* CEO Tinubu says can raise the cash for the $1.79 bln
* Finance split 50-50 between equity and debt
By Tim Cocks
LAGOS, April 17 Nigerian oil firm Oando
is close to securing funds to buy ConocoPhillips'
Nigerian assets, the company's chief executive said on
Wednesday, as he looked to allay fears it is struggling to raise
finance for the $1.79 billion deal.
Wale Tinubu told Reuters in an interview in Nigeria's
commercial hub Lagos that the firm, having already raised the
additional equity needed in February with a rights issue, now
also has agreed in principle the necessary debt.
Oando has been looking for the past year
to finance its transformation from a marketer of refined
petroleum products into an upstream firm focused on oil and gas
exploration and production.
The deal to acquire Conoco's fields, that were
producing around 43,000 barrels of oil per day (bpd) last year
and have proven reserves of 213 million barrels of oil
equivalent, is scheduled to close by mid-2013.
But analysts have questioned whether Oando can persuade
investors to deliver the funds.
"We're confident in our ability to raise finance," Tinubu
said. "Because we have a diverse group, we've been able to raise
equity from our shareholders and extract value from parts of our
business to reinvest in the upstream."
Tinubu also said that in reality the deal would only cost
Oando around $1.5 billion, not the $1.79 billion headline
figure. He declined to explain the discrepancy, but a source
close to the deal said this was because of a net positive cash
flow from the assets of $200-$300 million.
Tinubu said of the $1.5 billion cost around $725 million
would come from debt.
"The debt is already arranged," he said, but he declined to
name banks involved and said some details remained to be worked
out. Banking sources say the debt will be in the form of a
syndicated loan of international and Nigerian banks.
Tinubu said once Oando had completed its acquisitions the
upstream business would account for about three quarters of its
assets, against 40 percent now.
The ConocoPhillips deal is the latest of several sales of
Nigerian onshore assets made by foreign oil companies and
Brazil's Petrobras is now looking to sell $5 billion of
"We would certainly be interested in considering it," Tinubu
said when asked if Oando was interested in buying some of the
Petrobas interests. "We know we will be approached by them," he
Political pressure from a government keen to have more
indigenous firms operating fields plus rampant oil theft by
armed gangs hacking into pipelines and potential liabilities
from damaging oil spills have encouraged some foreign firms to
slowly move out of onshore oil production.
But other firms like Britain's Afren and Nigerian
firms like Seplat and Conoil are moving in, creating competition
Tinubu said local companies like Oando were in a better
position to handle issues with local communities.
"Being an indigenous company, we're better suited to handle
the issue of theft and of community relations," he said.