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Friday, July 1, 2022

Oando Fails to Pay $180 million Signature Bonus on OPL 321, 323

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Oando Energy Resources (OER) has failed to make the required signature bonus payment on time after the award of Oil Prospecting Licenses (OPLs) 321 and 323 to its subsidiary Equator Exploration Limited.

OER holds 81.5% equity interest in Equator Exploration Limited.

On 20 October 2020, the Ministry of Petroleum Resources (“Ministry”) communicated re-award of OPL 321 to Equator Exploration Nigeria Limited (64%), Owel Petroleum Services Limited (26%) and Tulip Energy Limited (10%).

The award was subject to the following terms and conditions: payment of signature bonus of $35 million within ninety days of receipt of Award letter; sole risk contract requiring Equator Exploration Nigeria Limited to identify and negotiate with a technical partner with Deepwater experience as the contracting party; and preservation of Government Back-in Right.

On the same date, the Ministry also communicated re-award of OPL 323 to Equator Exploration Nigeria Limited (78.6%), Owel Petroleum Services Limited (11.4%) and NJ Exploration Limited (10%) subject to the following terms and conditions: payment of signature bonus of $145 million within ninety days of receipt of Award letter; sole risk contract basis requiring Equator Exploration Nigeria Limited to identify and negotiate with a technical partner with Deepwater experience as the contracting party; and preservation of Government Back-in Right.

Due to a failure to pay the signature bonus totaling $180 million for both OPLs, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), via a letter dated 21 January 2022 granted a sixty days’ payment extension for the signature bonus.

” Management plans to meet the new payment date,” Oando said in its financial statements seen by MoneyCentral.

Located offshore Nigeria, adjacent to OML 125 and at a water depth of 950m – 2000m, OPL 321 and OPL 323 cover a combined area of 217,00 km² (530.535 acres).

Oando reported a loss of N132.57 billion for the one year period that ended in December 2020.

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