"This potential transaction represents a transformational step forward for our company," Oando chief executive Pade Durotoye said in a statement after the close of markets.
"Our management team is familiar with the assets contained in this proposed transaction and, we believe, possess the regional experience and technical expertise necessary to capture and unlock their future value for our shareholders."
The deal includes two offshore properties including a 95 per cent operated interest in the Chota Field and a 20 per cent non-operated interest in the Uge Field.
Oando will also take over a 20 per cent non-operated interest in an onshore joint venture, a 20 per cent stake in the Kwale-Okpai Independent Power Plant and a 17 per cent stake in the Brass LNG project.
ConocoPhillips' 2012 net production in Nigeria averaged 43,000 barrels of oil equivalent per day through October, including 60 per cent natural gas and 40 per cent liquids.
Oando current assets are predominantly in Nigeria with production of approximately 3,300 barrels of oil per day from the Abo Field, and an additional 1,500 barrels of oil per day from the Ebendo Field, once a damaged export pipeline has been repaired or replaced.
ConocoPhillips said the sale, which is expected to close by the middle of next year, is part of a plan to focus its portfolio.
Including the Oando deal, the company said it has announced $11 billion in asset sales this year.
"This intended sale represents further progress on our asset disposition program," said Don Wallette, ConocoPhillips's executive vice-president, of commercial, business development, and corporate planning.
"We are pleased that Oando PLC recognizes the value of this asset."
Earlier this week, ConocoPhillips agreed to sell its business in Algeria to Indonesia's state-owned oil and gas company Pertamina for $1.75 billion.
The Algeria business holds stakes in three major oil fields and produced an average 11,000 barrels of oil equivalent per day for the year through October. Toronto-listed Oando has paid a cash deposit of US$435 million to ConocoPhillips.
The remainder of the purchase price will be financed through equity and debt, including private placements of equity-linked securities and an offering of shares.
A syndicate of international and Nigeran banks are expected to provide US$800 million in senior secured loans.
Shares in Oando were unchanged at $1.49 on the Toronto Stock Exchange on Thursday.