The management of Oando Plc, on Monday, said it has made progress against all odds, shown in its report for the half-year ended June 30, 2019, wherein net profit stood at N7.2bn, further inspiring hope of a dividend pay-out in the near future among shareholders.
A key take away from the result, according to a statement by Ayotola Jagun, its chief compliance officer and company secretary, is the significant reduction its debt and liabilities arising from its 2014 acquisition of ConocoPhillips Nigeria.
Specifically, the group said total borrowings for the period by 5% to N200.7bn from N210.9bn in 2018 full year, reducing total debt since 2014 by 58% from N473.3bn.
Complimenting this effort, the statement added, is the 13% reduction in borrowing for its upstream business to $221.13m, as against $255.6m at the end of the 2018 full year, totaling about 72% debt reduction from $801.6m in 2014.
“The company further reduced its Reserve Based Lending facility to approximately $0.4 million from $450m at inception, a 99% reduction,” it added,
The statement quoted Oando’s Group Chief Executive, Adewale Tinubu describing the performance as positive even as “crude oil and natural gas production grew by 15% and 8% respectively compared to the similar period last year.
Oando said although Nigeria witnessed no movement in its oil production compared with the same period of 2018, the company witnessed an increase in its oil production, attributable its management and partners to ramp up production.
During the six-month period, production by its upstream subsidiary, Oando Energy Resources (OER), increased by 8% at 40,873boe/day, compared with 37,814boe/day in the same period of 2018. Oil production increased by 15% from 14,675bbls/day in H1 2018 to 16,876bbls/day in H1 2019, while natural gas production increased by 8% from 118,866mcf/day in H1 2018 to 128,533 mcf/day in H1 2019.
In the downstream, it continued, Oando Trading completed approximately 7.3m barrels of crude oil trades under various contracts with the Nigerian National Petroleum Corporation (NNPC) and delivered 228,970 MT of refined products in H1 2019.
Speaking at the recently concluded Nigeria Oil & Gas Conference, Tinubu, recalled that the ConocoPhillips transaction was extremely challenging given that Oando had to pay a non-refundable deposit of $450m and thereafter worry about how the rest of the capital would be raised within a short time frame. The situation, he stressed, was made worse by the unexpected delay in securing Ministerial consent needed to complete the transaction at the time, despite being an indigenous company. This delay stretched the transaction for 18 months.
As a result, he continued, “the bad news is: not only was it a very expensive transaction then because the price of crude oil was $112 (per barrel) when we closed and by December crude oil prices had dropped to $60 per barrel. One year after the acquisition, crude oil prices had dropped even further to $30 a barrel. You can imagine us signing the largest cheque in our corporate history and immediately after the market doing a complete reverse. This was coupled with being in an era where Niger Delta militancy was on a high, (following which) production was severely hampered; we had a large swamp rig operation and pipelines network which was affected”.Today, Oando is in its third year of consecutive profits.”