Latest News | News Break Nigeria Tenacity is one attribute of any chief executive with belief and confidence in the pursuit of a strategy aimed at delivering better value to shareholders. If you were looking for a demonstration of tenacity in the traditional dogged pursuit of a goal that you’ll find in a focused Executive Management Suite in corporate Nigeria today, you won’t need to look too far. On Wednesday in Paris, after a focused and relentless pursuit of an acquisition that came with its own twists and turns, Wale Tinubu, the chief executive officer of Oando Plc and Chairman of Canada-based Oando Energy Resources, the upstream exploration and production business of Oando, finally got his hands on the priced Nigerian upstream oil and gas business of ConocoPhillip for $1.5 billion. The transactions took long in coming, but Tinubu and his team must be very pleased that they stayed the course, never wavering or giving up on a deal that they knew would raise the stakes for the company and its shareholders. “We believe in the significant potential that the Nigerian oil and gas industry holds and are privileged to play a pivotal role in its consolidation, growth and development. We will continue to seek strategic opportunities that provide a platform for enhanced growth and value creation for our stakeholders,” Tinubu said at the completion of the acquisition. But across the entire Oando Group members’ offices in Nigeria, in Ghana, in the United Kingdom, in Canada, thumb pumping will go on for days, if not weeks. There would also be the traditional sigh of relief that usually comes with a successful conclusion to a long drawn out transaction process. Tinubu and his team had put in their bid for the ConocoPhillips assets in 2012 and by October of that year the company was on the short list of bidders; eventually emerging bid winners a month or so later. Tinubu has always wanted to grow the company. It is the reason why at a point in the growth trajectory a defined focus emerged, describing the company as an “integrated energy solutions provider”. He would later explain this to be an attempt to discountenance the common thinking that the company was just a fuels distribution company. “We are the largest fuels importer into the country after the national oil company. We are also a big exporter of products out of the country. We have the largest local gas distribution system in the country. We have the Lagos Gas Pipeline system, which is almost 100 kilometres in length with almost 140 big industrial companies on it,” he said. Adewale Jubril Tinubu, Group Chief Executive of Oando PLC The company that Wale Tinubu took over and began to rebuild was actually largely a fuels distribution company. But he has expanded it over the years. It is now a company with so many arms, including an exploration and production company. That division of the business used to produce about 5,000 barrels of crude oil per day. Not anymore. With the acquisition of ConocoPhillips, production jumps to around 50,000 barrels per day. This immediately makes Oando an indigenous major. And here is what this transaction is bringing to the table of the new indigenous major: It is bringing 20 percent non-operating interest that once belonged to Phillips Oil Company Nigeria Limited in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as the related infrastructure and facilities in the Nigerian Agip Oil Company Ltd joint venture (NAOC JV). This 20 percent interest in the NAOC JV includes 40 discovered oil and gas fields with remaining oil and gas recovery; approximately 40 identified prospects and leads; 12 production stations; approximately 950 km of crude oil, natural gas liquids and natural gas pipelines; two gas processing plants; the Brass River Oil Terminal; the Kwale-Okpai 480 MW combined cycle gas-fired power plant (“Kwale-Okpai IPP”), and associated infrastructure. Analysts say this is massive On Wednesday morning when BusinessDay broke the story that the deal was finally going to be signed in Paris, there was a lot of happy comments on the website by excited investors. One commented thus: “Congrats Oando Team. I’ve always believed in the Oando vision. Very hopeful about the Oando announcements. Please no more transaction fees that erode dividend to shareholders. Let’s have a great earnings announcement and dividend that drive impressive capital appreciation. Let the share price and dividend reflect what Oando is – AN INDUSTRY LEADER,” said an investor who called himself Hopeful in Oando vision This acquisition is significant for Nigeria and Tinubu knows this. For besides the fact that Oando is a private business that indigenous players are beginning to make significant inroads into the industry should represent good news. “It’s a significant transaction: it’s the largest single upstream acquisition done in Nigerian industry by an indigenous company,” Wale Tinubu said, adding :”In the long term it will be good for the country, in terms of being able to retain value in the country, as opposed to the exploitation or the exports of profits outside the country,” he added. As the country’s indigenous oil companies expand their hold on the industry, a time would come when they would be looking at the very big assets. Tinubu is already talking about growing Oando’s production to 100,000 barrels per day. But he sees offshore work as still too technical and requiring a particular kind of expertise that only the international oil companies can provide for now. “The offshore belongs to the international oil companies. There’s so much oil offshore! I think we need that capital, we need that expertise to develop offshore,” he said. But he will keep his eyes open for more deals. As CEO of the Oando group, Tinubu has always kept his mind on establishing a major player in the sector by working to grow the business in different but integrated directions. He now has a two to three years assets searching plan, it would seem from what he said. “We’re looking for similar assets, with sizeable, proven and developed reserves, with their own export facilities,” he said. He is a firm believer in having indigenous participants play bigger role in the oil and gas industry in Nigeria as he thinks this would help the country deal with a myriad of issues that have plagued the industry including oil theft, pipeline sabotage and regulatory uncertainty that have stifled investment. “If you live in an emerging market, or in a place like Nigeria, you realize that a lot of self-help is required,” he said. “Everybody has private guards, everybody builds their own fences, there’s a neighborhood watch. That same principle will apply to oil and gas assets, with more fragmented pieces owned by indigenous companies who provide protection for these assets,” he said. Phillip Isakpa
Posted on: Fri, 01 Aug 2014 00:40:12 +0000
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