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OAO - Oando Plc - Acquisition Of Interest In Offshore Nigeria

Release Date: 25/02/2008 11:42:59      Code(s): OAO
OAO - Oando Plc - Acquisition Of Interest In Offshore Nigeria                   
                        Oml 125 And Oml 134                                     
Oando Plc                                                                       
(Incorporated in Nigeria and registered as an external company in South         
Registration number: RC 6474                                                    
(External company registration number: 2005/038824/10)                          
Share Code on the JSE Limited:  OAO                                             
Share Code on the Nigerian Stock Exchange:  UNTP                                
ISIN: NG00000UNTP0                                                              
("Oando" or "the Company")                                                      
1.  Introduction                                                                
Shareholders are advised that Oando has, subject to the fulfilment or           
waiver of the conditions precedent set out in paragraph 3 below, entered        
into an agreement to acquire Shell Nigeria Exploration and Production           
Company Limited`s ("Shell") entire 49.81% interest in the Production            
Sharing Contracts ("PSCs") and Joint Operating Agreement ("JOA")                
respectively in respect of offshore Nigeria Oil Mining Licence ("OML") 125      
and OML 134 (the "Transaction").                                                
2.  Terms of the Transaction                                                    
Oando has agreed, subject to the fulfilment or waiver of the conditions         
precedent set out in paragraph 3 below, to acquire, the Shell interest for      
an aggregate initial cash consideration of US$625,764,000 (the "initial         
consideration").  The initial consideration payable in terms of the             
Transaction will be settled as follows:                                         
-  US$62,576,400 on 22 February 2008, the date of signature of the sale         
and purchase agreement (the "agreement") for the Transaction; and             
-  US$563,187,600 on the completion of the Transaction.                         
The initial consideration will be adjusted to account for changes between       
the effective date of the Transaction being 30 June 2007 and the completion     
date being the date when all the conditions precedent set out in paragraph      
3 below have been fulfilled or waived. The initial consideration and any        
adjustments will be funded from both internal cash resources and from           
external financing. Standard Chartered, Standard Bank Group Limited, BNP        
Paribas and Merrill Lynch International are providing financing to Oando        
for the Transaction.                                                            
3.  Conditions precedent                                                        
The Transaction is subject to warranties and indemnities normal for a           
transaction of this size and nature and is also subject to the fulfilment       
or waiver of the following principal conditions precedent:                      
-  pre-emptive rights related to the JOA being waived;                          
-  receipt of consent by the Nigerian government;                               
-  approval by Oando shareholders in a general meeting of the                   
  implementation of the Transaction; and                                        
-  no material adverse event having occurred in the business condition as       
  defined in the agreement.                                                     
4.  Rationale for the Transaction                                               
Oando is Nigeria`s largest energy group with strategic investments in a         
range of energy companies across West Africa.  With its investments and         
diversified business model the Company is fast achieving its goal of being      
"the leading integrated energy solutions provider".                             
The Transaction represents a rare opportunity to acquire a balanced             
upstream asset portfolio in our home market in line with our stated             
principle to acquire proven and actively producing properties that              
demonstrate the potential for increased financial return. Oando, through        
the Transaction, will benefit from partnering with Agip, a world class          
operator with significant experience in Nigeria.                                
The assets being acquired include production from the Abo field combined        
with near term production growth and high potential exploration acreage to      
complement Oando`s existing upstream position. The Transaction brings           
approximately 9,000 barrels per day of crude oil production, 82.5 million       
barrels of 2P and risked contingent reserves and turns Oando into Nigeria`s     
leading indigenous exploration and Production Company.                          
5.  Circular                                                                    
The Transaction is a Category 1 transaction in terms of the JSE Limited`s       
Listings Requirements.  Oando is accordingly required to issue a circular       
to shareholders containing full details of the Transaction and the              
resolution required to be approved by Oando shareholders.  The circular         
will be posted to Oando shareholders in due course, including the notice of     
a general meeting.                                                              
6.  Financial effects                                                           
The Transaction relates to the acquisition of assets and historical             
financial accounts for the acquired business are not available. Therefore,      
financial effects cannot be quantified at this stage.                           
25 February 2008                                                                
Financial adviser                                                               
Standard Chartered                                                              
Deutsche Securities (SA) (Proprietary) Limited                                  
Date: 25/02/2008 11:42:59 Supplied by www.sharenet.co.za                     
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