The management of Nigerian based energy group- Oando Plc, on Monday offered further information about its half-year unaudited result presented last weekend, assuring that it is poised to ride on the wings of positive factors like the rising crude oil production and price at the international market to grow revenue and profit for the benefit of its shareholders and investors.
In a statement to the Nigerian Stock Exchange (NSE), Oando Plc noted that for the third time in a row, it posted positive financials defying speculations and bolstering confidence in the Oil and Gas sector, beginning with the 2016 final year-end 2016 results which came with a N3.5bn net profit. This was followed by the group’s N1.7bn first quarter 2017 net profit; and N4.6bn half year ended June 30, 2017 PAT, representing a 117% rise from previous a net loss of N26.9bn reported in the corresponding period of 2016, even as turnover for the period increased by 26% from N212.3bn to N267.1bn.
Against this backdrop, Group Managing Director/Chief Executive of Oando Plc, Wale Tinubu expressed management’s commitment “to optimizing our overall production base, seeking unique profit-driven opportunities to further partner with IOCs (Independent Oil Companies), while firming up our balance sheet to provide greater shareholder value.”
The statement noted that as a result of the gradual recovery of Nigeria’s oil sector from the upheaval of low oil prices; due in part to the exemption of Nigeria from the global oil production cut by the Organization of Petroleum Exporting Countries (OPEC) as well as containment of the Niger Delta unrest which has led to a steady rise in oil production.
“In May 2017, the country’s oil production increased by 273,600 barrels per day (bpd) to 1.484 million barrels per day (bpd), a testament to these changes,” the statement noted.
An analysis of the half-year results of oil and gas companies operating in Nigeria reveals a steady increase in earnings, it said, showed that Royal Dutch Shell’s cash flow rose to the highest since the oil crash began, generating $3.6bn earnings, Tullow Oil’s revenue increased by 46% to $0.8bn and Oando proved no different.
A comparative review of Oando’s financials further show positive performance across all financial indices, turnover increased by 26% to N267.1bn from N212.3bn, gross profit increased by 76% to N33.4bn from N19bn, while net finance costs fell to N16.4 billion from N35.3bn.
The numbers, Oando Plc continued, indicative its ability to manoeuvre the cyclical nature of the sector by adapting quickly to continued low oil prices, which it has done through the successful implementation of its corporate strategic initiatives of Growth, Deleverage and Profitability alongside its renewed focus on its dollar earning businesses.
Tinubu added: “With security concerns in the Niger Delta receding, Nigeria’s economic recovery has been buoyed by a boost in oil output, while the legislative approval of certain segments of the Petroleum Industry Bill (PIB) provides greater long-term policy certainty for the sector. Our returns underline our continued successful foray into the Upstream.”
The approval of the Petroleum Industry Governance and Institutional Framework Bill (PIGB) is set to further improve the sector. The anticipated fall out of the PIGB is a more efficiently regulated oil and gas industry and a conducive business environment for sector players.
More recently, specifically Thursday, July 27 three petroleum industry bills passed second reading in the Senate; this is expected to further encourage substantial investment in the petroleum industry.
The company said it successfully realized N3.2bn in net cash from the crystallization of the Corporate Facility hedges (1,590bbls/day) through its Upstream business, Oando Energy Resources.
In the second quarter of 2017, the group successfully completed the sale of its interest in OMLs 125 and 134 to Nigerian Agip Exploration Limited “NAE” for a profit of N4.6 billion, while in its Downstream business, Oando Trading (OTD), there was a 40% growth in traded volumes and a commendable 147% increase in turnover to N217.5 billion compared to N88.1bn for the comparative period of 2016. The trading business lifted volumes exceeding 7.5mmbbls of crude and imported 610,000MT of refined petroleum products, a 72% and 20% increase respectively.
“The Structured Trade Finance lines in its Downstream business increased by N76.5bn to N214.1bn in total, from a total of five International and African banks, further validation that Oando is still a good business investment. This increase in financing allows the company to achieve greater trading capacity and in turn more volumes,” the statement added.