OANDO Plc, Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, in its unaudited results for the three months period ended 31 March, 2017, has announced a reduction in its net debt by 29 per cent, just as it posts N1.7 billion Profit After Tax.
In the company’s 2017 first quarter result, Oando Company’s turnover grew by 116 per cent to N138.4 billion, while its gross profit by 53 per cent to N13.4 billion compared to the first quarter of 2016.
According to a statement from the company, Oando’s N1.7 billion profits can be attributed to proactive measures put in place to enable the business cushion the effect of continued economic headwinds.
Through its upstream subsidiary, Oando Energy Resources (OER) the company has consistently adopted a hedge mechanism that ensures the business is protected from fluctuating oil prices. Approximately 66 per cent of the company’s crude production was hedged with 9,590 bbls/day of crude oil production hedged at $65/bbl (average) with expiries ranging from July 2017 to January 2019.
Commenting, Mr Wale Tinubu, Group Chief Executive, Oando PLC said, “Following a successful restructuring in 2016, we are pleased with our Q1 2017 results which reflect a return to normalcy and growth in spite of continued security challenges, economic headwinds and a fluctuation in crude prices.”
The company has continued to reduce its net debt quelling any concerns of critiques; as at March 2017 it stands at N225.9 billion a 29 per cent reduction from N316.6 billion in March 2016.
“In the upstream, production in the first quarter of 2017 decreased to 38,125 boe/day compared to 49,365 boe/day in Q1 2016. However, due to decreased production expenses Oando Energy Resources (OER) recorded a profit of N4.96 billion in the first quarter of 2017 compared with a profit of N815.5 million in the prior year comparative period.
In the Midstream following the partial divestment of Oando Gas and Power (OGP) to Helios Investment Partners, we successfully concluded the sale of Alausa IPP for a transaction price of N4.6 billion. In the Downstream, our trading business through Direct Sale & Direct Purchase (DSDP) and Offshore Processing Agreement (OPA) yielded N115.6 billion compared to N4.4 billion in 2016.” Tinubu said.
In the Upstream Oando Energy Resources (OER) recorded a production shortfall due to significant reductions in gas production and delivery caused by a ruptured Gas Transmission System (GTS-4) gas line at OMLs 60 to 63. In addition, the Trans Forcados pipeline continued to suffer downtime resulting in reduced production from its Ebendo field. Despite these operational challenges, OER recorded a 608 per cent increase in profits; N4.96 billion in the first quarter of 2017 against a profit of N815.5 million for same period in 2016.
The sale of Alausa Independent Power Plant (IPP) is part of the company’s overall divestment strategy and in line with Oando Gas and Power’s new focus on gas infrastructure expansion specifically the aggressive development of its Gaslink franchise which serves over 160 industrial and commercial customers across the Greater Lagos area, through the Central Horizon Gas Company the completion of an additional nine kilometre of pipeline infrastructure within the Trans-Amadi area and, Gas Network Limited (GNL) its compressed natural gas (CNG) entity and pioneer virtual pipeline initiative currently, delivering gas to customers within a 100km radius.
In the Downstream Oando Trading (OTD) witnessed a 150 per cent growth in traded volumes and a significant increase of 1718 per cent in turnover to N115.6 billion compared to N4.4 billion the comparative year. OTD also increased its secured credit lines by N76.6 billion to a total of N214.4 billion, giving it added leverage to further grow the business.
Speaking on the company’s first quarter results, the GCE said: “The first quarter earnings from OER and OTD underscore our proactive decision to focus on our dollar denominated export businesses. Our resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come.”
The International Monetary Fund (IMF) projected that Nigeria’s economic growth would rise by 0.8 per cent in 2017. The IMF said: “After contracting by 1.5 per cent in 2016 because of disruptions in the oil sector coupled with foreign exchange, power, and fuel shortages, output in Nigeria is projected to grow by 0.8 per cent in 2017 as a result of a recovery in oil production, continued growth in agriculture, and higher public investment.” This will in turn impact the growth of the country, projected to rise to 2.6 per cent in 2017 and 3.5 per cent in 2018.