3,491,082 Units. The closing of the OML 131 Acquisition is subject to acceptance by the TSX and any requisite approvals from Nigerian regulatory authorities.

Assuming completion of the OML 131 Acquisition and the COP Acquisition, OER will own a 100% interest in OML 131.

Source: NSE

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